Peter Dunne examines the prospect that our election next year may turn into an auction with the major parties seeking to outspend each other

Peter Dunne examines the prospect that our election next year may turn into an auction with the major parties seeking to outspend each other

By Peter Dunne*

Britain votes today in an election brought on by the ongoing failure of the House of Commons to approve any of the Brexit deals put before it over the last couple of years by successive Prime Ministers, Theresa May and now Boris Johnson.

Mr Johnson will be hoping his gamble to call an early election will pay off and that he will be able to honour his latest commitment to the British people to leave the European Union by the end of the coming January. But whether even a decisive election outcome will help heal the divisions that have exploded in Britain since the 2016 referendum, and now threaten the very survival of the United Kingdom, is doubtful.

There has been another aspect to this election that has been significant.

Jeremy Corbyn’s Labour Party has been campaigning to end what it describes as the austerity of the last decade by promoting the most left-wing manifesto published by Labour since 1945. It even surpasses Michael Foot’s 1983 effort, now remembered as “the longest suicide note in history” which contributed to Labour’s landslide defeat by a Margaret Thatcher rampant after recapturing the Falklands Islands a year earlier. Time will tell whether Mr Corbyn can buck history, or whether a similar fate awaits him this election.

The relevance of this to New Zealand was highlighted by the Greens’ announcement earlier this week that they will no longer be bound by the Budget Responsibility Rules they agreed with Labour before the last election to stave off allegations that they were too profligate to be trusted in government. The Rules were designed to show that both Labour and the Greens could act responsibly in office, and to pacify sympathetic but edgy voters that they would mismanage the economy, if put in charge.

Now, the Greens say the rules are too restrictive, stopping the government at a time of record surpluses from investing the amounts they see as required to overcome local rising social and infrastructure deficits – from increasing child poverty levels to upgraded schools and hospitals. As well, even Labour, after a similar two years of criticism from its core supporters that it is being too stringent, is looking to loosen its purse strings and considerably soften the self-imposed Budget Responsibility Rules.

In so doing, both parties will be hoping to regain some momentum towards becoming the “transformational” government they jointly pledged to become at the last election. But the Finance Minister will not abandon fiscal restraint altogether, as, like Finance Ministers before him, he has developed the acute sense of parsimony that goes with the job.

Nevertheless, as Labour enters election year it can be expected to become considerably freer with its spending promises than it has been so far. Even more freed of the restraint of the Budget Responsibility Rules the Greens can be expected to go full Corbyn now when it comes to spending promises. Between them, both look like offering a veritable cornucopia of expensive election goodies for voters to drool over.

National will be rubbing its hands in glee at the prospect of at last facing unashamed real tax and spend parties at the election, but may need to tread a little carefully.

If, as Jeremy Corbyn is so obviously hoping in Britain, the public reaction against government restraint has built up to the extent that voters are now prepared to indulge in a splurge of public spending and mounting debt, based on selective discriminatory tax increases on others, National may quickly find that being the harbinger of fiscal responsibility is not the winning card it once was.

After a decade of relative stability and steady although modest income growth, voters may indeed be willing to kick back their heels somewhat come election time. In such circumstances, it will without hesitation and quickly and shamelessly seek to outspend Labour and the Greens. And we will end up with potentially the biggest election auction of recent times, possibly even since 1957 and Labour’s infamous final campaign advertisement “Do you want 100 pounds or not?”.

With the ongoing international economic uncertainty caused by Britain’s dithering over Brexit, through to having to pay for yet another visit here by a member of its Royal Family, New Zealand has not had much to be grateful to Britain for in recent years.

It may have even less to be pleased about should Mr Corbyn emerge as its next Prime Minister and the contagion he unleashes spreads to our shores.


*Peter Dunne is the former leader of UnitedFuture, an ex-Labour Party MP, and a former cabinet minister. This article first ran here and is used with permission.

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I'd vote for a pragmatic party because the following facts will not change:

NZ's economy and future depends on more dairy, more agriculture, more migrants, more international students, more tourists, more resource exploration, even better relationship with China, more and better teachers, better stringent rules on education, compulsory course for a second language from primary to high school, less or no more resources putting into reducing carbon dioxide, less social benefit for those who can work but just choose not to, NOT legalising cannabis.

Any party chanting policy against any of the above are against NZ and the well being of all NZers.

16
up

Spoken like a despot wannabe. We all know where you want NZ to end up:

https://cpj.org/reports/2019/12/journalists-jailed-china-turkey-saudi-ar...

I reckon the name xingmowang is just a pseudonym, his/her name is probably John/Jane Doe or Smith.
He/She is just taking the p*ss, it must be as it's so way over the top ;)

Citizens Reprogramming And Punishment ...

.. they're a political party who'd welcome your vote .

The distinctive feature of the New Zealand economy is that land is an important input into
the productive process. This is obvious with the agricultural, fishing and forestry sectors but
it also applies to international tourism. In a simple model of the New Zealand economy
where the supply of land is fixed, and New Zealand’s isolation means it is not a ‘natural’
location for the production of a broad range of internationally traded goods and services,
then an increase in the labour supply through large scale immigration will reduce the
marginal product of labour. As a result:
 Real wages will fall
 Owners of land will benefit
 There will be an outflow of ‘native’ labour in search of higher wages in Australia
 The economy will be bigger, but average incomes will fall
 Resources will flow into low value service production.
http://www.tailrisk.co.nz/documents/TheSuperdiversityMyth.pdf
Power decides the truth however

Xingmowang, is pretty much describing the last bunch (9yrs of Nat co.) - even today? Nat co. announced to 'curb'/ring fencing.. the Healthcare spending ha ha ha.. nice pattern eh? No one strike under Nat co. - under Lab? every man & his dog going for strike for better pay. - Remember this, putting NZ overlord to China? answer me these questions: Do China care/thinking about another country? other people well being? let alone world well being? - to find the answer? I suggest to live among the community, even on different countries, years in/out - tabulated your experiences then keep that in mind.

National going to curb / ring-fence health spending just as Boomers are hitting retirement and facing less affordable health insurance? Well...that'll be interesting.

Rock > Granny State < Hard Place.

You sound like a hardcore growthist or the party secretary of a major Chinese city. What you described will leave NZ with a destroyed natural environment and much worse social-economical polarisation. Evetually, it will turn NZ into a dirtry and corrupt 3rd world slum.

I think it would be fair to say that there has been a huge political shift over the last decade. I would suggest it is a global one, not merely one experienced by the UK. Politics has become more polarised in many places since the GFC.

I think it is grossly misleading to describe the Tory policy as "fiscal restraint". There is so much context negated in that comment and the context is important to the political climate and, let's face it, the constitutional crisis, the UK is in. Economics has and always will be a large part of vote motivation (even when people aren't consciously aware of that) but the UK is more divided down tribal, partisan lines than it has been for decades. The lies, underhand tactics and hate on both sides is quite something and it goes way beyond something that can be encapsulated in a moderate phrase like "fiscal restraint". The Tory rhetoric has gone hard right, the Labour rhetoric has gone hard left. Historically, the most prosperous, stable and successful the UK economy ever is, is when the parties compromise a bit more in the centre. It's boring, and there are issues there too but extremes to either side of the political spectrum don't translate into material well being across a nation.

I think the polarising, partisan contagion could very easily spread if rising wealth inequality continues to rise in NZ. And just like in America and the UK, families will be torn apart, long term friends will stop speaking to each other and people will start attaching layers of other social values as part of this increased politicisation. It's ugly and I hope it doesn't but we are an imitating species so contagion is likely.

Partly agree with your thoughts on centrism but not totally. Centrism can equal status quo and resistance to the need for real reform, and often selects halfway house measures that are ineffective.In my view most of the west needs to go further to the left, but not too far....I haven't yet read Corbyn's manifesto, so can't comment on whether I think he has gone too far left.

I definitely mean "compromise in the centre" as a process between parties in a democracy rather than just all the parties resting on their laurels in the middle ground... we need effective opposition in a democracy.

A useful sidebar to this shift from the always-relevant Richard Fernandez....the elites are highly threatened by us clevver amateurs.....

For NZ the most influential element in any election is MMP itself. Since its inception there has been a representation of sorts of third parties. ACT, The Alliance, Christian Heritage, United Future, The Maori Party,
NZF and The Greens. The last two are the only significant survivors & are of course presently in government. These two as well are there only because of the longstanding attraction of the leader of one and the international profile of the other. It is fairly obvious MMP only arrived as a protest vote by the electorate against FPP. And, given the way things are now, it is apparent that the electorate has been of insufficient size, understanding and maturity to embrace and manage MMP as is necessary. To date no party in NZ has been able to gain outright power, on its own in a MMP election. That will apply to National next year, without a viable coalition party, full stop. Therefore, based on current polls, again the party that achieves the most of the popular vote will not be in government. So is it then not unreasonable, to argue that the system can actually dictate the government to be, rather than the electorate itself?

Any party that receives the majority of the popular vote under MMP will be able to govern alone.

What you mean to say is that National is likely to receive the plurality of the popular vote, as they did in 2017.

Unfortunately for National, a majority is what is needed, not a plurality.

tks, see what you mean. Have used the edit accordingly. Probably still a bit imprecise but imagine most can get the point.

Are you sure that MMP hasn't, in fact, killed democracy as we know it? Are we now, in fact, more of a Bureaucracy with democratic characteristics?

The dead hand of bureaucracy, tell me about it! I think in the beginning the ability that MMP provided to tactical vote, was uptaken by the electorate. Hence the relatively strong presence of ACT on the right and The Alliance on the left, &initially, to a little lesser extent, NZF & The Greens were in the mix. Trouble was these minor parties in government came under fire for being either poodles or the tail wagging the dog and accordingly fell away in popularity and votes. For instance, I believe behind the scenes The Maori Party accomplished more by being in government than out of it, and they had too boot, some really worthwhile MPs. What their electorate expected is hard to know, but obviously they did not see it that way. But to your point. I don’t know that democracy in NZ is exactly dead but you are right that the, shall we say consensus, style of government has burgeoned into a “committee” & “consultant” approach to all and sundry, areas of administration. Bloody inefficient. Bloody frustrating.

In my opinion MMP kills democracy. We have to have MP's accountable to there electorate.
With MMP you can be a list MP forever and never win an electorate, that is not democracy!
As a list MP you are employed by the party which is where you allegiance lies not to an electorate.

Unfortunately the alternative to MMP is a system of fewer people holding more power on the basis of the votes of a smaller proportion of the population - as seen in our last governments under FPP. So it's unfortunate if folk are clamouring for FPP on the basis of it being more democratic.

An STV and a lower threshold would be good improvements, as have been recommended by the electoral commission. But it's hard to get politicians to vote themselves less power.

election promises,like kissing babies are part of the political theatre now and few believe them, many who feel they cant vote national as they are too pro china and resent being lied to about immigration by labour and NZF could be ready to vote for the greens.

If only there was a 90 day trial for any new government.

Apart from some politicians from Nationals, all politicians from Labour and Green are just talkers, or to be precise brainless talkers talking up on what their gullible voters would like to hear, then forget after 10 shots of drinks and puffs of legalised-to-be cannabis.

You would be under the table after 2 drinks X...you must love living here..or are you a troll in Chin?

Two 5 oz’s of L & P would probably do it, I wager.

So much negativity from the MSM directed towards Jeremy Corbyn. why? He only wants to reign in the banking sector. Create a national infrastructure bank to invest in real assets for the productive economy, his so called people’s QE. He wants to buy back strategic assets from the public sector. He’s one of the only politicians against austerity. Rock on Mr Corbyn.

He plans to replace a Tory government beholden to a dodgy banking sector, by forming a Labour government that will itself behave like an out-of-control banking sector.

Democratic politics across the globe is having its ''on the cross moment.'' The nails well & truly in place, the blood continues to fall on the ground & the crowds are either screaming for more or visibly grieving. There doesn't seem to be much in the middle, does there?
What's happening has been happening for the last 50 years in our schools & tertiary institutions (and education ministry) as socialism has become the topic of choice for those in charge. This is backed up by 90% of the media who are also liberally & socially inclined, and so reinforced into our naive minds for as long as we can remember. It is these same set of circumstances that are leading to our global decline in our educational results in reading, writing & math, which in turn is dumbing down the whole thing, sadly. It is now so social that most people don't know any different. They don't need to work (welfare) they feed & breed for free (welfare) they do not know how to behave (jails) they do not know how to look after themselves (hospitals) and they blame the people who work & create wealth & pay most of the taxes for their inequality. It's become a strange place these days. This is certainly not the country I was born & raised in the 2nd half of the 20th Century. This is Disneyland on drugs!

What's happening has been happening for the last 50 years in our schools & tertiary institutions (and education ministry) as socialism has become the topic of choice for those in charge.

Huh...New Zealand is actually far less socialist than it was in the past. What we've seen in the last 50 years is a veer towards neoliberalism. And arguably a dumbing down through cable television and weaponising of information.

What do you mean by this? In the years following 1950 the top tax rate was 77% - it didn't drop to 33% until 1990. University fees were introduced in 1990. In the 1960s and 1970s, significant state housing was built, and mostly sold off in the 1990s. NZ had one of the lowest levels of inequality of a developed nation until the 1980s, when the gap began to accelerate markedly. It seems to me that since the Thatcher/Reagan/Roger Douglas era, NZ has become a significantly less socialist nation.

Capitalism favours capital, not work. Very hard working people - think of teachers, nurses, cleaners - don't earn as much, and are not as materially wealthy, as those in perhaps as hard, but much more financially rewarding professions - think IT, finance. Is this because of increased socialism, as you claim?

I've been doing some back of the envelope calculations (someone correct me if I'm wrong). If we've increased the population by 400,000 through immigration, and Reddell estimates they need $80,000 dollars of infrastructure each, that comes to 32 billion?

Paid for by boomers stealing childhoods.

And a hardworking middle class taxpayer will pay something like a million dollars in their lifetime. The extra infrastructure is easily affordable if we are importing productive people.
We are also inevitably swinging towards infrastructure work-arounds as west is now incapable of building infrastructure cost effectively due to bureaucratic overheads. Rooftop pv + home and car batteries to meet power needs, rainwater and septic tanks use to avoid extortionate water charges, air taxis in a couple of years to avoid roads... The future is bright.

And by the time they've finished spending that, they will need another $60 billion to pay for all the migrants that will arrive over the next 10 years.

Fiscal responsibility and Government spending but no mention of budget priorities, a point I made a week or so ago. Governments must spend, but on what is the issue. NZs track record is of not spending on things that would help maintain our economic viability, while essentially giving away (or allowing )almost everything that allowed us to make money.

There will be narrow thinkers who will argue from a global warming perspective against roads, but efficient travel will require good quality roading, rail, and shipping infrastructure. Those who argue against roads are essentially arguing to dis-invent the wheel, because they don't want any future that includes any form of travel.

My view of this is 2/3rds of the way through this electoral term, the Government now has a very good perspective of where the country sits economically, infrastructurally, commercially and all those other ways that count. so now they are able to set some priorities on what is needed, and where, and can talk about implementing it. This is not a simple exercise as they are also trying to change the economic model that has ruled us for the last almost 40 years. Yes it looks like an election bribe, but that is the consequence of a comparatively short electoral cycle, and don't forget we are almost a year out from that election still so this is very early for the bribes to start.

I could be being naive, but I am hopeful.

. . we're not getting a peep out of the Greens .. it was Julie Anne Genter who halted the Gnats roads of national significance programme ... and she who nearly copied the banning of internal combustion engines by 2035 movement . ...

This is not a simple exercise as they are also trying to change the economic model that has ruled us for the last almost 40 years. Yes it looks like an election bribe, but that is the consequence of a comparatively short electoral cycle, and don't forget we are almost a year out from that election still so this is very early for the bribes to start.

So our first baby steps into becoming Japan? When you talk about bribes, the same thing was obvious in Japan from the mid-90s (every vested interest group was out for a share of the public loot). However, the biggest difference between NZ and Japan is that they have rather long-term goals, particularly with regards to infrastructure, public transportation, urban planning (some may challenge this), and public housing. NZ pales in comparison partly because of partisan politics.

I don't think we are 'becoming Japan' JC. what I think is the Government is trying to navigate an extremely fraught path that enables NZ to survive with a reasonably good standard of living. Long John makes a good point above about the impact of social policies, but that cannot change until the Government succeeds in creating an environment that enables the regions to develop economically to the point that everyone can get good jobs that offer a reasonable standard of living. So often much of the perspectives we are given seem to originate from the big cities, likely mostly Auckland, but 75% of NZs population does NOT live in Auckland, and many do not live in a major city.

Our last National Government, and the Labour Government before it both significantly neglected areas that were essential to maintaining economic growth, or stability. Instead taking the easy way out through immigration to prop up the economy while ignoring the long term negative impact that this causes. Japan's partisan politics are something to behold, so do not think they are free of those issues.

Well I can't see NZ leveraging too much more from the the household debt-driven approach to driving the economy. Furthermore, the immigration-driven approach to pumping GDP also cannot work without the requisite infrastructure to support it. So 'becoming Japan' is kind of a reference to public-sector driven economic activity. In many ways, we may need to 'become Japan.'

Furthermore, Japan does have its issues politically but it's hard to deny that they have strong long-term vision for public society. NZ could learn from Japan and also countries like Singapore and Austria.

Here's a question JC; I get your point on the household debt driven economy, but what about the Social Credit model for Government money? How would that work today. I don't claim to understand the model, but currently as I understand it the Government has ceded responsibility for the amount of money in circulation to the RBNZ, and works with in that limit. Thus it must either get its needs through taxation or issue bonds which incur an interest charge, and will mature requiring to be paid back. The SC model basically states that the Government can just create it's own credit limits to get work done without incurring the liabilities of debt? Is this right? If not how would it work?

The new iteration of it is Modern Monetary Theory (MMT) It is being hotly debated in US, Japan and Europe but not a peep here in New Zealand. Basically it says a nation like NZ with its own freely floating sovereign currency has absolutely no restrictions on how much it can spend apart from inflation. Spending comes first, Taxes and bond issuance second as a way to moderate inflation and protect the OCR respectively. Neither fund the government's spending. How can you pay tax without first having the money created by the government's agent, the RBNZ? "Tax and spend" is backwards. The private sector can't create NZD, only the RBNZ can. Likewise Treasury and RBNZ work together to buy and sell bonds on the open market all the time, surplus or deficit, because their purpose is not funding. It is to mop up or release reserves as required to defend its desired interest rate. As long as resources - human and material - are available, a government like NZ can spend freely until constraints that create too much inflation are hit. No borrowing or taxes required. NZ government can always meet payments for anything denominated in NZD including interest. This year's taxes do not fund next year's spending or any other year

So how does this work? If the Government spends, does that drop the value of the dollar? Reading your comment from one perspective, why tax at all, just spend, or is it to limit the total amount of funds in circulation? This would be effectively undermined by the banks who seem to be creating unlimited credit to loan out (perhaps limited now by capital ratios)? The money the banks are taking out would be defining the cap on funds in circulation surely (they are creating credit, which is being paid for with real money)? Where should this responsibility lie?

Nobody is arguing against roads, since we all have cars and need to drive everywhere. What we don't want is dairy cows or any farmed animals, they are the real polluters of NZ.

Actually a lot of people are arguing against roads. But they are both short sighted and don't understand the whole picture.

Great comment - made me think. I do wish the Parliamentary Budget Office would be in place before the 2020 election - as it provides independent costing of all election promises (i.e., "bribes").

At least the coalition have put in the groundwork for that one. I worry that if National get in in 2020 they will scrap that initiative. It really is critically important for citizens to be able to make properly informed choices in these days of "fake" news.

Interesting...on election propaganda, findings in the UK that:

1. For the Conservatives, 88% (5,952) of the party's most widely promoted ads either featured claims which had been flagged by independent fact-checking organisations as not correct or not entirely correct.

2. For Labour, it said that it could not find any misleading claims in ads run over the period.

So the right wing in the UK is being rather loose with the facts in attempts to indoctrinate the populace, from the looks of it.

Source: https://www.bbc.co.uk/news/amp/technology-50726500

And the Conservatives ad campaign strategy is being run by two NZers and an Australian;

https://www.nzherald.co.nz/entertainment/news/article.cfm?c_id=1501119&o...

We all know who they'll be!

Goodnight Kiwi, Cookie Bear & Skippy? Seriously though, Adlai Stephenson once said something like we have a bargain, the Republicans will stop telling lies about us if we stop telling the truth about them. Despite that, he lost heavily!

I'd not heard that - but it's hilariously clever.

Not looking so flash them Corbynistas now ..

No they are not. Deservedly so in my opinion Brexit was decided democratically, full stop. The political denial, and the London media denial (eg The Independent) has been not far off evil. One has to feel for PM May though. She called an election, which strategically looked a done deal, but it backfired. Lots of backfires lately. Brexit itself and Trump for example. The voters are getting to just wanting to vote against the establishment. Some aspect of that got JA in here for example.

I cannot believe how poor the commentary on the UK election has been in NZ. Johnson has been portrayed as some Trump like character while Corbyn is seen as a left leaning idealist. For most Brits, apart from his extreme left supporters, it is clear that Corbyn has been soundly defeated for the simple reason that he is an anti Semitic, unpatriotic Marxist, whose economic vision for the UK would have plunged it back into the dark ages. He is trying to blame his defeat on Brexit but the truth is that millions of voters could not bear the thought of him in No.10. (This view has even been echoed by several Labour MP’s in the last few hours.) Boris Johnson may have his faults, (who doesn’t?) but he is an exceptionally clever man who has the drive, passion and ability to get things done. The reaction of sterling and the stock market show that these voters are not alone in seeing him as Britain’s best option. I could have wept with relief when I saw those exit polls!

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