Changing climates — water under the bridge

Colin James speech to the Water and Wastes Association Conference, Rotorua, 18 September 2007

We are a people of few words. How do I know that? Because we are about to have our second monosyllabic election in succession: Brash v Clark in 2005; Key v Clark in 2008. All you have to remember is not to put an e on Clark and an s on Key.

The last multisyllabic Prime Minister was Holyoake and before him you have to go all the way back to MacKenzie for four months in 1912. Mostly we have simple bisyllabls: Savage, Fraser, Holland, Muldoon, Bolger, Shipley — though out of the Labour party’s eight Prime Ministers [Savage, Fraser, Nash, Kirk, Rowling, Lange, Palmer, Moore and Clark] half have been monosyllabs. And after Clark you get Goff. In fact then you would have double-monosyllabs: Phil v John, Goff v Key. You can’t it simpler than that.

You can see why Luamanuvao Winnie Laban and Georgina te Heu heu — or Christopher Finlayson, for that matter — have no show of being Prime Minister. You couldn’t pound the table about Luamanuvao Winnie the way you can about Helen (and people do bang on about Helen, not least in emails and letters I got after last week’s column about her). By the time you’ve got the name out, you’ve used up all your emotional energy.

You can see why Nordmeyer had no show against Holyoake in 1963: two tri-syllabs. Stick with the tricycle you know .

I hope you’re not waiting for me to draw some deep and insightful message from this. Well, there isn’t one. It’s just curious. In our sorts of societies we seem to go for short-name leaders. Bush v Gore (George v Al) in 2000: John Kennedy in the 1960s and Dwight Eisenhower in the 1950s were standouts in a twentieth century of bisyllabic presidents (and three monosyllabs) (though they did have monosyllabic first names). You can see why Peter Costello never really had a show of pushing John Howard aside for the top job in Oz: three syllables to Howard’s two.

Oz, by the look of it, is on the way to Rudd, another monosyllab. Kev. Helen Clark has been watching to see how the old master would see Rudd off. So far there aren’t too many clues. Big spending and big gestures aren’t doing it. Not very promising for Helen for next year.

The odds are on a Key-led government after 2008. If so, he will have got there after six years in Parliament, which would be the fastest of anyone. Don’t rule Helen Clark out. She will do what she has to to win and that will include personal tax cuts. She will fight till 9pm on the Friday. But the government is showing wear and tea. Household finances are tightening. And John Key is the next generation, has fired up his party and is highly plausible, non-threatening and connective. His negative is inexperience and lack of knowledge. He is trying to fix those.

Key is smart enough to know that voters want some change but not much, especially the voters he has to win off Labour. So he’s squared off policy where there is a risk of voters returning to Helen. Next year he will mark out a handful of points of difference, principally in tax and regulation but also to some extent in social policy — and with a preference for market-based solutions over regulation and self-regulation over government regulation.

Which gets me to my theme: changing climates.

My first change of climate is in politics — from a bit left of centre to a bit right of centre. If there isn’t such a change in 2008 there will be in 2011. But it will be fairly mild. We will only really notice the change after three terms — at least, that’s the gameplan. John Key and Bill English have studied Howard — and Clark. After four terms of Howard’s modest term-by-term changes the policy settings are distinctly, though not dramatically, different from the Hawke-Keating settings. Clark likewise [except that she has been more dramatic on the social/moral front, which is in part her undoing.]

What these sorts of changes in political climate do, if the new weather patterns hold for a while, is shift the centre. It shifted a long way after Sir Roger Douglas and Ruth Richardson pulled out the economic props. It shifted a bit under Helen. It will shift a bit under Key.

My second changing climate is in the economy.

First, in the short term, a cooler breeze is starting to blow into households, which been basking in an endless summer haze. A rebalancing is under way. The domestic economy is slowing, households having gorged on debt to the point where there are no more notches on the belt — and in any case the supply is less generous: foreigners are less interested in funding banks in an obscure part of the world, so mortgages will be fewer and more expensive and so the housing market will slow. That should help ease the currency down, which on the Reserve Bank’s reckoning is right now 7%-8% above the “equilibrium” level. So in time exports will be favoured over imports and the horrendous and unsustainable balance of payments deficit eased a bit.

Second, over the past 10 years the terms of trade have been moving our way as China’s entry into the world labour market and the productivity gains from computerisation have reduced the world prices of manufactured goods and many services. More recently, for a variety of reasons — the rise of middle classes in Asia, the conversion of good food land to ethanol production, droughts in Australia, water problems elsewhere — world food supply has fallen short of world food demand, which is good news for our primary exports — for the next 10 years or so. But it makes life harder for traditional manufacturing: niche manufacturing and high-tech ICT and bioscience-based ventures should do alright but there are questions whether we can get to the New Zealand Institute’s ideal “weightless economy”.

Beyond 10 years the picture is less clear. South America is coming up fast as a competitor in efficient pastoral farming, some of it funded by investment by the likes of Fonterra and PGG-Wrightsons. And there are climate change issues.

There is also the place of tourism: if we want a higher-wage economy, commodity tourism, which is a low-wage occupation, will need to be a relatively smaller part of the economy.

My third changing climate is our place in the world: we are being moved from a warm, cosy climate to one where we can’t be sure if there will be frost or sunburn. First, the climate is changing inside New Zealand. We were comfortably British, or ex-British — one culture, one way of doing things. We are now at the same time decidedly ex-British, on our own and more confident about that, and decidedly more Pacific, bicultural officially and, slowly but increasingly, in our everyday lives. We used to be in the Pacific. We are now increasingly of the Pacific. This is much more apparent to a 25-year-old than to a 55-year-old. This is a profound change and it is unidirectional.

But, second, the Chinese and Indians are coming. We have been reassuringly in the Atlantic tent, kin (most of us) with those in Europe and the United States whence have come the great bulk of new science and technology and the overwhelming weight of the ideas of how to organise society, the economy and politics. But we — and Australia — are inexorably being moved into the Asia sphere of influence and we will have to get used to more and more of the world’s driving scientific and organisational ideas coming from China and other Asian societies. This will be a huge wrench — but it will be assisted by Chinese and Indian and Japanese and Vietnamese investment and people. They work hard, learn hard and save hard. We don’t. The future, unless we change our habits, is obvious — and it is not a simple continuation of past trends.

My fourth changing climate is the climate. By that I don’t mean the science: melting ice caps, disappearing polar bears, the sea coming over the road and in the front door, extreme weather events, failing crops, tens of millions of refugees –to hear some people tell it, by sometime next Tuesday afternoon. I will leave the science to the scientists. I am more interested in people’s and governments’ reactions to the science.

According to the International Panel on Climate Change, climate change will be benign to New Zealand through the next 10 years or more: we will be able to grow more, though with a bit less water and a bit less reliably. In a world that is going to have more troubles than New Zealand that is a good story. It is an even stronger story when you look at the rapid and serious over-extraction from aquifers in India and China. The green revolution in India, which enabled India to feed its huge expansion of population, depended on water from the ground. In the north of China the massive industrial expansion has depended on water. But now wells are running dry in both countries — and the huge Himalayan ice reservoirs are diminishing. This is potentially a brake on the economic development of both countries. It will also make at least India more dependent on food imports.

But the real issue is what consumers and retail chains and insurers and investors — and governments — do. Tesco is developing a carbon profiling system. WalMart has told Dole it wants carbon-neutral bananas. The European emissions trading system is likely to add airlines to the list for phase three. Nicolas Sarkozy has mused on climate-change-based tariffs and Europe may well go that way if there is no international agreement for the post-Kyoto — post-2012 — period. Sarkozy and Angela Merkel of Germany have already begun to push Europe toward a more aggressive stance against countries which use various devices to undermine the competitiveness of European businesses — that could easily be tweaked in the future to encompass non-climate-change-friendly economies.

New Zealand is not part of any trading bloc. [Australia doesn’t count.] It depends on trade and its lifelines are very long. It is an easy target and has already been targeted by chattering-class journalists in Britain.

One way of deflecting this is by beefing up the brand.

Beefing up the brand could mean becoming greener than green: really clean, really green, really pure, instead of actually dirty, brown, impure but empty. But that would mean fewer of the world’s most climate-friendly cows. It would mean shutting down an aluminium and a steel plant that are in the world’s top echelon for greenhouse gas efficiency. It would mean a lot more trees. It would mean less coal use (until carbon capture and storage comes in). The upshot of that self-denial would mean we would sell less to the world. And the world would be dirtier than it need be.

Or beefing up the brand could mean:

* proclaiming New Zealand as greenhouse-gas-efficient, the best place in the world, from the point of view of the planet’s gain, to do things such as food growing or aluminium or steel — and proving it by, for example, growing swags more trees, concentrating on renewable electricity and phasing down fossil-fuel dependency, getting farms far more nitrogen-efficient, cleaning up waterways, hugely improving the greenhouse-gas efficiency of buildings and transport, and so on;

* working with developing-economy countries on a rational policy post-2012 for land use, land use change and forestry which would reduce deforestation and illegal logging in tropical countries (at a cost to rich countries);

* working with developing-economy countries on a rational policy on agriculture which recognises the intractability of animal methane while pouring resources into research on the topic and helping develop carbon-friendly tillage;

* working with developing-economy countries to develop sectoral agreements for the likes of cement, aluminium and steel, which are inescapably energy-intensive (and which, in the case of steel, require coal) to get their new plants up to best-practice;

* and much else, which there is not time to go into.

But that means changing the climate of the debate here: the government needs to recognise that “consultation” will not do; there will need to be “engagement” in which the government is an equal, not a superior, player in getting a New Zealand Inc approach that everybody who counts is committed to. I suspect that even the most ardent apostle for climate change, schooled and skilled in predicting apocalypse, would conclude from looking at our political system and the behaviour of our political parties that “engagement” and “widespread commitment” is beyond even their capacious imaginations.