This might sound familiar: a chaotic and unpopular government is voted out of office but the public seems underwhelmed by the replacement, denying it a post-election honeymoon. The new finance minister claims to have discovered a vast hole in the Budget and orders the public sector to make significant cuts and stop wasting money on consultants, simultaneously cancelling infrastructure projects that have seen massive cost blowouts.
It’s the messaging employed by the UK’s new Labour Prime Minister, Sir Keir Starmer, and his Chancellor, Rachel Reeves, whose statements are frequently interchangeable with those of our own PM Christopher Luxon and Finance Minister Nicola Willis.
Both governments have also made the traditional pledges about improving waiting times in the health system, fixing education, getting houses built, cracking down on crime: centrism 101.
It reminds us that much of the radicalism and divisiveness from our government comes from the coalition partners: the Treaty Principles Bill and the removal of Te Tiriti obligations from the Oranga Tamariki Act are Act Party pet projects; the proposed fast-track regime is the stunted brainchild of NZ First’s Shane Jones, and the sequence of wildly generous policies favouring the tobacco industry flow from his fellow minister Casey Costello.
The comparative normality of National was the subtext of its recent conference. Luxon and Willis celebrated “the National government” rather than their coalition, and announced or signalled policies that could have been introduced by a Labour administration.
Labour-led
Their centrepiece was the acceleration of the new maths curriculum for Year 0-8 students, policy that was developed under the last Labour government, alongside a handful of measures subsequently announced by Education Minister Erica Stanford: overhauling the Education Review Office to focus on achievement, and personal development for teachers so they actually understand the maths they’re supposed to be teaching.
National’s campaign manager, Chris Bishop, sternly warned the conference that “declining rates of home ownership is the greatest threat to the centre-right worldwide”, pointing to one of the significant factors in Starmer’s victory: 37% of mortgage-free homeowners voted Conservative but only 12% of private renters.
Willis asserted that National was the party of workers and suggested her government could raise additional capital to scale up Kiwibank, disrupting the “cosy oligopoly” of the Australian banks.
Sir John Key – until recently the chair of ANZ, the largest member of said oligopoly – quickly came out against the idea.
Key differences
Taken together, these policies and arguments hint at something substantive – even ideological – beneath National’s centrist normality; the subtext to the subtext: a heretical, still-whispered critique of the Key government. Yes, it was popular; it rebuilt Christchurch after the earthquake, delivered some roads of national significance and the ultra-fast broadband network. But the National Party is supposed to believe in equality of opportunity, which requires a high-performing educational system and competitive enterprise, which requires, y’know, competition, especially in a key sector like banking.
One of the frequently stated goals of centre-right politics is the construction of a property-owning democracy, in which widespread ownership of capital serves as a bulwark against the socialist tendencies of the left.
But under the nine-year term of the last National government, the education system deteriorated, the housing shortage reached crisis proportions and key markets consolidated into oligopolies, notably retail fuel, building construction materials, groceries and personal banking.
Kiwibank was introduced by Jim Anderton in the early 2000s with the goal of introducing competition to the sector. Its origin myth lies in an interminable meeting in which then-prime minister Helen Clark and her finance minister, Michael Cullen, fiercely opposed the project, but Anderton was so unyielding the rest of Labour’s ministers begged their leaders to just let him have his damn bank.
Oligopoly rules
Kiwibank has never been large enough to seriously compete with Australian operators, which a recent draft report from the Commerce Commission described as a stable oligopoly consisting of BNZ, ANZ, ASB and Westpac. They control 90% of the market and routinely charge higher interest rates here than across the Tasman, delivering greater returns on capital. They could not convince the commission that their astonishing profits and persistent failure to innovate could be attributed to anything other than a lack of robust competition. The obvious way to disrupt the oligopoly is to grow Kiwibank and the obvious way to do this is to open it up to external investment.
Willis floated the New Zealand Super Fund or ACC as possible part-owners. They’ve been shareholders before, and in 2021, the Super Fund wanted to buy the whole operation and attract private investment and governance to make it more commercial. The Labour government refused and in 2022, bought the whole thing. The Crown is notoriously bad at running commercial entities, so Treasury has been politely asking why it now controls a mid-tier retail bank.
KiwiSaver providers have been salivating about the prospect of acquiring debt or shares in Kiwibank. Willis has ruled out listing KiwiBank on the stock exchange without an electoral mandate from voters.
Fixing banking will not be easy. Key’s displeasure will just be the beginning of a sustained lobbying campaign by a wealthy and influential industry.
The government is also encountering fierce resistance as it confronts systemic problems in the education system and the housing market. Key is still an enormously popular figure within National – the ultimate purpose of the National Party is simply to be in government, and he delivered this but at the cost of ignoring a multitude of problems which now require an enormous investment of time and money to solve.
A successful Luxon government will look like a stark departure from Key’s perpetually relaxed reign rather than a continuation of it.
