The last time a TPP was signed, in Auckland 2015.

PoliticsAugust 29, 2017

The TPP’s not dead – here’s why

Guest writer

The last time a TPP was signed, in Auckland 2015.

The NZ election campaign coincides with a crunch time for the future of the Trans Pacific Partnership. In the absence of the US, attempts to renegotiate an 11-member TPP risk scuppering a deal that could bring enormous benefits to New Zealand, argues Stephen Jacobi, executive director of the NZ International Business Forum.

Good ideas never die and so it has proved with TPP. No amount of huffing and puffing from the arch-protectionists and the anti-globalists, not even the president of the United States, has (yet) been able to consign TPP to history. Those people with genuinely held concerns about aspects of the agreement – and there are many – might wonder why this is so. It’s because the remaining 11 parties to the agreement continue to see it as a means of accelerating trade and investment growth and providing a new benchmark for improving the rules against which business is done in the region. The parties are convinced that the agreement, as negotiated, contains the necessary safeguards to protect domestic sovereignty and the continuing rights of governments to regulate in the national interest.

Officials are meeting again in Sydney this week to try to hammer out a recommendation for TPP leaders to consider when they gather for the APEC Economic Summit in Danang, Viet Nam in November. Officials have met on two earlier occasions since the United States withdrew from the agreement. Reports suggest the coalition is holding at least for the meantime. At issue now is the extent to which the agreement, signed in Auckland in February 2016, and ratified by both Japan and New Zealand, should be amended other than simply the clause by which it enters into force. The latter clearly needs to be changed, but is that all?

It would seem logical to strip the agreement of those particular US demands in intellectual property, medicines and state owned enterprises, but there are good arguments to the contrary. Some TPP members hope that the United States will change its mind on TPP and return to the fold. While this is out of the question for the current administration, things may change in the future. It might also be possible to leave these elements in the agreement as is, but agree not to apply them before the US joins. That would preserve a strong enticement.

The TPP gets a cheer from representatives of 12 countries including the USA at the signing in Auckland. Photo: MICHAEL BRADLEY/AFP/Getty Images

Beyond this, there is a risk that if the agreement is opened up for substantive renegotiation, other parties might find the excuse to relitigate elements which they found problematic. It’s no secret that everyone in TPP found something to be unhappy with – even New Zealand was disappointed with the outcome on dairy. Reopening the negotiation could risk further unravelling the delicate consensus and require years to rebuild. This risk has led both Japanese and New Zealand governments to call for the agreement to be ratified as currently concluded.

For the business community, which has waited eight years so far for TPP, the prospect of going back to the drawing board simply risks delaying the introduction of much-needed improvements to the way trade and investment is governed and regulated. Years’ more wrangling about TPP is not attractive. Business models are changing rapidly and TPP runs the risk of being outdated the moment it takes effect.

New Zealand exporters to Japan have particular cause to worry. TPP would have delivered the free trade agreement with Japan that New Zealand has been seeking for some years now. Japan is the only country in East Asia where we do not have an FTA. Already our competitors in Chile and Australia have freer trade than we do. Now, the European Union and Japan have concluded a political agreement on a new FTA. Without TPP New Zealand exporters of beef, dairy, horticulture and wine face an uphill battle in Japan. The problem is particularly acute in beef, a trade worth around $150 million each year. New Zealand exporters pay 38.5% in tariffs whereas Australian competitors pay only 27.2%. A new safeguard tariff introduced recently does not apply to Australia and means our tariff goes up to 50%.

The TPP gets a boo from protesters outside the signing in Auckland. Photo: Phil Walter/Getty Images

The importance of the Japanese market is what leads a delegation of New Zealand business leaders from the NZ International Business Forum to visit Tokyo next week. They are keen to hear from Japanese business organisations and academics about how they see the challenge of salvaging TPP and to encourage them to express support for the earliest possible entry into force. Japan’s leadership of TPP-11 is very welcome – it arises from the importance the government of Shinzo Abe attaches to the structural reform of the Japanese economy which is emerging from decades of lethargy. Agricultural reform is a particular priority and something New Zealand can potentially help with given our own experience in removing subsidies and integrating our export companies in global markets.

For the longest time, New Zealand exporters have operated with the bipartisan political support from major political parties. In recent years, during the long and controversial negotiation of TPP, that bipartisan support has broken down, much to the disappointment of the business community. In the current electoral campaign, there is disagreement about whether to support the concept of TPP-11. The National-led government is a strong supporter, the Greens and NZ First are opposed and Labour believes TPP needs to be renegotiated to take account of its proposed policy to ban purchases of residential property to overseas tax residents.

It is not unusual for an incoming government to seek to re-evaluate trade policy. Governments make decisions differently from Opposition parties. Governments have access to the free and frank advice of officials and to representations from the business community and other stakeholders. They have to take account of the full range of issues, including, in this case, the serious damage which would be done to New Zealand economic interests in Japan if TPP does not proceed. This calls for governments-in-waiting to exercise caution in signalling future trade policy changes. In the case of TPP it might prove possible to address residual concerns about aspects of the agreement from within the agreement itself, rather than seeking a re-negotiation.

In coming weeks, we will hear much from our political leaders about having to make tough decisions. TPP could be one of these. Whoever sits down with the other TPP leaders in Danang will have a big call to make. The opportunity to secure New Zealand interests in Japan and other markets make it imperative that TPP does not get “lost in translation” in the midst of negotiations that are now under way and a rigorous election debate.

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Winston Peters returns to the stage. Photo: Getty Images

PoliticsAugust 28, 2017

Winston Peters and the real mother of all scandals

Duncan Greive

Founder

Winston Peters returns to the stage. Photo: Getty Images

The New Zealand First leader is paid almost $200,000 a year in public money. Shouldn’t he be leading the conscientious objectors rather than claiming superannuation, asks Duncan Greive.

This column was written in 2017, before Winston Peters was in government. As deputy prime minister, his salary is now $334, 734.

The “mother of all scandals” started as a tweet, became a 24 hour near-obsession for New Zealand’s politics nerd community and ended up being broken by the subject himself, with Winston Peters pre-emptively revealing there had been some sort of clerical error involving his NZ Super payments.

OK, it might turn out to be more than that, and he did sound flustered for the first time since 2008 or so in a series of broadcast interviews this morning. But for now the gap between expectations and reality on this scandal is as vast as Peters’ career has been interminably long.

Yet as it stands it is perhaps as scandalising that Peters was receiving the payments at all. Not just because NZ Super should be means tested, but because he volunteered to receive this very handy top-up to his huge parliamentary salary.

While NZ Super is a universal allowance – so it’s not means tested and available to all eligible New Zealand citizens and permanent residents – it’s not a compulsory one. Which is to say that everyone who receives it has to do what Peters did, and very deliberately assess their needs and circumstances before applying to receive it.

On April 11 2010, Winston Peters turned 65. He would have been 18 months out of parliament at the time, on his second break from the institution he first entered in 1979. His then most-recent register of pecuniary interests listed a family trust, property in Whananaki and the Bay of Islands, all without a mortgage. He was eligible for the quite extraordinary benefits for former MPs, including business class travel to the UK and a dozen domestic flights per year. As an MP elected prior to 1992 he was also eligible for the Parliamentary Super scheme.

Still, as a man used to a particular lifestyle who looked to be at the end of his parliamentary career, you can see his justification for applying for NZ Super. He’d worked hard for the public throughout his adult life, and was plausibly entitled to the benefits that go along with that.

Then 2011 came. He and NZ First were polling around 2%, and the campaign seemed like the vain folly of a political addict, unable to conceive of an identity beyond that life. It seemed doomed, until the teapot tapes scandal gave Peters an issue he could wrap his arms around. He and NZ First roared back into parliament with eight MPs.

With the revival came the salary: a base of $155,700, topped up by more than $10,000 thanks to the MPs he brought with him.

Which means that from his salary alone he is not far off the $200,000 figure which denotes the top 1% of income earners in the country. Add in the various perks and allowances of an MP and he would easily have had a lifestyle commensurate to that figure. Today he continues to draw the allowance; his salary is nearly $195,000.

And yet he continued to draw NZ Super right through. It should be noted that having enrolled in the scheme did not mean Peters was required to continue to draw on it. All recipients can opt in and out at their leisure, according to a spokesperson from the MSD.

Which meant that one of the most well-compensated people in the country had his already extraordinary income further topped up simply because he could.

The worst part is that the presumed justification – that he was only taking what he was entitled to – mirrors that which has accompanied his whole cohort as it has glided through life with a level of governmental support to which it has studiously taken care to deny its children.

WINSTON PETERS at a TVNZ leaders’ debate. PHOTO: Getty Images

Peters was born just prior to the end of the second world war, so is thus not quite a boomer. Instead he has acted like a kindly uncle to that generation, benefitting from all the same forces, yet present in parliament for much of the legislative changes which helped cement the inter-generational gulf.

He was a member of the National party, a failed candidate in fact, when Muldoon reversed the Labour party’s proto-Kiwisaver in 1975, replacing it with an extraordinarily generous universal scheme paying 80% of the average wage to all married couples aged 60 and over.

He was part of the National government when student loans were introduced, and the RMA enacted – the laws which ensured Generations X and on started their working lives with debt and commenced rampant house price inflation in earnest.

And he’s been the staunchest defender of the current universal and increasingly unaffordable status of NZ Super. Indeed, his signature recent legislative achievement is the Super Gold Card benefits add on pack, which has gifted us the modern grotesquerie that is wealthy Waiheke Island residents ferrying back and forth to the mainland for free, while a few kilometres away young families live in cars.

They do it not because they need it, but because they can. Because they assessed their needs and their means and elected to apply. It really is a choice. Even if you disagree with most governmental policies which benefit you, you’re essentially powerless to resist. If you think the top tax rate should be higher, you can’t donate the money to the IRD.

Yet NZ Super is near unique in being a draw on Crown resources which you as a citizen decide whether to deploy. Which is to say that the wealthy have the ability to conscientiously object – to effectively means test themselves.

Peters chose not to do that. As a result, more than $20,000 a year which would otherwise have been part of a surplus flowing into areas of real need instead finds its way to his $2.65m St Mary’s Bay home.

It’s not the mother of all scandals, sure – but it’s pretty obnoxious all the same.