In today's email, we preview what might be covered in the coalition negotiations between Winston Peters and both National and Labour.
1. 'Negotiators, start your engines'
Finally, the talks about forming a new Government will get underway today, albeit only in preliminary form.
I've taken a look at the key negotiating points and the manoeuvring in the pre-start box in this piece published first yesterday on Newsroom Pro.
The serious discussions won't start until after the special votes have been counted and the final result confirmed on Saturday at 2pm, but these early discussions will set the tone and sketch out the hot buttons to be pushed when the green lights flash.
New Zealand First announced yesterday that Winston Peters would have discussions with the National Leader Bill English in Wellington this morning and with Labour Leader Jacinda Ardern in the afternoon.
But everyone made clear these talks were really about everyone setting out timetables and priorities before the real negotiations start from Saturday. These discussions today are as much about pre-cooking things so governing arrangements can be agreed in a tight timetable of just five days until next Thursday. Think of it like pre-heating the oven.
Winston Peters has repeatedly confirmed his planned date for a decision of October 12, which is when the writs are returned to finalise the election result. English has expressed scepticism about meeting that deadline, given his experience of previous simpler negotiations with smaller parties to form three National-led Governments since 2008.
Negotiations between Peters and the two main parties in 1996 lasted almost two months and weren't concluded until December 10, although the election that year was on October 12.
2. English in pole position
Bill English is in pole position with the first session with Peters, although Ardern said yesterday she didn't feel she was the underdog and didn't see being second to talk to the 'kingmaker' as a problem.
"One meeting has to happen before the other. I'm not particularly concerned about the order. The importance is that meetings are being had and we're preparing to form a stable coalition government," Ardern told reporters after meeting the New Zealand women's rugby team at the Civic Square.
"I'm not particularly worried about the logistics. The more important thing is we're meeting and getting on with the negotiations to form a stable, durable government," she said.
"These are preliminary talks and special votes remain important. Having this preliminary discussion means we will be able to move quickly once those special votes come in."
Ardern reiterated the importance of getting a running start ahead of the Saturday start gun at 2pm, and she said it was still possible to decide on governing arrangements before Peters' self-imposed deadline of October 12, which is when the writs are returned.
"We're being ambitious about working through the issues as quickly as we can, but at the end point forming a stable, durable coalition Government. It is absolutely possible to do it within that timeframe, but it does mean those preliminary negotiations are very important," she said."
3. Mixing and matching policies
It's worth looking at what the common areas of policy are and what the key negotiating points are likely to be, particularly around wages, migration, regional development and the NZ Superannuation Fund.
Ardern said Labour had common views with New Zealand First on wages.
New Zealand First campaigned on lifting the minimum wage to $20/hour within three years from $15.75/hour currently, but only if the corporate tax rate was cut from 28 percent to 25 percent, and corporate tax for exporters was cut to 20 percent.
Labour campaigned on lifting the minimum wage to $16.50 per hour and lifting it to two-thirds of the average wage "over time and as economic conditions" allow. That would be around $19.70 currently, given the average wage in the March quarter was $29.90. Labour did not plan any corporate tax cut.
Both Labour and New Zealand campaigned on removing the secondary tax on second jobs, which mean workers over-paid $750 million in tax in 2016.
"We certainly share a common view that we need to lift the wages of those on the lowest wages in New Zealand. All of that I'll be leaving that to the negotiating table, but we do share a focus on lifting the wages of those with the lowest wages," Ardern said.
"There are some shared values, and not least is changing away from the status quo of the last nine years," she said.
Labour and New Zealand First also both campaigned on reducing net migration, albeit by different amounts. Labour proposed changes to rules for international students and lower skilled temporary workers that would cut net migration by 20,000 to 30,000 a year.
New Zealand First promised to reduce net migration to around 10,000 from over 70,000 currently, without being specific about exactly how that was done. New Zealand First also emphasised reducing migration of lower skilled workers, but has shied away from changes that would affect regional employers, particularly in horticulture and agriculture.
Two years ago, National cut its permanent residency target for each two-year period by 5000 to 85,000 to 95,000 and earlier this year it tightened rules for temporary workers wanting permanent residency, but has not sought to cut current migration levels.
4. Trade deals and buyers' bans
One of the key debates will be around moves to ban or tax foreign buyers of houses and land, and whether those moves will require trade deal negotiations. Key TPP talks in early November are looming too.
New Zealand First campaigned for a ban on foreign buyers of freehold land, including for farming and housing. Labour campaigned for a ban on foreign buying of existing homes. Such a ban would require New Zealand to renegotiate its Free Trade Agreements with Korea and Taiwan, and changes to the Trans Pacific Partnership.
National has argued that a stamp duty on foreign buyers would be allowed under those free trade agreements.
New Zealand faces a deadline of sorts on the TPP because leaders of the TPP countries are expected to meet and discuss the agreement on the fringes of the APEC summit in Vietnam on November 8, followed by the East Asia Summits in Manila three days later.
Asked whether the negotiations would cover the TPP or the FTA changes needed for a foreign buyers' ban, Ardern said: "We've set out some of our views for those negotiations. We've set out clearly that we maintain the ability to ban foreign speculators from purchasing existing homes in our residential housing market. Whether or not they will come up in our negotiations remains to be seen."
She was also asked about New Zealand First's opposition to the Investor State Dispute Settlement (ISDS) mechanism currently in the TPP.
"That hasn't been our focus, but I don't want to presume what will come up in those negotiations and what priorities other parties will place when we come to the table," she said.
Other areas likely to be discussed include New Zealand First's proposals to move the Port of Auckland to Northland and various measures to beef up regional rail routes. An entire port move is a non-starter because of the massive cost (north of $8 billion after new rail links are built through central Auckland) and the fact the port is owned by the Auckland Council, rather than the central Government.
5. Happy days for the NZ Super Fund
Labour and New Zealand First also have common ground on the New Zealand Superannuation Fund. They both want to resume contributions immediately.
Labour specified initial contributions would start at $500 million this financial year, rising to $2.2 billion by 2020/21. However, New Zealand First has also called for the fund to be exempt from having to pay tax. It paid NZ$1.2 billion in tax in the last 12 months.
Labour could in theory substitute the contributions for the tax reduction to keep the tax system clean. National will be under pressure to bring forward its planned resumption of contributions from 2020/21.
For the record, National suspended contributions in 2009 and planned capital contributions not made since then total $14 billion. The NZ Super Fund estimates it would be $21.3 billion bigger than it is now ($35.4 billion) if contributions had continued, including $6.8 billion in returns over and above the cost of borrowing.
6. Mind the gap
One reason the negotiations feel a bit like a phony war is the results of the special vote count could make it easier for Winston Peters to accept a Labour-Green-New Zealand First combination.
That's because an extra seat or two could lift their combination clear of the 61 threshold. On the current seat count, National on 58 plus New Zealand First on nine seats would comfortably have 67 seats in Parliament, while the centre-left combination would have just 61, with Labour on 45, Green on seven and New Zealand First on nine.
Most expect the Greens to pick up one seat at the expense of National, but some also see a chance that Labour and the Green could pick up one each. That would give Peters the option of picking between National on 56 and Labour-Green on 54. That would give a Labour-Green-New Zealand First Government a two seat buffer to 61 to cope with any defections or by-election losses.
Ardern said she was hopeful there would be one more seat to add to the Labour-Green side, with the Greens closer to winning one more than Labour.
"Having a bit of extra comfort would certainly be helpful, but we should also keep in mind the numbers that National have worked on in the last several terms of government," Ardern said.
"At any given time that required an additional coalition partner to get supply and confidence agreement to get the legislation through."
7. Bracing for migration cuts
Newsroom's Shane Cowlishaw has taken a deeper look at how some parts of the economy are bracing for apparently inevitable cuts to migration, including those in aged care in particular.
Aged Care Association chief executive Simon Wallace told Shane that migration was the biggest issue facing the industry after the equal pay settlement that raised wage bills across the board.
“It’s a big issue for us because we are facing over the next 10 years a real spike in the aging demographic and estimations from the work that we’ve done...is that we’ll need 1000 extra workers a year between now and 2027.”
Regarding any changes that may be demanded by New Zealand First, Wallace said he had spoken to several party members about the issue but had not come away any clearer on what their policies were.
The notion that the industry could just hire New Zealanders to fill the positions was unrealistic, as caregiving was now a much more highly skilled position and there were simply not enough locals willing to do the work.
“[Winston Peters] says that but we just can’t get the Kiwis to do the jobs, you only have to talk to our members and we just can’t find 1000 right Kiwis.
“We do rely on migrants and the Government would probably say we’re overreliant on migrants, Michael Woodhouse has told us that, but we just can’t find them.”
Horticultural employers are more relaxed, given Peters' support for the Registered Seasonal Employer scheme and for the need for migrants in the regions. But the international education industry is also bracing for change.
8. Bollard's 'noodle soup' at Apec
Newsroom's Foreign Affairs and Trade Editor Sam Sachdeva spoke to former Reserve Bank Governor and current Apec chief Alan Bollard yesterday about the future for Apec and for Bollard himself.
Bollard spoke at length about the challenges to globalisation from the growing nationalism typified by Trump and the likes of New Zealand First, although Bollard didn't specifically talk about Winston Peters.
Bollard concedes more could have been done to look beyond the positives of globalisation to the potential negatives, saying “we took some of that for granted”.
“ ‘One billion people out of poverty, what else do I need to say - isn’t it bloody obvious?’ But of course that’s not good enough...and we have to look much more within countries who’s getting the benefits, who’s getting the costs, and that is a much more complex story.”
The issue is about perceived and relative inequality as much as actual inequality, he says, particularly in the United States, with some in the current generation worse off than their parents and China’s economic rise creating insecurity.
With the United States stepping away from its leadership role on trade, Bollard says there a range of countries that can fill the gap left behind.
Bollard is looking at a couple of options for reforming Apec, including adding services into the merchandise trade liberalisation aim and potentially shifting the current 'noodle bowl' of trade agreements into an over-arching Free Trade Area of the Asia Pacific.
Another option is to focus on policy changes in labour markets, social protection and tax behind borders to combat the nationalism.
“[Leaders have] said, well we haven't communicated well enough, we haven’t focussed on what are the end impacts of trade and openness, we haven’t worked out who it’s benefiting and who it’s hurting, we haven't focused enough on policies about mitigating the costs."
9. An interesting discovery awaits..
Newsroom's Tim Murphy reported yesterday that blogger Cameron Slater (above), public relations man Carrick Graham and former MP Katherine Rich have failed in a court bid to knock out a defamation claim by three health experts.
The High Court would not strike out the case, which was prompted by revelations in the 2014 book Dirty Politics, and said the defamation action could yet proceed to a jury trial.
Slater, founder of the Whaleoil blog, is accused by Dr Doug Sellman and two other health academics Boyd Swinburn and Shane Bradbrook, of defaming them in a series of posts on his site.
They allege Graham, son of the former National cabinet minister Sir Douglas Graham, arranged for the posts to be published on the Whaleoil site for a fee and was in turn paid by the ex-National MP Rich through her employer the Food and Grocery Council, for having the pieces posted.
The case claims Graham wrote one of the pieces himself, "authored, commissioned or procured Slater to publish the others and authored and published" comments made about the articles.
Justice Matthew Palmer, who declined to strike out the case on the grounds of it being out of time, being the honestly-held opinion of the writer or as having qualified privilege as part of robust political debate about alcohol, sugar, fat and tobacco, suppressed the "alleged defamatory statements" until after a trial.
But he said: "In general they are personally abusive about the plaintiffs as well as their positions on matters of public policy relating to the regulation of alcohol, tobacco, sugar and fat."