In today's email we survey the post-election landscape presided over by Winston Peters, who is giving little away but nevertheless providing plenty to talk about.
1. 'Nine permutations of Government'
Winston Peters hogged the spotlight in a car crash of a news conference in the Beehive Theatrette yesterday afternoon that was heavy on spectacle and light on information.
Among the few skerricks to be picked from amid the wreckage were:
Peters confirmed he would not hold substantive negotiations until after the special votes were counted on Saturday October 7. He has previously told Newsroom's Sam Sachdeva he would decide by October 12 which way he would go. That's the day the writs are returned to confirm the result.
He said his negotiating team would include seven or eight people, although he did not name them. He said the full New Zealand First board would be consulted before the decision, while the full party membership would also be consulted, but not have a final say.
He said there were nine permutations of Government that he could see, rather than the two coalition arrangements most people talked about, although he would not detail what those nine permutations were.
He said this would be his last news conference before October 7, although shortly afterwards he gave an interview to Sky TV Australia in which he said he would be prepared to compromise on his 'bottom-line' of holding a referendum on abolishing the Maori seats.
"The Maori Party itself are a race-based, origin of race party who got smashed in this election and it's gone. So some of the elements on which the promise was made have just changed, that's all I can say," he said.
2. A view from the dashboard
Newsroom's Sam Sachdeva and our photographer and editor Lynn Grieveson went to yesterday's news conference to listen, ask and take photographs, which can you see sprinkled through this email.
Peters was his irascible, mercurial, combative, grinning, bombastic and dismissive best or worst, depending on your point of view or moment in time.
Sam noted down his thoughts for Newsroom Pro on what must have been the most unusual and frustrating news conference held in the Beehive since the days of Muldoon, who is some sort of model.
Informative? Barely. Educational? Hardly. Entertaining? Absolutely, Sam wrote.
Tuesday afternoon’s spectacle was a quintessential Winston Peters press conference, albeit in new environs: the Beehive theatrette, traditionally reserved for briefings from the Prime Minister of the day.
Some could be tempted to see the choice of venue as a sign of Peters’ aspirations - a thought the man himself was quick to cut off at the knees.
“This meeting’s being held here for the reason that our caucus is being partially renovated - and for no other reason in case somebody has a penchant to rewrite this as well.”
From there, it was about 23 minutes of insult comedy - or plain insults in some cases - hurled at members of the media from the bully pulpit, with New Zealand flags draped behind him.
“In the campaign I saw a lot of people who are voters but I didn’t see many of you, and what’s astonishing about the requests that are coming from the media at the moment is how many people turned up after the election when we couldn't affect the result who somehow think we’ve got a terrible responsibility to be fulfilled where the media of this country is concerned?”
“Something’s gone wrong with our democracy,” Peters pronounced as he leaned on the lectern with both elbows, decrying “the crap that some people are putting out, malicious, malignant and vicious in the extreme”.
He even brought props, brandishing the morning’s Dominion Post as an example of journalism without “integrity”, along with data on NZ First’s performance on special votes at the last election.
By and large, Peters stuck to his lines from election night and the morning after: he and his party are in no rush, waiting to see how those special votes affect the overall makeup of Parliament on October 7.
“What we’re going to do is make a decision in the national interest when we know what the people in this country have said, and in what numbers, and when we know with precision what we’re dealing with.”
The NZ First leader drew from his usual bag of tricks: questioning the media’s questions, slinging around personal insults, and in one case giving one foreign journalist cause to question whether it was worth the trip across the ditch.
“Where are you from?” “Australia.” “It shows.”
Early on, Peters declared this would be his last press conference before the final vote count was announced on October 7. With the composition of Parliament likely to shift slightly - and NZ First’s leverage with it - that seems fair enough.
And with more heat than light coming from Peters’ appearance, perhaps it’s worth everyone having a breather and waiting for the real negotiations to take place.
3. Peters wants Yang Inquiry
One question Newsroom did ask at the news conference was whether Peters was determined to carry through with his pre-election call for an inquiry into Jian Yang, the National List MP who trained spies in China for over a decade.
Peters said an investigation into Yang would not affect his negotiations with the National on forming a government as Yang “was not the National Party, he is one member of it.”
"Someone has raised some serious allegations, really serious. Those allegations if they’re not true are defamatory and libellous, and I'm not going to let them just slide by no, so I think an inquiry should be held.”
A Newsroom investigation earlier this month revealed that the National MP’s had studied and worked at the Luoyang languages school in China’s Henan Province - part of the People’s Liberation Army’s Third Department which spies on foreign countries.
He also attended another PLA institution, the Air Force engineering school, for five years. At a media conference following Newsroom’s story, Yang admitted he had not declared he had attended the PLA institutions when applying for a visa to enter New Zealand but instead named “partner universities”.
He said that was what the “system” had told him to do. He also confirmed he had been a member of the Communist Party and a “civilian officer” in the PLA.
Speaking in Dunedin before the election, Peters called on September 14 for an urgent inquiry into Yang.
"The influence of the Government of China is real within the New Zealand Government. This is not a spy thriller from the airport bookshelves,'' he said to loud applause.
“New Zealand became vulnerable the moment National recruited Dr Yang,” Mr Peters said.
“His decade of work with Chinese military intelligence had only now been opened-up, but not yet laid bare. He sat on the influential Parliamentary Foreign Affairs, Defence and Trade select committee.
"That made his background working with China's military intelligence for a decade seriously significant.”
Yang says he was never a spy but conceded that the students he taught went on to “collect information” on other countries; “if you define it that way," he acknowledged, “then they were spies.”
Last week, in a statement to Newsroom Yang said all the information he had given to the New Zealand authorities about his previous employment and education was “correct and truthful”.
However, a version of Yang’s citizenship file released under the Official Information Act to Newsroom by the Department of Internal Affairs was heavily redacted, including his workplaces for the previous 10 years at the time of application in 2004.
Yang attended National's election night celebrations at Sky City Convention Centre, where he was interviewed by Panda TV channel 37 -- a local Chinese language television network. He has declined interview requests from English language television stations.
4. So what is Labour saying?
As Mark Jennings reports this morning on Newsroom, Labour has been very quiet on the issue of Jian Yang.
Labour has not joined Peters’ call for an inquiry and has remained silent on the Yang story.
The party was in Government when Yang was granted residency and later citizenship. Like Yang, Chinese Labour MP Raymond Huo has been a strong supporter of the communist Chinese government.
Huo raised eyebrows in some parts of the local Chinese community when he began using a quote from Chinese Premier Xi Jinping as the Chinese version of Labour’s campaign slogan “let’s do this.” (As seen above and in this tweet from Huo)
Like Yang, Huo is involved in “United Front” activities here in New Zealand.
The United Front is the name of the Chinese body that represents all political parties in China but is controlled by the Communist Party and works on managing relationships with individuals or groups with influence, inside and outside China.
Huo told RNZ in a report on Xi Jinping’s 2014 visit to New Zealand that the Chinese community was “excited about the prospect of China having more influence in New Zealand “
Huo was not an MP at the time but came back into Parliament as a list MP this year when Jacinda Ardern's success in the Mt Albert by-election made her list seat vacant.
He is pictured below shaking President Xi's hand at a photo opportunity during his visit to Auckland's Sky City Grand Hotel in November 2014.
5. The Winston Whisperer
Newsroom's Tim Murphy looks behind the scenes at who is advising Winston Peters in this piece for Newsroom, including Paul Carrad, a former advertising and PR man.
He could be mistaken for a bodyguard, so close has he been at Winston Peters' side this election campaign, Tim wrote.
In numerous pictures (taken by Sam Sachdeva and others) of the New Zealand First leader on the hustings, including those on election night and the morning after in Russell, a tall blond man wearing a suit and tie is in the near background, often walking a step behind the Kingmaker like a royal courtier.
He is Paul Carrad, no Diplomatic Protection Squad member but Peters' key aide on the campaign and a man considered likely to remain close, but in the background, in this next critical phase of coalition negotiations.
Carrad - known as PC - is one of those whom departing NZ First MP Richard Prosser described yesterday as "others on the outside" who Peters is close to and whose counsel he takes.
A former advertising man turned sports agent, fundraiser, tourism cruise operator, corporate communications guy, government relations strategist and lobbyist, Carrad has been by Peters' side for weeks and close to him for years. At Russell on Sunday morning when Peters gave a media press conference on the waterfront, Carrad stood a few metres back, just out of shot. On election night he hovered as Peters was photographed on the Duke of Marlborough hotel deck.
Carrad retired with Peters and his partner Jan Trotman to their Whananaki bach on Sunday and it was him who dealt most with the media post election rather than Peters' press secretary.
It was Carrad who, during the infamous Peters interview with Guyon Espiner on Morning Report during the campaign, was sent off to Peters' vehicle outside to fetch a letter from former Prime Minister Helen Clark and deliver it later, live on air, to the studio.
He is known as a top tier dinner party guest, a raconteur with access to influential figures in politics, government, business and sports. But crucially, according to those who know him, he is keenly informed on public policy issues, current affairs and media, clever and someone who can join the dots of political strategy.
Those who have watched his proximity to Peters through the final stages of the campaign remark that Carrad would have been good for the 72-year-old NZ First leader. He is not considered rash, weighs his options carefully and can draw on a wealth of viewpoints.
"Paul is a deal doer," one contact of his said yesterday. "He has worked very closely with Winston for some years. Paul has a very strong commitment to regional development.
"I would think one of the keys for Paul and others is how to lock in life-after-Winston [for New Zealand First] through a coalition deal."
Carrad is a man of many talents. His LinkedIn page has 30 'featured skills' listed.
He is a connector and networker among the rich, famous and powerful in two countries, New Zealand and the place he spends much of his time, the Cook Islands. One observer called him "the number one Kiwi up in Rarotonga". Since 2001, through his consultancy Pacific Communications Ltd, he has managed the development aid relationship between the Cooks government and the European Union.
A former Cook Islands foreign minister, Wilkie Rasmussen, lauds Carrad on LinkedIn as "truly one of the best ... sound analytical mind and always up to date with current affairs."
His involvement with Peters has been most obvious through the campaign but the two have been linked closely for years. They would have crossed paths over the decades in Wellington, Carrad's home town, where in the 1980s and 1990s he worked in advertising and then government relations and PR consultancies. He has been a committee member of the Royal Port Nicholson Yacht Club, a former council member of Sailing NZ and was on the NZ Olympic Committee.
Carrad helped NZ cricketer Jeremy Coney and international golfer Greg Turner "with commercial aspects of their careers" and co-owns a Fiordland charter vessel, the MV Pembroke, with Turner and several other parties.
New Zealand First is yet to reveal who will conduct negotiations on its behalf alongside Peters, except that there could be seven to eight on the team. But those who know Carrad expect him to be in the background advising and acting as a sounding board rather than in any public role.
6. The cost of Winston's policies
Newsroom's Sam Sachdeva had a good look yesterday at the range of costs for New Zealand First's various policy options to see which are the big ticket items that might to too rich for both sides and the smaller ticket items that could be agreed to.
Figuring out where the major parties sit ideologically in relation to NZ First is easy enough: broadly speaking, Labour may fare best in areas like foreign ownership, education and immigration, while National could be better placed on law and order, welfare and Maori issues.
Beyond any baubles of office, the hardest part will be accommodating some of the minor party’s policies while making the budget work.
With both National and Labour pledging to maintain an operating surplus and reduce government debt to 20 per cent of GDP (the former by 2020, the later by 2021/22), any large new commitments will force some juggling and re-prioritisation of their own plans.
While Steven Joyce’s claim of an $11.7 billion “fiscal” hole in Labour’s plans was widely laughed out of town, it’s true that Jacinda Ardern and company have little room to move in terms of new spending commitments (although the same is true for National to a lesser extent).
Pinning down Peters on the fiscal particulars is also a difficult task, as RNZ’s Guyon Espiner found out during a now legendary Morning Report interview.
So which policies will be the easiest to fit into the books, and which will cause the greatest headaches?
During that interview with Espiner, Peters estimated his party’s policies would cost roughly $10 billion in investment and borrowing over “about seven to eight years”.
However, NZ First’s tertiary education policy alone - which includes a universal student allowance and wiping student loans for those who stay and work in New Zealand was estimated to cost $4.6b a year at the party’s regional conference in June.
Both National and Labour said at the time the policy was unaffordable; Labour has costed its own plan of three years’ free tertiary education at $265m in the first year, rising to $1.2b once fully implemented.
Another hefty policy is NZ First’s pledge to take GST off “basic food”.
The party’s own website said that would cost $3b a year, but Peters told Espiner the actual cost would be between $600m and $700m.
The ambiguity around what counts as “basic food” makes this one a little hard to cost, but NZIER estimated Labour’s 2011 pledge to take GST off fresh fruit and vegetables as costing nearly $250m a year.
A promise to cut the corporate tax rate to 25 cents would cost about $2.5b, Peters told Espiner, although some estimates have put it lower, at about $1.4b.
Giving local government the GST from foreign tourism would cost $1.5b a year in lost revenue, the party estimates.
Then there is Peters’ pledge to move container operations from the Ports of Auckland to Northport, near Whangarei, within 10 years.
Kiwirail has estimated simply upgrading the Auckland to Northland rail line would costs billions of dollars, while a Port Future Study released in 2016 estimated the cost of moving the port to the Manukau Harbour or the Firth of Thames at between $4b and $5.5b.
Those headline policies alone take you into the billions of dollars. Then there are policies which could have a significant but less tangible impact on the economy, such as cutting immigration levels and renegotiating free trade deals.
With Labour, there are some policy overlaps that would make life easier for Ardern, such as free driver’s licence training and testing for students, as well as a move to 26 weeks’ paid maternity leave.
However, the party’s fiscal plan gives it only $3.2b in unallocated spending over the next three years, compared with $4.2b for National by its own calculations.
With Ardern recommitting to Labour’s budget responsibility rules, that could make life harder for her when it comes to meeting Peters’ demand.
Bill English and his team would also have to make some spending changes if it was to adopt a significant number of NZ First’s policies.
There are smaller ticket policies that could carry a heavier symbolic weight, such as fulfilling Peters' pledge to properly fund smaller regional airports (estimated by the New Zealand Airports Association to cost $32m over five years).
Labour or National could also boost their own police promises to meet NZ First's target of 1800 sworn police (Labour estimates its plans to gradually hire 1000 sworn police to cost $40m a year).
7. Five scenarios for the special votes
Paul Young from the Morgan Foundation has written a useful analysis of where the special votes might fall and how it could change the political calculations after October 7 from the current 58 to 52 split of seats between National and the Labour-Green bloc.
With his permission, here is the analysis below, which suggests that if the 2014 pattern is repeated then National could drop two seats (from 58 to 56) and the Labour-Green bloc could win two seats (one each to Labour and Green) to make the equation 56 to 54.
However, there is a scenario where if the huge increase in special votes was from the young and went to Labour, then National loses three seats (two to Labour and one to the Greens), which would make the split 55 each for Winston to choose from.
Here's Paul Young's analysis below:
On the provisional result, the 2017 election is New Zealand’s closest MMP election yet in terms of the gap between the Left and Right blocs. With a record 384,072 special votes (around 15 per cent of the total) still to be counted, the final result will be even closer. While the special votes will not change the fact that either bloc relies on NZ First to form a government, they could have an important impact on negotiations – primarily for the prospects of a Labour-Green-NZ First coalition. They are also important to the public discourse around coalition options.
Special votes have consistently favoured the Left in recent times, particularly the Green Party. Special votes include overseas votes, dictated votes, and votes cast by people who enrolled during the advance voting period. The latter category is especially important to watch this election due to an apparent late surge of predominantly younger voters (the fabled “youthquake”).
The provisional election result has National on 58 seats, Labour on 45, the Greens on 7, New Zealand First on 9, and ACT on 1. Projections by Graeme Edgeler and Chuan-Zheng Lee show that if the special votes follow a similar pattern as in 2014, National will lose two seats: one to the Greens and one to Labour. This will put Labour and the Greens on a combined 54 seats: very close to National’s 56. A Labour-Green-NZ First coalition would then command a comfortable majority of 63 seats.
This result appears likely, but how confident can we be? Curious, I made a spreadsheet tool to test out different special vote scenarios. It has had a bit of use after I shared it on Twitter, and I have seen a few wildly optimistic scenarios plugged in. I’m a bit concerned I have created a denial mechanism.
After spending far too long playing with the spreadsheet myself, here are five scenarios for how the special votes could change the election result. They can be explored in this interactive infographic.
Scenario 1: 2014 pattern
This scenario matches the projections described above. It assumes that parties underperform or overperform in the special votes relative to the ordinary votes by the same proportion as they did in 2014. For example, National’s share of special votes was 17 per cent lower than its share of ordinary votes.
I’ve rounded the numbers to a whole percentage point, which gives the following shares of special votes: National 38 per cent, Labour 41 per cent, Greens 9 per cent, NZ First 6 per cent, and all other parties 6 per cent. (I’ve grouped all the other parties including ACT together here as it’s extremely unlikely they will impact the seat distribution.) As mentioned, this leads to 56 seats for National, 54 seats for the Labour-Greens bloc, and NZ First sitting unchanged on 9 seats.
This scenario serves as a good baseline. The remaining four scenarios deviate from this in different ways.
Scenario 2: National comeback
In this scenario, National manages to hold onto its 57th seat rather than lose it to Labour. This would happen if Labour were to lose 1 per cent of special votes to National and 1 per cent to the Greens compared with Scenario 1, leaving it tied with National on 39 per cent. There are also other ways that this could happen: the key condition is that National gets an equal or higher percentage of the special votes as Labour does.
As a relatively small shift from the 2014 pattern, this could definitely happen. However, it would go against a trend of National performing increasingly worse in the special votes relative to the ordinary votes over the last three elections (and vice versa for Labour and the Greens). This seems particularly unlikely to occur if most of the increase in special votes this year is indeed from younger voters.
Scenario 3: Keen on Green
In this scenario, the Greens take a second seat off National and the Left and Right blocs draw level at 55 seats each. The first key to this happening is the Greens getting around 13 per cent or more of the special votes. The second condition is that Labour needs to be around 6 per cent above National, otherwise the Greens would take a seat off them instead. This would require National to drop back to around 34 per cent, with Labour holding fairly strong on at least 40 per cent.
Clearly, this is a big stretch. The Greens did manage to get 15.4 per cent of special votes in 2014, but that was from a much stronger provisional result of 10 per cent (compared with 5.9 per cent this year). For this to happen, the youthquake would need to be high on the Richter scale, and it would need to heavily favour the Greens over Labour.
Scenario 4: Jacindamania
In this scenario, it’s Labour that manages to take another seat off National. To do this, Labour would need to beat National by around 12 per cent in the special votes. They’d also need to avoid pushing the Greens below about 7 per cent, otherwise the Greens wouldn’t pick up their eighth seat. This could require Labour to get around 46 per cent of special votes to National’s 34 per cent.
This is very similar to Scenario 3 but with a redistribution of votes between Labour and the Greens (together they have 53 per cent in both scenarios). It seems equally if not more unlikely, unless young voters did show up in droves mainly to vote for Jacinda Ardern.
Scenario 5: The Dark Horse
In this scenario, NZ First manages to take a seat off National. The party would need to get around 9 per cent of special votes to do this, requiring an extra 3 percentage points compared to Scenario 1. In this scenario those extra votes all come from National; if some came from Labour instead then NZ First’s extra seat would also come from Labour.
This scenario would buck history more than any of the others. Across the last three elections, NZ First has done worst in special votes relative to ordinary votes out of all sizeable parties except for the Conservatives. For them to go up 1.5 percentage points this year would be utterly remarkable – but then again, is anyone willing to bet against Winston?
Could National hang on to all 58 seats?
There are ways this could happen, but it is very unlikely. One way is if the Greens received less than 7 per cent of special votes and National beat Labour by at least 5 per cent. Alternatively, National could take a seat off Labour if it were ahead by at least 11 per cent. Either of these would require National to get at least 44 per cent of the special vote – well above what it received in any of the last three elections.
What these scenarios tell us
The five (and a half) scenarios above present a wide range of possibilities for what could happen with the special votes. Of course, we could come up with even more exotic scenarios, but these ones already push the boundaries plenty.
Based on past patterns, National is almost certain to lose a seat to the Greens, and it seems more likely than not that they will also lose a seat to Labour. The chances of any further changes are pretty remote, but can’t be completely ruled out. To take another seat off National, Labour and the Greens would need to get an additional 3 per cent of special votes beyond what they are projected to receive. Furthermore, these would need to be optimally distributed between the two parties as seen in Scenarios 3 and 4.
Whatever happens, none of this will change the big picture outcome of the election. However, it’s important for the public to understand – and for the media to report – that the National and Labour-Green blocs will likely be just a couple of seats apart once the special votes are counted. We’ll have to wait until October 7 to know for sure. And so will Winston.
8. RBNZ holds and keeps options open
Amid all the political drama, there has been some economic news, albeit of a relatively more stable kind.
The Reserve Bank announced as expected this morning that it had left the Official Cash Rate on hold at 1.75 percent for a sixth time.
Also, as expected, it stuck to a hard neutral stance in line with its full August 10 Monetary Policy Statement that projected the OCR would stay on hold well into 2019.
Here is the key final paragraph: "Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly."
It was unchanged word for word from the August 10 statement.
9. One fun thing
Twitter was all ...er... a-twitter yesterday about the possibility of lengthening the limit on tweets to 280 characters from 140 characters.
Mexico's former President Vincente Fox caught the mood with this tweet: "@realDonaldTrump has been wrecking America 140 characters at a time. Imagine what he could do with 280 now."