The new Labour-New Zealand First-Greens Government is under way, and already there have been some unexpected positive developments and some pratfalls. Few would have expected the new government to sign up to an only-slight-modified Trans Pacific Partnership, and that is clearly good news for our economic future; but on the other hand, most would have expected a more professional approach to managing the business of Parliament than we have seen to date.
The speech from the throne, summarizing the Government’s programme for this Parliamentary term, contains lots of flowery rhetoric of the kind that most such speeches contain.
Some of the commitments made are positively counter-productive. I don’t know of any business person who thinks that scrapping the 90 day trial period in employment law will make employers more willing to take a risk on hiring somebody with few qualifications and a history of unemployment.
Nor do I know anybody who thinks that removing “excessive sanctions in the welfare system” will encourage those in receipt of benefits to seek employment.
Sharply increasing the minimum wage – already one of the highest in the world relative to the median wage – will clearly benefit those who remain employed on the minimum wage, but will make employers less likely to employ those with few skills and will increase unemployment.
Making the first year of tertiary education completely free will certainly increase the number of those who decide to start tertiary education, but whether it contributes to a more educated workforce is at least an open question. The risk is that young people who are a bit uncertain about what they want to do with their lives take advantage of the “cost-less” education, at the expense of further financial pressure on tertiary education institutions themselves.
Other commitments in the speech from the throne look like cheap political stunts. Such is surely the commitment to re-enter the Pike River mine, and the commitment to tax the export of bottled water. But surely Dr Brash, people who export our precious natural water should pay a tax on that? The amount of our water which will ever be exported in bottled form will never be more than an absolutely miniscule percentage of our enormous fresh water resource (one of the largest in the world), and it is clear that exporting bottled water generates much more local employment per litre of water than any other use of water, including water used to produce milk, meat, wine or kiwifruit.
Some of the commitments in the speech from the throne are pure politics and have serious long-term implications. For example, the Government is committed to retaining the age of eligibility for New Zealand Superannuation at 65, even though the Labour Party has in the past recognized the inevitability of raising that age if New Zealand Super is to be sustainable.
But I welcome some of the commitments made.
I welcome the Government’s commitment to establish a Criminal Cases Review Commission, as recommended by the Justice Select Committee in response to the petition which Katherine Rich and I mounted when we were both in Parliament in 2003, seeking to review the seriously flawed conviction of Peter Ellis. Such a Commission is long overdue and would presumably be modelled on a similar commission in the UK.
I welcome the commitment in the speech from the throne to “work within the Budget Responsibility Rules that include running sustainable operating surpluses across the economic cycle, reducing net [public sector] debt to 20% of GDP within five years and keeping government expenditure as a percentage of GDP in line with historic trends…. [while] personal income taxes, taxes on the family home and GST will remain at the same rates as they are today.”
Perhaps the most important commitment is to make a serious assault on the truly ridiculous cost of housing in New Zealand. Twenty-five years ago, the median house price in Auckland was about three times the median household income. Houses got gradually more expensive until, by 2008, the median Auckland house price was some six times the median household income. John Key, then Leader of the Opposition, campaigned in 2008 on making house prices more affordable. Alas, when National left office, the median house price in Auckland was almost 10 times the median household income, making Auckland housing some of the most expensive in the world.
The new Government has promised to take a number of measures to change this situation:
If the Government is serious about these commitments, and there is every reason based on speeches by the Minister of Housing and Urban Development – who is also the Minister of Transport – to believe that it is, there is only one way for house prices to go over the next few years. And it certainly isn’t up.
Having more affordable housing in our largest city (and that will certainly influence house prices in other parts of New Zealand) will go a long way towards reducing the recent growth in wealth inequality, overcrowding, and child poverty which the Government claims it wants to achieve.
Of course, there is much which the speech from the throne does not say.
Despite asserting that the coalition agreement allows each party “to remain true to its values and honour its core election commitments”, there is not the slightest suggestion that there will be a referendum on the Maori electorates – despite that being a “bottom-line commitment” by New Zealand First – or indeed anything else which suggests that any of the parties to the agreement intend to honour Article III of the Treaty providing that all New Zealanders should have the same political rights.
Nor is there the slightest sign that the new Government knows how to increase New Zealand’s deplorable record of stagnant productivity growth. But then, the outgoing National-led Government had a deplorable record there also.
Copyright © 2024 Don Brash.