Just Left

On the #tppa - The Context

I've been thinking about the Trans Pacific Partnership Agreement (common twitter hashtag #tppa) for a while due to my professional interest in what is happening in international Intellectual Property Law.

This post sets out some of the bigger picture as I see it, and will be followed by a further post about the potential impact of the agreement, and then probably a final post on the implications for Labour's trade policy.

It's slightly heavy going. The takeaway point? Be concerned, and find out more.

What is the #tppa anyway?

The Trans Pacific Partnership Agreement is a "comprehensive" plurilateral agreement (i.e. between multiple countries), being negotiated between some Latin American, North American, Australasian and East Asian states (Viet Nam, Malaysia, Singapore, Brunei, Peru, Chile, the United States, Australia and New Zealand).

It is important to understand first that the TPPA is NOT A TRADE AGREEMENT. It will be called that a lot in the media, but that isn't its purpose. It goes "behind the border" and deals with a huge range of things that are about building comprehensive common standards and platforms in a huge range of areas - electronic commerce, investor-state dispute resolution, telecommunications, banking, services, intellectual property. These are all above and beyond the "trade" related aspects of the agreement.

The timetable is that the negotiators are aiming to finalise an agreement towards the end of this year, around the date of the U.S. Presidential election.

The TPPA builds on an existing agreement, known if memory serves as the P4, though it is in fact being negotiated from the ground up.

Japan, Canada and Mexico have all expressed an interest in joining the agreement, interest which has not so far been reciprocated by the negotiating parties.  The total two-way trade value between the United States and the eight other countries is around $440bn a year, making the value of the agreement reasonably small in the scheme of U.S. and global trade.

So that is what it is. In thinking about it, there are three bits of context to keep in mind with this agreement:

• the geo-strategic situation,
• the nature of globalisation and trade agreements, and
• the future prospects of New Zealand's economy.

Geo-strategic situation: is it all about China?

I am not a geo-politics expert, but it seems to me that part of the web of conflicting ambitions about this agreement relate to whether the purpose is economic, or geo-political. U.S. policy in the Asia Pacific is at least in part about the containment of China. That has to be why China is not involved in the negotiations, at least in part.

Readers will be more across the foreign and security policy debate than me, but the important point about that context is this: to the extent that economics is the core of the agreement, the U.S. will push hard for (in particular) Intellectual Property rules, as that is the main area of potential economic gain for them. The other countries will push back. Agreement will be hard to find. If on the other hand the geo-political imperative is what is driving it, then the U.S. will be more likely to accommodate reasonable economic demands from the other countries in the agreement.

Nature of globalisation: less is best.

More globalisation isn't always better.

Dani Rodrik made an argument in a recent book "The Globalisation Paradox" (a Washington Post review is here) that I fundamentally agree with. The TPPA is an example of the constant pressure to try and go beyond freeing up global trade (which I support), and into reducing the differences between countries on a whole range of fronts that up until now have been left to national decision. His view is that globalisation would have more legitimacy, and actually deliver better, if it was in essence "thin" - focused on reducing trade barriers, but leaving democratic governments to regulate the social and cultural elements of their societies as they see fit.

This appeals to me on a number of grounds. One is practical. I think that "subsidiarity" is an awful word that hides a great concept: make decisions as close to the grassroots as you can. There isn't any problem with countries cooperating to do things they can't do by themselves: e.g. freer trade, or tackling climate change, and so on. But there isn't much point in taking things they can do for themselves (e.g. choosing the balance between the interests of creators and users in the intellectual property universe) and forcing decisions on those into complex, slow, multilateral or global forums. Governments are closer and more accountable to the public, and can change things faster.

Another is principled: I think as a matter of democratic choice that most choices SHOULD be available to governments. In trade you generally both gain, but in some of the other areas agreements like #tppa seek to regulate, there can be very one sided gains that just cost some parties a lot, to put money in the pocket of another. IP (intellectual property) is the classic example. The U.S. wants #tppa states to lengthen the copyright term. That would put more money in the hands of U.S. IP producers of old, end-of-term copyrights (like some early Disney stuff) at the expense of consumers who would, once copyright expires, be able to make free use of that content. States should choose that balance, based on what is good for their people. They should not be locked in to choices made in one context that cannot later be changed.

So I suppose my head is at a "thin" globalisation model. Free trade is broadly good. But trying to use international agreements to pick the pockets of the poorer countries is not good. Taking away government ability to choose what suits a country best isn't good either.

Next steps for New Zealand's economy - the future or the past?

The third bit of context is about what comes next for our economy. We are unusually dependent on primary industry today for our exports and our standard of living. We have a very efficient agricultural sector in economic terms.

I don't think that that represents our future. I apologise in advance for the generalisations here, but this is trying to set out some big themes.

Here's why it isn't our future. We are hitting limits. Environmental limits mainly: but also physical ones. There isn't a lot more land to use, and the rising intensity of use of existing agricultural land requires ever increasing inputs - that add to the pollution being caused. Also, our agriculture industry is quite polluting, and is resisting the imposition of simple pricing mechanisms that would force them to start down a less-polluting path.

We can make our best future as an economy by adding value through innovation. A lot of that will happen in agriculture, but it can also happen in other areas: design, music and culture, high value manufacturing, business services, electronic commerce, high value tourism etc.

Those sectors tend to be faster growing than agriculture, and importantly, they are less capital intensive than agriculture - and they create more and better jobs for a given investment than agriculture does.

One way the #tppa could fall would be to give us some limited goods market access to the U.S., say in dairy and in meat. The cost would be tougher IP laws that hurt those new economy sectors I mentioned above.

I think that would be cutting off our future. We should not sign up to an agreement that advantages the old-economy industries with relatively limited growth prospects, and puts barriers in the way of new-economy industries that represent cleaner, greener and richer jobs for people who live and work in New Zealand. We would be doubly disadvantaged: relative advantage would be with industries with a slower growth path, leaving all of us worse off; and the chances of upgrading our economy into a more high-tech and high-income zone would be lost to us.

Conclusion

So that presents three areas of context. There are others that I don't have time to cover in any depth. There might be nuance you care to share with me that I haven't thought of - I'd love to hear from you if that is the case.

My view is already probably quite obvious. I think there are major risks to New Zealand's future present in the #tppa, the Trans Pacific Partnership Agreement. I'll try and get to some of those specific concerns in the next post, probably over the weekend.

Fiscal responsibility

There was a nice set of numbers in a Stuff story yesterday about net Government debt levels in the past few years:

Net core Crown debt in $NZ:
2000: $25.9b
2002: $25.3b
2005: $19.9b
2008: $10.3b
2011: $40.1b

Forecasts:
2012: $53.8b
2014: $67.8b
2016: $72.5b

These numbers show Labour's prudence in office, and National's profligacy.

Yes, there has been damage to the government's financial position through the Canterbury earthquakes and the global recession. Those are granted. But the chipping away at NZ's debt levels has also come about through wilful cuts to government revenue through tax cuts to those who need them least, only partly offset by tax rises on those who feel the pain the most.

The story contains a broader narrative about public impressions of who is responsible for the debt.

I've never understood why anyone would think it's a left wing thing to run up public debt.

The Clark governments in 1999-2008 weren't exactly National-lite, and they paid off a large volume of net debt. The Nats in the 1990s left it more or less where they found it; Labour in the 1980s and National in the 70s both lifted debt significantly.

Modern social democrats aren't interested in running unsustainable deficits. Given the New Zealand private sector's obsession with borrowing to the hilt, it is more important for the NZ Govt to be conservative fiscally than is the case for many other countries.

That is why our policy last election was a mix of tax increases and spending restraint that would have seen borrowing a little higher in the short run but lower after about four years, and for all time after that.

David Shearer has decided the policy should avoid the confusions inherent in the 2011 pledge to re-start NZ Super fund contributions while the deficit still exists. That's fine. Since National is promising surplus by 2014/15, which Labour was too, I anticipate the incoming Labour led government in 2014 will pretty quickly be looking to start the pre-funding again.

Fiscal responsibility is what we are all about -- along with a broader responsibility to society and the economy which isn't part of National's DNA.

We will on average run higher levels of government spending and tax than National, because we have different judgements about where the line should be drawn between individual and community responsibility in some areas, and because we use the State to undo the inequalities the market creates by its ordinary operation.

We will be tougher on pollution than National because we don't believe in giving some sectors a free ride that they don't deserve.

We will be more careful about preparing for the upcoming baby boomer retirement and the costs it will impose on super and health spending. Thus our painful pledge to raise the retirement age over time; thus the KiwiSaver initiative; thus the creation of the NZ Superannuation fund; thus our determination to run fiscal surpluses and pay off debt.

Two final thoughts.

First, external prospects. If the world enters a prolonged low-growth period, then Labour will have to do tough thinking. It is easy to be fiscally responsible when revenue is rising through economic growth. When it is not, tougher choices will be required -- and our take on them has to be clear well before 2014.

Second, the broader economic fight between the parties isn't on fiscal issues - it's on how to grow and develop. The wider structures that are driving poor performance in our economy - flawed tax regimes that exempt capital and incentivise non productive investment; limits on firm scale growth due to lack of access to capital; an under-regulated labour market that keeps wages low and lets firms avoid tough choices about productivity - are the actual real difference between Labour and National these days. Even in a world of low growth, doing these things better will leave New Zealanders better off.

As David Parker said in his excellent pre-Budget speech this morning: "Change nothing, and nothing changes -- but don't blame Greece!".

A strident attack on working Kiwis

It was sobering at the Labour regional conference this weekend to hear from men working at Affco about the despicable tactics that the Tallys family are employing to try and bust the Meatworkers union.

This week's leaks of cabinet papers showing an extremist attack by the National government on the few remaining collective bargaining rights that Kiwis have should worry everyone who works, or who wants to, in New Zealand.

Labour has to stand up and say that we'll undo these changes if they go through. We have to go further and propose a much better system for industrial law and employment relations.

If these plans come to pass, the only outcome is lower wages and less hope for people all across the economy.

Two stories (Stuff, Herald) outline the plans.  They include:

• Not requiring employers to conclude collective bargaining
• Allowing employers to opt out of multi-employer collective bargaining
• Allowing employers to initiate bargaining on their own terms
• Removing the thirty day rule that sees new employees covered by a collective where it exists.

I'm not an employment law expert. People who are tell me that the practical effect of the first and third bullet points will be particularly terrible. That makes sense: if bargaining doesn't have to lead to an agreement, employers can de-collectivise workplaces at will. The idea that workers would maintain the right to organise and fight for a fair share becomes a joke.

This is all in the context of a low wages, deunionised workforce in NZ. Our problem is not mighty unions. It is mighty employers who, frankly, verge on taking the piss when they argue unions are the problem. You should see how they snigger at how much people have been taken in by stupid arguments about "unions being the problem".

I have seen it. It makes me sick. It has to change. Labour and the left have to change it.

New Zealand has a weak employment rights framework. The Employment Relations Act passed in 2000 did not really fix this, and National has already weakened this since it won in 2008.

The consequence of those weak rights at work is low pay. One of the consequences of low pay is low investment and low productivity. Why invest time and money in thinking of productive ways of organising your business, if labour is so cheap you don't need to?

The weak labour law framework isn't only about wages, it's also about power.

The CTU has a nifty little graph that shows the share of our economic output that working people like you and me get in wages.

(Hat Tip for the graph to The Standard.)

It's been falling since the Rogernomics Revolution. But look at what happened from 1991 to 2000 or so - it fell further. Look what happened after that. It began to go up. The sharp uptick since 2008 is about the collapse in the economy caused by the global financial crisis. National's changes haven't yet attacked the core of collective bargaining.

You can also notice the Australian pattern of a much bigger share of the GDP being wages. This helps explain why wages are so much higher over there. It's not just that Australia is richer: it's that a bigger share of that bigger pie goes to people in wages.

That is what Australians gain through stronger rights at work, and through a legal framework that guarantees those rights. It's not about Aussie unions per se, which also have problems, but about the whole picture.

What do Aussies get? A bigger share of the pie. The fact of that means Aussie businesses have to be more productive, have to invest more, have to think about how to sell more of higher value. They do. That helps the pie get bigger. That is a virtuous circle.

This is a power question. National has been more effective than the Coalition in Australia in redistributing the fruits of people's hard work away from the people who do the work, and into the pockets of those who own business. They smashed the union movement up in a way that it has not recovered from, in a way the Aussies never managed to do. The graph says it all.

It is also a question of values. Collective bargaining and fair rights at work are about the idea that as people, we work together. We can cooperate. That the world of work is one where we have rights, where we aren't slaves to the boss for whatever hours we are paid for, and where we are giving our time and effort in exchange for decent work, the return is decent wages.

The Australian union movement managed to tap into that set of values around mateship and a fair go for all Australians when it united with the Labor Party to defeat and destroy "Work Choices", and defend fair rights at work against a vicious attack.

As a member of the New Zealand Labour Party, I wish we'd gone much further in putting in place fair rights at work during the 2000s. This attack by National is an opportunity and a threat.

The threat is that we'll mumble about it in response, and leave National and employers thinking that they can keep going down this track.

The opportunity is for us to define this as an attack on very Kiwi values of working together to make the country a better place. An attack on our opportunities to get decent wages here instead of having to leave for Australia to do it.

That is an opportunity we should take up.

The Hope Project: changing Labour's organisation

Yesterday I said that overhype can lead to disappointment, and foreshadowed what will happen to John Key as it becomes ever more obvious that he can't deliver a "Brighter Future". I was asked by a few people to expand on what Labour has to do.

Labour is going to need to pitch as the party of the future and as the party of hope, to reconnect with past and possible supporters.

Too many of those people don't think that is what we are about. Some of our own conduct and choice of messages has helped create that impression. That is why we need to change.

I'm going to focus on the party outside parliament, because that is where my involvement is.

Our president, Moira Coatsworth, foreshadowed the review we are now doing in May last year. David Shearer is the co-sponsor and the review has been widely supported across the broad leadership of Labour.

It was clear to Moira, and more broadly, that Labour's organisation needed a solid going-over, because it simply isn't working.

For those who quibble with that, consider:

• membership trends
• operating budgets
• party vote trends
• electorate vote trends
• membership involvement in setting Labour's agenda and policy

Those have seen our vote float between 27% and 41% in the past two decades. The centre left vote has also, arguably and depending on definition, shrunk pretty consistently since 1996. It isn't that all parts of the picture are bleak, but that the whole combo is.

My view is as a serious party seeking to change the country and lead governments, we need to peak our vote in the mid to high forties. Today, the Labour party doesn't have the organisation or the programme to achieve that.

That is why over the years (here in 2008, here in 2010, or here in 2011 for instance) I have said that Labour needs to open up: it needs to be more in touch with the interests and mores of people who do or might support it. It needs to be relevant to all those people, seen favourably by them, and able to organise them.

So I was pleased when the review kicked off this year with a listening phase. It wasn't that the wise heads defined the issues and consulted about them: instead the broadest set of areas was floated, and the party listened. It really listened. Members of the review team travelled around the country and heard what people had to say.

To most normal people, that sounds like an obvious way to start.

To most people in politics, it is extraordinary.

The review group, under tight limits of time and resources, pulled together over 1000 submissions and the results of dozens of discussion meetings, to produce its report for consultation at the regional conferences.

You can find the report in PDF format here.

It's a very interesting first pitch. It deals with the need to keep values up front in the party and to improve the internal culture where this is needed.

It wants us to look again at local structures, MMP campaigning, the democratisation of policy making, representation, leadership selection and more.

I think it's a thorough start and the feedback at regional conferences is really positive so far. People are aware of how big the mountain is we need to climb, but feel the proposals made so far are starting off in the right direction.

The test for the party is what comes next. After the regional conferences, the review team has about a month to tie down concrete proposals for annual conference. As a member of the party council that will receive the report and sign off final plans, I don't know exactly what the review will come up with. Like all my fellow Councillors I'll be looking forward to seeing it.

The test we will face is not to decide whether or not to change Labour so it can win. It isn't to make those changes in a technical sense, because we know we need to do that.

The test is going to be working the changes we agree are needed into the work that thousands and thousands of volunteers and people across diverse communities do every day to make Labour the party that it is.

I'm confident that substantial changes, based on our values, will get support and will be a major landmark on the way to a win for David Shearer in 2014. Implementing it will be the hard but satisfying work of the next few years.

That'll be the Labour party organisational side of things sorted and on the up.

In a political world marked by dashed expectations, which is what 2014 is going to be all about, getting our organisation right is a vital part of putting together a hope project that can really change New Zealand.

Boy does the country need it!

Next post in this short series will talk about the broader strategy we need to follow to make best use of a stronger organisation.

Where's the hope? Obama and Key

Do you remember the hype of the 2008 General Election campaign? The American one, I mean, where "YES WE CAN" was triumphing against doom and fear.

I do. I remember it vividly. Most people do. It had an effect here of course: the Labour government of Helen Clark was on the way out and the Time for a Change pop-culture meme was being butressed by the amazing rhetoric and iconography out of the States.

Obama's problem since is that the U.S. political system does not allow a President much say over what the country does. Combine that set of constraints with the worst global economic crisis in eighty years, and you get disappointment.

Expectations had flown so high. The chilling winds of global turmoil and Obama's inability to meet them -- actually, inability to ever even come close to meeting them even if the economy had been in good times -- has the counter effect today.  Many people who were stirred to enthusiasm and hope have had their hopes dashed.

We all know, from our own lives as well as our own politics, what happens to dashed hopes. Especially when they are dashed by someone else.

Sooner or later we tend to find someone to blame or hold responsible, and we take it out on them.

It doesn't happen fast and it doesn't always happen. But when it does it's generally pretty intense and it doesn't often then get rekindled.

How is this relevant to Mr Key?

The National government Mr Key leads is preparing for its fourth Budget, which will be announced next week. It's a budget of failure: National's yawning budget deficits and willful tax splurges for the rich have left a party whose priority is cutting things with little choice but to cut. Or at least not to grow.

Add to that the continual bad news about the rest of the economy and the headlines that are flying around (e.g. Fed-up Kiwis flee to Oz en masse), and the Government's swing to the right since the election, and you're starting to see some similar things here.

Mr Key has far more levers at his disposal than Mr Obama does. He is far more responsible for the absence of progress than his American counterpart.

John Key and National promised a brighter future. All they've delivered is the opposite.

The public have sussed this out. The changing tone of public debate is accelerating the slow change in opinion.

So where's the hope?

Labour couldn't find the inspiration in 2011 to hold out a hopeful vision of the future.

If we can get our heads around that and do it, then 2014 is going to see a change of government.

The one thing voters really don't like is being the victims of false promises. As capable a politician as John Key is, he is not going to be able to distance himself from the core of the agenda that got him into office.

The long downward slide, in other words, has begun.

Next week's budget will be another increase in the slope, because it's all about failure, zero, restraint, cutting, tough choices. Not a skerrick of hope in sight.