Home >> Australia & Pacific >> Australia & New Zealand

     Email   Print 

New Zealand goes to polls at time of global economic turmoil – Part II

Chris Ford - 11/11/2008

The potential saving grace for the Labour-led government has been the re-emergence of Winston Peters’ conservative nationalist New Zealand First Party after months of controversy for the party and its leader over their initial non-declaration of a donation from expatriate Europe-based billionaire Owen Glenn.

Since 2005, New Zealand First (like United Future) has been in a parliamentary confidence and supply agreement with Labour. As part of the deal, Winston Peters was awarded the Foreign Minister role and two other minor portfolios as a minister outside cabinet.

In February this year, evidence began to emerge that Peters’ had failed to disclose that Glenn had given him and a NZ First Party-aligned trust $100,000 to help cover legal expenses incurred over an electoral petition filed by Peters after he lost his electoral district in 2005. In return, Peters and the Labour-led government were asked by Glenn to push his case for appointment as the country’s honorary consul in Monaco. Other donations were not disclosed either to the electoral or parliamentary authorities. Peters’ and his party vehemently denied the allegations that money had been given by both Glenn and other millionaire donors. This denial was undertaken in order to retain the party’s outward disdain towards big business influence in politics. This has been a huge vote winner for the party in the past but this perception began to unravel as the donors, such as Glenn and property tycoon Sir Robert Jones made allegations that they had assisted in paying Peters’ legal costs through the party controlled trust.

Glenn presented evidence to a parliamentary committee in August that effectively refuted Mr Peters’ denials. Shortly afterwards, Parliament voted to censure Peters over his behaviour while Act Party leader Hide moved to lay complaints with both the Police and Serious Fraud Office. The ‘Peters Affair’ looked as if it could cost NZ First dearly as it began to lose traction in opinion polls.

In recent weeks, Peters has been exonerated by several authorities over complaints laid by Act. The country’s Electoral Commission and Serious Fraud Office dismissed complaints against him and the Police are expected to do the same with respect to non-filed donations returns. This has given Peters renewed hope of being able to bolster his support which remains just below the 5 per cent of all votes cast threshold required for his party to return to Parliament under the country’s electoral law. Another way that Peters could potentially return to Parliament is through winning his electoral district in the North Island city of Tauranga but this looks unlikely given that he lost the seat to the National Party (of which Mr Peters was once a member) in 2005.

His return could effectively save the Labour Party due to the National Party’s so-far often stated refusal to have NZ First as part of any post-election centre-right government. This bar on NZ First entering any National-led government was announced by John Key in late August, soon after Peters’ parliamentary censure. The National Party has continued to be un-moved on this stance meaning that Peters, who has generally enjoyed a good working relationship with Labour, will support the centre-left bloc in any attempt to form a government.

National’s trenchant stance on NZ First could mean the possibility of a scenario, in itself, unthinkable just a year ago – that Labour could form a government even though it could have far fewer seats than National.
As this is being written, media reports have attempted to smear both Peters and Labour with new allegations surrounding Peters pressuring his Foreign Ministry officials to appoint Owen Glenn to the consular role in Monaco. In retaliation, Labour has tried to implicate John Key with knowledge of an illegal financial transaction to a failed New Zealand corporate which was made in the late 1980s while he was a foreign exchange dealer.


National wrestles with the recent past

The counter-charges being made against Key are reflective of the lingering doubts that some people harbour against the National Party. This goes back to the previous leadership under former central banker Don Brash who was deposed by Key in late 2006. In 2005, the party under Brash received considerable financial and practical support from a host of sympathetic right-wing big businesspeople, think tanks and the Exclusive Brethren Church.

The nature of the support and the right’s subliminal campaign to undermine Labour and other centre-left parties was detailed in a best-selling book by investigative journalist Nicky Hager The Hollow Men. This book, through a series of stolen emails and interviews with anonymous National insiders detail how 2005 election policy was largely influenced through donations from the right-wing New Zealand Business Roundtable, corporate donors and right-wing political think-tanks such as the Maxim Institute. The book alleged that forces both inside and outside of the party engineered the rise of Brash, a right-wing monetarist, to continue the New Right economic and social reform agenda advanced by former finance ministers Roger Douglas and Ruth Richardson during the late 1980s and early 1990s. Brash delivered a populist speech on race relations in New Zealand stating that Maori were more ‘privileged’ than the majority European population in early 2004. These attempts to introduce wedge politics into New Zealand on race and other social issues (such as e.g. civil unions covering gay, lesbian and heterosexual couples) were designed to give National a boost in support amongst Labour-voting working and middle-class social conservatives, a move that (for a time) succeeded.

These moves opened up new ground for National to harvest support for more right-wing policies including broad tax cuts and privatising/contracting out social services including health and education. This was at a time when New Zealand was in the midst of an economic boom when the political advantage would have otherwise lain with the centre-left. However, Labour (without the influence of its former more left-wing coalition partner, the Alliance) persisted with unpopular policies including rural school closures during early 2004, until popular opinion caused it to rescind the closure programme. Another policy reversal that Labour undertook during 2004 in the wake of the centre-right’s increasing support was the decision to nationalise the coastal foreshore and seabed, thereby denying indigenous Maori the right to make ownership claims over stretches of it in court. This created the space for the emergence of the Maori Party to represent the interests of the indigenous population in Parliament and this might impact on the final election outcome as will be discussed shortly.

The indirect influence that National continued to exert over policy direction gave it and the broader conservative right increasing confidence that Labour could be toppled at the 2005 general election so that its agenda of free market economic reform and social conservatism could be enacted. Brash, due to the influence exerted over him by the shadowy, right-wing Exclusive Brethren Church (one that has traditionally eschewed political involvement of any kind) and the Maxim Institute think-tank, reversed some of his previously strong libertarian stances on issues including civil union rights in order to opportunistically attract the small Christian fundamentalist vote.

General election 2005 also heralded the dirtiest political campaign seen in the country’s history with Exclusive Brethren members distributing mail shots advocating tax cuts, health care privatisation and education policy reforms which mirrored National’s policy platform while maligning aspects of Labour and Green Party policy. What made matters worse were that the mail shots were not attributed to the Exclusive Brethren until Green Party Co-Leader Jeanette Fitzsimons uncovered that church members were involved during the course of the election campaign itself. National leader Brash denied that either he or the party had any involvement with the campaign but the Hager book alleged otherwise in that several meetings outlining the campaign had been held with him and other National Party campaign organisers.

Due to these underhand moves on the part of the right, National came close to winning the 2005 election by only two percentage points but was only stopped by the uneasiness that the electorate had about party’s trustworthiness following these revelations. These concerns were strengthened by revelations in The Hollow Men that National planned to renege on the more moderate parts of its agenda in terms of e.g. guaranteeing Labour’s extra week of annual vacation leave for workers which it intended to scrap on economic grounds.

It was against the background of these revelations that John Key was made party leader in December 2006. The son of Jewish concentration camp survivors who had emigrated to New Zealand after the war, Key was seen as the personable, telegenic, ‘centrist’ face who could take National back to power, one in contrast to the gentlemanly but gaffe-prone right-winger that Brash was perceived to be. Much was made of his ‘rags to riches’ tale of growing up in a government house with a widowed mother to being a high flying foreign exchange dealer. Key’s minders seemingly downplayed the exchange dealer role in order to emphasise his ordinary upbringing.

Under Key’s leadership, National moved back to the centre by agreeing to accept many of the Labour-Alliance and Labour-Progressive governments programmes including paid parental leave, four weeks’ vacation leave, nil interest on student loans, income-related rents for public housing tenants (all policies that were opposed by the Brash-led National Party) while continuing to advocate a low-tax agenda.

These moves have made National look electable for the first time in nine years. But, as was pointed out in the first part of this series of articles, the party has stumbled on the trail with some opposition MPs making statements on toll roads and culturally insensitive comments regarding Asian and Pacific migrant workers. The party’s tax cut policy has been undercut by Labour’s own programme of rolling tax cuts, announced by Finance Minister Michael Cullen in this year’s budget. With the global economic crisis impacting on the start of the campaign, National had to make some last minute adjustments to its own tax cuts package which it hoped would be the flagship for its election campaign but due to the crisis, and government forecasts regarding renewed budget deficits, they adjusted rates to being only a few dollars more than Labour’s own tax cut plans across several income brackets. This resulted in National, which was hoping to outdo Labour, only receiving an at best mild reception for its tax policy in early October.

After National’s tax announcement, the gap between the centre-left and centre-right blocs has begun to narrow.


The Maori Party: a possible political king maker?

If the election comes down to a virtual tie between centre-left and right blocs, then the Maori Party could end up as the king maker deciding which bloc (National or Labour-led) will lead the country until 2011.

The Maori Party, as was pointed out above, emerged out of the foreshore and seabed protests of mid-2004. This finally ended the long-established electoral ties that had existed between the Maori people and the Labour Party that had existed for nearly 70 years. In 2005, the Maori Party gained four of the seven electoral districts reserved for Maori in the nation’s parliament. The ‘Maori seats’ as they are known, were initially set up to dilute the electoral position of Maori by earlier European colonial administrations but have come to be seen as important by the Maori people in ensuring that their people have a minimum of representation in the predominantly European-dominated legislature.

The primary demand of the Maori Party at this election is the legal entrenchment of the Maori constituencies so as to assure the survival of minimal indigenous representation. Within both the centre-left and right parties, there has been a desperate scramble to endorse this proposal on the basis that the Maori Party could hold the balance of power post-election with opinion polls showing the party could take at least six, if not all seven, Maori districts.
In terms of electoral outcomes, this could create an overhang as under the Mixed Member Proportional (MMP) system, if a party wins more seats while not gaining at least five percent of the total vote (as it is only polling two percent on average), an ‘overhang’ situation could emerge. If this scenario were to eventuate, the number of seats in Parliament could increase to at least 124 or 125 meaning that any new government would have to secure at least 62 or 63 and not 61 votes to survive in office.

The Maori Party has so far not given any indication as to where they are leaning politically. Party leaders Tariana Turia and Pita Sharples have made soothing noises towards both sides throughout the campaign.


Predicted outcome

On the basis of current polling, National will be given first option to form a government given that it will probably hold the most seats in Parliament post-election. Labour will also try to form a government if the result between the two blocs is close, even though it will hold fewer seats than National. While questions have been raised about the possible legitimacy and political risks for Labour in trying this tactic, it may still try to do so.
On balance, a centre-right government still looks more likely as the antipathy that the Maori Party has towards Labour could see it giving National support on budget bills and confidence motions in return for a number of policy concessions, including repeal of the foreshore and seabed law and greater funding for Maori policy initiatives.

If this outcome transpires, National faces the daunting prospect of governing in a deeply recessionary environment which could tempt it towards introducing austerity budgets focused on cutting government expenditure, all of which it has sworn not to do, at least publicly. Were this to be the case, this will test the Labour Opposition’s power to oppose as when it was in opposition in the 1990s it opposed the National Party’s welfare benefit cuts and has not dramatically reversed them in office.

Again, this could present opportunities for other parties in the wings. The left-wing Alliance Party, which exited from Parliament in 2002, could poll significantly better than it did at the 2005 election meaning that it could be a contender for a return to parliamentary duty in 2011 if the recession is prolonged.

It seems that in both New Zealand and the US, the elections to be held in the first week of November will see the arrival of new governments led by new, young leaders, albeit, of slightly different ideological hues. How the prospective new administrations in both New Zealand and the US face the most dramatic crisis that has faced international capitalism since the Great Depression will determine whether they survive or not past the mid-2010s.