October 20 2021
Judith Collins has set targets of either 85-90 per cent vaccinations or December 1 for when the party believes Covid-19 restrictions should end, and the borders start to re-open.
OPINION:
National has decided to take itself seriously the past month.
For nearly a year, politics in New Zealand has been an unusual contest between centre-left and left-wing ideas along the Labour-Green faultline, with the occasional skirmish with the libertarian right occurring along the Labour-Act axis.
National was, at best,an entertaining sideshow, and at worst, a policy vortex - depriving voters of one of the things to which the party is itself most philosophically committed: choice.
The party has released two significant pieces of policy in the last month: one relating to supercharging the vaccination rollout and reopening the country, the other relating to supporting the economy through the tough times of the pandemic and out the other side.
Unlike some of the party's more far-fetched ideas last year, these policies seem plausible, and in line with policies that could come from centre-right parties that are currently in government like the governments of Australia, New South Wales, and the UK.
At the broadest brush, the policy documents show National trying to whip itself into some semblance of sensibility (internally, of course, the story is quite different - with a significant number of MPs currently dithering over whether to change leader this year or next).
On a fiscal level, this week's policy showed a significant shift for the party, which has been in the economic hinterland following its not inaccurate characterisation by Finance Minister Grant Robertson as no longer the party of Key and English.
The party's economic plan was significant for its largesse. It included business tax cuts costing between $750m and $800m a year, individual tax cuts of $560m a year, a loss carry-back scheme of $100m a year, and a plant and equipment write-off policy costing up to $400m a year (although this eventually nets out).
It also included wage subsidy tweaks worth about $370m a week for every week they are deployed.
In total, the baked-in tax changes cost about $1.8b a year over two years, excluding any of the big wage subsidy fixes.
National leader Judith Collins, with senior MPs, from left, Louise Upston, Shane Reti, Andrew Bayly and Michael Woodhouse. Photo / Mark Mitchell
In our age of relative spendthriftery, it's easy to forget the relative cost of new policies: when everything's expensive, less expensive things start to look cheap.
National's plan was very expensive indeed. The policies announced yesterday would absorb the entire operating allowance National set aside for 2022 in its 2020 election alternative budget.
In plain English, this means if the Covid package was funded in the conventional way, it would eat up National's entire allocation for new spending next year, leaving scarcely a cent for anything else: no new money for health (which eats up nearly $1b of new money every year just to keep the DHBs from collapsing).
National currently plans to fund the $1.8b covid policy through other means: cancelling other spending (although it's currently unclear whether there is enough spending to cut to fund the package).
National isn't walking away from its philosophical position as a party of small government. Shadow Treasurer Andrew Bayly had a crack at the Government this week, alleging excessive Government spending was causing inflation.
The party has challenged the Government to recommit to reducing net debt levels to between 15 and 25 per cent of GDP - Labour's pre-Covid debt target. In nominal terms - the Government would have to borrow $50b less than expected in the next decade if it wanted to get net debt levels to 25 per cent of GDP by 2030 (or, looking at it another way, the Government could only increase borrowing by about $20b-$30b in the next decade).
National has moved from an era where individual policies were risible, to a slightly more benign position where the individual policies make sense, but are less coherent when put together.
How can you cut borrowing and spending to reduce inflation, while upping spending commitments to businesses, cutting income taxes to boost consumption? The truth is, you probably can't: the spending creates debt and demand, which collectively drive inflation.
The incoherence speaks to something deeper going on in National and the wider political right. On a caucus level, National is mostly a low-tax, low-debt small-government party.
But some MPs and supporters are getting the message from voters that fiscal austerity comes at an electoral cost. Leader Judith Collins is a noted admirer of red Tory Boris Johnson - and her unofficial challenger Simon Bridges this week told Politik he's recently become fascinated by Johnson-style appeals to working-class voters too (although he didn't mention spending).
The party is torn between promoting costly policies it thinks will be popular, and a debt hawk economic policy it thinks is necessary. In reality, electoral necessity tends to trump party political dogma. It's hard to see the electorate's demands for increased spending in health and education foregone in pursuit of a debt target, at a forthcoming election.
On the basis of this week's expensive plan, it would not be difficult to see whatever National puts forward in 2023 taking a step towards the more muscular, expensive and interventionist economic policies of right-wing parties in the UK and Australia.
The party is unlikely to admit a change from the small-government philosophy that's proved tried and true the last three decades. But the direction of travel put forward this week appears to suggest secular economic forces dragging it into a more statist future.
