ACC: National can't have it both ways on multi-insurer provision

Papers released under the Official Information Act reveal advice from officials to Ministers that raise questions about the effects of the present government's plans to introduce competitive provision of employers’ accident insurance.

A briefing from the Treasury to the Minister of Finance, dated 12 March 2010, advised that “competition is unlikely to lead to reductions in levies in the short term”. Instead, levies may have to rise as private-sector insurers seek to fully fund the costs of capital, marketing and reinsurance – costs which ACC, in its present form, does not have to face.

Both Treasury and the Department of Labour have repeatedly advised ministers that levies for most employers will probably rise under competitive provision – unless there are dramatic cuts to the benefits paid out to people injured at work.

Ignoring this advice, the National Party’s election manifesto of 2011 promised that competitive choice in ACC’s work account will ensure “the lowest cost for levy payers”. And yet it also promised to keep the same criteria for cover and level of entitlements.

The two promises contradict one another according to the government’s own advisors.

While Australian insurance companies stand to gain a new income stream from competitive provision of work-injury cover in New Zealand, it looks like most employers will have to pay higher levies in order to cover the costs faced by those private-sector insurers.

Annual benchmarking of ACC's work account with Australian states’ workers compensation shows that ACC, in its present form, performs well and that Australian insurers do not deliver results superior to ACC.

ACC provides NZ employers with excellent value for money, as well as comprehensive benefits to injured employees. The blinkered approach of the present government favours the interests of foreign insurance companies over local employers and employees. Without cutting statutory benefit levels for New Zealanders injured at work, it is highly unlikely that most employers will enjoy lower premiums under a multi-insurer scheme. The government’s own advisers in Treasury and the Department of Labour have made this point repeatedly.

An October 2011 cabinet paper released under the Official Information Act restates the intention to introduce competition by 1 April 2013. It is time to ask: if the proposal lacks credibility and appears not to be in the interests of New Zealanders, either as employers or employees, then what is the real motive behind it?

A plague on both their Houses

Protests and platitudes. There’s nothing like Waitangi Day to bring out the worst in us.

Political platitudes abound, like Mr Key’s claim that National’s economic policies (sell the assets and extract some oil and minerals) will be good for Maori. It’s unlikely that many Maori (or many other New Zealanders) will gain decent careers from Key’s dig-and-sell approach; and the money from the asset sales and resource royalties will only be funneled into Mr English’s budget deficit. So it’s unlikely that one new school will be built as a result. Mr Key should talk about reducing inequality, and then those with any social conscience could start to take him seriously.

And while I can understand why Maori wish to see Treaty provisions in the legislation that will empower the hocking off of state assets, what’s the need for such a heated protest? Why would the Maori Party stake its support for the Government on the question of whether the SOE Act’s section 9 would be rolled over in to the asset-sales Bill? Tariana Turia’s ‘letter to the nation’ on this issue is replete with sentimentality about the past, but devoid of convincing legal or political reasons that could apply to the future. She talks of acting with good faith and honour, but her party does not do so if they threaten to walk away from a governance agreement on such flimsy reasoning so early in the parliamentary term. Empty threats?

Having said that, though, there is so far no compelling reason put forward not to have a Treaty-rights clause in the asset-sales legislation either. The only reason National were hoping to get away without having one was because it might frighten off potential investors, and hence lower the price. But their asset-sales plan is a poorly conceived one to begin with, so I’m not going to let them off the hook even if they do include a clause like s 9.

There’s nothing particularly noble about demanding a Treaty clause in the asset-sales Bill either. Its main purpose will be to protect the future business interests of iwi corporations on a ‘just in case’ basis – say, for instance, to claim rights of first refusal if the power company puts land up for sale, or to charge a rent for usage of ‘sacred’ waters. It’s like giving the Maritime Union (about whom an equally sentimental historical case can be made) a special permanent right to strike, just in case something might affect their members’ well-being.

And of course one hears at this time of year those platitudes about how the Treaty is supposed to be the founding document of the nation, and Waitangi its birthplace.

New Zealand was, for administrative purposes, deemed by the British temporarily to be a part of the colony of New South Wales at the time of the signing of the Treaty. Once that process was over (it took a few months to peddle the Treaty around the country), Hobson declared British sovereignty, rightly or wrongly.

New Zealand was subsequently made into a separate colony (not a nation) by Letters Patent issued from London. While the Treaty gave permission to the British to govern New Zealand, it required Acts of the UK Parliament (in 1846 and 1852) to constitute a system of responsible government here.

It was not until 1947 that New Zealand’s Parliament finally (and reluctantly) adopted full law-making powers, and yet we still rely on the British monarchy for our head of state and to appoint our governor-general. Ironically it is the Treaty, along with many New Zealanders’ sheer sentimentality about ‘the Crown’ and its PR machine, that stands in the way of taking the final step to becoming a fully independent nation.

So, the question of when, and by authority of which document, New Zealand actually became the not-yet-fully-independent nation that it is today is a moot point. A hastily and poorly drafted Treaty signed in 1840 was an important stepping-stone along the way. But let’s not over-rate it.

Where do the Greens fit in?

I’ve been asked this question by a reader. The Greens got my prize for the best campaign last year, and (more importantly) they got their best-ever result, with 14 MPs. But let’s look at where their strongest support is coming from: it’s most strongly (but not exclusively) middle-class urban electorates. The Greens’ shift to the centre under the new leadership obviously paid off last election. But their success was also partly due to Labour’s poor showing. The fact that many Green-party voters split their electorate vote with the local Labour candidate shows a degree of divided left loyalties, and that could swing Labour’s way on party votes in 2014 if Labour gives the right signals.

Russell Norman’s appeal to small business owners last year show how the Greens are now doing well with the urban knowledge workers and a certain type of petit-bourgeois self-employed or entrepreneurial class – those with slightly alternative ideas about capitalism, I guess. But they are not so favoured in the very wealthy or the very poor suburbs.

So, again, the sad story is that the three most successful parties will all be circling like sharks around a shrinking school of fish. The Greens did really poorly in the three low-income South Auckland electorates and they fared not very well in most Maori electorates. They don’t do well on traditional blue electorates, but they do do well on Labour’s traditional territory. Wellington Central stands out as the Greens’ best result (they got more party votes there than Labour); but Auckland Central performed well for them too, for instance.

Labour and the Greens appear to be stealing votes off one another, while the centre-right romps home to victory (for the time being). In as much as anything is really predictable in politics, this last excellent result for the Greens could be a high-tide mark. As Labour regains support, it will be partly at the Greens’ expense (though NZ First is bound to suffer too). I would be surprised if the Greens equal or better their 2011 party vote in 2014.

So, on hard-nosed electoral grounds, there is no point in the Greens sticking up for the poor and marginalized any longer, because the poor and marginalized are simply not responding to them – or simply not voting at all.

The party with the most to gain next time around, if their leader can get the tone right, is the Mana Party. There is a huge untapped pool of disfranchised voters in South Auckland and elsewhere, including the Maori rolls, that could help them take off next time. In my last post I was a bit dismissive of their 1% showing, but let’s wait and see if the three years ahead give them time to build up a better support base.

Heads, National wins – tails, Labour loses

One big feature of the last election was the low voter turn-out. From an estimated eligible population of 3,276,000, the number enrolled was 3,070,847. That’s a 93.74% enrolment rate. But 2,257,336 votes were counted, or only 68.9% of the estimated eligible population. There were one million or more eligible citizens who did not vote. Enough silence to transform the political landscape (or not)!

Traditionally it’s thought that a low turn-out is bad news for Labour, and the last election reinforces that. Looking at the results for each general electorate, there is a negative correlation between the number of party votes for Labour by electorate and the total number of votes. This is particularly noticeable in South Auckland electorates (those who saved Labour’s arse in 2005!). In Maori electorates, the turnouts were consistently very low. Only 56.7% of people on the Maori rolls actually voted. People who otherwise might have voted Labour were the ones most likely not to vote at all.

Here’s another telling statistic: 762,897 people voted for a Labour candidate in their electorates; but only 614,964 gave Labour their party vote. Labour could have won close to 34% of the party vote if loyalties to local Labour candidates had been equal to loyalty to the party as a whole. So, even those who did get out and vote, and who were supportive of local Labour MPs, were often splitting their votes. Remember the debate about Labour’s election billboards?

It’s an easy bet that those one million non-voters are younger, poorer and more probably unemployed than the average New Zealander. Any Labour leader who can connect with those people could be on to a winner. But how likely is that? Consider the risks of trying to woo them, only to find that they still won’t vote, because they just can’t relate to the white faces on the TV screen. We are talking about cleaners, kitchen hands, check-out counter operators, and illiterate unemployed youth. Many of them who have jobs are working on election day and/or may not have thought about voting at all.

What’s the alternative, then? In marketing terms, National and Labour are competing for a shrinking demographic of voters: that is, the middle-class voters, and not the poorer non-voters about whom Labour has forgotten. Championing the rights of those at the losing end of the spectrum is no longer a viable electoral proposition for this Labour Party. The Mana Party tried to fill that gap, but it got them hardly any votes at all (one per cent!)

This is the sad fact of New Zealand society today, as we have become more diverse and more unequal. Those who most need to be heard are abandoned politically and economically by the major 'left' party – and they in turn are abandoning the ballot-box. They simply go un-represented politically, and their voices are silenced.

Like any major party, Labour has to straddle a wide social contradiction – in their case, between the need to capture the middle-class centre, and the lower-paid workers and the unemployed. If the priority is to gain office, Labour will be tempted to cater more to the former (who vote) and less to the latter (who don’t). But then Labour loses a very large potential support base (one that National has had no chance of winning) and has to compete with National on their common turf. Labour’s unearned reputation for being ‘socialist’ and ‘soft on welfare’, however, means it may only win that contest on those occasions when the middle class gets so fed up with National they decide it’s time for a change. That leaves Labour, like before, as the party of the exception, rather than the norm.

The worst possibility is that a demagogic far-right party hoovers up those unclaimed low-income voters… If that happens, I know whom to blame.

Maori seats: Why do they exist?

Provision for originally four Māori seats was first made back in 1867. Until that time, eligibility for the male-only vote was then based exclusively upon property ownership, effectively disfranchising Māori men, as Māori land was mainly communally owned. It was pointed out in the House during the debate that Māori owned three quarters of the North Island at the time and paid a considerable sum in tax to the Crown, and yet lacked representation from among their own people. On the other hand, there was also opposition from parliamentarians due to their reservations about special measures for Māori. The initial legislation that created the four seats only extended for 5 years, however, as it was considered a temporary measure until such time as Māori lands were converted to individual titles (in itself a controversial policy) (Sorrenson 1986).

In 1876, the legislative provision for Māori seats was extended indefinitely, as MPs were afraid that amalgamation of the rolls would have an adverse effect on their electoral results. Māori voters could have swung marginal electorates. The Māori seats also survived the change to universal franchise and the removal of the property qualification in the 1890s. Later on, from the 1930s until the 1990s, they were an important part of the Labour Party’s electoral support thanks to a deal between Labour and the Ratana Church (Sorrenson 1986). As the bulk of Māori still lived rurally, the conservative National Party, on the other hand, may not have wanted to amalgamate the electoral rolls, as Māori were staunch Labour-voters in those days. Amalgamation would have cost them marginal seats.

The National Party’s submission to the Royal Commission on the Electoral System (1986) recommended abolition of the Māori seats. This was reiterated by the former leader of that party, Don Brash, in 2005. Under MMP (proportional representation, since 1996), the impact on National of amalgamation of the rolls would not now be as drastic as it would have been under the old FPP system – which relied entirely on local electoral pluralities.

The original allocation of four seats represented far less than the proportion of Māori in the population at large, and Māori would have had 14 or 15 seats on a population basis in 1867. But they remained at 4 until 1996. Under MMP their number has grown to 7. But (according to Janine Hayward) it is estimated that the present parliament has all together 20 Māori MPs.

The original allocation of four Māori representatives was under-representative numerically, and hence arguably tokenistic, if not discriminatory. Māori may have considered that they would be worse off politically with no Māori seats at all; even though one can also argue that the Māori seats effectively diluted and silenced real Māori political influence. Labour’s post-War electoral hold on them could actually have encouraged Labour to take Māori voters for granted; and anyway Labour spent most of the time from 1946 to 1996 in opposition, leaving Māori MPs with even less long-term influence on the executive.

Meanwhile, National’s weak polling in those electorates would have meant that party had even less political incentive to take heed of Māori.

We should not forget Māori efforts, especially in the nineteenth century, to create a parallel and autonomous indigenous parliament, due to long-standing grievances about colonisation and the effects of the British legal system. And so, while Māori resist the abolition of the Māori seats, we should not assume that they are entirely satisfied with their separate electoral system either. The 1986 Royal Commission reached the judgement that ‘the system of separate Māori representation has proved to be largely ineffective’ (p. 98). But, while the Commission believed that Māori representation would be better provided for under MMP, even with a common roll, it recommended retaining the Māori seats at least until after the adoption of MMP.

The present-day Māori Party (first elected to parliament in 2005) provides a strong Māori voice in parliament, and relies entirely on Māori seats (though they went from 5 seats to 3 in the 2011 election), and the recently-formed Mana Party holds one Māori seat. For such reasons alone, Māori would oppose the abolition of these seats for the time being. Māori seats may look like an unsatisfactory compromise for Māori – as well as looking like ‘special treatment’ from the point of view of many non-Māori – but New Zealand is far from giving up this unique constitutional provision at present, in spite of controversies about it. The National Party is hardly going to raise the issue of abolition again right now, as they are relying on support from the Māori Party to give them supply and confidence votes in the House.

References:

Royal Commission on the Electoral System (1986) Report of The Royal Commission on the Electoral System 1986: Towards a Better Democracy.

Sorrenson, M.P.K. (1986) A history of Māori representation in Parliament. Appendix B. Report of The Royal Commission on the Electoral System 1986: Towards a Better Democracy.

Controversies ahead for 2012

In 2008, the post-election support agreement between the Māori Party and the National Party included an agreement ‘to establish a group to consider constitutional issues, including Māori representation’, to be led by the Deputy Prime Minister (Bill English) and the Minister of Māori Affairs (Pita Sharples, co-leader of the Māori Party). The terms of reference include, among other things, Māori representation in Parliament and local government, the constitutional role of the Treaty of Waitangi, and the possibility of a written constitution. The membership of a constitutional review advisory group has already been named, and the process should kick off during 2012, to report to Cabinet initially in 2013.

The structure of the review group and the reporting process suggest that it will all be carefully managed politically by the government of the day. Perhaps a more independent public body would have been preferable (but, speaking as a member of the public and an interested academic, I would say that, wouldn't I!). At this stage, however, this is only a process of informing, discussing and seeking people’s views. The questions of becoming a republic and changing the head of state, moreover, are not explicitly a part of the terms of reference, but there is no bar to their being discussed, and they are bound to be brought up anyway. We do have an enthusiastic republican movement in New Zealand, but, in my opinion, the controversial matters of Māori representation (and the separate electoral rolls) and the constitutional status of the Treaty do need to be resolved first, before we get into the full debate about republicanism, and so this step-by-step approach seems quite wise.

It is inconceivable, for instance, that we could adopt a written constitution without wide public debate and a referendum. But given some of the issues included in this present constitutional review, the debate could easily get heated. I'd watch this space, if I were you, as it could prove to be an interesting 'sleeper' issue for the coming year or more. And this process will have to go on alongside the Electoral Commission's review of the MMP system, now that voters have decided to retain it. Interesting times.

In future posts, if there's interest, I may cover more background on the Maori seats and the constitutional status of the Treaty.

More on the referendum

Due to the dramatic differences in informal vote numbers across electorates - and hence a skewing of the distribution of Part B preferences - it's hazardous to draw exact conclusions from correlations across the different votes. Also, the figures I have are aggregates of electorates, not ballot-papers individually. I've done the maths anyway, but I won't cite figures, as they are not really precise. Keep in mind that you could vote, for instance, for FPP in Part B, and yet vote either for MMP or for change in Part A.

Overall, the percentage of an electorate's pro-MMP vote in Part A correlates almost one-to-one with informal votes in Part B. So those informal votes must be mostly pro-MMP voters.

Other correlations are weaker, but they suggest that:

1. The more pro-change votes in an electorate, the more votes in favour of both FPP and SM in Part B.

2. The more pro-MMP votes in an electorate, the more votes for STV in Part B.

3. PV seems to be evenly split between pro-MMP and pro-change voters who made any choice in Part B (once one takes out the Maori electorates which showed a strong preference for MMP but also gave PV the second place in Part B).

Points 1 & 2 are unsurprising. One might have expected that PV would correlate more strongly with the pro-change vote, but it was, after all, the least favored of the 4 alternatives.

As I argued in my previous post, the pro-change voters' preferences seem to be divided largely between the familiar (FPP) and the option pushed by the 'Vote for Change' lobby-group with Mr Key's support (SM).

It makes sense that pro-MMP voters, if they chose any alternative, would go for STV, as that is the most proportional of the four alternative systems.

Maori electorates were more in favour of PV than the nation as a whole, probably because it delivers 12 Maori seats. If they chose to go on the Maori roll, then presumably they like the idea of more Maori seats.