By David Hargreaves and Alex Tarrant
Regional Development gets the expected strong focus in Labour's just-signed coalition deal with NZ First, with the headline feature being creation of a $1 billion a-year Regional Development (Provincial Growth) Fund.
There's also room for some old NZ First favourites, including a new supercharged 'Gold Card' for superannuitants and a suggested boosted up role for Kiwibank.
Labour leader Jacinda Ardern and NZ First's Winston Peters put pen to paper on Tuesday afternoon to commit to a new coalition Government. The full agreement is available here.
The release of what looked like some fairly substantial state-funded initiatives saw the New Zealand dollar quickly lose around half a cent against the American currency before recovering somewhat to about US69.6c.
On more general economic matters, the agreement, as expected makes for a review and reform of the Reserve Bank Act - though no specifics are outlined in the document.
Ardern indicated in a press conference later that the plan would be to include employment alongside price stability, and broaden the monetary policy decision-making board - in line with Labour's policy. She also hinted that the Governor and that board might be mandated to consult a wider range of people before coming to a decisoin.
Also there's plans for a Housing Commission, though again without specifics.
There is the stated intention to progressively increase the Minimum Wage to $20 per hour by 2020, with the final increase to take effect in April 2021.
There is a plan to investigate growing Kiwibank’s capital base and capabilities "so that it is positioned to become the Government’s Banker when that contract is next renewed".
Also there are plans to strengthen the Overseas Investment Act and undertake a comprehensive register of foreign-owned land and housing. See more on that below, including comments from Peters on stamp duty not being a favoured option.
Regional development, many portfolios
Ardern said the deal with NZF prioritised regional economic development and jobs for kiwis. More on that below, as well.
She said the policies fall within Labour's budget responsibility rules and that she would lead a fiscally responsible government.
As previously announced, NZ First will get four Cabinet Ministers and an under secretary. Those ministers will be busy, with a substantial number of portfolios given over to the NZ First representatives.
This will include the following portfolios: Foreign Affairs, Infrastructure, Regional Economic Development, Internal Affairs, Seniors, Defence, Veterans’ Affairs, Children, Forestry, State Owned Enterprises, Racing, Associate Finance, Associate Education and an Under-Secretary for Foreign Affairs and Regional Economic Development. A Minister from New Zealand First will be represented on the Cabinet Appointments and Honours Committee (APH) and the Cabinet Legislation Committee. Ministers from New Zealand First will also be represented on other Cabinet Committees as agreed between the Party Leaders.
The agreement indicates that priorities for the $1 billion a-year Regional Development Fund will include:
• Significant investment in regional rail.
• Planting 100 million trees per year in a Billion Trees Planting Programme.
• Commissioning a feasibility study on the options for moving the Ports of Auckland, including giving Northport serious consideration.
• Other large-scale capital projects.
Other regional aspirations in the agreement include:
• A commitment to relocate government functions into the regions.
• Re-establish the New Zealand Forestry Service, to be located in regional New Zealand.
• An increase to MPI BiosecurityNZ’s resourcing and a Select Committee Inquiry into Biosecurity.
• Honour existing Crown Irrigation investment commitments.
• Recognise the potential for aquaculture in promoting regional economic growth.
• Examination of agricultural debt mediation as well as receivership fees and charges.
Ardern said the $1bn Regional Development Fund would come out of the near-$10bn of unallocated capital spending in Labour’s fiscal plan over the next four years.
Projects would include regional rail, “heavy investment” in forestry, and opportunities to help fund projects that might also be fundable by infrastructure bonds. “Essentially what we’re saying as a government is, we are committed to making sure we rebuild our regions, that there is strong growth, and that there are job opportunities. They’ve been neglected for too long. That is why this fund is being created.”
Asked in what ways the regions had been neglected, Ardern rattled off: “Infrastructure, rail, roading, job opportunities, health, education. You name it, and we’ll find an example if there’s been neglect.”
Ardern said there had been real advocacy on the subject from Peters particularly around Northland, saying there were obvious reasons for that being the case. “But you’d be hard pressed to find a region that hasn’t experienced neglect.”
Peters was asked if rail to Northport in Whangarei would be one of the first projects to get off the ground. He said the two parties understood that “when the head of Mainfreight says that it’s a no brainer, that it may just be a no brainer.”
Another policy is to raise the minimum wage to $20 an hour by 2020. Ardern said that in the government’s first 100 days, there would be legislation to raise the wage to $16.50 from 1 April 2018.
From then, government would use discretion to ensure that the step changes were done at appropriate times and in the appropriate way, she said – the full track to $20 would not be legislated for now.
“But we’ve been very clear on the goal, and where we see ourselves finishing in 2020, with an introduction by 2021. Peters had made the point continually during the talks – which Labour agreed with – that, “we are a low wage economy,” Ardern said. New Zealanders deserved to have a wage they could live and survive on and “have a quality of life with.”
Foreign buyers - stamp duty not favoured by Peters
Ardern said the parties had agreed on banning the purchase of existing homes by foreign buyers – she later clarified this was non-resident foreign buyers. There were also plans around foreign ownership of farmland and other critical infrastructure. The parties also shared a view on cutting rights in the forestry industry.
On farmland and other infrastructure, Ardern said the Overseas Investment Office would be used to properly investigate sales of farmland five hectares or greater.
Asked why he settled for this after arguing to ban foreign buyers across the board, Peters replied: “Well, I got pretty close – is that near enough? The reality is, there’s going to be a change and a clear signal sent internationally that New Zealand is no longer for sale in the way it has been. And we’re happy with that.”
Ardern said the goal was for New Zealanders to have the ability to buy a “decent, dry, affordable home in New Zealand.” One of the steps towards that was making sure demand side pressures were dealt with. “We will find the mechanism in order to deliver that goal.”
On whether any mechanism could include a stamp duty, she would only say: “We will stop foreign buyers from buying homes in our existing housing market.” Peters jumped in – there was flexibility to work their way through to means to the end.
“I might add, that the structure and strategy that you advocate [the question was on stamp duty] did not work in Vancover, and has not worked in other parts of the world. And we would like to put some intelligent science into it before, I think, we discuss that together.”
He continued: “We’re not against getting more income, for goodness sake. But when you realise that, that won’t stop what’s going on, and didn’t stop them in Vancouver, and other parts of the world, then maybe that strategy would be a failed one.”
Shared views and objectives
The preamble to the agreement says that Labour and New Zealand First have a range of shared values, and policy objectives.
"The commitment of Labour and New Zealand First is to provide stable and effective coalition government.
"Labour wishes to progress action in accordance with the Labour Party’s Policy Platform. New Zealand First wishes to progress action in accordance with its policy platform.
"Together, we will work to provide New Zealand with a transformational government, committed to resolving the greatest long-term challenges for the country, including sustainable economic development increased exports and decent jobs paying higher wages, a healthy environment, a fair society and good government.
"We will reduce inequality and poverty and improve the well-being of all New Zealanders and the environment we live in. Labour and New Zealand First are committed to building public confidence in, and engagement with Parliament, and Government and the electoral system as a whole.
"We are committed to an independent and robust public service. We will do this while maintaining our independent political identities and working in the best interests of New Zealand and New Zealanders.
These are the official 'Coalition commitments':
• The Parties agree to support and promote the matters and issues which have been subject to agreement between them.
• The Parties will work collaboratively and in good faith to reach agreement on particular policy and legislative initiatives. The key directions for the first term will be set out in the speech from the throne.
• The Parties endorse and will operate in accordance with the Cabinet Manual.
• As provided for in the Cabinet Manual, the Parties will “agree to disagree” where negotiated between party leaders, and in such circumstances the Parties will be free to express alternative views publicly, and in Parliament. The Labour and New Zealand First Parties agree to identify policies and roles in a way that maintains and promotes the distinct identity of each party. This will include public attribution and acknowledgement of the Party responsible for policy.