Wednesday, 8 September 2021

 

I began my working career, straight out of university, in the old Department of Trade and Industry, in the division that looked after import licensing.  In those days, any business wishing to import goods had to first obtain an import licence from the government. Very junior officials, like me at that time, were making major decisions about the raw materials and consumer products businesses were allowed to import. We were supposed to be following the policies set out in the government’s annual Import Licensing Schedule, but really we were guided by officials’ sketchy judgement of whether such goods were actually necessary or whether there were already alternatives available in New Zealand. 

Our superiors had little more real-world experience than we did. Most of them had joined the public service straight from school and were focused on seeing out their forty years’ service before they could claim their pension. Over the intervening years, punctuated for some by war service, they had risen to the lofty heights of the lower middle management positions they held when I joined. 

They resented the younger more educated graduates now working for them. (I remember once using the phrase “we face difficult economic challenges” in a draft Cabinet paper, only to have one of my superiors cross it out and replace it with “because we are in tight times” which he said sounded less academic.) They overcame their shortcomings and resentments through the exercise of petty power, so ran the system as though it was their own personal fiefdom. The consequence was inefficiency, inconsistency, and low-level corruption. Yet their influence was pervasive – when one of them was put on trial for corruption, the case had to be abandoned because, despite three attempts, it proved impossible to select a jury of people who did not know him. 

When I joined the Department, I was a committed protectionist, believing that controlling imports the way we were was the right thing for New Zealand. But after a few months of seeing the system at work and having on an almost weekly basis visits from senior business leaders begging the likes of this fresh-faced official for import licences so they could carry on or expand their businesses, I realised its folly and became the ardent supporter of free trade and open markets I remain today. 

One of my earliest pleasures in politics came less than a decade later when as the Parliamentary Under-Secretary for Trade and Industry I was part of abolishing the old import licensing system once and for all. Import licensing, which had first been introduced in 1936 by the first Labour Government as a foreign exchange control measure during the Depression, and the bureaucratic practices that went with it, had well and truly served their purpose just on fifty years later! 

I was reminded of all this again when I saw advice from the Ministry of Business Innovation and Employment (MBIE) – the modern version of the old Department of Trade and Industry – about how businesses can operate during the current Covid19 lockdowns. In language too eerily reminiscent of the import licensing days MBIE has said that construction sector manufacturers will need a high degree of evidence before they can be permitted to resume production. They have gone on to say, “This may include evidence of how the building products are a critical component of residential construction, evidence of there being limited building product supply in New Zealand, and evidence of health and safety measures in place to minimise the risk of Covid19 transmission.” 

The thought that major building and construction industry players are having to go cap in hand to junior officials in MBIE to plead their case to be allowed to resume business seems like import licensing all over again. The sole concern here should be whether it is safe for a business to reopen in a Covid19 environment. There should be nothing more to it than that. 

It is most certainly not for MBIE to decide whether this product or that is necessary or desirable. Junior government officials, often with little life experience, making major decisions about when and how significant businesses can operate seems just as ludicrous now as it was when I was doing import licensing. And it will surely prove to be just as an inept and uneven approach. The best people to understand business conditions and the demand for specialist goods and services are those involved in the businesses themselves, not an official with no direct business experience sitting behind a desk in Wellington, or, now more likely, working comfortably from home. 

One of the major reasons for import licensing’s ultimate failure was that the assumption and practices which underpinned its administration fell out of step and way behind current business practice of the day. Yesterday’s solutions were no longer fit for purpose for dealing with today’s challenges. Yet setting up a business continuity licensing regime, which is effectively what is occurring at present, run by faceless officials with no practical experience is the modern equivalent of the failed import licensing system. 

MBIE’s approach, endorsed by Ministers, amounts to subtle re-regulation of the business sector in a way not seen since Muldoonism of the late 1970s and early 1980s. In line with the axiom, “history repeats itself”, it is likely to be just as spectacular a failure and will have eventually to be unwound and balance restored. But given that the current government seems to think that anything that happened before it came to office in 2017 is ancient history and therefore not worth taking any notice of, that is likely to be some time away. 

In the meantime, do not get your hopes up for an early start to that building project or home renovation you may have been planning post lockdown. Like Little Britain’s computer, MBIE says “no”.

 

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