The National Party has been creeping closer towards a coalition agreement with its support partners, the Act and New Zealand First parties, with a resolution possible from next week.
Winston Peters, leader of NZ First, told the National Business Review a deal could be struck in the next two weeks, but also that he would walk away if talks didn’t go well.
The party had a caucus meeting to discuss priorities on Tuesday, prior to which deputy leader Shane Jones went on Radio Waatea and criticised National’s foreign buyers tax proposal.
David Seymour, leader of the Act Party, told Radio New Zealand on Monday he was close to getting a draft agreement done with National, but also that he hadn’t spoken with Peters.
The pair have previously been fierce competitors and will have to learn to work together under the leadership of Prime Minister-designate Christopher Luxon.
Luxon has tried to keep a tight lid on any talk about the talks, but even he has dropped a couple of hints about what is on the table.
For example, when asked whether he had any appetite for a referendum on the Treaty of Waitangi, he reiterated National opposed the idea during the election campaign.
The referendum was pitched as being a “bottom line” for the Act Party, but Luxon has little desire to burn political capital on a contentious vote that could threaten his re-election.
Another Act policy that has been all but ruled out is abolishing the Zero Carbon Act. Luxon put delivering net zero by 2050 on his personal pledge card, which outlined his eight priorities.
Getting priorities straight
Speaking to reporters after the announcement of the final election results, the National Party leader said he was working through “the big rocks” of the various parties’ policies.
‘Big rocks’ is corporate jargon for ‘priorities’ and was popularised by author Stephen R. Covey, in his book The 7 Habits of Highly Effective People.
Covey suggests not getting bogged down with small tasks and instead focus on the ‘big rocks’ while letting the small stuff settle into place around them.
National’s tax cut proposal may be the biggest rock of all. Nicola Willis, who would be the party’s finance minister, even promised she would resign if she failed to reduce taxes.
But the policy may need some tweaking to secure support from its coalition partners.
NZ First doesn’t like the policy's key revenue stream, selling homes to overseas buyers, and Act doesn’t think it is fiscally responsible enough.
The end result could be that the overseas buyers' part gets dropped and the public spending cuts get bigger, for example. That could placate both parties’ concerns.
It's harder to see the compromise on climate action. Either the country hits its net zero targets, and Luxon fulfils his pledge, or it doesn’t.
The emissions reductions need to come from electrifying NZ’s transport and heavy industries, as well as emissions from dairy farms and permanent carbon forests.
Both NZ First and Act oppose agricultural emissions pricing in any form, unless adopted by trading partners. National wants to start charging farmers in 2030.
Perhaps the party might decide this isn’t such a big rock? Killing or diluting the policy would give both its coalition partners a win and please key supporters in rural communities.
National could push the rest of the economy to shed even more emissions, or rely on methane reduction technology, to make up the shortfall.
Forest for the trees
Planting permanent carbon forests could be one path to net zero, but the Climate Change Commission thinks it is risky and NZ First wants to protect productive farmland, anyway.
Some ‘big rocks’ are shared between the parties: cut government spending and regulations, crackdown on crime, ditch co-governance, and improve health and education outcomes.
Both support parties will be wanting to get a signature policy across the line. For Act it might be a Ministry of Regulations, which would have oversight of regulations in all portfolios.
For NZ First, it may demand an independent inquiry into the Covid-19 response.
This was a key promise the party made to win voters from fringe parties and could be crucial to keeping those supporters onside. But would National want to fuel conspiracy theories?
A much easier policy win would be convincing National to drop its plan to lift the retirement age from 65 to 70 after 2044. Any promises made in 2023 will be forgotten by 2044, anyway.
However, the Act Party will be pushing in the other direction and asking National to start the transition to 70-years-old as soon as possible. It’ll be a support party showdown.
Small rocks
While unlikely to be considered ‘a big rock’, it will be interesting to see where KiwiSaver policy ends up.
The Act Party wants to target the up to $521.43 subsidy to just low income earners and leave the scheme otherwise unchanged.
National has proposed a raft of tweaks, often to the dismay of the funds management industry.
Their ideas include letting under 30-year-olds borrow from their fund to pay rent bonds, letting savers split their funds between providers, and allowing withdrawal to buy a first farm.
Agriculture spokesperson Todd McClay expressed support for the latter policy the day before the election; it is not official party policy.
NZ First’s manifesto proposed allowing savers to use the funds to pay down their mortgages.
It suggested something similar to a Singaporean model which allows savers to withdraw any funds over and above a ‘basic retirement’ level to pay off bank loans.
Most KiwiSaver providers and experts oppose making the scheme more complicated and want it to be laser-focused on retirement savings without any bells or whistles.
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