Friday, 4 July 2014

New or Improved?

There is an interesting tendency for politicians to prefer selling entirely new ideas over the alternative of improving what we already have. I'm not sure how general this is, and it is perhaps mainly an opposition trait, but two examples stand out.

Electricity is one. As I've been saying, the main thing needed in our electricity sector is for the existing regulator to use its existing powers in a more effective way. The regulator apparently disagrees, so we're all suffering from a dearth of independent retailer competition. Faced with this scenario, opposition parties advocate something entirely new in the form of NZPower.

Much the same phenomenon is happening in climate change policy. We already have a cap & trade scheme in place (the ETS), but it has been neutered by politicians. An obvious option would therefore be to un-neuter it. Instead, the proposal is for a carbon tax. I happen to think a tax is a better idea because of the price certainty it gives investors. But there would also be great benefits from a properly calibrated ETS.

Reform is clearly needed in both these cases, and politicians have to sell reform somehow (except when they give us those nasty post-election surprises). What surprises me a bit is that "new" is perceived as more attractive to voters than "improved" in these cases. It suggests that the existing systems have lost a lot of credibility.

No comments:

Post a Comment