Tensions at the top

: Easier times: The Prime Minister at Shane Jones' Waitangi weekend party
 

Relations between the coalition partners, Labour and NZ First, were stretched yesterday after Shane Jones attack on Air New Zealand’s chair and board.

Prime Minister, Jacinda Ardern, publicly admonished Jones for his comments saying that calling for the chair to go was a step too far.

Her comments came after she had to spend the weekend defending her Government’s position on the British spy poisoning case following Foreign Minister, Winston Peters'  initial refusal to accept that Russia was responsible.

National's first reaction to Jones’ comments was to criticise him.

But by yesterday morning some of their MPs were starting to get calls from provincial members of the party advising them to back off.

Meanwhile, the reaction of Air NZ Chair, Tony Carter and the CEO, Christopher Luxon to Jones’ comments were considered excessive by some in the Beehive.

The Beehive would have preferred silence form the airline.

"The Crown has the same rights as any other shareholder. That doesn't mean they can dictate the operations of the company; they can't use their majority shareholder position to make the company make non-commercial decisions," Luxon said.

Newshub reported last night that Luxon was considering standing as a National MP in the 2020 election – a claim, if true, that will only reinforce the view from Government Ministers that Air New Zealand is a National Party enclave.

But Jones knew his audience.

Air New Zealand is not popular in many parts of provincial New Zealand, precisely the areas where NZ First gets its votes.

The Government’s problem is that there is nothing it can do about Air New Zealand other than appoint the board.

Currently, all seven board members are Government appointments, appointed by the previous National Government.

Treasury, in its Investment Statement published this week, says: “The primary commercial objective of Air New Zealand is to deliver returns to its shareholders.”

Air New Zealand has no social obligations at all.

If Jones wanted to change that, he would have to persuade the Government to change the ownership structure of Air New Zealand.

Any proposal to buy back the 48.1% of the company the Government does not own could cost $1.7 billion on present sharemarket prices.

Jones knows that, which is why his rhetoric was all he was left with to remind New Zealand First's provincial constituents that he was on their case.

But there are bigger and more fundamental problems looming in the relationship between New Zealand First and Labour.

First is water.

Ardern has ducked questions on how Labour will deal with the latent Maori claim to have a say in water allocation and to receive part of any royalty that may be levied on water.

At Waitangi in February she said, "Everyone has a stake in water, but we acknowledge that particularly Maori do.”

However, the next day, speaking at a media conference after the meeting with the Iwi Chairs she placed her emphasis on the work Labour was doing on water quality.

“No doubt we will keep having that discussion (about water ownership) but right now quality is a huge part of that focus,” she said.

New Zealand First fundamentally oppose any special rights for Maori on water.

The Waitangi Tribunal is supposed to be hearing a claim for freshwater rights which would require it to line up any proposed water reforms against the Treaty.

In a previous hearing, the tribunal found that Maori had rights "akin to proprietorship" over water.

The hearing is currently stalled while the tribunal waits for the Government to unveil any reforms it might propose.

Any attempt to levy a charge on water – whether it is on water bottlers or as a “cleanup” levy  --- is likely to trigger the resumption of the Tribunal hearings.

But if the Government did that and then reached a settlement with Maori, New Zealand First would be likely to invoke its “agree to disagree” clause in the Coalition Agreement and not vote for any legislation which the Government might propose.

And then there is Defence procurement, specifically the need to replace six P3 Orion maritime surveillance aircraft.

New Zealand has approval from the US to buy four Boeing P8 Poseidon aircraft as replacements.

A business case for the purchase has been prepared and initially the option to purchase the aircraft had to be exercised by the end of this month.

Defence Minister Ron Mark has suggested that has been extended.  

POLITIK understands the new deadline is now the middle of the year which would suggest the Government is trying to push the purchase into the 2019/20 financial year.

There was no provision at all for the purchase in the capital budget outlined in the Pre-Election Economic and Fiscal Update.

And although National was responsible for that, their Finance spokesperson, Amy Adams, was yesterday suggesting that Labour wanted to walk away from the entire $20 billion defence re-equipment plan proposed in the Defence White Paper of 2016.

She asked Finance Minister Grant Robertson whether, “given his repeated refusals to commit to funding the Defence Capability Plan, is it his intention, then, to fund additional capital promises by cutting back on the defence budget?”

Robertson replied; “ What I have said is that we want to undertake, as we have agreed through our coalition agreement, a review of defence procurement.

“When we do that, we'll be able to understand what the costs are for making sure that we have effective capability and capacity in our Defence Force.

“What we won't be doing is writing out a ghost cheque for $20 billion.”

Mark was also questioned about the re-equipment budget, and he seemed to suggest that the review might be more fundamental than had earlier been implied.

“At the moment, my focus—as has been explained already by the Minister of Finance—is to review the capability plan within the context of the 2016 announcement to ensure that what we are looking at is what we should be looking at, that the proposals that have been put on my table do stack up, and that I've had an opportunity to run due diligence over all of the assessment and evaluation processes that have taken place

“It would be inappropriate for me, this Government, to simply rubber-stamp the work that was done by the previous Government,”

But New Zealand First has been consistently critical of under-spending on defence.

Peters in April last year asked whether four P8’s would be enough to cover the area New Zealand was responsible for, which extended from Antarctica to north of the equator and from the mid-Tasman Sea to the east of the Cook Islands.

Mark in Opposition consistently lobbied for more Defence spending.

If then, Robertson’s review cuts defence capital spending, New Zealand First will have another challenge on their hands.

Insiders say that relations between Peters and Jones on the one hand and Ardern and Robertson on the other have been tested over the past few days over both the Russian statement and the Air New Zealand comments.

 The problem for the Government may be that this may be only the beginning.

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