NZ politics

Reading Grant Robertson

Michael Reddell NZ politics

I got home from Papua New Guinea at 1:30 on Saturday morning and by 3:30 yesterday afternoon I’d finished Grant Robertson’s new book, Anything Could Happen, and in between I’d been to two film festival movies, a 60th birthday party, and church. It is that sort of book, a pretty easy read.

In some respects, that is to the credit of the author. It is pretty well written (although not exactly the publisher’s description: “beautifully written”). I almost always like the “early life and upbringing” chapters of autobiographies and this one was no exception. That is probably a mix of the various laugh-out-loud funny anecdotes,

the fact that there were certain similarities in our childhoods (heavy church orientation, and I too was six when Mum and Dad told us we were changing islands so Dad could pursue his sense of call to the ministry), and the discovery that my wife and kids are (distantly) related to Grant Robertson (former Minister of Finance, Downie Stewart, who resigned in 1933 on a key point of policy difference, is a common relative).

Two other sections will stick with me: the treatment of his father’s betrayal of his family and his employer, culminating in 18 months in Dunedin prison is quite moving, and something no one would wish on any teenager, and Robertson’s pretty severe physical debilitation by the second half of 2022, that meant that when Ardern first indicated (in the September quarter of 2022) that she might step down, Robertson stepping up really wasn’t a viable option.

For the rest, unfortunately, I imagine it is the sort of book many of his mates and Wellington Central supporters will want to have on their shelves. Perhaps his staff at Otago too.

But you will search in vain for any serious insight or reflection on the politics, politicians, or policies of the 20 years or so in which Robertson was first a staffer, then an Opposition MP, and then a senior minister and close confidante of the Prime Minister. He was Labour’s finance spokesperson and Minister of Finance for, in total, just under 10 years (Minister for six of them), and had been Labour’s spokesperson on economic development for a while before that. He ended his political career having held only one substantial portfolio – Finance – and yet in this book you will look in vain for any distinct Robertson perspective on events or issues or institutions or individuals relating to that portfolio or (mostly) for any perspective at all.

As just a small example, back when Robertson became Opposition finance spokesperson his big project was something called the Future of Work, Danish “flexicurity” and all that, (an old post on some of that here). There was serious work done, and yet the book contains just one mention of that project – a mention of getting agreement from Andrew Little (newly elected leader) that he could do it.

But step back a bit further. Robertson shifted over to the political side (from MFAT) in the Clark government, stepping in first to become political adviser to Marian Hobbs before shifting some time later to the Prime Minister’s office. Robertson obviously has and had great affection for Hobbs, who wasn’t one of the shining stars of that government. We get plenty of the amusing malapropisms to which Hobbs was prone under pressure, but little of what made her tick. And if she is now a name many readers will barely be aware of, the same can’t be said for the big players of that government – Clark, Cullen, even Anderton, and of course behind the scenes Heather Simpson. Do we learn anything about them from this book (written by someone who was actually a student of political science, before himself becoming a senior player)? Barely at all.

And if we get that Robertson really really didn’t like, or have any time for, his rival (and Labour leader at the 2014 election) David Cunliffe – and to be fair, there seem to be many people who share that view – and wasn’t too keen on Charles Chauvel (younger readers can look him up) either, that is about it from his side of politics, and even those critical comments are less insightful than conventional and one-dimensional. Robertson served as a senior minister for six years, in a government with lots (and lots) of Labour ministers, losing them by the end at a rate of not much less than one a month. But there is no critical evaluation of any of them (not Stuart Nash, not Kiri Allan, not Kelvin Davis’s time as deputy leader), and not even any insight on what made key players tick. My one takeaway about Jacinda Ardern was learning that she’d once been hospitalised with the same obscure 19th century condition that had once put my wife in hospital on the other side of the world.

And if you suspect that that silence might have had to do with not wanting to risk upsetting anyone in the Labour family, he isn’t really any better on people on the other side of politics (other perhaps than a few interesting comments on Winston Peters in the 2017-20 Cabinet). Luxon gets three mentions, only two from his time in politics, and one of them was simply a mention that he (Luxon) had suggested Robertson (as caretaker Minister of Sport) should go the Rugby World Cup final in 2023, and Nicola Willis – despite facing him as National’s finance spokesperson through the last 20 months of his term and the election campaign – gets no mention at all (critical or otherwise). You’d have thought that a shrewd and experienced operator like Robertson would have had some perceptive, witty, and perhaps even unfair, observations to make. But apparently not. Perhaps he just wasn’t a close observer of people?

And it isn’t just politicians. If productivity (or cognate words/ideas) gets no mention, neither does the Productivity Commission – whose fate Robertson sealed with his appointments in the government’s second term. There is barely any mention of the advisers in his office, whether the political ones or the Treasury secondees and almost nothing about Treasury at all. Gabs Maklouf, whom he inherited, gets just one mention – around the “budget leak” in 2019 – and Caralee McLiesh also rates only a single (and entirely non-insightful) mention. There is nothing about her recruitment – an overseas person with no macro experience – or contribution (Covid or otherwise) or personality or role in the institution. You will learn precisely nothing about Treasury itself (not even Robertson’s views of it) in this book.

And while I’m enough of a junkie that I was always going to buy the book, I was perhaps most interested in what Robertson would have to say about the Reserve Bank in general and Adrian Orr in particular, the more so since Orr was no longer the incumbent. The short answer is almost nothing.

Orr appears twice in the index. The first mention relates to his appointment at the end of 2017. Robertson suggests that on coming into office he did not want an RB insider to become Governor. Which would be fine except that by then (a) Wheeler had refused to seek reappointment, b) his deputy, Spencer, was serving as a – dubiously legal – acting Governor and planning to retire as soon as a substantive appointment was made, and c) I’m pretty sure the other senior RB potential contender, Geoff Bascand who had indicated that he had applied, had already been winnowed out before the change of government. Anyway, Robertson’s only observation is that he wanted to know whether Orr would be open to the reforms Robertson’s envisaged (an MPC, with externals), which Orr was.

And the second reference was to that odd episode in late 2020 when Robertson overruled the Bank and inserted in the MPC’s Remit a clause that (loosely) required the Bank to assess the impact of its policy measure on house prices (without having any particular implications for policy). It was, we are told, “the only time in my term as Finance Minister that I clashed with Adrian Orr as Governor”. And that’s it.

On the substance, that comment in the previous paragraph is pretty damning (if true). The Minister never raised concerns about Orr’s behaviour (of which there were many documented public episodes), the Minister never expressed concern about the $11 billion Orr and the MPC lost taxpayers, he never expressed concerns about FEC being misled, he never raised concerns about inflation being let to run rampant? And did he really never have the feisty Orr overstep the mark, even slightly, in his (Robertson’s office)? And, of course, we learn nothing of his sense of Orr – even with just with the benefit of hindsight – we get no sense of why Orr was reappointed (over the objections of Opposition parties, when Robertson himself had amended the legislation to require consultation), nothing about that weird ban on having experts appointed to the MPC, let alone anything about the wider reform of Reserve Bank governance (and the underpowered Board he appointed) or even such significant structural reforms as deposit insurance.

And, of course, there is nothing at all on the structural fiscal deficit Robertson bequeathed to his successors (yes, even on PREFU numbers which included quite a bit of last minute vapourware promises about future fiscal chastity and sobriety). Not even a rueful reflection on the contrast between those Budget Responsibility Rules he and James Shaw had launched (to the upset of the left of their own parties) back in Opposition in March 2017 and the way it all ended. And nothing at all on what role Treasury advice and (poor) forecasts played.

It is a shame. There was some good things done by Robertson as Minister of Finance. He was finally willing to grasp the nettle and reform the governance of monetary policy and of the Bank more generally (I was a discussant at the event in 2017 when he launched that policy and the associated post was headed “Grant Robertson made my day”). Not everyone was a fan (the RB wasn’t) but I thought, and think, that deposit insurance was an appropriate second-best reform. But even on RB matters, execution and details left so much to be desired. Perhaps Robertson can’t really be blamed for Orr in late 2017 (he was new, and had to appoint someone the Quigley-led Board wheeled up), but he can for most of what followed – the bloat, the loss of focus, the personal behaviour, the disempowered MPC (lightweight appointments, never heard from), and so on…..all culminating in that stunning exit on 5 March this year.

There aren’t many good books in New Zealand on policy and politics. You’d have thought (I did – I was looking forward to the book) Robertson would have been capable of something more. Perhaps the market is small, but it is hardly as if he’s in need of whatever money a New Zealand political autobiography might make. Sadly perhaps it reveals him finally as not much more than a political operator, without very much substance at all.

When I wrote here a few years ago about Michael Cullen’s book – which for all its faults, written against the clock of terminal illness, was better than this – I concluded this way (reacting to a quote from Helen Clark lauding Cullen)

Meanwhile Cullen – and Clark herself of course – bequeathed to the next government (who in turn bequeathed it to this one), the twin economic failures: house prices and productivity (the latter shorthand for all the opportunities foregone, especially for those nearer the bottom of the income distribution).

In that sense, what marks him out from a generation or two of New Zealand politicians, who have spent careers in office, and presided over the continuing decline?

And now the same failures were bequeathed by Robertson (and his bosses) to Willis (and hers). And just this morning we hear the latest Prime Minister distancing himself from his housing minister’s ambition for lower house prices (suggesting he just wants a slower rate of increase), and nothing at all shows any sign of improving productivity.

New Zealand politics for you…….

Ministers of Finance

Michael Reddell New Zealand economic history, NZ politics

No, nothing so serious as fiscal policy.

I saw this morning this chart in a tweet from a Canadian economics professor (prompted by the new ministerial appointments in Canada).

I was digging around in the list of former New Zealand Ministers of Finance anyway, and thought it might be interesting to try a New Zealand version. Responsible government here goes back to 1856 and so I dug out the previous occupations of those who have held the office of Minister of Finance (or Colonial Treasurer or Treasurer) since then. The list has 42 names (although several held the office on several separate occasions – Ward being the most recent to have been Minister of Finance four separate times, the last ending in 1930). Canada, reading from the chart above, appears to have had 43 federal Ministers of Finance since 1867.

Of our 43, 7 held office for less than six months (some of those early governments lasted for days or mere weeks). I could have excluded them from the chart below, but it doesn’t look as though doing so would materially alter the picture (although it would mean dropping our one engineer – Charles Brown (1856) – and the one builder (William Hall-Jones (1906)).

When you sometimes hear breathless cries of how awful it was that Muldoon served as his own Minister of Finance while being Prime Minister you realise how little New Zealand history people know. In addition to Muldoon, the following served as Minister of Finance and Prime Minister at the same time (some on more than one occasion): Stafford, Vogel, Atkinson, Grey, Ballance, Seddon, Hall-Jones, Ward, Massey, Forbes, and Holland. You’d have to guess it won’t happen again, but it simply hadn’t been uncommon in New Zealand (and that in the days before legions of Associate Ministers).

So, to the chart. In most cases it is pretty clear how to classify people (Tizard was a teacher, Muldoon and Douglas were accountants, Richardson was a lawyer), but not always. I’ve shown both Grant Robertson and Nicola Willis as political staffers, but Robertson had also been a public servant and Willis a lobbyist.

The chart is very different from the Canadian version. Farmers still top the chart, although the last farmer to have been Minister of Finance was Gordon Coates who left office in 1935 (yes, I know Bill English has some claims but by the look of it he spent about a year on the family farm before going into politics).

As for the “business” category it is also a little arbitrary: Seddon (publican), Birch (surveyor) and the architect and builder each had their own firms – as in fact for a time had Walter Nash, although I’ve classified him as a political administrator in respect of his long service as secretary of the Labour Party. And in case you are wondering about the civil servants, that list is Bill English and a number of colonial administrators, including one of the eminence of George Grey.

Unlike Canada, no economists have held the office. I have no reason to think that a bad thing – I’m wary of, for example, doctors as Minister of Health – although no doubt Don Brash once aspired to it, and perhaps Dan Bidois (Parliament’s one current economist) does now? And it is worth bearing in mind that once upon a time incomes per head here were well above those in Canada, and now they lag behind (and Canada itself has a pretty woeful productivity record).

[UPDATE: Since I have been contacted on this point by a few people, I should note that I am aware that Brooke Van Velden has a degree majoring in economics. However, at least as I understand it, she has never worked as an economist – which is not a criticism of course – and on leaving university worked for the political PR firm Exceltium. Bidois, on the other hand, worked as an economist at OECD for several years.]

Anyway, I’m a history and politics junkie and I found it interesting. I hope some of you did. For the real nerds here is the full table

Or not

Michael Reddell NZ politics

“Time has come for a four-year term of govt”, or so declared the editorial in yesterday’s Sunday Star-Times. I voted against the idea in the 1990 referendum, and would do so in any conceivable future referendum.

Four-year electoral terms (which is at issue, not – at least directly – “four-year terms of govt”) appeal to politicians and bureaucrats (on the latter, see how voters in Karori/Wellington Central/Ohariu were among those least opposed to four year terms in the two referenda we’ve already had). The reasons aren’t particularly hard to fathom: more time and less accountability will almost always sound good to those being held to account (think students with assignments and lecturers with a reputation for granting extensions easily), and since most Wellington head office bureaucrats tend to be more attuned to the interests and perspectives of ministers – and “getting stuff done” – than to those of pesky voters (often actually assuming they know better the interests of those voters and their families than the voters do themselves).

But what caught my eye most in the SST editorial was a claim from a representative of a business lobby group (in this case Infrastructure New Zealand) that “three years is just not enough time to develop policy, implement legislation, and embed the necessary system changes and begin to measure results”.

It isn’t an approach most of us would settle for in other areas of life

Representative democracy can helpfully be seen as an agency problem. We (the voters) are the principals, who elect/employ agents to act on our behalf. But it is difficult to ensure that they do so, especially over such a wide range of issues, and the most powerful lever by far available to us is simply the ability to toss them out. They can at times simply pursue their own ends (in some cases, simply holding office might be enough), or pursue ends, or by means, which we come collectively to think are not the best way forward. Circumstances change too, in ways that neither voters nor MPs can envisage with any confidence. And while there are some other checks on what governments and Parliaments do, they are often pretty thin (the more so in New Zealand where governments form from a parliamentary majority, and Parliament is sovereign and can if it chose reverse or override the effect of any judicial rulings).

Agency problems aren’t unique to democratic politics. Another good example is widely-held public companies, listed on a stock exchange. There are many shareholders, who delegate power to a board of directors and, through them, to management. Those agents can do a good or bad job, and they can pursue shareholders’ interests or their own (managers, for example, tend to like bigger empires which tend to raise executive remuneration whether or not they add to shareholder value). Of course, in tightly-held companies these issues are much less severe – at the extreme a founder may be both CEO and the dominant shareholder. That person might do a good or a bad job, but the main wealth affected is his/her own. Representative democracies are much more like widely-held public companies, but our exposure to things going wrong or being done badly is much greater, because for most of us there is little or no scope for diversification, and even when there is (eg dual citizenship) exercising that option can be both costly and disruptive. This is our country. We have only one.

Listed companies are traded on the stock exchange. For companies of any size there will be transactions – and a fresh market-clearing price – each day. When management and the Board are seen to be doing a capable job – have a credible strategy to add shareholder value – the share price of the company concerned will match or outstrip the market. When doubts arise, the share price underperforms. It doesn’t tend to be too good for the chief executive’s career prospects if that underperformance becomes entrenched. Here’s one example of a New Zealand underperformer.

A day to day fluctuation in the share price won’t usually affect the Board or management much. Noise happens, market trends will be at work. In the political sphere, a single opinion poll typically won’t matter too much either. But over time a weakening share price is going to raise doubts among existing shareholders as to whether capital should be left in the business (retained earnings), and make it more difficult and expensive to raise fresh capital (each dollar of fresh capital dilutes existing shareholders’ interests to a greater extent).

What can shareholders do? They can, of course, as individuals sell some or all of their shares and thus reduce or eliminate their exposure to the firm and the agents (Board/management) it had been employing. But they can also vote out some or all of the directors, or create a climate where some incumbents think it might be best if they stepped aside and did not seek re-election.

And how often do directors come up for re-election? Well, in New Zealand the stock exchange listing rules require each director to face re-election at least every three years.

A person I mentioned this to wondered if the three years had been inspired by the three year electoral term for our government. I don’t know the history of the NZX listing rule, but I thought I’d check the situation in some other countries. The ASX also requires directors to face election at least every three years, but then Australia also has three-year federal parliamentary terms. But what about Canada and the UK, both of which have parliamentary terms of up to five years? Listing rules in Canada appear to require annual election of all directors (a practice that was apparently common there even before the rules changed in the 2010s). In the UK, the corporate governance code appears also to require annual elections for directors, at least for larger listed companies.

There is simply much less at stake as regards the governance of any individual listed company than in respect of our Parliament and government (and bear in mind that no government in 100 years or more has fallen inside the three year parliamentary term, although there have been a couple of discretionary early/snap elections). And there are far fewer checks and balances (let alone easy exit options). I cannot for the life of me see why we would delegate so much greater power to MPs and ministers (and their supporting bureaucrats) for terms longer than shareholders and the market generally choose to do for those who run public companies. Parliament is sovereign, individual companies are not. Individual companies also have much clearer benchmarks for performance (something around maximising shareholder value) than is ever conceivably possible for a Parliament or government.

Of course, there are plenty of democratic countries with longer electoral terms but (for all NZ’s faults) it is far from obvious that the general quality of government and policymaking has been any better in the UK or Canada (federally) than in Australia and New Zealand. And I don’t think either an upper house or a written constitution is any sort of solution that should make New Zealanders more comfortable with the idea of a four-year electoral term – you can’t create an alternative legitimacy simply thru a different voting (or worse, appointment) method for an upper house, and the written constitution simply hands over (lots) more power to the whims of unelected and unaccountable judges.

When we’ve had governments that really wanted to do bold stuff (a) they’ve managed to do a lot in three years, and b) in all case I can think of they managed to persuade voters to give them (at least) one more electoral term, to either carry on the work, consolidate results or whatever. It will be 50 years this year since we last decided not to give a government a second term (and that government had lost its biggest electoral asset to death halfway through). And in that sense, things aren’t so different from a company and CEO devising and putting in place transformational strategies for a company. These things take time, and especially take time to produce secure longer-term bottom line results. But shareholders are putting their money on the line each day, directors face re-election each year, and chief executives are probably more prone to being ousted early than Prime Ministers (the last PM to be forced out by his colleagues on anything other the health/age grounds was almost 30 year ago [perhaps Palmer too, but he’d not become PM at an election], and he was I think the only one in at least a century). Part of the skill of being an able PM/Cabinet or Board/CEO is to convince your publics (voters or shareholders) that you have the skills and the plans and that you warrant being allowed to stay.

And although, at a political level, it is easy to overstate the extent to which incoming governments typically reverse what their predecessors had done (not that much very quickly even after the 1984-90 or 1935-49 governments) it is also true that there are genuine contests of values and ideas – indeed, to a considerable extent it is what politics is about. In that sense, it is different than the listed company situation, where differences are much more about means rather than ends. On many things at any one time there are real differences across the public in values and priorities. And if public opinion shifts sharply or political leaders lose our confidence I can’t see strong reasons why they should simply have a claim to hold office for longer. They are, after all, our agents, not the principals. Good agents are really really valuable and can make a huge difference for the better. But good help can hard to find, and difficult to monitor that they are pursuing the preferences/priorities of those who voted them in.

And if the idea of a four-year term for Parliament has no appeal whatever with the present or any recent crop of politicians (I find it hard to think of any government in my adult life that I’ve felt with conviction really warranted even a second term), the suggestion that it would have to be accompanied by longer term for local government is positively alarming. Perhaps there are good local bodies – whose councillors should then readily win re-election – but I live in Wellington.

PS I’d also commend on this topic a column by Rob Campbell in Newsroom (paywalled today, but not I think from tomorrow). I suspect he and I would disagree on a huge proportion of policy issues, but that is his point (and mine)

Inflation (but not that sort)

Michael Reddell NZ politics

The CPI will be out later this morning and I’m sure all eyes will be on that.

But the Prime Minister’s reshuffle on Sunday prompted thoughts about inflation of another sort – the number of ministerial portfolios/titles in our executive government. When the reshuffle comes into effect on Friday there will (still) be 30 members of the executive (Cabinet ministers, ministers outside Cabinet, and parliamentary under-secretaries), 79 portfolios, and 6 distinct “other responsibilities” (and of course lots – 25 in fact – of “Associate Minister of” titles, but I’ll ignore those).

This is how the official ministerial list is laid out these days.

In this reshuffle, the Prime Minister didn’t add any new ministers (net), but he did add to the very long list of job titles: Tertiary Education and Skills was split into Universities (Reti) and Vocational Education (Simmonds) – as if (eg) law, accounting, or medical degrees weren’t primarily vocational – and a new “other responsibility” was created in the form of Minister for the South Island (like Minister for Auckland it isn’t a warranted portfolio). The new Minister for Economic Growth title was simply a relabelling of the old, and latterly unimportant (announcing handouts to various “major events” – check Melissa Lee’s press releases) Economic Development portfolio.

Numbers of portfolios (and ministers etc) do fluctuate from time to time. Re portfolios, government re-organisations/reforms matter – eg the Minister of SOEs now has responsibility for a whole bunch of government trading entities that once each had their own minister (and others were sold). But the long-term trend has been solidly upwards.

I went back to the New Zealand Official Yearbooks to get some snapshots each quarter century since 1900. (Here I simply followed the lists and counted “Deputy Prime Minister” and “Minister without Portfolio” as portfolios, a description here which does not distinguish (as NZOYB did not) between warranted and other distinct responsibilities. There were very few associate or deputy positions until the 2000 list)

The current Ministerial List structure seems to be available online back to about 2005. So for more recent years I used those lists. For what follows I’ve used Helen Clark’s final list (the numbers from her first list are in the table above), John Key’s first one, Bill English’s last one, Jacinda Ardern’s post-election 2017 and 2020 lists, a late one from Chris Hipkins, and Christopher Luxon’s first and most recent lists. I’ve shown both the number of warranted portfolios and the number of (distinct) “other responsibilities”, partly because over time some roles have gravitated from one column to the other with legislative change (eg responsibility for the SIS and GCSB), and partly because the older lists summarised above didn’t make the distinction).

So that is two new records – 81 job titles in his first list a mere 14 months ago and 85 now – set by Luxon, leading the government that had won office on talk of government bloat etc. And if the number of members of the executive isn’t a new record, it is certainly right up there (we’ve had 120 MPs since MMP was introduced in 1996, and as recently as 1999/2000 had “only” 25 members of the executive).

By contrast, in 1949/50 and 1975 – when the government had its hand in so much of the economy – National Party Prime Ministers Holland and Muldoon had governments with many fewer members of the executive and many fewer job titles (In 1991, Bolger had 25 people in the executive and about 70 distinct job titles).

Do these job titles come at vast expense? No doubt, not (a few changes to ministerial letterheads). Most of the “grace and favour” ones seem empty or unnecessary or just a piece of cheap political rhetoric: “we care” about group or sector, x, y, or z. A cynic who I mentioned these numbers to wondered if perhaps Luxon might have a growth target of getting to 100 ministerial titles: Minister for Wellington, Minister for Regional North Island perhaps, or Minister for Catholics, Minister for Protestants, Minister for Other Religions, and Minister for Atheists? Given how much money we throw at the industry it is perhaps a little surprising that no PM has yet set up a “Minister for Film” or Minister for Gaming”. And in a few countries (including in our region) they do split Treasury and Finance into separate portfolios.

It is insubstantial bloat – fault of successive Prime Ministers, although on this one Luxon appears to be the worst – made worse because every new portfolio titles attracts interested parties and pressure to “do something” under the aegis of that portfolio. Cynics suggest, for example, that the Minister for the South Island title was created mainly because there is no capable South Island minister actually in Cabinet, but presumably now the pressure will be on for James Meager to have some announceables (perhaps even some distinct bureaucrats). It just sends all the wrong signals from a government that talks about restraint, fiscal discipline, focusing on essentials etc. Much better to have slimmed the list of titles – and perhaps the list of people. Without more than two minutes effort I found it really easy to eliminate 21 of the job titles (and that is before starting on the associates – Associate Minister for Sport and Recreation anyone (that’s Chris Bishop by the way), and we once had an Associate Minister for the Rugby World Cup).

Not only would ending the title inflation be quite possible here, it can be and is done elsewhere. In the UK, for example, (a much bigger country and Parliament) there are lots of junior ministers but only around 30 distinct portfolio areas/titles. Australia’s federal government appears to have about 50.

Where might one start? Well, consider James Meager (who seems a perfectly able person, so this is not intended as a reflection on him). He has been given 3 distinct portfolios/responsibilities – Minister for Hunting and Fishing, Minister for Youth, and Minister for the South Island – not one of which is actually needed (at least for anything other than political show).

Divisiveness and democracy

Michael Reddell NZ politics

Not the usual stuff of this blog, but at lunchtime yesterday I went along to this well-attended event (St Andrew’s was full).

I had a few reactions and didn’t think I could do them justice in a few quick tweets.

Why did I go along? Well, several reasons really. Being semi-retired one has time, in principle the topic sounded interesting and important, I’d never heard Salmond speak before, and I have some time for Boston. I can’t say I necessarily expected to agree with the thrust of the promised “conversation”, but it is always good to hear people you disagree with make their best cases. Boston noted that it was a rare event at which he lowered the average age (and he is a few years older than me).

As it happened, Salmond did most of the talking, while Boston acted more as guide and host to the conversation (although he threw in some more comments in the Q&A session, including stating his preference to raise the NZS eligibility age to 70 – I clapped at that point). He sought to structure the discussion under 4 headings: treaty issues, environmental issues, the future of democracy, and “what on earth should we do now”.

Of course, I should have anticipated that the “conversation” wasn’t really going to be anything at all disinterested. If you were concerned about the way in which politics and society were going, and were interested in exploring common ground, rebuilding trust, engaging in efforts towards mutual understanding etc, you certainly wouldn’t have taken Salmond’s approach. From Salmond’s side in particular, it was mostly a series of sneers and laments about this government (David Seymour in particular, and Christopher Luxon who seemed to have fallen into the hands of bad people).

(As regular readers will know I am not myself a particular fan of this government, have little time for either Seymour or Luxon, and do not support Seymour’s Treaty Principles Bill.)

If inflammatory language is one of the problems of our day, Salmond contributed more than her fair share in just one session. Had anyone who strongly disagreed with her own politics been present they’d not have felt as if Salmond had any interest in them, except to sort them out and put them on the straight and narrow, or any recognition that there might be legitimately competing interests, world views, models for how policy should be done or New Zealand governed. Instead – particularly on treaty issues – we got sneers at how David Seymour couldn’t read Maori (which seemed particularly strange from someone of wholly European ancestry re someone of part Maori ancestry), claims that his approach was “impertinent”, that it was all “heartbreaking”, and that “it takes a lot of work to remain as ignorant as many of us have been”. It was, apparently, okay to have a discussion about the Treaty of Waitangi, “but not like this” – more, it seemed, a case of it was okay for the unwashed to ask questions of the experts and be put back on the right path, as if historical research (fascinating as it often is) was the answer, rather than one contribution to dialogue and debate as to how a modern New Zealand should best be governed, and what (if any) ongoing role an 1840 treaty might play in that.

The government was then accused – in the calm moderate language that fosters dialogue – of an “ambush of our democracy”, a claim which appeared to apply not just to treaty things but to the environment. This government, we were told, “is going in the opposite direction to our survival as a species”. Strangely – or perhaps not – the fact that the ETS continues in place, which caps emissions across the economy as a whole, was never mentioned. The fast track list seemed very unpopular……and yet of course there was no mention of projects fast-tracked under the previous government. Perhaps one line I might welcome was that there wasn’t much evidence of the coalition agreement commitment to evidence-based policymaking, if only it weren’t that successive governments – of both political stripes – have been so poor on that score.

And if the rhetoric hadn’t been amped up enough, we were then told that the government was “tossing whole categories of people on the rubbish heap”, while being invited to evaluate the government on how many New Zealanders were leaving, the suggestion being that it was because of this “ambush of democracy” – as if this hadn’t been a stark and sad feature of New Zealand, across governments except when the borders were closed, for too many decades.

I’m sure it was quite entertaining and emotionally satisfying for the much of the audience – and there were audible gasps of approval when she quoted Nobel economics winner Paul Romer to the effect that “we must stop apologising for regulation. It is the only thing that protects us from the abyss” – as if no one had noticed that David Seymour’s own new ministry is actually called the Ministry FOR Regulation.

I suspect that Boston was pretty sympathetic to a fair amount of Salmond’s commentary but he did inject a moment of realism, noting that the government (and its component parties) are about as popular now as they were in the election last year. If good Christopher Luxon (Salmond had been keen on him at Air NZ) really had fallen among the disreputable, “many of our fellow New Zealanders” seemed to quite like what he was doing.

(Now again to be fair, Boston seemed distinctly unimpressed with the Labour Party, and Salmond with the Green Party, so perhaps they might think it was all just the failures of the Opposition).

Salmond seemed dead keen on allowing New Zealand policy to be shaped by international “great and good” people: we got repeated references to various reports of Nobel Prize summits. It wasn’t quite clear how this was going to help her treaty concerns, but I guess she had in mind the environment. Quite why we’d want New Zealand policy to be guided by a bunch of people who are very expert in usually quite narrow technical areas, when most political hard choices are about values and distributional tradeoff, wasn’t ever made clear. Salmond seemed very keen on “citizens’ assemblies” and exercises in so-called “deliberative democracies” but presumably only so long as people like her got to guide the material these selected citizens were presented with. More money for journalism, and public broadcasting in particular, seemed to be a policy line both Boston and Salmond were championing, seemingly utterly oblivious to the declining public trust in journalism.

Perhaps weirdest of all was the way Salmond ended. Apparently oblivious to Boston’s reminder that the current government isn’t exactly unpopular (at least outside central Wellington) there was an impassioned plea that we should “let leaders lead”. Since I doubt she in mind Seymour, Shane Jones, or even the diminished Luxon, one can only assume it was only the right sort of approved leaders who should be allowed to lead. In a final flourish of no nuance whatever, we were told that we needed leaders who would look to the interests of their children and grandchildren, not to the interests of donors. A particular unconstructive approach to enhancing mutual respect etc to simply assert that everyone who disagrees with you is either ignorant or in the thrall of donors, and has no concern for next generations (even their own) at all. It really was quite breathtaking.

Perhaps if one went along to an ACT rally, or even a New Zealand Initiative members’ retreat, it might all be about as bad on the other side: the dismissive sneering and the automatic assumption of a single right pathway, if only the peasants could be cowed or brought to understand. Maybe (I genuinely don’t know). For myself, I’m sceptical of constant calls for “social cohesion” etc, since there are really big and important differences and values and world views and priorities, and there isn’t much point in assuming that one side or the other only needs to be enlightening (or perhaps silenced). But it really was astonishing that someone as able in her own field as Salmond evidently is, had no apparent interest in anyone else’s models or values or frameworks, or even a conception that there could be such things: the people of goodwill and intelligence might genuinely, deeply, and perhaps intractably disagree.

But it probably all played well to the elderly base present at the meeting. Just like so many gatherings – so much social media for that matter – do.

Reading the documents

Michael Reddell New Zealand economic performance, NZ politics

The two coalition agreements (ACT and NZ First) and the ministerial list, that is.

First, the ministerial list with its 28 ministers and 2 under secretaries, in a Parliament that at standard size has only 120 MPs. Yes, it is one fewer undersecretary than Ardern had in 2017 (meeting the ambitions of three parties as well) but…..this was supposed to be the government of busting public sector bloat, not simply matching previous excess (Luxon was quoted yesterday defending his numbers by reference to Ardern). Supporters of the government will pop up on Twitter suggesting there is a big agenda and they may all be very able people, but……it is far from obvious why (for example) we need an undersecretary to the Minister for Media and Communications, the entire job of one NZ First appointee (this parallels a 2017 appointment when one Labour person had the entire job of being undersecretary to the Minister of Ethnic Communities, a portfolio itself barely a job in the first place). The reforming governments of 1984 and 1990 didn’t seem to need executives of 30 or 31 people to get their jobs done.

And then there are all the portfolios: 76 of them by my count (up by five, I think, from the previous government, and 68 in the first Ardern ministry). If I read the table on Wikipedia correctly, the 1984 governments had only about 45 portfolios. It seems to have become a cheap form of pandering (pure portfolio labels themselves don’t cost much, but over time portfolio labels probably tend to beget activities and expenditure) to almost conceivable sector and population group.

It is almost as if your existence isn’t validated until the government has created a ministerial portfolio that covers you. (It is not as if none of these portfolios has any useful substantive content but…..why do we need a minister “for” manufacturing, or “for” hunting and fishing” or “for” hospitality, let alone for something as basic and individual as “recreation? I’ll go further – taking for granting that the Racing portfolio is absurd – and suggest there is no need for a Minister for Tourism either, even if we have had one for more than a hundred years. And that is before starting on the plethora of population ministries, for not one of which one could really mount a serious case for (notwithstanding there may be bits and bobs of real needed stuff in places like Maori Development). None of it speaks of a government that is serious about shrinking the public sector and back-office bloat. The amounts involved of course aren’t individually large, but the pennies add up, and people look to actions at least as much as words.

What of the coalition agreements. The preambles made interesting reading (basically the same, but here I’ve used the ACT one) for what the parties wanted us to believe they were about.

I was struck by the two highlighted bits.  First, I wasn’t sure –  even though all parties talk it up –  why “social cohesion” was thought to be a good thing (seemed to be talked about eg by people wanting “hate speech” laws or the dodgy Disinformation Project people).  There are real and deep divides among people, and values differ very deeply –  I (for example) regard most of the parties of the further left as repugnant (on multiple grounds) and am not any keener on David Seymour’s moral vision.  Much of the country now, on the other hand, regards orthodox Christianity as repugnant (governments even legislating to outlaw some of it). We all have to rub along in some form or another living in a common space, but that is about it surely?  And second, that bit about being a “world economic and social leader”.   It was bit puzzling for two reasons: first, there is no way what is in these agreements is at all consistent with that stated ambition (and, to be fair, National in particular never suggested otherwise in the campaign) and second, when New Zealand was regarded as a “world economic and social leader” wasn’t that primarily under the pre-war Liberal governments that were relentlessly extending the role of the state?  As for “export powerhouse”, well I suppose it sounded good when they wrote it down.

For those who haven’t dug into the coalition agreement documents themselves you might not have seen mention of the “Ongoing Decision-Making Principles”. These are them

I take them with something of a pinch of salt, but I was pleased to “rigorous cost-benefit analysis” in there twice. Let us hope so. It would certainly make a change, and not just from the most recent previous government.

Consistent with the pinch of salt approach, there was a telling item in the ACT agreement. It starts “when evaluating government expenditure it should be assessed on the extent to which it is delivering public goods [here I’m going “tick”], social insurance [another “tick”, perhaps a little less enthusiastic], regulating market failure [“tick”, I suppose, although “being cognisant of government failure” would go nicely with that] and [………..wait for it] political choice”.

You have to wonder why they bothered. It was going quite well with that list, until the “and anything else we happen to want to spend money on at the time” was added. It is realistic I guess, but not exactly inspiring or even very aspirational.

The bigger question across all these documents (which incorporate, when not specifically excluded, the things in National’s 100 day plan, their 100 point economic plan, and their fiscal and tax plans (“plan” in some cases being a generous description)), is to what extent the new government’s programme mostly unwinds some of the bad stuff the previous government did and to what extent it genuinely sets a pathway to a much better future. Whatever you think of the state of things when National left office in 2017 – and at least there wasn’t a fiscal deficit – our average productivity performance was then as poor as ever, business investment lagged that in most OECD countries, and no real progress was being made towards abundant and easily affordable housing. And, for example, the Wellington City Council still wasn’t well-run and was still prioritising ideological vanity projects over basics (water, most notably).

There is a long list of stuff in the documents outlining the new government’s programme that I like. But it is long on things (small and large) undoing the last government’s agenda, most of which I put big ticks next to.

But it seems (and I’d like to believe I was misreading it, but I don’t think I am) short on making for a much better future relative to 2017.

Take the business side of things. National has long talked about encouraging foreign investment, but…..there was never much in their campaign, and the ill-conceived attempt to ease the foreign buyers housing ban proved stillborn. There seems to be a commitment to make it easier for overseas investors to engage in build-to-rent housing projects which sounds positive. But there isn’t much beyond that. The one item I spotted was this

which sounds as though it should be positive, but also seems quite limited. Presumably all the screening requirements and other current restrictions remain in place.

New Zealand has one of the highest company tax rates in the OECD, and not only is there nothing in the agreements to lower that rate – which bears most on foreign investors – but they are proceeding with the same distortionary policy Labour also proposed to remove tax-depreciation provisions for buildings (offices, factories etc). It is a step in the wrong direction.

There are some positives, including provisions around consenting for renewable energy projects and infrastructure projects, ending the oil and gas ban, encouraging minerals development and exploration, and to the extent that they are followed through on and work a focus on better schooling should produce some economic payoffs a decade or more hence (which isn’t a criticism just a reality). I’m all for school choice, but it is mostly about choice (good in its own right), and it isn’t yet clear how far the parties will be willing to go. The talk of a new RMA sounds good on paper, but with minimal detail, and huge uncertainty about specifics and then how courts might interpret things, who really knows how much it will amount to.

Could the new Ministry of Regulation end up being a positive? Quite possibly (although we once hoped for that from the Productivity Commission), but conducting reviews – worthy as they may be – is different from getting a three-party Cabinet to agree on substantial material regulatory and legislative changes, and National in particular did not campaign for a mandate of major change. And it isn’t clear either that the parties have a clear idea as to what it would take to once-again be a world-matching economic performer, or that they are going to supported by an officialdom with the intellectual leadership etc to produce top-quality advice equal to the challenges.

As for housing, the parties have committed to keep in place the outgoing government’s “highly productive” land restrictions, which functionally have the effect of making it harder to get the sort of competition in land around cities that really could drive down house prices. On the positive side, “automatic approval for appropriately certified building materials from the US, Europe, the UK, and Australia”.

Some are lamenting the agreement to make the Medium Density Residential Standards voluntary. I’m not – as on their own they were never going to materially contribute to lowering house prices, and represented something of a central government overreach that never dealt at all with real externalities, even if some of those involved had good intentions (others – like too many councils – just had a vision of urban form they wanted to impose). I am sorry that the government did not pick up the idea of allowing easy localised (ie own group of properties only) opt-outs from the new rules, and is not doing anything about a presumptive right to build. Overall, in combination, and in combination with an immigration policy which seems to be even more “big NZ” than late Labour, it is a recipe for house prices in New Zealand to continue to be ruinously unaffordable for huge proportions of the population.

Oh, and National’s (very weak) NZS policy has been kicked for touch, so that there is not even a pretence of beginning to face the fiscal implications of the continually ageing population and growing life expectancy (themselves both good things), all of which might seem a trifle less bad if we were starting with fiscal surplus and very low debt, rather than with big fiscal deficits and debt levels rapidly converging on OECD medians.

Time will tell. But for now I’m not much more optimistic than I was before the election. There is a reasonably encouraging list of things to unwind (although many more things could have been added), but having done the unwinds little in the agreements suggests any sort of full-throated seriousness about actually reversing decades of economic failure or the scandal that is house prices in land-abundant New Zealand. I doubt we will even hear again that stuff about once again being a world economic leader: with such an unambitious forward agenda, and weak policy capability, the gap between rhetoric and reality would quickly just be too sad, inviting head-shaking and some derision.

The fiscal gap that is macroeconomically significant

Michael Reddell Fiscal policy, NZ politics, Uncategorized

That was a weird 24 hours or so. If you had told me a week ago that anything I was involved with would be the lead item on Morning Report and on the two TV channels’ evening news bulletins, I would not have believed you. Election campaigns are funny things.

I don’t want to say anything much more about the foreign buyers’ tax issue, although it did occur to me this morning that National’s stance – refusing to release any workings, or details of the Castalia review- was somewhat at odds with Willis’s recent statement that National now wants a state Policy Costings Unit established. In any such model, the full costings/modelling for any policy a party adopted would routinely be released. But in the end it is their choice, as it should be. And, as I noted yesterday, whatever political/reputational significance the (likely large) gap in the revenue estimates has, it simply isn’t macroeconomically significant, at about 0.1 per cent of GDP per annum.

The OBEGAL operating balance forecast for this fiscal year in the PREFU earlier this week was 2.7 per cent of GDP, and less than three months into the fiscal year I’m sure Treasury would tell us that even if there are no policy changes, that is a point estimate within a credible range easily 0.5 percentage points either side of 2.7 per cent.

In the run-up to last year’s Budget, the Minister of Finance released a new set of “fiscal rules” (these have tended to be something of a moveable feast to say the least, but the 2022 ones are still in place). Under those “rules” (to be a real rule it has to lead to changes in behaviour not just changes in the rule), the aim was not just to get back to surplus (OBEGAL) but to maintain a surplus in the range of 0 to 2 per cent of GDP. To simplify things, we’ll focus on a midpoint of 1 per cent of GDP, each year.

Back then – less than 18 months ago, the big Covid spend now well behind the government – a surplus was thought to be close. In fact, in the HYEFU in December 2021, Treasury had projected a surplus of 0.5 per cent of GDP for this current fiscal year 2023/24 (by Budget 2022 that forecast had already slipped to a deficit of 0.6 per cent of GDP). So back then, not long ago, getting to surplus wasn’t some “end of forecast period [4 years away]” idyll, per the Labour Party’s current “Our Pathway Forward” document released a couple of weeks ago.

Treasury forecasts that GDP for the 23/24 year will be $417 billion. If we take the difference between the forecast deficit of 2.7 per cent of GDP and the 1 per cent of GDP surplus target, we get a $15.4 billion fiscal gap this year. Expenditure not sufficiently funded by revenue to be consistent with the fiscal goal the government itself had set.

People will talk a lot about Covid spending having been necessary, and I’m sure much of it was. But that was then and this is now (23/24 and beyond). The only justifiable reason for the Covid spend to still be influencing spending today is the servicing costs of the resulting debt – which themselves are much higher than they would have been if only the Reserve Bank MPC, with the imprimatur of the Minister and the Treasury, had not engaged in a massive liability swap, buying back long-dated debt and issuing huge volumes of new floating rate liabilities, right near the trough of a decades-long trend decline in long-term interest rates. And part of the reason we should aim to run surpluses in more-normal times is to counterbalance the inevitable deficits when really bad things happen (be they the Canterbury earthquakes or Covid).

One could produce lots of other estimates of “the gap”. For example, the residual cash deficit (number 2 on the PREFU “fiscal strategy indicators” bit of the tables) is way larger again. Or – as I talked of in earlier posts – we could play around with inflation adjustment. But whichever way you look at it there is a really large fiscal gap, which wasn’t foreseen even at the end of 2021, let alone pre-Covid

In the 2019 HYEFU, just prior to Covid, the forward projections had had a surplus for this year (23/24) of 1.5 per cent of GDP. Tax revenue as a share of GDP for 23/24 is higher in the recent PREFU forecasts than it was back in December 2019 (not surprising given the fiscal drag from inflation), so the gap is entirely down to additional spending. That’s a choice, by this government.

As the IMF, The Treasury, and every other serious analyst (including the ANZ just today) also recognise, the choice to widen out the prospective deficits a lot has also directly acted to work against the drive to lower inflation, putting more upward pressure on interest rates. (The Minister and RB Governor dispute this, but they must be considered motivated reasoners, and the Governor in particular has been slow walking the release of whatever (if any) analysis they might have to support his story. As one follower on Twitter noted, perhaps he and Willis have more in common than we had thought.) As I’ve documented, when we look across advanced countries, we now seem to have one of the larger deficits around. All this in a year in which the economy is expected to still be pretty much fully employed.

Ah, but the government would tell us, surpluses are coming. After all, Treasury said so. You only have to look at the PREFU tables and there in 2026/27 there is a very modest surplus.

But if we are talking about credibility of numbers, this really takes the prize for worst among the major political parties.

As I’ve pointed out previously, The Treasury has to do its forecasts on what the government tell them is its policies. There isn’t any real discretion. These are only Treasury’s best forecasts conditional on assuming the policies a government that is behind in the polls told them will be its policies in government for the next several years. You can’t really have Treasury doing unconditional forecasts, but PREFU numbers in particular for years beyond the current year really aren’t worth very much at all, because they can easily be, and have been, gamed.

Just before the numbers were finalised – no doubt knowing where they were heading – the government decided to indicate that future fiscal policy (almost entirely periods beyond the election) would be run materially tighter than they had previously indicated. This was a mix of cutting baselines for various departments, cancelling a few things immediately, and announcing that in out years the future budget operating allowances would be reduced. And, as if by magic, they took $4 billion out of total expected spending over the forecast period, without making even one specific commitment about things that wouldn’t be done etc in that future period. Going into a PREFU, the Minister of Finance can tell the Secretary any number he likes, and she has to use it. And this is not to suggest that the previously announced future operating allowances had been just fine either; after all, similar political imperatives had driven the government at Budget time, wanting to show a surplus (then) in 2025/26.

In the furore around National’s costings re the foreign buyer tax, we didn’t get to see any substance from the reviewers either. But being in government is a bit different. If Treasury had to do forecasts using what the government said was going to be its fiscal policy if it were to be re-elected, Treasury was free to provide its own interpretative or contextual comment. And it did.

We don’t have a very clear insight into just which cost pressures Treasury was referring to there. Some of it will be general inflation (prices and wages) from here, but some of it should presumably be stuff like the huge cut in real university funding that the government has imposed in the last couple of years, perhaps accidentally on account of inflation, but not remedied and probably not sustainable. Or the real wage cut they recently imposed on secondary teachers (even as private real wages are steady to rising) when recruitment and retention issues remain real, or a similar burden they seem to want to impose on senior doctors. Inflation can be a wonderful thing for government budgets in the short-term, but reality – market real wages, international competition etc – will eventually out. And as others have pointed out, none of these PREFU numbers capture things like the pressure for increased defence spending or the costs of big new projects like the new harbour crossing for Auckland that the government rushed out a few weeks ago.

On any fair assessment of the way this government operates, the current expenditure projections simply are not credible. And Treasury – the government’s professional advisers – know it (presumably some journalist will have thought to OIA any private fiscal analysis Treasury has given to the Minister in the last month or two). Cyclically-adjusted deficits do not heal themselves and nothing specific the current government has said or done has amounted to anything more in that direction than drawing a line on a graph and saying “that is our policy” (or would be if you were to re-elect us). What won’t be done, in such volume or quality or whatever. Ministers can’t or won’t tell us, and their own track record has actually been one of not delivering anything as low as the indicated future operating allowances.

These issues should swamp in substantive importance anything around one line item in National’s plan, which even if things are as bad as our model (and they could be worse if National did have to shift to a tax-residence base), is not much more than 0.1 per cent of GDP, slightly worsening a deficit that any new government will face of 2.7 per cent of GDP. It is the 2.7 per cent that really should be in focus.

But that is true as much for National as for Labour. And at the moment the signs are not encouraging. We are told to be a little patient and that the party’s “fiscal plan” will be released sometime before the first of us cast our ballots (little more than two weeks away). But nothing we have heard so far gives us much confidence that the party is any more serious about deficit reduction than Labour is.

The Back Pocket Boost package was their big tax and spending announcement. Luxon has been explicit that PREFU will change nothing about that package, so what else (material) is there? Perhaps this is unduly pessimistic but I wonder if we won’t see something a lot like Labour’s policy – vapourware commitments to surpluses years ahead, but nothing specific. In one sense National could be worse than Labour: not only is there the probable gap from the foreign buyers’ tax revenue, but National has already assumed a lot of whatever public sector fat can readily be cut is used to finance the promised tax cuts. That fat can’t be used again to cut the deficit. On the other hand, of course, National (and ACT more so) does seem genuinely exercised about bloat and excess in recent years, and you’d have to think they would be a bit better positioned (even just psychologically) to make the needed cuts, and personnel changes, than a bunch of ministers who delivered the spend-up in the first place. But those two influences probably largely net out and we are left with a big fiscal gap – that $15 billion one – and two parties neither of whom seem to have any real idea as to what they would do, sustainably, to actually deliver surpluses. Perhaps neither really cares very much. Which should go to their credibility with voters…..but probably won’t.

To end, just another chart for those – from whichever side – going “but Covid”. The chart is a variant of one I’ve shown before, but this time I’ve indexed net debt to a common starting point in 2019 for the median OECD country and for New Zealand (the latter using PREFU numbers for 23/24). (The scale here is percentage points of GDP: so an increase from 100 to 110 is an increase of 10 percentage points to net debt as a percentage of GDP.)

You can see the impact of Covid. In both the OECD grouping and in New Zealand the spending associated with the first big lockdowns made a big difference, boosting debt materially. Probably few argue with that very much. But what has happened since then? Net debt for the median OECD country (as a share of GDP) is now a bit lower than it was in 2019, reflecting some mix of inflation (unexpected inflation cuts nastily into the real value of nominal debt) and a prompt return to something near a balanced budget (not every country of course, but this is the median country).

But not in New Zealand where the government has made a conscious choice to increase core spending a lot further (even in the gamed PREFU core Crown spending as a share of GDP is now expected to be a bit higher than was projected for 24/25 even at Budget time), consciously choosing to run large deficits, which it now has no real idea how to close.

(Note that as I’ve shown previously the absolute level of NZ government net debt (share of GDP) is still below the OECD median- the chart above is about relative changes over that specific period – but that gap has been closing fast.)

One interviewer yesterday asked me to sum up the gap in National’s foreign buyers’ tax revenue estimates in one word. I could only manage three: “a bad gap”. That gap matters on its own terms, but the really bad gap – the one that should be getting a lot more attention from the media, and a lot more engagement from our political parties, is the $15 billion one that none of them seem interested in engaging honestly on how they really plan to close it. It is a huge gap. Having brought it about reflects very poorly on Labour (or should) but the apparent indifference to the grim outlook for the next few years reflects very poorly on the credibility of both our main parties, notably he who is now Minister of Finance, and she who would take the job just a few weeks from now.

I should perhaps add that while Matthew Hooton’s column today makes some useful points in a similar vein, his prophecies of impending doom, parallels with 1990 etc, really don’t stack up exposed to any very much scrutiny. Our situation now is grim but much less dramatic. More perhaps on a par with the resigned in difference of both parties to house prices (is anyone talking getting them durably lower?) or productivity (does either party have any serious ideas that might drive productivity growth sustainably much higher?). Does either party really care?

Fiscal credibility was once a thing in New Zealand. Both main parties seemed proud of it, even if at times the constraints tied their hands. These days, the two parties – led by Labour, now apparently followed by National – seem to have together shredded what was left of it.

My wife and I are heading off tomorrow for a spring holiday so most likely there will be no more posts here until the middle of the week after next.

Reading “The China Tightrope”

Michael Reddell China, NZ politics

The China Tightrope is the title of the new book by Newsroom’s foreign affairs reporter Sam Sachdeva. The subtitle is “Navigating New Zealand’s relationship with a world superpower”. In the quite limited New Zealand media coverage of the China issues, Newsroom has been better than most. In conjunction with the Financial Times, in 2017 they helped break the story of then National MP Jian Yang’s highly questionable, hidden from the public (and in important respects from the NZ immigration and citizenship authorities), past, including as a CCP member and teacher at a PLA university run at least in part to train spies. They gave considerable coverage to Anne-Marie Brady’s Magic Weapons paper that was released at about the same time. They even ran a post I’d originally written here on NZ/PRC issues.

There was quite a lot of coverage of these issues for a couple of years after 2017, but then the issue seemed to rather die away, at least as far as the media were concerned. And even as more and more of the true character of the CCP regime in China under Xi Jinping became apparent. The all-consuming nature of Covid probably helped, as did the (apparently) joint decision by Jacinda Ardern and Todd Muller (in perhaps the only worthwhile thing he did in his brief stint as National leader) to jettison MPs Raymond Huo and Jian Yang just prior to the 2020 election. Remove the headline risk and you reduce the frequency of headlines must have been the hope. Professor Brady, a world expert on Chinese influence issues, also appeared to turn away from public engagement (perhaps not entirely surprisingly after some of her experiences) and without prominent credible expert voices there often wasn’t that much for busy journalists to report. Establishment New Zealand had, after all, never really wanted scrutiny or challenge at all; there were too many cosy interests (all no doubt legal) to protect. Hadn’t the previous government set up and funded (and the current government maintained it) the New Zealand China Council largely to influence the public narrative in an emollient direction. There there, nothing to worry your heads about. We the bureaucrats and business people have it all under control, never ever uttering even a concerned word about the nature of the regime or its activities and interests here. And that suited both political parties, with strong fundraising interests.

So when it was reported a few months ago that Sam Sachdeva was writing a book on the issues it piqued my interest. There aren’t, after all, that many serious books on New Zealand current political issues.

Sachdeva appears to have faced considerable challenges in writing his book. There were probably practical issues (how much space the publishers would allow, where to pitch the book to get a reasonable level of sales in a small market, and so on). Then there was the problem that any journalist writing such a book needed to be conscious of his ongoing day job. Push too hard in the book and the access required to do the day job might well be jeopardised.

As it is, access seems to have proved to be quite an issue for Sachdeva in writing the book. We are explicitly told that Jacinda Ardern refused to engage at all (consistent with the Herald’s Matt Nippert’s experience earlier in her PM-ship in which he spent a year or more fruitlessly seeking an interview on PRC issues, Nippert also having pursued some of the Jian Yang story). Sachdeva is hardly some scandal-mongering reckless pseudo-journalist, but the then Prime Minister, and leader of a large political party implicated in a number of these issues, simply refused to engage. That was no doubt convenient for her.

The other person we are told who refused to engage was Professor Brady:

Brady initially indicated a willingness to speak with me for this book, before ultimately declining om the grounds that everything she might say was already in her research, and it would be ‘impossible’ for me to say anything authoritative about the New Zealand-China relationship given my lack of Mandarin-language skills and expertise in the CCP system.

For someone who has talked up the role of universities, and academics, as “critic and conscience” it didn’t seem a very constructive sort of approach. After all, quite a lot has happened since 2017. Then again, there have been indications that whereas in 2017 Brady was very much outside the official tent, and ready to air (what seemed like reasonable) complaints, that in recent years she may have taken on roles, formal or informal, that leave her feeling less free to speak. Her occasional comments on Twitter have tended to be relatively positive about the current government, and it would have been good to have heard some of those angles and arguments elaborated.

We know that Ardern and Brady refused to speak to Sachdeva. He provides a list of the people he did talk to, whose views are attributed. There is also a comment that “Other interviewees whose thoughts are included are not listed, as they agreed to speak on condition of confidentiality”. It isn’t clear quite what sort of people might be included here – if it is mostly people from within the ethnic Chinese community in New Zealand, well and good (there are probably legitimate fears of PRC intimidation and threats), but I recall a suggestion that at least one government (MFAT) official might have been included, which seems less than ideal. Either way, it is hardly as if there are revelations (breathtaking or otherwise) in the book.

What is less clear is the situation of others. Did Sachdeva not ask, or did they refuse to talk. Here, I have in mind:

  • current senior National Party figures (Luxon, Brownlee, McClay (he of, for example, the infamous “vocational training schools, and none of our business” approach to the Uighur concentration camps).  I recall exchanging notes with Sachdeva on Twitter several months ago and if I recall correctly he told me he had had a request in for many many months for an interview with Luxon on foreign affairs issues, to no avail.
  • Simon Bridges (who –  and not Bill English as Sachdeva says –  signed the 2017 Belt and Road MOU, the one envisaging a “fusion of civilisations” etc, who did the 2019 trip to China, glowing state-media TV interview and all, organised by Jian Yang, and who did nothing to deal with the Jian Yang situation.  Oh, and who was consistently critical of Ardern for not being sufficiently obeisant before China.
  • Jami-Lee Ross
  • Nanaia Mahuta, Damien O’Connor (for the foreign policy/trade side of things) and whoever was the Minister of Justice and the Minister for the intelligence services at the time the book was being written
  • Jian Yang or Raymond Huo
  • Phil Goff (he of the very large “donation” –  auction proceeds for the works of Xi Jinping – from a Beijing source to an earlier mayoral campaign)
  • Peter Goodfellow
  • Nigel Haworth
  • The Green Party’s foreign affairs spokesperson
  • Ingrid Leary (the Labour backbencher who is now a co-chair of the Inter-Parliamentary Alliance on China, but who seems to keep very very quiet on such issues)

Remarkably, the only current member of Parliament Sachdeva (who was chair of the parliamentary press gallery only a handful of years ago) said he talked to is Simon O’Connor, the rather-marginalised National MP who is from time to time willing to speak up on these issues (also part of IPAC), but is nonetheless constrained by being a fairly junior member and spokesperson in a caucus whose leaders tend to have quite different views.

I was also a bit surprised that he had not talked to Prof Geremie Barmé, an Australian academic expert on PRC issues now resident in New Zealand (who had written an open letter  –  addressed broadly, but including to the then Prime Minister – urging people to take seriously the arguments and evidence Anne-Marie Brady was advancing).  The letter ended thus

Since September 2017, Professor Anne-Marie Brady’s work has attracted overwhelmingly positive global attention. It has also been subjected to vilification by Chinese officialdom. Regardless, her work continues to influence the debate about China’s “sharp power” on the international stage, and it contributes to practical policy discussions in Europe, North America and in Australia. This work remains ever more pressingly relevant to the public life, and the future, of her homeland.

On the other hand, Sachdeva did get interviews with John Key, Tim Groser, and Murray McCully (and the former Executive Director and the current chair of the China Council) of the trade-trumps-all school (and who, to be fair, came to office before Xi Jinping).

And if he talked to the director of the Contemporary China Research Centre (which is apparently hosting a roundtable discussion on Sachdeva’s book in Wellington tomorrow night, which I can’t make), who seems to have become a bit more sceptical, and keen to distance himself from PRC interests, than when I wrote about some of his comments here in 2018, another surprising omission is Tony Browne. Browne is a former NZ ambassador to Beijing who for a considerable time chaired the Victoria University Confucius Institute (PRC funding etc and all, photo of Xi Jinping on its page on the Vic website), chairs the Contemporary China Research Centre (supposedly an independent forum for expertise and debate, but which shares an office with the Confucius Institute), and still appears to serve as a consultant to the PRC government entity that drives the entire Confucius Institute movement internationally. Oh, and he is also the NZ course director for the ANZSOG training programme run each year (but disrupted by Covid) for up and coming mid-level CCP officials (and where they get access to many of Australasia’s great, good, and powerful). I’m something of a Browne sceptic, but he does have a thoughtful case to make for the sort of engagement/involvement I’m critical of.

If I was extending the list of those I was surprised not to see interviewed it would include (a) at least one or two university vice-chancellors (supposedly balancing critic and conscience responsibilities with being big export businesses to China), (b) representatives (present or past) of entities like Fonterra or Zespri or Air New Zealand, or c) perhaps some freer-now-to-speak former senior MFAT officials. Perhaps a little flippantly, the New Zealand Police too, who like cosy relationships with Beijing, and allowed one of their own senior official to accept a role as visiting professor at a Chinese domestic security (aka repression and concentration camps) university. I guess they too have a case to make.

None of this is to suggest that Sachdeva is particularly sympathetic to the gruesome pro-China bonhomie that flows from the lips of John Key. He clearly isn’t. Or that he has not talked to sceptics and critics (Winston Peters and Ron Mark appear in the list of interviewees, and people like former FT Asia editor Jamil Anderlini and Australian researcher and author Alex Joske.

Nor does he fall for all the spin one sometimes hears. He rightly draws attention to the academic paper suggesting that the NZ-China preferential trade agreement probably made little or no difference to NZ GDP per capita (although reports unsceptically claims about China’s alleged role in “saving” or underpinning New Zealand economic performance after 2008, and reports uncritically conventional lines about new trade deals – UK and EU – being likely to make a material difference to New Zealand exporters’ trade with China).

There also isn’t much sense as to how perceptions and policies have been shifting over the years. Some argue that the current government is much better on PRC issues than its predecessor (perhaps just because the external backdrop is changing). Is it really so, and what is the evidence and the counter-arguments? I’m a bit sceptical myself, but Sachdeva should have had the connections and access to offer a persuasive case on issues like that. He didn’t do so.

Overall, I think my frustration with the book is that a) I didn’t learn anything and b) I wasn’t made to think harder/deeper. He didn’t seek (or at least find) sources who could shed light on events and interests (notably, for example, around the National Party, or around autonomous sanctions (where National has put forward legislation that Labour consistently refuses to support), let alone around the threats and pressures within the local Chinese community. And he doesn’t advance a robust and detailed argument for any particular approach to the PRC issues (whether one I’d prefer or some other), developed in ways that force one to think harder about one’s own view. For example, what, if any, place is there for morality in foreign policy? Is realpolitik everything, but even if it is where should that take New Zealand policymakers? Or to what extent should the business interests of particular and sectors shape the policy choices and stances of governments? Coverage of the Pacific issues (notably the Solomons) seemed weak, as did the treatment of Taiwan issues (is it really appropriate that no NZ political leader will ever explicitly acknowledge that China is threatening to invade Taiwan, and that invasion of other countries, notably free and democratic ones, really isn’t acceptable, and is it any more likely those same craven politicians will be any less bad after an invasion, when they willl presumably want their markets back pronto). He is more inclined to report someone’s glib line – eg big donations don’t really matter because migrant Chinese just want their photo with a decisionmaker, which they might struggle to do at home – rather than digging deeper and exploring (evaluating) the nature of the risks.

And so I’m left wondering what contribution the book finally makes: aren’t the sort of people who are likely to buy/read the book already fairly familiar with the issues at the level they are covered here? If others do buy and read, will they be left any better informed or influenced than some inchoate sense that “its awkward” (and that Sachdeva has a bit of hankering for a bit more state funding of political parties).

It is all coming into focus again now:

  • We have an election coming, and (as he notes) no serious changes have been made to electoral donations laws that allow foreign-controlled NZ resident companies to donate heavily,
  • We have an election coming, and the leader of the main opposition party has never it appears been willing to face serious questioning about his approach to PRC issues, whether as foreign policy or domestic intimidation and interference,
  • We still have a member of Parliament who has been described as having close United Front ties, and other political parties appear to continue to choose ethnic Chinese candidates based on their acceptability to the PRC interests,
  • Several of our universities now appear to be under severe financial pressure and would presumably champ at the bit to have more PRC students, with all the attendant economic leverage that would grant (and unwillingness to stand up as critic and conscience)
  • We have Prime Minister –  amid a busy year, not doing that well in the polls – nevertheless not too busy to go and make obeisance in Beijing.  Note that ministers will talk a talk about diversifying trade and reducing exposure to (the somewhat overstated wider coercion risks from) China, but where is the PM leading a big trade mission, talking of introducing new (and newly subsidised) industries to the market.  Of course, he will say he will mention human rights etc issues, but (a) does anyone take that seriously, beyond a “Mr General Secretary, you know we have to mention Xinjiang” and his interlocutor nods knowingly, knowing that actions and inactions speak louder than ritual incantations.  Hipkins trots off to China while the PRC authorities hold indefinitely on trumped up charges a journalist from our closest ally.
  • On trade, the issue is not whether private firms trade with partners in China, rather it is whether politicians here are, or are not, willing to adjust their behaviour to protect those specific sector interests, or the beliefs and values of New Zealanders.
  • The Taiwan threats become more pressing by the year, and yet there is no public debate or political leadership here on the issues/threat/risks,
  • Systematic media and political coverage of the PRC inroads in the Solomons (most notably but not exclusively) is limited to say the least.

There is even the small matter of whether Chinese language teaching in our state schools should be provided and funded by the New Zealand government and taxpayers or if it should continue to be heavily funded by the totalitarian, repressive, expansionist PRC authorities (through Confucius Institutes) including allowing those same authorities to vet for political/religious/ideological compliance the Mandarin language assistants put in front of kids in our classrooms.   This would be an easy one to do the right thing on, but neither the universities (3 of them) that host these outposts of PRC policy, nor the schools, nor the government (nor the Opposition) seem to have any interest.  What hope then for a more robust stance in other areas of policy, where vested interests are stronger.  Sachdeva never did draw comparisons between New Zealand’s responses in the past to apartheid South Africa, Nazi Germany, or (nuclear testing) France.  He should have.

I’ve written previously about the economic coercion issues and so won’t at length here.  On specifics, I thought Sachdeva accepted too much at face value past stories of coercion (yes, Norwegian salmon exports to China fell sharply, while those to Vietnam –  neighbouring country –  rocketed) and didn’t really distinguish the interests of particular firms and sectors (which can be powerful lobbies, especially if they operate in secret) from overall national economic performance, especially for economies with their own monetary policy and a floating exchange rate.  Similarly, he was too ready to take at face value lines about differences between Australia (iron ore exports) and New Zealand (milk powder): dairy is another globally traded product, and what isn’t sold in one market will end up being sold elsewhere (perhaps at a different prices).  But my point in closing is not so much whether or no my argument is correct, as that in a rare NZ-focused book on the subject the arguments and issues just weren’t teased out and tested in a way that could have made a useful contribution to the (all too often too thin) New Zealand debate on the PRC issues.

The PRC and all that

Michael Reddell China, NZ politics

In recent days, there has been quite a bit of coverage of issues around the New Zealand’s government’s approach to the PRC.

There was, for example, last week’s trailer for the Australian 60 Minutes piece on New Zealand and China, which excited a great deal of scorn (and coverage) for what was, after all, a teaser to get people to watch a longer programme. It wasn’t clear what riled people more – the (not new but) clever play on words suggestion about “New Xi-land”, quotes from Mike Hosking, or what but the “elite” reaction was quite remarkably hostile.

As it turned out the actual 60 Minutes programme (you can watch it here) as something of a damp squib. Sure there was the nauseating spectacle of Michael Barnett, Executive Director of the Auckland Chamber of Commerce, talking of being “friends with benefits” with the PRC (complete with the “nudge, nudge, wink, wink” nuance), and openly asserting that whatever the PRC did on the human rights was really its concern only, and not something for anyone else to worry about. Presumably he believes what he is saying, but not the harshest critic of the Jacinda Ardern or Judith Collins would suggest they held that view. And from the Australian perspective, the programme makers seemed to start with the line that the Australian economy was paying a high price for their government’s stand, while New Zealand was prospering…..but with not a shred of evidence examined for those claims. At a macro level, the two economies look very similar right now, with unemployment rates post-Covid now back down not too far from late 2019 levels (Australia possibly a touch closer than New Zealand). And some of the programme even seemed quite sympathetic to the common, but fallacious, view that somehow New Zealand is less able to take a stand, due to size or other unpersuasive reasons. There was, of course, the clip of the 60 Minutes journalist asking Ardern whether she ever held back in making comments on China because of fears about trade. She again claimed that she never did – and surely no one serious in Australia, New Zealand, or China believes her – but 60 Minutes made no effort to unpick that claim either (which, as I noted in a post recently, if true must then mean she is really almost entirely indifferent to, and has feel no serious moral unease about, what China does – and I don’t believe that either). There was nothing about the New Zealand government’s reluctance to call out PRC attempted economic coercion of Australia, nothing about its refusal to criticise the PRC for the arbitrary detention and recent secret trial of an Australian citizen. And, of course, nothing about how weak both main parties here are on issues like political donations or CCP-connected political figures.

Of somewhat more importance was the political theatre in Queenstown yesterday, culminating in a long and wordy communique, in which Scott Morrison and Jacinda Ardern were falling over themselves to suggest that there was no real difference between them when it came to China. Both had their reasons no doubt.

Here is what they had to say.

First, on “coercion”

37. The Prime Ministers affirmed their strong support for open rules-based trade that is based on market principles. They expressed concern over harmful economic coercion and agreed to work with partners to tackle security and economic challenges.

39. The Prime Ministers reiterated their shared commitment to support an Indo-Pacific region of sovereign, resilient and prosperous states, with robust regional institutions and strong respect for international rules and norms, and where sovereign states can pursue their interests free from coercion.

Those references to coercion were new (weren’t in last year’s communique) but notice how weak they are. The first reference (para 37) is not even in the “Indo-Pacific and Global security” section, and neither reference explicitly names the range of steps the PRC has taken against Australia. Since we can reasonably expect that Australia would have welcomed strong and explicit support, we can only assume that New Zealand wasn’t up for it. That reflects very poorly on the New Zealand government – most especially in a joint communique with the Australians. Senior figures in the US Adminstration have made (much) stronger statements than that, specifically about the Australian situation.

Then there was the South China Sea

42. The Prime Ministers expressed serious concern over developments in the South China Sea, including the continued militarisation of disputed features and an intensification of destabilising activities at sea. The Prime Ministers further underscored the importance of freedom of navigation and overflight. They emphasised that maritime zones must accord with the United Nations Convention on the Law of the Sea (UNCLOS) and called on all parties to respect and implement decisions rendered through UNCLOS dispute settlement mechanisms. The Prime Ministers reiterated the importance of the South China Sea Code of Conduct being consistent with international law, particularly UNCLOS; not prejudicing the rights and interests of third parties; and supporting existing, inclusive regional architecture.

Which seemed quite good. I hadn’t heard Ardern or Mahuta say anything at all about the South China Sea – it certainly wasn’t in the list of issues they mentioned in their respective recent China speeches – but it turns out most of this language was also in the previous communique from 15 months ago, with just a couple of (useful) modifications. And – read it again – note that the PRC is not even named. It is good to see, but you get the impression that it was one of those issues that mattered to the Australians and in putting together communiques there has to be some given and take (I’m assuming Ardern’s side is the one keen on the strange “circular economy” paragraph that also survives from one year to another).

Then we got a paragraph that was not there at all last year

43. The Prime Ministers expressed deep concern over developments that limit the rights and freedoms of the people of Hong Kong and undermine the high degree of autonomy China guaranteed Hong Kong until 2047 under the Sino-British Joint Declaration. The Prime Ministers also expressed grave concerns about the human rights situation in the Xinjiang Uyghur Autonomous Region and called upon China to respect the human rights of the Uyghur people and other Muslim minorities and to grant the United Nations and other independent observers meaningful and unfettered access to the region.

I suppose it is good stuff as far as it goes, which is not very far. On Hong Kong, for example, there is no denunciation of the growing number of political prisoners or – in this week of Tiananmen Square remembrance – of the heavy punishments people of Hong Kong are threatened with if they seek to participate in (long-established) vigils). And as for the Uighur comments, they are less pointed that the recent resolution of the New Zealand Parliament which – if it did not name China – did refer to “severe human rights abuses”.

It is also interesting that in the next two paragraphs the two leaders could call out Myanmar much more directly

They condemned the violence being perpetrated against the people of Myanmar and called on the military regime to exercise restraint, refrain from further violence, release all those arbitrarily detained, and engage in dialogue.

Which is good stuff, but might almost equally be said of China….except the thought would never cross Ardern’s mind (perhaps the Australians would not have been keen either).

And what is missing completely is also interesting – no mention of PRC threats to Taiwan, military incursions etc, and not even (that I could see) a mention of the desirability of Taiwan participating in the WHO.

Oh, and there was also this

41. The Prime Ministers agreed to continue working collaboratively, bilaterally, and with our partners in the Indo-Pacific region, to uphold sovereignty in an era of increasing strategic competition. The Prime Ministers reaffirmed their resolve and shared respective approaches to countering foreign interference and agreed the importance of building resilience across all sectors of society, including in education, infrastructure, research, electoral processes, media and communities.

But that is just boilerplate communique-speak, with no substance whatever. It covers over the fact that the New Zealand government has been reluctant to even speak of foreign interference/influence risks – seen most recently in the belated emergence of news of the secret National/Labour deal to clear about the headline risks around Jian Yang and Raymond Huo, while neither party leader will even front with the public on the issue.

The different stance between New Zealand and the 13 western countries (not the Five Eyes) on the WHO study on Covid origins was also quietly swept under the carpet.

So for all the bonhomie and smooth words, it didn’t really amount to much. As I noted earlier, it suited both sides now to paper over the cracks and pretend to a commonality of view. There is a line afoot that only the PRC itself benefits from divergence between western countries (or specifically New Zealand and Australia) on these issues, but that is an argument for more substantive alignment, not for pretending to a commonality that just doesn’t exist. Read the speeches (Ardern, Mahuta), watch the interviews (eg O’Connor): this is a government that simply has no stomach to seriously call out the PRC. Perhaps Damien O’Connor’s respect was “a mistake” – as he now concedes – but it was a slip of the tongue only in that he shouldn’t have said it publicly, not that the idea had never previously occurred to him and a word he’d never previously thought of slipped out. Or repeated references from senior ministers to “respecting” the PRC. Decent people don’t treat with respect regimes responsible for (at least) “severe human rights abuses”.

The appropriate benchmark here is not what Australia says or does (although the consensus across Australian politics is clearly in a quite different place to that in New Zealand – see the recent speech from the ALP’s Penny Wong) but on what is right and proper. There are areas where Australia itself isn’t as strong as it could be – one could think of parliamentary resolutions, autonomous sanctions regimes, the Winter Olympics, and so on.

But the New Zealand government’s stance continues to fall a long way short. Why will the Prime Minister not explain why her government scrapped the Autonomous Sanctions bill that had sat on Parliament’s order paper for several years, with no replacement? Why does her government continue to claim that she will be guided by the UN on “genocide” declarations re the Uighurs, when she knows that China is a veto-carrying permanent member of the UN Security Council. Why does she never speak openly about the South China Sea (an evolving and worsening situation, currently directly threatening the Philippines)? Why is she never willing to highlight threats to Taiwan? Why will she not front up about the Jian Yang/Raymond Huo deal? Why does her party keep recruiting ethnic Chinese candidates with strong United Front ties? Why will she do nothing serious about reforming electoral donations laws (even as multiple court cases and SFO investigations are underway)? Why was she so loathe to comment at the time of the break-ins to Anne-Marie Brady’s house and office (let alone when other NZ universities sought to have Brady silenced)? Why is she not willing to speak out about the Winter Olympics – does she really think the Olympics should be held in a country responsible for “severe human rights abuses”? Why is she not taking any lead to get PRC/CCP-funded and recruited/screened people out of our schools, instead funding Chinese language learning properly ourselves? And so on.

I was going to include in this post some thoughts on, and responses to, a new article in the Victoria University publications Policy Quarterly by Anne-Marie Brady on the New Zealand government’s approach to the PRC. It is a very generous treatment, about the “significant progress” she claims has been made under the Ardern governments of the last four years. I didn’t find it very convincing at all, but I guess it must have been welcomed in the Beehive and in MFAT.

Fearful or values-free?

Michael Reddell China, NZ politics

In many respects one doesn’t even need to read the speeches of government ministers on the PRC to know the stance they are taking; one need only look at the audiences they choose to speak to.

Nanaia Mahuta’s speech a couple of weeks ago was to the New Zealand China Council, the heavily government-funded body set up to help out the China-focused bits of the business community, champion ties with the PRC, and never ever say anything critical of the regime. And yesterday the Prime Minister chose to share a platform with the PRC Ambassador – host last week of the egregious propaganda event in defence of the regime’s record in Xinjiang – in speaking to the China Business Summit – a commercial event organised by one of the council members of the China Council, and heavily oriented to trying to do lots (and lots) of business with PRC entities. Invited speakers tend not to set out to upset their hosts, and in this case both lots of hosts would clearly prefer business above all, and a government operating in the service of those specific business interests. And that is, largely, what they get. From accounts of yesterday’s event, only the visiting Australian speaker (former senior DFAT official) appeared to offer a discouraging word, a dose of geopolitical realism on the nature of the regime. From our political “elite”. leaders past and present, more or less crass (more in John Key’s case) opportunism and spin.

There were, perhaps, a couple of things to be said in favour of the Prime Minister’s speech, at least relative to Mahuta’s. There was no invocation of assorted deities or suggestion that she herself was one (“I bestow a life-force upon this gathering“), and the weird taniwha stuff was nowhere to be seen. More substantively, whereas Mahuta talked several times about the government’s plans to “respect” the PRC, that word appeared not once in the Prime Minister’s speech. At the margin, her framing seemed slightly less gruesome, even if – like some abused wife unable or unwilling to break free – she keeps talking, of one of the most heinous regimes on the planet, of how “areas of difference need not define a relationship”.

We are told that the Labour caucus is this morning going to discuss its approach to the ACT notice of motion to declare the situation in Xinjiang a genocide. Perhaps they will surprise us by allowing a debate, perhaps they will really surprise us and vote for it, or some substantively similar preferred government wording. But there was not the slightest hint of a change of tone or stance in yesterday’s speech. Here is the whole of what the Prime Minister said on the Xinjiang situation

We have commented publicly about our grave concerns regarding the human rights situation of Uyhgurs in Xinjiang. 

I have raised these concerns with senior Chinese leaders on a number of occasions, including with the Guandong Party Secretary in September 2018, and then with China’s leaders when I visited in 2019. 

Note first that all of these references are in the past tense. But more importantly, not how she describes the situation. Like Mahuta ( “the treatment of Uyghurs in Xinjiang”) it is depressingly neutral language (“the human rights situation”), and “grave” is only used to qualify the extent of her concerns. It isn’t much better on Hong Kong where she will only go as far as to refer to “negative developments with regard to the rights, freedoms and autonomy of the people of Hong Kong”. It is the sort of language bureaucrats and MFAT diplomats love.

Oh, and do note the observations about when the Prime Minister has allegedly raised these concerns previously. It is a bit of a stretch to take seriously the 2018 episode, when after that same meeting we were told that the Prime Minister and the Guangdong Party Secretary had agreed to strengthen “party to party exchanges”, and we know how effusive her own party president (and the National’s) was being about Xi and the regime at the time. It must have been a fearsome telling off….or not.

The contrast is striking with the stance taken by a growing number of legislators around the world. From the Prime Minister’s own side of politics, for example, take this recent statement from US House of Representatives Speaker Nancy Pelosi

“The Biden Administration’s coordinated sanctions on China are a strong and resounding step to hold China accountable for its barbaric atrocities against the Uyghur people.  These sanctions make absolutely clear that America and the international community stand as one to defend the rights and dignity of the Uyghur people from China’s abuse.

“China’s persecution of the Uyghur people – including its imprisonment of more than one million people in labor camps and the torture and extrajudicial killings of many more – is an outrage that challenges the conscience of the world and that demands action. 

I’m pretty sure that not once has Ardern ever uttered those sorts of words.

One could go on. The media like to report the line – also in Mahuta’s speech – that

As a significant power, the way China treats its partners is important to us.

Code, or so it is suggested, for “we don’t really like what the PRC is trying to do to Australia or Canada”. But what feeble words, so vague and general they aren’t going to bother the PRC, or given aid and comfort to anyone else.

Unlike, for example, President Biden and Prime Minister Suga, our so-called leaders are too feeble, scared of their own shadow, to even name economic coercion for what it is.

President Biden and Prime Minister Suga exchanged views on the impact of China’s actions on peace and prosperity in the Indo-Pacific region and the world, and shared their concerns over Chinese activities that are inconsistent with the international rules-based order, including the use of economic and other forms of coercion.

And so it went, No reference to the wider and brutal domestic repressions, nothing about the South or East China Seas, nothing about the threats to Taiwan, and nothing (of course) about the PRC’s influence and intimidation activities here.

But we did get a new line from the Prime Minister yesterday, although only in the question and answer session for which there is no transcript. I first saw it reported this way

finny 21

And a Reuters story reported it thus

When asked if New Zealand would risk trade punishment with China, as did Australia, to uphold values, Ardern said: “It would be a concern to anyone in New Zealand if the consideration was ‘Do we speak on this or are we too worried of economic impacts?'”

So we are left with a choice. Either the Prime Minister is speaking the truth, and she is shocked, nay scandalised, that anyone could even think that economic considerations played a part in her government’s choice to say little. In which case we would have to conclude that she and her government really have no values and principles when it comes to anything to do with China. I’m not an Ardern fan at all, but I simply don’t believe that. But the alternative interpretation is that yesterday’s comment was just an outright lie, made up to get round an awkward question. There really isn’t a middle ground I can see. And no serious observer is going to believe that she was telling the truth.

Her government’s stance is craven and cowardly, and all too many people – especially in the business community – commend her for it, even if they’d use different words to describe the policy (perhaps “realistic” or invoking that vapid cover for opting out of the world, “an independent foreign policy”).

Foremost among those champions of turning a blind eye, or just trading eyes wide open, were the former Prime Ministers John Key and Helen Clark, who also spoke at yesterday’s event. Both have a record of cosying up to the PRC regime, in Key’s case more recently as a lobbyist for the US company Comcast in advancing its business interests in China – not a role you get if you are known to be a robust defender of human rights, the rule of law and so on. Now perhaps in fairness to both, when they were in office (perhaps especially Clark) the regime was perhaps a little less egregious (and less evidently so) than it is now. But if times have changed, their approaches do not appear to have. Indeed, in his Politik newsletter this morning, Richard Harman – who has previously provided a platform for the PRC Ambassador’s propaganda – described Key and Clark as “taking direct aim” at the government and calling it back from a concern about the PRC and to a true “independent foreign policy”,

The weirdest of the comments from the former PMs came from Key. He was quoted as suggesting that heightened concern about the PRC was really all Trump’s doing (this was a bad thing) and not something New Zealand should get caught up with. What isn’t clear is whether he believed this nonsense (see Biden or Pelosi, for example) or was also just making things up on the day (or which interpretation reflects more poorly on him). He went on to suggest that really we are much more likely to have an influence on the PRC if we are good friends with them and only ever raise concerns privately. This time, not even he can believe that, but it is a good line to use to sway those who want to be swayed, and don’t want the government doing or saying anything. No one supposes that anything any democratic country – least of all tiny New Zealand – says is going to deflect Xi from the regime’s approach to Xinjiang, Hong Kong, Falun Gong, religious and political freedom, the South China Sea, or whatever. It isn’t as if these are little misunderstandings and a good friend can helpfully get them back on the right course. It is that not speaking – playing along and acting as if the PRC is some normal country run by decent people – directly serves the regime’s interest.

These New Zealand political figures really are despicable, and never worse than when chanting the mantra of the “independent foreign policy”, an empty phrase that at present just seems an excuse for moral abdication, burying the values and principles most New Zealanders champion in some hobbit hole in the south seas, free-riding in the hope that the trade, the trade, can be kept up a little longer, and life not made tougher for firms that voluntarily choose to sup with the devil.

In many ways, I thought the best piece on yesterday’s attempt at circling the wagons was one that appeared on the Guardian Australia website by Bryce Edwards.

edwards

It was pretty much the line I’ve run here, that both speeches were carefully crafted efforts to look and sound – to the general New Zealand market -a bit tougher than usual (and ministers have even found one or two erstwhile sceptics to suggest a real shift in tone), while actually saying little or nothing that would disconcert Beijing, and not being remotely in line with the global shift in opinion on the threat the PRC increasingly poses. Edwards – from the left – appears to think this a good approach, going so far as to note that “[Beijing] will be very happy with today’s speech”

He ends with an observation that seems, sadly, mostly accurate about New Zealand domestic opinion

What foreign observers might see as Ardern kowtowing to Beijing, will be seen domestically as her successfully swimming in turbulent global waters between China and the west.

Helped along, of course. by a National Party that at its upper levels is quite as dreadful on the PRC as Ardern and Mahuta.

(On the National Party, Monday’s Politik newsletter reported that at the National Party’s northern regional conference at the weekend party members “voted overwhelmingly” to call for an inquiry into CCP/PRC interference in New Zealand”. Assuming this is true – I’ve not seen it reported anywhere else – it seems quite significant, in a party led by Judith Collins and Peter Goodfellow, both with a record of being all-in with Beijing, And yet, welcome as the call might be, one couldn’t help thinking that any such inquiry might start with – or be preceded by – full disclosure by the National Party about, for example, what it knew about Jian Yang when they put him into Parliament and why they kept him on and promoted him after his past became known, about ties with CCP figure Yikun Zhang, and so on.)