Free Press. ACT’s regular bulletin
ACT’s regular bulletin
The coalition talks are taking longer than Winston Peters promised. The media have slavishly built up Peters as Kingmaker for over a year. We thought he had leverage, too. But something’s wrong. He is flustered. He wanted to be more than kingmaker, he wanted to be king. But what if he is actually a beggar that both parties are ambivalent about dealing with?
Undercooked Election Result
We know what it’s like to be a minor party washed away by the Jacinda tidal wave. New Zealand First thought they’d double their support during the campaign, instead they lost three list seats and their only electorate seat. They have far less of a mandate than Peters expected when he set the October 12 deal deadline.
The trick of running an auction is making sure each bidder doesn’t know how much the other is willing to pay. Winston Peters’ bizarre press conference where he abused journalists for half an hour sent two messages to both Bill and Jacinda. 1) You know I’m trouble. 2) The other side knows too, because I did it in public.
What’s Really Going On?
We may have all misread the situation. Both Bill and Jacinda may be saying, “Listen mate, you’ve lost your seat, your party’s finished in three years like you are, and everyone agrees you’re a nightmare to work with. We’ll give you a couple of million dollars budget to be the Minister of Racing, otherwise we’ll sit this one out, thank you very much.”
You Read It Here First
Neither side wants to be kingmade or queenmade by Winston Peters, both realise it is a poison chalice. The Kingmaker is actually a beggar, and that’s why he’s lost track of the timeframe.
But How Would We Really Know?
Bill and Jacinda could have unionised and given Winston clear terms. Put your demands publicly so the public know what you’re asking for. Then we could be having a policy debate instead of a farce. The public would be a lot happier.
We’ve Seen This Move Before
Labour, the Greens, New Zealand First indeed all of the left-wing parties, were apoplectic about the TPP being negotiated in secret. Now they are happy to negotiate a domestic issue in private. Foreign relations require secrecy because it’s a nasty world out there. A domestic deal should have been done with cards on the table.
What about the Policy?
The last three weeks have set a new low with zero policy discussion anywhere. The media have been happy to report on which biscuits are being eaten at coalition talks. They’ve also described policy discussion as ‘going down a rabbit hole,’ and ‘attention seeking’ when David Seymour raised it. Don’t cry for me Aotearoa!
Preserving the Good
New Zealand routinely ranks in the world’s top five for the important policy settings. We are free traders with a competitive agricultural sector that does not rely on subsidies. We have a broad-base low-rate tax system that allows most people to pay their taxes without hiring an accountant. We have an independent central bank focused on inflation targeting. We have had, for the past nine years, restrained Government spending. We have flexible labour markets without crippling compulsory unionism. These are all under threat this week.
In an excellent NBR column this last Friday, Matthew Hooton points out how a multi-party consensus on trade is essential to our prosperity. Every other prosperous population of five million-odd people is integrated into a large bloc. Denmark, for example, is a member of the EU. British Columbia is part of Canada and, by extension, the North American Free Trade Agreement. Superpowers can afford to change tack when a demagogue is elected, but pulling out of negotiations New Zealand’s diplomats have nurtured for a generation will not just cost us those agreements, but our reputation as a trustworthy negotiator.
Low Rate Broad Base Taxes
Our taxes are low compared with most places (try adding up three levels of taxes in California, for instance). We don’t have a myriad of silly exemptions that are only good for tax accountants. Look out for silly concessions to New Zealand First or even the Greens such as taking GST off some foods, or adding a capital gains tax so that you pay twice, once on the income you invest, then again on the capital you accumulate.
Inflation Targeted Monetary Policy
At the end of the day, central banks have one job, and that’s deciding how fast to run the printing presses. They can run them fast for more inflation, slow for less, or just right as is the target in New Zealand. That’s. It. Trying to lower the dollar by printing money is daft because each New Zealand dollar may be worth less but domestic inflation means exports cost more New Zealand dollars.
Restrained Government Spending|
New Zealand has run a trade deficit twice since 1988, in 1999 and from 2004-2008. Both times New Zealand First held the balance of power and fiscal restraint went out the window. The public sector sucked up resources and Wellington landlords drank extra champagne, but mortgage interest rates hit 11 per cent for everyone else. The fastest way for either party to stop the economy is to abandon fiscal restraint by buying into New Zealand First’s madcap spending promises.
Flexible Labour Markets
New Zealand led the world with the Employment Contracts Act introducing contract-based labour law. Wage growth accelerated through the 1990s until the Clark Government started to retreat from our country’s world-leading economic reforms. Labour’s Fair Pay Agreement Policy was barely scrutinsed during the campaign. ACT couldn’t get its full destructiveness into a soundbite. It would reintroduce union negotiated pay rates for every sector (contractors included) and make strikes part of daily life again. It is the most destructive policy on offer in these negotiations.
ACT’s charter schools are changing kids’ lives for the better. Kids who had failed for years at state schools are now at University thanks to these innovative schools. There are currently six schools contracted to open in 2018 and 2019. It would be shameful for an incoming Government to sacrifice these kids’ futures at the altar of union bullying. Partnership Schools must be maintained and invited to expand.
National hasn’t been shy about handing out corporate welfare and picking winners, especially when regional votes have been up for grabs (ten bridges anyone?). National’s corporate welfare machine could be wound up to a whole new level by a New Zealand First deal, though. Look out for boondoggles to move ports and subsidise industries with taxpayer money.
Making New Zealand a Better Place
If those are all the things that government shouldn’t do, here are a few things that the next Government should do (and ACT will not be letting it forget).
Replace the RMA
It’s a dog. It’s the biggest handbrake on development and housing affordability in New Zealand today. After being amended 19 times in 26 years, nobody believes that another amendment will make any difference. If anything, recent amendments have made it worse with things such as 20 day time limits for consents (councils just stop the clock) and Iwi Participation Agreements (coming to a council near you). The next Government should set a three year time limit for a total replacement, introducing land use planning laws based on property rights. National belatedly campaigned on ACT’s policy of replacing the RMA in cities. Let’s hope that if they have another term in Government they find some mettle.
Fund Infrastructure Properly
Councils waste a lot of money but they simply don’t have the cash available to keep up with infrastructure. The next Government should share half the GST on new construction with the council that issues the consent. This has the added advantage that it will give councils the incentive to issue consents with a bit more enthusiasm than we’re used to. The alternative is continued sclerotic home building and more taxpayer money going into housing subsidies in its various forms.
Pay Good Teachers More (but not on union contracts)
The last Government opened a Pandora’s box of wage inflation with its care worker settlements. Partly due to housing costs, teacher unions (who have let teachers take a 30 per cent pay cut in the last 30 years) are now demanding a 14.5 per cent raise and threatening to strike. If pay increases are inevitable, there’s never been a better time to strike a bargain. Good teachers should be paid more on individual contracts, while others should be shown the door.
Reward Self Improvement in Prisons
We have major problems with crime, recidivism, and illiteracy in prisons. They are all connected. National belatedly campaigned on ACT’s policy of reducing sentences for prisoners who learn to read in prison. Labour are open to the idea. Let’s hope that whoever forms a Government takes on this ACT policy.
Raise the Age of Superannuation
Universal Superannuation at age 65 is not sustainable. In the lifetime of current university students, we will go from four workers supporting each retiree to only two. The age will have to be raised before then but National’s policy of waiting until every single Baby Boomer retires first is a slap in the face for younger taxpayers. Free Press predicts that an economic downturn and fiscal crisis will force the issue anyway.
Let’s Wait and See
If we do see a Government formed this week, ACT will be holding it to account on the policy issues. Bring it on.