John Key is resigning from his position as Prime Minister of New Zealand immediately and will retire from parliament at the next election.
Until evidence appears to the contrary I will take him largely at his words as to the reason why. He has been Prime Minister for eight years and seemed somewhat bored with the job. He is a multi-millionaire and has many other options. He was a very popular leader and simply chose to go while the going was good.
Key was not a very ideological right wing leader. He had a personal manner that seemed to appeal to many and never did anything that would upset people in significant numbers. That included making no changes to many policies of the Labour-led government that he had previously condemned as socialistic when in opposition – such as Working for Families and interest-free student loans. The one issue he seemed to have some passion for – changing the flag – was not exactly going to change the world and went down to a comprehensive defeat in the referendum.
Some policies he has continued including maintaining the minimum wage level at 50% of the average wage when its real value was allowed to decline significantly under the previous National-led government from 1990-1999. This government also felt compelled to introduce a stronger Health and Safety law in the wake of the Pike River disaster and continuing high death rates in industry – especially forestry.
Privatisations have also been largely limited to the three large power generators. Whilst unpopular it did not generate much anger given the generators are once removed from direct dealing with the public. A state housing privatisation process has been stalled in the face of significant public opposition.
This government was also elected just as the world financial crisis and subsequent recession hit in 2008. This was followed by the two large earthquakes that hit Christchurch in 2010 and 2011. This forced the government to abandon the dogma of only running budget surpluses and to open the tap in public spending. Net government debt to GDP had fallen under Labour from around 30% of GDP to an extremely low 5% in 2008. National took it back to 25% of GDP by the end of its second term and putting the brakes on. This was almost and orthodox Keynesian approach associated with social-democratic managers of capitalism rather than conservative right wing governments.
So we had the spectacle of the 1999-2008 Labour-led government running budget surpluses every year for nine years and paying off government debt in a fiscally very orthodox and conservative approach. Then National increased government debt from $10 billion to $60 billion in a few years with budget deficits of up to 10% of GDP equivalent – last seen under a previous National government led by Robert Muldoon.
These policies did moderate the impact of the world crash and recession beginning in 2008. The government was also helped by the fact that the Chinese government launched a massive rescue package for their economy that helped sustain exports and export prices from New Zealand to what is today this country’s largest export market. Australia also suffered less from the crash as a consequence of Chinese action which also helped sustain New Zealand’s exports. A speculative property price boom has also been allowed to get out of control to promote a feel-good factor of higher paper wealth which can be borrowed against by the private sector.
That means New Zealand’s debt levels for both public and private sectors are much higher than before as it appears we are heading into another cyclical downturn worldwide the consequences of which could be much more severe than the disaster of 2008-10.
Relatively speaking New Zealand and Australia did better than most advanced capitalist countries in Europe, North America and Japan. The recessions there were deeper and the recoveries have been very weak.
This government has, in fact, received criticisms from some business people and right wing columnists for failing to progress a more aggressive anti-worker agenda. That view is being given some expression in the leadership challenge from Judith Collins.
The fact that John Key felt the need to publicly nominate Bill English as leader when he resigned was probably a sign that his succession as leader was not necessarily a straight -forward affair. The more ideological right wing of the party remains strong. They want to weaken health and safety laws, rip up the Resource Management Act, push ahead with charter schools and bulk funding. Many would not consider English as the man to achieve these goals.
The problem for the National Party today is that it knows that without Key it will struggle to win the next election. His personal popularity was important to National maintaining its support. He has to be worth at least 3-4 percent of the Party’s support level.
Because the New Zealand economy has had a sustained period of modest growth the government was able to maintain a vote at around 47% and get through the 2011 and 2014 elections with relative ease – even given we have a proportional system of representation. With just a couple of extra votes from the right wing United Future and even more right wing Act Party they were able to secure a majority. They could then do a deal with the Maori Party to reduce their dependence on the others parties if necessary for particular legislation.
Labour suffered an awful period of internecine warfare after the 2008 election that saw the leadership change three times in a relatively short period. Unfortunately for them, from the public’s perspective, the factionalism seemed to lack any basis in genuine principles or policy alternatives. As a consequence, Labour has languished at around 30% in the polls since 2008. The party refused to commit to forming a Labour-Green’s government in the 2011 and 2014 election which just made them look unable or unlikely to be able to form a government since they were only polling around 30%. They needed a firm commitment from the Greens to make their bloc a realistic alternative to the strongly polling National Party.
That bloc was formed in June this year. With the Greens currently at around 14%, however, it means the difference between National and the Labour-Greens bloc is relatively minor.
New Zealand First is on around 8% means that their leader Winston Peters could well be the kingmaker after the next election.
In many ways, New Zealand First would have the greatest leverage over a possible National-led government as Winston could deliver all the votes they need even if National shed 4% of their polling support before election day. The National Party was his original home although on most policy issues he shares the views of Labour. He wants to protect the welfare state, he opposes privatisations, he favours an active state role in economic and social policy. He was a Minister in the 2005-2008 Labour-led government. But New Zealand First cannot be trusted to go with labour and the Greens. He went with National in 1996-1998 and could do so again if the price is right.
It is possible that the Maori Party will do a deal with Hone Harawira for the Mana Movement to withdraw candidates in seats the Maori Party can possibly win if the Maori Party doesn’t run against him. The combined vote of the Maori Party and Mana in Hone’s old seat of Te Tai Tokerau was much larger that the winning Labour candidate Kelvin Davis. In 2014 Kelvin could only beat Hone with the support of John Key, Winston Peters and Maori Party leaders all telling people to vote for him against Hone. However, three years is a long time in politics and Kelvin has been a very effective opposition MP and will have rebuilt support at the grass roots in ways not available to Hone.
It is also difficult to see how a principled “deal” could be done. The Mana Movement split from the Maori Party because they formed a governmental coalition with the National Party. Today the Maori Party is clearly the political wing of the corporate elite within Maoridom that has grown stronger in wealth and influence over recent decades as a consequence of the settlements won as part of the Treaty of Waitangi claims process. The Maori Party will never rule out going into coalition with whatever party is in government if it gives the corporates access to the trough of government.
However, I don’t believe a possible Labour-Green led government has anything to fear from the Mana-Maori Party accommodation taking some seats off Labour. If a Labour-Green coalition is possible with Maori Party support the Maori Party are almost certain to support that coalition rather than National – just to prove to everyone that they don’t favour National all the time.
From a union perspective, I favour a defeat for this government and the formation of a Labour-led government. I do not believe that such a government will make any fundamental changes to New Zealand society. Both Labour and the Greens are dedicated to running the system not changing it. However, I believe we can force some concessions from a Labour-Green coalition that would not be possible under a National government. In particular, Labour and all the possible coalition partners they could have, including New Zealand First, the Greens, the Maori Party and Mana have committed to making the minimum wage equal to two-thirds of the average wage. That number would be $20 an hour today. Unite will be campaigning to make the minimum wage a living wage for our members in 2017.
We will also be fighting for a broad range of measures that can be implemented almost immediately that can make a big difference to working people being able to fight for ourselves rather than relying on whoever is in parliament at any particular time.
Many of these measures may not appear very radical, in fact, the more reasonable the better. But they need to be able to empower workers and unions to build ourselves into a force capable of taking on the bosses in much broader and more militant way than we have been able to in recent decades.
In my view, we deserve a government that unambiguously takes the side of the working class majority in this country – just like National and Act do for their wealthy mates. To achieve that goal will require working people to get much more active in politics on a day to day level. We can’t denounce existing parties for not doing enough when they have never really been challenged to do more than they have.
We must build existing unions and form new ones that are able to struggle much more effectively that we have. We need to forge allies with everyone in the community being exploited and abused. We need community organisations willing to fight as allies.
When we get up off our knees we can also demand that existing parties stand with us in the struggles we face. Then we can judge whether we need a completely new party or whether the existing parties or parts of those parties are able to shift enough to be on our side for the duration of the struggle that will be needed to bring about a fundamental change in who hold power in society.