02 April 2016

The prime-ministerial We

John Key has been talking to his UK counterpart, David Cameron, and making bold statements on behalf of New Zealanders.
First, he is reported as coming out in support of the UK staying within the European Union in Britain's forthcoming referendum, thus supporting Cameron's position. He said: "It's up to the British people to decide, but we certainly think it's a stronger position for Britain to be in Europe." Who is this "we"? Presumably, in context, it is the NZ government of the day, his government – although probably many New Zealanders would agree with him. All the same, he drew some predictable criticism from Brexit supporters in the UK who suggested that foreign leaders should be kept out of their domestic debate.
Mr Key also advocated on behalf of NZ ex-pats in the UK, reminding Cameron of the close historical and social ties between the two nations. He said: "We are at the core ... a British colony and I thought there was an argument that New Zealanders could be treated in a way which reflected that." The "we" this time is presumably the entire nation.
But, New Zealand is no longer a colony of Britain, and it is very surprising to hear this comment from the same prime minister who only recently tried to get us to change the NZ flag, to rid it of the Union Jack, and to modernise our national symbol.
Do "we" New Zealanders really want to be treated as "colonials" when we're in the UK? I think probably not, even though "we" did vote to keep that old colonial relic of a flag.
I can understand the PM doing his job advocating for special immigration rights for Kiwis, but he does not have to talk us back into a colonial relationship with the UK in order to get the point across. The PM could clarify the position that New Zealand is an independent sovereign nation now. And he could be more careful about his use of the prime-ministerial "we".

25 March 2016

The referendum on John Key

Just as the 1997 referendum on superannuation turned into a referendum on its sponsor, Winston Peters, so the referendum on the NZ flag became a referendum on John Key. The evidence for this is clear from the electorate results of the flag referendum. The correlation coefficient between each electorate's votes for the silver fern flag and the percentage of party votes for National in the 2014 election is a very healthy 0.95.
The weird aspect of this is that the electorates most in favour of changing to the silver fern flag were the most conservative ones, like Clutha-Southland and Tamaki.
But the really bad news for National is that the vote nation-wide went against the Prime Minister's desired option: only 43.2% in favour, compared with their overall party vote in 2014 of 47%. Keep in mind that, in the general election, voters had a wider range of choices, while in the referendum there were only two.
The referendum indicates that Key (at least temporarily) has lost the support of about 4% of voters, or maybe more, enough to cause an upset at a general election. For the first time perhaps, many who have been consistent Key supporters have ticked a box that effectively said 'no' to him.
National have enough time between the flag referendum and the next general election in 2017 to recoup that loss. After all, it was only about a flag, and political memories can be very short sometimes. But they have work to do if they are to prevent this from becoming an electoral 'tipping point'. Note that only 39% were in favour of the silver fern in Northland, the same electorate that voted out a National candidate in early 2015 (in favour of Winston Peters, who then opposed changing the flag) and that used to be a safe National seat.
Take-home message for politicians from the flag vote is: 'Don't start a referendum unless you really have to, or are really confident of your support.'

30 May 2015

Greens make the smart choice

When the Greens elected Russel Norman as their male co-leader in 2006, the winning candidate was not yet even a member of parliament. So we should not be too surprised that this time, following Russel's resignation as co-leader, they have elected a smart and (relatively) young man who has only been in the House since the last election.
While Kevin Hague would also have made a great leader, the choice of James Shaw signals that the Greens know who their most receptive audience is: educated, politically aware urbanites who are forward-thinking enough to know that the future for business and economics has to be genuinely sustainable and based upon renewable energy sources. These people are also concerned about social inequality and poverty – but they are not the poor. The electorates where the Greens polled the lowest in 2014 were the South Auckland Labour strongholds, Manurewa, Mangere and Manukau East. So, the Greens can continue to push their message of social justice, so long as they know that the poor aren't paying attention to them. The people who are listening and voting Green are relatively affluent, likely to be university graduates, and pursuing innovative businesses and/or knowledge-intensive professions.
Under the Turei–Norman leadership, the Greens have gone from 5 to 6% of the party vote to 10 to 11%. Although they were disappointed at their result at the last election, that's still a big leap. The fact that they could aspire to 15% shows how far they've come.
To get to that 15% level, though, there is no point in fishing around only in the left-of-centre pond. While it's inevitable that the Green success will to some extent be at the expense of Labour, the Greens have to focus now on 'soft' National supporters as well. To do that, they don't need to change their economic policies. What they need to do is to show their educated middle-class audience that Green economics makes sense for the future, and that it is not dangerous or impractical. What they have to watch out for is that, as green ideas become more widely accepted and 'mainstream' (as they inevitably will), the major political parties simply adopt those ideas and thus marginalise the Green Party electorally.
Nonetheless, Andrew Little has lots to worry about. On his left and right, the Greens will be poaching educated urban voters, while Winston Peters will be poaching white uneducated provincial voters. Former Labour strongholds like Wellington Central can no longer be taken for granted. While the Greens would like to see the Labour Party succeed, Labour is in danger of becoming 'just another opposition party' rather than the unquestioned leader of the Opposition. And that's where they'll stay if they can't get their act together.

22 May 2015

Ideological reassignment

There are moments when our assumptions about the left/right ideological spectrum get blurred or challenged. The most outstanding of these was the Rogernomics policies of the fourth Labour government that 'outflanked National on the right'. But the Clark government made similar (if less dramatic) moves by claiming authority over terms such as 'knowledge economy'.
Another such ideological switch has occurred with National's Budget 2015. While the left have reason to criticise National's policies as watered down and insufficient efforts to address social problems, the Key government has nonetheless staked out ideological territory normally free for maneuvering by its opponents. The obvious policies that illustrate this are the new capital gains tax test, the increases in child-related entitlements and the move to leverage Crown land in order to speed up house-building in Auckland. One might add to this list the much earlier pledge by Mr Key not to raise the age of entitlement to NZ Super.
On this latter problem, Andrew Little is wondering now whether to means-test Super. This is normally an idea that emerges from the right, and shows how desperate he is getting in seeking to differentiate himself from Key.
On the other hand, it would be a mistake to see National as getting 'soft' on welfare. Their 'investment approach' (a statistically sophisticated form of targetting), the requirement that single-parent beneficiaries be available for work once their youngest turns 3 (instead of 5), and the onerous administrative requirements on beneficiaries hardly make life cushy. Getting tough on benefit eligibility, while raising the income entitlements, is putting a bob each way politically.
National's ideological ambivalence will blunt Labour's (and the Greens') policy differentiation and political attacks as we roll inexorably on to the next election. Key will always be able to say his government is addressing the opposition's concerns, and most voters won't pick over the details. Labour's new leaders have some hard thinking to do if they want to avoid seeming petty and irrelevant in their efforts to hold government to account and to present themselves as a credible alternative.

18 May 2015

Capital gains tax: Flip-flop of the century?

In its finance policy manifesto for the 2014 election, the National Party warned voters not to 'put it all at risk' with Labour and the Greens who would 'impose extra taxes' on New Zealanders, including a capital gains tax (CGT). National warned us that a CGT would be 'expensive and complicated', and that such taxes, as proposed by their opponents, 'would stall our economy and cost jobs'.
Labour meanwhile was promoting a CGT on the grounds that it was fair to tax such gains, that it would shift investment away from housing, and that it would cool the Auckland property market. That was the most prominent point of policy differentiation that Labour took to the election. John Key, however, ridiculed Labour's CGT proposal, for instance arguing that it would be too hard to determine what exactly is a 'family home' and what is an investment property.
Needless to say, Labour lost the election. They gained 25% of the party vote. But, ironically, the idea of a CGT was more popular, according to pre-election opinion polls, than the party that was promoting it.
According to a Herald-Digipoll in June 2014, almost 41 per cent of respondents were either strongly or moderately in favour of the CGT, up from just under 38 per cent in July 2011. Just under 35 per cent were strongly or moderately opposed. Labour has since distanced itself from this otherwise quite popular policy.
The National government's pre-Budget announcement of a tightening up of the CGT rules came as a surprise. So, after all, they do think the CGT is effective, fair and not too complicated? But the policy is not a copy of Labour's more comprehensive one. Arguably, it only targets investors, including foreign investors, who try to avoid the existing CGT for the first two years of ownership. It's 'just a tidy up of the tax laws', according to Mr Key. If that's all it is, why make a big pre-Budget announcement, rather than bury the policy in Budget-day press statements?
One way to knee-cap a political opponent is to dominate their policy territory. Hence, National has just run the CGT banner up its flagpole. And that leaves Labour floundering around to find the right words to oppose National's new initiative. Andrew Little can now attack the Prime Minister for his previous lack of concern about the Auckland housing boom and the effect that foreign investors may have been having on it. But he can hardly oppose the policy itself, even though Labour has resiled from its former CGT proposal. Labour left that 'property' vacant, and National have occupied it.
Debate rages at present over just how effective the government's new policy will be in taking 'some heat out of Auckland’s housing market', as its own press statements have put it. And, by the next election, we will most probably have forgotten about the big U-turn taken by National in 2015. It's possible that the CGT will become 'the new normal' in New Zealand's taxation laws, like it is in many other countries. Will political parties contesting the 2017 election be competing over who has the best CGT policy?

14 May 2015

Do we need a meddling Monarch?

Memos from Prince Charles to UK Ministers (published by the Guardian after a decade-long legal battle) reveal that the next-in-line-to-the-throne may not take the impartial, non-political approach characteristic of his mother, Queen Elizabeth. The memos reveal that Charles is quite prepared to intervene in matters ranging from badger-culling to heritage preservation to agricultural regulations.
One of the memos directly involves New Zealand. Writing in 2005 to Tessa Jowell, then UK Secretary of State for Culture, about the conservation of the Shackleton and Scott Huts in Antarctica, our future King recalls a conversation he had with Helen Clark. Although Jowell's department is, he believes, unable to assist projects "overseas", he wonders whether Antarctica isn't somehow "British" and hence not technically "overseas", and he asks her, even if it's "futile", to apply "a bit of imaginative flexibility in the interpretation of these rules."
He may be well intentioned. After all, the preservation of the Shackleton and Scott huts is a worthy cause. But, here we see the future monarch using his personal influence for a pet project and asking a minister to bend the rules in its favour. It appears that anyone able to influence him could well be able to influence public policy by pulling strings at the highest levels of government.
The most eye-popping of the memos is the one to the PM, then Tony Blair, in which the Prince attempted to influence the UK's agricultural policies in ways that would have contravened UK and EU regulations.
The UK's monarch is equally New Zealand's monarch. Queen Elizabeth has set a good precedent of impartiality, allowing the democratically elected government of the day to get on with its business. She has a right to be privately informed and advised by, and to warn, her ministers. But she does not meddle in government either in the UK or in her other realms, such as New Zealand. Her role (and the role of her appointed Governor-General) is constitutional, not political. After all, the monarch is not elected. Once the Sovereign begins to get involved in politics and public policy, then he or she could become a target for lobbying.
The publication of these memos is a major embarrassment for Prince Charles, and they bring into question his suitability as monarch. In fact, they bring into question the suitability of New Zealand's retaining the British monarch as its head of state at all. There is no reason in principle why Charles, as future King, would not seek to use his private influence over ministers in New Zealand in order to see to it that his pet projects were treated with special favour. Do we really need that?

13 May 2015

ACC: Political football du jour

The government's announcement of cuts to ACC levies has brought Labour's leader Andrew Little into the fray arguing that he would go one better and return ACC to its former pay-as-you-go model, which could mean even deeper levy cuts, at least for a while.
Since 1999, successive governments have moved ACC away from pay-as-you-go to fully-funded. The scheme now has more or less sufficient funds to pay off all future outstanding costs of current claims. In theory, the scheme could be wound up without further levies. This has meant that we (the people of NZ) have had to pay higher levies in order to amass a huge fund that (at 31 June 2014) was $27.4 billion. That's quite a big nest egg!
So, in the 2013/14 year, ACC collected $4.7 billion in levies from us. But its claims costs were 'only' $3.65 billion. On top of that surplus, ACC earned an investment income from that huge nest-egg of $1.5 billion. In short, the scheme is rolling in money. That's our money. And keep in mind that levy-payers and claimants are not two separate, competing groups of people. All New Zealanders pay into the scheme (except children, who will one day anyway). And, over a lifetime, I would guess that we all make (at least a few minor) claims. We all pay and we all benefit, and the good thing is that we do not have to share any of the investment income or the surplus with greedy shareholders or investors, because the scheme is a state monopoly.
It's easy to see from the figures that, now that the scheme is close to fully funded (and more than that in some accounts), levies can be reduced, and we can enjoy the benefits of the investment income.
In the past, I have opposed full funding, as the ACC has operated for most of its life without it, being a state monopoly. Full funding is a requirement for private-sector insurers, and is useful if the government wanted to privatise ACC. But that's no longer an issue (thank heaven!)
But, now that it is fully funded (at our expense), I would suggest that we just keep it that way. We, the levy-payers, have saved for years to get to this state, and we can benefit from the investment income. Businesses especially benefit from predictability in their budget-lines, one of which is the ACC levy. So, I disagree with political parties who want to throw ACC funding from pillar to post, as Mr Little is suggesting. Just leave it alone, and get on with the job of injury prevention and rehabilitation now, please. Oh, and thanks for the reductions in levies! We deserve them!