This column expands on a Werewolf column published by Scoop on Friday
Routinely, Winston Peters is described as the kingmaker who gets to decide when the centre right or the centre-left has a turn at running this country. He also plays a less heralded but equally important role as the scapegoat who can be blamed for killing taxes that his senior partners never much wanted in the first place.
Neither Jacinda Ardern nor Grant Robertson for example, really wanted a capital gains tax, for fear of Labour copping the “tax and spend“ label that they ended up being saddled with, anyway. Usefully though, Labour could tell the party faithful that it was wicked old Winston who killed the CGT.
This time around, Peters has been held responsible for killing the foreign buyers tax that (on the campaign trail) National’s Nicola Willis promised would provide “the lion’s share” of the revenue needed to pay for the government’s tax cuts. By doing so, Peters has delivered a blessing in disguise to National, given that almost every economist in the country felt the tax had no chance of meeting its revenue targets, while having every chance of hiking up house prices in the Auckland market. No doubt, National is relieved to see the media crediting Peters for killing its folly.
Of course, this means that the new government now has a $740 million hole in its revenue projections every year, a hole even bigger than what an under-performing foreign buyers tax would have created, anyway. Last Friday, Luxon talked about how these missing annual shortfalls of hundreds of millions of dollars would be met by the “buffers” [???] contained in the tax plan.
Some re-prioritisation, Luxon added, would also be required. You bet. It is also a safe bet that lower priorities will be given to the public services relied on by the people on lower incomes who stand to gain the least from the tax cuts.
While preaching the virtues of small government and austerity, the new government has displayed no signs of thrift when handing out the baubles of office. The number of MPs inside and outside Cabinet has swollen to 30 members. Some 44% of the coalition’s MPs now belong to the Executive, with access to elevated salaries and to a myriad of perks, along with all the backroom staff deemed necessary to service their needs. Forget the Christmas mini-Budget. For some, Christmas has already arrived.
National won 14 posts within Cabinet, and its junior partners got three each, despite NZF winning fewer votes than ACT. Peters won the plum job of Foreign Affairs Minister and will have first crack at being this country’s deputy PM (and acting PM when Dad’s away) until just after his 80th birthday. At the stroke of midnight sometime in mid 2025, David Seymour will take over the role. The kids may have squabbled in the past, but they’ve learned to share.
Along the way, Peters has forced ACT to swallow yet another round of the much-condemned (by ACT) regional development fund, which will once again gift NZF’s Shane Jones with the power to dispense $1.2 billion this time, on regional “infrastructure” projects. Peters also won from National a commitment to keep the retirement age at 65, alongside gains for aged and dementia care and (unspecified) enhancements to the Gold Card.
In short, Peters has delivered for his base. Even the cranky conspiracy theorists in his ranks can take solace from the fact that this new government will not be pushed around anymore by UN resolutions on indigenous rights, or by the World Health Organisation:
…..by 1 December 2023 [ the new government will] reserve against proposed amendments to WHO health regulations to allow the incoming government to consider these against a “National Interest Test”.
For those hoping that Peters might play a moderating role within the new government, there have been a few crumbs. The Grocery Commissioner’s powers to deter supermarket price fixing may be increased, banking profits may face select committee scrutiny and the tax police at the IRD might get a bit more money to do tax audits.
Any extra funds for the tax police, however, may get cancelled out by IRD’s wider obligations to meet the austerity cuts being imposed on almost all government departments and state agencies. These cuts are being pursued even though by world standards, New Zealand has a modest ratio of state spending to GDP and has the lowest Crown debt to GDP ratio in the developed world.
No matter. For ideological reasons, the coalition agreements stipulate that Crown spending will be decreased, regardless of population increases, evolving expectations, and social need.
Despite the talk about the country voting for “change,” a striking number of the coalition policy proposals are saturated with nostalgia for the era before Treaty obligations, indigenous rights, gender diversity and environmental regulations became the norm, and before the judiciary started to embrace the alternatives to imprisonment. The new government will stop all of that nonsense.
For all the media attention paid to the Seymour v Peters personal conflict, a large number of crossovers exist between the hidebound conservatism of New Zealand First and the Thatcherite young fogey-ism of ACT. Both parties are actively hostile to any form of identity politics, both detest any expressions of indigenous rights, and both oppose any forms of affirmative action being taken to address the existing levels of ethnic or gender dis-advantage. Lord help us, all parties in the new government also seem to oppose anyone riding a bicycle.
The scrapping of the Māori Health Authority and the removal from legislation of all reference to Treaty principles are but two of the major indicators of this desire to re-embrace the attitudes and policy prescriptions of yesteryear. Beneficiary bashing has also gone digital. ACT – which likes to portray itself as a bulwark against excessive state power – is proposing to give the state the power to intervene into personal bank accounts and dictate what supermarket items some beneficiaries can, and cannot, spend their benefit money upon. ACT is promising to:
Implement sanctions, including electronic money management, for beneficiaries who can work but refuse to take agreed steps to find a job.
In other meetings of minds, the three amigos have also agreed to reduce spending on cycleways, to scrap the Auckland Light Rail and Lets Get Wellington Moving projects, to revoke several key anti-smoking health measures, and to restore oil and gas exploration. That last item is a purely ideological gesture that has as much chance of attracting fossil fuel explorers to New Zealand as Christtopher Luxon has of securing a free trade deal with India that includes our dairy exports.
Further signs of the new government’s Great Leap Backwards? ACT wants to phase out fuel excise taxes and introduce electronic road user charging, by – perversely – imposing it initially on electric vehicles. At ACT’s urging, National is also being asked to conduct a ”robust cost benefit analysis” before public money is spent on National’s plan to build 10,000 electric vehicle charging stations around the country. No similar cost/benefit hurdles however, have been proposed for the 13 roads that the new government is promising to build.
Landlords, dignity restored
Nearly half the New Zealand population lives in rental accommodation. In a further leap backwards at last Friday’s press conference, Luxon and Seymour promoted the feudal notion that what’s good for landlords is good for their (forelock-tugging) tenants. In doing so, they echoed senior National MP Chris Bishop’s prior claim that making evictions easier is a “progressive, pro-tenant move.” (i.e. Kick the children of rowdy parents living in state housing out onto the streets and/or send them straight to the orphanage and the poorhouse as a salutary lesson. Besides, that’ll help free up the rental market.)
In future, as Seymour promised on Friday, “landlords will once again be treated with dignity.” Apparently, while living at subsistent levels under the reign of the socialists, landlords were having their dignity besmirched by having to ensure their property wasn’t in a state likely to do harm to their tenants. There’ll be no more of that woke nonsense in future.
Of course, you or I might think that a landlord is someone who chooses to profiteer from other peoples’ need for shelter. Yet courtesy of the new government though, landlords will
(a) receive a phased-in multi-billion dollar tax break on their property investments and
(b) be gifted with a reduction of the bright line test that has mpeded property speculation and
(c) be empowered once again to evict tenants at three months notice without needing to provide a reason, and
(d) be freshly empowered to impose a new “pet bond” on tenants, additional to the current maximum bond of four weeks rent. With changes like these in place, Kiwi kids will once again be free to fulfil their dream of growing up to be landlords.
Rolling back workplace rights
Workplace relations policy has been another arena for the Great Leap Backwards. Despite the token expression of support for the idea of fostering more high wage jobs, all of the workplace-related measures contained in the coalition agreements directly suppress the ability of workers to bargain collectively for better wages and conditions. The rollback of workplace rights includes a commitment to:
*Repeal the Fair Pay Agreement regime by Christmas 2023.
*Reform health and safety law and regulations.
*Expand 90-day trials to apply to all businesses. •
*Consider simplifying personal grievances and in particular removing the eligibility for remedies if the employee is at fault, and setting an income threshold above which a personal grievance could not be pursued.
In addition, the Reserve Bank has been stripped of its requirement to consider the impact on employment of, say, any RB decision to raise interest rates. In a blow against workers in the gig economy, the ability of employers to exploit their contractors will be legally entrenched:
*Maintain the status quo that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court.
So much for the court system’s ability (and increasing willingness) to strike a fairer balance between the competing rights evident in the gig economy, worldwide. Other countries are moving in that more balanced direction. But… Why would the centre-right’s corporate donors want any progressive evolution in gig workers’ rights to be allowed to take root in this country?
Regularly, New Zealand gets voted in international surveys as the easiest, least-regulated country in the world in which to do business. Regardless, ACT has won support for a new Ministry of Regulation, to be funded by scrapping the Productivity Commission. This new Ministry will review regulations in the likes of primary industries, the finance sector, early childhood education, and healthcare occupational licensing, presumably in order to reduce the compliance requirements in those sectors. Evidently, the health and safety lessons of Pike River have already been forgotten.
To non-believers, the Ministry of Regulation sounds like a new tier of bureaucracy, and an added layer of output measurement, complete with its own array of backroom staff. In the very next breath however, 2017 has been identified in ACT’s coalition agreement as the new yardstick for permissible levels of departmental spending. In its coalition agreement with National, ACT won agreement to:
Deliver savings in public sector spending by reducing non-essential back office functions, with expenditure reduction targets to be set for each agency, informed by the increase in back office head count at that agency since 2017.
This tying of expenditure to 2017 levels seems both arbitrary and perverse, given the subsequent increases in population and in public expectations. In reality, the state sector was already severely stretched back in 2017, and the last National government left behind glaring capital expenditure needs in state schools and (especially) in public hospitals which were left ill-prepared for the pandemic. Clearly, once the new government has had its way, the next pandemic will find us in no better shape.
BTW, has Wellington’s mayor – or its Chamber of Commerce – said anything publicly yet about the impact on the capital’s retail economy of losing thousands of public sector salaries?
Farmers, free at last
No surprise that farmers stand to be the next biggest winners after landlords. The trifling requirements on farmers to minimise the effects of their activities on climate change and on water pollution have either been scrapped, or postponed indefinitely. ACT’s coalition agreement even promises to amend the RMA “to allow farmers to farm” – an activity otherwise impossible during the years of socialist tyranny.
From now on, local councils won’t have to be overly concerned anymore with all those pesky regulations about water quality:
Replace the National Policy Statement for Freshwater Management 2020 to allow district councils more flexibility in how they meet environmental limits and seek advice on how to exempt councils from obligations under the National Policy Statement for Freshwater Management 2020 as soon as practicable.
As a result, this has to be the weekend’s least surprising press release headline: “Federated Farmers say new Government will restore farmer confidence.”
With similar de-regulatory gusto, and while New Zealand is till coping with the fallout from the leaky homes crisis, ACT has won approval from its coalition colleagues for preliminary work on this daft step backwards:
Explore allowing home builders to opt out of needing a building consent provided they have long-term insurance for the building work.
Crap work has been done on your home? Well, buckle up and sue the builder to get the repair money back from their insurance company. What could possibly go wrong with that system?
The plunge back into the policies and attitudes of decades gone by, has an imported American “culture wars” ring to it. As mentioned, all three parties appear determined to roll back any recognition of identity politics based on race or gender. This includes scrapping any affirmative action to bridge the existing gaps in health, education and opportunity that have been fostered by New Zealand’s colonial history.
As in the US, ACT is promising to erase the teaching of that colonial experience, and to restore “ balance” to the school history curriculum. Along the way, ACT is also promising to improve the “cost effectiveness” of the school lunch programme. (We don’t want hungry kids to grow up thinking that life offers them a free lunch.)
Further along on the culture wars battlefront… Under the catch cry of “need not ethnicity” the call for equal treatment is being used to perpetuate the current system of advantage. By doing so, the new government is being stubbornly blind to the evidence that not all ethnicities and not all genders enjoy equal opportunities in this country, or experience anything like fair and comparable life outcomes. Unfortunately, the denial of the social impact of privilege seems to be a foundation principle of the new government.
In that respect, the scrapping of the Maori Health Authority, the promise to force the school curriculum back to basics, the waiving of student fees only after two years of study has been completed, and the erasure of any reference to Treaty principles from legislation are only the more obvious examples of the barriers being erected to protect the existing forms of privilege.
Supposedly, restricting the waiving of student fees to year three tertiary study is a response to the dropout rate in years one and two. In reality, it will erect barriers likely to prevent many kids on low incomes from being able to access tertiary education at all. This would seem to be consistent with how the new government is interpreting its mandate for “change” as a licence to regress. (Let’s stop the children of the underclass from lowering standards.)
Obviously, nostalgic rhetoric can win elections. New Zealand is now about to discover whether the policies and attitudes of the past provide a platform for meeting our future needs.
After all the cries of “are we there yet” New Zealand now has a new government, sworn in this morning. The expressions of impatience did serve to fill in a lot of dead time on the news cycle, but they also called to mind this classic Simpsons clip: