What a National Government May Entail

By Gordon Campbell

Economic uncertainty is National’s latest rationale for why they’re not releasing their main policy positions and costings until the election campaign has virtually begun. Off hand, it is hard to think of a serious pretender to government in any other modern democracy that could get away with concealing the nature and cost of their policies for so long, merely because it suits them tactically to do so.

At most, this year’s election is now only five months away. Could Barack Obama for instance, get away with indicating that he won’t set out his policy stances until say, October – because it suits his election chances to keep the details to himself for as long as possible? C’mon Granny Herald, how about an outraged front page editorial upholding our democratic right to know what these contenders to government have in store for us ?

After all, people agree to be governed, but only by informed consent. So far, the polls are indicating that a change in government is on the cards. Yet so far, the polls have been based on public dislike of the Clark government, not on any comparison between the policy alternatives. The smiling Mr Key is a vacuum in waiting, which people are filling with whatever they desire him to be, and the media isn’t helping much to fill out the picture.

A week ago for instance, as No Right Turn pointed out the NZ Herald ran stories about (a) Key being voted the country’s sexiest politician, and (b) Nelson MP Nick Smith getting engaged by writing his “ Will you marry me?’ proposal in the sand with a stick. Spare us. Early this month, National claimed to have already released some 14, count ‘em, 14 policies. Yet apart from its $1.5 billion promise to roll out broadband by 2012, none have any costings. attached – a rather essential ingredient if voters are to judge how affordable the ‘policies’ are, and the levels of debt that may be required to finance them.

Counted on the list of 14 is the vague promise that by 2050, National will (somehow, no details provided) reduce New Zealand’s carbon emissions to half their 1990 levels by 2050, and equally vague promises to adopt Labour’s nuclear free policy and to continue Winston Peters policy of targeting aid to the Pacific.

Given the virtual information blackout National has imposed about its plans, it would be surprising if fears about its hidden agendas didn’t arise. Frankly, it seems (a) scary and (b) infuriating to be this close to a possible change of government without National being willing to tell us how it proposes to care for the sick, fund schools and universities, manage the workplace, protect the environment and run the economy. Just what has it got in its policy kitbag that it needs to hide?

To shed some light, I’ve tried to summarise below what I think National’s policies in government might be, based on speeches, press releases and statements in the House. This is an open source exercise. Meaning : if you can find other clues on what National plans to do, please send them in, and I’ll add them to a template every week – at least, until National officially shows its hand.

To make the exercise more readable, I’m looking today only at education, health, the economy and law and order – and on Wednesday, will try the same on telecommunications, the environment, and industrial relations.


Spokesperson : Anne Tolley

National is still clearly missing Katherine Rich’s exit from the education debate. As John Key indicated in May National will double the funding from $40 million to $70 million for private schools. In similar vein, National’s education spokesperson Anne Tolley reportedly signalled last week that operational funding for schools will not increase beyond the inflation rate.

Taken in tandem, this signifies that while easing the burden on parents with kids in private schools is a priority for National, helping to meet the operational shortfalls in public schools is not. Therefore, families with children attending public schools will receive nothing from National beyond inflation adjustments to help bridge the funding gaps in our ‘free’ public education system. Incredibly, Labour’s modest 5 % boost in schools’ operational funding in this year’s Budget was denounced as unnecessary ‘pork” by Tolley, who clearly has no idea what she’s doing in this portfolio area.

National, despite its criticisms of NCEA over the last three years, will retain NCEA if and when in government. Last week’s announced review of NCEA took much of the remaining steam out of NCEA as an election issue – though it was already receding after last year’s refinements of the system of checks and balances on marking procedures. Key has announced plans to set national standards in reading, writing and numeracy. National will also offer more opportunities for trades and industry–based training – and private sector learning institutions will be allowed to compete with the public education system to offer such courses to 16 and 17 year olds.

There will be other profit opportunities provided for the private sector in education. Last year, Key announced that the private sector will be more involved in the building – and in the running ? – of public schools, via public/private partnerships. Since then, Key has said that he envisages PPPs in education as being limited to the provision of infrastructure, but this boundary remains to be confirmed, whenever the party’s education policy is finally released.

There is also serious semantic blurriness around the ‘bulk funding’ question. Reportedly, National has ruled this out during its first term in office, at least. In fact, it looks more as if National is interested in something akin to bulk funding, while resolutely shying away from risking ‘a 1990s argument’ by using the term. Key’s full, multiply hedged response on bulk funding is worth quoting, from the April 12 Agenda transcript :

I think it’s unlikely that bulk funding will be part of our programme in 08 and it’s just….we do want to try and deliver a system which gives more flexibility to schooling, but I think you know the issue around bulk funding is a bit of a kind of a 1990’s argument versus 21st sort of century perspective that we want to take…, I’ve asked a whole lot of teachers and principals and while the feedback is mixed those that were previously bulk funded actually like the system. In the end it’s also about where you set bulk funding to ensure that there are no losers, and that can be very expensive – so some flexibility in a slightly higher trust, less regulatory model can work, and we’re playing round with some ideas on that.

Whatever the outcome of National’s ‘playing round with some ideas on that’ entails, this doesn’t read to me as though bulk funding has been dumped, in spirit or in practice. Anne Tolley, the day after this Agenda interview, stated on radio that bulk funding has not yet been discussed [ as policy] and National’s deputy education spokesperson Alan Peachey has been consistently in favour of it.

Moreover, Norman LaRocque of the conservative Education Forum lobby group explained in a speech to the Henderson Rotary Club on June 12 that the term ‘bulk funding’ had best be avoided – essentially for tactical reasons – and hidden instead within a wider concept of school self management. “ Bulk funding is dead,” La Rocque concluded, “Long live bulk funding.” So, watch this space for further exciting developments on Bulk Funding : The Sequel.

And what of vouchers, the other centre right ideological hobby horse in education ? The NZ Council for Educational Research concluded this about vouchers : ‘ Competition for students by schools has not improved quality, achievement or access. Such schemes favour a minority at the expense of the majority. Competition among schools is hardest on those serving lower socio-economic communities and in fact it depresses overall educational levels.’

While National’s prospective coalition partner Act – via Sir Roger Douglas – has once again put forward education vouchers as its core policy, Key has been silent on this topic, as far as I can tell. Apart from in January, when Key publicly advocated making them available to 16 and 17 year old school-leavers, within those trades courses I mentioned earlier.

On student loans, National has embraced the Labour ‘interest free’ policy that it attacked so vociferously in 2005, and it now lists this among the 14 policies that it proudly calls its own. Beyond that, National’s plans on student loans contain only two new ( and minor) elements. It will do a bit of tinkering for the relatively affluent – it is offering a 10 % bonus to those materially blessed students who, during their first ten years of repayment, can afford to pay off their loans in lump sums of $500 or more above the compulsory rate. Example : if students pay off an extra $800, then National will subsidise that, and make it $880. Not exactly a hammer blow at the $10 billion student loan behometh.

Secondly, National is considering the scrapping of student loans for medical students if they agree to do postgraduate residencies in rural communities for three or four years. While welcoming the proposal, NZ Medical Students Association president Anna Dare pointed out that rural communities are not the only problem area. “We have moved beyond a simple maldistribution of our medical workforce and now face a national doctor shortage.” Lower medical fees and increased central government funding of the health system would be required alongside this immediate debt relief, Dare told the Otago Daily Times.

Summary : National will boost its subsidies to private schools and to wealthy students with student loans, and place a virtual freeze in real terms, on operational funding for public schools. It will provide business opportunities in courses for 16 and 17 year olds, and also turn to the private sector to help build ( and manage?) public schools.


1. By how much beyond inflation, if at all, does National propose to boost operational funding for public schools ?

2. Via its promotion of PPPs in education, will National allow the private sector to manage and operate New Zealand public schools ?

3. National already supports vouchers for 16 and 17 year olds seeking trades based training. Will a National government introduce education vouchers beyond that point in the public school system ?

4. Will a National government allow school boards any greater role in the setting and administering of teacher salaries within the public school system ?


Shadow Minister: Tony Ryall.

Simon Upton’s health reforms in the early 1990s virtually atomised the public health system, and set competitive forces loose in the health sector from which it has still not yet recovered. Ironic then, to find National’s spokesperson Tony Ryall now preaching the gospel of collective harmony :

“National believes the future lies in working together – primary and secondary, public and private – with a good lead from the government.”

Health will be where National’s essential balancing act – cut taxes, without (much) cutting of public services – will tested, and it is giving clear signs are that spending in the health sector will be rigorously monitored and contained. “We’re not going to be cutting health,” Finance spokesperson Bill English told a post Budget gathering in Christchurch in late May, “but we are going to focus on the harder issue of how to get more out of what you put in.”

Meaning : more from the same funding or less, as National squeezes the health sector to make it more productive. As yet, Ryall isn’t saying whether Labour’s lower charges to visit the doctor and lower charges on prescriptions will be kept, reduced or scrapped.

Last year, Ryall triggered a backlash by indicating fees for doctor visits would no longer be capped, under National. That issue is likely to recur, given the vision for health outlined last Friday by Ryall in his speech to the NZ Medical Association. You can read the full speech here.

The main ingredients? A larger role for GPs, who will be expected to form ‘one stop’ shops (called Integrated Health Centres) for diagnosis, outpatient treatment and referral. The economies of scale at the IHCs will require larger networks of doctors to staff them, and their economic viability will also necessitate them being granted longer term contracts with DHBs. Oh, and there will a bigger role for PPPs in the health sector as well, plus – as mentioned earlier – financial incentives for medical students to do their training and subsequent practice in rural communities.

In essence, the vision is one of moving treatment out of costly hospitals ( will these become known as Disintegrated Health Centres?) ) into primary healthcare care profit centres that will be gifted with a virtual stranglehold on plum DHB contracts. One see why, in this climate, National would not want any cap on fees for visiting the doctor , since there are only a couple of possible financing alternatives if National is truly proposing a more significant shift to primary care than we have already seen under Labour.

These options would seem to be : (a) reduced funding for hospitals, and a shift of those funds into primary care or (b) higher fees paid by patients going to the doctor. What Ryall seems to be proposing is a more profit-driven model, with recoupment at the GP level and productivity gains everywhere else. The package has been framed in the happy talk of convenience, planetary friendliness ( “ travelling is the new petrol-driven financial curse “) and accessibility – even though the fresh primary care emphasis is being pitched by National in the midst of an accelerating shortage of GPs.

In order to carry out its bright new round of cost containment and productivity reforms in health, National has borrowed one of its main buzzwords from a leading Japanese car company. “Lean Thinking,” Ryall explained in his speech to the Theatre Managers and Educators Conference at Te Papa in April : “ is derived from the methods of vehicle manufacturer Toyota. Lean thinking begins with driving out waste, so that all work adds value and serves the patients needs. Identifying value-added and non value-added steps in every process is the beginning of the journey towards lean operations.”

Got that? So, expect an influx of more time and motion health bureaucrats to carry out the studies on what current procedures do, and which procedures don’t, add greater value to the patient/clinician interface. Ryall again, in the same speech : “

Around the country we have hundreds of superbly qualified and motivated clinicians who can take responsibility for redesigning and improving their services. Many are looking at lean thinking. Mid-last year National’s health team held a telephone conference call with an NHS hospital in Scotland to learn about their success is using lean thinking to improve patient service.

Faced with a retention problem among your health professionals ? Ryall’s answer – get doctors to run the hospitals, as well as treating patients ! Or as he puts it, get clinicians to take responsibility ‘for re-designing and improving their services.’ Somehow, Ryall sees hospital doctors and specialists doing more of the re-designing and management of service delivery, while simultaneously doing less of the paperwork. Good trick.

Salaries ? Always an issue, Ryall concedes, always will be. Yet perhaps not as important as that priceless ( meaning : cost free) sense of satisfaction that comes from clinicians being able to lift their game. He wants more ‘productivity’ out of the workers in the health system, free of administrative hindrances. “Many clinicians tell me that improving productivity is a key route to professional satisfaction.”

In Ryall’s opinion, money isn’t the main issue anymore in health care – its more about the cultivation of fruitful and personally fulfilling caring, on current rations. “Money talks, but it is not the only, or even the prime, motivator.” Lean thinking, Ryall concludes, is bringing nurses at Middlemore hospital back to the bedside, and lean thinking is allowing them to do what they had trained to do. “They’re happier, enjoying work and doing more.” Truly, as the sign used to say over the gateway to Dachau concentration camp, work will make you free.

Summary : National looks likely to intensify Labour’s existing focus on primary care. It envisages larger concentrations of GPs working in Integrated Health Centres (IHCs) and will endow them with longer term contracts from DHBs to make the IHC model economically viable. It will use the Toyota car company’s ‘lean thinking’ concepts to crack down on waste in the public health system.


1. Will National reduce subsidies for GP visits, and allow fee hikes for patients – and how would this be consistent with a focus on primary care ?

2. Will National reduce subsidies on prescriptions and allow hikes in the cost of prescriptions– and how would this be consistent with a focus on primary care?

3. How much does National estimate it will cost to set up and run its system of Integrated Health Services, and will patient fees for visits to IHCs be capped ?

4. By how much, if at all, does National propose to boost health funding in real terms over the next three years ?

5. Where is the waste in the public health system, and how much does National propose to save annually by ‘lean thinking’ and other productivity measures ?


Shadow Finance Minister : Bill English.

Earlier this month, National blamed the uncertain state of the economy for why it wasn’t releasing economic policy in the meantime. The timing sequence will therefore be : no alternative Budget, a tax package, then a fiscal framework. Nothing at all will emerge, Finance spokesperson Bill English says, until four to six weeks before polling day. National, he says, needs to wait for Treasury’s Pre-Election Fiscal and Economic Update view of the economy. Blame it on Economic Uncertainty.

Ridiculous, of course. If National’s tax package for the next three years depends for its structure and viability on the accuracy of a single Treasury forecast, things are in very sorry shape indeed. One would have thought it would not be beyond English’s capability to issue two sets of figures, based on best/worst case scenarios for the economy.

The reticence looks more like fear of a voter backlash. Clearly, National has raised public expectations on the tax cuts – and will now have to outbid both Labour and United Future without (a) boosting inflation and keeping mortgage interest rates up in the pain zone or (b) fostering voter resentment by dishing out the bulk of the tax cut revenue to the relatively affluent.

Neither dilemma can be neatly resolved. Look therefore, to a headline difference – National abolishes top tax rate! – and a reduction of Working for Families at the top end, to free up some dosh for middle income voters. Again, Key signalled this direction in his April 12 Agenda interview in his comments about Working for Familiues :

“ I’d rather deliver for those higher income earners through taxes as opposed to a government sort of programme, but quite clearly for the vast bulk of people they’ll continue to get Working for Families… and the reason is for lower income families they absolutely need more money to make ends meet and in fact you can’t do it through tax cuts because you can’t cut their taxes enough…

Middle income families, Key continued, have been an ignored group, and the high mortgage belt in Auckland is feeling the pain : “ …I think they are people who are under an awful lot of stress and particularly in more expensive areas like Auckland where they’ve got tremendous mortgages, their interest rates have doubled, and rightfully so they are up in arms, and they deserve and will under a National government get a much better deal.

Prediction : access to Working for Families will be reduced for those on higher incomes, and this will be used as an excuse for giving such people a bigger chunk of the tax cuts, now and in every subsequent year. For everyone else, Working for Families support will be frozen, and will decline over time in real terms.

Tax relief will be directed at middle and upper incomes. However, as Bill English also told the Christchurch post-Budget gathering cited above, National can now offer only a $10 to $16 a week package over and above what Labour has already put on the table. Given the expectations National has created, such a puny offering – it is likely to be less than the ‘block of cheese’ tax cuts that it derided from Labour – could be politically damaging. No wonder that National is wanting to conceal the Tax Cuts That Dare Not Show Their Face until the election campaign madness is fully upon us.

Tax cuts are not the only – or even the main tool in National’s kitbag. Under a National government, public private partnerships (PPPs) are set to become a major vehicle of state provision in almost every sector imaginable – in education, health, roading, prisons, and possibly even in social welfare delivery. If National can’t sell existing state assets to its business allies ( privatisation of everything except ACC is off the agenda, at least during National’s first term of office) it intends to build new ones for them instead.

Understandably, business is rather keen on PPPs – given the ‘no risk’ 30 year contracts, opportunities for cost racheting and guaranteed re-payments that go with them. Globally, the problem with PPPs is that the state tends end up carrying most of the risks, while the private sector tends to reap the bulk of the rewards.

Why is this so? For the taxpayer, the concept is only as good as the government’s motivation and ability to drive strong bargains in how the PPP contracts are structured and managed over the course of their long, 20 to 30 year lifetimes. For politicians, it’s a ‘no risk’ exercise as well. If the contracts turn out to be fishy, the chances are the politicians who signed them will be long gone.

Along the way, the public can have extreme difficulty in getting any useful information about the contracts involving their money. Since these are state partnerships with the private sector, a lot of the detail is ruled to be commercially sensitive. In that sense, PPPs are a device for removing a lot of formerly open government activity from public scrutiny. The inherent problem with PPPs is that we may never know what sort of deal – and what level of costs over time – we are up for.

[For a detailed critique of PPPs, I recommend the many studies on PPPs by Canadian economist Professor John Loxley of the University of Manitoba, including this one and this one :

In a few weeks time, I’ll do a separate column on the international evidence on the track record of PPPs in roading, health and prisons. But not now.]

What we do know is that John Key is very keen on PPPs.

In his speech to the Road Transport Forum last September in Christchurch, Key confirmed that National supports (a) tolls on new roads (b) a reduced consent process for roading projects, and (c) as a particular priority, the reform of the ‘onerous restrictions ‘ placed on roading consents by the Land Transport Management Act. He explained how PPPs work in roading :

The private sector finances, in part or in full, the construction of the road and is repaid over time [where are the disciplines on cost over-runs?] by a service charge from the government [what ensures these cannot be racheted up] or by revenues from the project [ie, by tolls] or a combination of the two. PPPs allow the government to spread payments for major projects over their useful life. [this is actually a problem, since there is no reliable way beforehand to estimate the costs of borrowing involved ] Payment is made only when services are delivered, risks are shared between the private sector and the government [ where is the risk for the private sector ? ] and private sector management and expertise is also bought into play.

On Kiwisaver, National is once again telling voters they will have to wait until a few weeks before the election to hear National’s policy about this scheme. In the wake of a revelation by National MP Kate Wilkinson that National would not enforce compulsory employer contributions, Key was forced to publicly confirm that National would support Kiwisaver contributions at a ‘pretty similar level’ to those currently required under Labour. [ He would have had to grit his teeth to do so. A few months earlier, Key himself had expressed concerns about the impact of compulsory employer contributions on small and medium sized businesses.]

As Finance Minister Michael Cullen pointed out, this still leaves it unclear whether National is supporting merely the 1 % contribution now required, and is intending to dodge the 4 % level envisaged from April, 2011. In particular, National has been called on to clarify whether it would keep (a) The $1000 taxpayer kick start (b) The government contribution of up to $1040 a year (c) The full employer tax credit and (d) The full support for first home buyers. For no discernible reason, National is staying mum about such details.

Summary : National has been trumped on tax cuts, and is with-holding its squib until election eve, presumably to minimize the fallout from public disappointment. To minimize voter antagonism, it has also had to shelve selling off state assets, so PPPs will carry the major weight of its economic agenda. Kiwisaver will be retained, but in truncated form.

Law and Order

Spokesperson : Simon Power

The murders in south Auckland and gang violence in Hastings and Invercargill will cancel out, in the public mind, any political gains for the government from the record low numbers on the dole and other benefits. The current law and order situation is the social equivalent of stagflation : more people may be in work, but some forms of serious violence and social alienation are intensifying, not decreasing.

How to stop the cycle ? New Zealand already has a ratio of one police officer for every 504 people in this country. National, last weekend, indicated its intention to get that down to one to 500. The gist of National’s law and order policy framework was laid out by John Key in his speech last November to the NZ Police Association national conference.

Even before the trial of tasers had been positively evaluated, Key was firmly supportive : “ Increasingly, police are confronted with out-of-control offenders, high on drugs and unaware of their surroundings, who are near impossible to stop….Tasers are the obvious answer. “ Subject of course, to them being positively evaluated.

Anything more the police might want? Key, again :

“We’re also keen to ensure your toolkit makes the most of modern crime-solving technology.

DNA is one such technology….It’s time to increase the range of situations in which we use it…Currently, DNA samples can be taken only with a suspect’s consent, or where people are suspected of an offence punishable by more than seven years imprisonment.

That requirement precludes DNA samples being taken from those suspected of a wide range of significant offences….And it requires police officers to go through the complex process of applying to the High Court for leave to take a DNA sample where consent is not obtained.”

One could well ask – what is so vexingly ‘complex’about having to convince a court why you should be forcibly taking DNA samples from someone yet to be convicted of any crime? Do it anyway without the courts’ permission, Key is saying – even if police are dealing only with a suspect that they’ve picked up, regarding a crime punishable by imprisonment. This latitude is coming from the same party that complains about the powers of the nanny state.

Earlier this year, Key unveiled National’s plans to double the length of residential sentences, to lower the minimum age from 14 to 12 for tougher sentences ( including electronic braceletting in some circumstances) before Youth Courts, and to send youth offenders to boot camps.

In the House on June 18 Key revealed that National has already earmarked $35 million to create what Key has called “army-style correction camps for young people.” National will also impose a $50 levy on all offenders to go towards victims’ costs. It also supports the Clark government measures to crack down on gangs – including measures to make gang membership an offence, and a factor in tougher sentencing.

Trying to convince voters that you’re a tough hombre on law and order is one thing, but the social and economic cost of the policy is something else again. New Zealand already has an exceptionally high ratio of people in prison compared to other modern democracies. New Zealand’s incarceration rate of 197 per 100,000 people is almost twice that of most western European countries. The rate in France for instance, is only 90 per 100,000, and even Britain’s rate is a much lower 140 per 100,000. This is hardly evidence of a ‘soft on crime’ approach holding sway in New Zealand – rather, it suggests that the Sensible Sentencing zealots are driving down a blind alley.

Last week, National’s justice spokesperson Simon Power conceded that National’s combo of no parole for serious violent offenders and longer sentences would mean more prisons would need to be built during National’s first term of office, with all the related costs.

As NBR reports:

“Mr Power also said there was a case to be made for lengthening sentences in some areas and National leader John Key had talked earlier about lengthening supervisory sentences for young people.

He said that in its first term, a National government would be looking at building another prison.

But, he said, that if the prison population continued to track as it was “any government would have no alternative but to do that”.

He had no difficulty with tendering for private management within the prison system.”

This policy will create further scope for private sector profiteering in law and order – via the use of PPPs to build and run private prisons. In case anyone would like to know where that policy ends up, here is an utterly chilling recent account of the US prison industry in New York state :

And here is another equally damning summary from Scotland last year of the lack of positive evidence to support the use of PPPs in building and running private prisons :

In New Zealand, we seem to be racing into the use of PPPs in the law and order context, for ideological and profit-driven reasons – with little if any, supportive evidence, and without a case being made for the social and economic benefits.

Summary : On law and order, National is pitching a ‘ get tough’ law and order message – targeted particularly at youth and violent offenders with little regard to the failure of this approach evident in our already high imprisonment rates, and with no visible concern for the social and economic costs of building more prisons, and housing more inmates. The overseas critiques of PPPs and private prisons are being ignored.


1. What are National’s cost estimates for the new law and order policies that it has announced since Mr Key’s Police Association speech last November, up to and including the new prison that it says it will build during its first term?

2. Will National be inviting the private sector to build and run that new prison ?

3. If New Zealand’s already extremely high incarceration rates have not stemmed the tide of violence in our society, why does National think that more of the same will be a worthwhile social and economic investment?

In conclusion, National has plenty of signs scattered in the sand as to what its policies will be. It should now be willing to front up and outline these policies in more detail, with likely costings. National’s evasions and stonewalling on its tax package and Kiwisaver plans in particular, have no justification. If you have further details of what National plans in government, please send them in.

Wednesday : National’s plans on the environment, on the workplace, and telecommunications.