MMP holding country back

Helen Clark

Chief executives may decry her incrementalist style of Government, but it is clear they rate Prime Minister Helen Clark as head and shoulders above the pack as New Zealand's most effective political leader.

Thirty-four percent of chief executives gave Clark an excellent rating on the effectiveness scale.

National Leader Don Brash's rating as excellent was just nine per cent.

Other leaders, such as NZ First's Winston Peters and United Future's Peter Dunne, rated at three per cent or under in the excellent category on the effectiveness table.

The survey results do not bode well for the right-of-centre parties.

Act NZ's Rodney Hide has paid the price for his antics on 'Dancing with the Stars' as far as chief executives are concerned. Just two per cent believed he deserved a tick for excellent effectiveness. Worryingly for the star struck Hide, more than 80 per cent put him in the indifferent category. He will have to up his game to increase Act's profile by the next election or find himself relegated to dilettante status.

Green leader Jeanette Fitzsimons shares Hide's position at the bottom of the political leadership effectiveness table. But unlike Hide, she has the benefit of a co-leader to lift the Green's profile.

Some CEOs considered Clark's high rating was due to the fact that she was focused on effective leadership not policy performance.

"Helen Clark is an effective political leader but the economic and social policies of her Government need challenging in significant areas, said a leading Auckland transport sector CEO."

Others believed New Zealand was poorly served by its political leaders.

"I have very little faith in any of them. I'm trying hard not to come across as a cynic," said a small business boss.

Clark's effectiveness is illustrated by her mastery of the MMP political process where she has made coalitions, or, support arrangements, with differing political parties at the last three elections to form her governments.

Her overall mastery is admired.

But can she or her Government - be trusted to 'do the business' given the exigencies of New Zealand's political system?

Finance Minister Michael Cullen hit the nail on the head when he warned business there were parliamentary issues that would impinge on just how much cash he could dish out to the business sector in the form of corporate tax cuts.

Cullen was alluding to the impact of the mixed member proportional representation system - otherwise known as MMP - which forces the reigning minority government to make deals with other parties in order to stitch up enough votes to pass tax-cuts legislation.

The Finance Minister did not say so out loud at his press conference to unveil the skimpy Business Taxation Review.

The unveiling of the long-waited review - widely decried by business as "tax-cuts lite" was evidence enough of MMP in action.

CEOs canvassed by the Herald have differing views on MMP's impact.

An Australian CEO operating a major company here said MMP was "surely New Zealand's biggest issue".

"A compromised Government equals compromised policy equals compromised economic performance.

"New Zealand will be at best an average performer while it is constrained by MMP."

A NZ motoring boss noted: "Challenges to be faced by future generations are not being adequately addressed because of political differences: climate change, energy and aging population issues (health and retirement benefits). "A minority Government struggles to pass bold new legislation needed to deal with major sustainability issues and we are starting to pass all our big problems on to our children and grandchildren."

CEOs don't need to look far for proof positive of the defects of MMP in action.

The "bold and innovative" tax review that Michael Cullen and Revenue Minister Peter Dunne promised last year demonstrates how the compromises deemed necessary in the MMP system could turn a tax tiger into a mouse within a matter of months.

Chief executives surveyed for the Mood of the Boardroom are concerned that even if the Government wanted to be bold, MMP is hindering it from implementing the type of policies necessary for New Zealand's success.

MMP also forces the major political party to do deals that can run counter to its principles to get a Government together. One example cited was Labour's decision last year to agree to NZ First leader Winston Peter's request to abandon plans to toll motorists on a second Tauranga harbour bridge.

A capital markets CEO said that MMP "suits incrementalism".

"Most people probably like this style - but it prevents anything that is vaguely bold ever happening. At present, we are heading in the direction of death by 1000 cuts."

But others said MMP had some upside given the inherently cautious approach that both Cullen and Clark have displayed in Government.

"Consensus politics based on collaboration around specific issues will achieve better political outcomes," said an Auckland energy sector boss. "First past the post results in unfair majority governments."

The Business Taxation Review itself would not have got off the ground if United Future leader Peter Dunne had not demanded it as part of his price for supporting Labour.

But it is notable that since the review was published, Dunne has 'gone over' Cullen and publicly promoted a 30 cents corporate tax rate to match Australia as his preferred option rather than wait for submissions from the business sector to close at the end of September.

Some business cynics suggest Dunne is simply trying to shift the focus from his original push for New Zealand to have a competitive company rate with Australia and lower expectations to prepare business for a simple matcher,

Some 74 per cent of CEOs surveyed are concerned over MMP's impact.

Just 21 percent were not concerned.

This stance is replicated among small-to-medium sized business heads where 71 per cent of those canvassed from Business NZ's membership had issues with MMP in practice and just 25 per cent did not.

Australian parties also have to make compromises to achieve power.

But New Zealand's more extreme form of proportional representation is considered to stand in the way of the major party - in this case Labour - from forging the type of policy agenda that New Zealand needs for long-term success.

There is strong anecdotal support for a public referendum on MMP.

Some chief executives suggested that after 10 years of MMP in action, a public push should be made to re-examine it.

But a top Auckland lawyer notes it may be difficult to implement.

"MMP means we are pandering to the margin all the time. We need a referendum on the issue. However with 'smart' people heading for Australia and immigration bringing in welfare beneficiaries, it may be too late to ever revert."

Typical comments included:

* Auckland banker: "Undue influence by small minority parties:

* Auckland motoring CEO "On their own, the parties promise a lot - in coalition they offer very little - a hopeless model! Except to the lowest common denominator."

* Auckland energy CEO: "Competition is also needed in politics. In France, or Australia - politicians would have rushed millions of dollars of aid to the Canterbury farmers affected by snow."