What Labour is really planning to do
By Richard Harman (author)
Almost unbeknown, certainly to the opposition, Labour is setting out in its backrooms with its myriad of reviews and inquiries to redefine the New Zealand economy.
The process is being led by Finance Minister Grant Robertson and has been given urgency by the realisation that President Trump’s victory and the Brexit decision in Britain mean that Labour's traditional working-class base can no longer be taken for granted by the left.
Add to those external pressures a more subtle belief among many in Labour that the Clark Labour Government did not make any fundamental changes to the New Zealand economy.
In 2015 a series of seminars held by the Labour-aligned Fabian Society reinforced that view.
Robertson believes the time has come to deal with some big issues.
"There are a number of big-picture shifts that this Government is recognising and facing up to that maybe we haven't," he told POLITIK.
“I think it is a natural generational change.
“So those issues around a low carbon economy, the future of work, making sure that we have people ready and prepared and those issues about inequality and inclusion are picture issues for New Zealand, and we are addressing them.
“At the same time, we have to deal with the day to day; making sure that the health system work and that the education system is there and doing well.
“So, yep, that balance is there.
“But I would say that the legacy of this Government will be that we start to address those big shifts in our society and our economy.”
Helen Clark's legacy
Robertson was on Helen Clark’s staff and is reluctant to criticise her; he has commissioned her Finance Minister Michael Cullen to head his Tax Working Group, so he is guarded in his response to suggestions that the previous Government did not ultimately leave a substantial legacy.
“I wouldn’t be as critical of that Government.
“But what I do know is that this Government has, and particularly with Jacinda at the forefront of it has looked and said these are the big issues facing us and we can make big and significant changes that are both going to be good for New Zealand and the planet but also have to be made as well.”
But the changes that Robertson is talking about all come with costs – either real or political.
For example, analysis by the New Zealand Institute of Economic research shows that GDP could fall by 10 to 22 per cent in the period up to 2050 as a consequence of action taken over climate change.
“There is a transition to make, absolutely,” said Robertson.
“The thing to be clear about though is that the economy keeps growing under every scenario; the question is what is the rate of GDP growth when you are shifting the basis of your economy.
"If you are going to be net zero in emissions, then that will take time to transition, and there is a cost."
But climate change is ultimately simply a change to a macroeconomic indicator.
The future of work
The future of work is more complex and more political.
Robertson produced a report on this in 2016, and though it seems to have largely been forgotten in New Zealand, it has acquired admirers like the international consultancy McKinsey and even one prominent National MP who told POLITIK that he was envious that National had not produced the report.
Yet the report addresses the fundamental issue facing progressive political parties around the world; how to maintain the loyalty of the old blue collar “working class” whose lives have been disrupted by globalisation and technological change.
The Harvard Professor of Political Philosophy, Michael Sandel, argues that the response of progressive parties like the Democrats in the US or the Labour Party in Britain has been to ignore the workers and instead allow themselves to be dominated by a metropolitan elite with its emphasis on identity politics.
Sandel argues that that is why Trump has been able to draw so many blue-collar votes in the US and why the British voted for Brexit.
Within the New Zealand Labour Party, certainly at or near the top, there is a strong view that this means the party must remember its class origins and reassert its linkages with the trade union movement.
Allied to this is a widespread view within the party that they must address inequality in New Zealand.
It’s a constant theme.
Only yesterday, celebrating the passage of the overseas house buyers’ legislation, David Parker chose to highlight the impact the legislation would have on inequality.
“This Government believes that New Zealanders should not be outbid by wealthier foreign buyers,” he said.
"Whether it's a beautiful lakeside or oceanfront estate, or a modest suburban house, this law ensures that the market for our homes is set in New Zealand, not on the international market."
"If you look at the causes of inequality, you see those graphs of wage levels plummeting after the Employment Contracts Act,” said Robertson.
“So a part of dealing with inequality is restoring some balance into industrial relations law.”
But Robertson knows that the new industrial relations law is going to have to be much more flexible to cope with the more varied employment landscape and the reduction of formal, structured workplaces.
He also accepts the argument that metropolitan educated elites now occupy a privileged place in society.
“it is symptomatic something that we are trying to work to change which is the default assumption that a school leaver should go to university.
“So one of the things that is important about the first year of tertiary education free policy is that it applies across the board.
“It is not just for university education it is for Polytechs and apprenticeships, and it is worth two years of apprenticeships.
“I think that valuing of the trades and the value of work has reduced over the years and we need to improve it.”
Robertson has set up a forum involving the Combined Trade Unions and Business New Zealand one of the themes that has already come through is that there are needs for re-training for people in mid-career.
“There is a group of people in those core manufacturing type occupations who have to retrain.”
And so there is already a pilot programme running with a number of big manufacturers where the Government is assisting with the retraining of the workforce to cope with the next generation of skills the companies will need.
This will spill over into what may well be some innovative welfare arrangements whereby workers will get income support in mid-career while they retrain.
Robertson has asked the Forum to look at this.
In his Future of Work report, Robertson proposed that the Government investigate alternative income models including trials of a Universal Basic Income.
“One of the issues that the Welfare Advisory Group is looking at is income adequacy through the transition; that is also what the Just TRanisitons group that Megan Woods has set up in MBIE is starting to look at in industries and communities like Taranaki about what is required in those changes.
“There is no doubt in mind there will need to be support for the transition.”
A social contract
But as the teachers’ strike showed yesterday, there are workers whose jobs are assured who have a different argument with the Government.
In part, they want more money, but they also want some relief in terms of their conditions which have seen hospitals and schools understaffed and under-resourced after nine years of Bil English’s austerity.
Winston Peters alluded to this last month while he was acting Prime Minister saying that the Government was focused on trying to establish a social contract with nurses “and other people doing vital work in the public service to address their concerns.”
"The issue that was really getting at nurses was, yes, they wanted to be valued through pay, but more and more they were saying it was about being valued.
“That's the bit about the social contract which says you are a professional, we value you as a professional, and we will make sure that your working environment is safe.
“There is an element of a new social contract which says it is about you as a worker in this modern environment.”
All of this debate about where the economy is going will get more focus as Treasury and Robertson talk more about the Living Standards Framework and the associated Well Being Budget planned for next year which very simply look for more ways to measure the success or failure of the economy than just GDP figures.
"Those big-picture issues about where the transition of the economy is going, that is the big stuff that I want to make sure we get right.”
If he does as much as he wants to and if the Tax Working Group comes back with a plan to restructure taxation so that it deals with inequality, then Robertson will start to be seen as one of the most significant political figures on the Labour side of politics.
On his office wall he has a picture of one of Labour’s heroes; not one of the romantic figures much loved in so many Labour offices like Michael Joseph Savage, or Norman Kirk or David Lange but instead the dour Scots wartime Prime Minister, Peter Fraser.
Yet of all of Labour’s leaders, it was Fraser who left the most complete and concrete legacy.
He is obviously an inspiration.