"MORAL HAZARDS"

In economics there is a concept of ‘moral hazard’ often linked to the insurance industry where it’s used to explain the theory that, e.g., fire insurance increases the incentive to commit arson. Economic literature is full of studies explaining how the International Monetary Fund’s loans to some countries create a ‘moral hazard’ and perverse incentives where governments are bailed out, and that this actually works against reforms and for governments to clean up their acts. An invitation to steal? A ‘moral hazard’ always exists where public servants and governments can graze in an unaccountable, non-transparent manner off the taxpayer. It’s rampant in the private sector when there are controls, licensing and monopolies. Competition and transparency are the cleansing air against the possibility of corruption.

There is a real and present danger of ‘moral hazard’ in democracies like New Zealand where situations arise which are opaque in regard to government expenditure to promote themselves. Every government has done it and each government a little more eager, better at it than its predecessor. The envelope keeps being pushed. Technology and the massive increase of political advisers, whose job it is to get their master re-elected and their policies marketed, has increased this ‘moral hazard’. Information and advice about government policies is proper but where’s the line in the sand? Was it necessary for my in-laws to get a computer-generated letter from the Prime Minister, carefully crafted for the elderly – noting pension increases, rates rebate, police increases, health expenditures, and then have another letter from the local MP? Did Australian voters really need a fridge magnet before an election to advise them of what to do if terrorists attack? Whenever an issue emerges, there will be a TV advertising how much the government cares. The government spends millions of dollars on worthy issues such as anti-smoking, alcohol abuse, dangerous driving, family care packages, be careful when swimming, eat correctly, exercise, etc., etc. We also did it, but you can say "no", and as a Minister, I refused several TV campaigns that would have reminded voters what a good guy I was. Much of this expenditure is doubtful but hard to refuse and why not - the other guy did it? What’s party promotion or legitimate explanations of Government programmes? All this needs to be cleaned up and the disingenuous and clever response of the government when some of this was exposed was startling. Yes, we would have retrospective legislation to validate expenditures because National did it for tourism? Pardon, there’s a difference between spending on public goods and party promotion. One excuse was, the National Party was supported by some weird, religious groups with unpleasant ideas ….. but that’s their money. The unusually well-informed commentator, ‘lefty’ Chris Trotter, in an article, did his mates no favour when he said, "Social peace for a paltry half million dollars? Strikes me as the most courageous and forgivable kind of corruption."

So, you are entitled to do anything to defeat an opponent whose ideas you can safely rationalise are against your principles. Not so far from locking them up! The rules are opaque, the rulings of the public auditor conflicting and contradictory.

The political ‘moral hazard’ has been magnified with MMP proportional representation. There must be coalition, governments and leaders have learnt to do whatever it takes. Labour could have been in government in 1996 despite its lowest vote since the 1920’s if Helen Clark had been prepared to accept New Zealand First leader, Winston Peters, as Treasurer. National leader Jim Bolger said yes and that was it. These coalition deals always spend more money. The Greens want a flawed ‘Buy New Zealand’ campaign – give it to them. They need staff to assist them - give it to them, let’s pretend our Foreign Minister is not a member of government to get the votes in Parliament. We can’t blame our politicians for all this, it’s systemic. The system promotes it. The Government can still win on this by stopping the rot. Total transparency, competitive tender for government work, and independent oversight on a multi-party basis. Open all political parties’ books, honest party internal rules subject to oversight as a payback for State funding, as they do in elsewhere. And while they are at it, public disclosure of incomes that the Parliamentary Press Gallery earn outside their jobs, registration of lobbyists, and insist companies and individuals disclose their political donations and seek permission of their boards for spending shareholders’ money. Give the people the information and let them decide, otherwise this incremental slide into sleaze will continue. This ‘moral hazard’, not addressed, will become moral outrage, and unchecked, a new government will do exactly the same.