Richard Prebble: Jacinda Ardern will face the tyranny of events

by Richard Prebble / 19 January, 2018
RelatedArticlesModule - Jacinda Ardern pregnancy

Prime Minister Jacinda Ardern. Photo/Getty Images

Each January, the Listener invites two insightful former political figures to look at the year ahead. This week: a former Act Party leader.

Experiments suggest that the toss of a coin is more reliable than a forecast. At this time last year, I predicted Bill English would lose the election, the Māori Party would disappear, Peter Dunne and Gareth Morgan would fail, David Seymour would win Epsom and the winner of the election would be Winston Peters.

Impressive? Well, actually, National won the election, Winston lost his seat and I did not predict the Jacinda effect. All a forecaster can do is point out facts and trends. No forecaster, including the Prime Minister, predicted her pregnancy. I wish her well. Every mum knows how challenging it will be. 

Labour did not expect to win and made promises it did not expect to have to deliver: affordable housing, ending child poverty and solving Auckland’s gridlock. 

It will fail. Affordable housing requires Resource Management Act reform. If passing a law could solve child poverty, government would be easy, but poverty is not some arbitrary percentage of a median income. Poverty is a lack of shelter, clothing and food. Child poverty is caused by the lack of affordable housing and increases in tobacco excise, which is in effect a tax on the poor. Addicts feed their addiction first. A packet of 20 cigarettes now costs $25, more than a hit of P. Reducing the tobacco tax would lift thousands of children out of poverty.

Trams in the Prime Minister’s Mt Albert electorate will cost a fortune, take forever and make congestion worse. The petrol tax means it will cost more to be stuck in traffic. A congestion tax would immediately free up the roads.

The coalition will learn painful lessons about unintended consequences. People will enrol for free tuition to get free student loans to put into subsidised KiwiSaver accounts to qualify for taxpayer-funded HomeStart grants. Billion-dollar regional slush funds lead to waste and rorts. It takes time for these scandals to be exposed.

This year, the coalition can happily spend the surplus until there is a crisis.

Cartoon by Steve Bolton.

Cartoon by Steve Bolton.

No telling the future

Harold Macmillan, when British Prime Minister, is alleged to have said, when asked what was most likely to knock governments off course, Events, dear boy, events.” Events no one can forecast drive politics, such as the Christchurch earthquakes or a global recession triggered by the failure of sub-prime mortgages.

No government programme survives the first real event. Governments have to dip into their electoral mandate to take unpopular measures to solve the crisis. A government appointed by a man who lost his seat and supported by another party that also lost MPs has no mandate to call on.

Even if Jacinda Ardern has remarkable leadership skills that we are yet to see, she faces an impossible task. The three parties have different philosophies and different constituencies. No party will sacrifice its base to save the other two.

And it is really a four-party coalition. There are 18 Māori MPs. Labour’s Māori MPs refused to go on Labour’s list and ran their own campaign, promising to outdeliver the Māori Party. On some issues, such as water, the four parties could not be further apart.

Charter schools will be an early test. For Māori, charter schools are a success. Māori and Pasifika pupils have been excelling in charter schools. In state schools, on an average day, half the Māori pupils are truant.

Labour’s leadership has promised the teacher unions that charter schools will be closed or the rules so changed that they, too, will fail. Te Tai Tokerau MP Kelvin Davis and list MP Willie Jackson have promised the schools will stay. Does Chris Hipkins really want to destroy the prospects of Māori and Pasifika charter-school pupils? The coalition may duck the issue. Other union demands will be tougher.

An even earlier test will come when schools open with classrooms with no teachers. The minister will blame the previous government, but it is now his problem. Teachers’ pay has fallen. It is not enough to live in Auckland. The teachers will get a big pay rise.

All state unions will demand similar big increases. No surplus can meet every union demand. By the end of the year, our triple-A credit rating will be at risk.

Higher interest rates are grim for Auckland homeowners with mortgages, but they are a disaster for the biggest debtor, the Government. The good state of the books is largely because of low interest rates. Expenditure in real terms on education, health and now welfare is rising, and just as global interest rates are increasing, the coalition intends to borrow more.

We are in the second-longest growth cycle since World War II, but the economic cycle has not gone away. US President Donald Trump could start a trade war – or a real war. The Republicans will take a hiding in the mid-term congressional elections. Brexit is going to be messy. No one really understands the Chinese economy. There is no end of possible shocks that could cause recession.

As economist Rudi Dornbusch observed,Things take longer to happen than you think they will, and then they happen faster than you thought they could.” So the good times could last longer than we think, but the price of houses, shares and bitcoins can fall faster and further than we think possible.

So, what of the parties? As Foreign Minister, 72-year-old Peters is going to find the overseas travel brutal and he’ll wish he had taken better care of himself. Being in coalition has been fatal for all third parties. The Greens will be no exception. For now, they are enjoying office too much to care.

Winning the election and losing the coalition talks was worse for National than losing the election would have been. A loss would have prompted the party to hold a review and choose a new leader. Bill English should never have entered an auction for NZ First’s support.

English should do a John Key and move on. If National decides to run on the same leadership and the same policies it will lose.

If Morgan had not wasted $2 million on his own vanity party but had backed either the Māori or Act party, the election result would have been very different. With no MP, the Māori Party will struggle. Seymour’s euthanasia bill is courageous, but it is not a party saviour.

MMP requires a strong third party on the centre-right. Which party that is will not be resolved in 2018.

Next week: former Labour Party president Mike Williams.

This is an updated version of an article first published in the January 20, 2018 issue of the New Zealand Listener.

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