Thinking about voting in the NZ election

I’ve spent much of my adult life overseas during NZ elections, but when Ive been here I am in admiration at how little we allow the more boorish side of international politics to enter our country.

This year I find my self registered in Auckland Central, and facing with a genuine dilemma.

I quite like the MMP government of the last few years. National and their partners have managed to ‘not screw up ‘as NZ got battered by the global financial crisis, the Christchurch Earthquake, the Japanese Tsunami and the continued global economic meltdown. They even managed to ‘not screw up’ the Rugby World Cup.

Not screwing up might sound like a pretty thin complement, but I don’t intend it to be so. After nine years in opposition, any party would be tempted to ram home a load of politically charged policy that changed everything. Instead National kept a steady hand on the tiller, and largely didn’t change what worked. There were no draconian moves to save the country from the GFC, while the handling of the earthquake has been largely acceptable, though huge gaps are emerging.

The solid last few years are a tribute also to a solid previous 9 years with Labour in charge under MMP, and solid National and Labour led governments before that. We can quibble about the effectiveness of particular governments that have been in power for too long, and we can argue about whether particular policies are right or wrong, but to largely keep things moving in the right direction is pretty much all we ask as New Zealanders.

I  like the way our system works, how the Greens and Maori parties worked with National to temper the  politics, how Labour worked productively in committee, and how common sense largely prevails. MPs are almost universally good people trying to do good work. But it’s a strange profession, and the election process is a bizarre way to get a job.

I’m a swing voter.

I’ve voted for every major party over the years, which excludes ACT and Winston Peters, and as long I am largely sober those two parties will never get my vote. I’m a fan of economic reason dominating discussions of economics affairs, and of ensuring that every New Zealander (and everyone in the word) gets decent and fair childhood, education, medical care and employment and business opportunities. All three (National, Labour, Greens) major parties agree at least somewhat with these principals, and the differences are where they win or lose on policy.

Labour

Labour is currently demonstrating a poor understanding of public sector economics. Their promotion of removing GST on fruit and vegetables is particularly galling. The economic cost to society will be high. We will almost certainly spend more money and time (which can be measured in dollars) on compliance than we will make from this tax.

How about them apples?

Imagine – you are travelling on company business, and buy an apple as part of your lunch. Is that apple GST-free? Should you itemise it separately in your expenses? What if the apple was cooked – is it still exempt? What about canned apples?

Meanwhile the market price of fruit and vegetables is set according to how much consumers will pay, not on cost price. While the overall cost price is important, GST is a small component versus the effects of seasonality, the scale of the supplier and the type of store. Meanwhile it’s also going to decrease the input prices for burgers fast food restaurants like McDonalds – an unintended consequence that may not be desirable.

I don’t mind a low (15-20%) capital gains tax which Labour is proposing, and I do like progressive tax systems. The details of each of these is important though, and more work is required.

Labour is also beating a drum against on asset sales, of which I have more below.

The candidate in Auckland Central is Jacinda Ardern. I’ve seen her in the street 4 times now, once knocking on our apartment block door, once at a fair, at a debate and in Wynyard Quarter with Goff and co. She seems very eager and smart and approachable, and is certainly working hard. But there are also too many party hacks and old folks in the Labour team, with little evidence of the necessary refresh of the candidates that they will need to become electable. They have failed to confront the tough decisions internally, which bodes badly for them making the tough decisions for the country.

National

National also have some economically unsound policies, and the big one they are campaigning on is asset sales. I’ve heard three reasons for the sales – to raise money, to give more liquidity to the NZX and to get better management by a private sector board.

What’s missing is the effect on the end user – the consumers and businesses. These infrastructure assets, while a small part of the overall Government assets, have a critical effect on the efficiency of our economy. They sell vital services to us, and we need to ensure sustainable and low cost renewable power, and an efficient and low cost yet excellent airline.

The goal of raising money is relatively short term, and could arguably be accomplished by issuing debt from those companies for a much lower expected cost. Meanwhile the NZX is always going to suffer from a critical mass problem, as, frankly, does the ASX.

But it’s the last point where I take real issue. The economic events of the last few years are ample evidence that short term profit focused investors are lousy owners. The Occupy Wall Street movement, with participants in NZ, signifies the contempt for which we hold owners and agents who manage companies for personal gain.

Meanwhile the NZ Government are actually superb natural owners of infrastructure, and the current arms-length system of governance set up with COMU is a generally good way to run them. Governments have very long term perspectives and these companies should be focused not just on short term profits, but also on the overall impact on the economy and end-users. This means more direction to build low or zero carbon emitting power generators, to invest in both generation capacity as well as helping customers use less. It means Meridian spinning off more amazing little companies like Powershop, which was top in the Deloitte Fast 50 this year.

It’s true there are some private sector companies that are managed for very long term goals and focus, but while they are often wildly successful, companies like Apple and Berkshire Hathaway are few, and leaders of the quality of Jobs and Buffett rare.

However this doesn’t mean that National is wrong about selling down, nor that Labour is right about not selling assets.

We have some remarkable potential asset owners in New Zealand, owners focused on the long term gain for investors and for New Zealand. I refer of course to the various iwi, as well as to the superfund and ACC fund. They are the natural buyers for the assets, and it would be highly unlikely that any of them would want to sell to a hostile foreign investor. Many Kiwisaver funds will also invest, though some of them will churn away over time, they will also have a longer term perspective.

I feel that National have not, mainly because they can’t, pushed this point enough beyond a few coded statements. The assets will end up being owned by the Government and by funds investing on behalf of New Zealanders. Prime Minister Key has used the cringe-inducing phrase “Kiwi Mums and Dads” several times, to refer to potential investors, but while most Mums and Dads (and those of us without children) won’t invest directly, the big funds will be investing on our behalf.

Meanwhile the percentages sold could also be reviewed. Firstly we don’t really have to own all the power producers – so why no sell down more of the dirty coal/gas ones and keep the clean green ones. For the others, why not sell down 24% rather than 49% so we maintain super-control with 76% ownership, as with Air New Zealand. For Air New Zealand, please let’s just not touch it as everything is going so well in the Airline of the Year. When Air New Zealand focuses on being excellent at what they do rather than doing deals then we all win.

In Auckland Central the National candidate and incumbent MP is Nikki Kaye. She seems to work hard, though I have only seen her on the campaign trail once. The National supporters in the area meanwhile have collectively managed to rile me up, but then again so have several Labour and essentially all ACT supporters, so let’s call it even.

Greens

The Green party continues to mature, and this election is fielding 15 or so very electable candidates. It seems to be fairly widely agreed amongst observers across the spectrum that they have done a great job in selecting their number 10-15 list candidates, young, smart and potentially great additions to parliament.

Their policies are a mixed bag, but they are wisely front and center with the more sane ones – clean rivers, child health and green jobs. A sustainability focused party should have long term economic health at the forefront, and they seem to do so as well. They were also the only party, thanks to @garethmp, to front foot the copyright debate, and they hold the higher ground in the transport debate and in issues like food labelling and rebuilding Christchurch.

But the Greens cannot govern alone, and many of their policies won’t survive the test of the real world. So they need to be in partnership with another party.

But that party should, in my opinion, certainly not be Labour, at least not this cycle. They are not yet ready to govern again, and the dual-left of center parties will struggle with the coming economic events. National on the other hand need the Green perspective to add sustainability and a longer term focus to their government. I’d like to see the Greens work with National to moderate the approach to asset sales, but also to aim higher in other areas like the Christchurch rebuild and sustainable yet high economic growth.

ACT

I have no idea what ACT stands for beyond personal ambition with a healthy dose of greed. Their time has long past, and National will be well rid of them.

Winston Peters

I just hope he never comes back into politics, as his motivation always seems to be self-serving. He will bring entertainment but instability to parliament.

Maori Party

The Maori party, like the Greens, should be part of any governing coalition. It’s critical that Maori views and requirements are incorporated early into any new policy, and being on the governing coalition is the way to do so. National worked well with them in the last term, and should do so again. Maori have very long term goals, and this longer term perspective is critical to maintain across governments.

Mana, United Future

These are parties of one person who serve an electorate, and will likely get in and keep doing well what they are doing well.

Overall

I’m picking National will just win, draw or nearly win the election outright, that ACT will not earn more than one seat (hopefully none), and that National will choose to work with the Maori and Greens as they did in the last term (as well as Peter Dunne of course). New Zealand first won’t be showing up to the bar.

Overall that’s a bit of wishful thinking as I see this group as the best outcome for New Zealand right now. We need to continue to weather the global events, and certainly don’t want rapid politically driven changes.

For Auckland Central, hopefully Nikki Kaye will become a minister and Jacinda Ardern will elevate to a front bench position after a major Labour reshuffle.

About Lance Wiggs

@lancewiggs
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13 Responses to Thinking about voting in the NZ election

  1. nzbenn says:

    It’s a well-considered piece you’ve written Lance. Nicely done.

    My local electorate choice is very clear, because Tau Henare is standing in Te Atatu. Let’s just say that I have a new understanding as to why Trevor Mallard might have punched him. My vote goes to the Labour candidate.

    My party vote would have been fairly simple, if it were not for National directing $400m of asset sales money into Dairy irrigation. All signs point to Dairy being a huge polluter, and with the much cleaner tech sector catching up rapidly on export earnings, surely it would have been a better call to put that money into tech (and especially clean technology)? In fact if we want to support our giant Dairy sector, we should be incredibly careful about their image.

    I know some say it’s wrong for the government to pick tech winners, but my gut feel is bringing in top green/tech talent through research investment would be a long term win.

    One last thing: National’s education policies are looking fairly atrocious, and their beneficiary-bashing is troubling (just like not all bankers are wankers, not all beneficiaries are layabouts).

    • Lance Wiggs says:

      Thanks Ben Who knows where the money will end up, but irrigation and sanitation are two areas that we do need to continue to invest in. Like it our not the foundation of our economy is in the primary sector. While we don’t see much in percentage growth terms, the idea to me is to minimise the risk of a bad drought to the economy, but also to ensure that systems are in place to deal with effluent. A National/Greens coalition will address both issues. I also don’t believe statements about earmarking income – the money we earn here goes to there. It’s really all fungible, and money earned can be spent pretty much anywhere. As for R&D – it’s happening across the country, but under-reported as there is a negative tax incentive to capitalise that work. A R&D tax credit will unearth that work, but it comes at the cost of increased tax compliance complexity and cost. Picking winners is not the Government’s job. Backing early winners to help them accelerate their success is a far more effective way of ensuring success. I think of Government in the mezzanine capital not venture capital game, though with the VIF funds they are in both. Programs like Better By Design (Labour initiated it, National and NZTE are working to make it even better) are about accelerating already successful companies.

      Elections bring out the worst – and sometimes best – in politicians. Let’s get it over and on with the business of governing.

  2. Gordon J Milne says:

    If you buy an apple, you will get a GST receipt from the vendor. You use the GST on that receipt when you write up your expenses. You do not need to pick the entire receipt apart to separate the GST-free from the GST-taxed.

    • Lance Wiggs says:

      In Xero you enter in the amount of the transaction and indicate whether it includes GST or not. Now you need tow lines or another field to type the actual GST amount in.

      • Gordon J Milne says:

        I wonder how Xero copes with this in other countries. The UK, for example does not charge VAT on a large number of items including fresh food, books and children’s clothing.

        Problems using Xero isn’t a real problem.

    • At present GST has very simple rules. Simple is good, because it makes it hard to find loopholes, and it makes it easy to administer. Many small business do their own GST calculations, and it’s not hard. Complicating it will make it a much more expensive tax for businesses , it will likely introduce corner cases and ‘interesting’ side-effects. Do not want.

  3. It’s a good analysis. One of the best I’ve seen by a blogger and all the better for being non-partisan.

    A few thoughts:

    1. The MMP system means we’re unlikely to see a rapid change of direction, although a Labour-lead coalition with NZ FIrst in the mix might throw things off course.

    2. I agree with your point about changes to GST. Once you start tinkering with it there’s no knowing where things will stop.

    That said it’s not enough to sway my vote one way or the other. Australia has something similar and that country is often held up as an exemplar.

    3. You are spoilt for choice in Auckland Central Nikki Kaye and Jacinda Ardern strike me as two of the best young politicians we have. I look forward to when one is Prime Minister and the other is leader of the opposition (I may happen both ways around). I could happily vote for either.

    4. I’m concerned that National hasn’t done enough to cut borrowing – selling a few assets is’t likely to make enough difference and any gains are extremely short-term.

    5. National has been coy about policy and avoided discussing meaningful specifics, especially on economics. This worries me. I’m sure there is a plan. I’d like to know what it is before voting.

  4. Paxman says:

    God forbid that our poor business travellers are confused as to whether they should claim GST on their lunchtime apple! Surely they are too important to worry their fine brains on such trivial yet complex matters.

    NZ may not embrace the boorish elements of international politics, though that is a matter of opinion, but it sure is boring if this is an election issue. Surely any encouragement to provide cheaper healthy food to NZ’s children (and of course our businessmen) is to be welcomed.

    If our apple sellers and expenses systems can’t provide us with such information and tools to handle some foods being GST-able and others not, then maybe look at the wider boorish world out there who have been doing it for years and see that they can handle it no problem.

    • Lance Wiggs says:

      The issue with the GST is that it does introduce complexity and cost into the system, while it is of dubious merit on the revenue slide. As mentioned above it’s also a slippery slope – after veges why not books (to prop up a dying industry perhaps) and so forth. We get even more credit than Australia for our GST system, as we rightly should. It’s a policy that sounds good at first, but dies in the details.

      • Exactly.

        And on top of the accounting and tax collection confusion, before you know it there’s a conga line of industry lobbyists beating a path to Wellington to make a case for taking GST off everything from cough syrup to condoms and all stations in between.

  5. Hi Lance,

    Thanks for the well thought out analysis of the election – IMO your the first piece of analysis I’ve read all the way through and found myself agreeing to the majority. I too am I swing voter. I’ve voted Labour when I thought they were in a best position to lead the country and National when I thought it was time for a change. I’m now in JK’s electorate which takes some of the interest out of the local electorate process but the final wash-up of who gets what seats should be interesting.

    I don’t tend to bother paying much attention to who is doing what/making what promises during the election period because I think the MMP process tends to temper a lot of the more far right/left views into more of a central norm. The reality is that NZ is still a pretty awesome place to live in the wider scheme of things even after years of different Labour and National lead governments so the outcome of this weekends election probably won’t result in any significant change in the next three years.

  6. Glen Barnes says:

    A lot of commentators can’t see how or why a National/Green/Maori can work or why people actually want this. For me it makes the most sense out of any outcome:

    - Having the Maori party in power seems to have made a decent impact on Maori affairs and given some focus to what have been some long standing issues without the us vs. them mentality of days gone by. There is still a lot to do but I can see progress being made and would like to see it continue.

    - The Greens do have some good policies and if they can get some concessions from National on water, child poverty and green jobs this can be a good thing. Unlike a lot of tech people I’m not anti farming, it is after all one of our major exporters. I am against farmers not keeping our environment top of mind, federate farmers constantly complaining and Fonterra only reaching for the minimum required by law. There are however many farmers who are planting around rivers and do run their farms in an environmentally sound way. It can’t be that expensive to fence, plant and manage our waterways and I see this as a must do for New Zealand.

    - And National? Well I just think they will run the books better than Labour. I don’t mind the asset sales ( I’ll probably buy shares and treat the dividends as a discount on my power bill…). I don’t think they are doing anything special for a me as a hitech startup (government funding is just too hard to get if you arr not a professional grant writer)

  7. Pingback: Where predictions eventually become true | Lance Wiggs

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