22 May 2015

Ideological reassignment

There are moments when our assumptions about the left/right ideological spectrum get blurred or challenged. The most outstanding of these was the Rogernomics policies of the fourth Labour government that 'outflanked National on the right'. But the Clark government made similar (if less dramatic) moves by claiming authority over terms such as 'knowledge economy'.
Another such ideological switch has occurred with National's Budget 2015. While the left have reason to criticise National's policies as watered down and insufficient efforts to address social problems, the Key government has nonetheless staked out ideological territory normally free for maneuvering by its opponents. The obvious policies that illustrate this are the new capital gains tax test, the increases in child-related entitlements and the move to leverage Crown land in order to speed up house-building in Auckland. One might add to this list the much earlier pledge by Mr Key not to raise the age of entitlement to NZ Super.
On this latter problem, Andrew Little is wondering now whether to means-test Super. This is normally an idea that emerges from the right, and shows how desperate he is getting in seeking to differentiate himself from Key.
On the other hand, it would be a mistake to see National as getting 'soft' on welfare. Their 'investment approach' (a statistically sophisticated form of targetting), the requirement that single-parent beneficiaries be available for work once their youngest turns 3 (instead of 5), and the onerous administrative requirements on beneficiaries hardly make life cushy. Getting tough on benefit eligibility, while raising the income entitlements, is putting a bob each way politically.
National's ideological ambivalence will blunt Labour's (and the Greens') policy differentiation and political attacks as we roll inexorably on to the next election. Key will always be able to say his government is addressing the opposition's concerns, and most voters won't pick over the details. Labour's new leaders have some hard thinking to do if they want to avoid seeming petty and irrelevant in their efforts to hold government to account and to present themselves as a credible alternative.

18 May 2015

Capital gains tax: Flip-flop of the century?

In its finance policy manifesto for the 2014 election, the National Party warned voters not to 'put it all at risk' with Labour and the Greens who would 'impose extra taxes' on New Zealanders, including a capital gains tax (CGT). National warned us that a CGT would be 'expensive and complicated', and that such taxes, as proposed by their opponents, 'would stall our economy and cost jobs'.
Labour meanwhile was promoting a CGT on the grounds that it was fair to tax such gains, that it would shift investment away from housing, and that it would cool the Auckland property market. That was the most prominent point of policy differentiation that Labour took to the election. John Key, however, ridiculed Labour's CGT proposal, for instance arguing that it would be too hard to determine what exactly is a 'family home' and what is an investment property.
Needless to say, Labour lost the election. They gained 25% of the party vote. But, ironically, the idea of a CGT was more popular, according to pre-election opinion polls, than the party that was promoting it.
According to a Herald-Digipoll in June 2014, almost 41 per cent of respondents were either strongly or moderately in favour of the CGT, up from just under 38 per cent in July 2011. Just under 35 per cent were strongly or moderately opposed. Labour has since distanced itself from this otherwise quite popular policy.
The National government's pre-Budget announcement of a tightening up of the CGT rules came as a surprise. So, after all, they do think the CGT is effective, fair and not too complicated? But the policy is not a copy of Labour's more comprehensive one. Arguably, it only targets investors, including foreign investors, who try to avoid the existing CGT for the first two years of ownership. It's 'just a tidy up of the tax laws', according to Mr Key. If that's all it is, why make a big pre-Budget announcement, rather than bury the policy in Budget-day press statements?
One way to knee-cap a political opponent is to dominate their policy territory. Hence, National has just run the CGT banner up its flagpole. And that leaves Labour floundering around to find the right words to oppose National's new initiative. Andrew Little can now attack the Prime Minister for his previous lack of concern about the Auckland housing boom and the effect that foreign investors may have been having on it. But he can hardly oppose the policy itself, even though Labour has resiled from its former CGT proposal. Labour left that 'property' vacant, and National have occupied it.
Debate rages at present over just how effective the government's new policy will be in taking 'some heat out of Auckland’s housing market', as its own press statements have put it. And, by the next election, we will most probably have forgotten about the big U-turn taken by National in 2015. It's possible that the CGT will become 'the new normal' in New Zealand's taxation laws, like it is in many other countries. Will political parties contesting the 2017 election be competing over who has the best CGT policy?

14 May 2015

Do we need a meddling Monarch?

Memos from Prince Charles to UK Ministers (published by the Guardian after a decade-long legal battle) reveal that the next-in-line-to-the-throne may not take the impartial, non-political approach characteristic of his mother, Queen Elizabeth. The memos reveal that Charles is quite prepared to intervene in matters ranging from badger-culling to heritage preservation to agricultural regulations.
One of the memos directly involves New Zealand. Writing in 2005 to Tessa Jowell, then UK Secretary of State for Culture, about the conservation of the Shackleton and Scott Huts in Antarctica, our future King recalls a conversation he had with Helen Clark. Although Jowell's department is, he believes, unable to assist projects "overseas", he wonders whether Antarctica isn't somehow "British" and hence not technically "overseas", and he asks her, even if it's "futile", to apply "a bit of imaginative flexibility in the interpretation of these rules."
He may be well intentioned. After all, the preservation of the Shackleton and Scott huts is a worthy cause. But, here we see the future monarch using his personal influence for a pet project and asking a minister to bend the rules in its favour. It appears that anyone able to influence him could well be able to influence public policy by pulling strings at the highest levels of government.
The most eye-popping of the memos is the one to the PM, then Tony Blair, in which the Prince attempted to influence the UK's agricultural policies in ways that would have contravened UK and EU regulations.
The UK's monarch is equally New Zealand's monarch. Queen Elizabeth has set a good precedent of impartiality, allowing the democratically elected government of the day to get on with its business. She has a right to be privately informed and advised by, and to warn, her ministers. But she does not meddle in government either in the UK or in her other realms, such as New Zealand. Her role (and the role of her appointed Governor-General) is constitutional, not political. After all, the monarch is not elected. Once the Sovereign begins to get involved in politics and public policy, then he or she could become a target for lobbying.
The publication of these memos is a major embarrassment for Prince Charles, and they bring into question his suitability as monarch. In fact, they bring into question the suitability of New Zealand's retaining the British monarch as its head of state at all. There is no reason in principle why Charles, as future King, would not seek to use his private influence over ministers in New Zealand in order to see to it that his pet projects were treated with special favour. Do we really need that?

13 May 2015

ACC: Political football du jour

The government's announcement of cuts to ACC levies has brought Labour's leader Andrew Little into the fray arguing that he would go one better and return ACC to its former pay-as-you-go model, which could mean even deeper levy cuts, at least for a while.
Since 1999, successive governments have moved ACC away from pay-as-you-go to fully-funded. The scheme now has more or less sufficient funds to pay off all future outstanding costs of current claims. In theory, the scheme could be wound up without further levies. This has meant that we (the people of NZ) have had to pay higher levies in order to amass a huge fund that (at 31 June 2014) was $27.4 billion. That's quite a big nest egg!
So, in the 2013/14 year, ACC collected $4.7 billion in levies from us. But its claims costs were 'only' $3.65 billion. On top of that surplus, ACC earned an investment income from that huge nest-egg of $1.5 billion. In short, the scheme is rolling in money. That's our money. And keep in mind that levy-payers and claimants are not two separate, competing groups of people. All New Zealanders pay into the scheme (except children, who will one day anyway). And, over a lifetime, I would guess that we all make (at least a few minor) claims. We all pay and we all benefit, and the good thing is that we do not have to share any of the investment income or the surplus with greedy shareholders or investors, because the scheme is a state monopoly.
It's easy to see from the figures that, now that the scheme is close to fully funded (and more than that in some accounts), levies can be reduced, and we can enjoy the benefits of the investment income.
In the past, I have opposed full funding, as the ACC has operated for most of its life without it, being a state monopoly. Full funding is a requirement for private-sector insurers, and is useful if the government wanted to privatise ACC. But that's no longer an issue (thank heaven!)
But, now that it is fully funded (at our expense), I would suggest that we just keep it that way. We, the levy-payers, have saved for years to get to this state, and we can benefit from the investment income. Businesses especially benefit from predictability in their budget-lines, one of which is the ACC levy. So, I disagree with political parties who want to throw ACC funding from pillar to post, as Mr Little is suggesting. Just leave it alone, and get on with the job of injury prevention and rehabilitation now, please. Oh, and thanks for the reductions in levies! We deserve them!

09 May 2015

How come conservative parties appear to walk on water?

The stunning and unexpected victory of David Cameron's Conservative Party in the UK, meaning that they will be able to govern alone for the next 5 years, has some similarities to the success of Key's National-led government here in NZ. And hence some lessons for Labour.
Why are UK and NZ centrist voters quietly sticking with the conservative option? It comes down to three things: a desire for national unity and security; perceived economic credibility; distaste for troublesome coalitions.
Middle-ground electors in both countries are feeling, it seems, vulnerable. They are still getting over the 2008 financial crisis, and they are fearful of extremists. They are willing to bear some unpopular austerity in return for the security that conservatives can more believably promise.
In the UK election, this meant that English and Welsh voters swung to the Tories, if only to counter-act the separatists in the Scottish National Party and to head off a Labour–SNP coalition. Meanwhile the Liberal Democrats were hammered severely too, as punishment, I guess, for the compromises and the problems they have undergone as a minor coalition partner with the Conservatives in the 2010–15 government. Voters have now chosen strong majority government.
UK Labour – just like NZ Labour – is thus caught between a desire to compete with the conservatives for the middle-ground issues of economic and national security, and the redistributive demands of the lower-paid. That is, they are torn between their traditional social democracy (blended with contemporary identity politics) and a need to compete on the same turf as the centrist Tories. Like it or not for Labour, the lessons are as follows:
Don't pander (in public) to minority groups demanding separatism, irredentism, or special recognition.
Prove you can work with, and lead, your coalition/support parties and keep them in line.
Show you are not going to spend our way out of problems, especially for the poor (who don't much vote anyway), and that you are committed to fiscal discipline.
Or, if you can't bear to do all of that, and would rather stick with your left-wing ideals, then expect to lose the next election.

26 April 2015

Do we really support genocide denial?

It's sad to see Turkey's dictator lash out at those world leaders who have publicly acknowledged the Armenian genocide of 1915. Turkish President Erdoğan is an authoritarian leader. He can try to ban references to the genocide at home, but he is having little success in banning it globally. After all, the Pope and the Presidents of France and Germany have, among others, used 'the g-word' recently. France's President Hollande even attended the centennial commemoration in Yerevan, Armenia.
There's little value in claiming that the Germans are in no position to accuse Turkey of genocide. Germany has owned up to its past, and so, of all countries, Germany ought to acknowledge the Armenian genocide. The Ottoman Empire was allied to Germany in the War in 1915 when the atrocities happened. Germany has a special obligation to recognise these events for what they were, regardless of how much Turkey's leaders criticise them in reply.
Of course, New Zealand remains officially silent on the genocide. This is because our government does not want to be banned from Gallipoli commemorations. According to one Turkish news website, Turkey’s president Erdoğan compared the numbers of leaders attending events for the Battle of Gallipoli in Çanakkale and those for the genocide remembrance in Yerevan. “Two heads of states went there [in Yerevan]. Thank God, 20 heads of state came to us,” he said. His guests included our PM, John Key, as well as Prince Charles.
Clearly our PM's attendance at Çanakkale gives moral support to the genocide-deniers in Turkey. How long can this hypocrisy go on? Do New Zealanders really wish to remain silent about the mass murder of 1.5 million people just so they can continue to attend Gallipoli? When we say 'Lest we forget', referring to our fallen, why do we forget the victims of the genocide that was happening in the same country at the same time?

25 April 2015

Is Key in the same boat as Len Brown?

There are significant differences, and also similarities, between Key's hair-pulling incident and Len Brown's infidelity.
In both cases, the story emerged as a statement by the woman concerned on a blog site, and not initially through mainstream media. In both cases, the facts as published online were not disputed by the man who was accused of inappropriate behaviour. And, in both cases, the blogger was obviously politically motivated, seeking to damage, if not pull down, their target.
Both stories involve a top political leader in his 50s and a much younger woman. And the public reactions to both vary greatly: from 'Disgusting, the man should stand down', to 'I don't really care'.
In both cases, Graham McCready got involved as a private prosecutor. The courts threw out his case against Len Brown, concerning alleged corruption. Mr McCready is reported to be laying a complaint of sexual harassment with the Human Rights Commission, but I would guess that that one will be declined too, if the parties concerned (Mr Key and the waitress) consider the matter resolved.
In both cases, the woman, as target (or victim) of an older man's attentions, has her name and image dragged through the media, and is ruthlessly used for political ends. We are left with questions about the subordination and exploitation of women.
Of course there are important differences too. Mr Brown's affair involved extra-marital sexual activity that went a lot further in terms of physical intimacy. This was apparently consensual, and no accusation of harassment was made. But it also raised deeper moral concerns about his trustworthiness as a married man, and many people drew a parallel with his trustworthiness as mayor.
In Mr Key's case, hair-pulling is hardly the height of sexual intimacy, but it was not consensual touching. That behaviour does, on the face of it, fit the definition of sexual harassment in the Human Rights Act, as it was unwelcome and repeated. 'Just joking' doesn't let you off the hook.
Both leaders have suffered severe political and personal embarrassment from these stories. So, the main political question is: What does this do to their reputations and political viability?
Despite the aims of the blogger who released the story of Mr Brown's affair, and despite demands from a sector of the public and from the NZ Herald, the mayor has not stood down. But he has suffered a lot of political damage, and financial and electoral support have declined. Mr Brown remains in office, but would not win re-election in 2016 if he stands again.
I have said in the past that it would be a pity if Mr Brown had stood down, as that would have been giving in to, and hence rewarding, muckraking and political blackmail. So, to be consistent, perhaps I should say the same about Mr Key as a serial hair-puller, creepy though that may be. Why reward the Daily Blog with a prime scalp?
It seems unlikely to me, at this stage, that 'ponytailgate' makes Key un-re-electable in 2017. It may make him reconsider his desire to stay on as PM, given the extent of international ridicule and invective arising from this incident. But this story does not evoke the same level of conservative distrust in him as a man, and hence as a leader, that the Len Brown story evoked. Hypocritical though it may be, sexual harassment is a left-liberal preoccupation, while marital infidelity (if publicly revealed) is anathema to the conservative right.