Jamie Whyte

(Almost) unconditional support : ACT forgets to play its hand

On National Radio’s Morning Report show this morning, ACT leader David Seymour provided an excellent example of how not to negotiate. With Environment and Housing Minister Nick Smith set to announce tomorrow National’s proposed changes to the Resource Management Act, Seymour was asked whether he would be supporting the yet-to-be-announced changes.

The response was a clear affirmative. “It is extremely urgent that New Zealand reforms its Resource Management Act…” Therefore, he’s got National’s back on this one.

So what are the reforms? Well, we don’t know. They haven’t yet been announced.

Does Mr Seymour know? Has he been given a pre-announcement heads up, to ensure that his support is based on some actual intel, or is he simply making the assumption that the changes will be identical (or almost identical) to the proposed changes that were abandoned prior to the last election? It’s an assumption, he confirmed on Twitter to me this morning, based on where Mr Smith’s “thinking is usually at”.

To be fair, it isn’t completely unconditional support that is being offered. On Morning Report, Mr Seymour reserved his right to pull back, should the changes, once announced, be materially different from his assumptions.

Of course, we all know that ACT went into the 2014 election promising to repeal the RMA. Here’s a quote from former ACT leader Jamie Whyte during the election campaign:

The problem is not with the administration of the RMA. The problem is with the very conception of it. The RMA is an assault on property rights that stifles investment and economic growth. The restrictions it puts on using land for residential development are the reason housing is so expensive.

Nonetheless, from a realpolitik perspective, why would ACT simply blindly agree to support National’s proposed changes? If the changes are essentially what National tried unsuccessfully to push through last year, then National will struggle to get support from Peter Dunne or the Maori Party. If National doesn’t want to water down its proposals, then that leaves just ACT. And given ACT’s hatred of the RMA (except, of course, where it stymies intensive development in Epsom), surely this would be a perfect opportunity to press for additional changes?

With National able, on every piece of legislation, to go to just one of ACT, United Future or the Maori Party, opportunities to extract a pound of flesh aren’t going to come along often for those three minor parties. ACT seems to have just blown a prime opportunity to extract concessions on one of the party’s main election policy platforms.

The slow decline of ACT continues

In a way, you’ve got to hand it to ACT. The party’s obituary has been written many a time, as Hide, Brash and Banks fumbled their way along. Everyone was certain that the humiliation of Banks was the end of the line. Nonetheless, defying the naysayers, David Seymour held the seat of Epsom. ACT survived for another Parliamentary term.

Except, of course, that Jamie Whyte, party leader and philosopher-warrior, didn’t make it into Parliament to join Seymour. Immediately following the election, Whyte was in limbo as leader, still in charge, but awaiting the ponderings of the Board as to his future. The limbo is now over – he has tendered his resignation, and the Board has accepted.

Which means that David Seymour is now the leader of ACT. Is this the point where the donors turn off the tap? Where the members shrug and walk away?

Back in the Brash and Banks days, there was the occasional murmur regarding pulling the pin on the ACT name and forming a new party, keeping the donors and members, and jettisoning the public faces of a sullied brand. It must be tempting for the party’s backers to reconsider that option, given the joke that ACT has now become. Nonetheless, the party still has a seat, an MP and an under-secretary position, with all of the funding that goes with that.

And National keeps providing the electricity for ACT’s life support machine. There’s no guarantee that a fresh new libertarian movement would receive a hand up from National. With no electoral seat accommodation, it’s highly unlikely that a new party to National’s right would be able to explode out of the gates to hit 5% by 2017.

Which means that ACT will continue to limp on, its death rattle continuing. Seymour and the Board will talk of rejuvenation and growth, but I can’t see it happening. The best that might happen is that Seymour holds the fort well enough to bring in a second MP next time round. The odds are long, but they’re odds ACT will take because, frankly, they’ve got no choice…

The minor parties – some thoughts & questions

The Greens

They ran a blinder of a campaign. Their polling numbers were looking great, as they closed on 15% in some polls. Then they got just 10.02% on the night (although their vote share is likely to rise by at least a small amount once the special votes are counted – Graeme Edgeler estimates to 10.5% if they got the same proportion of specials as they did in 2011).

What happened? Is it a voter turnout issue? Did the Greens actually slump abruptly in the final days of the campaign? Or do the polls have a bias towards the Greens?

Going forward, the Greens have some big decisions to make. They’ve loudly declared on many an occasion that they want to supplant Labour as the major party of the Left. So do they try for a more centrist approach to grow their vote? There were elements of such an approach in their policy of personal tax cuts to offset the effects of their planned carbon tax. If they want to supplant Labour, that’s what they’ve got to do, but will their membership allow it?

For much of the last term, the Greens were the de facto opposition in Parliament, with Labour failing to fire. Yet in the build-up to the campaign, the Greens offered to campaign together with Labour. The offer had a dual purpose: to show a Government-in-waiting, and to try to reduce the relevance of Winston Peters. Do the Greens go hammer and tongs for Labour’s vote share, or do the two parties attempt to work together to present a united front of opposition?

NZ First

Winston Peters is getting old. For most of last term, he was an embarrassment, lurching from one badly contrived attack to another, each one failing to fire; a collection of not-so-smoking guns. The campaign itself seemed to have rejuvenated him. He certainly saw off the young pretender, Colin Craig, and raised the NZ First vote in the process.

Is he good for another election campaign or will this have been his swan-song? If this is his final term, he’ll be leaving after a comeback of six years without baubles. Winston likes baubles, no matter what he might publicly say, so does he try again in 2017 in the hope of one final Ministerial stint?

The other thing Winston wants is for NZ First to continue on after he’s gone. It’s always been Winston First – no succession plan, no contrary views allowed. He’d like nothing better than to prove wrong all of those critics who for twenty-one years have said that once Winston goes, so too will NZ First.

Ron Mark is back and is being touted as a possible successor. However, if Andrew Williams’ allegations about deputy-leader Tracey Martin are correct, then woe betide anyone who sees themselves as competition to her right of succession! Life in NZ First could get interesting…

The Conservatives

Colin Craig got played by John Key, strung along for just long enough, before being thrown under the bus. Nonetheless, right up until the final few days, Craig and his party ran a remarkably focussed, relatively gaffe-free campaign. Despite being out-manouevered on occasion by Winston Peters, the Conservatives grew their vote share to just over 4%.

It wasn’t enough to get them in to Parliament, but it wasn’t a bad result on a night when National made over 48%. If Craig can keep his core team together, then they’ll have a good shot at breaking 5% in 2017.

The Maori Party

The critics said they were finished in 2014. With Turia and Sharples retiring, Mana were going to wipe out Te Ururoa Flavell, and the Maori Party would perish. Well, Flavell’s still there, with a relatively comfortable majority, and Mana is no more. And, assuming the special votes don’t do something odd, Flavell’s brought in Marama Fox with him, so it won’t be an entirely lonely three years.

If Flavell wants it, National would probably give him the Maori Affairs portfolio. Key doesn’t need to in order to govern, but he’ll be looking to keep Flavell on-side through to 2017. It’ll give the Maori Party some policy gains and keep Flavell’s profile up, and the party will look to remain competitive in seats like Tamaki Makaurau and Te Tai Hauauru.

Internet Mana

And that took care of that then…

The Internet Party was nothing more than a vehicle for Kim Dotcom’s ego and vengeance, and with Dotcom admitting that his personal brand poisoned the combined Internet Mana vehicle, the Internet Party will soon be no more. Dotcom certainly won’t be pouring his money into it, and there’s no real reason for anyone to stick around. Laila Harre’s pay cheque disappears, along with what’s left of her credibility.

Likewise, with no party leader funding for Hone Harawira, and precious few alternate sources of income, the Mana Movement is dead. Harawira took a gamble, sick of being a one man band in Parliament, and it all turned to custard. Annette Sykes did her best in Waiariki, but still came up well short, despite having a full three year campaign and Dotcom’s cash. It’s over.

ACT

Duncan Garner summed it up best when he described David Seymour as being like a five year old about to start High School. Despite winning Epsom (and by all accounts, Seymour put in the hard yards door-knocking to do so), it’s going to be an awkward and ineffectual three years for ACT. Jamie Whyte remains the leader outside of Parliament (for how long though remains to be seen), with Seymour the fresh-faced novice being the voice inside Parliament. Who do the media go to for comment? No one knows…

How do they rebuild? Lord only knows. Their natural constituency is minuscule, and they hold a seat on National’s whim. It’s not a great basis for growth.

United Future

The writing’s on the wall for Peter Dunne. Despite running against new candidates from both Labour and National, and despite having John Key’s personal blessing, Dunne’s majority is just 930. The only MPs with smaller majorities are Nikki Kaye in Auckland Central (648) and Trevor Mallard in Hutt South (378).

The glory days of United Future are long gone. Once upon a time, the worm turned at Captain Sensible’s whim. Now, the Dunne brand is that of a strange political vampire living out some political half-life.

Rebuilding United Future is a laughable proposition. The only question is whether Dunne goes out on his own terms or waits for the inevitable stake through the heart from the good people of Ohariu.

Out in space, no one can hear you scream

From the sidelines of relevance, ACT has been screaming and waving its hand in a desperate bid to be noticed. The bold (some may use less charitable descriptive language) policies have been coming thick and fast recently – abolishing the Overseas Investment Office, getting rid of the Resource Management Act, arming shopkeepers…

They’re designed to grab headlines, to give party leader Jamie Whyte a few life-giving gulps of publicity oxygen. If publicity is supposed to get you votes, it doesn’t appear to have working for ACT. Following their campaign launch and OIO and RMA announcements, the last Colmar Brunton had them on a year-long high of 1.2%. Unfortunately, they could then only manage a combined 1% from the latest Digipoll and Ipsos polls.

Things are only going to get worse this week. Tonight, Kim Dotcom unveils his Moment of Truth. Whatever Dotcom and Glenn Greenwald have to say tonight, be it bunker busting explosion or damp squib, the media won’t be talking about much else. Certainly, the upcoming War of the Documents between Greenwald and Key won’t be a simple day-long skirmish.

Minor party policy will well and truly be taking a back seat. ACT and United Future might as well just concentrate on Epsom and Ohariu respectively, and give up on the rest of the country. Given that Colin Craig has no hope of winning an electorate seat, Dotcom’s Moment of Truth might very well be the final nail in the coffin of the Conservatives’ run for the 5% threshold.

In fact, the coming week is likely to be a policy-free vacuum full stop. Which means that for the opposition, they’d better hope that whatever Dotcom and Greenwald have to say is compelling and easy to understand.

David Cunliffe, Russel Norman and Meteria Turei had better get used to the idea that for the next four days, the only soundbites they’ll be giving will be on spying. For the Greens, that focus might still pick them up a few votes, given their long-term activism against our spy agencies. For Labour though, Dotcom’s Moment of Truth may prove catastrophic. All eyes will be on John Key and whatever he may end up declassifying. With four days of Key v Dotcom & Greenwald, David Cunliffe and Labour Party policy won’t get a look in.

The stakes are high. If Dotcom’s “proof” that Key knew about Dotcom before the raid isn’t watertight, Internet Mana will be a laughing stock. Likewise, if the Greenwald v Key debate about mass surveillance gets lost in a maze of paperwork and semantics, Labour and the Greens can probably give up on being anything other than bit players for the final week of the campaign. The only winner is likely to be Winston Peters, sweeping up the disillusioned.

The fortunes of Labour, the Greens, and Internet Mana are now firmly anchored to two men. Roll on 7pm…

Poll of Polls update – 11 September 2014

This evening, we’ve just had the latest One News Colmar Brunton poll released, with some quite interesting results.

National slump a large 4% to 46%. That places them in the danger zone, where David Cunliffe could potentially form a coalition, albeit one involving the Greens, NZ First, Internet Mana and the Maori Party.

Labour drops too, down 1% to just 25%. Yet another poll, yet another bad result for Labour.

The Greens are the big movers, up 3% to 14%, a result they’ll be more than happy with.

For the remaining minor parties, NZ First remains on 7%, comfortably above the 5% threshold, while the Conservatives climb 1.1% to 4%. It’s yet another good poll for the Conservatives, but they’re still awaiting a result that puts them over 5%.

ACT also have some significant movement, going from 0.1% to 1.2%. That’s the first poll this year that has had them above 1%, and it’s ever so close to bringing in party leader Jamie Whyte.

Internet Mana slump 1% to 1.4%, while the Maori Party rise 0.6% to 0.8%. United Future double their support, going from 0.1% 0.2%.

So here’s how the Poll of Polls looks now:

National: 48.2% (-0.2%)

Labour: 26.4% (nc)

Greens: 12.5% (+0.1%)

NZ First: 5.6% (+0.1%)

Maori: 0.8% (-0.1%)

United Future: 0.2% (nc)

ACT: 0.5% (+0.1%)

Internet Mana: 2.1% (nc)

Conservative: 2.9% (+0.1%)

Based on those percentages, the parties are predicted to win the following number of seats:

National: 60 (nc)

Labour: 33 (nc)

Greens: 16 (+1)

NZ First: 7 (nc)

Maori: 2 (nc)

United Future: 1 (nc)

ACT: 1 (nc)

Internet Mana: 2 (-1)

In terms of the parties’ vote share, National continues to slump; from a high point of 50.4% a month and a half ago, they’ve now dropped a full 2%. Those lost voters aren’t going to Labour though, who remain static on their low point of 26.4%.

Instead, the support seems to be flowing to NZ First and the Conservatives, both of whom continue to creep up, both reaching new Poll of Polls highs.

Seat-wise, the slight rise of the Greens, who also achieve a Poll of Polls high, sees them stealing a seat from Internet Mana, who remain stalled at 2.1%, all momentum currently lost.

The Right bloc remains on a total of 62 seats, compared to 51 for a Labour, Greens and Internet Mana alliance, meaning National could continue to govern with the support of both United Future and ACT.

ACT goes for broke

ACT’s campaign launch occurred yesterday. It’s slightly odd that the party would launch their campaign after people have already started voting, but there you go. Keeping their powder dry and all that…

Party leader Jamie Whyte’s keynote speech to the ACT faithful was everything his party would have hoped for – a mixture of hard-hitting attacks on just about every party around (I think the only party he didn’t bother to attack was United Future, which is a good measure of Peter Dunne’s continued irrelevance) and the release of some old-fashioned back-to-ACT’s-roots policy.

Policy-wise, ACT would abolish the Overseas Investment Office:

It has no proper job to do. When foreigners invest in New Zealand, we benefit. There is no injury for the OIO to protect us from.

Likewise, the Resource Management Act would go to:

The problem is not with the administration of the RMA. The problem is with the very conception of it. The RMA is an assault on property rights that stifles investment and economic growth. The restrictions it puts on using land for residential development are the reason housing is so expensive.

The speech will certainly have fired up the troops. Matthew Hooton was aflame with passion about it this morning on Radio NZ’s Nine to Noon programme, while David Farrar couldn’t resist quoting extensively from it at Kiwiblog.

The problem ACT faces is that “the troops” really aren’t a significant chunk of the population. The most ACT has polled this year is 1%, while sometimes they’ve failed to register at all. In this site’s Poll of Polls, they’re currently sitting on just 0.4%, not quite low enough to produce an overhang, but well below the approximately 1.3% they need to bring in Jamie Whyte (assuming David Seymour takes Epsom).

ACT needs something that will resonate with more than 1% of the population, and quickly. They’ve tried a return to One Law For All (which was again recapped in Whyte’s speech), but it produced no sparks in the polls. Winston Peters, Colin Craig and, to a lesser extent, David Cunliffe were already on board that particular bandwagon, and the remainder of ACT’s  policy platform obviously wasn’t palatable enough to lure the One Law For All vote from those parties towards ACT.

ACT presumably hopes that there is a significant core of landowners who are sick to death of being told what they can and can’t do with their property by the RMA. (Although, of course, David Seymour has been campaigning on putting greater RMA-style roadblocks in the path of development in Epsom, which seems more than a little ideologically impure or, dare I say it, hypocritical.) Quite who the party is targeting with the eradication of the OIO is less clear. How many large farm-owners can there possibly be who will vote ACT in order to sell their farms to foreigners without having to go through the OIO? Every vote counts, I suppose.

But will the RMA and OIO policy backfire on ACT? Rachel Smalley certainly seems to think so:

He appears to lack the one attribute that every political party leader in this country has, and that is an emotional attachment to New Zealand. Winston has it, so does Key and Cunliffe and Norman. Colin Craig does. Harawira, Harré, Flavell, Turei, Dunne – they all have it in spades. Whyte doesn’t.

It does not concern him if every last acre is sold offshore. Let the market decide, he will say. ACT sees New Zealand as a market, to be bought and sold to the highest bidder.

So will this resonate with voters? No, it won’t. Nothing ACT does resonates with voters. Have a look at the polls – the party barely registers any support at all.

So what will Epsom voters do in light of this? Will voters accept their role as political zombies and do as they’re told, breathing life into the ACT Party? Or will they vote how they wish, perhaps for the Conservatives, perhaps for National, and let nature take its course?

We shall see. Whyte has snatched some headlines with this policy, but at what cost? The philosopher, I think, has gone a step too far with this one.

I’m not sure I agree with Ms Smalley on her conclusion that Whyte’s speech is a step too far. Setting aside ACT’s perennially populist ‘tough on crime’ and One Law For All stances, their policy settings have always been dry and rational (depending on your particular brand of rationality). Epsom voters know that ACT will have little to no sway in the next Parliament, and exist in all practical terms merely to ensure the continuance of a National-led Government. They know there is no chance that National would go along with abolition of the RMA, and a less-than-zero chance that National would buck strong public opinion against overseas asset sales. The calculus is simple: A vote for David Seymour in Epsom is a vote for a further three years of a National-led Government.

Where I do agree with Ms Smalley is with her assessment that ACT’s RMA and OIO policies won’t resonate with voters. The party is going for broke with a headline grabbing speech, but the timing is all wrong. The minor party debates have now been and gone, and the focus will now shift to the remaining Key v Cunliffe debates. Abolishing the RMA and OIO needed to be hammered home weeks ago, when Whyte had easy access to the cameras. Instead, perusing the NZ Herald and Stuff websites this morning, Whyte’s speech has largely sunk without trace.

Jamie Whyte should begin resigning himself to remaining a leader outside of Parliament.

‘The Nation’ minor party debate – Colin Craig loses, Winston Peters wins

Having spent the weekend in Napier, resolutely not pondering anything political, I got back to Gisborne last night and finally got around to watching The Nation’s minor party leaders’ debate.

Policy-wise, there was nothing to learn. This was a show devoted almost entirely to the spouting of pre-prepared talking points. Here’s my view of how the various leaders performed:

Colin Craig v Winston Peters: This was perhaps the most important clash. Having initially been excluded from the debate lineup, and making an entrance purely because of a High Court injunction, Colin Craig needed to do well to justify his presence. He’d argued in Court that the Conservative Party would be negatively impacted if Winston Peters was given free reign to speak on conservative policy platforms – essentially admitting that the policy platforms of NZ First and the Conservatives are largely identical. Both parties are duking it out for the same pool of voters, and that pool isn’t large enough for both to make it over the 5% threshold.

So who won? In my opinion, it was Peters by a long shot. He wasn’t in particularly hot form, but it was more than enough. Perhaps the defining moment was when moderator Lisa Owen described Mr Craig as Peters’ doppelganger, and asked him to describe why anyone should vote Conservative rather than NZ First. Craig couldn’t come up with a single policy reason. Instead, looking somewhat miffed at the question, he said that the Conservatives were clear that they would work with the party with the most votes, rather than play games a la NZ First. If that’s the Conservative Party’s major point of distinction from NZ First, then it’s game over for Colin Craig.

Winston Peters v Metiria Turei: Given Mr Peters’ long-held antipathy towards the Greens, fireworks were expected between Peters and Turei. As it happened, when Peters was offered the chance to put the boot into the Greens, he declined, instead saying that he gets on with everybody. This was then followed up with, “I get on with everybody who has a reasonable view on a reasonable thing”. What that means is anyone’s guess, but there’s no doubt that Peters is happily engaged in his favourite electioneering past-time – keeping everyone guessing.

Colin Craig v Metiria Turei: As a property developer, Colin Craig is not a fan of “green tape” holding up development. Plus, as Winston’s stunt double, it’s only to be expected that Mr Craig would be anti-Greens. Unfortunately, for Mr Craig, Ms Turei owned him. She held tightly to the party line (“National’s pollution economy”), while Craig’s interjections were banal and resulted in perhaps the defining image of the night – Turei haughtily performing a ‘talk to the hand’ in Craig’s direction.

Talk to the hand, Colin. (Thanks to Stephanie Rodgers at Boots Theory for the screenshot.)

Talk to the hand, Colin. (Thanks to Stephanie Rodgers at Boots Theory for the screenshot.)

Te Ururoa Flavell v Hone Harawira: Love him or hate him, you can’t deny that Hone Harawira has natural charisma. Te Ururoa Flavell, not so much. With everything at stake for the two party leaders in their respective seats, and with both parties fighting for the same pool of voters, neither could afford to have a bad debate. They both stayed on message, with Harawira banging the drum of Maori inequality, and Flavell emphasising a) the real gains made by the Maori Party due to being at the table, and b) that his party is not a proxy of the National Party. Unfortunately for Flavell, there was no passion to his approach. Harawira had the emotional message and the better soundbites. A win on points for Harawira.

Jamie Whyte v the world: It wasn’t a good debate for Jamie Whyte. He was stilted and amateur. Sure, he had some good lines, accusing others of being “communistic” and “neo-racist”, but you get the feeling that he rather prefers the safety of a lecture theatre, where he can espouse his dry rationality to his heart’s content, free from the indignity of moderators who interrupt, opponents who interject, and people in general who laugh at you while you’re talking.

Peter Dunne v ???: In his role as Captain Sensible, Peter Dunne exists in his own separate space. No one bothers feuding with him, because his strongest held view appears to be that people should be able to decide at what age they begin claiming superannuation. And that’s basically how it played out on The Nation. Dunne was there, but you’d struggle to remember much of what he said, apart from that he wants people to be able to decide at what age they begin claiming superannuation. There was some half-hearted sledging from Winston Peters, when Dunne described the anti-land sales position as “xenophobic”, but Peters didn’t seem to think it was really worth his time to bother directing much bile in Dunne’s direction.

Perhaps the most interesting part of The Nation was the panel discussion between Brook Sabin, Bryce Edwards and Lisa Owen over which leaders should have been part of the debate. Which says a lot about the debate itself…

 

 

It isn’t easy being Whyte

Jamie Whyte has a problem. He’s the leader of a party that doesn’t have enough support to get more than one MP into Parliament, assuming ACT wins the Epsom electorate. And given that he’s not the one standing in Epsom, that means that unless something magical happens to ACT’s polling, he’ll be missing out. David Seymour will be ACT’s sole representative in Parliament.

ACT is polling just 0.5% in this site’s Poll of Polls. The highest any major poll has had them this year is 1.1% (the mid-March 3News Reid Research poll), and in the last dozen polls released, they’ve hit 1% just once. Of the last five poll results, they’ve ranged between 0.8% and not registering at all.

Richard Prebble (and, to a certain lesser extent, Rodney Hide) understood that ACT’s natural ideological constituency was relatively small. There really aren’t that many classical liberals floating around. Nonetheless, in the wake of the ever-extending meltdown that was the last gasp of Hide’s leadership, Don Brash’s attempt to make lightening strike twice, and John Banks’ eccentric conservatism, ACT finally went back to its roots. Jamie Whyte was supposed to be the calm voice of rationalism. Voters would be unable to ignore the power of the Professor’s arguments, and ACT would be great again. No more the shrill populism of perk busting! No more the awkward conservative Sensible Sentencing Trust juxtaposition! Nothing but cool, calm classical liberalism…

Unfortunately, such ideological purity still has only a tiny natural support base. Thus, no movement in the polls. So what do you do when nothing you say gets you any traction? Well, after having consulted Richard Prebble, there’s only one way forward – go populist. Expand upon Three Strikes, and go Back to the Future with a One Law For All crusade!

Now, Richard Prebble always understood that when one rabble-rouses, one shouldn’t over-think the rationale. One Law For All and Getting Tough On Crime don’t have the most convincing rationales behind them – either philosophically or statistically. They’re crude slogans, designed to attract support without thought.

That’s not the Whyte way. As a former professor, he doesn’t want to be seen as simply a common Prebble-esque rabble-rouser. He enjoys the role of political philosopher, and therefore needs a philosophical underpinning to his every stance.

One gets the feeling that his impassioned philosophical defence of One Law For All was made up on the fly, a work in progress. It was certainly easily demolished on blog sites such as Pundit, Maui Street and Public Address. And from there, the philosophy-on-the-hoof process has continued, with Whyte attempting to cite coup-plagued Fiji as a model of racial policy. Now he’s tried to cite Sweden as a an example of how to eradicate race from the law, only to be monumentally fisked by Professor Andrew Geddis.

Unfortunately, the populist policy Whyte is pushing already exists (to a greater or lesser degree) within a crowded conservative market place. Whyte is up against Winston Peters and Colin Craig, and Whyte is certainly not a patch on Winston when it comes to selling racism. He’s not even a patch on Colin Craig in those stakes, and that’s certainly saying something.

They say that all publicity is good publicity, and Jamie Whyte must certainly be hoping that’s the case. There’s really little else that seems likely to go his way.

ACT’s corporate tax cut number confusion

It’s hardly surprising that ACT has released a policy involving the reduction of corporate tax. Promising not to cut taxes – that would certainly be one for the books…

The NZ Herald reports:

The Act Party wants to cut the company tax rate from 28 per cent to 12.5 per cent by 2020, which it says will see a rush of business activity that would boost jobs and wages.

“No single measure could do more to promote the economic welfare of New Zealanders than cutting the company tax rate. And it is relatively easy, because company tax raises far less revenue for the government than income tax and GST.”

Dr Whyte said reducing the company tax rate from 28 per cent to 20 per cent next year would cost $1.53 billion in lost revenue – which would be made up by scrapping all Government funding to business interests, or “corporate welfare”.

Cutting the rate further by 1.5 per cent a year would cost about $150m in lost revenue. By 2020, the company tax rate would be 12.5 per cent.

The problem is that the numbers don’t match up.

Treasury predicts corporate tax revenue in 2015 to be approximately $9.8 billion. Dropping the corporate tax rate to 20% in the first year would drop that tax take to about $7.0 billion, a drop of $2.8 billion. That’s well above the $1.53 billion in lost revenue that ACT are forecasting in the first year.

Of course, ACT are predicting that decreasing corporate tax rates will increase economic growth, which means that lost revenue will in fact be less than $2.8 billion. ACT estimates that each percentage point reduction in corporate tax results in a $220 million loss in Treasury revenue, which ends up being only a $150 million loss “when you take into account the fact that a lower company tax rate will expand the economic base to which it is applied and increase the dividends and wages subject to incomes tax” (quote taken from Jamie Whyte’s speech – link here).

But applying that formula to ACTs initial 2015 corporate tax rate decrease of 8% yields a loss of just $1.2 billion. Whichever you look at them, ACT’s figures for the first year (based on their own calculations) don’t seem to add up.

In fact, their figures don’t seem to work for subsequent years either. Just look at the table below, again taken from Jamie Whyte’s speech notes.

Table 1: Revenue forgone from a lower company tax, $million

Tax rate Lost revenue Funded by

2015

20.0%

$1,530

Abolishing corporate welfare ($1.5 billion) and carbon trading ($164 million)

2016

18.5%

$154

Part of the $1.5 billion of new spending in the Budget

2017

17.0%

$153

As above

2018

15.5%

$150

As above

2019

14.0%

$150

As above

2020

12.5%

$150

As above

Mr Whyte’s speech says that every 1% decrease in the corporate tax rate will result in a $150 million loss in revenue to Treasury. Yet, his table shows a $150 million loss per 1.5% drop in the corporate tax rate.

Over at the Standard, Micky Savage has posted on “ACT’s voodoo economics“. His self-described “quick calculation” regarding the loss in Treasury revenue doesn’t appear to include any factoring in of increased economic growth, but the interesting part of the post is his update:

ACT candidate Stephen Berry has provided me with some more details of the policy.

  • The cut in the first year will be to 20% at a cost of $3 billion.
  • The initial shortfall will be funded by further asset sales.
  • The 12.5% rate will not be reached until 2020 and they presume that the enhanced growth rate will fund this.

Still does not add up …

It appears ACT’s Stephen Berry doesn’t know the details of the policy either. His estimate of the first year cost to Treasury is almost double that of his leader’s. Further, Mr Whyte says the first year loss will be completely covered by “abolishing corporate welfare and carbon trading”, while Mr Berry thinks further assets sales will be needed to cover a shortfall.

I’d also note that if the corporate tax rate becomes wildly out of synch with personal or trust tax rates, there will be a huge incentive for individuals to set up companies, channelling income through a company at a lower tax rate than if they syphoned it through a trust or declared it as personal income. Such distortions will also impact on ACT’s figures, although there’s nothing in Mr Whyte’s speech to suggest that this has been factored in.

ACT’s figures on this issue look dodgier by the hour.

National & Colin Craig – number-crunching, not love

There’s a considerable reluctance on the part of National to gift an electorate seat to Colin Craig. That’s understandable. No one quite knows what might come out of Mr Craig’s mouth. Right now, that’s no issue for National – John Key can simply shake his head, roll his eyes and say no more. It’s a different story if an electorate deal is announced, as Colin Craig becomes definitively tied to National. Suddenly, Key gets tied to every Craig-ism.

To a lesser extent, Key has a similar problem with ACT, with Jamie Whyte’s propensity for newsworthy philosophical musings. However, ACT at least has a reputation for not rocking the boat. Their support of National doesn’t come with too high a price. To centrist voters, looking for stability, ACT is a known quantity.

Colin Craig and his Conservatives aren’t a known quantity. If they make it into Parliament and strike a coalition or confidence and supply deal with National, no one knows how hard they’ll fight for their “bottom lines” and points of principle. Will they play nicely in the coalition sandpit?

It’s fair to say that if John Key could avoid working with Colin Craig, he would. Unfortunately for National, John Key can’t take the risk of not cutting an electorate deal with the Conservatives.

Various commentators assume that Key is watching the polls, trying to decide whether he needs to or not. That doesn’t make sense to me. After all, look at what happened to the polls in 2011. National was by far and away the largest party, getting 47.3%, but the final polls from One News, 3News, the Herald Digipoll and Fairfax all had National over 50%, able to govern alone. Fairfax was staggeringly high, showing National polling a massive 54%. National scraped over the line, thanks to ACT and United Future getting one seat each, and could also rely on the Maori Party for confidence and supply. If Labour had lost the Te Tai Tonga seat to the Maori Party, National would have been unable to run its asset sales agenda.

No matter how high National are polling, they won’t be able to trust that those polls will hold up on 20 September. The numbers from 2011 dictate that National will strike a deal with the Conservatives. They won’t dare risk losing a chunk of the right-wing vote that may be decisive.