Newsroom Pro's 9 things at 9am: No Government today; NZIER proposes Policy Costings Commissioner

In this morning's email, we look at why Winston Peters will miss his self-imposed deadline of naming a Government today and who is most likely to be chosen to be the Government.

1. No Government today

Winston Peters assured us on July 25 he expected to announce which form of Government he would join today, but it looks like we may have to wait for a few days yet.

"We should (have talks) finished by tomorrow night but it depends on other people as well," Peters told reporters in Parliament.

He said a caucus meeting would be held this morning before fresh meetings with National and Labour. He expected today's meetings to be the most substantive yet.

"We're probably going to be more focused on these subjects as we close these negotiations than at any time before that."

Peters said he would then take the options to the New Zealand First Board to obtain a consensus.

"I'll lay out to the board both options," he said.

He denied there would be a vote, saying he expected there would be a consensus.

"If you don't have a serious consensus, then stay there until you've got one. Who wants a 50/50 vote?" he said.

He expected more than 75 percent support for a decision.

Peters also noted he had yet to discuss ministerial offices or portfolios.

"We're not going to think about offices and positions until we're happy with the policy.

"If we want to pervert the process, you start worrying about yourselves. If we haven't got the policies right then the rest of the questions won't arise."

2. A deposit guarantee scheme?

Peters was also asked about New Zealand First's policy of introducing a Government guarantee for term deposits. It's a policy he shares with Labour and the Greens, while the National backs the current status quo of no guarantee.

Peters appeared to say it had not been discussed yet.

"The reality is that, if we end up needing that, it would be a very parlous situation,” he said of a post-election comment about financial instability.

“But we still need to consider it. I’m not making this part of any discussion at the moment. Any country in the Western world in particular would be having regard to the Australian deposit guarantee scheme, as opposed to the absence of one with Australian banks in New Zealand," he said.

New Zealand is now the only country in the OECD without a deposit guarantee scheme.

Former Reserve Bank economist Michael Reddell has written a piece for Newsroom about the need for a deposit guarantee and why it won't harm the Government's finances

Here's my October 2014 column on the lack of a deposit guarantee on Newsroom Pro.

3. 'Not a bad word about James'

Elsewhere, Green Leader James Shaw again reiterated that the negotiations were being handled from the Labour-Green side by Jacinda Ardern, and he trusted her to do a good job.

Perhaps interestingly, given Peters' reputed antipathy towards the Greens, he said he had never criticised Shaw.

"I've never had a bad word with him, or about him that you could possibly quote because I've never said something bad about him in my career," Peters said.

Shaw has made a point of not criticising Peters, unlike his former co-leader Metiria Turei, who called Peters a racist at the beginning of the campaign. Shaw has never repeated that.

4. So which way will it go?

I'm asked this question at just about every opportunity by most people now. For the moment, New Zealanders have stopped talking about the weather and the rugby and whether Auckland house prices are over-valued. Even my 15 year old daughter wants to know which way New Zealand First will go.

In this final day of negotiations, I can't discern a clear leaning one way or the other by any of the parties.

Just as the election was a close call with a virtual tie between the centre-left and right blocs, this decision could come down to an awkward discussion in the New Zealand First caucus and board meetings tonight.

Peters surprised most by picking National in 1996. That ended in disaster for Peters and National when Jenny Shipley rolled Jim Bolger to engineer the ejection of New Zealand First from the Government. She picked off his caucus members and he resigned angrily to protest an attempt to privatise Wellington airport. National essentially removed the man who had struck a deal with Peters over late night whiskeys late in 1996.

Peters chose Labour in 2005 and had a more successful time in Government as foreign minister. He eventually had to step down from that role because of the Owen Glenn donations issue, rather than any particular problems with the Labour team. It must be remembered that Jacinda Ardern and Grant Robertson were in the back office of the Clark Government. Fellow ministers in that Government, Steve Maharey and Phil Goff, have both said Peters was professional and collegial in that 2005-2008 Government.

Peters is well respected (and vice versa) by several members of the Labour top table, including David Parker on many economic issues. Kelvin Davis is a close friend and relative from Northland.

There has been little love lost between Peters and various National figures.

Peters has never been critical of Jacinda Ardern, but has accused English in Parliament of not telling the truth and being complicit in covering up a crime. English also seconded the motion to eject Peters from the National Party in 1992.

Peters is also reputed to be no fan of Steven Joyce and Paula Bennett, who would have to work with him in cabinet, deliver his policy wins and potentially become Prime Minister in the event that English was not there.

Peters and New Zealand First also have more policy overlap with Labour and Green than National, particularly on the key issues of migration, foreign ownership and regional development. A new centre-left Government also offers Peters and New Zealand First Government the prospect of being in a multi-term Government, rather than a flagging fourth term Government. His last two experiences were of being hitched to the wagons of dying third term governments.

However, Peters has previously gone with the largest party when making his calls in 1996 and 2005, and National is clearly the largest party now.

If I had to make a call at this stage, I would say there is a 60 percent chance Peters goes with Labour and the Greens, if only because of the policy overlaps, the lack of personality clashes and the better experience in governing arrangements for 2005 to 2008.

There still remains a 40 percent chance New Zealand First will go with National because it is the largest party, it will be desperate to grant policy concessions to retain power for a record fourth term, and National doesn't carry with it the potential complication of having to seal a deal with the Greens, who Peters has never liked.

So I'm basically on the fence, although leaning to the higher likelihood of Labour-New Zealand First-Green Government. Either form of Government could easily involve New Zealand First remaining on the cross-benches with supply and confidence agreements and ministerial positions outside of cabinet, rather than being full coalitions.

One outlier is the prospect that New Zealand First agrees a deal that involves it abstaining on votes of supply and confidence, rather than agreeing to vote with the governing party on budget and confidence. That is a recipe for instability, but would remove some of the risk for New Zealand First of hooking its wagon to the Government.

We should know either way by the end of tomorrow at the earliest, and by Monday at the latest.

5. 'Keep the bastards honest'

In the wake of the 'fiscal black hole' debacle and frustratingly vague costings for New Zealand First policies, NZIER's principal economist Peter Wilson has written an excellent paper on the need for a Parliamentary Commissioner for Policy Costings.

Wilson said treasury officials would be the best people to do the costings before an election, but be overseen by an independent and experienced person.

"But to preserve their political neutrality, we suggest that a prominent person, say a former Secretary to the Treasury or Auditor-General, should be appointed on a fixed-term basis prior to each election to oversee their work and take ultimate responsibility for the costings," Wilson.

He stopped short of calling for a full-time (Australian-style) Parliamentary Budget Office, a (UK style) Office for Budget Responsibility or a replica of the Canadian Parliamentary Budget Office.

Wilson wasn't too prescriptive, but suggested a range of features for such a Parliamentary Commissioner.

"At the simplest end of the spectrum, the Commissioner’s role could be limited to providing technical assistance to parties, in the form of guidance material and templates that political parties could use to prepare costings of their proposals," Wilson said.

"This could include standard estimates of the costs of the major components of programmes (salaries, rents, etc.). If this sort of material had been available and used by the Labour Party to present its costings, then there would have been less ambiguity about what it was proposing.

"Moving along the spectrum, the Commissioner could, at the request of a political party, prepare costings of proposals, which will remain confidential to the party until they announced the policy.

"As is the case in Australia and Canada, parties could be permitted to seek a costing of another party’s proposals. This increases the incentive on all parties to have their policies costed independently, since if they don’t, they will know that their opponents could.

"A more proactive role would be to require the Commissioner to prepare and make public prior to polling day their costing of the manifestos of the political parties standing for election."

Labour and the Greens have both called for some sort of body to independently cost party policies. This is a useful addition to the debate. I certainly don't want to be forced to produce another 'fiscal black hole' adjudication on the fly in the next election,

For the record, there was no fiscal black hole.

6. Wellington's curious 'city deal' proposal

Newsroom's National Affairs Editor Shane Cowlishaw has uncovered an interesting proposal from the Wellington City Council for a 'city deal' where the Council shares revenues from GST and income taxes with the central Government in exchange for development plans.

It was buried in OIA documents about proposals floating around in front of ministers.

It is still in the embryonic stage and the current National Govenrment is not commenting in the caretaker stage. The Council is also being cautios.

But it certainly would help break the funding logjam for housing and other developments in cities whereby ratepayers refuse to pay the interest on the extra debt needed for infrastructure developments. Councils' only funding mechanisms are rates.

Meanwhile the central Government benefits from any growth through GST and income taxes.

Wellington’s council is lobbying the Government for a unique deal that could see the Crown return GST revenue and grant it stronger powers to acquire development land, Shane reports.

"City Deals" are in wide use in the United Kingdom and are arrangements between Government and local councils that focus on boosting economic growth in regions that show potential.

No such deal has ever been done in New Zealand, but the Wellington City Council (WCC) would like to see that change.

Details of the council’s plans were revealed in an April briefing from the Ministry of Business, Innovation and Employment (MBIE) to Economic Development Minister Simon Bridges, released under the Official Information Act.

WCC first approached the chief executives of several Government departments in August 2016 with the idea, which contained three policy tools.

These included an earn-back mechanism, where the Crown returned a share of its revenue to the council in return for investment in initiatives with growth potential.

Other ideas were special economic zones that could be exempted from national regulation and land assembly changes that would give the council more power to acquire land not owned by them.

The group of Government CEOs told WCC that there was a strong focus on regional economic development and there was a willingness to explore a regional growth programme with the city.

But in February this year, the council came back with an updated proposal that had been developed following the Wellington Regional CEO Forum.

MBIE described the proposal as “very high level” but noted that WCC wanted to negotiate a City Deal now, followed by a regional deal in a two-stage approach that recognised the economic importance of Wellington City.

The second half of the briefing was redacted.

The council’s chief executive, Kevin Lavery, is from the UK and was the boss of Cornwall City Council before arriving in New Zealand’s capital.

With the Government currently in caretaker mode and its future makeup unknown, Lavery told Newsroom it was not a good time to discuss the proposal.

“We’re at early stages and have had some exploratory discussions, obviously we need to see who forms the next Government and who the next Economic Development Minister will be.”

See Shane's full report here on Newsroom Pro, where it was first published yesterday.

7. Coming up...

New Zealand First, Labour and National hold their final day of government-forming negotiations today. New Zealand First is expected to hold caucus and board meetings later tonight, and possibly tomorrow.

Any deal involving Labour would then have to be approved by a special and possibly online meeting of over 50 Green Party delegates.

  1. One fun thing

One of the running jokes of the big wait in the Press Gallery has been which type of biscuits will be taken into the meetings with Winston Peters by Jacinda Ardern. This is what happens when people have time on their hands...

Claire Trevett: "Word is Jacinda Ardern is really upping the game today - she's said to be taking home baking into the meeting. A ginger loaf apparently."

RNZ's Chris Bramwell: "??? > Ginger Loaf > Gingernuts > Chocolate Wheatens"

9. Another fun thing

Luckily for us, not even Winston Peters is going as far as Donald Trump went on Twitter this morning:

"With all of the Fake News coming out of NBC and the Networks, at what point is it appropriate to challenge their License? Bad for country!"

Have a great day