Economic Crisis – How About A Minister Outside Cabinet!

Gordon Campbell on John Key’s peculiar government, and its response to the economic crisis

That John Key certainly is a joker. In the face of the biggest global economic crisis in 80 years, the new government has come up with a governing structure whereby….either and probably both Rodney Hide and Peter Dunne will have ministerial responsibility for some aspect of the economy, but won’t be able to sit at the Cabinet table to know what’s going on, and to see how their efforts are meshing with the collective. Key’s predecessor, Don Brash expressed astonishment when Dunne became Revenue Minister outside Cabinet in 2005. Given the global financial crisis, it seems even more astonishing this year.

The issue is not about whether MMP allows for minor parties to enjoy ministerial responsibility outside Cabinet. Though National decried such arrangements loud and long as a constitutional outrage when Winston Peters was made the Minister of Foreign Affairs outside Cabinet in 2005. Ultimately, Dunne played a limited role while sidelined in his Revenue post, and sat on a few policy task forces, while Peters’ brief was a relative breeze – he merely had to articulate government foreign policy to outsiders.

With the new government, Hide in particular seems set to play a role in the economy beyond the mere Revenue post – and yet somehow, that task is thought able to be carried out without direct recourse to Cabinet table discussions. It sounds absurd, and New Zealand can hardly afford to structure its response to the global recession in this fashion, for political expedience.

Yesterday, Key mentioned Hide’s experience in economic matters as being part of the reason why he might be being considered for an economic role. Unfortunately, Hide’s experience in that area should disqualify him, not qualify him – in that Hide is a throwback to the Reaganite supply side, tax cutting, untrammeled free market school of economics. That’s the mindset that got the world into this mess – and more of the same from Hide and his colleagues in the Act Party can only make things worse.

It may have escaped Key’s notice – but hopefully not that of Bill English – but we are right now in the throes of a Keynesian renaissance, where government outlays ( in tandem with tax cuts) are being used to stimulate consumption. This requires a fine balance between stimulating consumption, while controlling debt. It requires government here – as in the US – to play a far bigger, and far more active role in regulating the markets, and protecting us all from their proven irresponsibility.

Therefore, a razor gang approach would be exactly the wrong response. Especially when Hide, Roger Douglas and co will not be able to participate in Cabinet discussions, and ensure that their actions are meshing positively with – and not undermining – the essential role that government regulation has to play in this crisis. Hide is a throwback to a pre-crisis era, and he should be kept as far away as possible from decision making on the economy.

Perhaps that is what this peculiar structure is designed to achieve. If Hide and Dunne aren’t at the Cabinet table, their main conduit to executive level decision making on economic matters will be Bill English. Good luck with that. People who remember the 1990s will recall the fate of the hapless Neil Kirton of New Zealand First, in co-managing the Health portfolio with English. Sure, English was younger then, but he wasn’t exactly renowned for sharing his toys and playing nicely with the other kid. In short, Kirton got pulverized.

Later this afternoon, we will find out what Hide has managed to achieve out of his deal with National. So far, it hasn’t seemed like much of a negotiation. Hide has essentially thrown away his cards, and declared his unconditional love and support from the outset – well before any of the details were finalized. Certainly, the Hide who appeared on Sunday night television blustering about Key being to the left of Helen Clark on some issues and Act being there to hold National to account didn’t make it to Wellington the next day.

In his place was a different Rodney Hide, in extreme conciliatory mode. As was Peter Dunne. Dunne is being cast as the Ringo Starr of this lineup, the Everyman figure brought in to suggest a modicum of inclusiveness and moderation does exist within the mix. Together, Dunne and Hide have only underlined National’s need for the Maori Party to come on board, to give some sense of genuine ideological breadth and variety.

If the Maori Party do sign on – and all logic says they shouldn’t – their input will also presumably be located outside Cabinet, for the same reasons of retaining their brand identity. Even Matthew Hooten – on RNZ Maori news this morning – has echoed the Scoop suggestion that the Social Welfare portfolio could be the only inducement large and enticing enough to get the Maori Party on board.

Perhaps it is – but that would only compound the structural problem mentioned earlier. It would mean that in the midst of this global economic crisis, New Zealand would not only have placed one and perhaps two Ministers tasked with economic decision making outside Cabinet. We would have placed the welfare safety net meant to protect the vulnerable away at arms length from the main forum of decision making as well. You could hardly imagine a worse response to an emergency if you tried.