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Keith Rankin: Left Scenarios

Left Scenarios

Keith Rankin, 22 November 2001

The Alliance appears to be fracturing. The crisis is partly a result of maintaining the identity of a party which is in government as a minority partner. (The Greens in Germany have similar problems, indeed triggered by the same issue; the war in Afghanistan.) But it is also partly a result of the failure of both the political and economic left in New Zealand to forge an electorally attractive vision of a shared future. The left today is reactive, a defender of old ideas rather than an intellectual risk-taker. The left - in New Zealand and elsewhere - is in the habit of opposing rather than leading.

To deal with the first issue first, what has the Alliance achieved in Government? The oft-touted Kiwibank and paid-parental leave are gains of a sort. Unfortunately the Kiwibank has been set up to fail, and the paid parental leave is to be paid as a benefit rather than as a genuine cost of production.

The Alliance is able to enunciate neither the main reason why the Kiwibank should be good for New Zealand, nor the main reason why it can expect to gain a substantial market share in the medium term.

The contest for new accounts is more important than the ability of Kiwibank to persuade people to change banks. A wise Kiwibank will aggressively market itself to young New Zealanders, to new New Zealanders, to returning New Zealanders as well as to New Zealanders who don't live near to a bank at present. The Alliance is not adequately contesting the unrelentingly negative views from the likes of Rodney Hide and certain elements of the media.

More important than market share is the fact that the mere presence of the Kiwibank will change the behaviour and fee structures of the existing banks. One of the classic ways to regulate an imperfectly competitive industry is to join it. That's how the Balance/Seddon/Ward Liberal Governments (1890-1912) successfully regulated, for example, the insurance industry. The Alliance should be making this point strongly. But it isn't. Even if the Kiwibank makes a financial loss, the general efficiencies that a low cost banking sector will pass on the NZ economy as a whole will make the Kiwibank socially profitable. It's no secret. Economics 101 covers this topic of societal efficiency under the headings of "market failure" and "imperfect competition".

As for paid parental leave, all the Alliance has done is to win a subsidy for employers while disallowing that subsidy to the self-employed. Certainly it is better to have subsidised parental leave than no parental leave. And certainly there are very substantial issues to face if some countries treat parental leave as a cost of production while others do not. But we can do better. We needed more promotion by the Alliance of the reasons why paid parental leave should not be paid as a benefit.

Most of us have no great difficulty recognising that annual leave, statutory holidays and sick leave represent costs to producers. By subsidising parental leave, we are opening the door to those on the right who argue that annual leave, for example, is not a legitimate cost of production. The logic then follows that, if the government believes that annual leave is a good thing, then the government should pay for it, by way of a subsidy to employers.

The real contribution that the Alliance has made to government has been to prevent the many silly policies that would have otherwise been rammed through from seeing the light of day. Thanks to the Alliance, the present government has a leftish stance that was entirely absent from the 4th Labour Government. Indeed, the result of the Alliance acting as the hidden keel of this government has made it much more predictable than the Douglas/Lange government ever was. That in turn has created a very favourable environment for business.

From 1984 to 1990, business in New Zealand was constantly in a state of shock. In those same years, businesses in more pragmatically governed countries led a huge revival in economic growth.

In 2000 and 2001, it's the other way around. For the first time since 1984, we have an environment that is attractive to employing businesses. We now have a much higher level of new business starts than in all of the countries we like to compare ourselves with.

The market economy is complementary to government, and works best when government is substantial and reliable, and when all residents of a country are able to participate in its economic life as consumers and in other ways. If you want to severely damage the market economy, allow the Alliance to implode and vote Act.

What can the Alliance do now? Or is it too late?

Regardless of Jim Anderton's virtues and vices, an Alliance with a future needs to win some electorate seats other than Wigram. Indeed, in general, a minority coalition partner probably always needs to come to some electoral accommodation with the majority partner to ensure the survival of the coalition, given the electoral difficulties faced by minority partners in government.

A convenient "unwritten rule" could be that a majority coalition partner does not contest the home electorate of a minority partner Cabinet Minister. Indeed it makes sense for established Cabinet Ministers of majority coalition parties (eg Labour) to become List MPs. In a sense they belong to the nation as a whole, and not to any particular electorate. (Indeed Michael Cullen has already made the choice to not represent a particular electorate.)

The second thing that the Alliance can do is to split into a Maori and a general wing, with each wing contesting elections separately. (Indeed a New Mana Motuhake with both Willie Jackson and Derek Fox in key leadership roles could be electorally attractive.) The trick is to then persuade Labour to aggressively compete for the Maori party vote while not standing candidates in the Maori electorates. This would increase the proportion of centre-left MPs in Parliament (thereby raising the likelihood that Labour will survive a close election in the future). It would also ensure that the most discomfiting Maori MPs (to pakeha voters) were comfortably outside the Labour Party tent, thereby helping Labour to support some Maori initiatives while not being seen by pakeha Labour voters as hostage to radical Maori.

The third thing that the Alliance can do is to enunciate a "New Left" vision that is attractive and relevant to young New Zealanders. I suggest that they start focussing on public property rights as the basis of an income stream that is equally available to all New Zealanders. Workers' bargaining power is always greatest when workers have some alternative socially validated income. (The social acceptance of income derived from public property rights is initially more important than the magnitude of that income.) That's why the issue of land was so important to the left in the 19th century, and why Henry George was all the rage in 1880s' New Zealand.

New Zealand needs a party on the left that serves both as the "conscience of the Government" and, through its "social conscience" role, as a leader of the key debates that any mature democracy must have if it is not to ossify. Such a party needs to be able to play an active and uninhibited role in social debates, regardless of whether or not it is a part of government, and regardless of government support for those initiatives. A mature Alliance would be able to advocate alternatives to the war in Afghanistan in its social conscience role while accepting that the realities of day-to-day Government in a small country in a big world require compromise on the part of Alliance Ministers.

We only have to see the difference between how the New Zealand and Australian governments have responded to the "war on terrorism" to appreciate that we really do have a left-leaning government. Alliance activists can achieve more by thinking about what we can do in the long run to enhance the security of all peoples on our planet, than by committing a principled suicide.

© 2001 Keith Rankin

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