Brian Easton says ACT ‘s neoliberals are still trying to sneak in a change to the constitution

This is a re-post of an article originally published on pundit.co.nz. It is here with permission.

When ACT – the Association of Consumers and Taxpayers – was formed, its then party leader, Roger Douglas, with an optimistic exaggeration which marked his time as Minister of Finance, announced that he was sure it would get more than 50% of the vote. Its share of those on the electoral roll averaged about 3% across the ten MMP elections.

A major factor in its voter share has been how well the National Party is seen to be performing. There are a number of ironies here. By gifting a seat (mainly Epsom) to ACT, National has ended up in an uneasy coalition with ACT (and NZ First). It has also probably cost National funding, for ACT is exceptionally generously supported by the wealthy.

ACT’s lack of political support from the public for the core ideas of its neoliberal founders has led it to spread its interests.* Under the leadership of Richard Prebble it added ‘law and order’ populists; more recently it has absorbed the gun lobby. Not all its initial supporters were enthusiastic, but there are so few New Zealanders who are neoliberal that they need allies.

Its current leader, David Seymour, who has just become deputy prime minister, is best classified as a libertarian. Perhaps that explains his outstanding achievement of the End of Life Choice Act. As a minister he has handled the Pharmac portfolio effectively, but much as a conventional conservative politician would. He has been less successful as minister of early childhood education. (Curiously Luxon took a more ‘neoliberal’ approach of shifting responsibility onto individuals when he said that parents should provide their children lunch by an apple and Marmite sandwiches – presumably without butter.) His promotion of charter schools would be supported by neoliberals but is as much libertarian. His Ministry of Regulation has brought out the mouse of reducing regulation of hairdressing.

Seymour may not know much economics. Most of his economics statements could have been written by Chatbot, but that is true for a lot of what purports to be New Zealand economic commentary. (The approach of ACT’s deputy-leader, Brooke van Velden, is a neoliberal economist constrained by political reality. Whatever you think of it, you know where she stands.)

ACT was founded as a party advocating neoliberal economics; neoliberal economists still advise it, even if many of its members do not always appreciate the economics they are signing up to.

Very often what may seem to be a populist cause involves ACT sneaking in its neoliberal agenda.  It campaigned in the 2023 election on an interpretation of Article Two of Te Tiriti o Waitangi that ‘the New Zealand Government will protect all New Zealanders’ authority over their land and other property’ which has hardly connected with either the original text or the intentions of those who were agreeing to it. It only makes best sense as a neoliberal attempt to slip into New Zealand law the ‘takings’ issue discussed below.

This principle two was so out of touch with history, that it was replaced in the bill that went to Parliament by ‘Rights of hapu and iwi Maori – the Crown recognises the rights that hapu and iwi had when they signed the Treaty/te Tiriti. The Crown will respect and protect those rights. Those rights differ from the rights everyone has a reasonable expectation to enjoy only when they are specified in Treaty settlements.’

(I leave others to explain the force of this Article 2 had it been passed into New Zealand law, since in the 185 years following the signing of Te Tiriti the Crown repeatedly failed to uphold it.)

Seymour, the libertarian, has campaigned on the importance of the third principle: ‘All New Zealanders are equal under the law, with the same rights and duties’. If he really meant that was his sole commitment, he would advocate the principle being incorporated in, say, an amendment to the Bill of Rights Act.

The latest neoliberal attempt to shape the constitution is ACT’s Regulatory Standards Bill, which is before Parliament at select committee. Their crucial notion is in subsection 8(c) ‘Taking of Property’, which reads:

   legislation should not take or impair, or authorise the taking or impairment of, property without the consent of the owner unless –

1. there is a good justification for the taking or impairment; and
2. fair compensation for the taking or impairment is provided to the owner; and
3. the compensation is provided, to the extent practicable, by or on behalf of the persons who obtain the benefit of the taking or impairment.

Put simply, Clause 8c(ii) says that the government has to compensate the owner for any loss of value to their property from its action. Perhaps this is an extreme example, but suppose a government budget had a measure which resulted in share prices falling. The courts might rule under 8c(ii) that the government had to compensate the shareholders for the loss. That could be true if the measure was as direct as the introduction of a capital gains tax, but it might also apply if the share market disliked the deficit track the budget announced.

I explored the direct notion with an example here. (At that stage – the bill had not been introduced to Parliament – the proposal was simpler.) This column looks at some wider issues.

However, if a measure – say the revised deficit track implied in the Finance Bill – resulted in a rise in share prices, there is no offsetting clawback to the government. The effect of the legislation is to protect property owners from the downside of government while leaving them to benefit from the upside. (Remember the vision of socialising losses and privatising profit?)

A useful test of proposed legislation is to consider its impact had it been introduced earlier. Suppose it had existed in 1984. It would have prevented almost all the legislation introduced under Rogernomics. Ironically, ACT’s first two leaders – Douglas and Prebble – were the chief instigators of the changes. Is their party now denying them? In the time since the bill was introduced to Parliament, the Government has passed legislation with ACT’s approval which would cost them a fortune if the Regulation Standards legislation was in force.

Or consider what would have happened had the principle of compensating all takings been practised since 1840. Māori property rights have been repeatedly breeched since then. Perhaps Māori would support the bill if it had a clause which said its provisions should apply back to 1840.

In effect, the act would be a new treaty which set out property arrangements just as te Tiriti o Waitangi did. It would wipe out all past uncompensated property actions of the Crown, starting afresh, an action of much merit as far as all the major beneficiaries of the unjust actions would be concerned.

The legal meaning of ‘property’ has evolved over the years. Intellectual property laws were primitive in 1840. What actual property rights means in the Bill would be a matter to be settled by the courts.

Economics and law may diverge as to what is meant by property rights, so this paragraph has to be cautious. During the debate introducing the bill, MPs talked of ‘private property’. However, the courts may have a wider, or a narrower, interpretation. For instance, they might deem that what Iwi call their ‘kaitiakitanga rights’ – their guardianship of the environment in their rohe – are property rights under the takings provision.

The Finance and Expenditure Select Committee, which is dealing with the bill, has only one lawyer among its 11 members (ACT’s Todd Stephenson). It is hardly competent to deal with the constitutional issues the bill raises. Yet the bill was not referred to the Justice Select Committee – one may assume that Seymour was burnt by its treatment of the Treaty Principles Bill. Parliament has given the public but 20 working days to make submissions.

Is this another case of neoliberals trying to sneak in a revolutionary constitutional change, as was the original intention with their Treaty Principles Bill? Will Seymour argue the case for ‘good regulation’ diverting the public’s attention from the Bill’s critical purpose to increase property rights – as he did with the Treaty Principles Bill? Is a group of neoliberals, who at best got 6.8 percent of those on the enrolled to vote in 2023 – and probably a lot less given ACT’s support from other lobbies – levering its position in parliament to pursue its minority vision, without explaining to the public what it is doing? Sounds like Rogernomics repeating itself. As David Lange said of neoliberals ‘rust never sleeps’.

* As this was going to press I found this review of Hayek’s Bastards: The Neoliberal Roots of the Populist Right by Quinn Slobodian, which argues that Hayek’s vision has been corrupted. I have yet to read the book, but I don’t think any ‘corruption’ of New Zealand ACT is quite the form that Slobodian analyses, but the reasons may be similar.

*Brian Easton, an independent scholar, is an economist, social statistician, public policy analyst and historian. He was the Listener economic columnist from 1978 to 2014. This is a re-post of an article originally published on pundit.co.nz. It is here with permission.