Prime minister Jacinda Ardern at Labour Party Congress 2020 (Photo by Hagen Hopkins/Getty Images)
Prime minister Jacinda Ardern at Labour Party Congress 2020 (Photo by Hagen Hopkins/Getty Images)

PoliticsJanuary 12, 2021

The next six months are make or break for Labour

 Prime minister Jacinda Ardern at Labour Party Congress 2020 (Photo by Hagen Hopkins/Getty Images)
Prime minister Jacinda Ardern at Labour Party Congress 2020 (Photo by Hagen Hopkins/Getty Images)

The government should hit the ground running in 2021, writes Pattrick Smellie of BusinessDesk.

For anyone still looking for a transformational agenda from the cautious Ardern Labour government, there’s good news: if it’s going to happen, it will happen in the next six months.

Of course, like most public policy, the acts of transformation will not be quite the blinding light moments of truth that the word itself implies.

Nor will all expectations be met. Rather, there is a rolling maul of initiatives coming to a head on climate change, infrastructure funding, fresh and wastewater, land use, and labour market reform that have the potential to remould core aspects of New Zealand life.

All will be much clearer by June.

And on top of these, there are a couple of major issues that either demand urgent political interventions – think housing affordability – or are regarded by key ministers in an unexpectedly empowered administration as areas to force change – think electricity market arrangements.

Why now?

Why the first six months of this year? First, much of what’s coming down the track was close to fruition. After gestating or being delayed in the first three years of an Ardern-led government, a lot of policy is, shall we say, ‘shovel-ready’.

And second, New Zealand’s short, three-year parliamentary term makes it important that newly elected governments hit the ground running.

The three-way Labour-NZ First-Greens ensemble took six months to find the light switches after the 2017 election. This time around, things are simpler because there is no coalition, the players are more experienced, and the thinking is maturing rather than being thrown together after a surprise win.

As a result, Labour can create political momentum by getting some very big reforms underway now, and legitimately expect them to be showing their promise by 2023.

If that goes to plan, their prospects in the election that year must be strong. With National in long-term disarray and the Greens riven between the pragmatic climate change activists led by James Shaw and the social justice proponents led by Marama Davidson, Labour might even hope to govern alone again in a third term.

And if not, at least it’s a dream worth pursuing in the meantime.

So, to take each major area in turn.

Housing

The first order of business this year looks likely to be a housing policy announcement, perhaps as early as next week’s Labour caucus retreat in Nelson. Grant Robertson signalled before Christmas there would be a housing package early in the New Year. If anything, the issue has become more urgent over the summer. This is not only a crisis of home ownership affordability, but also rent affordability. Life as a residential property landlord remains cushy by comparison with operating almost any other kind of business.

Only two things can change that, and one of them is not a capital gains tax.

One, building a lot more affordable houses to flood a tight market with supply; and two, making it tougher to be a landlord. Rent control, higher borrowing thresholds for investors, tough enforcement of minimum housing standards, tighter regulation of property managers and improved renter rights would – together – make a big difference.

Climate change

On the climate change front, the tortuous process of appointing a permanent Climate Change Commission with its own legislation, the Zero Carbon Act, took most of the first three years of the last government but it is done.

And in three weeks’ time, on Feb. 1, the CCC will publish its first draft five-year carbon budget for NZ. It is likely to shock a lot of people. The scale of NZ’s underperformance against its Paris Agreement carbon emissions reductions is large, and this document will lay out for the first time the possible cost – financial and in changes to the structure of our economy. It will be sobering.

But it will also become a major part of the government’s agenda from here on in. There are only nine years until the 2030 goals need to be met and the whole world is getting serious about climate change now. The time for avoiding the problem is nearly at an end. The political challenges, however, will be immense, and its impacts transformational.

RMA reform

Resource Management Act reform was subject in the last term to a huge investigation by retired Environment Court judge Tony Randerson. He produced a blueprint, including draft legislation for two new laws to replace the 30-year-old RMA. Environment minister David Parker largely accepted the report. While it arrived too close to the election for decision-making, it is clearly largely in line with Labour’s intentions.

With draft legislation in hand, Parker is well-placed to accelerate the parliamentary process for introducing the changes, the most important of which introduces regional spatial planning into law for the first time. Its likely impact will be to massively reduce opportunities for objectors to new developments, except when spatial plans are debated, years before any shovel is remotely ready to start digging into anything.

That would be transformational, particularly when combined with the fast-track powers of the Urban Development Authority legislation that jilted former housing minister Phil Twyford put in place before the last election.

By mid-year, Parker expects to have RMA legislation before a select committee.

Local body infrastructure reform – ‘three waters’

Local government minister Nanaia Mahuta is one of this government’s secret weapons. She held the local government portfolio in the Clark cabinet and asked for it again when Jacinda Ardern picked her cabinet in 2017.

By keeping the gig in this parliament while also taking on foreign affairs, Mahuta is demonstrating an insistence that she complete the so-called ‘three waters’ – drinking, waste and stormwater – reforms that she’s been working on the past three years.

By March, the cabinet aims to have local government on board with reforms that would take water reticulation assets off council balance sheets and amalgamate them into between two and four nationwide water companies.

By early 2022 – with local body elections due later in the year –the future shape of water asset ownership and management should be known. Local communities will kick up about this, but the emerging bill to clean up urban water infrastructure is huge – perhaps more than $40 billion over 30 years, and that doesn’t even cover the most expensive bit – failing stormwater drainage systems.

The government will have to help fund this and the new, amalgamated water providers will be able to borrow more than local councils. These are vital factors in delivering needed upgrades to NZ’s overloaded and ageing water infrastructure. While mainly below ground and therefore invisible, achieving that would be truly transformational.

Labour market reform
Labour market reforms have been ready to roll for a while but faced opposition from New Zealand First, which is no longer a factor. Trade unions expect action and they should get it quickly.

The first Fair Pay Agreements are likely to emerge as the year progresses.

DHBs

Andrew Little has made it clear that he isn’t willing to wait five years to restructure the country’s unwieldy hospital bureaucracy. The current 20 DHBs could be down to four or five within two years and there should also be a new Public Health Agency that ensures NZ can respond in a nationally coherent way in the event of another pandemic.

This is a very big ask and will only be worthwhile if the restructuring to a smaller number of larger, more efficient and cohesive public healthcare providers is well-executed. It could be transformational, or it could be a disaster, whipping up parochial fears and disenchanting a largely pro-Labour hospital workforce;

Electricity market

Energy minister Megan Woods and former energy minister David Parker show every sign of being unconvinced that the wholesale electricity market arrangements that have helped push NZ close to 90 percent renewable electricity without active government intervention has been a success.

That’s partly because the retail electricity market is difficult to make competitive and small players are getting squeezed out as wholesale prices become more volatile, favouring the big, incumbent and somewhat unloved electricity generators.

The issues are complex but the temptations to make bold gestures whose ultimate effect is to intervene to produce lower electricity prices – at the expense of taxpayers who will fund most of the new renewable development instead of the private sector – is likely to be attractive to households and big industry consumers alike.

The outcome can certainly be portrayed as transformational, particularly if wrapped in aspirational language about new heavy industry – think ‘green’ hydrogen – powered by renewable electricity.

Whether it’s the best answer is debatable, but the clock is running on the future of several large electricity consumers, including the Tiwai Point aluminium smelter, NZ Steel’s Glenbrook plant, the Methanex plants in Taranaki, the oil refinery at Marsden Point, and pulp and paper processors.

Watch these spaces.

This article originally appeared on BusinessDesk. Their team publishes quality independent news, analysis and commentary on business, the economy and politics every day. Find out more.

Mad Chapman, Editor
The Spinoff has covered the news that matters in 2021, most recently the delta outbreak. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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