A slight rightwards shift

Free trade agreements are safe. So is the lifting of the genetic modification moratorium if Labour wants it. Labour has support on its right.

Helen Clark got the next best thing to a majority on Saturday: a support party to balance off the Greens. The wonderchild of the election, Peter Dunne’s United Future will lend a slightly rightwards lean to her second administration.

And the Alliance is all but gone, reduced to Jim Anderton and Matt Robson. Clark has effectively got the freedom of manoeuvre within her government that she sought, even if she must take into account two other parties.

The Greens will bargain for policy concessions as the price of guaranteed support on confidence and supply. They want more than they got in the last Parliament, both in money and in policy items. They have drawn up a list of 72 items, though most are relatively small.

But the fact that they will have eight MPs (or at most nine on the special votes) and not the 12 or 13 they thought the opinion polls were promising them means they have fewer bargaining chips. And the fact that Clark can turn to Dunne reduces the Greens’ bargaining power even further.

So yesterday there was talk that the Greens might confine their withdrawal of support on confidence to just one vote if the GM moratorium is lifted on cue in October 2003.

Still, Clark will want to give the Greens enough to stop them walking or splitting. Having two supporting parties, each enough to provide a majority, is a lot better than one. In a sense (though a different sense) Winston Peters proved that in the last Parliament.

But there are limits. Clark will not accede to the Greens demands for a retreat from existing free trade agreements and cost-benefit analyses of new ones (with Hong Kong and the United States) designed to kill them. Dunne is a free trader from a long way back.

What will Dunne want? His voting record has been closely aligned since 1996 with National, with whose party whip his proxy vote in Parliament has been parked. Moreover, United Future’s new MPs are by mentality, background and religious affiliation closer to National’s side of politics than Labour’s.

And United Future scored nearly 100 per cent on Business New Zealand’s assessment of its policies for business-friendliness, including cutting government spending below 30 per cent of GDP and cutting Resource Management Act red tape.

United Future’s economic policy spells out four objectives for a “free and open market” that also respects social responsibility. They are:

* Reduce impediments to business performance

* Promote an export-friendly country

* Encourage innovation

* A tax system that takes into account the costs of raising a family

So the party wants to:

* cut company tax to 30%;

* streamline tax compliance and penalties;

* reduce personal tax to a comparatively flat rate, abolish fringe benefit tax and phase out excise duties;

* introduce income-splitting for families, a home carer�s allowance for under-5s and tax rebates for child care costs;

* raise the personal tax rebate for charities to $5000;

* support ACC competition (Dunne voted against renationalisation in 2000);

* “review the Employment Relations Act to allow for greater flexibility and stability” (Dunne voted against the act in 2000);

* implement a stable population and immigration policy, with an emphasis on diversity;

* improve links between research and commercial application and beef up tax-deductibility for research and development;

* support free trade agreements.

All that is in the interests of a “free and open market”.

The Greens are against almost all of that. They rated only three endorsements on Business New Zealand’s scorecard.

Clark won’t bend in any case on the tax policies, ACC or the Employment Relations Act.

So United Future’s influence in those areas is likely to be minimal. In any case, it will take 18 months or more for Dunne’s eight greenhorn MPs to find their footing. The Greens, by contrast, are battle-hardened and a smart bunch.

The same can probably be said about Labour Minister Margaret Wilson’s extensive plans for more workplace regulation, since Greens by and large support the direction of her policies.

Wilson is planning: a new Holidays Act; a bill to protect the most vulnerable workers when a business is contracted out or sold (transfer of undertakings); a review of redundancy laws; a mechanism to examine pay equity between men and women in comparable occupations; administrative support for bids for multi-employer agreements; ratification of ILO measures, one of which might allow general strikes; protection for workers in contact with hazardous substances (such as printing ink); a minimum employment code for contractors to the state sector; and a “fine tune” of the Employment Relations Act.

Apart from that, Labour plans little new or extended regulation. Almost all of its initiatives are already under way, including its extensive environmental and energy programme, including the election-delayed ratification and implementation of the Kyoto protocol. The Greens would like Clark to go a lot further but United Future might provide a counterbalance.

What is less clear is how the counter-influences might play in such matters as the sale of part of Air New Zealand or the purchase of the rail track. The Greens oppose the first and demand the second. Dunne would likely take reverse positions.

Dunne also ensures Deputy Prime Minister-designate Michael Cullen’s superannuation scheme beds in. The Greens oppose it and might have made it a crunch issue if they had held the balance by themselves. Dunne voted for it.

United Future is not explicit on the raft of facilitative interventions Pete Hodgson and Jim Anderton have introduced in research, start-up assistance, investment promotion and industry and regional development. But it seems unlikely Dunne would make large waves there.

What has Anderton said he wants? His top asks were: stable government, full employment, free education and health care, family-friendly workplace relations policies, no privatisations and investment in New Zealand of as much of the super fund as possible.

What will he get? Small steps in his direction — even smaller than in the last term. Except to the extent that he is backed by the Greens. But he dislikes them intensely. That is a recipe for moderation.