Claire Trevett: The clever politics in PM Chris Hipkins’ Loaves and Butter announcement - how will Chris Luxon counter?

OPINION:

There was a certain cleverness about Prime Minister Chris Hipkins’ decisions in his first big announcement under his Loaves and Butter approach to governing.

He could not afford to go small. Having come in promising to deliver a decent nip and tuck of the Labour Government’s programme, he had left a vacuum on delivering on it for two weeks.

Over that time, speculation – and hence expectation – ramped up. By the time it came to unveiling any actual announcements, it was being called his policy “purge”, and a “bonfire of policies”.

In terms of delivering on expectation, he would have been gratified by the various resulting riffs on his nickname Chippy and the word chop: Chippy the Chopper, Chippy’s chop shop.

Had he come out and announced just one or two piffling things, it would have been slated as Chippy’s fizzler rather than his bonfire. But as well as the chops, he also delivered bread and butter – the rise in the minimum wage. That will put an extra $40 a week into those workers’ pockets.

His announcements also force National to move. Hipkins’ start has left National a bit flat-footed so far.

Illustration / Guy Body

Its leader, Christopher Luxon, will give more of an idea about what his party might do on the cost-of-living front at his state of the nation speech on Sunday.

It is what Luxon has been talking about for months now, without spelling out what he would do differently. Hipkins’ shift to focus on it means Luxon now has to counter early rather than let Hipkins get all the running.

But that was not where the cleverness lay. That was obvious politics.

The cleverness was in the curation of the overall package. For everything that would annoy a sector, there was also something to please them.

The unions issued releases criticising the decision to put the income insurance scheme on ice, but celebrating the increase in the minimum wage – the biggest in some time, courtesy of Hipkins’ decision to adjust it for full inflation.

Business groups issued reactions the exact reverse of that: Happy about the income insurance scheme, but concerned about the hit to small businesses in particular from the increase in the minimum wage.

Hipkins gave a sign that he had listened to business, who asked for income insurance to be scrapped. He also put paid to nervousness in the Labour base that he might jettison fairly key Labour ideals in the process of trying to make the party more palatable to centrist voters in the election.

His decision to forge ahead with the full inflation adjustment to the minimum wage rather than a smaller increase would have placated many of those core Labour supporters who may have worried about Hipkins’ intentions.

It was in keeping with his own promise to keep his eye firmly on Labour’s core values: Workers and jobs. And it was in keeping with his promise to put the cost of living at the centre of his programme.

Hipkins mounted a good defence of it, saying those low-paid workers faced “impossible trade-offs” in a cost-of-living crisis - forced to choose between medical care, food and clothes, fuel and power.

Of course, it isn’t him who has to pay the wages – it’s business, who had hoped for a smaller increase, or no increase until the economy improved. And it will put some businesses under significant pressure – not just from the minimum wage increase itself but the bump-on effect of it, as they are expected to lift the wages of the more senior workers too.

The quid pro quo for them came in the effective binning of the income insurance scheme and a direct cash injection for Auckland businesses hit by floods.

The best criticism of Hipkins’ announcement National finance spokeswoman Nicola Willis could muster was that income insurance and hate speech reform had been put on the shelf rather than put in the scrapper.

It does mean National can continue to try to use those to drum up fear about what the next Labour Government might do – and that might be something that comes back to haunt him.

But opposition to the income insurance scheme did not have widespread traction beyond the business sector. It was a bad idea during high inflation, because it took more money out of workers’ pay packets – and businesses as well.

That does not make it a bad idea – just a badly timed one.

Shifting the hate speech law to the Law Commission was a good way to deal with it. It was contentious and required careful, considered handling. The last thing Labour needed was another debate on it in election year.

However, scrapping the merger between RNZ and TVNZ was almost a simply symbolic show of Hipkins’ vow to stop spending on what former PM Sir Bill English called the “nice to haves” and instead focus on the bread and butter issues.

The difference is English identified that a lot earlier during the global financial crisis than Labour has done now.

Labour is – and should be – copping flak about the waste of money on the merger– more than $15 million, only for it to be scrapped. But continuing with it would have cost even more – last year’s Budget allocated $327 million for it.

Nonetheless, there are only so many things you can spend millions of dollars on only to scrap them because they get unpopular. The Auckland cycle bridge and the merger are now both fine examples of it, as ACT leader David Seymour took delight in pointing out.

Seymour even worked out how much bread and butter could have been bought with the money spent on the merger (4.3 million loaves of plain white bread or 2.3 million 500g blocks of butter, apparently).

The upcoming decisions on Three Waters will be the bigger test of Hipkins’ political skills. He won’t scrap it – but he will have to come up with something that fixes the main concerns. He has indicated that will be both in terms of the role councils have when it comes to the management of the assets – and in the current co-governance proposal.

Local Government Minister Kieran McAnulty has been charged with coming up with a solution to the first.

Hipkins’ promotion of Willie Jackson in his reshuffle makes it obvious he will be critical when it comes to the co-governance question. Hipkins considers Jackson to be the best placed to consider that and to explain it.

At least Jackson, who is also the Broadcasting Minister, will have more time on his hands to do that, thanks to the bye-bye Hipkins gave to the RNZ-TVNZ merger.