OPINION
With weeks of caretaker government ahead, the best advice for Chris Hipkins and Christopher Luxon is to study what Robert Muldoon did – and not do that.
Muldoon’s refusal to act upon incoming prime minister David Lange’s advice caused the 1984 currency and constitutional crisis.
In contrast, Hipkins immediately confirmed he would follow Luxon’s advice.
Luxon’s lesson is from 1975, when Muldoon announced he had abolished the New Zealand Superannuation Fund, stopped deductions from wages and ordered all contributions to be returned.
Alas, he hadn’t got around to getting Parliament to give him such powers.
The Supreme Court ruled he had acted illegally and unconstitutionally, a rap over the knuckles he apparently didn’t care about or learn from.
By saying almost nothing about how he will bring his government and policy programme together, Luxon is certainly being more prudent.
He has also largely succeeded in silencing David Seymour and Winston Peters, just as he stopped National MPs from babbling their most treasonous thoughts to the media.
Special votes probably won’t improve National’s and Act’s numbers. National has lost at least one seat from specials in seven out of the previous nine MMP elections.
Some hope Labour’s disgraceful treatment of New Zealanders abroad through 2021 – for which Hipkins, the responsible minister, has come close to apologising – will change that.
However, of the 567,000 special votes, just 15 per cent are from overseas. The rest are from locals, some of whose lives are sufficiently disorganised that they weren’t enrolled. They lean left.
The final result, expected in two weeks, is needed before the business end of negotiations can begin among Luxon, Seymour and Peters.
Some basic points are nevertheless becoming clear, on foreign policy, resource management, law and order, tax and race relations.
Luxon’s government will continue Labour’s reorientation away from China and towards New Zealand’s only remaining military ally, Australia, our other friends in Five Eyes, plus Nato, Japan and South Korea. It will lean marginally further towards Israel.
Act firmly backs the democracies’ defence network, promising to increase defence spending to the Nato benchmark of 2 per cent of GDP by 2030, reaching 1.5 per cent by 2026-27 at a cost of $4.35 billion – or more if the economy grows faster under National.
Peters is even more suspicious of Beijing’s intentions, launching the Ardern Government’s tilt away from China and towards the US in December 2018 at Georgetown University in Washington DC.
If anything, National is the most pro-China. Party doyen and Luxon adviser Sir John Key achieved a commercial coup after stepping down as prime minister in 2016 by keeping in personal contact with President Xi Jinping and – astonishingly – being granted a 2019 one-on-one meeting in no less than the Great Hall of the People in Beijing.
Few other former leaders of small countries are so honoured.
Key remains one of Beijing’s biggest fans, condemning 2022′s US congressional delegation to Taiwan as “reckless, provocative and dangerous”, similar language to the Chinese embassy in Wellington.
Other important National figures and donors have extensive interests in Xi’s authoritarian superpower, including former party president Peter Goodfellow and Zuru Toys’ Nick Mowbray.
Still, National’s defence policy made clear it stands with Australia, Five Eyes and advancing New Zealand’s values of democracy, freedom and security. It promises a strong, combat-ready, interoperable military able to defend New Zealand and Australia and operate globally.
Likewise, Act and NZ First accept Luxon prioritising India on trade.
His promise to complete a free-trade agreement with New Delhi by the next election is naive, with more foreign milk powder and lamb – let alone beef – unwelcome to Prime Minister Narendra Modi’s Hindutva Government.
Better is to use the office of prime minister to help grease the way for Kiwi businesses to do their own deals with Indian partners. Peters and likely finance minister Nicola Willis would also help.
Act and NZ First also agree National has a mandate to repeal Labour’s resource-management reforms and return to the old Resource Management Act while deciding what happens next.
The three parties are completely aligned on law and order, so that more police, more courtrooms and more prisons are certain, although Act wants them to focus on education, training and rehabilitation rather than be universities of crime.
Tax will be the most fraught issue.
Luxon undoubtedly won a mandate for tax cuts, and Willis needs some tax reductions to extinguish her vow to resign as finance minister if none occur.
Yet National’s tax package is off the table.
Even if Luxon’s proposed foreign-buyer and online gambling taxes could have delivered the promised revenue, the delay in forming a government means they can’t become law until next year.
Meanwhile, Act repeated on Tuesday that crushing inflation must be the government’s No 1 priority. It will oppose any tax cuts that fuel aggregate demand and push inflation and interest rates higher.
Incredibly, Peters also sounds more fiscally responsible than National. More reliably, for decades he has been viscerally opposed to foreigners buying houses in New Zealand, even if they pay a 15 per cent tax on the purchase price. It was that very issue that propelled him into power in 1996, after his infamous “Whose Country Is It Anyway?” speech in Howick.
A different tax-cut policy and timeline will be negotiated.
Wisely, Luxon has distanced himself from Act’s radical demand for a referendum on the principles of the Treaty of Waitangi. Peters also opposes it. As a textual originalist, he doesn’t believe in any such “principles”.
Loosening the valve on race relations would nevertheless be prudent. A minority of Pākehā, usually conservative and elderly, struggle with the speed with which te reo Māori is being adopted by the media and government agencies. They object to weather presenters saying “Ōtepoti”, rather than “Dunedin” and government departments being called “Waka Kotahi – NZ Transport Agency” rather than “NZ Transport Agency – Waka Kotahi”. A cuppa will help.
That buys political space for National to accelerate Whānau Ora and further devolution of health, education and social spending to Māori and other local providers. Pointless Labour Party monuments like the Māori Health Authority should be gone by Christmas. The money will be used to pay Māori doctors, nurses, teachers and social workers in local communities rather than Māori sociology graduates in Wellington bureaucracies.
The historic Treaty settlement process will continue.
After that, who knows? There are deep tensions among the three parties, on policy, personnel and personal style. It helps that special votes have slowed things down. The bigger test lies ahead: somehow agreeing a full Budget by May.
- Matthew Hooton has over 30 years’ experience in political and corporate communications and strategy for clients in Australasia, Asia, Europe and North America, including the National and Act parties and the mayor of Auckland.
One day up and the next day down.