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Home / Business / Economy

Mai Chen: US woes make NZ look good

By Mai Chen
NZ Herald·
3 Aug, 2011 05:30 PM4 mins to read

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Opinion

Some say the United States is the greatest democracy in the world, but we should be thankful that the crisis over raising the federal Government's debt ceiling, with its partisan bickering, filibusters, special votes, endless commentators and uncertainty, cannot be replicated under New Zealand's constitutional arrangements.

In short, the Republican-controlled House of Representatives and the Democrat-controlled Senate have for weeks been unable to come to an agreement on the conditions for lifting the debt ceiling.

The Republicans demanded spending cuts, but the Democrats could not agree on how much. It was only an eleventh-hour deal struck on Monday, and passed by Senate and the House on Tuesday night, that stopped the world's largest economy from defaulting and losing its AAA credit rating.

The rest of the world watched first in amusement and then in horror once we realised the detrimental effects a US default would have for all of our economies.

Seeing Winston Peters this weekend past at his party launch made me think about how things have changed in New Zealand.

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For nearly nine weeks after our first MMP election, in 1996, New Zealanders woke up every morning not knowing who their government would be. Winston Peters kept us on tenterhooks about whether he would side with Labour or National.

But that was the first MMP election, and now government formation is much faster and more stable. In 2008 it took fewer than 10 days for the Government to form, and it has not fallen apart.

It seems a long time ago that the Prime Minister threw Winston Peters out of the government for a breach of collective cabinet responsibility, and many New Zealand First MPs defected to the National Party. As that 1998 crisis unfolded support for the Government was unclear. Prime Minister Jenny Shipley knew she had to secure the confidence of Parliament. Four weeks after the National-NZ First coalition collapsed, she had survived a confidence vote for her new administration. The collapse of the first MMP government was a very uncertain time for New Zealanders.

But these days, coalition agreements between political parties to form governments include promises of votes on appropriations, confidence and supply, and the Cabinet manual records the evolution of "agree to disagree" provisions, which could have averted the 1998 sacking of Mr Peters.

These agreements usually involve significant concessions from the incoming government. But they also discourage support parties from withdrawing their support, making the system more certain because of what those support parties gain in return.

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For example, the 2008 agreement between United Future and National secured Peter Dunne a ministerial post, and protected the existence of the Families Commission. Act's agreement gave Rodney Hide and Heather Roy ministerial warrants, and commitments to policy on law and order, tax, climate change, and more. The Maori Party's agreement made Pita Sharples and Tariana Turia ministers, secured the continuance of the Maori seats, and gained a commitment to initiate a priority review of the Foreshore and Seabed Act as well as a constitutional review.

So it's no surprise that it's been a long time since anyone has realistically threatened to withhold confidence and supply.

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You almost need to look as far back into New Zealand's past as the 1984 devaluation crisis when Prime Minister Robert Muldoon refused to carry out the instructions of the incoming Labour Government.

But even this was remedied by the "caretaker" constitutional convention and the enactment of the Constitution Act 1986, which allows incoming ministers to act even if they haven't been sworn in, as long as they are sworn in within a certain number of days afterwards.

Some people have said that the New Zealand system needs improvement, and there is certainly going to be debate, in the context of the upcoming MMP referenda. We will choose whether to keep MMP and review it, move to supplementary member (SM), single transferable vote (STV), proportional vote (PV) or return to first past the post.

Rumours of a backroom deal in Epsom between Act and National have exemplified for some what is wrong with MMP. There has also been ongoing debate as to whether we need our equivalent of the Senate or an Upper House. The constitutional review under way will also look at the size of Parliament, the length of its term and the Maori seats. Whether New Zealand should become a republic will no doubt also be raised in the review. But for all the talk, it takes a crisis like that going on in the US to remind us that although there is always room for improvement, our government system works pretty well.

* Mai Chen is a partner in Chen Palmer NZ Public and Employment Law Specialists and author of Public Law Toolbox, forthcoming.

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