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HUGO Assessing the economic and political environmentvision in New Zealand Confidential to March 27 2015 HUGO members Northland by-election – what happens if Winston wins? Page 2 The National Party has given away any realistic expectation of winning Saturday’s Northland by-election. It could still happen, but it depends now on the party machine getting its vote out. Thoughts are turning to whether Peters can be wooed back to supporting National, even weakly. Green Party leadership Page 2 By entering the race for the Green Party co-leadership, being decided at the end of May at the party’s annual conference, 33 year-old former environmental activist Gareth Hughes has created a clear choice to the more pragmatic positioning of the more experienced Kevin Hague. Social housing policy – looking dicey Page 3 If the road to hell is paved with good intentions, then that may prove an apt description for Bill English’s cherished policy goal of reforming social housing to be more responsive to tenants’ needs. The Salvation Army’s pull-out places big questionmarks over the initiative’s political saleability. Auckland needs bigger wharves Page 4 But will Aucklanders allow Ports of Auckland to extend them any further, even assuming the current consented extensions aren’t overturned by the current political pressure? One thing’s certain: container ships aren’t getting any smaller. Korea FTA signed, Indian deal as far off as ever Page 4 John Key signed the new NZ-Korea free trade agreement in Seoul, weathering embarrassingly timed leaks about NZ spying on that country’s Trade Minister during the 2013 WTO leadership contest. While India FTA talks have resumed, there is little cause for optimism about an early resolution. Might a rethink of the 1% to 3% inflation target warranted? Page 6 The US Federal Reserve has indicated a slower track for interest rate increases this year, global central banks are maintaining highly accommodative monetary policy settings. It remains to be seen whether commodity prices will stabilise. If these trends persist, the case can be made for a rethink on the long-standing 1% to 3% target band for inflation. Tougher workplace sanctions on the way Page 4 A rash of cases of serious breaches of employment law has prompted a government revision of the sanctions that will apply. From June, new, higher fines will apply and mediation will not be possible for serious breaches, which will go either to employment tribunals or the Employment Court. Senior executives should familiarise themselves with this new detail. Text finalised March 26 Contact: [email protected]. No responsibility is accepted for acts or omissions by clients as a result of items herein. © The Hugo Group 2015 HUGOvision March 27 2015 POLITICS AND POLICY If National loses Northland, Environment Minister. A ‘win’ for Peters might be engineered by creating an appropriately non-critical what then? concession that allowed a significant tweak in favour The National Party is now resigned to losing the of economic development priorities. Northland by-election and thought is turning to the extent to which NZ First can still be turned to for Northland by-election: it never rains but it support, and perhaps to undermine Labour at the pours 2017 election. Thinking among senior National Party The Key administration’s political management skills figures is that a Peters win in Northland may bring have been sorely tested by a wave of damaging events him not only back to Northland, but also potentially and bad luck that have played into Opposition parties’ back to National. hands in the lead-up to the Northland by-election. Peters’s large family connections in the north are To name but a few: helping him enormously, as is the signal from • The government was forced to vote down the so- Labour’s Andrew Little to back NZ First over the called ‘Feed the Kids’ bill two weeks out from the Labour candidate, and the assistance he’s getting vote. In Northland, where poverty abounds, this from cross-over politician Shane Jones. was a gift to NZ First; Ministers also report that a few stubborn issues, • NZ First had two private members’ bills drawn notably the scandal over the Kaipara District Council’s from the ballot that the government would rather wastewater scheme funding blowout, are constantly had never seen the light of day: the first opposing being raised against the government. Late campaign investor state dispute settlement provisions in the news that National’s candidate, Mark Osborne, was TPP (the Fighting Foreign Corporate Control Bill); manager at a loss-making council-funded community the other seeking to overturn the Sky City convention trust is unhelpful in this context. centre deal. Both allowed NZ First to demonstrate its A string of other issues have also broken against potential to overturn unpopular policy; the government in recent weeks, ranging from the • Bill English’s social housing plan took a major knock embarrassment of disclosures about spying on the with the Salvation Army deciding, four years into South Korean Trade Minister in 2013 while John Key the policy-making process that it has engaged with, and Tim Groser were in Seoul to sign the NZ-Korea that it doesn’t have the scale or capacity to buy and FTA. manage former state house stock; A Peters win would remove the government’s • disclosures that NZ has used its access to the “Five guaranteed one seat parliamentary majority. Even Eyes” surveillance network to pursue diplomatic with ACT on-side, it would have only 60 instead of and trade opportunities. Voters may not especially 61 seats in the 121 seat Parliament. care about this, but there is a politically corrosive In such circumstances, Key would likely overcome effect to the ongoing disclosures. By timing his personal antipathy to Peters and seek a release of spying on the South Korean Trade parliamentary accommodation that might include Minister in 2013 at the same time as John Key commitment to consultation on legislation but fall and Tim Groser were in Seoul signing the new short of support on confidence and supply motions, FTA, that achievement was overshadowed and since the government’s majority is still firm there, embarrassment created with hosts; thanks to agreements with the United Future and • the Young Nats’ unguided missile attack on Maori parties. Key extended an offer of that sort to Winston Peters and candidate Mark Osborne’s Peters before the last election. management role at a loss-making Northland trust Speculation beyond this point is fraught, but any suggested a party machine lacking discipline. working relationship developed between Key and Peters would be likely to weaken Labour’s Green co-leadership contest has expectation that it could count on NZ First’s support at the 2017 election, making a Labour-Green implications for Labour government harder to form. Gareth Hughes has opened up the contest for the Green party co-leadership. The result may be In short, Labour’s tactic of backing Peters to relevant to how Labour and the Greens get on if embarrass and make life difficult for Key could Labour leads the government post-2017. prove strategically counterproductive. Whether any such accommodation could salvage National’s The initial logic was that No 3 MP Kevin Hague RMA reform plans is too early to say. However, its would take over from Russel Norman at the party 2 intentions are softer than when Amy Adams was conference at Queen’s Birthday Weekend. That is still HUGOvision March 27 2015 POLITICS AND POLICY the most likely outcome but is not assured. Social housing policy – dead in Hague is capable, would probably have been the water? Health Minister if Labour’s side had won in 2014 and has managerial experience to complement his The Salvation Army’s rejection of direct involvement in environmental and social-liberal position. But he Bill English’s social housing policy is a serious blow for lacks Norman’s sound-bite skill. what is intended to be a flagship policy. The Sallies had been smarting for some time about the government’s Hughes can appeal to those in the party who want repeatedly painting them as cheerleaders for the policy. to strongly reaffirm the left-of-Labour positioning It’s true they were close to the four years of policy on social and economic issues – Hague favours that formation that led to this point. positioning but more pragmatically. Hughes comes from an activist environmentalist background: he Ministers appear to have been unaware that the worked for a while with Greenpeace in India. Sallies were biting their tongues as long as mid-late last year about the way their support was being And, at a young-looking 33, he can project portrayed. And on closer inspection, the Salvation generational change, which the Greens need, Army realised its work on marginalised groups – including in the organisation, which he says needs addicts, the mentally ill, and the socially maladjusted to be professionalised. But his youth might deter –didn’t represent as close a fit with the government’s potential voters who are only marginally Green. intentions for the social housing policy as may have Vernon Tava, recently appointed an Auckland appeared at first blush. However, its ability to provide co-convener, has taken the Kennedy Graham line the social “wrap-around” services the government that the Greens should position themselves on a wants to see provided in the context of housing for “sustainability axis” and be more left-right flexible to the severely disadvantaged is unquestioned. The make working with National more practicable. expressed desire to work as partners in “consortia” providing social housing is real.

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