Colin James’s paper at the Victoria University post-election conference, 2 December 2005
The 2005 election could be said to have begun on 19 June 2003 when the Appeal Court [Endnote1] decided the foreshore and seabed were “land” and, under common law, iwi and hapu could take a claim to the Maori Land Court for title. That enlivened the National party and shook the Labour party with far-reaching effects in due course on the 2005 election. UMR’s reading of whether the country is on the right or wrong track plunged from 40% net positive to 5% in six weeks, National leader Don Brash demanded “one law for all” in a speech in January 2004 [Endnote2] and Labour’s comfortable poll whiplashed temporarily in a large lead for National. At the same time, National’s competitors on the right, ACT and New Zealand First, lost half their poll ratings.
A second staging post in the election was the predictable and predicted variations the marking of the NCEA and scholarship examinations which became public in January 2005. Skilfully exploited by National’s education shadow minister, Bill English, who had already made hay out of injudicious forced amalgamations of schools, the exam failure dug a deep hole in the government’s reputation for competence and capability. That mystique having been thus shattered, the government was suddenly more vulnerable to criticism on other fronts. A serious erosion of Labour’s poll lead set in from April.
A third staging post was the May 2005 Budget’s flagging of only timid personal tax relief by way of a sub-inflation adjustment of thresholds in 2008 against 2005 levels. Press speculation of more substantial cuts had built up in the Budge runup, fuelled still more the day before the Budget by Labour party president Mike Williams’ injudicious comment about a “dark secret”. National had already flagged extremely generous tax cuts to be funded from a huge and rising Budget operating surplus. The absence of a credible tax cut plan in the Budget gave National free rein to exploit that difference which translated into a menacing lead in the polls by late June.
Battle was joined in fury after 4 July when the departing United States Ambassador insensitively re-raised the “unfinished business” of the anti-nuclear legislation. [Endnote3] Labour used that to skewer National as secretly planning to tamper with the legislation to appease the United States — and even, unconvincingly, claimed a rich United States businessman had been a “bagman” for National, importuning senior businesspeople for votes and donations for National. The polls whiplashed back in Labour’s favour.
Soon after, in opposition to National’s tax cuts and proposal for tax relief on student loan interest payments, Labour promised to write off all student loan interest for those who stayed and worked in New Zealand and then, four days before National revealed the detail of its tax cuts on 22 August, announced a large extension of its Working for Families package of tax rebates and other assistance to families with at least one member in paid work.
By then the election had turned into an auction, the like of which had not been seen since 1975, when National proposed a very generous universal pension which quickly proved unsustainable. Towards the end the auction became almost surreal: Don Brash, the fiscal Presbyterian who ruled out a cut in GST on petrol on 25 August as prices were rising almost daily at the pump, suddenly metamorphosed into a value-free campaigner with a promise to do just that on 12 September.
The Prime Minister characterised the alternative programmes offered by Labour and National in this auction as a “contest of values” and since the election she has claimed victory for Labour’s spending for all over National’s tax cuts for the rich. In fact, Labour’s star promise, on student loans, favoured the middle class and National’s tax cuts would have delivered considerable benefits to the less well off. Nevertheless, Labour did succeed in planting fear among some, perhaps many, voters, that health, state house and other spending would be have to be cut to accommodate National’s tax cuts by way of creation of a “strategic deficit”. So there is something in the Prime Minister’s claim.
But is it a convincing claim?
The contest as a factor. This was the hardest-fought campaign for a quarter of a century. For the first time since 1981 the two major parties were both strong and evenly matched. In elections from 1984 to 2002 either one or both of the two parties were weak, producing lopsided contests and/or opening up large space for smaller parties. The combined Labour-National vote share was 70% in 1993, 62% in 1996, 69% in 1999 and 62% in 2002. It was clear long before the 2005 election was called that the combined vote share was going to exceed 75% and in fact it was a touch above 80%.
Both major parties used rough tactics.
National ran a punchy billboard campaign, contrasting a smiling Don Brash with a grumpy Helen Clark and pithy, overstated contrasts in policy. It accepted the assistance of the Exclusive Brethren Church in push-poll canvassing against liberal Labour electorate MPs, using the electoral roll, and in a brutal pamphlet campaign against the Greens and Labour. It was advised on its tactics and polling by an Australian political consultancy, Crosby|Textor, which seconded a staffer to Brash’s team. Lynton Crosby was the campaign director for Australian Prime Minister John Howard�s 1998 and 2001 election victories. Mark Textor was the official pollster and key external campaign strategist for Prime Minister Howard�s Liberal Party in the 1996, 1998, 2001 and 2004 federal elections. [Endnote4]
Labour was curiously tongue-tied in its belated billboard response but took the gloves off at one point with a series of out-of-context quotes from Brash on the American relationship. And right near the end it used blatant scare tactics to persuade state house tenants, only 46% of whom voted in 2002, to vote: those who might be rash enough not to vote were warned they faced eviction at Brash’s hands.
In short, it was a contest of wills, at least as much as, and arguably considerably more than, a contest of values. In this contest Helen Clark and Labour were a full match and more for Don Brash and National.
In fact, as issues go, this was a core issue: which leader and party could take the heat better. Clark was the more assertive and better briefed in the televised “debates”. Brash on several occasions couldn’t speak with authority on his party’s policy — on housing he explained he had not read the press release — and badly mishandled his part in the Exclusive Brethren’s role in the election, thereby blotting out National’s campaign for three crucial days in the second last week of the campaign and putting his own reputation for high integrity at risk. He also made some simple errors, for example, allowing himself to be trapped into saying Clark and Labour voters were not mainstream.
The economy was also a core issue, as in 2002. And, as in 2002, it was in general terms a plus for the government — maybe a greater plus than in 2002. In elections it is at the level of the household that the economy operates and households were relatively flush: unemployment was very low; real wages were beginning to rise; house prices were high and, so folklore had it, were bound to continue to rise, which was giving wide latitude to householders to borrow for consumption against the rising equity in their houses; and around a quarter of a million families began to benefit from the Working for Families package.
But in two significant respects the economy was a problem for the government.
The first was that an infrastructure deficit that had begun to build up during the 1990s and intensified during the boom years after 2000, when rapidly rising demand for electricity and roads increased pressure on supply. National made a special pitch for Aucklanders’ votes with a blunt promise to build more roads faster and to devote, over time, all proceeds of petrol tax to road building instead of diverting some to general spending — one of its comparative billboards was devoted to that message, contrasting a series of controversial low-quality spending programmes on Labour’s side of the billboard with the single word “roads” on National’s side. A tribute to the effectiveness of National’s roads campaign was paid by Michael Cullen’s sudden announcement on 23 June that $500 million claimed by the Inland Revenue Department from banks for under-reporting profits would be spent on roads, even though the matter was still in dispute.
This was another example of the contest of wills. Labour, which had in fact hugely increased future spending on roads, was determined not to let the argument go by default.
The second economic problem for the government was the huge Budget operating surplus, projected for fiscal 2004-05 at 4.9% of GDP ($7.4 billion) in the Budget in May, which had resulted from the roaring domestic economy and high company profits. Even after allowing for $1.9-$2.0 billion of extra spending in each of 2005-06, 2006-07 and 2007-08, operating surpluses of 4.3% of GDP, 3.3% and 2.3% were projected for those three years. Michael Cullen tried to convince the media and voters that this did not represent a pile of cash, since student loans, contributions to the superannuation fund, roads and other capital spending reduced it to a small cash surplus in the first two years and thereafter a cash deficit. But he failed, so the National party was able to argue with some force that its proposed $3.9 billion of personal and company tax cuts over the four years was affordable. Cullen’s argument was rendered more ineffectual when during the campaign he began to announce how he proposed to spend the $2 billion earmarked for new spending (most notably on the student loan writeoff). His predicament worsened when the pre-election economic and fiscal update issued by the Treasury on 18 August increased the projected surpluses to 5.6% of GDP ($8.3 billion), 4.7%, 3.9% and 2.5%.
Consequently, tax became a core issue of the campaign. National presented this not in terms of improved economic efficiency (the principled argument) but as goodies for voters, whom it invited to visit a website and work out how much they would get. Large numbers did. Anecdotal evidence (including from union officials) and polling suggest the tax promise may have wooed voters across the divide from Labour, including many wage workers: National claimed 85% of all taxpayers would pay no more than 19%. By comparison, Labour’s targeted Working for Families rebates (Labour called it “relief”) and threshold adjustment foreshadowed for 2008 was pallid. (It might also be surmised, though there is no firm evidence for this, that increasingly indebted householders, especially those on limited incomes who had struggled to buy overpriced houses, may have seen tax cuts as relief from mortgage pressure on the household budget.)
Labour’s counter to National’s tax promise was to claim it was either unaffordable or, if afforded, would create a “strategic deficit” to which it would respond in future with cuts in social services. A variant was to insist spending cuts were inevitable, since around $1 billion of the $1.9-$2.0 billion of “new” spending provided in the Budget would do no more than meet rising costs of existing services driven by demand and technological and wages cost-push, especially in the big-spending health service. Cullen was unusually aggressive in this counter-attack, reflecting the menacing plausibility in National finance speaker John Key’s fiscal calculations. And the party pamphleted state house tenants with warnings that National would push up rents.
National’s tax weapon was also blunted by New Zealand First. Leader Winston Peters, who was promising large increases on spending on his party’s core voting block, the “seniors”, declared the promised cuts unaffordable.
This was the nearest the campaign came to Clark’s “contest of values”: tax cuts versus social spending. It was in this sense that health was an issue: not that Labour was failing but that National might cut spending.
A variation on this difference was demonstrated in the two major parties’ different approaches to student debt. National promised it would make interest on student loans tax-deductible, on the imaginative ground that it was an investment on a par with a young tradesperson borrowing to buy tools of his/her trade. That is, National made student debt a tax issue. Labour promised to write off all interest on debt if the indebted former student spent at least half the year in New Zealand (or was furthering study overseas). That is, Labour made student debt a spending issue.
This was a middle class battleground which transcended generations. Labour found parents and grandparents switching sides in response to its promise, which underlined its sensitivity as an issue. Student leaders insisted high debt was a major reason many young people were leaving to live and work in other countries, either to earn higher incomes from which to repay the loans or the escape repayment. Don Brash rejected this argument but traded on it subliminally by joining the chorus of concern at the large numbers emigrating, many only temporarily but some permanently, especially to Australia where real wages were (are) much higher. He implied that lower tax and lighter regulation would over time close the wage gap and encourage more people to stay at home.
Labour’s student debt promise had an unintended consequence. It weakened the Greens’ pitch to students by narrowing the gap between the two parties’ policies. The Greens wanted “free” tertiary education; so did United Future.
But generally social issues were less issues per se than reflections of two other factors: out-of-touchness or insensitivity or arrogance; and capability and competence (or their lack).
Education was an illustration of out-of-touchness. In 2004 Education Minister Trevor Mallard started to push through a raft of forced amalgamations of schools, ostensibly to lift educational standards through greater critical mass but also to gain management efficiencies. In many affected communities there was very vocal resistance, which Mallard ignored until the electoral damage — highlighted by Rod Donald of the Greens and, later, by Bill English of National — impinged on Helen Clark’s consciousness and the programme was abruptly curtailed.
Education also provided the opening for English to undermine the government’s capability mystique. Variations in school scholarship and NCEA exam results, predicted but not forestalled, made Mallard and the government look foolish.
Likewise, the old perennial, law and order, was essentially a capability issue: understaffing of the police emergency 111 call system as the numbers of calls rose to an astonishing (and surely totally unjustified) 495,000 a year caused some mistakes and triggered a media frenzy. In the ultimate, law and order was probably not a large vote-moving issue: Labour had increased police numbers substantially and toughened penalties and started to build more prisons, which blunted attempts to make it major election issue.
Nevertheless, overall, Labour lost some of its capability gloss, enough to discourage concentration on capability during the election campaign as an element of Labour’s brand. Likewise, Clark’s failure to deal adequately with an incident in which she was driven at very high speeds to catch a plane to attend a rugby game on 17 July 2004, for which several police and her driver were brought to court in early August, undermined her claim as a Prime Minister of integrity.
But that illustrated a point made during the Australian federal campaign of September-October 2004. Prime Minister John Howard was shown conclusively during that campaign to have lied during the previous one. It did not affect his standing. For most voters the point was not whether he told the truth — politicians are assumed to lie at least some of the time. The point was whether he could do the job. The electorate’s answer was that he could. The obverse judgment was that his opponent, Mark Latham, could not.
The differentiation was not so stark in New Zealand. But Clark, for all her faults, was generally judged competent. Her approval ratings and her ratings as preferred Prime Minister in opinion polls were consistently very high. Brash, by contrast, lost ground on that score during the campaign. Rated very highly as Reserve Bank governor, he too often came across as absent-minded professor in the campaign. And the star of the campaign, John Key, was too new in the job, though he landed real hits on Cullen. National, in short, was not quite ready — a judgment shared, in private comments to me, by many in business and even by some senior National figures.
Which brings us to another issue (or at least, factor): tactics. Labour ultimately proved more tactically skilful and cynical, blunting National’s major promises in advance or overtrumping them. Though it lost the billboard war and maybe the television advertising contest (a more skilled judgment on that is for later in this conference), it showed long political experience, held its nerve when its pollster told it a week out it was 3% behind National and defeat seemed likely and produced an on-the-ground initiative which might well have made most or all of the difference of 2% in the vote between it and National.
This initiative was born 18 months earlier with a pilot “census” of voting in 2002 by state house tenants — or rather non-voting, for 46% did not. This was widened to cover the main centres and was followed up by telephone canvassing and then a huge mailout in the second last week of the campaign, topped off with an intense election-day sweep by volunteers to get tenants to the polls. Where this was done there was a noticeable lift in late enrolments and turnout in Labour’s favour. Where it was not done, as in the North Island east coast provincial seats, the swing against Labour was heavy and cost several electorate MPs their electorate seats.
Labour also campaigned effectively to blunt the Maori party vote by painting a scary picture of a Brash government to voters in Maori electorates, with the result that a large proportion of those who backed Maori party electorate candidates gave their party vote to Labour.
And Helen Clark put to good use her power to decide the election date. Until early 2005 she had talked of going “full term” and did not demur when that was interpreted as September. Then in early 2005 she became vague about the date. National and New Zealand First convinced themselves she would call it for late July (just before the trial of her motorcade drivers) and consequently started their campaigns in May. For New Zealand First this proved costly. In May Winston Peters promoted himself as an alternative leader to Brash and Clark but this was a mistake in a contest that was going to leave less room for smaller parties. His and New Zealand First’s support dwindled in June and failed to recover.
The Greens held their vote best of the small parties. Their tactic was to present a government-in-waiting with Labour. Labour used this to contrast the uncertain support for National and to encourage voters to stick with stability. Stability was United Future’s main pitch but it also attempted to indicate an ability to moderate both major parties (and to reassure National-leaning voters) by staging a coffee meeting between leader Peter Dunne and Don Brash.
ACT, beset by very low poll ratings, concentrated on having Rodney Hide win the Epsom electorate (supported with a thinly veiled hint at one point from Don Brash, though opposed by National’s Epsom campaign team). It thus succeeded in keeping two MPs in Parliament. ACT’s aim was to convince voters Hide would be in Parliament so voting ACT would not risk wasting votes which National needed. Hide’s having won this time will make that tactic more credible next time.
Tactics by outside supporters were also a factor. The Exclusive Brethren have been mentioned. Federated Farmers ran a fierce campaign against government proposals for public access to waterways bordering farmland, the review of high-country Crown leases and the Department of Conservation’s management of rural land — and did not tone down the campaign even though the waterways access proposal was heavily modified well before the campaign. The Northern Employers and Manufacturers Association campaigned strongly against the government on roads. On the other side the Public Service Association, the Engineers Union and other unions campaigned against the National party, including providing on-the-ground workers for Labour. All these outside supporters ran expensive advertising campaigns.
The unions were a factor in converting non-vote into a vote for Labour in low-income suburbs. The farmers’ campaign was probably a factor in lifting National’s vote in rural seats and provincial seats with a rural component. Agriculture Minister Jim Sutton, whose deafness to initial farmer protests at his proposals was another example of Labour’s out-of-touchness and, arguably, in its slowness to defuse the issue, its capability paid the high price of a big swing against him in both the electorate and party vote in Aoraki.
The unions are a Labour “identity group”. Over the past three decades Labour has widened its original remit of evening up life chances for the working class to evening up life chances for other “disadvantaged” or “marginalised” groups: ethnic minorities, women, the disabled and homosexuals. This last group is known within Labour as the Rainbow group, comprising gays, lesbians, transsexuals and intersex people.
Labour’s championing of gay issues, culminating in the Civil Union Bill passed in late 2004, laid it open to a charge of political correctness. This is a liquid phrase that can be poured into many bottles but generally in the campaign it was intended, by the government’s critics, to signify eccentric — that is, non-centrist — behaviour, for example, through taken a decidedly liberal moral stance or intruding into private pleasure (a ban on smoking in bars) or over-concerning itself with the “rights” of “extreme” groups. This may over time have contributed to the desertion since the mid-1970s of many conservative (mainly male) wage-workers who once, in Labour’s working class days, would have been near-automatic Labour voters.
The National party hoped to accentuate this desertion in 2005 and presented itself as concentrating on “mainstream” issues in contrast to Labour’s supposed minority interests. Whether it succeeded is for other contributors in this conference to adduce evidence or otherwise. Don Brash, a moral liberal who nonetheless changed his Civil Union Bill vote from for to against, clearly thought it did succeed. In his post-election reshuffle of spokespersonships, he created one for “political correctness eradication”.
In fact, Helen Clark has set out as Prime Minister to redefine the centre and identify Labour with the centre and the centre with Labour. The 2002 election gave Labour hope she might be succeeding but the 2005 election made it clear the battle for the centre is still undecided and National is now a strong contestant. It was therefore no surprise that in her first speech after forming her new government, Clark made her highest priority the development of a new consensus on economic development and began to talk of building a “New Zealand way”.
Another set of identity groups are ethnic minorities, especially Maori. Generally immigration was not a nub issue in this election — migrant numbers had fallen away and few who had not long ago moved their vote were susceptible to New Zealand First’s scare tactics on refugees and potential terrorists (National piggy-backed on this by promising fewer refugees). But the Treaty of Waitangi was arguably the deepest and most powerful issue running through the campaign.
The Treaty is shorthand for a raft of issues relating to the status of Maori generally, iwi and hapu, their place in the power structure, society, economy and national culture and the reaction of non-Maori to the radical change since the mid-1980s in that status and government policy.
This is at the core of the nation. National put itself on the electoral map in 2004 by taking a hardline “one law for all” line. Labour may owe as much as 1%-2% of its final vote to adverse reaction by liberal whites, Maori and Pacific islanders to National’s hard line. The Maori party emerged as a force in the Maori electorates.
I have written and spoken a great deal about this elsewhere [Endnote5], so will not expand on it here. Suffice to say that, after June 2003, the Treaty became overtly central in our electoral politics, both at a deep, almost subconscious, level, and at the level of superficial talkback radio argument and at many levels in between. It is likely to remain central for some elections to come. Arguably, one of the most important outcomes of the election was the reluctance of the electorate, taken as a whole, to follow the hard line taken by Don Brash. The National party’s own rethinking of that line is instructive in that respect.
A final factor in the election was that it did not end on 17 September. First, the final count took two weeks — for which there can be little justification in the e-age — and government-formation negotiations could not begin in earnest until then because the final count altered the composition of the House and gave Labour a slightly greater advantage over National than the election night count.
Then there were two weeks of negotiations between Labour and New Zealand First, United Future and the Greens, with competing proposals from National (backed by ACT) to New Zealand First, United Future and the Maori party. There was a glimmer of doubt about the outcome until the formal announcement of the new, “innovative” governing arrangements on 17 October.
Again, I have written and spoken about this elsewhere. [Endnote6]
So what did we get? Essentially, National recovered its vote, doing best in its strong city seats and rural seats. Labour held its vote share and picked up votes out of non-voting. So those expecting a landslide to National were right and those expecting Labour to hold on were right.
The election looks like a near-parallel of 1969 and 1981, when the government squeezed back and when it could be said the opposition was judged not quite ready. Both narrow wins were followed by economic deterioration, decay within the government and loss of the next election.
The economy here is slowing and that might develop into a hard landing. The arrangement with Winston Peters is inherently (though not inevitably) unstable. The 2008 parallel with 1972 and 1984 looks a good bet.
But that reckons without Helen Clark’s determination and without the impact of minor parties, coming or going, waxing or waning, on the final result. And not least in that calculation is the Maori party. If it can develop into a coherent party with a clear programme and deepen its organisation and networks, it might well be one of the waxing parties next time. In that case there is a fair likelihood it would hold the balance of power, with options for leverage with both Labour and National.
There will almost certainly be eight Maori seats after next year’s census and Maori electoral option. It is just possible — though no more than possible — this might be the most important legacy of the 2005 election.
Endnote 1 Attorney-General v Ngati Apa  3 NZLR 643 (CA)
Endnote 2 Dr Don Brash, “Nationhood”, speech to Orewa Rotary Club, 27 January 2004
Endnote 3 Ambassador Charles J Swindells, “Silencing the Echoes of the Past”, address at the 4th of July Celebration, 4 July 2005
Endnote 4 Crosby|Textor website http://www.crosbytextor.com.au
Endnote 5 See “Ruataniwha — a double take on the Treaty”, speech to the Ngai Tahu planning summit, 13 May 2005, “Four million people in search of an idea”, address in the State of the Nation series at the Auckland Anglican cathedral, 24 July 2005, and “After the Treaty: a new fiction”, Bruce Jesson Memorial Lecture, University of Auckland, 14 November 2005 at “Speeches and Briefings” on http://www.ColinJames.co.nz.
Endnote 6 “Whatever it takes”, comments to an Australasian Study of Parliament Group seminar, Wellington, 30 November 2005, in “Speeches and briefings” on http://www.ColinJames.co.nz.