Judith Collins has nothing to lose by trying something ambitious. Photo / Mark Mitchell
Judith Collins has nothing to lose by trying something ambitious. Photo / Mark Mitchell
COMMENT:
On August 11, when responding to the first community cases of the second wave of Covid-19, the Prime Minister announced that "we have a Resurgence Plan that we will now activate".
Nearly six weeks later, despite requests under the Official Information Act, the claimed Resurgence Plan is yet tobe published. If it exists at all, it seems it is like our constitution — dispersed among a number of documents, and supported by conventions that are not even written down.
You may ask why Jacinda Ardern would have referred to a plan that, at best, does not exist in anything like the form she implied. The answer is the same as it would be if the question was why Judith Collins constantly claims to have a plan. Both main parties' market research shows the public is desperate for any sort of plan — and, under MMP, what the voters want, the voters get, at least rhetorically.
Today we learn if Collins has substance behind her words. She has no choice but to be bold.
Wednesday's Pre-Election Economic and Fiscal Update (Prefu) outlined the worst set of numbers ever published since Ruth Richardson implemented her pre-election disclosure regime in 1993. They revealed almost certainly the worst real outlook since the Great Depression.
Most public attention has been on the Treasury's projection that, under current policies, the Government's accounts will remain in deficit for at least 15 years.
Over the next five years, the Government's net worth will plunge by $100 billion to just $43b — and then keep declining. Over the same five years, net core Crown debt, even taking into account the Superannuation Fund, will leap from just $14b to $134b — and then keep rising.
New Zealand's ability to respond to a further shock will keep getting worse until 2034 at the earliest.
The Prefu projected that unemployment will rise and stay high for longer than previously forecast, partly contributing to productivity growth now expected to be even worse than believed in May. A weaker global economy will mean lower prices for our exports. Services exports, including tourism and international education, will remain devastated.
Under the party that made such political hay out of the "housing crisis", wage growth will be weak but house prices will leap ahead, radically widening inequality.
Perhaps most worrying, the Treasury's long-term forecasts may be too optimistic, being predicated on the border being back to normal by New Year's Day 2022. Under the current Government's approach to Covid-19, that requires the heroic assumption that a vaccine will be developed and distributed widely enough to achieve community immunity by late next year.
Moreover, while optimists like Westpac point to a domestic economy that has proven more resilient than expected, that has been based on a wage-subsidy scheme everyone agrees cannot continue.
To the extent that he has one, Grant Robertson's economic plan consists of the set of assumptions that informed the Prefu plus his largely symbolic tax increase on incomes above $180,000 a year. Quite deliberately, Labour is avoiding anything new or innovative.
Prime Minister Jacinda Ardern and Finance Minister Grant Robertson during their press conference in Palmerston North yesterday. Photo / Mark Mitchell
Likewise, at least until today, National's economic plan has consisted mainly of Chris Bishop's massive Upper North Island infrastructure package plus schemes to subsidise new businesses and jobs.
It has also caught itself in a self-imposed quandary around Paul Goldsmith's apparent obsession with reducing net core Crown debt, excluding the Super Fund, to 30 per cent of GDP "in a decade or so".
Robertson has slammed that as a "Bermuda Triangle" fiscal policy, saying National is somehow trying to increase spending, reduce revenue and lower debt all at the same time.
The only way out of that triangle is for National to plausibly offer an expressway to economic growth higher than the Prefu's anaemic numbers for 2021 and the 3.6 to 4.1 per cent forecast from 2022 to 2024. Its problem is that too seems at odds with a focus on lowering borrowing, at least in the short run.
National's main argument that it would deliver higher growth has been around the quality of spending.
Up against the Government of KiwiBuild, fees-free tertiary education, the Provincial Growth Fund and the Green School, that is an easy argument to make, but it still relies largely on a matter of opinion. A simple assertion to be more efficient spenders of the tens of billions forecast to be borrowed has insufficient rhetorical power to swing many voters. To get back in the game, National's plan today will need to shock the campaign.
Were National bold, it would put short-term fiscal concerns aside and go all in with big tax cuts. It would open up New Zealand to unconstrained foreign investment, except for land. The Resource Management Act would be abolished before Christmas, rather than on Collins' existing timeline to get it done within three years. A commissioner would be appointed to replace Phil Goff's hapless Auckland Council.
In other measures, the 90-day trial period would apply to all new hires. Instant depreciation would be radically increased even above National's existing promise to take it to $150,000 per asset. All shovel-ready projects submitted to the Government earlier in the year would be funded. Every school or community facility that needs it would get a lick of paint in the 2021 calendar year. A commitment might be made to open the border by the end of 2021, come what may.
All this is certainly outside the comfort zone of Collins' MPs. But she has just one shot at the prime ministership and her party continues to be 20 points behind in the polls. She has nothing to lose by trying to recapture the initiative, and offering something bold enough for voters to at least be prepared to give her the benefit of the doubt before next week's leaders' debate and in the fortnight before advance voting opens.
Collins needs to prove that, unlike Ardern, when she says she has a plan she actually does. We will have our answer by lunchtime.
- Matthew Hooton is an Auckland-based PR consultant whose clients have included the National and Act parties. These views are his own.
