A learning curriculum for Brash and Key

When Don Brash and John Key have got over their loss, if that is what it turns out to be, they might thank their lucky stars. If they were strategising for their party’s long-term health, this may turn out to be the election to lose.

Brash and Key are both men in a hurry, Brash because of his age and Key because that is the way he tackles life.

Both will benefit from an enforced learning break.

Key needs to work on economic principles to give his policy prescription more durable foundations. Parliament is not a dealing room.

Brash needs to widen his understanding of his country. Across tracts of policy, he could not manage much more than slogans — indeed, some of the official policy was not much better.

Brash is a better man than the campaign showed us. He has had to focus on learning to be a party leader and campaigner, which necessarily obscured the long view and the deep view. Now he can find out how the country and the government works — acquire the knowledge Bill English has, for example.

Labour’s survival under the tax and Treaty of Waitangi assault showed the electoral value of a set of political values, by which voters can sense a party and accept or reject what they sense.

National’s two king-hit policy jabs of Treaty and tax worked on voter resentment and “me-first” rather than reflecting a set of values by which the country would be run and the economy managed. Without that values compass, Brash was enticed into a cynical promise on September 9 to reduce the petrol tax, reversing a rejection only a fortnight earlier. That tested the limit of voters’ credulousness.

Contrast English’s education policies: founded in principle, buttressed with research and on-the-ground discussions, rich in detail.

Now imagine the Brash-Key combination in charge just as the economy is slowing, the balance of payments deficit is reaching banana republic levels, the currency falling and inflation way above 3 per cent.

There is a real danger of mistakes and missteps and then blame.

There is no doubting their ability to learn on the job. Brash has studiously worked his way into his various jobs. Key is a brilliant learner and was star of the campaign. But the ninth and seventh floors of the Beehive are not places to learn on the job if the going gets rough.

Assuming the government goes Labour’s way, Brash and Key can watch Helen Clark and Michael Cullen navigate the choppy, potentially turbulent, economic waters ahead and cop any voter blame. And they can understudy for their parts without the pressure of a looming election.

Here is a curriculum. Clark and Cullen could also usefully study it, too, if they want a fourth term or even just to survive a third term with honour.

* Household debt is high. Yes, household assets have risen, too, but much of that is paper value — house prices out of line with rents and so bound for a correction. How does the government correct the imbalance of savings and debt?

* Is there a case for a balance-sheet debt-equity approach to the government’s finances, as Key implied in his willingness to lift government debt? Some economists think so. But if there is such a case, should it be based on forcing better financial discipline or constraining public services — the “strategic deficit” Cullen charged National with intending — or on an ideal ratio for optimum economic efficiency?

* What is the optimal tradeoff between tax levels and public service levels? And how much is this a political calculation — votes in the bank — or one of economic efficiency?

* How over the long term can adequate physical and cyberspace infrastructure be assured and resources allocated? What is the balance between the 1970s administrative approach which still pervades much of the policy and a more flexible, market-driven approach?

* What is the desirable level of fundamental science? The Clark governments have lifted government funding in real terms but not much as a percentage of GDP. They have also begun to rebalance funding into basic science for our staple, land-based industries. But they are far happier buying hip operations. There is not much evidence Brash and Key have science much higher in their policy priorities.

* Does “choice” deliver better social outcomes — and so a more skilled workforce and a richer country? Or is there a role for an active government, especially at pre-school and school level?

* What is to be done with state-owned enterprises? Key modestely planned to sell down 20 per cent of each SOE, to improve governance. This would have had mum-and-dad investor appeal but was junked because asset sales were deemed by campaign moguls to be a vote-killer. Key might study how to resurrect the idea. Cullen might want to re-examine his rigid Labour ideology.

* What is the appropriate regulatory environment? In the 1990s business applauded Ruth Richardson but lost the argument with the public who from 1993 on demonstrated, by voting in large numbers for Winston Peters and Jim Anderton, they wanted a readjustment. Is the criterion solely economic efficiency, as Brash’s speeches implied, or more complex?

This is not an exhaustive curriculum. But it is enough to keep National’s stars busy awhile. And give Labour’s food for thought.