Author: Gary Hawke

“It’s Time” sums up the New Zealand election result. The echo of Australia in 1972 is not only that Helen Clark’s government was swept from office in a widespread feeling that it had lost touch with the electorate but also that John Key’s anxiety to be in office so as to attend the APEC Leaders’ Meeting must have led him to think about the executive consisting of only Gough Whitlam and Lance Barnard.

Normal processes will probably suffice. Legal changes after Muldoon’s resistance to a quick change of power in 1984 mean that the effective constraint on government formation is the political planning for a secure coalition, one which could persist beyond the 2011 election. It would be disruptive to form a cabinet and then have to adjust its membership once arrangements were made with coalition partners.

The victory of the National Party was sweeping.

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Author: Gary Hawke, NZIER and Victoria University, Wellington

Political timing has put an unusual emphasis on New Zealand’s fiscal situation in relation to international financial turbulence.

In the 1980s, reforms included adoption of General Accepted Accounting Practices for the public sector, the most important aspect of which was that accrual accounting would provide better information for political decision-making. It did, but despite being based on a belief that transparency was desirable and influential, it did not stop concealment of the financial situation of the Bank of New Zealand in the 1990 election campaign. In the early 1990s, legislation required that an election campaign should be marked by a Pre-Election Economic and Fiscal Update in which not only would the Minister of Finance explain developments and intentions, but the Secretary of Treasury would attest as a matter of professional judgement to the accuracy of the information provided.

The current government has undermined much of what was achieved in the 1980s. It has given up the attempt to keep the tax system simple and transparent; the Working for Families initiative addressed the way that in a society characterized by multiple-income families children are likely to experience relative poverty but it did so in a way which makes it very difficult to track redistributive effects. Subsidies reappeared in the tax system for activities like Research & Development with little ability to monitor effectiveness. Most important, an initiative to facilitate realization of private savings intentions was turned into a heavily subsidized KiwiSaver programme whose effects on redistribution are likely to be large and random while the effect on savings behaviour will probably be small.

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Author: Professor Gary Hawke, New Zealand Institute of Economic Research and Victoria University of Wellington

As in most countries, including the United States, foreign policy is not a major issue in the current New Zealand election campaign. A contest among various forms of populism has little scope for looking overseas even if the more important longer-term influences on the prosperity of the various coalitions of voters being wooed are to be found abroad rather than locally.

Indeed, foreign policy has probably come closest to surfacing through the peculiarities of New Zealand’s electoral system. In the last three years, few outside New Zealand could understand how we came to have a Minister of Foreign Affairs, Winston Peters, who was not a member of Cabinet. His party, New Zealand First, provided assurance to the government on issues of confidence and supply but remained less than wholly part of a coalition government. In attempting to position himself as a significant force in the election campaign, he won a major boost to the funding of the Ministry of Foreign Affairs and Trade. Now that the government’s fiscal position has worsened dramatically, that funding must come into question by whoever forms the next government. Current polls suggest that New Zealand First is unlikely to be able to defend its trophy.

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