Economist Brian Easton says the coalition party agreements are mainly about returning to 2017 when National lost power. They show commonalities but also some serious divergencies

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

The two coalition agreements – one National and ACT, the other National and New Zealand First – are more than policy documents. They also describe the processes of the new government.

This column focuses on policy. The agreements give the impression they were negotiated separately, with National running between the two rooms. There are some common policies, some policies which with just a little cooperation could have been written jointly, and each also contains policies or sentiments that the other party – ACT or NZF – would have liked to have had in their agreement too had they known about them. But there are also differences which may lead to severe political tensions – even to a breakdown of the coalition government.

Summarising their combined 4500-odd words on policy is not easy. I set aside a number of individual policy proposals of the sort which come up on the floor of party conferences. Some are aspirational or pious, ranging from good and bad ideas which may or may not be adopted to special interest group demands. (NZF’s include detailed demands for improving the Northland region but nowhere else.) Some could have appeared on the floor of the Labour Party conference and even been adopted by its government.

(This column does not cover the fiscal – tax and spending – aspects of the agreement. An economist waits until HYEFU. However implementing the proposed tax cuts within the borrowing limits will require major expenditure cuts. The NZF agreement includes increased spending proposals, while ACT also wants to spend a bob or two.)

The dominant policies in the agreements can be summarised as a return to 2017 when National lost power. (Each agreement states that items not covered by the National manifesto are the default.)

The most prominent change is the winding back of Treaty and Cultural issues. All three parties reject co-governance and agree ‘public services should be prioritised on the basis of need, not race’. NZF directs that ‘all public service departments have their primary name in English, except for those specifically related to Māori’ (adding that it requires ‘public service departments and Crown Entities to communicate primarily in English – except those entities specifically related to Māori’; something I would support if the word ‘plain’ had been inserted before ‘English’). Both agreements abolish the Māori Health Authority. NZF also wants to replace all references in legislation to the principles of the Treaty of Waitangi with ‘specific words relating to the relevance and application of the Treaty, or repeal the references’.

ACT is more ambitious. Its manifesto proposal for a referendum is replaced by introducing ‘a Treaty Principles Bill based on existing ACT policy [sent] to a Select Committee as soon as practicable’. NZF says nothing about this. Perhaps it will support the introduction of a more moderate bill than ACT had in mind. Neither National nor NZF is committed to supporting the amended bill when it is reported back to Parliament.

All three parties want to repeal the Natural and Built Environment Act 2023 and the Spatial Planning Act 2023, returning to the Resource Management Act 1991 which, however, they want to amend.

Both agreements stop some of the big projects that Labour had under way. ACT’s is most explicit:

‘Immediately issue stop-work notices on several workstreams, including:

            - Three Waters (with assets returned to council ownership).

            - Auckland Light Rail.

            - Let's Get Wellington Moving.

            - Income Insurance.

            - Industry Transformation Plans.

            - Lake Onslow Pumped Hydro.’

ACT also wants to revert monetary management by the Reserve Bank to the pre-2017 approach without the ‘dual mandate’ which took unemployment into account. (Most economists think that will make little difference to the actual way the RBNZ manages monetary policy.)

Both agreements continue to support the zero carbon target, the NZF one more explicitly. However they presage a change in the way it will be done. My impression is that there is a realisation in the deep bureaucracy that the current system is not working, and some changes would be desirable. A change of government enables them to obscure the source of their proposals. Greenies will be wild any way.

Another unwinding is that parties want to revert to the more judgmental 2017 approach to law and order. (The Act document has changes it wants in regard to gun laws which were tightened after the Mosque Massacres.)

There are also reversions in education and healthcare policies. Perhaps the most contentious is the proposed repealing of the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Act 2022. Renters will find it harder.

And so such things go back. There are a number of proposals which amount to commercialisation, outsourcing and privatisation. Both agreements have proposals to reorganise immigration although it unclear whether they want more immigrants or whether they just think the current system is a shambles.

Labour laws are to be returned to their earlier status which were more pro-employer. Even so, while National has agreed with ACT to repeal the Fair Pay Agreement regime, NZF has committed National to ‘moderate increases to the minimum wage every year’.

I leave nitpickers to reconcile these and other policies. However, the contrast between the two agreements on regulation is stark ACT’s proposals for economic liberalisation are the centrepiece of its agreement. Its leader, David Seymour is to be Minister of Regulation, there is to be a new ministry and numerous proposals aim to roll back government intervention to improve ‘efficiency’ (there will be other effects). There is a commitment to pass the Regulatory Standards Act as soon as practicable. I have cautioned that an Act in its form of the 2021 Regulatory Standards Bill is unworkable. Even so, it is the one really innovative proposal in the two agreements, which are otherwise unremittingly back to 2017.

If the RSA is passed, it is likely to be watered down. Even so, to pass it requires the support of NZF. Their agreement with National proposes a number of policies which would increase regulatory interventions in a way that is anathema to ACT. Will there be a standoff?

The agreements are clear that standoffs can happen. ‘As provided for in the Cabinet Manual, the Parties can “agree to disagree” in relation to matters on which the Parties wish to maintain, in public, different positions’ and ‘no Party is obliged to support another Party’s Members’ Bills’.

It has happened before. Labour’s ambitions for its Seabed and Foreshore Act were thwarted by – yes, it was coalition partner – NZF. (The NZF agreement mentions the need to revisit the legislation – now replaced by the Marine and Coastal Area (Takutai Moana) Act 2011 – following a decision by the Court of Appeal; since Te Parti Māori is not in power the parliamentary situation may not be as fraught.)

It will require the wisdom of Solomon to find a way through some of the potential conflicts. There are commentators on the right who think there is not such wisdom in the current National leadership. Any doubts are reinforced by the mess of the forty-day negotiation which generated these two coalition agreements.

*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.