Whether the Greens join the Government tonight is irrelevant. To whomever will listen, Jacinda Ardern is making clear that this will be a Labour Government, governing from the centre.
A committed incrementalist, the Prime Minister wants Labour to be the semi-permanent party of government, like National from 1949 to 1999 or the Swedish Social Democrats from 1936 to today.
Expect to hear a great deal about “accelerating the recovery”, by which Ardern means a traditional merchandise-export recovery rather than some Green New Deal. There will be nothing to unduly worry business or the median voter, including on tax.
Ardern declared 2020 the Covid election and it was. Labour’s 950,000 supporters from 2017 remained loyal not because of progress on housing or child poverty, but because of the Prime Minister’s leadership through the pandemic. Roughly 250,000 previously blue voters joined them, with many believing Ardern had literally saved their lives.
Ardern is determined to keep Covid out of the population but also to avoid another major lockdown. With the plague now out of control in much of the world, the border will not be re-opened to tourists or foreign students until a vaccine is found. Labour’s third term depends on it.
If tourism and international education are stuffed, Ardern’s focus is necessarily on merchandise trade, which in practice means the traditional products of dairy, meat, wood and fruit. Just as traditional will be the Government’s efforts to assist.
More offshore NZTE advisers will be hired to help exporters who can’t travel. The 10 per cent quota in quarantine facilities for foreigners deemed essentialincludes minimum-wage workers like fruit pickers.
Ardern’s trade policy is likewise traditional, focused on finalising free-trade agreements (FTAs) with the UK and EU.
When, as expected, a Biden Administration seeks its rightful place at the head of the TPP table, Ardern will encourage early accession, finally realising New Zealand’s multi-decade goal of an FTA with the US.
On tax, National’s campaign against the risks of a Labour-Green wealth tax served both its opponents well. Left-wing voters learned the Greens wanted one while Ardern was gifted repeated platforms to assure centrist voters it was ruled out.
Ardern’s promise extends to alternatives like a land tax. There will be no tax changes except for the new 39 per cent rate on personal income above $180,000, which won’t matter much, with tax experts already making progress on lawful avoidance schemes.
Similarly, neither business nor farmers need fear significant new greenhouse-gas (GHG) imposts beyond those already announced, despite Ardern calling climate change “my generation’s nuclear free moment”.
It may risk a 2020s version of the 1970s Save Manapouri or 1980s anti-Clyde Dam campaigns, but the multibillion-dollar Lake Onslow scheme would basically deliver Ardern’s goal of 100 per cent renewable energy by 2035. Technology and the free market will surely make the car fleet 100 per cent electric within a decade or two.
On methane and nitrous oxide, Ardern does not want New Zealand food production to be substituted by offshore farmers with higher per-unit GHG emissions. Nor does she want full-scale war with domestic farmers.
Instead, the Prime Minister wants to re-establish Labour as the party of infrastructure, which she believes it was in the 1930s. The Resource Management Act will be repealed and replaced by Tony Randerson’s recommendations. Ardern wants roading, rail, housing, shovel-ready, Provincial Growth Fund and other infrastructure projects accelerated, including those supporting primary industries.
Beehive strategists point to Wednesday’s decision to fast-track the Matawii water storage reservoir as symbolising that a Labour Government is now in charge. They point to the Greens’ scepticism of such projects, which will not only provide drinking water to Kaikohe but also support the expansion of Northland’s agriculture and horticulture sectors.
Equally, they believe the decision kills off the idea that Northland needs NZ First to deliver big new projects or that farmers need National.
To assure delivery, the Prime Minister would be well advised to abandon the artificial distinction between the finance and infrastructure portfolios and put Finance Minister Grant Robertson fully in charge. It goes without saying that if Ardern wants business or anyone else to take her seriously on infrastructure, Phil Twyford must be removed from anything remotely connected to the topic and preferably from the Cabinet altogether.
Traditional state housing, rather than KiwiBuild or social housing, will be central to the infrastructure strategy.
For as long as the Reserve Bank and Treasury keep printing and borrowing untold billions, house-price inflation will remain out of control, whatever changes are made to the RMA, the building code, the Auckland Metropolitan Urban Limit or anything else. As Milton Friedman warned in 1963, “inflation is always and everywhere a monetary phenomenon”.
Act’s David Seymour has proposed the Reserve Bank’s monetary policy committee be required to target asset-price inflation but the source of that suggestion is probably enough for Robertson to reject it.
Nevertheless, Ardern and Robertson are under no illusion that the house price-to-income ratio will continue to worsen. Having been burned enough already by attempted private-sector solutions to the housing crisis, state housing will henceforth be their main answer.
The Government could also consider appointing a commissioner to replace Phil Goff’s hapless Auckland Council, whose latest stunt has put at risk over 350 hectares of new urban development near Drury.
Worsening child poverty, of course, is the issue Ardern says motivated her to enter parliament in 2008 after Helen Clark’s nine-year regime. So far, she has made no progress and has taken to complaining about out-of-date data.
Beyond the 2017 Families Package and school lunches programme, perhaps Ardern has decided economic growth is the best way to reduce material deprivation, the most important measure of poverty.
Nothing additional appears planned.
None of this will inspire Labour’s 950,000-strong base, let alone the Greens’ 200,000 voters.
But it is a programme likely to find favour with the quarter million previously National-voting supporters whodelivered Ardern her historic majority — and on whom she calculates her third term depends.
– Matthew Hooton is an Auckland-based PR consultant, whose clients have included the National and Act parties. These views are his own.
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