Paul Paynter – All Governments Are Failures

“All governments are failures,” Oscar Wilde once proclaimed.

It’s quite true.  They have a great deal of power, limited and infrequent accountability, and can fund any project they like with the taxes they demand from us.   That is hardly an environment that is conducive to efficiency and competence.

A prime example recently was the government guarantee of Mascot Finance.  Mascot was clearly in trouble and had ceased taking deposits, yet Treasury guaranteed the company.  When, to no one’s surprise, it failed just a few weeks later, all we got from our Prime Minister was a “Whoops, we made a mistake there.” In the private sector you’d almost certainly get the sack for such an error, and losses on that scale would bankrupt many businesses.

But in government it’s “easy come, easy go.” When you don’t have to earn your money, you tend to spend it more loosely and with less accountability. While the private sector isn’t perfect, they generally make fewer errors than governments – business owners’ houses, livelihoods and retirement savings are on the line.

For these reasons, it’s important to restrict the role of government. Almost everyone would agree we need law and order and so having a government administer a police force and judiciary seems like the safest way to handle these issues. To restrain crime of every sort is the fundamental role of government.

Beyond this, the important thing for a society to do is to restrict government to those activities that the private sector cannot reasonably manage. This seems to make for the best and most prosperous society.

My wife grew up in communist Hungary and her experience is that when the government runs everything, it makes people poorer – not richer. People who are poor and desperate will do anything to improve their lot, and this accounts for the large “black economy” in Communist regimes.

Indeed, long before communism arrived in its modern form, Thomas Jefferson identified its hideous reality. “Government big enough to supply everything you need is big enough to take everything you have,” he said.

The US was once the polar opposite of communism – it was the land of opportunity, where everyone had the chance to better themselves and to control their own destiny.  It’s on that basis they became the most prosperous country on earth.

Their current woes are good evidence that utopia is hard to achieve.  It seems that the US government facilitated corporate crime rather than restrained it – but I’d still rather live in the US than North Korea.

Politicians are also terrible egotists.  Once elected, politicians seem to think they should take the lead on everything – particularly economic prosperity.  History indicates that great business people, inventors and engineers have driven economies – not governments.  Politicians should perform their necessary underpinning role and stay well out of the way.

Some choice examples of government failure exist in our own region.  Splash Planet was touted as an exciting commercial venture, set to be a cornerstone of Hawke’s Bay tourism.  Of course, reports also forecast it would quickly become profitable. Sadly Splash Planet has continued to be a loss-making venture that has delivered well short of its potential.

Similarly, the press recently reported that the Opera House is losing $100,000 a month. Although it is a fine facility, it is clear that it is grossly over-capitalised and cannot generate enough revenue to sustain itself.

These are good examples of how governments fail to keep their feet on the ground, and have far too great a belief in their own commercial competence.  Neither project was a bad idea, just badly managed, with the rate payers continuing to pick up the tab.

Splash Planet is a good example of a venture in which the Council should have sought a private sector partner for at least 50% of the project.  The facility is a commercial venture, a natural monopoly and should be able to be run profitably.  If a business person had their money on the line, greater urgency would have been shown in getting it right. Failing that, Council should have just leased the facility to an operator for $1.  Even that would have been vastly preferable to making ongoing losses.  To do this would have been an admission of incompetence, and so it was never going to happen.

Now we are presented with a $56 million Regional Sports Park, a facility that has grown spectacularly from the original proposal we voted on.  At a time when house prices are falling, jobs are in jeopardy and the Council’s rate income is set to plummet, should we really have such grand ambition?  Is a $12.8M velodrome really a “need” of our community?

There is no doubt that some sports need more investment.  Netball is an excellent example of a sport that lacks facilities.  We should have built new netball courts at Windsor Park over the summer so that they could be ready for the start of the current season.

With all these things, a good question to ask is “How can we get the private sector funding this, rather than ratepayers?”  There are many elderly people who don’t require sporting facilities and don’t really want to pay for them.  Perhaps Council should allow a 30% rates rebate for businesses that make a donation to an approved sports club.  Is not the public in a better position to decide which sports bring value to the community and which do not?  Or does government have to administer all the handouts?

Of course governments don’t like ideas that make them less relevant and empower their citizens.  Government would rather hold the sports clubs in servitude – with their hands held out for funding.  Taken to the extreme they would also like to decide who gets to eat and who does not – perhaps they already do.

It seems human nature is all too willing to become indentured to the state.  If government can acquire “easy money,” then the smart thing to do is try to get your snouts in the trough of that “easy money.”  It is the perfect environment for pompous demagogues to groom citizens that are happy to give up their self respect.

As for our own community, it’s time for back to basics government.  Faced with what looks like an enduring recession, council need to restrict themselves to a simple list of functions they should seek to perform with excellence. If that were the case, I genuinely believe rate decreases would be achievable.