National faces its moment of choice - bold reform or do nothing? - Matthew Hooton

OPINION

We’ll never know if Monday’s meeting between Christopher Luxon and King Tūheitia Pōtatau Te Wherowhero VII was a meeting of minds.

It’s difficult to imagine more different people. The Prime Minister is a talker; the King a man of few words. Luxon presents as being about action in the here and now; Tūheitia as a custodian of a tradition, taking the long view.

The King’s advisers and Beehive strategists are tight-lipped about the meeting’s atmospherics and agenda, held ahead of tomorrow’s national hui at Tūrangawaewae Marae in Ngāruawāhia.

It can’t have gone too badly given that Māori Development Minister Tama Potaka and National backbencher Dan Bidois are now to attend the hui.

It’s understood the Luxon-Tūheitia summit covered all the immediate issues, including NZ First’s English-first policy and Act’s plan to rewrite the principles of the Treaty of Waitangi ahead of a referendum.

But Tūheitia, more so even than Luxon, knows that the relationship between rangatira and hapū and the Crown is bigger and will endure longer than any government, let alone the demands of sub-10 per cent political parties.

As with the Prime Minister’s meeting with Ngāi Tahu this week, it would be extraordinary had the Luxon-Tūheitia talks not covered everything from commercial opportunities and business regulation to New Zealand’s disastrously failing education system.

Luxon knows there can be no winners from a full-on confrontation between his coalition and Māori activists. Nearly 90,000 people voted for the current radical version of Te Pāti Māori (TPM) and another 330,000 for the Greens. Not all of them can be upper-middle-class Grey Lynn, Wadestown and Merivale liberals.

As a practical matter, the state has only around 10,000 sworn police officers, about the same number as gang members, 4000 regular soldiers and 2000 reserves. If things ever fully kicked off, it wouldn’t take much for law enforcement to be overwhelmed, and every prime minister knows it.

For context, every baby boomer may claim to have been on the field in Hamilton in 1981, but only 350 were there, supported by just 5000 protesters outside.

Across the country, only 150,000 people joined other demonstrations against the Springbok tour. Fewer than 10,000 showed up at Fowlds Park to march on Eden Park on the day of the third test. Of those, only a small minority signed up for the Biko or Patu squads, committed to direct confrontation with the riot police.

More recently, the 2022 occupation of Parliament’s lawn peaked at fewer than 3000 activists, yet apparently rendered police powerless. It took even fewer to overwhelm law enforcement at the US Capitol the previous year.

If this suggests activists have a veto over government policy then the truth is they do, in the same way foreign investors can withdraw their funds, lenders can dump their bonds, the middle class can move to Australia, taxpayers collectively could stop transferring funds to the IRD and the teacher unions could call an indefinite strike.

Luxon may not have quite understood the delicate balances he was upsetting when agreeing to some of NZ First and Act’s demands but, from their perspective, he’s now obliged to deliver everything in the coalition agreements if he wants their support for Finance Minister Nicola Willis’ first Budget in May.

Very careful diplomatic skills will be required.

At the same time, National MPs have a very important strategic decision to make before their caucus retreat wraps up in Christchurch later today: are they to seek re-election by being a government of continuity or change?

To use Luxon’s preferred corporate language, this is not a case where the power of the “and” trumps the tyranny of the “or”.

“Continuity and change” is a slogan from the American political comedy show Veep and Malcolm Turnbull’s even funnier 2016 Australian re-election campaign.

There are arguments for and against both bland centrism and bold reform, and historic examples of successes and failures.

Finance Minister Nicola Willis. Photo / Mark Mitchell

The trade-off is this: if you go with centrism, you must avoid upsetting any powerful forces in New Zealand for the whole three years but accept that the economy will be doing worse and inflation and interest rates will be higher than they would otherwise be.

If you go for bold reform, you have to do it immediately and hope the benefits arrive and memories of the transition costs fade in time for the next election.

For example, if Willis wants inflation to reach the 2 per cent midpoint and new fixed mortgage rates to be back below 5 per cent next year, her spending cuts will need to be far greater than indicated so far and the Government’s books back in surplus, even as ministers keep discovering cost blow-outs in everything from defence to social policy.

Taking such risks is likely to be too scary for many National MPs.

The more cautious will point to Helen Clark’s 2005 re-election, John Key’s three election victories and Bill English’s strong showing in 2017 as evidence centrism is much safer. Bolder National MPs will respond by saying that risks Act, NZ First or both either pulling out of the coalition or letting down their supporters, giving National no realistic governing partners in 2026, or earlier.

Those bold National MPs could instead cite Michael Joseph Savage’s 56 per cent re-election in 1938 after radical social reform, Sid Holland’s 52 per cent after facing down the waterside insurrection in 1951, and David Lange’s 48 per cent in 1987 after radically reforming both the economy and foreign policy.

They could argue that Clark was on track to win 50 per cent of the vote in 2002 after some fairly robust changes, ankle-tapped only by her explosive response to John Campbell over Nicky Hager’s allegations of a cover-up involving genetically modified corn.

National’s conservatives might respond by saying it doesn’t always work out that way, with Jim Bolger taking National down to 35 per cent in 1993 after the Mother of All Budgets, worse than Luxon’s 38 per cent last year.

Perhaps both sides of the debate could agree that more important than the choice between continuity and change is the popularity of the prime minister, and whether he or she can articulate a clear sense of direction, whether Savage and Walter Nash selling socialism, Lange and Roger Douglas selling the free market, or Key and English selling smile and wave.

Either way, they need to decide, so that Willis knows whether her brief is to transform New Zealand for the better over the next few months or hold the Key-English do-nothing course for another three years.

- 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.