Richard Prebble: There is a policy vacuum in Labour’s plan

By Richard Prebble

NZ Herald·

14 Feb, 2023 04:00 PM4 mins to read

Prime Minister Chris Hipkins. Photo / Mark Mitchell

Opinion by Richard Prebble

Richard Prebble is a former Labour Party minister and Act Party leader.

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OPINION

Labour has dropped four major policies: unemployment insurance, the TVNZ/Radio NZ merger, the biofuels mandate and the hate speech legislation. Plus Chris Hipkins has signalled possible significant changes to Three Waters. He has not ruled out dropping other policies. From now on the “absolute focus” is on one issue, “the cost of living crisis”.

Apart from the two world wars, no New Zealand government has suspended policies in order to focus on a single issue. US President Jimmy Carter during the Iran hostage crisis suspended all his activities to concentrate on getting the hostages back. Adopting a single focus is called a ‘Rose Garden’ strategy.

The Rose Garden strategy does not work. Events keep happening. Within days of the cost of living being the” absolute focus”, the floods had to become the Government’s focus.

The issues the policies were trying to address have not gone away. Unemployment can be a financial disaster. The country still needs to reach zero emissions. Malicious fake news can cause great harm.

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Labour had to do the policy U-turn. There are real problems with all the cancelled policies. Biofuel production does damage the environment. Mergers rarely succeed. Unemployment insurance would be a significant tax on employment. Free speech is vital for democracy.

Is Hipkins that rare politician who does let facts change his mind?

Only Greens co-leader James Shaw has said the biofuel mandate was a mistake. Hipkins says the policies were stopped because it was “too much, too fast”.

Would the policies be cancelled if Labour did not now believe the policies are mistakes?

Is now focusing on a single issue also a mistake?

All the problems with the cancelled policies were known before the policies were adopted. A more careful analysis of the problems and the Government would never have embarked on any of the policies.

Governments suffer from short-termism. Policy is rushed to meet the electoral cycle. Good policies can take many electoral cycles to show results.

What is even worse is when policy is driven by fickle public opinion polls. As David Lange put it, if governments follow the opinion polls we might as well be governed by fruit flies.

Who doubts that the cost of living crisis has become Labour’s “absolute priority” because it is the number one issue of concern in every opinion poll?

Rushing out policy to solve the cost of living crisis will make the crisis worse.

A moment’s analysis reveals the cost of living crisis is a symptom. The problem is inflation. Focusing on the symptom and ignoring the problem will make inflation worse and, so too, the cost of living crisis.

Consider the Government’s first two cost of living policies.

Prime Minister Chris Hipkins is right - Labour must reprioritise. Photo / Dean Purcell

An across-the-board fuel subsidy: the fuel subsidies are worth a third less to the poor who need assistance than the wealthy who do not. The $700 million must all be borrowed. Extra government borrowing and spending add to inflationary pressure.

A 7.1 per cent increase in the minimum wage. Not everyone on the minimum wage faces a cost of living crisis. Some come from above-average income households. Many qualify for government income assistance. Now no union can settle for less than a 7.1 per cent increase. Businesses will have to pass on the wage increases, ensuring the cost of living crisis continues.

Governments can reduce inflationary pressure by balancing the books. Governments can assist the vulnerable with carefully targeted assistance.

What no government can do is reduce inflation by borrowing and spending.

A Rose Garden strategy of having an absolute focus on the cost of living will fail. It is not just events that will overwhelm the strategy - the issues the policies were to address still need addressing. There are many other important issues such as health, and productivity and as we have witnessed, the need to combat the effects of climate change.

Issues cannot be ignored because they are not in the polls. Today 100,000 children are missing school. A country that does not educate its young is doomed to be a failed state.

Let us commend Hipkins for his policy U-turns. We need more politicians willing to let facts change their minds.

Hopefully, the PM will quickly realise a Rose Garden strategy is not viable.

Where Hipkins is right is Labour must reprioritise. A careful analysis of the issues facing the country should determine the Government’s priorities. Rigorous analysis of the problems will result in better policy.

What is not sustainable is to use the cost of living crisis as an excuse for a policy vacuum.

Nature hates a vacuum. Politics hates a vacuum too. The political party that fills the policy vacuum with practical workable solutions will be the election winner.