Steven Joyce

Where to from here for National?

If John Key wants to have a stab at a fourth term as Prime Minister, there’ll be no one in the party to stop him. He’s weathered the Dirty Politics and Moment of Truth storms, and come out the other side with an increased majority.

Now it’s time for a clean up. Jason Ede has already resigned, which is perfect timing for National. An announcement prior to the election would have looked like an admission of guilt, just prior to people walking into the polling booth. This way, it’s lost in the honeymoon maze, and when the House returns to sit, the opposition will have lost another line of attack.

You’d hope that National’s leadership has learned its lesson from the Dirty Politics saga, and will keep people like Cameron Slater at bay. National may have romped home, but Brand Key has lost a touch more of its shine in the process. National’s result wasn’t necessarily as much an endorsement of John Key’s charms as a rejection of the state of the Left.

And hopefully, National MPs (and prospective MPs) lower down the food chain learn from the reaction within National to the Dirty Politics claims regarding Slater and Lusk’s involvement in the Rodney electorate selection process. If anyone finds out you’ve contracted Slater or Lusk to run interference for you, you’ll hopefully be toast.

Of course, the big issue for National, as they seek re-election in 2017, is the same one that kept them awake at night over the last three years – coalition partners. The election results for ACT and United Future were risible. National will give them roles in this new Government though, partly as a reward for six years of loyalty, partly in the vain hope that they might against all odds surge again in popularity and offer National more assistance at getting over the line in three years time.

Likewise, the Maori Party will be offered a role again too. Te Ururoa Flavell has been very clear that the Maori Party cold work with both National or Labour. National will be keen to keep Flavell onside.

But what if that’s not enough? What if ACT and United Future remain unappetising minnows, and Team Key needs a few more seats next time? Does National build up the Conservatives in the hope that they’ll supplant NZ First?

Once the honeymoon fades, Steven Joyce and the rest of the strategy team will undoubtedly be pondering what needs to be done to ensure a victory in three years time.

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Will National drop 6% in three months? A less than serious analysis…

Rob Salmond at Polity notes that in the 2008 and 2011 election campaigns, National has dropped 6% in the three month campaign window. His analysis is fairly simple:

All I did was find any published poll where the field dates included the day three months before election day, then compared that to the final election result.

On this analysis, Mr Salmond finds that in 2008, National went from an average of 51% on 8 August to an election result of 44.9% (a drop of 6.1%), while in 2011 National dropped from an average of 53.1% on 26 August to an election result of 47.3% (a 5.8% decrease).

So what would we get if we use Mr Salmond’s analysis on this current election cycle? The election will be held on 20 September 2014, so we take all polls where the field dates include 20 June 2014. That’s just two polls – the 3News Reid Research poll that put National at 49.7%, and the last Roy Morgan poll that had National on 48%. That’s an average of 48.9%, meaning Mr Salmond would expect to see National drop to about 43%.

But wait! Mr Salmond notes that for his 2008 election analysis, he made “one one-day exception to get the 2008 N up” from two polls to three. That meant he included a Colmar Brunton poll that spanned 9 to 14 August, one day outside the three month date of 8 August. Including that poll made no difference to the result, as the Colmar Brunton result was 51%, exactly in the middle of the other two polls.

If we apply the 2008 “one-day exception” to 2014, we also get to include the last Colmar Brunton poll, which put National on 50%. The average of the three polls therefore increases slightly to 49.2%.

Of course, the issue with this sort of analysis is the tiny data set used. In each election year, the analysis is based on just three polls. If there’s an outlier poll in the data set, it will skew the average.

So does Mr Salmond’s analysis include any outliers? Well, in both the 2008 and 2011 data sets there’s a poll from Fairfax. Fairfax’s final poll prior to the 2005, 2008 and 2011 put National, in every one of those three elections, well higher than any other polling company’s final poll. And in between elections, Fairfax tends to have National polling almost 2% higher than the industry average.

So how high did Fairfax put National three months out from the 2008 and 2011 elections? In 2008, they had National at 54% – that’s 3% higher than the Colmar Brunton poll and 6% higher than the Roy Morgan. In 2011, they had National at a staggering 57.1% – over 5% higher than the other two polls which both had National on 52%.

Eradicate the Fairfax outliers from Mr Salmond’s analysis and the 2008 average drops to 49.5%, while the 2011 average drops to 52%. That’s a three month fall of 4.6% in 2008 and 4.7% in 2011.

Eradicate the outliers and the “one-day exception” and there’s only one poll left in the 2008 data set, the Roy Morgan showing National on 48% – 3.1% higher than National’s 2008 election result. The average drop over both elections? 3.9% – rather lower than 6%.

If National’s average polling as at 20 June 2014 (not including the “one-day exception”) is 48.9%, we’d expect to see National therefore drop to 45%.

Of course, my tongue is lodged firmly in my cheek with this “analysis”. My point is merely that statistics can be made to say whatever you wish. Hell, if we include the 2005 election in the analysis, applying the “one-day exception” and excluding Fairfax, there’s only one poll in the data set and it shows National 3.1% below it’s election result of 39.1%. Average everything out on that basis and National drops only 2.1% on average! If their average polling as at 20 June 2014 (including the “one-day exception”) is 49.2%, we can then expect National to get 47.1%, just 0.2% below what they got last election! That should make John Key and Stephen Joyce sleep better tonight…

Cracks appearing in Labour’s new monetary policy

When Labour’s new monetary policy tool – using a Variable Savings Rate (VSR) to alter the rate at which workers must contribute to Kiwisaver  – I stated:

It’s a fascinating idea, although I’d need to see some fairly detailed modelling to have any idea whether it would actually work.

Well, since the policy has been announced, the majority of financial commentators seem to view it as a useful additional tool for the Reserve Bank, but don’t believe that it will be able to be used as a substitute to the OCR.

A major pitfall is the rate at which a VSR could be altered. The OCR can be adjusted every six weeks, providing a regular ability to adapt to the latest financial figures. However, a VSR would be something that could only be altered infrequently, given the complications for employers in adjusting accounting software for employer Kiwisaver contributions every time the VSR changes.

That means that the OCR would have to remain as the primary tool for curbing inflation, with a VSR making sporadic appearances. That’s not to say that interest rates would not be lower than they otherwise would – however, they, certainly wouldn’t be sitting at the stable low levels that Labour promises with their policy.

Perhaps the biggest problem for Labour is the numbers on what effect a VSR could actually have on inflation. Fran O’Sullivan threw some interesting figures out in the NZ Herald:

But the more interesting comparison is the size of the lever that Wheeler can pull. At February 2014, the residential mortgage pool was $191.8 billion. $75 billion was at floating rates with a further $64.9 billion on one-year rates.

This means it doesn’t take too many rate hikes to suck a few billion dollars out of homeowners’ pockets and reduce demand.

Increasing KiwiSaver contribution rates is not going to have the same blunt – and well-understood – effect.

At June 30, 2013 2.15 million people were enrolled in KiwiSaver – 53 per cent of the eligible population. Labour’s plan to make KiwiSaver compulsory will increase overall saving and is well overdue.

But it’s not a “net net” by any means.

That’s because KiwiSaver contributors are at this stage putting only about $1.5 billion into the scheme each year (2013 figures).

So, what is the relative strength of Labour’s proposed VSR lever, against that of the existing OCR? Here’s where Labour needs to work fast, because the only figures hitting the headlines are those supplied by National, and they’re not good. From Stuff.co.nz:

National had conducted “back of the envelope sums” which suggested that to prevent interest rates going up by 1 per cent, KiwiSaver rates would have to be lifted by 6 cents in the dollar.

Asked about the calculations, Joyce said that raising the OCR by 1 per cent took around $2.5 billion a year from the economy, while a 1 cent increase in KiwiSaver contributions created an additional $400 million, partly because other savings were undermined.

David Parker can argue all he likes that National’s figures are wrong, but it’s those figures that will stick in people’s minds, regardless of Steven Joyce making it clear that he has no idea whether they’re correct:

The figures were developed “in a couple of hours with the help of a couple of boffins” and so were not authoritative, he said. “My point is not so much that that’s the right number…my point is that Labour should have a number.”

And that’s the problem for problem. Without a figure of their own, Labour leaves itself open to scaremongering like this from David Farrar at Kiwiblog:

So what does that means if you are on say $60,000 a year. It means your take home pay will drop by $3,600 a year or a massive $70 a week to stop interest rates rising by 1%.

Now you may not even have a mortgage. Most people do not. Everyone who does not currently have a mortgage will have their take home pay slashed.

But what if you do have a mortgage. Say you have $300,000 owing on it. Let’s say the VSR means your interest rate is at 6% instead of 7%. What difference does that make to your weekly repayments? At 7% a $300,000 20 year mortgage costs you $536 a week. At 6% it is $495 a week so that saves you just $41 a week.

Now I don’t have the foggiest idea about how close or otherwise Steven Joyce’s figures are, but I certainly can’t make much of an evaluation until Labour provides a counter-figure. It’s an attack that Labour should have seen coming, and Parker should have had some numbers on hand. Otherwise Labour risks this becoming a 2014 version of 2011s “show me the money moment.

Extra-judicial murder

New Zealand doesn’t have the death penalty. Whatever crime you may commit on New Zealand soil, the state will not execute you. We also believe in the right to a fair trial and due process, and we expect our government to stand up for those rights when we as New Zealand citizens travel overseas.

Which is why it’s somewhat of a worry that our government doesn’t seem at all perturbed that the US government has murdered a New Zealand citizen in Yemen.

Despite article 2(4) of the United Nations Charter prohibiting the use of force by one state against another, the United States defends its use of drone strikes in foreign countries as simply the use of self-defence in response to an imminent threat, with the host state unwilling or unable to take appropriate action. In November last year, in Yemen, the US launched a drone strike against a top al Queda operative associated with Osama bin Laden. Given that drone strikes can be less than completely accurate, collateral damage often occurs, and in this particular case, the collateral damage included a New Zealander.

The New Zealander, who called himself Muslim bin John or Abu Suhaib al-Australi, has been confirmed by John Key to have attended a terrorist-training camp. Which apparently makes it okay for America to have taken him out. From a stuff.co.nz article:

“Some New Zealanders … put themselves in harm’s way,” Key said.

“This is an individual that travelled to Yemen, had links with terrorist groups and had been in all sorts of associations that no right-thinking person would do. The truth of it is if he didn’t have those links and wasn’t in Yemen he would almost certainly be alive so I think most New Zealanders will judge that.”

The big question that John Key should be asking of the US is whether a credible imminent threat actually existed. It’s one thing to act to stop an imminent threat based on credible intelligence. It’s quite another thing to simply assassinate by drone those who oppose US foreign policy and advocate the use of force as part of that opposition. If no credible threat existed, it’s simply state-sanctioned extra-judicial murder. No criminal charges, no arrest, no right to trial, no ability to refute the intelligence the attack was based on (because we all know that US intelligence can always be trusted, right?).

However, prior to John Key fronting, Steven Joyce had stood in and confirmed that the government would not ask the US about the reasons for the drone strike. Was the drone strike ethical? Well, that was “a matter for those countries which do carry out drone strikes”.

This strikes me (no pun intended) as having a very “see no evil, hear no evil, speak no evil” feel to it. It’s essentially saying that NZ will not judge the morality of other country’s actions, but that stance doesn’t make sense given our long history of international nuclear-free  and human rights activism. Our government is telling us (and the rest of the world) that it will hypocritically close its eyes when it comes to America’s actions. Personally, I expect rather more from my government, especially when the lives of New Zealand citizens are involved.

Why neither Judith Collins nor Steven Joyce will ever be Prime Minister

I’m going to make the call now – neither Judith Collins nor Steven Joyce will ever be NZ’s Prime Minister.

When John Key departs, the accepted wisdom seems to be that there will be a battle royal between Ms Collins and Steven Joyce for the succession. Personally, I remain unconvinced that the victor will be either of them. Certainly right now, they appear to be the two titans flanking Key – Joyce, the pragmatic fixer of unfixable problems; and Collins, the ideological arch-conservative. However, political history has a habit of consigning the so-called anointed ones to back-office oblivion by the time their shot at leadership rolls around. I wouldn’t be at all surprised if both Joyce’s and Collins’ stars have both significantly faded by the time Key calls time on his leadership.

The problem for both is one of persona. For Mr Joyce, despite his huge workload and legendary capabilities, his star is almost non-existent to the public. With no electorate, he’s a Grey Man, a behind-the-scenes puller of levers, who gets wheeled out to explain in short soundbites why something isn’t worth worrying about because it’s going to be fixed. Soothing, but dull…

For Ms Collins, the problem is the opposite. One could almost say that she has too much personality, too much of a public persona. And very little of it is likeable. Sure, she may be the darling of the Conservative wing of the National party, but in broader circles, not so much. There’s grudging respect – hell, the nickname “Crusher Collins” says it all – but there it ends. Most times when she’s being interviewed, she comes across as arrogant, dismissive, occasionally vicious.

The thing about arrogance is that people love to see it all come crashing down. Schadenfreude anyone? And of course, Judith Collins has just invited all of her enemies (both without and within the National party) to tap-dance on what may end up being the gravestone of her leadership ambitions. She’s now apparently on final warning from John Key, after withholding details of a dinner in China with senior members of Oravida. Key is reported to have stated that Collins had “mislead by omission” and that her actions and led “to the perception of a conflict of interest” which was “unacceptable”. That’s a severe dressing down.

But the bit that says everything you need to know about Collins and why she’ll never be Prime Minister?

Collins confirmed she was forced to give an explanation to Key this morning about the lapse but refused to confirm if she had apologised to him.

If she hasn’t by now worked out when to provide a full mea culpa and move on, starving a story of oxygen, then she’ll never learn. Politicians are almost by definition arrogant egotists (why else would they hunger after public office?); the important thing to learn is when to climb down and humble oneself. Collins’ overweening pride will be her undoing, long before she gets the chance to have a crack at the Prime Ministership.