The Mark-Time Budget
The fact that this week’s budget will do no more than mark time should come as no surprise. We now have getting on for three years’ experience of a government whose idea of managing the economy is simply to wait to see what turns up.
Some of what has turned up has not been very helpful. The Christchurch earthquakes, in particular, plus the collapse of a couple of dozen finance companies, have not made things any easier. The government, of course, has seized on these factors to explain why their do-nothing policy has not produced better results.
But other developments have been very advantageous. World commodity prices – and prices for our commodities in particular – have soared to record levels. Our major export markets – Australia and China – have been the two economies that have best been able to shrug off the global recession. Our Australian-owned banks, while having to grapple with the higher cost of international borrowing, have ensured that we have been largely insulated against the global financial crisis.
And, as independent agencies like the IMF and Standard and Poor’s have made clear, (and has been conveniently ignored by media who prefer to focus for their own reasons on the government’s deficit) our public finances are – both historically and comparatively – in a reasonably healthy state, reflecting the prudent management and repayment of public debt carried out by earlier Finance Ministers.
These factors should surely have meant that we, too, like our two major trading partners, were able to rebound from recession and resume a rate of growth that would restore something like full employment and – with higher tax revenues – achieve an immediate improvement in the government’s accounts. But, disappointingly, having fallen into recession before most other countries, we are still bumping along on the bottom.
Economies are robust things. You can kick them, neglect them, starve them, but sooner or later their natural buoyancy will bring about a recovery of sorts. But that recovery will be longer delayed, and will be from a lower base and less strong and sustainable than it should have been.
The failure to get the economy moving is in other words not a cost-free dereliction of duty. Over a three-year period, the failure to move forward could well have cost us up to $20 billion in lost national income and will mean that growth, when it does resume, will be from a lower base and on a lower trajectory – penalising us for years to come.
Many remain without work, many more are worse off, our public services are underfunded, our investment in our future is undermined, our ability to protect our environment is weakened, all because recession continues to hold us in its grip.
We can ill afford such a loss. Little wonder that Australian living standards continue to outpace ours (as the current disparity in the value of our respective currencies makes clear) and that the exodus across the Tasman is again gathering pace.
One does not need to support Act to have some sympathy with Don Brash when, faced with government by inertia, he accuses the Prime Minister of taking no action to grapple with our problems – which is not to say that the good doctor’s prescriptions would not make matters a good deal worse.
We may be grateful that the Prime Minister declines to follow Don Brash’s advice but why does he not bestir himself of his own accord? It is partly a matter of political calculation. The Prime Minister no doubt reasons that he continues to do well in the opinion polls without doing anything, so why take the risk?
But it is also a matter of experience and temperament. Many voters will have concluded, when John Key became Prime Minister, that the economy was in safe hands. A self-made millionaire would certainly know a thing or two about what makes the economy tick.
But experience in the frenetic and short-term world of the foreign currency trader – a world of snap judgments and overnight deals – is not necessarily the best preparation for managing a whole economy at the macro level over a long period. That requires something very different.
And John Key has another characteristic, which he shares with my former colleague, Tony Blair. His basic pitch to the electorate is that he is a nice guy who can be trusted to take the pain out of politics – and, to some degree, the politics out of politics. A winning smile and a telegenic personality – both possessed in large measure by both Blair and Key – will get you a long way; but that advantage is put at risk when hard decisions have to be made and people are disappointed.
We need a budget this week that faces the tough issues, that sets us on course to save and invest, to reduce our national indebtedness, and to improve the competitiveness of our productive sector – and to use the comparative strength of the government’s finances to help us achieve these goals. It seems unlikely that we will get it.
Bryan Gould
14 May 2011
This article was published in the NZ Herald on 17 May
Do You Want The Good News Or The Bad News?
The May election results delivered what was promised – only more so. The winners and losers were eminently predictable, but the voters’ judgments were unexpectedly savage.
The night’s big losers were, of course, the Liberal Democrats. They certainly expected a poor showing but they must be surveying the post-election wreckage with something approaching dismay.
The overwhelming rejection of electoral reform, and the slim prospect of its reappearance as a viable option, mean that the holy grail of Liberal politics – and the assumed pay-off for a risky coalition deal – has crumbled in their hands. They are now left as the fall guys for the disappointments of coalition government, not only with no compensation for bearing the brunt of unpopular measures dictated to them by their senior partners, but with that downside underlined by the demonstrated failure and unpopularity of their central selling proposition.
Sadly, the mishandling of the way the issue was put to the electorate means that the UK remains saddled with an electoral system that serves the interests of adversarial politics and puts a premium on posturing rather than serious policy-making. There is, I suppose, a kind of poetic justice in the Lib Dems now finding themselves – with no salvation in sight – hoist on the petard of extreme policies that their coalition arrangement commits them to supporting.
The Lib Dem plight is, in other words, bad news for the wider politics of the UK. A similar judgment can be made – at first sight – of the Scottish Nationalist triumph. Closer examination, however, reveals that the message may not be as depressing as it seems. Alex Salmond’s success can best be regarded as partly the result of his own merits as First Minister and partly a reflection of the poverty of the message that Labour chose to deliver to its traditional supporters.
There are two optimistic interpretations that can be made. First, (and perhaps a little fancifully), the severity of Labour’s reverse might just persuade a timid and moribund Scottish Labour Party – and the wider Labour leadership in the UK as a whole – of just how much they have to do (in the aftermath of Blair and Brown) if Labour is to re-establish itself as the natural and accepted defender of the less advantaged and as the most convincing deliverer of a more equal and therefore more efficient economy and society.
Secondly, it is one thing to vote SNP for the purposes of identifying an effective Scottish administration – particularly when the alternatives were so unprepossessing. It is quite another to vote for Scottish independence. There is nothing to suggest that voters are ready to take that further and momentous step. But those who want to maintain the United Kingdom have been put on notice of how little time they now have to persuade Scottish voters.
If the messages were stark for the Lib Dems and encouraging for the Scottish Nationalists, what of the two main parties? For the Conservatives, it was a successful exercise in damage limitation. They avoided major losses in their own strong areas. They maintained a reasonable party unity and escaped the internal recriminations that a Yes vote on electoral reform would have produced. They preserved an electoral system that maximises their chances of staying in power, even on a dwindling minority vote. They have been able to use the Lib Dems as a lightning conductor for voter disaffection at the damage inflicted by government policies.
For Labour, the message is – or should be – a sobering one. The Scottish result is a warning of the price to be paid for taking voters for granted over a long period and of wandering across the political spectrum so that voters feel they no longer know what they are asked to vote for. And, looking to the future – and a pretty immediate future at that – a consolidation of that Scottish result in future general elections would destroy any chance of a Labour government of the United Kingdom.
Even in England and Wales, Ed Miliband now knows how much Labour needs still to do before it can translate an anti-Tory majority into an effective and well-supported government of the centre-left. It needs to be clearer, braver, more confident and distinctive. It needs to stop the ceaseless preoccupation with short-term polling, triangulation and spinning. It needs to strike out with a clear statement of a genuinely alternative and attractive option. The British people yearn to hear that voice.
Bryan Gould
8 May 2011
This article was published on 9 May at http://blogs.lse.ac.uk/politicsandpolicy/
John Key is Missing
Concern is mounting over the whereabouts and welfare of the Prime Minister, John Key. He has not been seen on television or heard on radio for nearly two hours. Worried aides say that they have no idea where he might be. The Diplomatic Protection Squad have enlisted the help of the public who are asked to monitor their television screens and radio stations for any sign of him.
“This is completely out of character for John Key,” a police spokesperson said. “There is no recorded instance since he became Prime Minister of his absence from the media for as long as two whole hours.”
The Prime Minister’s office, however, says that there is no need for panic, and no evidence that anything untoward has happened. Their only concern is that Mr Key apparently suffers from a rare medical condition that means that – without the stimulus of a television camera trained upon him – he is prone to falling into a coma. “It is essential that we get him to a television studio as soon as possible,” an aide said.
One theory as to why the Prime Minister has disappeared is that he had been upset when a camera malfunction meant that an interview he gave as he lifted weights at the World’s Strongest Man competition could not be broadcast. His office said that this was an unfortunate incident. “It’s possible that this triggered the onset of withdrawal symptoms.”
The last confirmed sighting of the Prime Minister was as he disappeared – concealed as the back end of a pantomime horse – at Trentham racecourse. The horse was eventually recovered but the back end was empty.
There was a brief glimmer of hope when he was subsequently seen on regional television dressed in a hula skirt but it was rapidly established that this was archive footage, taken from an hourly programme called Getting To Know Your Prime Minister.
Television news broadcasters said that they were worried but the situation was not yet critical. They conceded, though, that if the Prime Ministerial absence continued into a second day, they would have to re-schedule their programming to take account of much shorter news bulletins. They also hinted that if the Prime Minister remained missing, there was the risk of some job losses among camera crews.
The organisers of a popcorn popping contest in Auckland today said that if the Prime Minister was not available to judge the best popcorn, they had a stand-by arrangement that meant that Marc Ellis would step in. “We don’t think the children will notice,” one said.
Organisers of other sports contests, children’s parties and charity events through the day had made no contingency arrangements, however, and feared that they would have to cancel. There was good news for some, though; the Defence Minister confirmed that if the Prime Minister’s whereabouts remained unknown, RNZAF pilots would be given the day off.
The Deputy Prime Minister has called an emergency Cabinet meeting, so that Ministers can be advised on how to answer questions and make statements about their portfolios. “Ministers will need some special coaching,” he said, “since most will never have had the experience of dealing with these matters themselves.”
There has been little impact on the stock exchange so far, and inquiries overseas have only just got under way. First indications are, however, that the Prime Minister is unlikely to have gone offshore. A White House spokesperson, asked if he knew anything about the whereabouts of John Key, said “Who?”
Bryan Gould
6 May 2011
The Don and Rodney Show
Rodney Hide’s declaration of allegiance to the man who had just cut his political throat was, I suppose, only marginally less bizarre than Don Brash’s compulsion to lead something, anything. One suspects that, if he had been thwarted in his drive to lead a political party, he would have announced his intention to found a new country, so that he could lead that instead.
Yet the extraordinary spectacle of the Don and Rodney show has a wider significance than the question of which of two egocentrics should lead a minor party on the margins of politics. Ever since the Labour Party was taken over in the mid-1980s by extreme “free-market” ideologues, New Zealand politics has struggled to recover some sense of what political labels really mean.
It is in everyone’s interests – and is certainly an essential element of a healthy political system – that politicians should take up positions that are consistent with their true beliefs and policies. The Labour Party has at last re-established a recognisably left-of-centre stance, which the voters – whether they support it or not – can identify and understand.
Don Brash’s migration to the leadership of the Act party is similarly helpful. It means that he is at last positioned where he should have been all along, and can now openly make common cause with his old mentor, Roger Douglas.
It also provides confirmation, if we needed it, that his brief leadership of the National party was an aberration – the product of a “hollow men’s” conspiracy, not just against the voters in general but against the National party itself.
It was, presumably, his success (albeit short-lived) in hi-jacking the National party – backed as it was by wealthy but largely undeclared co-conspirators – that explains his assumption that he could repeat the trick with Act. We should all be grateful that at least we all now know where we – and he – now stand.
Most of us will have been open-mouthed but relatively detached observers of recent events. For the National party, however, there may be real consequences of the change in Act’s leadership.
On the one hand, if Don Brash is right in arguing that his leadership will provide a lifeline for an Act party that was otherwise in a terminal condition, John Key will have good reason to welcome the change. The deal whereby an Act success in holding on to Epsom provides National with five or six additional support MPs will clearly be advantageous in the event of a close election result this year.
On the other hand, a close link in the voters’ minds between John Key and Don Brash may not be helpful to National’s chances with voters beyond the boundaries of Epsom. John Key’s cautious reaction to the prospect of Ministerial office for Brash, and his rejection of any possibility that the new Act leader might take an economic policy portfolio, show that he is all too aware of the possible risks to National of a higher-profile Act leader – particularly when that leader is Don Brash.
The risk is all the greater when the voters know much more now about Don Brash’s true politics than they did. Many voters will have concluded by now that we all had a lucky escape when Brash – in his National guise – was narrowly defeated in the 2005 general election. They will not welcome the prospect of a Brash re-entry to front-line politics through an Act back door.
That is especially true at a time when New Zealand voters are being asked to re-evaluate their MMP voting system (interestingly, at the same time as British voters will also vote on a possible proportional representation system).
Proportional representation inevitably throws up the issue of what role could and should be played in parliament and in government by small, perhaps extreme, parties on the fringes of politics. The fear of those who support first-past-the-post is that PR will allow extremists to exercise an undue influence over the government of the day.
The good sense of the New Zealand electorate has, however, done much to lay those fears to rest. MMP has largely delivered the more representative parliament that was promised, with better representation of women and minorities, and has ushered in a style of government that operates more by negotiation than by diktat.
And this has been achieved without sacrificing the central virtue of a first-past-the–post system – the voters’ ability to throw one lot out and replace it with another. The New Zealand electorate still chooses between a right-of-centre and a left-of-centre government, with a continuing assurance that small, extreme parties will not be allowed to exercise a disproportionate influence.
A major party that allowed that assurance to be called into question could pay a heavy price. John Key cannot let it be thought that a vote for National is a leg-up for Don Brash. The back-stabbing intrigues of minor politicians should not be allowed to mean the intrusion of extreme policies into our mainstream politics.
On Being Prime Minister
Very few of us get within touching distance of becoming Prime Minister. For those who do get to the top of the greasy pole, though, it must be a heady experience.
Suddenly – overnight – you are feted wherever you go. People hang on your every word. Former rivals become your acolytes, dependent on you for preferment. Armies of public servants do your bidding. The whole government of the country waits for your instructions.
Little wonder that many Prime Ministers fall victim to what I call “Prime Minister’s syndrome” – the temptation, after a year or two of being treated as infallible, to believe it. Susceptibility to the syndrome, of course, varies from one Prime Minister to another; it is less evident in the case of those who are stop-gap Prime Ministers (say, a Mike Moore) or who succeed mid-term by virtue of a coup (like Jenny Shipley or Gordon Brown).
The most susceptible are those who become Prime Minister off the back of a general election triumph. They start as heroes of their party, with the excitement of victory and the expectation of great deeds to be performed. But hero-worship can be a dangerous launching–pad for a Prime Minister.
Perhaps the most extreme example of Prime Minister’s syndrome was Tony Blair. I recall Tony, as a young member of my Shadow Cabinet team, confessing to me that, if he were elected to the Shadow Cabinet in a forthcoming election, he was frightened that he would be “found out”. Yet, if the memoirs of his PR guru Alastair Campbell are to be believed, within a day or two of his general election victory in 1997 he was lamenting that Britain did not provide him with a bigger and more important stage on which to deploy his talents.
Tony Blair was of course a brilliant communicator – a facility that led him to fall victim to another aspect of the syndrome. He began to believe that he could convince the country of anything – that he need only assert something to convince people that it must be so.
He reached the point of ceasing to concern himself with the truth or otherwise of what he said; the mere fact that he had said it was enough – in his mind – to establish its credibility beyond all challenge. This, coupled with an almost messianic conviction that he should play an important role on the world stage, led amongst other things to the ill-fated adventure of the Iraq invasion.
Being Prime Minister, in other words, carries with it dangers as well as opportunities. Some of those dangers are personal as well as political. The more successful a Prime Minister is in promoting his or her public persona, the greater the risk that the public persona will devour whatever remains of the private person. Margaret Thatcher was another instance of Prime Minister’s syndrome – and a prime example of someone whose public image became so powerful that there was nothing left of the private person.
The political risks of the syndrome are equally serious. A Prime Minister who believes his or her own myth, who is constantly told that the fortunes of his government and his party and the welfare of the country depend entirely on him, is in danger of becoming dismissive of those who do not tell him what he wants to hear.
It is then just a short step to showing less than proper respect for colleagues (who begin to feel resentful in private, whatever they may say in public), for Parliament, and ultimately for the voters themselves – and voters are very good at detecting whether or not they are being treated in a cavalier fashion. Once they sense that they are being led by someone who is detached from their lives and who believes that they can be fobbed off with less than the truth, it is a hard road back.
If that point is reached, then even the most telegenic performers can find that their media skills can become a two-edged sword. Tony Blair is again a case in point. The boyish charm and open manner that served him so well in his early years eventually became – when he lost the trust of many people – a count against him. There are some in Britain today who cannot today watch Tony on television, so great is their revulsion at what they see as the contrast between the smiling appearance and the harsher reality.
The later symptoms of the syndrome develop when – inevitably – the initial excitement of Prime Ministerial office begins to wane. Some Prime Ministers lose patience with what they see as the endless nit-picking from ungrateful voters at home; they seek refuge at international gatherings where they feel that their true merits as world leaders can be properly recognised – though only a few actually have the ability, as Helen Clark did, to land a proper job in the international arena.
Perhaps the most pernicious aspect of the syndrome is that those who suffer from it do not recognise it until it is too late. In such cases, we can only hope that the victims of the syndrome do not include us.
Bryan Gould
21 April 2011
This article was published in the NZ Herald on 26 April.