David Farrar

The week in politics with centre-right blogger David Farrar

David Farrar: A reforming second term

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National's John Key. Photo / NZ Herald
National's John Key. Photo / NZ Herald

Many National supporters were frustrated at the lack of reform in National's first term.

They saw National cancels its planned income tax cuts for 2010 and 2011, rather than cut interest free student loans and Working for Families. They saw a soaring deficit, and the Government's response was to slow the rate of spending increase only. They saw a ban on asset sales, despite this being common amongst centre-right and centre-left Governments around the world.

National's second term is looking to be far more pleasing to those who want to see a reform agenda. This doesn't just mean a more right wing agenda. The Hawke/Keating Governments in Australia were good reformers, as was Tony Blair in the UK and Bill Clinton in the US. Even Julia Gillard is undertaking some quite good reforms.
So what are the areas of reform for John Key's second term?
Industrial Relations

The current industrial action at Ports of Auckland is a good reminder that we still lose too much money through strikes and lockouts. Many people are staggered that an unskilled job can pay an average of over $90,000 a year and still have people on strike over it.

National has gained a mandate for its policies to introduce a starting-out wage for young job seekers, to try and reduce youth unemployment.

They will also remove opt-out compulsory unionism from sites with collective contracts. New staff will now be able to go directly onto an individual contract, without first going on a union collective contract for the first 30 days.

Some supporters will call for National to go further. They question why employers should be forced to deduct union fees from employees, so that they become an unpaid revenue collector for the unions. The argument is that unions should invoice their members directly for their membership fees, just like any other incorporated society does.

Asset Part-Sales
National announced these in January, and Labour and others campaigned against them for ten months. Labour even had a countdown clock and based almost their entire campaign on the issue, yet National still won 62 seats with ACT and United Future, and will get to implement their policy (unless National lost two list MPs on special votes).
Many reformers will welcome this, as it represents the first (small) reduction in the size of the state since 1998, and will help breathe some life into local capital markets. It is still a very modest policy compared to some of the sales being done by Labor state governments in Australia.

Welfare Reform
Welfare reform will be a major policy focus of National's second term, and by the end of it the days of remaining on a benefit for life (unless seriously disabled) should be ended. All but the most incapacitated beneficiaries will be work tested, with welfare becoming temporary assistance for the hard time.
The most significant change is probably that those who are already on the DPB and have further children to a partner or partners who are not willing to financially support them, will not be able to avoid work testing. The latest research shows that 52% of those currently on the DPB went onto it when they were a teenager.

Education
National Standards were a worthy, yet minor, educational reform. It was ridiculous the amount of energy the educational unions spent on trying to undermine them. The agreement with ACT to trial charter schools is a far far more significant reform. Critics of our current system have been calling for performance pay, vouchers, bulk funding and less zoning. Well a charter school will probably be exactly that - they will be able to decide for themselves how much money they spend on salaries, property and operations - rather than have the Ministry in Wellington decide for them.

Spending
A commitment to keep core spending constant in real per capita terms is a huge game changer. Labour in five years increased core spending by 50%. That is great when you have debt fuelled economic growth but unsustainable when the bubble bursts, as it did.
A future Government will be able to change or even ignore the proposed law, but there may be a political price for doing so.

So overall, there's a lot for National supporters to be cheerful about in this second term National Government. The grumblings of the first term from National's own supporters will probably be replaced by more vigorous opposition to some of these measures from the Greens, Labour and NZ First. Having said that, people may be surprised that NZ First could end up backing some of the Government's policies in the areas of welfare reform, industrial relations reform and even education.


*David Farrar is a centre-right blogger and affiliated with the National Party. A disclosure statement on his political views can be found here.

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