Monday, November 03, 2008

Guest column: Consequences

From a guest poster who can't blog publicly because of his work

Are minor parties real? The Herald on Sunday doesn’t seem to think so. In its editorial yesterday, it insists that if a LPG + Maori Party coalition got a majority, it would have "no moral entitlement" to form a government, and that if it did, it would be a "seen as cynically corrupting the intentions of MMP", and its very existence "runs counter to the plainly expressed view of the people".

Let’s get some really, really basic facts straight. To form a government, you need the confidence of 50% of Parliament (excluding abstentions). There are distortions caused by parties not making the threshold, and by overhang seats, but by and large, 50% of Parliament represents 50% of voters.

It’s the assent of the majority that counts. Being the biggest party does not confer constitutional or moral rights of any sort. Nothing. Nada. Bup-dilliup-kis.

What the editorial is suggesting is that if Labour gets 40% and National gets 45%, we should forget about what the other 15% of the country thinks. Um… why? To state the bloody obvious – those are real voters casting real votes. Those votes count as much as any other. And if those people vote for parties or candidates that support Labour, then that’s their right. That’s why people have votes, remember? And then it goes into a sly endorsement of National:

And so, with a week to go, the polls suggest there is a mood for change. But the incoming Government needs to have a clear and unequivocal mandate.
A clear and unequivocal mandate to do what? To suggest that we need to give someone – anyone – as much power as we can do deal with the problem in whatever way they see fit is to ignore the real choice we face as voters.

The editorial reminded me of this quote from Canadian Bacon: "There’s a time to think, and a time to act. And this, gentlemen, is no time to think!"

But now is most definitely the time to think. We need to think about the real cost of the stimulus packages. Not just in terms of money, but in terms of consequences, because the packages offered by the two major parties are substantively different, and will take New Zealand down very different paths.

What will be the consequence of National’s plan to cut $3b out of Kiwisaver? A damn lot more than $3b. The point of cutting Kiwisaver is not just to free up the $3b dollars, but to encourage less saving and more spending. This is not spin. This is straight from National's fiscal policy paper:

Fiscal stimulus comes because… KiwiSaver members will have the opportunity to put a smaller proportion of their salary into their KiwiSaver accounts, and therefore have more in their pockets to spend.
This isn’t some sinister ploy, it’s just the National Party deciding that the benefits of a short-term consumption-driven stimulus programme outweighs the benefits of a long-term saving scheme. And it’s entirely possible that they’re right.

But it’s also possible that the consumption-driven part of the stimulus package will be ineffective, because most of it is spent on overseas goods. It could cause even more problems by reduce the power of Kiwisaver to offset external debt.

Even if it works as intended, the cost may still outweigh the benefits. Even when the economy is back on its feet, people would still be saving at 2%, or not at all. The consequence is that when the cost of the aging population hits, we may find ourselves with half as much savings as we would otherwise have had.

There’s an equally big chasm in the kinds of spending proposed. National wants to put money on broadband ($1.5b), roads ($750m), prisons ($315m) and schools ($500m). Spot the one that will never produce a cent for New Zealand. Thanks to their parole policy – easily the dumbest major policy produced this election – National will have to spend $315m on new prisons to house them.

However, IT, transport and education are the things that the OECD suggested as key barriers to New Zealand’s productivity growth, so their efforts in this area are commendable.

But it comes at the cost of things like the $1b home insulation fund, which was going to prop up the building industry – one of our hardest-hit sectors. It was also going to generate very tangible benefits immediately, by reducing home heating costs and improving health.

This is there the ideological difference shows through. National is single-minded about economic growth, and ideologically committed to lower taxes as the way to get there. Labour, on the other hand, sees growth as an end to social equity, and sees climate change as a fundamental factor in the future economy.

It’s not a clear-cut choice between nasty right-wingers and caring lefties, or of tired government and fresh new face. These are simply the trade-offs we have to make because we can’t have everything. But these are our trade-offs and risks, because we’re the ones who’ll have to carry the can.

That’s democracy for ya.