MAX HAYTON. New Zealand’s General Election, September 23 2017.

There’ll be no revolution this time.  Polls show New Zealand voters are as contented as a herd of freshly milked cows.  The election will produce a government that will be either centre-left or centre-right.  Either way, the winner will probably need help from minor parties.

So most of the excitement is on the fringes of the main campaigns.  The smaller parties that could gain considerable influence under the MMP (Mixed Member Proportional) voting system are campaigning hard with some innovative policies.

MMP works like this:   Political parties field candidates to stand in electorates, and they also provide a list of additional candidates (known as “list” candidates).

Each voter gets two votes.  They vote for the party they favour and they vote for an electorate MP.  The candidate with the most votes wins in each electorate.

New Zealand has one chamber, the House of Representatives, with 120 seats. This number can vary a little depending on what happens on Election Day.

Under MMP a party that reaches a threshold of one electorate seat or five percent of the party vote gets a share of the seats in Parliament equal to their share of the party vote nationally.

As an example, a party that wins thirty percent of the party vote would get thirty percent of the 120 seats, or about 36 MPs.  If that party won twenty electorate seats it would need to send to Parliament sixteen more MPs from its list in addition to its twenty electorate MPs.

In this way the number of MPs each party has in New Zealand’s Parliament is roughly equivalent to its share of party votes received nationally in the General Election.

By contrast a first-past-the-post system can allow a party with a minority of votes nationally to form a government if it manages to win the most seats.  That can no longer happen in New Zealand.

It also means that any minor party that wins one seat or reaches the five percent party vote threshold can gain substantial influence by giving their support to a major party wanting to form a government.  It’s harder for major parties to get a majority alone when a number of smaller parties are picking up seats or getting more than five percent of the party vote, therefore getting a number of members into the House.

At present the National party government is supported by ACT, United Future (a small centrist party with but one MP and likely not even a thousand members although its MP and leader Peter Dunne is Minister for Internal Affairs) and the Maori Party (an indigenous rights party with two MPs, one in an electorate and one from the list).

The main winner will be either centre right (the governing National Party) or centre left (Labour), but the price the winner will pay for minor party support could be significant.  Under MMP the minor parties have real power.

The government’s books are in surplus so the main difference between the two main parties is how much they will spend, what they will spend it on and how quickly.

In its May budget the Government revealed a new programme to boost family incomes, increase infrastructure spending and run a higher rate of debt reduction.

Perhaps its biggest promise is a tax cut that would cost NZ$8 billion (about AUD7.5 billion) over the next four years.  National’s core belief is that individuals can spend money better than any government.

Labour promises to spend about NZ$17 billion in four years (about AUD16 billion) citing a major need for more support for social services, health, education and housing. Labour calculates it can still maintain a budget surplus and even pay back some debt.

Labour would also reserve about NZ$800 million dollars (AUD750 million) to pay for programmes minor parties might require as the price for their support.

This might be a faint hope because Labour is well down in the polls.

The latest 1 News Colmar Brunton poll shows the National Party well ahead on 47 percent.  Significantly the Opposition leader Andrew Little ranks fourth as preferred leader, behind his recently appointed deputy Jacinda Ardern.  The Labour Party is 20 points behind National on 27 percent.

As permutations are calculated and realities dawn on them, the larger parties are forming alliances with parties that might help them acquire majorities.

National usually declines to run a candidate or it tones down its campaigns in electorates critical to its small support parties ACT and United Future.

National has recently had a leadership change.  The popular John Key was National Prime Minister since 2008 until he left abruptly in December last year.  He was succeeded by his deputy Bill English who leads the party into the September election.

Bill English and John Key are beneficiaries of a strong economy supported by historically high milk prices and massive investment in the Christchurch re-build.

The Christchurch earthquake was remarkable because property there was relatively highly insured.  Earthquakes in Chile, China or Turkey don’t usually require an enormous response from the insurance industry and other sources of finance.

The Reserve Bank of New Zealand estimates the rebuild including buildings and infrastructure is running at about $NZ$40 billion in 2015 dollars (roughly AUD37.6 billion).  Insurers had paid out NZ$26 billion by September 2015.  They haven’t finished paying out yet.

With this kind of activity there was no need to prime the pumps or print money or even be particularly competent in response to the GFC.  Key and his finance minister Bill English looked good while doing little except talking it up.  Their polling figures reflect this.

In its bid to make up a major polling deficit Labour has formed an alliance with the Green Party but their joint poll figures would not at present be sufficient for them to become the government.  They would need a third, substantial player which could be New Zealand First.

Labour is the party of the successful three term Prime Minister Helen Clark but since she left for a top job at the UN the party has languished.

A lacklustre slogan “A Fresh Approach” and a leader who polls poorly provide pitiful penetration for a manifesto with some interesting features:  Substantial payments to pensioners to help cover heating costs in the winter, payments to compensate schools that don’t demand donations from parents, three years of free education for adults at any time of their lives and resumption of government contributions to the Superannuation fund known as the Cullen Fund.  The National government stopped contributions to this fund in 2009, using the excuse of the Global Financial Crisis.

National’s aversion to a sovereign fund that would help pay for pensions echoes the massive mistake by Prime Minister Sir Robert Muldoon, who on assuming power in 1975 killed a promising superannuation fund that could by now have made New Zealand immensely wealthy.

When Labour promised to resume payments to the fund it also promised to hold the retirement age to 65.

Labour’s expenditure would be partly paid for by a crackdown on tax breaks for property speculators and large international companies and by cancelling National’s tax cut.

The tax cut from April next year would lift the incomes of 1.3 million households by an average of NZ$26 (about AUD24.50) per week.  Other promises already announced concern housing, family incomes and a predator free New Zealand by 2050.

The Government has already announced the pension age will increase so that anyone born in or after 1974 won’t get it until they’re 67.

In New Zealand everyone over a certain age, currently 65, gets the pension.

One minor party also wants something similar for younger New Zealanders.

A new party, TOP (The Opportunities Party) wants to introduce an Unconditional Universal Basic Income and pay $200 a week (AUD188.33) to all New Zealanders aged 18-23, no questions asked.

TOP says 18-23 is a tricky time of life with transition from home to work, training or university, high anxiety, high suicide rates and need for financial support.  Others might say it is a blatant play for the youth vote.

It would be paid for by asset testing some of the pension paid to the over-65s and a new tax on the capital value of property.  They say it is a way to make those who benefit from the rising value of property pay tax on their unrealised income.  Other income tax would be reduced as a result, spreading the tax burden more fairly according to TOP.

The Opportunities Party was founded by Gareth Morgan, a whiz kid economist, philanthropist and finance company founder.  His other passions are riding motorcycles long distances in remote parts of the world and promoting the eradication of cats from New Zealand to protect its birds.

An example of a small party using its influence at the national level is the ACT Party (Association of Consumers and Taxpayers) which after the 2011 election made an agreement on confidence and supply to help support the John Key government.  ACT was later able to introduce Academy Schools, otherwise known as Partnership or Charter Schools in New Zealand.  Those that have been set up have been of uneven quality.

Another proven stayer and likely to help decide which major party will form a government is New Zealand First, led by the incorrigible Winston Peters.

It could work this way.

The latest polling is reasonably good news for the National Government under the relatively new Prime Minister Bill English on around 47 percent, it is very bad news for Labour polling around 27 percent, but very good news for New Zealand First under Winston Peters.  He as leader is polling 11 percent and his party is also on about 11 percent approval.

This gives New Zealand First a chance to match or increase its present representation of 12 seats.  On present polling by National and Labour this could give New Zealand First the balance of power and has caused some commentators to name Winston Peters the Kingmaker.

It has happened before.  After the first MMP election in 1996, Winston Peters held the balance of power.  He surprised many by choosing to support the National party to form the government.  Before each election, and this one, Winston has played it close and won’t say who he would support or what his conditions might be until after the people have spoken.

So far he has announced some bold, populist policies.  He proposes a binding referendum on whether to abolish the seven Maori seats in Parliament and another referendum on whether to reduce the number of MPs from 120 to around 100.

He has long been an opponent of immigration at a level that he says is consistently too high.  Winston is part Maori, has a winning smile and a populist appeal especially with older voters nostalgic for the way their lives were when they were young.

The alliance between Labour and the Greens has failed to produce any perceptible improvement in their prospects.  National is out ahead, but with nine weeks until Election Day anything could happen, and early indications are that Winston might again be the man to watch.

Max Hayton is a NZ journalist with parliamentary and international experience.

print

This entry was posted in Australia and Asia, Uncategorized. Bookmark the permalink.

3 Responses to MAX HAYTON. New Zealand’s General Election, September 23 2017.

  1. derrida derider says:

    “National’s aversion to a sovereign fund that would help pay for pensions echoes the massive mistake by Prime Minister Sir Robert Muldoon, who on assuming power in 1975 killed a promising superannuation fund that could by now have made New Zealand immensely wealthy.”

    That shows a misunderstanding of the nature of intergenerational public finance, of pension funding, or indeed of what a sovereign wealth fund is. With its universal age pension and a relatively stable demographic structure there simply has never been a good economic case in NZ for compulsory superannuation (privatised taxation, if you like). Though of course the case in Australia was always almost as weak.

  2. There are several lessons in the NZ voting system that could usefully be applied in Australia. In particular, a system that results in parliamentary representation relative to popular support is overwhelmingly the case in Europe. In Australia, the National Party has about 4% popular support and more than 20 seats. The Greens have around 10% and 1 seat. Which tail wags which dog?
    The other point that could have been made is that NZ had a second referendum on the PR system when it polled more support than first time around before its introduction.
    NZ foreign policy is also worth a close look, but that is a topic for another day.

  3. Jaquix says:

    Fascinating and thank you for the explanation re MMP. I wonder if Australians would be more “contented with this system?

Comments are closed.