Just Left

Lively times!

So... a pending announcement that a new left wing party, the Mana Party, is to be formed...

... and a creaking sort of wobble-stumble-charge from Don Brash towards the cadaverous remains of the ACT Party, which has expired due to the political management skills of its current leadership team...

... and the promise that the hard-right Dr Brash, who seems entirely out of touch with humankind most of the time, will set up his Very Own Party should he not succeed in taking over ACT...

... and the intriguing campaigning that Winston Peters has begun to do again this year...

... and the ongoing implosion of the Maori Party ...

... and National's possum-in-the-headlights response to global economic crisis and the Canterbury earthquake...

It seems Brash won't get ACT and will get his VOP after all. I hope that he runs Banks in Epsom and finishes off Hide and ACT, simply because they have outlived their origins and no longer stand for anything. (The personal satisfaction that would come from rump-ACT meandering on isn't worth the risk.)

The extremism of such a party is clear for all to see. It will be a great thing to highlight to voters wondering what a second term National government would bring.

The challenge of a new left party though is a different kettle of fish. The big fights between Labour and Alliance people happened before my time - I was at the kiss-and-make-up conference in 1998 where Jim and Helen publicly signalled they could work together.

The scars of that time are still there. I hope that whatever new party emerges can spend its energy joining a broad coalition for change, and I hope that we don't see a descent into intra-left warfare like we did in the early 90s.

Who said this would be a boring year in politics?

Republicanista

Of course, I am a republican. I don't believe people should hold any job in public life because of who their parents are. It offends me deeply that we have a Crown and not a People as our symbolic point of reference.

So I was pleased at this morning's Dom Post editorial, and pleased that Republican Movement people had a banner to make a point at the Supreme Court's opening yesterday. 

I would like to see us have a commission look into all the details that would be needing sorting should we have a republic, and a broad public conversation followed by a couple of referenda to make a call, somewhere around the middle of this decade.

The hardest question is whether we clip on a republican look to our monarchial constitution, or whether we have a more thoroughgoing look at the bonds of citizenship and affection that bind us together as a political community - and the role of the Treaty relationship in that new republic.

Just because a question is hard does not mean it should be ducked, so I am glad that the issue's on the table once more.

- Jordan

What must Labour do?

As the fog of war lifts, you can see more clearly the contours of what has happened in the recent past.

We lost in 2008 for reasons I have canvassed before - people thought we were focused on issues that weren't important to them; we'd been in office for a long time; there was a recession; people had fallen out of love with our political style; some of our policies were not working out or were unpopular; and failures of political management added on top of this combustible pushed us over the edge.

That's what we did wrong. The Nats also did things right: they really did move to the centre, and they selected a leader who people like. Actually, they *really* like him - for the time being anyway.

We do have strengths though. People generally get the message that we ran the economy well, that health and education got better, that we ran a foreign affairs policy people can be proud of, and that we had a capable government that was doing its best for the people.

The Labour Party thus enters 2010 in a reasonably good position. Last year we managed total leadership change in the caucus and the organisation, we managed to get our fourteen new MPs working well, and we spent a lot of time out around the traps listening to people.

Our task this year, to be blunt, is to listen to what people have been saying, and to go beyond listening, and into reflecting back the things we are hearing and seeing what people think. Instead of listening and saying "that's nice", we have to say, "we've heard you and this is what we think."

That's policy, in some areas, but it is also in the politics or statecraft of the party. For better or worse, the fifth Labour government was a baby boomer government. The political methods of the 70s and 80s were those which ran it: it was tightly managed and focused.

I get the sense though that people are looking now for something a little different. Some in Labour look at Key's hands off approach and see a weakness. I see a strength. The rise of ICT, the end of "deference" towards authority, and growing generations of people who are as comfortable online as offline mean that a political party that is centralised and top down cannot really capture the public imagination.

What Labour must do is turn itself inside out. As we say "this is what we are hearing, what do you think?", we also have to invite people in to join with us and help shape what we are doing next. We have to use the best technology there is to do it, as well as the traditional means of face to face and direct mail politics. We need to be the party that people see as grassroots based, and where they know that if they want to raise an issue or a concern, it will filter through to what our policy is and what our politicians are saying and thinking.

We have to do this if we are to be relevant, and if we want to win there is nothing more important than being relevant.

When people broadly think that the Labour Party is the party that they can shape, that listens to them, and that reflects their concerns and hopes and aspirations in the nation's politics, then we will know we are on the right track.

It's not about rejecting what we did when last in government; it's about setting up the next government in a way that is relevant to people.

I'm looking forward to seeing how this agenda plays out over the coming months.

- Jordan

2010!

Hey folks, Happy New Year and all that jazz. The naughties are done, and the tens have begun.

Back in August I made some foolhardy promises about how much writing I might be doing. Hasn't happened. I was still too busy with other things - an ongoing restructuring at work, thesis work and of course Labour Party activity.

After a solid long break though I am feeling a little more loquacious, and so I hope to be offering a few more things here in twenty-ten as we're all calling it.

Last year politically was interesting. For me the biggest plusses are two, one found inside Labour and one found in the Government.

For Labour, the big plus is that we've resisted the historic tendency of left wing parties to undergo a round of infighting after losing office. Losing elections sucks, and the idea that people might like to have it out with each other and lay blame etc is not a surprising one. Problem is that it's self indulgent crap, and not what voters expect. The British Labour Party is doing that already, in advance of losing its election this year, but we aren't - and we won't. That's a relief.

The government is a big plus because it has shown firstly that it isn't a bunch of radical libertarians, and secondly that it doesn't really know what it wants to do. The first is good because it means John Key's campaign was honest. If I was an unkind man, I would describe him as a sheep in sheep's clothing, but I am not, so instead I will say he's an amiable, smart guy who is doing what he said he'd do.

The "what should we do next" is a plus because eventually people will tire of a government they sense doesn't have a plan. New Zealand faces lots of challenges that the government can play a key role addressing. This government already doesn't look like it has the ideas to tackle some of the biggest - particularly our economic situation, which is a theme I will come back to again and again.

As I observed back in August, the focus of my writing will be on Labour and on issues. It won't really be on the Government or the National Party, or their hangers on. Partisan rants will have to come from other authors, I'm afraid.

I'll be popping up now and again. I've got a few pieces on Labour strategy, the lessons of economic geography, broadcasting policy and others that I am chewing on. If I get one decent piece out per week, I'll be happy.

Best of luck for a great 2010!

- Jordan

Flat tax ruled out

I'm pleased to see (Stuff) that John Key has ruled out the adoption of a flat income tax in New Zealand.

Flat taxes are a nirvana of the fringe right. They increase the income of high income earners and decrease that of low income earners compared with a progressive income tax system - in other words, they make life harder for people on struggle street and easier for people who already have it easy.

The supposed economic benefits may be there in theory, but in practice the progress of an economy is about much more than the structure of its income tax system. New Zealand's economy has been held back by being treated as a branch economy by foreign investors, by low wages that have come in part from weak unions and a de-regulated labour market, by a lack of public and private investment in science and innovation, by a lack of market penetration by our largest firms in foreign countries, and by a monetary policy regime that just doesn't deliver a reasonable real exchange rate position for export growth.

Anybody who thinks that a regressive change to the tax system will fix those problems needs their heads read. It's reassuring that the Prime Minister is not one of those people.

Jordan

Referendum it is(n't?): National isn't listening.

Labour Leader Phil Goff is reported calling for a referendum on the proposals for reform of Auckland local government. His media release on the subject is here.

The National-ACT government now faces a simple choice: will it let Aucklanders have their say, or not?

If the answer is no, then National isn't listening. 

I had some sympathy with the Royal Commission drafting simple legislation that didn't include the consultation processes that are already in the law, because it had consulted on what it was proposing.

National tore up the Commission's report. It is proposing a new model that has had no consultation at all. Aucklanders deserve real input into that, and if the model stands as proposed by the Government, then we need the chance to vote it down.

National-ACT are already sending signals that they don't want a referendum. What are they scared of? The people making a decision?

Pretty strange thing for listening politicians to do, isn't it. Oh, wait - they aren't listening after all...

Softening us up...

The coverage this morning (Stuff, Herald) that forms part of the pre-Budget PR activity by the government should be putting all progressive New Zealanders on alert.

There is no question that the economic situation is serious; no question that the Budget deficit is going to be very large; and no question that because of the decisions of households and firms over many years, New Zealand's net international position is highly indebted and restricts greatly the opportunity for government to borrow.

Those things are all true. 

So is this:

"You can't cut your way out of a recession."

Thus spake Alistair Darling, the Chancellor in the UK, in the run up to this morning's British budget. He is right. You can only grow your way out of a recession. Cuts - to public spending in particular - will make the problem worse, not better. If the government uses this Budget to make cuts to public spending, then it will deepen the recession and create higher unemployment.

What should they do?

• change the tax cuts just given from benefiting the highest income earners, to benefiting the lowest income earners - and probably don't give major new tax cuts in future.
• Invest some money in making sure that there are job and training opportunities available for those who do get laid off during the recession. 
• Focus on economic growth and, if required, tax increases to stabilise and then reduce the Budget deficit once growth resumes - not before. 
• Protect and promote the public services that people need during the downturn, rather than cutting them. 

Most important is the focus on growth. Cutting spending during a recession will worsen the recession and increase the permanent loss of income, the permanent damage of unemployment, and slow down the resumption of growth. It should not be the approach taken. If the international funding constraint means that the Budget deficit really does have to be reduced, that has to be done in ways that do not affect public services or flows to households. Public sector investment is the obvious one to squeeze in such a situation.

  
What I fear is more likely is a Black Budget, which will follow National's traditional agenda of cutting the state and offloading costs onto individuals - especially those with the lowest incomes. So look out for higher tertiary tuition fees, "adjustments" to state housing rentals, cuts to community and voluntary sector funding, further sackings of public servants, constraints on school operating grants, reduced funding levels for Health Boards compared with plans, and so on.

I also expect that National will cast Labour as the villain of the piece, blaming us for the recession in defiance of the obvious effects of the financial crisis. They will simultaneously deny Labour any credit for the low levels of public debt and prudent investments that were made in the course of the past nine years. That is what governments always do, fair and accurate or not, but it's still moderately irritating.

Finally. Someone on the radio this morning mentioned possible privatisations to help finance the deficit. That is just dumb. Selling assets to meet a short term budget deficit is madness. You borrow or you tax. You do not sell out the future.

The Withering of the Private, and the Growth of the State

In the 1990s, Simon Upton and Michael Cullen had consecutive essays in NZ Books. Simon’s piece was called the Withering of the State, if memory serves, and was a classical liberal defence of private over public. Michael’s was a moderate and sensible 90s social democratic response, which avoided the flummery and triangulations of “Third Way” rhetoric and practice to an admirable extent.

Those two essays, more than ten years old, came to mind as I was recalling an argument with a mate in Sydney about the state government’s attempts to privatise the electricity generation system. The argument was that massive new investment would be needed in generation assets, and that the state’s budget could not cope with the demands. Far better to privatise that problem and leave it to the market. 

I am not an instinctive privatiser, and didn’t really buy the argument that privatising the assets would save anyone anything much. The investment would still need to be found, and the citizens of New South Wales would still need to pay the cost. The question was which would be cheaper in the long run, and government credit often is so long as the companies involved are not badly run.

The reason, in turn, that I was recalling that conversation was an essay by John Quiggin about the social democratic response to the financial crisis. He makes the case, very briefly, that the collapse of financial liberalism as a governing project means a new opportunity for social democracy as the most rational way of managing the risks created for people, families and communities by capitalism. 

In particular, he sees a permanent, larger role for government in both managing a more restricted financial sector, and in providing more human services to drive employment and to meet the demands of the public for higher quality public services.

The relationship between these rather disparate points of interest is simply this. The global financial crisis has kicked the stuffing out of the idea that the market is always right and that government is always the problem. 

That argument was never true and never reasonable, but it was the orthodoxy. Now though the fact that it wasn’t true is too hard for the public to ignore. The prophets of the past have been seen for what they are, and their influence over the shape of things to come is at an end.

Now that we can sustain a healthier and more nuanced debate about the relative strengths and weaknesses of the public and private sector, we should be able to build a global economy – and one in New Zealand – that is less susceptible to a repeat performance. Additionally, it should be an economy that is more in line with social democratic aspirations about a more equal and fairer society.

In those nuanced debates, one of the interesting ones is: how do you finance infrastructure through private involvement (telecoms, electricity, sometimes roading, sometimes water, sometimes ports, sometimes airports) when the massive flows of private sector investment capital that have provided so many of them are starting to dry up?

I recall attending a conference organised by NZCID in Auckland last year, where there were several bank economists (of all people!) who were arguing in a sense that the financial crisis had shifted the relative costs in favour of public investment, and against private investment in such goods. Governments’ cost of capital advantage had increased as the risk-aversion spread further through the system.

Now I beg to suggest that that risk aversion is going to be a long term change, and that we are not going to again see such a ready supply of global capital to finance investment. The state is going to have to play a greater role, whether it is in the New South Wales energy market, or whether it is in New Zealand (and Australia’s) new broadband networks, or in other areas of infrastructure.

So far from the withering of the state that Don Brash, Ruth Richardson, Roger Douglas and co wanted to see, and which Simon Upton wrote of so eloquently, we will instead see a withering of the private. The state is on the move, its relevance more clear and more vital in a day to day sense than in the quiet and easy years of recent times.

A final thought. The New Zealand Labour Party needs to take serious looks at these issues as it develops its programme for the 2011 election. The liberal straight-jacket that was part of Labour’s economic agenda in the 2000s has broken up, and times have changed. 

Will Labour change with the times? If so, how? (I suggest yes, and carefully.) National has clearly changed. It is too early to know what into: what is clear though is that the worst excesses of the liberal fundamentalism of the 90s are being carefully painted out. We will not know really until next year’s Budget whether that is an act or whether it is the real thing, but either way Labour will still need to change. An interesting project for the next three years.

Making oneself think, and repeating the point

Blaise Drinkwater has a new blog, on which one of his posts was an analysis of my Tuesday post on National's value-less government. Blaise is a smart guy: his blog ought to be well worth reading.  He links to a post I did in 2004, which talked about the role of pragmatism in politics.

Re-reading that post, what strikes me is that over four years and a bit, my views have not changed much. In that typology, I still define myself as a Group 2. My post on Tuesday defined the fifth National government, to date, as being Group 3.

I also don't usually talk about the audience for posts I write but in this case I'll make an exception. As a centre-left activist I have heard too much complacency for my liking: too many people saying "National will revert to type, don't worry."

They are wrong, those people, and I want my fellow lefties to consider the opposite extreme: that National might stand for nothing.

There is a good tactical reason for this: National would be hardest to beat if indeed it would do anything, and indeed stood for nothing. My view is that they are closer to that (than principled extremism) than they have been for some time, and that that is why they did well in the election and why they will be hard to beat.

What the left needs to do is have a project and a campaign that can take on the Nats and beat them in 2011 no matter how hard that is. The complacency of "revert to type" thinking makes inventing and running that campaign harder, not easier.

It is far better, after all, to overestimate your opponents and to think them hard to beat, than to do the opposite. 

That's why I wrote the post: as a wake up to some of the left readers here.

The strange thing, which I alluded to yesterday, is that instead the people it has got going are on the other side of politics. From the tenor of their critique, they reacted more to the slightly over-puffed rhetoric and swipes more to the substance.

Question is: where's the left? Do you lot agree with my view, of steely pointless pragmatism? Or do you think there is a Douglas ghost ready to ooze out? Or some combination? Or another answer altogether?

Is That It?

Matt Hooton and Laila Harre were bemoaning the lack of a narrative for the new government on the radio on Monday.

Here's my narrative: 

IS THAT IT?

It applies to two things today:

Resource Management Act

National's proposed changes to the RMA should be held up to the test that Nick Smith set for himself on the radio this morning. He said their aim was to not change the decisions that get made under our planning law, but instead to simply speed up the process. 

That's fine for me: efficiency should be improved whenever it can be, and public services (of which planning is vaguely a part) should always be aiming to become more user-friendly.  National's steps away from their earlier daft promise to re-write Part II of the Act also help with hoping that Smith might be right, and that this is not a gutting of the Act.

But: is that it? I thought the RMA was "fundamentally flawed" and "a handbreak on growth". If that sort of rhetoric is true, surely the whole thing should be abolished and the market allowed to rule, as ACT would like?

SME Package

While Kevin Rudd throws $43bn at the recession, John Key's government proposes a few tweaks and bells and whistles that will make some marginal differences here. I have not looked in detail at his proposed changes, but the overall summary in the media seems to be, "that's nice but why can't you do more?"

What we know already is that Labour's last Budget provides the real foundation for the injections of spending power and investment the country needs to keep the worst of the crisis at bay. It is not Mr Key's fault that there is little he needs to do.

But: he needs to say so. He needs to come out and say: "Look. Labour's last budget did most of the heavy lifting in responding to this financial crisis. The spending increases and tax cuts were very big, and they are working with the RBNZ's interest rate cuts to do all that government can really do at this point."  If he doesn't say that, then I and others are entitled to ask: "Is that it?" For if he won't acknowledge that then he must have more up his sleeve.

None of which is to say there may not be need for higher debt and more spending, or that the government hasn't planned what it might do. Labour's May 08 Budget was written in a different context to today. We have plenty of room to move in terms of public debt if we need to -- so long as people will keep lending to us, that is.