Fran O'Sullivan: Perfect time for a right-hand turn

Right-of-centre parties have a superb opportunity to form an opposition coalition within Parliament to push pro-economic-growth policies.

National has been devastated by its election wipeout.

But if New Zealand First leader Winston Peters, Act's Richard Prebble and United Future's Peter Dunne have the courage to put aside narrow sectional interests, form a brains trust with National using their best players, and capitalise on Labour's frank antipathy towards the Greens, they have an opportunity to shift the Government to adopt pro-business policies.

The election result is not a ringing endorsement of Labour's first term in Government - far from it.

Prime Minister Helen Clark did not achieve her pre-election goal of an absolute majority.

There has, in fact, been a shift back to the centre-right.

The shift gives Clark the ability to launch a frank incursion onto the opposing ground with a second-term agenda which is pro-economic-growth rather than the incrementalist regime which she towered over during her first term as Prime Minister - if she has the courage to do so.

Clark's strong campaigning increased Labour's vote.

The voting bloc to the left of Labour formerly occupied by the Alliance and the Greens has been halved.

Labour's coalition partner - Jim Anderton's Progressive Coalition - is reduced to a second-term poodle. The Greens are the only other left-of-centre party to survive.

The Greens have marginally increased their presence by upping the number of MPs from seven to eight. Clark knows that if she annihilates them in the next three years, there is a risk that the left spectrum will lose its majority at the 2005 election if the pendulum continues its rightwards swing.

It's a risk she should run to pursue stronger government.

The Greens are frankly anti-growth and will pull Labour down with them if Clark allows them to tag along.

Yesterday the Greens were continuing their absurd self-destruct mission, pumping out empty threats to withdraw support for Clark's minority Government when it lifts the moratorium against GM field trials next year.

On paper, the left spectrum commands 62 seats in Parliament to the 58 seats held by the right spectrum.

Labour's 52 MPs and the two Progressive Coalition MPs will form a minority coalition Government.

Clark knows she can count on either the Greens or United Future to get her above the line on most of Labour's current second-term agenda. The two parties essentially cancel each other out.

Clark's powers of political seduction are strong.

Dunne has said United Future will go into a confidence and supply arrangement with the minority coalition Government. The voters expect it.

During the election, Dunne presented his party as moderate centrists who would be happy to coalesce with either Labour or National.

Dunne's genesis is from Labour's centre-right wing of the 1980s.

But if Dunne has an eye to the long-term future, there is another more powerful game which can be played - if he ensures Clark pays a price for his seduction.

National will be a muted force in the short-term.

On Saturday, leader Bill English looked likely to spend the next term in a ritualistic mea culpa exercise apologising to New Zealand for its past policies.

Heads will roll as National sheets home responsibility for its inept campaign.

But former Reserve Bank governor Don Brash will be a powerful addition to its caucus and another bridge to Act, which has maintained its presence, bolstered by some new hungry MPs.

Even though Peters' New Zealand First achieved its 10 per cent showing on the back of firm immigration, law and order and Treaty of Waitangi issues, its underlying philosophy is pro-business.

Peters sprang from National's ranks.

Also reading the electoral prism will be the economic right within Labour's own caucus.

Cabinet ministers like Trade Negotiations Minister Jim Sutton, Health Minister Annette King and Foreign Affairs Minister Phil Goff are all unreconstructed Rogernomes at heart.

Waiting in the wings are MPs like Clayton Cosgrove, a protege of former Labour Prime Minister Mike Moore, now in his last months as World Trade Organisation supremo.

These MPs may have paid lip service to the ritualistic repudiation of free-market economics Clark took the party through during its nine years in opposition.

But the MPs have not completely shied away from the policy agenda which some of them helped former Labour Finance Minister Sir Roger Douglas drive as he unshackled the New Zealand economy during the 1980s.

They will not break ranks with Labour, but could be powerful voices around the Cabinet table as the election reality sinks in.

The next Parliament, in fact, represents fertile ground on which to sow pro-business policies.

If a pro-business opposition coalition emerged, it could take the Business New Zealand scorecard as a starting point.

In a pre-election survey of 260 businesses from its membership, the business lobby found 97 per cent wanted "balanced" or "faster growth" as the driver for social and environmental wellbeing.

Other major issues of critical importance to business are: tax changes to support savings and export investment, lowering of company tax rates, more skilled immigration, reduction of compliance costs associated with the Resource Management Act, better education outcomes so all students leave with the National Certificate of Educational Achievement under their belt, more industry training and strong international trading relationships.

The scorecard ranked four of the political parties who will be represented in the next Parliament as pro-economic growth.

The standout factor is the Greens, who are not ranked as pro-growth.

There is a lesson in this for Clark and Dunne.

The economy is already shrinking. New Zealand's economic growth rate is expected to tumble to half the average of our 14 major trading partners next year.

This presents opportunities for Dunne to either leverage some policy outcomes during his discussions over confidence or supply arrangements, or for a right-of-centre coalition to use private members' bills to shift the policy settings to a pro-business framework.

Take taxes.

All six parties support tax changes to encourage savings and export investment - so there is little to stop a concerted push on that score.

Labour Finance Minister Michael Cullen is adamantly opposed to cutting corporate tax rates, saying New Zealand's effective tax impost on business is less that of Australia's.

But on this issue, United Future lines up with National, Act and New Zealand First in favouring the cutting of corporate tax. Why not extract a policy concession to cut company tax from Clark during confidence discussions?

The business community would welcome it.

Quick inroads could also be made in the RMA and education without major risk.

There will also be new international political pressures as President George Bush launches his Iraq invasion.

But the prime impact will come from a contracting economy, with declining commodity prices which will take $1.5 billion out of the rural economy next year.

Exchange rate volatility has increased the competitive hurdle for New Zealand exporters. The environment is now tougher than in the previous three years.

Clark should deal the hand the voters have given her and shift her policies to the right.

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