National Starts To Panic.

Running Scared? That’s the voters’ choice, if you listen to National’ s panicky Chris Bishop: a clean two-party coalition, or a dirty three-way.

GUYON ESPINER AND ANDREA VANCE kept casting glances towards Ruth Richardson, much as they would towards a batty old aunt. Indisputably, there was something deeply eccentric about Richardson’s performance on Saturday’s Newshub Nation. But, there was also something scary.

Like the Bourbons (the French royal family restored to power following the defeat of Napoleonic France) Richardson appears to have “learned nothing, and forgotten nothing”. Hearing her speak about the New Zealand economy, and what is needed to restore it to health, it was as though the three decades that have slipped by since her brief tenure as Finance Minister were empty of incident. As if all the deterioration in the quality of New Zealanders’ lives and the slow decay of their nation’s institutions – much of it attributable to Richardson’s policies – could be made to disappear by a furious waving of hands.

Richardson is exactly the same person, ideologically, that she was in 1991, when her vicious “Mother of all Budgets” left beneficiary families in tears, and the charities dedicated to their support starved of resources. The same, pint-sized true believer: fizzing with ideological certainty; ready to inflict pain and hardship upon half a nation for its own good – and for the even better of the other half.

That the passage of so many years has not dimmed the fanatical brightness in Richardson’s eyes is only marginally less frightening than the fact that she sits on the Act Party’s Board-of-Directors.

That Ruth Richardson just might have the ear of Act Party Leader, David Seymour, was reportedly enough for a number of the National Party’s biggest friends and donors to take a deep breath and pour hundreds-of-thousands of dollars into the coffers of NZ First. Their argument was straightforward. National could not afford to be driven into the same dangerous territory as Jim Bolger. Winston Peters had applied the handbrake whenever Jacinda Ardern’s government threatened to leave the road – best to have him there if Christopher Luxon’s looked like doing the same.

After all, the only thing that had saved Jim Bolger’s government, following three years of “Ruthanasia”, was the First-Past-The-Post electoral system. The disastrous electoral impact of Richardson’s policies may be measured in the precipitate fall in the National Party’s share of the popular vote. From 48 percent in 1990 to just 35 percent in 1993. Had MMP been in place for the 1993 general election, Labour and the Alliance, with a combined Party Vote of 52 percent could easily have taken power. Bolger would have presided over National’s first one-term government.

If Seymour is permitted to exert the same economic and social policy influence over Luxon’s government as Richardson exerted over Bolger’s, then a Labour-Green government in 2026 will be odds-on favourite. And it won’t be anything like the Labour-Green-NZ First Government of 2017-2020. Assuming the pollsters are correct, and that Chris Hipkins’ government is soundly defeated on Saturday, then a pretty ruthless scouring of the Labour Party is unavoidable. What a National-Act government (unrestrained by Peters’ handbrake) is likely to face in 2026 will be as close to a “coalition of communists” as New Zealand has ever seen.

For a few days, over the course of the past fortnight, it appeared that the moderate faction of the National Party had prevailed over its hard-liners. Luxon made it clear to the voting public that while his preference was for a “clean” two-party coalition with the Act Party, if its preference was otherwise, then he would pick up the phone and call Winston. Almost overnight, NZ First’s numbers improved by a whole percentage point – lifting it to a projected 6 percent of the Party Vote. With NZ First securing that level of support, a National-Act-NZ First government became a dead certainty. The Right was poised to re-take the Treasury Benches.

Or … not. Between Luxon’s confirmation of a week ago that, if required, a three-party coalition, including NZ First, was possible; and National Campaign Manager Chris Bishop’s panicky Sunday predictions of deadlocked negotiations, hung parliaments, and the possibility (probability?) of a second election; something very serious had gone very wrong. Somewhere in National’s caucus, party, or party-donors’ ranks (and, quite possibly, in all three simultaneously) a split has opened up between those who favour simply a change of government, and those who, echoing Act’s election slogan, favour “real change” – Richardsonian change.

Having witnessed the NZ First “surge”, from 5 to 6 percent, these “Real-Changers” were clearly terrified that Act’s recent slump in support, from 15 percent to 10 percent, was not going to stop, and that Luxon might well emerge from Saturday night’s count with a Party Vote between 34-36 percent, followed by Act and NZ First with 8 percent apiece. For the Real-Changers, an Act Party with no more support than NZ First could produce only a lazy, do-nothing, National Government – something on the model of John Key’s. Unacceptable, was their judgement. Act won’t wear it. Seymour would rather face a new election than spend the next three years as National’s and NZ First’s geeky younger sibling. If Chris Bishop wasn’t prepared to tell the public, then Act and the Real-Changers would.

Hence Bishop’s panicky statement regarding fruitless negotiations, hung parliaments and a second election. Clearly, he and his fellow strategists are attempting to spook Peters’ more recent converts into returning to National and Act. Their argument is brutally simple: back a National-Act government – without Peters – or face months of crippling political and economic instability by keeping him in the mix. That’s the voters’ choice: a clean two-party coalition, or a dirty three-way.

Will it work? Is Peters’ recent support susceptible to such threats? Are they Real-Changers, too, or are they after a different sort of change? Not Richardson’s economic rationalism, but Peters’ economic nationalism? And if it’s the latter, then asking them to embrace Ruth and kiss Winston good-bye, may not work. It just seems logical that if a right-wing voter was looking for the real change that Seymour is offering, then he or she would already be safely tucked-up with Act.

Then there’s the Left’s lost and lonely. Driven away from both Labour and the Greens by the latter’s’ support for restricting freedom of expression, re-writing the Treaty, and encouraging transgenderism. These unreconstructed lefties are looking to NZ First for shelter from the wokesters’ storm. Ex-Labour-Alliance-Green voters are not going to oblige Bishop by backing a National-Act government – no way.

Peters, Himself, has described Bishops’ statement as “scaremongering”:

These very concerning comments must be an unfortunate misunderstanding because suggesting the National Party would start scaremongering and threatening to ignore the will of the people on Election Day and ignore the need of our country to form a stable government would be highly troubling to voters. It is telling voters National would instead enforce another costly election on the nation purely because of their own political expediency.

Which is a classically orotund Winstonian way of saying that such behaviour, far from persuading opponents of Labour and the Greens to run towards the National and Act parties, is much more likely to drive them into the arms of NZ First.

Very good news indeed for sly Uncle Winston, but not at all what eccentric Aunt Ruth was hoping to hear.

This essay was originally posted on the Interest.co.nz website of Monday, 9 October 2023.

An Exercise In Basic Accountancy.

Hoopla And Razzamatazz: Putting the country into debt allows a Minister of Finance to keep the lights on and the ATMs working without raising taxes. That option may become unavoidable at some future time, for some future government, but that is not the present government’s concern – not in the context of a three year electoral cycle. The politician’s motto is simple: “Always put off until tomorrow what is likely to cost you votes today.”

WHY HAS MAKING such a ridiculously big deal out of the whole Budget exercise persisted? The very notion that the government of the day possesses the foresight and skill to successfully diagnose and treat the nation’s economic ills in ways that have not been tried a hundred times before is fanciful. The smart move would be to treat the entire process as an exercise in basic accountancy. Because that’s all it is.

In essence, the budgetary process is about whether or not present state expenditures should persist (with appropriate adjustments for inflation) or be discontinued. Since most state expenditure is committed to activities that cannot be discontinued without throwing society into chaos, practically all of the Minister of Finance’s decisions are made for him. The sick must continue to be treated. The young must continue to be taught. The poor must continue to be housed and fed. The elderly must continue to be supported in their old age. Just attending to these “Musts” consumes practically all of the State’s annual revenue.

Of course a wise Minister of Finance will also keep a weather-eye on the condition of the global economy. Not because he can do anything about it, but because the impact of exogenous economic events – especially negative events – cannot help but affect the condition of the domestic economy. A reduction in the amount of money people spend and/or invest has consequences for the health of the nation’s businesses, the number of its citizens in work, and, most importantly, the quantum of revenue collected by the state.

In a rational society, any shortfall in state revenue would be made up by a corresponding increase in taxation. Unfortunately, democratic states are seldom governed rationally. Governments elected by the people are reluctant to court the wrath of their electors by increasing their taxes, preferring instead to allow the nation’s cultural and physical infrastructure to decay. Or, if the deferral of crucial maintenance fails to produce the savings necessary to keep the “Musts” operational, borrowing to make good the shortfall.

Government borrowing poses all manner of potential problems for the nation, but not immediately. In a democracy, this delay between the act and its consequences is precious. Putting the country into debt allows a Minister of Finance to keep the lights on and the ATMs working without raising taxes. That option may become unavoidable at some future time, for some future government, but that is not the present government’s concern – not in the context of a three year electoral cycle. The politician’s motto is simple: “Always put off until tomorrow what is likely to cost you votes today.”

The problem with days of reckoning is that they always come. It was Rob Muldoon who found himself without a chair to sit on when the music stopped playing in 1984. When the game resumed, David Lange, and his Finance Minister, Roger Douglas, found themselves without fiscal options. Something dramatic had to happen to the way New Zealand was run, or the lights would indeed go out and the ATMs stop working. (In 1984 they very nearly did!)

As we all know, something dramatic did happen – “Rogernomics”.

Prior to Rogernomics, Budgets had been newsworthy largely because they were the occasion for rises in government taxes on petrol, tobacco and alcohol. Less frequently they made news on account of minor adjustments to Income Tax. Roger Douglas put paid to all of that.

After 1984, Budgets became part of the grand theatre of economic reform. Not even the “Musts” escaped the attention of the reformers. The National Party Finance Minister, Ruth Richardson, confronted with another day of fiscal reckoning in 1991, produced what she called “The Mother of All Budgets”. (A reference to Iraq dictator Saddam Hussein’s promised “Mother of All Battles” during the First Gulf War, which should have warned New Zealanders what Richardson had in store!) It was TMOAB that slashed the incomes of beneficiaries by 25 percent – impoverishing thousands. For some Kiwis, Budgets were now events to be feared.

In spite of the best efforts of the political marketing experts, there has not been a Budget to match Ruth Richardson’s TMOAB for more than 30 years. Yes, there have been years in which Bill English (another National Finance Minister) felt obliged to cut back sharply on what he memorably described as the “Nice To Haves”. (Government projects that made life easier, happier, more fulfilling.) But the “Musts” have limped on from one Jerry-built Budget to the next. But, not for much longer. Those dark clouds gathering on the horizon speak gloomily of another day of reckoning that is fast approaching.

It will not be an ordinary day. Crowded into its 24 hours will be climate change, global financial fragility, the weakening and breaking of supply chains, rising geopolitical tensions, rampant inflation, and the ongoing effects of a global pandemic. To keep the lights on and the ATMs working in the face of these challenges, governments all around the world have been forced to borrow and spend like there was no tomorrow. (Which, with the hooves of the Four Horsemen of the Apocalypse thundering across the planet, may not be an unreasonable prediction!)

The current Finance Minister, Grant Robertson, has about as much chance of holding these grim arrivals at the border as King Canute had of keeping the incoming tide at bay. The budget Robertson delivered today, like most budgets, is a holding operation. If he’s lucky, he will get the chance to borrow and spend all over again in 2023, in a final bid to retain control of the Treasury Benches.

If, however, Robertson is unlucky and/or unsuccessful, then he is unlikely to be too distraught. Indeed, he may feel extremely relieved that he does not have to write the 2024 Budget. And if his assumed successor, Nicola Willis, has a lick of sense she will persuade her boss, Christopher Luxon, to hand-off the job of dealing with the Mother of All Days of Reckoning to Act’s David Seymour. After all, he’s the man with the machete.

Rather than search for a Budget title to top Ruth Richardson’s, Seymour should dispense altogether with the hoopla and razzamatazz surrounding the Budget performance. Since the document he hopes to present will be nothing more – nor less – than an exercise in basic accountancy, that’s the description he should use.

That the phrase ‘an exercise in basic accountancy’ will forever after strike fear into the hearts of New Zealanders is, sadly, as unavoidable as death and taxes.

This essay was originally posted on The Daily Blog of Friday, 20 May 2022.