Thomas Coughlan: Politics’ big question - what does a National-Act government look like?

OPINION:

One of the most common misunderstandings of New Zealand politics is that the relationship between National and Act is the mirror image of that between Labour and the Greens.

The current Prime Minister, Chris Hipkins, once quipped that the Greens were “Labour’s conscience”. They’re often thought to be the more ideologically pure leftwing party, shorn of the centrist electoral instincts of their centre-left benchmate (an oversimplification, but that’s a question for another day).

The relationship between the two parties has been formalised by Government - most recently by the Co-operation Agreement and prior to that the Confidence and Supply Agreement of the Labour’s first term. But even before that, in opposition, the two parties codified their relationship, inking a Memorandum of Understanding in 2016 to work “co-operatively” to change the government and signing up to joint Budget Responsibility Rules to ease fears that a Labour-Green government would be an idealogical break from three decades of fiscal orthodoxy.

On a personal level, Green co-leader James Shaw has said Green Party voters tended to be unimpressed by Green attacks on Labour leader Jacinda Ardern. Labour and Green ministers tend to get on, although there are occasional frictions.

The relationship between National and Act is not similarly cordial - or not yet at least.

This relationship more closely resembles the open hostility between the Australian Labor Party and the Australian Green Party. When Christopher Luxon puts a foot wrong, for example his kind-of U-turn on National’s proposal to repeal the 39 per cent top tax rate (currently under review), Act was the first party to lash National for a lack of spine.

Act whacks National for its foibles faster and more ruthlessly than Labour and the Greens can be bothered to do.

For the moment, the pseudo-animosity is mainly confined to the Parliament precinct. Who really cares about what National and Act think of each other anyway?

But with an election nine months away and National and Act a likely government by the end of the year, minds will naturally focus on the relationship between the two parties and how they might work together in government.

The political merit of the Budget Responsibility Rules is that they neutered a powerful political attack against a possible Labour-Green government, which is that they hike taxes and increase borrowing.

Whatever assurance Labour could give about an orthodox centre-left fiscal policy, National could allege that the Greens would force them to wriggle out of such commitments during coalition negotiations.

We saw a taste of this during the 2020 campaign, when National was able to conjure up the spectre of a Labour Party wealth tax - a Green Party policy that Labour was keen to distance itself from.

National and Act could face an equal and opposite attack from the left in the next election.

Unlike the Greens and Labour, which were paddling in the same direction following their 2016 MOU, National and Act are, in places, pulling in very different directions.

Act leader David Seymour is not the kind of politician to be distracted by the baubles of office. Photo / Mark Mitchell

On things like co-governance, National wants to strip it out of things like Three Waters and Healthcare, but it does not want a radical rethink of Treaty issues in New Zealand. Act wants to go further like putting Treaty principles to an inevitably ugly referendum (something Luxon has ruled out well ahead of time).

Fiscal matters are even more complicated. Act wants to run a contractionary fiscal policy, promising cuts to the overall level of spending (but not touching health or education) in a bid to get inflation under control (along with smaller tax cuts). This is quite different to what National is promising. While the party has not released a fiscal strategy yet, it has promised to increase funding for health and education in line with inflation and cost pressures (health gets more expensive as the population ages).

It’s said it will fund other parts of the public sector like RNZ adequately. It’s difficult to put a dollar figure on what that means, but it probably doesn’t mean a cut to government spending from where it is now.

Luxonism at the moment, looks like something between the Key-English and Ardern governments. Zero budgets like those seen early on in National’s last term seem unlikely, but obviously National is unlikely to spend as liberally as Labour.

Act is something different entirely.

Seymour has an almost revolutionary zeal and has been emboldened by his recent poll bounce.

The party likes to bring up the story of Seymour turning down a position in the executive of the last government to pursue the End of Life Choice members’ bill. Act sees this as symbolic of the party’s desire to put policy ahead of baubles and an indication that Seymour and his party are unlikely to be bought off by flashy titles like deputy prime minister: they want, to use their own words, “real change”.

This presents a problem for National and Act, which will probably, during the campaign, be forced to clarify what kind of a government they would form. Will it be a bluer form of Labour? Or will it revive the revolutionary spirit of the 1980s. It can’t be both.

The most difficult thing for these two parties is if they are unable to clarify what kind of government they will be before the election campaign. Voters could be put off by the uncertainty, to the detriment of National and, potentially, to the benefit of Labour and NZ First.

This problem is not unique to National and Act. With Labour and the Greens both struggling in the polls, there’s every chance that were they to form a government they would need the support of Te Pāti Māori.

This is awkward on its own, given how much Labour’s Māori electorate MPs have to scrap with Te Pāti Māori’s candidates to win their seats. If such governing arrangement were to form, the Greens would probably have to play mediator.

But such a government would put Labour in the same awkward position as National - being forced to rule-in or rule-out policies like reviving the implementation of the United Nations Declaration on the Rights of Indigenous Peoples, and pushing on with what Debbie Ngarewa-Packer calls a Tiriti-centric Aotearoa which the Chris Hipkins leadership seems keen to distance itself from.

The great irony of the current political landscape is that without a viable centre party, Labour and National’s race towards the centre risks being undone by the parties to their extreme.