I'm not surprised that National would continue to hand out a huge subsidy to farmers.
The thing that gets me is the irrationality of it.
We as a country chose an ETS because we thought that the market should be free to work out how best to reduce carbon emissions. The logic was that it would be better for firms and producers to face a price and allocate resources, rather than trying to regulate their specific behaviours.
It's very public that GHG emissions from agriculture can easily be reduced. Tweaks to farming methods, grass choices and so on can make a significant impact.
Thing is, farmers aren't going to do them without facing a price that induces them to move. They just aren't. What kind of business would make changes because it's the nice thing to do? Not many, if any, to snaffle Scribe's words.
So by keeping farming out of the ETS, National is blocking innovation -- or, worse, telling New Zealand farmers they aren't capable of innovating.
Both are poor logic, to put it politely. Townies like me will keep paying to subsidise wealthy farmers, and that's somehow presented as good for us.
There's a simple word for that: bullshit.
The same word applies to National's broader track record on the environment.
Like most of us, I suspect, I gave Key and co the benefit of the doubt when they came to office. I hoped that under the GreenWash of Blue-Green National, and the rhetoric about "balance", some things would change.
I was wrong.
Oil, gas and coal are the enegy priorities. Renewable energy is on the back burner.
ETS weakened for the second time, and agriculture left out.
Monstrously bad legislation to regulate the Exclusive Economic Zone, weaker than the already weak Resource Management Act
Continued mineral prospecting in protected areas.
Support for Solid Energy's insane lignite plans in Southland.
You will have your own list of things that matter to you.
The greenwash has rubbed off the eyes of all but the most dedicated cheerleader of the government.
National's balance is between environmental exploitation and public opinion. They will do whatever you let them get away with. At the moment, that's pretty much anything.
So the super debate is heating up. I have a question for you:
Does economic growth solve our Superannuation dilemma?
I've heard arguments both ways: the wages link seems to militate towards seeing it as a problem; the cost of healthcare always gets a bit sidelined; we don't actually know with great certainty the demographic future.
It has been a busy week in politics. One particular debate is worth pulling out, though not for reasons you might expect.
The Fighters Line Up
On Monday, Chris Trotter wrote a post called "Refugee Status", arguing that Labour is (to his mind) making a mistake in pitching to get votes off National rather than making big calls and big politics that will motivate the 800,000 who didn't vote in 2011:
"Too small and too timid to go after the 800,000 New Zealanders who did not bother to vote in the 2011 General Election, Labour’s strategy for 2014 appears to involve transforming itself into a refugee camp for disillusioned, disaffected, or just plain disgusted National Party voters."
It followed a related post from last Friday, called "Be Careful What You Wish For", where he appeared to argue that his identified trend of Labour moving to the centre to get voters from National would lead to a very difficult government between Labour and the Greens, should they form a coalition after 2014:
"As Labour’s more adventurous supporters abandon David Shearer’s sprawling centrist encampment, their places are being taken by refugees from National’s suddenly inhospitable political territory. If this process continues, the ability of both the Greens and Labour to negotiate a workable coalition agreement in 2014 will steadily diminish.
"The Greens’ planning up until now has been based on the assumption that Labour will remain a distinct political destination: a party whose foundations are sufficiently solid to carry the weight of a joint, red/green, policy platform. But what will happen to Labour’s foundations if Mr Shearer decides to make his erstwhile National supporters feel more comfortable?"
Josie Pagani, sometime Labour candidate and occasional commentator on RNZ's Nine to Noon show, responded - more to the Refugee Status post from Monday - with a note on her facebook page criticising Trotter's views:
"Chris Trotter’s latest column attacking Labour for being a ‘refugee camp’ for voters is infantile.
"I grew up in the 1980s in England. I watched the left eat away its support for nearly twenty years by blaming the working class for not voting Labour. “What on earth is wrong with them?” they asked.
"Actually it was worse than that. They used Trotter’s type of rhetoric, pretending they stood up for a ‘real’ working class, but they actually despised working people, looked down on their values, and enough working people understood that and elected Mrs Thatcher.
"These were wilderness years for Labour. It lasted decades."
"Reality, however, is made of sterner stuff. Which is why the only social democrats who possess the slightest right to describe their time in office as “successful’ or “history-making” are those who left the society they presided over more equal, more free, better housed, better educated, in better health and working for higher wages in a union shop.
"Mr Shearer may win in 2014, Josie, but if, when he finally leaves office, New Zealand is a less equal and a less free country, whose working people are still living in damp and over-crowded houses, and which is still failing to address the educational needs of Maori and Pasifika students, still making people pay to see the doctor, and still allowing workers to be bullied into signing individual employment agreements in non-unionised workplaces, then I ask again, as I asked in the posting which so upset you:
"What will have been the point? And who will notice the difference?"
"In replying to my criticism of his post, Chris Trotter reveals he doesn’t like modern social democracy.
"He’s entitled to be disappointed by every social democratic party in every developed liberal democracy if he wants – but he shouldn’t pretend that they are all selling out, or abandoning their principles.
"He says talk of “hard work and personal betterment” is the language of Labour’s opponents. In this he is wrong. Since it was formed Labour has fought for the right of working people to have the same opportunities as someone born into money or privilege."
Got all that?
Clear as mud?
In many ways, the above exchange typifies all that is wrong with debate on the left. People make a point, respond, respond again (all without really trying to dig into what their interlocutor is talking about), make assumptions, sparks fly, positions become entrenched, and you end up with a reasonably prominent pair of commentators fighting over... well, over what?
I thought that both Josie and Chris made some reasonable points, and that in doing so both of them hit on some critical debates Labour and the left need to have as we settle on our strategy for 2014 and beyond (sometimes tangentially):
How do Labour and the Greens fashion a coherent, credible alternative government?
To what extent should Labour focus on motivating people who didn't vote in 2011?
To what extent should Labour focus on winning support from current National voters, or current Green voters?
Are the above two bullet points in conflict -- and if so, how should we resolve that conflict?
What are the implications of the Global Financial Crisis and the Climate Crisis for Labour's statecraft, particularly in respect of the political economy?
To what extent will better overall political performance and a coherent story about where we are going undo some of the hard choices presented in some of the above bullet points?
Sometimes Chris's nostalgia drives me mad, but I think there are times when his articulation of a society based on social democratic values is compelling.
Sometimes I think Josie's notion that there are lessons for us from British Labour's experience is a misreading of New Zealand, but I welcome her reminder that modernisation involves looking forward not back (to quote a Blair slogan).
Neither Josie's view nor Chris's view are particularly representative of where the debates at the core of the Labour Party are at. They are, though, both worth following. By virtue of their privileged access to a range of public forums, they do have the chance to raise issues Labour and the broader left need to consider.
I'm pleased that National has backed away from its silly attempt to attack the quality of education that people can get at New Zealand schools.
It's one of a number of backdowns that National has done since it won power in 2008. Mining on protected conservation land is the other big one.
There is a bit of a pattern. When National steps outside the zone is has created as a pragmatic, moderate party, "de-toxified" from the 1990s Nasty Party image it cultivated, it tends to get smacked around by the public -- and when it gets smacked around, it backs off.
This is savvy politics in one sense, but it stores up problems for National in the longer run.
It's savvy because it lets them pretend they are "listening". That is rubbish of course. National thought it could get away with cutting $170m out of schools and putting some ($60m) of it back into "quality". It was a cut to front line education services that they tried to hoodwink the public into accepting with bollocks about a trade off. They arrogantly assumed they'd get away with it.
They didn't "listen" to change their mind: they got punched on the nose by the public for trying to attack the quality of the biggest and most important public service there is. National will be held to account for this exposure of their hard edged agenda to sack the State from now until election day.
There is another downside: National politicians have to be careful because a government that can be pushed around too easily loses the respect of voters. (Voters also lose respect for a government that is too tough: that's one of the challenging balancing acts politicians face.)
I don't anticipate seeing many more backdowns. National will be more careful from now on to not push outside the boundaries of the mandate. Mandates are complex things. Theirs is very narrow. Aside, arguably, from asset sales, they have to stay where they have positioned themselves: bang in the centre.
Which leaves you a final question to ponder on.
What's the point of a government that invests all of its political energies in winning elections on the premise of doing nearly nothing?
As I said back in April, the polls move slowly. It's the trend that counts. On that One News trend, things are starting to look up for the left. But there's a long way to go til 2014.
As an aside, on that road to 2014, there'll inevitably be tensions between Labour and the Greens. That is because the principles of the two parties have a lot of crossover. That leads to similar policies and aiming for votes from the same people at times.
My take on that is simple. I want to see a Labour / Green government, and I won't be attacking the Greens. That doesn't mean I won't criticise them when I think they're wrong. It also doesn't mean I think they are the party to lead the country: if I thought that, I'd be in the Green Party.
It does mean, though, that I deplore the notion that some in Labour seem to hold that the Greens are somehow "stealing" our votes. Memo to selves: we don't own anyone's votes, and nobody owes us anything. The Greens are doing their job to try and improve their support. Labour's task is to do the same and fight for every vote, not complain about someone else doing that.
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.
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.
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!".