Going For Growth?

Mr Mojo Rising: Economic growth is possible, Christopher Luxon reassures us, but only under a government that is willing to get out of the way and let those with drive and ambition get on with it.

ABOUT TWELVE KILOMETRES from the farm on the North Otago coast where I grew up stands the Brydone Monument. Constructed atop Sebastopol Hill, the Oamaru stone monument memorialises Thomas Brydone’s pioneering role in exploiting one of the great industrial innovations of the Nineteenth Century – refrigeration.

It was the consignment of sheep and lamb carcasses from the Totara Estate’s slaughterhouse, and loaded into the SS Dunedin’s refrigerated hold at Port Chalmers, that departed Otago Harbour on 15 February 1882. Ninety-eight days later, those same, frozen carcasses were unloaded in England. In today’s money, that single Totara consignment returned Brydone’s employer, the Australian and New Zealand Land Company, a profit of $200,000.

In the absence of an innovative breakthrough as transformative as refrigeration, Christopher Luxon’s energetic promotion of economic growth rings a little hollow.

In the century that followed Brydone’s original 1882 shipment, this country’s economy expanded enormously. Refrigeration not only rendered the raising of sheep and cattle for slaughter profitable, it more-or-less created New Zealand’s dairy industry. In historian James Belich’s memorable metaphor, it created a 16,000 kilometre-long protein conveyor-belt from the farm gates of New Zealand to the ports – and, ultimately, the tables – of Great Britain.

Refrigeration not only made billions for the largely British concerns that oversaw New Zealand’s economic evolution in the Nineteenth and Twentieth Centuries (fair enough, it was their capital that made it possible) but also formed the material foundation upon which New Zealand’s colonial society and culture was built. Our national character, forged on the owner-operated family farms that refrigeration made economically viable, would have been very different without it.

Is there an equivalent industrial innovation which today presents itself to those with capital to invest as ideally suited to New Zealand?

The disruptive innovation that immediately springs to mind is Artificial Intelligence. In New Zealand, however, the potential of AI would appear to lie in the human labour it replaces. In sharp contrast to refrigeration, AI looks set to get rid of jobs – not create them. Compared to New Zealand’s flesh and blood economy, an economy evolving out of AI would be a much more ethereal affair. Certainly, it is difficult to envisage the AI equivalent of a freezing-works.

Still, the world in which AI promises to play an increasingly vital part may see in New Zealand a secure, faraway location, plentifully supplied with the cheap, climate-friendly, and renewable energy supply needed to power the colossal computing resources AI demands. From farming sheep and cattle, could New Zealand become an energy farm for the tech lords of the Northern Hemisphere?

Luxon’s forward vision fell short of confronting that possibility. Instead, the Prime Minister homed-in on two economic sectors: tourism and education. Sadly, his goals for both would appear to embrace nothing more than the restoration of the economic status quo ante.

His ambition for the tourism sector is “more”. More bums on the seats of tour busses; more budget accommodation; more huge crowds at New Zealand’s premiere attractions; more pressure on an already inadequate infrastructure. His Labour predecessors wanted fewer, but richer, tourists. Unsurprisingly, perhaps, Luxon, the former CEO of Air NZ, is looking for an increase in tourist numbers.

“Mexicans with cell-phones” was how American producers described the Kiwis who staffed New Zealand’s film industry in the 1990s. How will investors describe the workers in Luxon’s low-wage, low-skill, tourism sector of the 2020s? “Filipinos with cash-registers.”

More bums on the seats of the nation’s lecture theatres is also what Luxon is looking for in the education sector. Full-fee-paying overseas students, the golden geese of the pre-Covid era, returning to these shores in ever-increasing numbers: that is what former health minister, now universities minister, Dr Shane Reti, is being asked to deliver. Such is the fate of this unusually intelligent and thoughtful politician: to be asked to do things that are not only impossible, but stupid.

Insufficient funding, compensated for by the financial contributions of overseas students, is steadily wrecking New Zealand’s universities.

Charging students for their tertiary education may have been justifiable when universities were basically finishing-schools for the ruling classes. In modern, highly-complex, societies and economies, however, user-pays is deeply subversive of the crucial role higher education is expected to play in refreshing and reinvigorating the nation.

Supplying credentials in return for a hefty sum of money transforms students into customers. Unfortunately, when it comes to the arts and sciences, the customers are not always right. Pretending they are undermines the entire meaning and purpose of a university.

As is the case with tourism, the tertiary education sector would benefit from fewer but better students. When tertiary education is state-funded the whole of society becomes the universities’ customer, and the quality of the knowledge and skills imparted, rather than the quantity of degrees awarded, becomes the sector’s primary goal. Graduates are thus reassured that not only do their qualifications possess genuine academic value, but so, too, do they. Indeed, “the best and the brightest” will be viewed by their fellow citizens as crucial to the social and economic development of their country.

But, this is not the state of mind in which the nation finds itself. New Zealand has spent the last 40 years telling its citizens that, barring the handful of social services its political class has – so far – been unwilling to dismantle (although David Seymour and Act are up for it) they are on their own.

If you purchased your tertiary education, and are still paying off the necessary loans, then the resulting qualification is yours, and yours alone. If somebody overseas is willing to pay you more for it than a New Zealand employer, then you are perfectly entitled to take up their offer. What is New Zealand, after all, but a name on the cover of a passport?

There is nothing in Luxon’s 2025 State of the Nation address suggesting than he regards this rugged and morally unimpeded individualism as a cause for government concern. On the contrary, it is precisely the “mojo” made manifest in such clear-eyed selfishness that he is so eager for New Zealanders to recover and display. Economic growth is possible, he reassures us, but only under a government that is willing to get out of the way and let those with the drive and ambition needed to succeed get on with it.

Luxon would have loved Thomas Brydone’s mojo. By all accounts he was a burly, bruising, bully of a man who got things done and wasn’t too particular about how. The men who worked in the Totara slaughterhouse fought heat, filth, stench, flies, and exhaustion to get those carcasses to Port Chalmers on time. Their efforts may not have been deemed worthy of a monument, and the quantum of their “profit” went unrecorded, but they, too, had mojo. Except the mojo of Nineteenth Century New Zealanders was very different from the Twenty-First Century mojo that Luxon prizes.

The extraordinary expansion of Europeans across the globe in the Nineteenth Century reflected something much more profound than mere demographic pressure. It was driven by a desire to create a new home for themselves and their descendants. A home very like the home they had left, but stripped of the evils that were driving them from it. These new homes – in Canada, the United States, Australia and New Zealand – may have been built with the capital of the elites they were fleeing (and upon the bones of indigenous peoples) but they were constructed differently, and in the name of objectives that were not exclusively commercial.

To have mojo in 1882 a New Zealander had to be a strong individual, but not an individualist. The great attraction of refrigeration wasn’t just its immediate profitability, but the vista it opened up of a national home that was prosperous, and growing constantly in confidence and ambition. A nation that would be better tomorrow than it was today. To have mojo in 1882 you had to be driven by dreams a lot bigger than yourself.

When I was a boy, a stand of tall trees surrounded the elegant homestead of the Totara Estate. John Macpherson, who acquired the property in 1906, and farmed it until his retirement in 1920, would never have seen them attain their full height and splendour. He planted them anyway.

This essay was originally posted on the Interest.co.nz website on Monday, 27 January 2025.

The Greater Of Two Evils.

Not Labour: If you’re out to punish the government you once loved, then the last thing you need is to be shown evidence that the opposition parties are much, much worse.

THE GREATEST VIRTUE of being the Opposition is not being the Government. Only very rarely is an opposition party elected on the strength of its manifesto. In the usual course of events, most voters don’t pay all that much attention to what the opposition parties are offering. Providing they present policies which convey at least the appearance of coherence, the electorate generally refrains from asking too many questions. After all, what they’re seeking is the defeat and humiliation of the party/parties which have so recklessly squandered their trust – and their faith. If you’re out to punish the government you once loved, then the last thing you need is to be shown evidence that the opposition parties are much, much worse.

One of the odd aspects of the 2023 General Election campaign is how little real effort the governing Labour Party has put into convincing voters that the National and Act parties are actually planning to hurt them. Labour knows this because it is also planning to hurt the voters. Not as much, admittedly, as the Right, but pretty badly nonetheless.

The Finance Minister, Grant Robertson, alerted by his Treasury advisers, has already announced a multi-billion-dollar reduction in state spending over the next three years. In this he has little choice – not after his leader unilaterally ruled-out any new or significantly increased taxes. Robertson is, thus, acutely aware that even minimal reductions in taxes must be answered by savage cuts in spending. He knows that National’s promised tax-cuts can only be paid for by imposing an austerity programme even more ruthless than his own.

That being the case, Labour’s supporters are entirely justified in expecting both Robertson, and the Prime Minister, Chris Hipkins, to go for National’s jugular – and rip it right out.

In the first Leaders’ Debate, for example, as Luxon was trotting out his usual platitudes and slogans extolling – but not verifying with even the most rudimentary computations – National’s tax-cuts, why didn’t Hipkins just interrupt him, in a voice of cold command:

“Stop lying to the New Zealand people, Mr Luxon! If there was even a shred of truth attached to these nonsensical figures, you wouldn’t hesitate to prove it by releasing the evidential basis for your claims. Your refusal to do so proves that you are lying about the affordability of your tax-cuts. New Zealanders deserve better than a liar for their prime minister, Mr Luxon!”

Luxon would have expostulated that he was not lying, and demanded a retraction and an apology. At which point, Hipkins could have responded by saying:

“You say you are not lying, Mr Luxon, and you demand an apology. Well, you shall have it, Mr Luxon, and gladly, if, by the time of the next Leaders’ Debate, you have released your party’s computations for the nation’s economists to peruse, and if, having perused them, the consensus view of the experts is that your tax policy is both sound and affordable. Let us have the numbers, Mr Luxon. Let us have the proof. And if your claims are vindicated, then, most certainly, I will withdraw and apologise. And yet, something tells me that you won’t be presenting us with the truth, and I will not be apologising.”

Can you imagine how utterly confounded poor Jessica Much McKay would have been by such an answer? How effortlessly, it would have handed the advantage to Hipkins? How humiliated Luxon would have felt – and how impossible it would have been for him to hide his humiliation? It would have been Hipkins’ “Show me the money!” moment, and with it he would have won the debate – and, quite possibly, the election.

Except, of course, that is not what we saw, was it? What we saw was two politicians who seemed to agree, more than they disagreed, with each other, and who called each other by their first names, like old mates. What we saw was living proof of the old saying: “Why bother voting? Politicians always win.”

Effective rebuttal of the Opposition isn’t limited to the set-piece debates. Every day of the campaign, the Opposition is releasing material with which Hipkins and Robertson could have a field day.

The release of the GDP figures, for example, offered Labour the opportunity to spring a trap for the National Party’s finance spokeswoman, Nicola Willis.

The better-than-expected numbers were rightfully trumpeted by Robertson as evidence of the soundness of the Labour Government’s economic management. Predictably, Willis responded with a scathing media release:

“Labour has mismanaged and vandalised the economy on a scale unlike anything we have seen in recent history.” Thundered Willis. “Government spending is up 80 per cent - $1 billion a day more than 2017. The current account deficit is the largest in the OECD. The economy has been anything but well-managed by Labour.”

Knowing he would later be facing the cameras, Robertson could have prepared a reply for the woman who would be Finance Minister:

“Nicola Willis clearly regards the Labour Government’s management of the Covid-19 Pandemic as an economic disaster. That can only mean that she would not have taken the measures adopted by our own, and practically every other government in the Western World, to keep New Zealanders safe; to keep their jobs and businesses safe; to keep their children safe.

“If Nicola Willis had been in charge, New Zealand would not now be experiencing an inflationary surge, because she would not have authorised the Reserve Bank to create the credit needed to keep our economy from crashing in the face of the worst global pandemic for a hundred years. So, no cost-of-living crisis.

“We would, however, now be in the grip of a much greater crisis: a devastating recession, with unemployment levels not seen since the 1930s. And that wouldn’t be all. No, that wouldn’t even be half. In addition to economic devastation, New Zealanders would be facing the moral and emotional devastation of 10,000 to 15,000 Covid fatalities – a death toll greater than New Zealand’s losses in the Second World War.

“Still, New Zealand would not now be facing a record current account deficit – just a deficit of human potential, talent and wisdom. Just the aching absence of beloved family members at ten thousand Kiwi Christmas tables.

“Am I being too harsh? Are you telling me that Nicola and National would, in all probability, have done exactly what we did? Then, perhaps, you should ask her what she means, precisely, when she accuses us of mismanaging and vandalising the New Zealand economy. Is she accusing us of saving more lives than was reasonable? Is she saying that National would have allowed more people to die – for the sake of the economy?

“Perhaps you should ask Ms Willis how she can leave something as huge as the Covid-19 Pandemic out of her economic narrative? Because, frankly, the people of New Zealand have a right to know how many people saved were too many people saved?

Sadly, Labour doesn’t talk like that anymore. Somewhere, back along the track, the party lost its sense of responsibility for the people who were bound to suffer if its MPs and candidates lost interest in the contest and gave up. Somehow, they forgot that winning and holding political power is not a game of bloody beach cricket! For true democratic socialists, it is never time to give the other team a turn. Not if the other team is itching to employ body-line bowling against the weak and vulnerable in their own.

Labour’s job is to win – and keep on winning. And if, every once in a while, it loses, then its right-wing opponents should damn well know they’ve been in a fight.

POSTSCRIPT: It seems that I wasn't the only person decrying the lack of aggression in Labour's election campaign. In the second leaders' debate, broadcast on TV3 on Wednesday, 27 September 2023, Hipkins came out swinging and landed several heavy blows on a stunned Christopher Luxon. Took you long enough, Chippy! - C.T.

This essay (minus the postscript) was originally posted on The Daily Blog of Friday, 22 September 2023.

Grant Robertson’s “Mini-Budget” Presents Progressives With A “Maxi-Problem”.

 Same As The Old Boss? Robertson’s fetish for paying down Crown debt and amassing government surpluses will limit this government’s options to doling out some extra cash to beneficiaries and the working poor; increasing public servants’ pay; and making a handful of modest improvements to the nation’s infrastructure.

IT’S OFFICIAL – there is now no prospect of this government living up to its promises of introducing “transformational” change. Thanks to Grant Robertson, the Labour-NZ First-Green Government will, with one exception, be fundamentally indistinguishable from the Clark-Cullen ministry of 1999-2008.

The exception? After its initial “Free Tertiary Education” and “Families Package” spending splurges, the Ardern-Robertson ministry intends to keep new spending at levels well below those of both Clark-Cullen and Key-English. Robertson’s fetish for paying down Crown debt and amassing government surpluses will limit this government’s options to doling out some extra cash to beneficiaries and the working poor; increasing public servants’ pay; and making a handful of modest improvements to the nation’s infrastructure.

Now, don’t get me wrong, all of these things are “nice to have”, but we must be very clear about the sort of economic policy Robertson’s “Mini-Budget” is locking-in. Essentially, what we have is a new government offering to be – at best – a slightly more generous version of the government it replaced. At worst, we may be looking at an initial burst of generosity followed by years of the most flinty-faced parsimony. Very much a case of “meet the new boss, same as the old boss”.

Conservative politicians and commentators are forever telling us that problems cannot be solved simply by “throwing money at them”. This simply is not true.

If a business is failing to grow; if it’s employees are being lured away by promises of higher wages; if the technology in use is out-of-date and prone to breaking down: what does the business owner do? If he’s smart, he borrows additional capital and ploughs it into the business. With the additional funds he buys new technology which, in turn, allows him to employ fewer staff at higher wages. The resulting uplift in the business’s productivity generates higher profits, out of which he repays the borrowed capital sum.

Throwing money at problems works a treat. If it didn’t, Capitalism would never have gotten off the ground.

Unfortunately, Robertson does not appear to grasp the critical fact that if New Zealand is to be “transformed” then he, as Finance Minister, is going to have to lay his hands on a very large sum of money. But, not only is Robertson averse to increasing the level of Crown Debt (even though it has never been cheaper for governments to borrow money) but he is also absolutely determined not to use the most important tool which governments – and only governments – possess: the ability to raise “capital” by levying taxes.

Raising taxes is important not only because it would allow the government to accumulate the financial resources necessary to do more than deliver a one-off lift in the incomes of the poorest New Zealanders, but also because a significant increase in the taxes of the wealthiest New Zealanders would begin to undo the transformation that the neoliberal policies of the past 30 years have already accomplished.

The transformation I’m talking about is the transformation which brought an end to the humane and generous social-democratic society for which New Zealand was renowned internationally, and which, in its place, erected the brutally competitive and grossly unequal society the vast majority of New Zealanders are required to live in today. If that society is to be transformed into something more decent and caring, then a substantial redistribution of wealth and power will have to be accomplished.

That could have been the brief of the much-ballyhooed “Tax Working Group”. (On the subject of which I penned a small political fantasy for The Daily Blog back in September.)  But, once again, Robertson erred on the side of caution – not transformation. The Tax Working Group, chaired by Robertson’s mentor and political patron, Sir Michael Cullen, has been given a ridiculously narrow brief, whose less-than-transformational outcomes will not come into effect until after the 2020 General Election.

By when, of course, it will be much too late to rescue this government from its all-too-evident parsimony and political gutlessness. Robertson’s tight rein on spending can hardly fail to set the coalition partners at each other’s throats. And as for that “Hallelujah Song” of emancipation and transformation, which Jacinda Ardern somehow convinced Winston Peters of Labour’s willingness to sing. Her ruthless finance minister will, long since, have truncated its stirring verses to a few discordant bars.

There will be some who take umbrage at my uncompromising pessimism. To them I say: “It is only because I have been here before.” I remember another inspirational Labour leader who put an end to nine long years of National Party rule by promising to take New Zealand “up where we belong”, and who then allowed his Finance Minister to wreak havoc on the expectations and aspirations of his party’s electoral base.

David Lange’s was a “transformational government” and no mistake. As transformational in its way as the First Labour Government. Except that, the transformation Labour wrought was not the transformation the people who’d voted for it were expecting.

“Rogernomics” was able to destroy New Zealanders’ humane and generous society because the political resistance to it was too little, and came too late. If the members and supporters of this government similarly fail to act immediately and decisively against the give now/withhold later policies of Finance Minister Robertson, then the best chance New Zealanders have had in 30 years to heal the harms of the neoliberal “revolution” will be lost.

Not that you’ll hear the National Party and their friends complaining. The low debt and large surpluses bequeathed to them by Grant Robertson will be more than enough to fund yet another round of generous tax cuts – for the rich.

The right-wing transformation of New Zealand will continue apace.

This essay was originally posted on The Daily Blog of Friday, 15 December 2017.

Transformational Politics Demands Transformational Economics.

Change Agents? Grant Robertson’s economic orthodoxy bodes ill for the expectations of Labour, NZ First and Green Party followers that Jacinda Ardern will, indeed, preside over the “transformational” change promised in her new government's coalition agreement.

LABOUR’S ECONOMIC ORTHODOXY presents its supporters with an A-Grade conundrum. If all you ever do is all anyone has ever done, then what are the chances that anything will ever change? Something in the Marxist nucleotide of Labour’s DNA continues to carry forward the message that economics and politics are inextricably linked. Stuff up the former and the latter will swiftly follow suit. That being the case, Grant Robertson could be Labour’s worst enemy.

Not that he should feel too badly about that, because Labour finance ministers have a well-established historical reputation for being their party’s worst enemies.

One has only to think of Philp Snowden, Chancellor of the Exchequer in Britain’s first and second Labour governments. While no one could fault the old man’s dedication to Labour’s working-class voters, his utterly conventional economic ideas left him helpless in the face of the Great Depression. In the words of his biographer, Keith Laybourn: “He was raised in an atmosphere which regarded borrowing as an evil and free trade as an essential ingredient of prosperity.”

It was Snowden’s unwavering faith in these nineteenth century liberal orthodoxies that broke his party and discredited his government. The people who paid the price for their Chancellor’s intellectual rigidity were (as is so often the case) his beloved working-class.

Things might have gone the same way here in New Zealand just a few years later had the proposals of Labour’s economically orthodox leaders (Michael Joseph Savage, Peter Fraser and Walter Nash) not been voted down by the more radical members of their party’s caucus.

It was thanks to this latter group that Labour went into the 1935 election with an economic policy calling for the “immediate control by the state of the entire banking system; the provision of currency and credit to ensure adequate production, guaranteed prices and wages; readjustment of all mortgages” – along with a policy of state-fostered industrialisation which, today, would be described as “economic nationalism”.

How very different these policies were from the policies of Roger Douglas, the Labour Finance Minister who championed the same laissez-faire economic policies implemented by Philip Snowden between 1929 and 1931. “Rogernomics” radically transformed New Zealand’s economy and politics – and very nearly destroyed the New Zealand Labour Party!

The two politicians most responsible for rescuing Labour from political oblivion were Helen Clark and Michael Cullen. In a double act of extraordinary sophistication, Clark and Cullen kept hold of the political reins for nine years by cleverly masking both the true extent of their government’s economic success, and the political opportunities it opened-up.

As Finance Minister, Cullen proved a master at making his burgeoning revenue surpluses, which might have funded a much more ambitious social-democratic programme, disappear.

Some of Cullen’s billions were invested in the special superannuation fund that still bears his name. Even more went into Working for Families, the massive employer subsidy which Cullen introduced in preference to allowing the trade unions to extract the money from corporate shareholders. Most of Cullen’s surplus billions, however, were directed towards paying down Crown debt.

The opportunity cost of these fiscal diversions would only become apparent towards the end of the next decade, when New Zealand’s physical and social infrastructure began to, quite simply, fall apart.

That Michael Cullen has for many years been Grant Robertson’s political patron and mentor bodes ill for the expectations of Labour, NZ First and Green Party members that Jacinda Ardern will, indeed, usher in the “transformational” change promised in the new government’s coalition agreement.

Even before he received his ministerial warrant, Robertson was at pains to bind Labour to precisely the same diversionary economic strategies pioneered by Cullen.

A Finance Minister who repeatedly swears allegiance to his own “Budget Responsibility Rules” is unlikely to champion the sort of creative and progressive economics that makes for creative and progressive politics.

Unless, like Savage, Fraser and Nash; Ardern, David Parker and Robertson are reined-in by a Labour caucus determined to fulfil their government’s “transformational” ambitions, then the long-deferred renovation of New Zealand’s disintegrating institutional and physical infrastructure will not receive the resources it requires.

A transformational government cannot be brought into being except by means of transformational economics. For all his faults, Roger Douglas understood this fundamental proposition. Progressive voters need a Finance Minister whose economic policies are as bold as his government’s political promises.

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 15 December 2017.

Bryan Gould To Labour: This Is No Time For “Conventional Answers”.

Poking The Luminaries: Former Vice-Chancellor of Waikato University and one-time aspirant for Jeremy Corbyn's current job, Bryan Gould, has urged Labour's luminaries to follow the brave example of Michael Joseph Savage's government of the 1930s and shake off the shackles of economic orthodoxy.

BIG UPS TO BRYAN GOULD. Perhaps anticipating a disappointing choice from NZ First on 12 October, the former Vice-Chancellor of Waikato University has put the rhetorical boot  into Labour’s fiscal and monetary caution.

Holding up the example of the First Labour Government’s radical solution to the problem of how to fund its ambitious state housing programme (Mickey savage’s government hit upon the novel idea of simply borrowing the money from itself!) Gould is demanding an equal display of courage and innovation from Labour’s current crop of leaders. 2020 looms as a year of new departures, politically. Gould wants the centre-left to be ready.

Even if NZ First turns left, Gould’s critique remains timely. Grant Robertson, guided by his patron, Sir Michael Cullen, will attempt to put the kibosh on Winston Peters’ expansive (and expensive!) economic programme. So, waving the bright red flag of a NZ First-friendly alternative monetary and fiscal strategy in advance of coalition talks strikes me as a damn good idea. Gould just might convince the “Three-Headed-Beast” to do a little more thinking before binding itself in the chains of Robertson’s reactionary “Budget Responsibility Rules”.

In the simplest terms, Gould’s argument boils down to this. If the private banks are allowed to create money (by crediting us with the money to buy our houses and then charging us interest on our mortgages) then why shouldn’t the state? He then argues that not only isn’t there a good reason why the state shouldn’t do this, but that it already has. “Quantitative Easing”, says Gould, was all about northern hemisphere states crediting their private banks with the money they needed to remain solvent. What, then, stops our own state from funding crucial infrastructure projects: railway and port expansion; new state houses; fully-funded training for thousands of new doctors and teachers; with similar financial instruments?

In his own words:

“Our leaders, however, including luminaries of both right and left, some with experience of senior roles in managing our economy – and in case it is thought impolite to name them I leave it to you to guess who they are – prefer to remain in their fearful self-imposed shackles, ignoring not only the views of experts and the experience of braver leaders in other countries and earlier times, but – surprisingly enough – denying even our own home-grown New Zealand experience.”

Gould’s gentlemanly reticence is all very well, but sometimes a spade should be called a bloody Grant Robertson! Thousands of New Zealanders are pinning their hopes on Winston veering left – as if that’s all that needs to happen. These same people do not appear to have the slightest idea that Labour’s current economic policies would render a Labour-NZ First-Green government next-to-useless. Yes, there might be just enough money to keep health and education stumbling along for the next three years – but there’ll be bugger-all for anything, or anybody, else.

Gould may be too polite to state the matter so bluntly, but I’m not all that interested in politeness. The awful political truth that we all need to get our heads around, is that “orthodox economics” is how otherwise “decent” politicians deliver pain and suffering to the most vulnerable people in our society. And that, at present, just about all the senior figures in the Labour Party and its parliamentary caucus are irrevocably wedded to orthodox economics.

If Winston is of a mind to veer left, therefore, he will first need to persuade Jacinda to abandon her opposition to any person other than Labour’s finance spokesperson taking on the role of Finance Minister. Labour’s intransigence on this matter is a strong indication of the party’s unwillingness to step away from economic orthodoxy. But, neoliberal orthodoxy is precisely what Winston has set his own, and his party’s, face against. How can he possibly enter into a coalition with Labour and the Greens while they remain committed to their ultra-orthodox Budget Responsibility Rules?

Jacinda should interpret Gould’s latest blogpost as a last-minute appeal for her to think outside the conceptual box in which Labour has imprisoned itself. If life is to be made better for those New Zealanders on the receiving end of neoliberal economic orthodoxy, then Labour must reach back into its collective memory and summon forth the courage and creativity which made New Zealand the “social laboratory of the world”.

In this regard, Gould deserves the last word:

“Many of today’s generation will have forgotten or be unaware of the brave and successful initiative taken by our Prime Minister in the 1930s – the great Michael Joseph Savage.  He created new money with which he built thousands of state houses, thereby bringing an end to the Great Depression in New Zealand and providing decent houses for young families (my own included) who needed them.

“Who among our current leaders would disown that hugely valuable legacy?”

This essay was originally posted on The Daily Blog of Thursday, 5 October 2017.

Jacinda's Biggest Challenge: Redefining "Economic Orthodoxy".

Economics Matters: The jubilation of Election Night 1984 was soon overtaken by the economic and social blitzkrieg that was Rogernomics. So, the two questions voters preparing to elect another popular Labour leader in 2017 need to ask themselves are: Does Jacinda's caucus contain the same number of radical change agents as David Lange's? And, if it doesn't, exactly how far will cautious economic orthodoxy carry Labour towards its goals of social equality and economic justice?

LET’S BEGIN with the assumption that Jacinda Ardern is about to become New Zealand’s next prime minister. And that, after nine very difficult years, Labour is poised to re-take the Treasury Benches. The next step, then, is to ask: “What happens now? What sort of Labour-led Government should we expect?”

More than one political observer has noted the similarities between this year’s general election and that of 1984. They have pointed out that Labour entered both campaigns with a new (or, relatively new) and inspiring leader. They also draw our attention to what they claim is a very similar sense of public frustration with the status quo. Socially, economically and politically, they allege, New Zealand finds itself stalled down a dead-end street. The dramatic response to Jacinda Ardern’s elevation, they say, has revealed the same hunger for bold new solutions to intractable old problems that made the 1984 election such an historical watershed.

The crucial factor in the 1984 equation, however, was the presence in Labour’s caucus of a critical mass of radical change agents. Even more critically, these change agents knew that their radical plans would be instantly endorsed and rapidly expedited by like-minded change agents strategically located in the Reserve Bank and Treasury. They were further reassured by the knowledge that important figures in the upper echelons of both the business community and the news media were sympathetic to their proposed “reforms”. Knowing this, Roger Douglas, Richard Prebble, David Caygill and Michael Bassett were supremely confident that the process of fundamentally changing New Zealand would begin the moment they made it into the Beehive.

In this respect, the contrast between the governments-in-waiting of 1984 and 2017 could hardly be greater. As evidenced by their self-imposed “Budget Responsibility Rules”, the leading figures of a Labour/Green/NZ First government pose no threat whatsoever to the underlying assumptions of the economic and social status-quo. Even the usually hostile right-wing newspaper columnist, John Roughan, seems relaxed about the prospect of electoral change, observing smugly that: “[T]oday’s economic orthodoxy, or ‘neoliberalism’ if you don’t like it, is well entrenched in the public service and there is little risk we will lose it.”

Certainly, as the acknowledged protégé of the former Labour Finance Minister, Sir Michael Cullen, Labour’s current finance spokesperson, Grant Robertson, has repeatedly reaffirmed his support for the standard political operating procedures of the Helen Clark-led Labour Government of 1999-2008.

At the heart of those procedures lies an unshakeable commitment to “responsible” (or, as Mr Roughan would put it, “orthodox”) economic management. No less than his mentor, Sir Michael, Mr Robertson has absorbed the lessons of the infamous “Winter of Discontent” of 2000, during which the New Zealand business community provided the Prime Minister and her Finance Minister with a short but effective demonstration of the sort of reaction any government foolhardy enough to stray from the paths of economic righteousness should expect.

It is difficult to imagine that, over the course of the past month, Mr Robertson has not reiterated those lessons to Ms Ardern. Certainly, her own public commitment to uphold the Labour/Green Budget Responsibility Rules points in that direction.

All of which presents Ms Ardern with a dilemma. On the one hand, her slogan, “Let’s Do This.”, suggests to voters that hers will be a government of action and achievement. On the other, her commitment to uphold the Budget Responsibility Rules speaks to the business community of a government committed to not rocking the boat – or, at least, to not rocking it very vigorously.

But, building “more homes” and delivering “better health and education” will require New Zealand’s social and economic boats to be rocked very vigorously indeed. Every bit as vigorously, in fact, as they were rocked by the “Rogernomes” of the 1980s.

Unfortunately, support for such radical rock-n-rolling will be extremely hard to find among the orthodox defenders of the status-quo populating the upper-reaches of the public service, news media and business community. As in 2000, their response to the merest hint that Labour is getting ready to embrace a genuinely progressive programme will be swift and brutal.

Ms Ardern’s response to their response should be guided by the political strategy of the First Labour Government. Take the people into your confidence. Explain what you want to do for them and identify the forces standing in their way. Reassure them that, with their support, the long-delayed changes in housing, health and education – the changes they voted for – will happen. And, finally, remind them that, in a democracy, crucial decisions about the future of their country must be made by – and for – the many, not the few.

Because the truly astonishing thing about all genuinely radical programmes for change – including those of 1935 and 1984 – is how quickly the utterly impossible of yesterday becomes the entirely doable of today.

This essay was originally published in The Press of Tuesday, 5 September 2017.

Don't You Dare, Jacinda Ardern! Don't You Dare!

Oi! Jacinda! No!  If Jacinda Ardern follows the advice of her advisers to scale back voter expectations and re-commit to the Labour/Green "Budget Responsibility Rules", then she will endanger everything she has achieved to date.

 

“DON’T YOU DARE, Jacinda Ardern. Don’t you dare!” That’s what I shouted at the television screen as she started hosing-down the political prairie fire she’d so spectacularly ignited barely a fortnight before. Someone, somewhere, had impressed upon her the importance of walking-back the expectations that “Jacindamania” is raising – especially among the young.

 

Someone, somewhere, has drawn her attention to Labour’s longstanding commitment to fiscal rectitude. Rapidly rising voter expectations of increased government spending on education, health and welfare are threatening to make a bonfire of the party’s much-vaunted “Budget Responsibility Rules” and, clearly, her advisers are insisting that she dampen them down.

 

But, if she heeds this advice, Ardern will endanger everything she has achieved to date. Instead of being hailed as Labour’s political saviour: the woman whose sunny ways have thrown her four dismal predecessors into shadow; she will begin to look like a front-person. A phoney. A fake.

 

All that promise; all that thrilling sense of now, at last, Labour has a leader equal to the challenges New Zealand faces; will dissipate. The radiance of “The Jacinda Affect” will fade. And, in the ensuing gloom, we will see only a smiley-face puppet whose strings are being pulled by the same grey men who gave us Phil Goff, David Shearer, David Cunliffe and Andrew Little. Those “leaders” who failed us by making promises, and then, almost immediately, taking them back again.

 

According to her Wikipedia entry, Ardern has a BA in communications. So, I’m betting there’s a little voice telling her not to listen to her over-cautious advisers. A little voice demanding to know why she is putting her dream-run to the Ninth Floor of the Beehive at risk.

 

She should listen to that little voice, and ignore the voices of all those telling her that the sky will fall if an Ardern-led Labour Government deviates even a smidgen from the numbers set down in the Labour/Green Budget Responsibility Rules. Because it won’t.

 

No need to take my word for it, however. This is what Aussie economist, Professor Bill Mitchell, from the University of Newcastle, NSW, said when asked to comment on the rigid fiscal parameters set down in Labour’s and the Greens’ budget rules. He described them as “the height of economic irresponsibility”.

 

Responding to RNZ’s Wallace Chapman on the Sunday Morning programme of 30 July, Mitchell went on to argue that, since roughly 1 in 8 New Zealanders are either underemployed or unemployed; a third of our children live in poverty; and we have record levels of household debt – “so you’ve got consumption expenditure being driven by debt which is an unsustainable process” – and since we have an external sector that’s draining spending through current account deficits; the very idea of running a fiscal surplus is, in Mitchell’s own words, “irresponsible in the extreme.”

 

Of course all those grey men whispering in her ear will tell Ardern that Bill Mitchell is a crank whose views should, on no account, be heeded. But that is what the advisers to the British Labour Party’s tragic Chancellor of the Exchequer, Phillip Snowden, said about John Maynard Keynes in 1929. And it is also, I’m guessing, what all the people she got to know in Tony Blair’s office said about Jeremy Corbyn’s “For the Many, Not the Few” manifesto. Grey, cautious men will always tender grey, cautious advice.

 

But if she really means to be New Zealand’s Justin Trudeau, then Ardern should follow his campaign strategy. Trudeau saw the New Democratic Party (Canada’s Labour Party) doing everything it could to be “responsible” – to the point where Canadians found it difficult to distinguish Thomas Mulcair’s NDP from Steven Harper’s Conservatives. Seeing the political opening before him Trudeau said something along the lines of “Let’s do this!” – and won.

 

Don’t hose down the expectations you have raised, Jacinda. Be guided, instead, by Bill Mitchell:

 

“[W]hat you’ve got in New Zealand is similar to many other countries in the advanced world. You’ve got the so-called “progressive parties” – the Greens and the Labour Party, who have abandoned [their traditional roles]. The Greens are sort of neoliberals on bikes. And the Labour Party are Neoliberal-Lite. They say, we’ll do austerity – but we’ll do it fairer.”

 

Except: “There’s no such thing as fair austerity when a third of your children are living in poverty.”

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 18 August 2017.

The Greens' "Economic Cred": Hard Won - Easily Lost.

Little Feet: Candidates vying to succeed Dr Russel Norman as the Green Party's Male Co-Leader. From Left: Gareth Hughes MP, Kevin Hague MP, James Shaw MP and Vernon Tava. When tasked by The Nation's Lisa Owen with supplying the answer to a simple economic question, three out of the four candidates failed dismally. His successor will have to work very hard to reclaim even a little of Dr Norman's hard won economic credibility.

 

IT WAS IMPRESSIVE – but it wasn’t real. The Greens’ apparent mastery of economics turned out to be just one man’s – Dr Russel Norman’s – achievement. Hopefully, Dr Norman’s successor will attain an equal level of economic literacy.

 

Because most commentators agree that, throughout John Key’s second term as Prime Minister, the Greens’ co-leader, Dr Norman, easily outstripped his centre-left rivals as the best informed and most articulate economic spokesperson on the Opposition benches.

 

With rare political discipline, Dr Norman acquired a good working knowledge of economics and spoke its language as fluently as Finance Minister, Bill English. Perhaps more so.

 

Quite rightly, Dr Norman had identified the Greens’ unfamiliarity with mainstream economics as a serious weakness. Why should the voters take them seriously if they cannot talk convincingly about the exchange rate’s impact on manufacturing; the effectiveness of the Reserve Bank’s handling of monetary policy; or whether employers are responding adequately to rising levels of worker productivity?

 

It was all very well to talk about a future based on “Green Growth” and “Green Jobs”, but voters living in the here-and-now needed to feel confident that the Green Party understood what was happening in New Zealand’s economy – to their jobs.

 

To become a great artist, it is said, the art student must first learn all the rules and master all the techniques of painting. Only then will he be ready to break all the rules and develop new techniques of his own. Dr Norman clearly believed that the same applied to economics. Only after familiarising themselves with the “dismal science” of classical economics would the Greens be ready to preach the more joyful gospel of sustainability and self-sufficiency.

 

Dr Russel Norman: Big shoes to fill.

 

Dr Norman’s efforts in this all-important sphere of politics did not go unnoticed. Mr Key’s second term had hardly begun when the Parliamentary Press Gallery began referring to Dr Norman as “the real Leader of the Opposition”. This wasn’t solely due to the fact that the Labour caucus’s internal feuding was wreaking havoc upon the Party’s political credibility. It was also about the way Dr Norman, as the Greens’ economic spokesperson, was going head-to-head with the Finance Minister in the House – and not losing.

 

Did all this praise go to Dr Norman’s head? Is that why he raised the possibility that, in a future Labour-Green coalition government, the Finance portfolio might well end up in his own hands? (The very idea was enough to cause serious conniptions in Labour’s ranks!) Was Dr Norman’s much derided suggestion that New Zealand embark on a limited degree of quantitative easing all the evidence his critics needed to prove that a little knowledge is a dangerous thing?

 

Actually, neither of these accusations stack up. Subsequent events were to reinforce Labour’s serious lack of talent in matters economic. And the journalists, so quick to pour scorn upon Mr Norman’s QE proposals, revealed much more about their own, and their government briefers’, ignorance of economics than they did about the Green co-leader’s.

 

In spite of the fact that Labour’s policies on superannuation and capital gains had been in place for more than three years, neither the party’s leader, nor its finance spokesperson, proved equal to the task of selling them to the electorate. A Labour-Green coalition could have done a lot worse than making Dr Norman its Minister of Finance.

 

Not that any of this matters now: not after last week’s edition of The Nation on TV3. In the course of introducing the four candidates competing for the co-leader’s job Dr Norman is stepping away from (Gareth Hughes, Kevin Hague, James Shaw and Vernon Tava) the show’s co-host, Lisa Owen, asked each man to answer a quick-fire question on the economy. What’s the unemployment rate? The inflation rate? The Reserve Bank’s official cash-rate? The economic growth rate?

 

Only one of the candidates, Mr Shaw, even came close to supplying the correct answer. In less than five minutes, Dr Norman’s hard graft over more than three years: his gift of (as Ms Owen put it) “economic cred’”; was needlessly thrown away.

 

None of the questions were difficult. A few seconds on the Statistics New Zealand website was all that they required. That none of the candidates had devoted even this much time to acquiring the answers, makes Dr Norman’s economic literacy an even more singular achievement.

 

Some very hard yards await his successor.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 20 March 2015.

Little Expecting A Lot

Great Expectations: Labour's new leader, Andrew Little, is expecting a lot more from his Shadow Cabinet than the standard neoliberal commitment to keeping the books in the black. He will not be judging the worth of Labour’s economic policies by the level of praise emanating from the business community.

 

ANDREW LITTLE’S Shadow Cabinet reflects his assessment of where Labour is, where it needs to be, and how quickly it should move in that direction.

 

With Grant Robertson’s faction currently wielding extensive influence in both the caucus and the wider party, Little has taken the precaution of seeding the Opposition front bench with at least three of his rival’s closest supporters (Jacinda Ardern, Chris Hipkins, Phil Twyford).

 

In accepting Little’s offer of the finance spokesperson’s role, Robertson himself has shown considerable courage. Throughout his parliamentary career, the Wellington Central MP’s political decisions have (mostly) erred on the side of caution. That will now have to change, because the incremental strategies of his mentors, Helen Clark and Michael Cullen, are no longer equal to the task of halting the relentless decline in Labour’s vote.

 

What’s needed in the finance portfolio is creativity and daring. Already, Little is making encouraging noises about a Universal Basic Income (UBI) the radical income support guarantee popularised by the economist-turned-philanthropist Gareth Morgan. Will Robertson be bold enough to transform New Zealand’s fiscal and welfare landscape by making the UBI policy his own? Or will he, instead, hold fast to the orthodox Treasury line?

 

Prior to last week’s wide-ranging interview between Little and Radio NZ’s Kathryn Ryan, the only political party bold enough to take the UBI seriously had been the Greens. Simply by broaching the subject, Little is sending out a number of important messages.

 

To the Greens he is saying: “You might want to taihoa on that shift to the centre you lot are so obviously contemplating because, unlike David Cunliffe’s, my radicalism tends towards the practical and specific.

 

To the rank-and-file of the Labour Party he’s acknowledging, firstly, the years of patient UBI advocacy put in by Lower Hutt stalwart, Perce Harpham, and his supporters; and secondly, that in spite of the time spent at the helm of the notoriously conservative EPMU, Andrew Little, as Labour’s new leader, is not afraid to debate radical ideas.

 

And, finally, to his caucus colleagues he’s saying that spouting left-wing rhetoric is no longer going to be enough. Labour needs to advance a practical programme of reforms that aim to do a lot more than just tinker around with the existing system.

 

The message to the man he defeated by a single percentage point could not be clearer.

 

Little expects a lot more from his future Finance Minister than the standard neoliberal commitment to keeping the books in the black. He will not be judging the worth of Labour’s economic policies by the level of praise emanating from the business community. For Little, looking after the One Percent’s funds cannot be Labour’s first priority. The critical challenge confronting Labour’s next Finance Minister will be funding the changes so desperately needed by the other Ninety-Nine Percent.

 

In other words: how does Labour make sure that a rising tide of economic growth lifts more than just the luxury yachts?

 

Little has strongly hinted that the answer to that question does not lie in the introduction of a Capital Gains Tax, or raising the age of eligibility for superannuation from 65 to 67. New policies, based on the electorate’s most urgent needs, is what Little has asked for, and his promise to review the Shadow Cabinet’s performance in 12 months’ time strongly suggests that he means to get them. Little’s colleagues would be wise to assume that his threshold for failure is set a lot lower than his predecessors’.

 

Little cannot afford to let Labour drift any longer. Either its Shadow Cabinet will convince the electorate that it possesses both the will and the talent to take New Zealanders where they want to go, or it will be reshuffled within an inch of its life. Either its MPs will make themselves the conduits for new ideas and bold initiatives, or they will be replaced. Labour will either, once again, become the party of progressive reform, or it will die.

 

And, if Andrew Little aspires to being something more than just the latest person to pass through Labour’s revolving door of leaders, then he will not only use the next 12 months to introduce himself to the voters, but also to recruit the best and the brightest Kiwis he encounters to Labour’s cause.

 

Time is not on his side.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 28 November 2014.

Cramped And Conventional: Labour's Alternative Budget Fails To Impress.

Labour Apologist? David Parker's Fiscal Plan is cautious in conception, orthodox in construction and singularly lacking in political inspiration. It's as if Parker felt the need to apologise for being a member of the Labour Party by constantly reassuring his readers that when it comes to controlling expenditure his plan is as fiscally responsible as the Finance Minister’s.

CONGRATULATIONS to the Labour Party for releasing an Alternative Budget well ahead of the General Election. Allowing the voters to quite literally get the measure of Labour’s economic ambitions is an entirely praiseworthy gesture which will, hopefully, be emulated by all the other parliamentary parties.

 

The document itself is less deserving of praise. What David Parker has produced is a Fiscal Plan that is cautious in conception, orthodox in construction and singularly lacking in political inspiration. If the document can be said to reveal any sort of vision at all it is of the most cramped and conventional kind – as if Parker felt the need to apologise for being a member of the Labour Party by constantly reassuring his readers that when it comes to controlling expenditure his plan is as fiscally responsible as the Finance Minister’s.

 

Responding to Labour’s Alternative Budget, BusinessNZ Chief Executive, Phil O’Reilly, noted that its costings and commitment to frugal spending would likely be welcomed by the business community. But Parker’s centrepiece – an increase in the top personal tax rate and trust rate to 36 percent – was unlikely to aid competitiveness and would penalise those who tended to invest most.

 

“Higher income and trust tax along with a new capital gains tax are not good signals for anyone wanting to invest in New Zealand’s growth.” Said O’Reilly.

 

But this rote rejection of higher taxes on the wealthy is of much less importance that the generally positive noises that preceded it. Clearly, Parker’s Budget is one that offers very little with which New Zealand capitalism could take serious issue. Indeed, the risible addition of 3 cents to the top tax-rate almost certainly occasioned a massive sigh of relief on the part of New Zealand’s top 2 percent of income earners.

 

On the afternoon he announced his candidacy for Labour’s leadership, David Cunliffe’s response to the inevitable question: ‘Do you believe in higher taxes?’ had been an unequivocal “You betcha!” Ever since, New Zealand’s wealthiest citizens have almost certainly been anticipating an aggressively redistributive fiscal strategy from the Cunliffe-led Labour Party. The announced top rate of 36 percent – 9 percentage points lower than Australia’s – must have them shaking their heads in disbelief. Their party was not so sparing of New Zealand’s poorest citizens.

 

Parker’s refusal to give effect to the confiscatory fiscal impulses of Labour’s membership is emblematic of everything that has gone awry with Cunliffe’s leadership. Elected on the promise of restoring the Labour Party to its core, democratic socialist, values (and being rewarded with a 37 percent poll rating by an electorate hungry for political substance) Cunliffe has failed utterly to build on the ideological momentum of his historic victory.

 

It is now clear than in the months following his win Cunliffe spent most of his time attempting to pacify his caucus colleagues. Rather than using the inevitability of constructing a left-wing coalition government to bring obstructive Cabinet aspirants to heel, the new leader attempted to construct some form of policy consensus. Parker’s Alternative Budget is proof of just how successful his caucus colleagues have been in forcing Cunliffe to abandon his democratic socialist promises.

 

The brutal fact of the matter is that Labour will go into the 2014 election with an economic policy package considerably to the right of its 2011 manifesto. In trying to unite his caucus “team”, Cunliffe has abandoned the very principles that had caused the Labour Left to embrace him as their champion. If Parker’s warmed-over “Third Way” social-democracy (with neoliberal characteristics) fails to inspire the voters, and Cunliffe leads Labour to defeat, it is likely the membership will punish their erstwhile champion’s apostasy with much more severity than the ABC faction’s admirable consistency.

 

Parker is at pains to paint his deeply conservative economic policies as a progressive “Economic Upgrade”. It is, he tells us in his introduction, “an ambitious set of goals” which, sadly, have required some “tough choices”. Among these, presumably, is the tough choice to compulsorily acquire a portion of a worker’s meagre wages and place it at the disposal of private investment companies until that worker turns 65. Or should that be 67? Tough, too, must have been the choice to build the 100,000 highly subsidised private dwellings the middle-class wants, rather than the 100,000 affordable state houses the working-class so desperately needs.

 

In the dreary tone of a latter-day version of the British Labour Party’s infamous Depression-era  Chancellor of the Exchequer, Phillip Snowden, Parker informs us that “not all the policies we would like to do can be funded”. The priority, as always, must be “getting the government’s books in order” and “getting the economy growing” after six years of National Party rule. Hardly the sort of message to get the masses flocking to the polling booths!

 

Cramped and Conventional: Philip Snowden (1864-1937) was Britain's Chancellor of the Exchequer at the onset of the Great Depression. Unable to think outside the box of laissez-faire capitalist orthodoxy, this Labour politician oversaw a programme of retrenchment and austerity which succeeded only in making the economic crisis worse.

 

What’s missing from this Alternative Budget is any hint of a political movement determined to change the overall direction of national policy. There is no plan to bring the ideas and aspirations of working-class people back to the centre of the political stage. No pledge to repair the damage inflicted upon the poorest and most marginalised New Zealanders by successive governments (including the last Labour Government).

 

There is not even an attempt to make good on the promise at the heart of Labour’s 2011 election campaign: the pledge to “Save Our Assets”. For Labour’s parsimonious finance spokesperson, the notion of “buying back the farm” clearly comes a poor second to “getting the government’s books in order”.

 

And yet there exist vast capital reserves that a bold and radical Labour-led Government could devote to housing the people and putting the unemployed to work. ACC does not need to be a fully-funded scheme. Were it to return to the pay-as-you-go scheme it was originally intended to be, then the $20 billion taken from levy-payers to transform ACC into an insurance company fit for privatisation would steadily become available for the improvement of New Zealand society.

 

It is the manifest lack of imagination, the stunted ambition, the absence of excitement and inspiration that makes Labour’s Alternative Budget so disappointing. The wealthy and the powerful will praise it – remarking on Labour’s surprisingly responsible approach to economic management. But for those who look to Labour for the opportunities that helped their parents and grandparents enjoy a more abundant life, Mr Parker’s Fiscal Plan risks being seen as just another reason to stay at home on 20 September.

 

This essay was originally posted on The Daily Blog of Thursday, 26 June 2014.

Mr Shearer's Selective Patriotism

Last Refuge? David Shearer's repreated use of the word "patriotism" would be less worrying if it was more inclusive. Unfortunately, the "NZ Inc." approach, rather than advancing policies designed to benefit wage and salary earners across the board, almost always involves extending the state's support to a select group of employers.

“BLOODY IMMIGRANTS, taking our jobs, shouldn’t be allowed!” That’s how conservative working-class voters, sharing a jug at the Hornby Working Men’s Club, might’ve put it. But their analysis, for all its pith and honesty, would’ve been wrong. Immigrants have become an indispensable component of the New Zealand labour market. Without them our economy would stall. It was David Shearer’s duty to explain that. As leader of the Labour Party his role is to counter ignorance with facts, and prejudice with values. In Christchurch last week he did neither.

 

In his speech to the Hornby Working Men’s Club last Thursday, Mr Shearer quite rightly stated that: “We need to avoid being locked into a downward spiral where our skilled people go to Australia for better wages, where those people are replaced by migrants who are paid less, which in turn sends more of our skilled workers to Australia.”

 

In that single sentence the Labour leader encapsulated the grim dynamic of New Zealand’s labour market. This country’s ability to hold onto its skilled workers has been very seriously weakened by the power of what is, in effect, a single Australasian market for skilled labour.

 

In this context New Zealand operates not as a sovereign state, but as an entity indistinguishable from a state of Australia. The 35 percent-plus premium Australian employers are willing to pay skilled Kiwis for crossing the Tasman leaves New Zealand’s government with no option but to replace them with skilled immigrants for whom New Zealand wages and salaries exercise a similar magnetic effect.

 

Mr Shearer appears to think that limiting the influx of immigrant labour will somehow slow the exodus of skilled New Zealand workers to Australia. But it won’t. Australia’s borders remain open, and so long as that remains the case the cleverest and most talented Kiwis will continue to fly.

 

And if the efforts of the New Zealand government to meet the rising demand for skilled labour (driven in large measure by the Christchurch re-build) are to be scaled back, and the inflow of immigrants choked-off, then the economy will also suffocate.

 

At the core of the problems Mr Shearer identifies in his speech is the depressed levels of New Zealand wages and salaries. One way to address this would be to simply prohibit the emigration of skilled New Zealand workers. That would, of course, require New Zealand to become a totalitarian state – a solution most of us would reject out-of-hand. The other alternative is to substantially lift New Zealanders’ incomes.

 

The interesting question, therefore, is why Mr Shearer offered his staunchly Labour audience so little in the way of concrete measures for lifting wages and salaries. A careful reading of his speech reveals that increased incomes have been relegated to mere aspirations: something Labour would like to see; expects to see; but will do nothing beyond a modest increase in the minimum wage to achieve.

 

This means that any Labour Government led by Mr Shearer is likely to shy away from direct interventions in the labour market. It will not pass legislation designed to reverse the flow of wealth from wage and salary earners to owners and shareholders. It will not, by substantially lifting the minimum wage, engineer a wholesale winnowing-out of New Zealand’s most inefficient businesses. It will not pass legislation restoring universal union membership or the national award system. It will not use the Government’s ability to set wages and salaries in the public sector to provide both a guide and a goad for private sector employers. In short, it will not do any of the things required to raise the incomes of New Zealand’s wage and salary-earners.

 

What Mr Shearer did do, however, was promise all kinds of direct aid and assistance to New Zealand Incorporated. “It’s time we got proud”, he said, “time we got patriotic. It’s time we backed New Zealand, instead of taking our hands off the wheel.”

 

But Mr Shearer’s patriotism is selective. State assistance goes only to exporters. Direct intervention in the labour market extends only as far as limiting the inflow of immigrants. And Labour’s promise of improved living standards, by way of “high-skill, high wage” jobs, continues to follow the example of the White Queen’s employment contract in Through The Looking-Glass and What Alice Found There: “The rule is, jam tomorrow and jam yesterday – but never jam today.”

 

What the audience gathered at the Hornby Working Men’s Club deserved to hear from Mr Shearer was an acknowledgement that Labour’s challenges are specific and immediate. To raise incomes by re-empowering working people and redistributing wealth. To make New Zealand a place where the diversity of its population is a source of strength and pride, not an opportunity for mistrust and division. To create a community of values, where loyalty is owed not to flags – but principles.

 

This essay was originally published in The Press of Tuesday, 23 October 2012.