When the Prime Minister gets back from her mountaintop there’s a job waiting: clean out the fridge.
Just look at the jumble in there: some vegetable has squished out of its plastic bag all over the tray, the pumpkin has fur and potatoes have sprouted; up above are half-eaten cheeses, curling salamis, old cold chicken and lamb, curdled yoghurt and cat’s meat the cat won’t go near any more.
There is a lot of cleaning up to do after the second-term party and the end-of-term election. Just as well the Prime Minister is getting a good break.
A good thing, too, that Michael Cullen has escaped the Wellington fug to the crisp Hawkes Bay air where he aims to do some concreting. He’s been grumpy of late. Steve Maharey needs time off from watching the wrong box, into which he has been stuffing unworkable ideas and has now parked Sir John Anderson. David Benson-Pope could reflect on his bad marks for English and Trevor Mallard on his caning for NCEA and school closures.
Truth is, there’s quite a bit to fix if they are to stop Trader John Key in his upward tracks.
Start with the economy. It oozed out of its constraints in 2004 but ministers tiptoed around the widening mess for fear of breaking the spell households were under before election day. Then ministers joined National MPs to egg households on by making massive election promises — as if the party could go on forever.
There is some reason to party quietly. Underneath, the economy is resilient and flexible and more solidly based than for decades.
But it’s time to square the accounts. Business has known that for a while and now consumers have cottoned on — not least because Beehive pronouncements have lost their rosy hue and the Reserve Bank and the Treasury have been jawboning big spenders, to undo the “serious imbalances” and “overvalued currency” and “overpriced houses” and heavy indebtedness.
These constitute the biggest and messiest leftover from the second term. Is the government helping with its large fiscal injection or is it still stoking the very fires Alan Bollard is trying to quench? Cullen, who is said to be critical in private of Bollard, reckons the first, the “automatic stabilisers smoothing the slowdown”. A raft of economists think the second.
They disagree on taxes, too.
Cullen pleads poverty against tax cuts, not least now because he has to find $550 million a year to replace the carbon tax and meet the Kyoto carbon deficit.
But at least that is a start on cleaning up what new Climate Change Minister David Parker in effect conceded was bad policy. Kyoto, a noble ideal, turned into one of the second term’s sloppier messes as estimates slid drunkenly from healthy surplus to costly deficit.
The bad news for business is that uncertainty still rules. It will be June at least before the new mix of Kyoto measures is promulgated. The good news is that in his first two months in the job, Parker appears sure-footed and comfortable with complexity.
And, for all Cullen’s poverty pleas, he did join Peter Dunne in December in promising “very bold” moves in business tax reform, to be made public in June. There is already significant progress on tax simplification and administration in the bill brought down last May.
But on personal tax the direction is towards complexity. The Working for Families package got bigger during the election and now scoops 350,000 families out of independence and into the government maw — fine in the short term for the beneficiaries they have become but tough for them when the last kid grows up and a headache for some future government wrestling with its high effective marginal tax rates.
And it didn’t quell a desire for personal rate cuts even among Labour supporters which the threshold adjustment in 2008 will not assuage — assuming it goes ahead.
One way to make some fiscal room is to fix the quality of spending. The second term showered poorly aimed or misdirected or inadequately audited programmes, across a range of portfolios. The cabinet began to look lax.
Mallard has the job of fixing that. Cullen has the job of fixing the source of a lot of it, tertiary education. Maharey has the job of fixing the NCEA, one of the worst second-term messes and one which knocked it off its poll perch early in 2005.
It’s a case of ministers cleaning up each other’s messes. Will it work?
The good news is that on all of those work started in earnest before the election (as it did with Kyoto).
The same goes for infrastructure. Roads were a big black mark in the second term but the big spend now under way should erase that. Electricity was only just not a mess in the second term. That might turn out to be a vote-killer this term.
At the heart of that issue is whether to ride over local sensitivities under the Resource Management Act. A small first step has been taken with the commissioning of a report into whether an override is justified for the Waikato transmission lines. Makara’s wind farm is a useful pointer.
So there is a pattern: the government got into some messes in its second term but also began to address them — though whether effectively or not is a matter of perspective.
Infrastructure issues are an element of a big challenge which the government has put at the heart of economic policy: getting productivity growth up. Three points stand out after two terms: innovation is still underfunded, trade and technical training likewise and the regulatory direction has leaned against workplace flexibility and profitability.
Which leads to another big challenge: Australia. Some progress was made in the second term, after not much in the 1990s. There remain some big blockages yet in the way of the “single economic market” which would make doing business in Australia the same as here. Much depends on the much-overworked Cullen on that front.
Next thing to fix: the sick unemployed. New Zealand is in good company — the whole of the OECD — in our blossoming sickness beneficiary rolls. If Benson-Pope, a decidedly uncuddly Social Development Minister, can (improbably) find a way of reversing that, he will expunge his tennis ball fiasco.
Elsewhere in the social services we find the architect of the carbon tax, Pete Hodgson, plunged into aged care: badly underpaid staffs, a sector in very deep transition, foreign companies arriving to cash in and a complicated funding system.
If Hodgson can balance all that and not break the bank — and he must — he will smell of roses, too.
One smelly outfit at the back of Clark’s fridge is Television New Zealand. Will technological change resolve its impossible dual mandate? Will Anderson’s reputation be irrevocably damaged? In this case the architect, Maharey, is still in charge.
There is a bigger leftover: the proliferation of political appointments on state-owned enterprise boards, the sprawling diaspora of Crown entities, many of which should logically be parts of departments, and three dozen departments when one dozen would be logical.
This tangle makes it much more difficult to get “whole-of-government” and “joined-up-government” out of rhetoric and into action. And it makes making messes more likely.
And who gets the blame? Where ministers can get away with it, the bureaucrats do. But in the second term ministers found they could get away with less than in the first term. They will get away with even less in the third term.
The cost of the mistakes and messes in the second term was that the cabinet’s reputation as a bunch of competent operators — which by and large they are — was seriously dented.
Getting back that reputation for competence is a huge challenge for Clark’s third government. If it fails, it is dead meat at the next election.
And can Clark do that with Winston Peters as Foreign Minister? That created a constitutional muddle. Whether Clark, a Prime Minister of formidable brainpower, determination and capability, can make apple pie out of that muddle will decide much about her place in history.