OPINION
National’s pitch to voters is both progressive and shrewd. Christopher Luxon declared a war on business consultants in his state of the nation speech yesterday, promising to crack down on the public service’s $1.7bn overuse of expensive business consultants and contractors, and use the savings to fund an expensive new $249m annual subsidy for childcare costs of those in work.
External contractors have become an increasingly large part of Labour’s public policy making process – especially those from the “Big Four” business consultancies of Deloitte, KPMG, Ernst and Young (EY) and PricewaterhouseCoopers (PwC). They charge government departments huge amounts – such as the $9000 per week, per consultant, for the failed RNZ-TVNZ merger.
The overuse of “consultocrats” is now costing the taxpayer $1.7bn a year. Luxon announced that National was going to focus on reducing that figure by at least 25 per cent, or $400m, and repurpose the savings to low- and middle-income families.
When asked whether he was concerned for the jobs lost by the business consultants he replied: “I feel very good about that. Big-time, big partners at consulting firms up and down New Zealand, thank you very much, but your money is going away, and we’re giving it to hardworking families.”
Luxon is really hitting out hard at the consultants, describing them as being on a “gravy train” and declaring “Under National, this gravy train will stop at the station.” The Spinoff’s Toby Manhire thinks this will be very popular, saying today that “making consultants the whipping boys, is a winner”.
What’s more, the attack on the consultants is something that Labour will find difficult to disagree with, and they will not want to defend the ballooning costs in this area.
While in opposition, Prime Minister Chris Hipkins campaigned against the growing use of costly consultants and criticised National’s overuse of such contractors. However, Hipkins then became the Minister of Public Service, under Jacinda Ardern, and oversaw massive increases.
Conservative political commentator Liam Hehir points out the problem for Labour: “This puts the government in a difficult position, particularly since the explosion in private bureaucracy occurred under the watch of now prime minister Chris Hipkins, who promised the opposite. So now Labour must either accept the criticism or defend the consultants who have done so well at the expense of public finances in the recent years. It’s a hard position for Labour to be put in.”
The new childcare policy announced by Luxon is a rebate, which would give families with young children up to $75 a week, with a cap of $3900 every year, depending on their income and use of early childhood education. Under the policy dubbed “Family Boost”, the full $75 a week will be available to families earning up to $140,000, and this will taper off for those earning up to the cut-off point of $180,000.
It is estimated that the policy will advantage 130,000 families. This policy is therefore a significant increase in the welfare state, and it is not a replacement for any other current childcare policy, but goes on top of current programmes.
Family Boost might therefore be seen as a big leap to the left by Luxon. Certainly, the policy has been well received by those who might normally be critical of National. As Newsroom political editor Jo Moir writes today, “Even left-leaning commentators and elected representatives couldn’t find fault, with several even endorsing the policy.”
So, if “Working For Families” was as John Key described, “Communism by stealth”, then this policy is something similar.
By focusing on the “squeezed middle”, and tilting the new policy towards low-income earners, National has made a raid into Labour’s own ideological territory, obviously with the hope of picking up traditional Labour and swinging voters.
Moir said the policy “sounds like something out of the Labour Party playbook”, while the Spinoff’s Toby Manhire pointed out that in listening to Luxon’s speech “you could be mistaken for thinking it was the other Chris, Hipkins of Labour, that was speaking.”
Political strategists refer to this as “triangulation”, in which a politician adopts the type of policy that is normally put forward by an opponent, which means that their opposition has trouble criticising it.
Stuff political editor Luke Malpass says today that the Labour Party will be deeply worried about this latest development: “this was one issue which Labour was quietly worried about: if the National Party went for a big, transformative (and expensive) childcare policy framed in terms of getting women into the workforce, easing the labour shortage while also coincidentally finding a way to dish out some middle-class welfare at a time when cash is tight, it could be quite bad for Labour.”
Similarly, the Herald’s Thomas Coughlan points out the problem for Labour: “Childcare costs are a deep foray into Labour territory – so much so that the words on the page of Luxon’s speech might have been lifted from Ardern herself (the delivery, of course, was quite different). That National should devise a policy that is more universal and costly than Ardern’s should be alarming to Labour.”
The policy can also be seen as politically progressive, in assisting women back into the workforce. Thomas Coughlan explains: “The cost of childcare has become an enormous political issue for both major parties. Childcare costs mean that parents, usually mothers, delay returning to the workforce after giving birth.” Coughlan himself suggests the policy could be described as “feminist”.
And yet, according to Coughlan, National can also pitch the policy as fulfilling National’s traditional philosophies too, as it “fits within the party’s philosophy of self-reliance and empowerment through work.”
The real shrewdness of the policy is that it is being conceptualised as a “switch” of spending – from rich consultants to struggling families. This means National can’t be criticised for fuelling inflation with their new big spend – because they can claim to be repurposing money from elsewhere.
National-aligned commentator David Farrar points out how persuasive the policy will be politically: “I, for one, would much rather have my taxes go on helping low and middle income families with young children, than paying $250 an hour consultants to design a billion dollar cycle bridge or merge together two state media companies that have nothing in common.”
There will be some questions about whether National really can make the $400m cutbacks in management consultants. To do so, they will be relying on the edict to government departments to do so. National will also put much more emphasis on the agencies to report their use of contractors.
The other big question is whether the childcare policy will result in higher prices and bigger profits for childcare providers. When the state increases subsidies for provision of social services from the private sector, those businesses will likely just charge much more.
Luxon’s answer to this is that childcare prices won’t go up because childcare is a “competitive market”.
However, this isn’t so clear. On Saturday, Stuff published a report on for-profit early childhood providers which suggested that state subsidies just end up in big profits for the owners of those businesses. Further debate and research is clearly required. More regulation might be required in this sector if it’s going to be the recipient of even more taxpayer funds. As Thomas Coughlan argues, “A regulatory eye on childcare providers’ margins would not go amiss.”
It’s hard to see how much of a change this big policy announcement will make on the election, but it shows just how much “bread and butter” concerns are now driving New Zealand politics.
It also shows that something of a “great realignment” might be occurring in New Zealand politics. Listener political columnist Danyl Mclauchlan has written about how a slow yet deep shift is occurring in democratic politics that is transforming the traditional left into parties dominated by educated urban elites, while the right reinvents themselves as coalitions of a multi-ethnic working class.
As a result, it’s not surprising if parties of the right begin focusing more on policies to deliver on the needs of that coalition. And it’s therefore perhaps no accident that Luxon also spoke so much yesterday about New Zealand becoming a multicultural nation instead of a bicultural nation. This signals that National might be coming after that traditional vote in ways that Labour could have trouble responding to.
The ball is in Labour’s court. It needs to show that it can better deliver policies to its own traditional base.
The problem for Labour is that they are increasingly associated with what political scientists call society’s “professional managerial class” – which is epitomised by the highly-paid business consultants in the bureaucracy. Given National’s new focus against these professionals in favour of working families, Chris Hipkins is going to have to speed up Labour’s shift in focus from the “woking class” to the working class.
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