In today's email we look at the potential policy mix of a coalition that may be announced today.
1. It's Coronation day ... maybe
Winston Peters is expected to make an announcement this afternoon on the result of his negotiations with Bill English and Jacinda Ardern about forming a new Government.
It's not totally clear whether that announcement will be a decision about whether he will pick King Bill or Queen Jacinda, given the New Zealand First board has yet to make its final decision and the Labour and National executives have yet to sign off on deals. The Greens have also yet to consult with their 150 delegates for the required 75 percent approval for any deal with Labour and New Zealand First.
It remains possible we will not know who will lead the Government at this time tomorrow, although a clear indication of which way Peters is leaning is probable.
New Zealand First announced late yesterday afternoon that it "will be in a position tomorrow afternoon to make an announcement on the result of negotiations following the 2017 General Election."
"New Zealand First Leader Winston Peters said he had spoken to the leaders of the National Party and the Labour Party today and, amongst other matters, advised them of that," the party said in a statement.
English said through a spokesman he had not had any indication of what decision Peters had made. Ardern is also understood not to have been told of which way Peters would go. Her partner Clarke Gayford tweeted he was on his way to Wellington this morning, but also had "no idea" who New Zealand First would choose.
2. The current odds
The negotiations have been remarkably leak-proof so far and Peters has been inscrutable in his comments to all and sundry about his views.
Both Ardern and English have complimented him on being given equal treatment in the negotiations and not knowing which way the New Zealand First leader was leaning.
For what it's worth (about two cents), my view is there's a slightly better than 50 percent chance Peters will choose Labour and the Greens.
He says policy matters, and the Labour and Green platforms have more matches with New Zealand First's than National's, particularly around migration, foreign ownership, transport, education and superannuation.
The long-assumed antipathy that Peters has personally for the Greens may not be so evident this time, given Russel Norman and Metiria Turei (who he didn't like and vice-versa) are no longer the leaders. Peters and James Shaw have never said a bad word about each other. New Zealand First and the Greens also both want to invest in rail and block foreign purchases of assets. They are at odds on water taxes, mining and capital gains taxes.
Peters' experience in Government with Labour in 2005-08 was also more positive than his one with National in 1996-98. He was forced to step down as Helen Clark's Foreign Minister by the Owen Glenn affair, but his departure from Jenny Shipley's Government came after she forced him out with policy moves and picked off his MPs.
Peters has also been very critical of Bill English in Parliament this year, attacking his actions in the Todd Barclay affair. He has not criticised Ardern.
But National will be determined to stay in power and does have an easier deal to sell to Peters, given there is no complication with the need for a third party's agreement and National does have the largest number of seats in Parliament. There has never been a Government in the MMP era that has been led by the Party with the second largest number of seats.
Peters could easily choose either side and get the policy gains he wants and plenty of ministerial portfolios for his senior MPs. It's basically a toss-up, although I still think there's a slightly larger chance of a Labour-New Zealand First-Green Government by the end of this week.
Also, for what it's worth for those wondering about the 'wisdom of the crowds', Australia's Betfair currently has National at A$1.50 for the win to Labour's $1.71, although they have swapped favouritism over recent days. It's a pity that iPredict is not around anymore for an indication of that wisdom of the insider traders closer to home.
We will put out an email alert to Newsroom Pro subscribers as soon as we know.
3. The potential policy mix
Again, none of the parties have indicated which policy concessions Peters has managed to extract, but here's a few that the respective policy platforms suggest are likely.
Migration cuts: New Zealand First's campaign slogan was "Had enough?", although it seemed to lack a question mark on the billboards I saw. It referred to the population growth from migration and that will be a key part of any deal.
Peters wanted a 60,000 reduction in net migration to 10,000, while Labour proposed a cut of up to 30,000. The devil will be in the detail of the agreed size of the cut and how it would be implemented. Peters has criticised Private Training Establishments and the Government for ramping up international student numbers. Both he and Labour want to tighten up the rules around lower value export education.
Labour and New Zealand First both wanted tighter rules for lower skilled temporary migrants, but Peters was not keen to see cuts affect regional agriculture jobs or the Registered Seasonal Employer scheme which helps our Pacific neighbours.
Superannuation: National is expected to drop its well-over-the-horizon policy of extending the age of eligibility for New Zealand Superannuation to 67 from 65.
Both Labour and National are expected to also resume contributions to the New Zealand Superannuation Fund immediately and create a state-owned KiwiFund as a default option for KiwiSavers.
A ramped-up Super Super Goldcard is a given.
Foreign ownership: A ban on foreign buyers of residential land is a sure thing if Peters goes with the Labour-Greens combination and either a ban or a stamp duty that complies with our free trade agreements is likely with National. A proper foreign ownership register is likely under both types of Government.
A ban on foreign buying of farmland is more likely under Labour and the Greens than National.
Transport: Labour and the Greens agree with New Zealand First on the need for more investment in both regional and urban rail transport, both for freight and passengers. An early commitment to fund rail of some sort to Auckland airport is likely under both flavours of Government, as is an improved rail line to Auckland and a look at a link between the existing line and Marsden Point.
An agreement to study shifting the Port of Auckland to Northland is also expected, without a commitment to fund a full move. A national Port strategy study is also possible.
An agreement to provide $32 million of Government funding to councils to keep open 12 regional airports is a given, particularly two of the 12 are airports at Kaitaia and KeriKeri. New Zealand First supported an Airports Association proposal for the funding.
Monetary policy: Labour and the Greens would be likely to agree to a monetary policy review with an eye to changes to the Reserve Bank Act to force it to consider full employment and the currency alongside inflation, as is the case in Australia, Britain and the United States.
Changing the single decision maker system to a committee system would also be considered by both flavours of Government.
National may agree to a review and tweaks to the Policy Targets Agreement, but not agree to change the Reserve Bank Act to remove the single inflation target.
Education: A Labour-Green New Zealand First Government would be expected to agree on some form of accelerated fees-fee or loan forgiveness system for tertiary education. Labour campaigned for three years fees-free, while New Zealand First campaigned for loan forgiveness for those students who stayed in New Zealand. A National-New Zealand First Government would be more likely to lean to fees reductions than loan forgiveness.
4. New Zealand First's policy losses
A bunch of New Zealand First's more expensive and difficult policies are unlikely to make it over the line.
a proposal to remove GST from food, which would be expensive and difficult to achieve,
a proposal to return GST from tourism spending to regional councils,
a plan to lift the minimum wage to $20 an hour over three years in exchange for a cut in the corporate tax rate to 25 percent,
a plan to reduce corporate tax for exporters to 20 percent,
a plan to force (or pay) Sky TV to give up rights to free-to-air and live sports events,
a plan to buy back shares in the Government controlled power companies.
5. Who should worry and hope
There are plenty of industries and individuals who will be chewing their fingernails and perhaps pulling their hair out in anticipation of today's decision and the likely policy mix of any new Government.
The aged care, hospitality and tourism industries (particularly in Auckland) will be worried that sharp cuts to temporary and low-skilled work visas will hit their prospects for growth hard.
The private international education sector will worry that big changes to English language requirements and work rights for students could hit demand for their courses. There may also be an inquiry into the sector and the associated issue of migrant abuse to contend with.
The agriculture and horticulture sectors in regions will be hopeful they are spared the worst of the migration cuts.
The rail and regional airport sectors will be hopeful Peters is able to secure concessions, while police will be pleased to see the extra officers all sides are likely to agree to.
Students and pensioners (ironically) are likely to be happy with whatever deals Peters secures on fees and the gold card.
6. New Zealand caught up in EU trade row
Newsroom's Foreign Affairs and Trade Editor Sam Sachdeva reports a free trade deal between the European Union and New Zealand is moving closer to fruition - but a full-blown spat over market access could be a sign of troubles ahead.
The EU’s Ambassador to New Zealand has pushed back at suggestions it and the United Kingdom are undermining their trade commitments, saying some arguments being made hold no water.
See Sam's full article, which was published first on Newsroom Pro last night.
7. Coming up...
National is expected to hold a caucus meeting at 11 am to discuss whatever deal Bill English has agreed to with Winston Peters.
Peters is expected to announce whatever decision he has made later this afternoon.
8. One fun thing
It is a great time for cartoonists in America. Here's one that caught the mood last night.