Congratulations Jacinda Ardern and the Labour Party. Saturday night’s election result wasn’t just a big victory, it marked an historic first. 2020 will go down as the first New Zealand election under MMP where a single party has snaffled more than half of all the seats in Parliament.
The MMP electoral process was specifically designed to avoid single-party majority government. In fact, MMP only came about because voters felt betrayed by the last majority single-party governments in the 1980s and early 1990s. They voted in a referendum in 1993 to introduce the voting system we have today and there hadn’t been a majority government in New Zealand since.
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Ardern has therefore been handed more power than any prime minister since 1990. Without an upper house or senate as in most democracies, the only practical constraint on her decision-making for the next three years is her own backbench, the courts, and her desire to get re-elected again in 2023.
So what to do with all this power? There is a lot to be done. The 2020 election came around at an inopportune time for New Zealand, effectively freezing our Covid-19 response in place for the last three months while the politicians were away campaigning.
A very difficult economic year looms just ahead of us. There is precious little time for celebrations and backslapping, or coalition negotiations with what is now an optional Green Party. The new government needs to make some rapid decisions to mitigate the rapidly worsening economic effects of the pandemic.
Here then are my nominations for the top six priorities on the prime ministerial to-do list.
Firstly, it is time to level with the country on our spending levels and debt. New Zealand has spent massively to preserve a sense of normalcy during the pandemic to date, and it simply can’t be sustained. According to the latest IMF Fiscal Monitor we have committed a higher amount of additional spending and foregone more tax revenue to this response relative to our size than any other advanced country. Let that sink in a moment. More than the US, Australia, the UK, France, all of them.
I think New Zealanders would like the Prime Minister to tell it as it is, and then tell us what she is going to do to soften the economic blow as the stimulus begins to be withdrawn.
Which brings us to the second priority, getting on with opening that transtasman bubble with Australia.
It need not be for all states, nor all of the time. But allowing a safe resumption of flows of people between our two countries would help resuscitate our tourism, travel and hospitality industries and do more than almost any other single government policy decision to reduce the economic hardship this country will go through next year. It would also free up space in our quarantine facilities for people arriving from other countries, including international students. International education is another sector we need to properly resuscitate to avoid a crisis in our broader education sector.
The third thing is to invite the business sector, and not just the big end of town, into the tent to help map the way out of this. It is large and small privately owned businesses that will determine the pace of economic recovery, not any level of government. They need to be listened to much more broadly than the very narrow engagement that has happened to date. If Kiwi businesses find the economic environment too challenging or too uncertain next year, they simply won’t invest and that will deepen the recession.
The fourth is to put some real teeth into the independent Infrastructure Commission, to determine a settled set of key infrastructure projects that will help add to New Zealand’s economic activity in the decades ahead, not subtract from it. Now the influence of New Zealand First and the Greens has waned on both flanks, it should be possible to settle on a list of clearly growth-enhancing transport projects, for example, that have broad public support and stand the test of time – rather than this constant oscillation between say, roads and public transport.
Fifthly, it is time to think carefully about how to green our energy markets further. We all want to reduce carbon intensity and some good progress has been made over the years, but if we don’t invest thoughtfully in new technologies in, say, our electricity market, we could end up simply adding yet more cost to everyone from consumers to large industrial plants.
And as we know many of those big, job-rich industrial plants dotted across the provinces already have at least one foot out the door. If they leave it will be a big blow to regional New Zealand.
My final priority on the PM’s to-do list would be to understand the limits of the mandate the public has given you. I’d provide this same advice to a National prime minister in the same position.
There are plenty of pundits already telling the new government to be bold and transformative. Some on the left think it is the opportunity to try out their unfettered ideology on the broader New Zealand public. Those pundits misunderstand the trust the public has placed in Ardern and her government.
The public has chosen her precisely because they see someone who is not too ideological, one who governs from the centre. They think she has done a good job with Covid to date and they are prepared to trust her instincts with the next stage of that response. Her decision to rule out significant tax changes beyond the additional higher marginal tax rate was an important signal.
The Prime Minister cares about child poverty. The most impact she can have in reducing that over the next three years is to get the country’s economy up and running again. That doesn’t require ideology, it requires pragmatic, consensual decision-making.
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