Labour takes revolutionary road towards state control
Covid-19 is a handy smokescreen for radical change
When a Government tips over the chessboard, swipes the opposition’s pieces and steamrollers over opponents — unopposed by any politician with the guts and fortitude to focus on the main game — it’s fair to say we have a revolution on our hands.
This is not a stretch.
Covid-19 is proving to be a convenient smokescreen for a radical reinvention of the state’s role in New Zealand.
This week the Government put a giant short under local authorities by spelling out that it wants to roll up 67 water entities into just four new regional water bodies.
In Local Government Minister Nanaia Mahuta’s mind, there is just cause for going down this track. Projections are that some $120 billion to $185b will be needed for water infrastructure over the next 30 years. There have been outrageous scandals like the disease carried by infected water supplies in Havelock North and raw sewage running through the streets of our capital city, Wellington. Possibly it’s no wonder that Mahuta and central government want to assert control.
But this is not what local authorities such as Auckland Council were expecting. Fur is flying in Mayor Phil Goff ’s suite.
Mahuta — and in the background, Finance Minister Grant Robertson — have a point when they intimate that Auckland Council’s balance sheet is too stretched to leverage up what is necessary to underwrite the expansion of water services in Auckland.
But Mahuta’s proposals neglect the point that Watercare can utilise its own balance sheet to underpin the necessary investment in provision of services for Auckland. This includes the Central Interceptor project. At today’s interest rates — including for longterm borrowing — Watercare is in prime position to simply recover the cost of investment from user charges. If it comes down to it, why not simply form a publicprivate partnership (PPP) where Auckland Council holds the lion’s share — a majority stake — and private sector interests the balance? Why share Watercare’s balance sheet with other local authorities and diminish its control to boot?
The Government appears to have rejected the PPP model and is focused on centralising regional control, which in Goff ’s mind simply results in a raid on the investment Aucklanders have built by underpinning Watercare’s more than $10b worth of assets, with a further $11b invested in the council’s current 10-year budget.
To the chagrin of Goff, reputed to be shoulder-tapped as our next Ambassador to Washington (and who, let’s face it, once had neoliberal credentials), the Government has really mounted a raid on his operations. Despite the PR around this, he has been presented with a fait accompli.
“Control over those assets, and our ability to ensure that Aucklanders’ needs are put first, is undermined by the reform, which proposes that Auckland Council could have less than 40 per cent of the representation in the governance of the new entity,” says Goff.
It’s not all yet a done deal. But without the smokescreen of Covid — where media and the Government’s political opponents have been focused — this incursion by the state on local government’s remit is passing by without significant analysis.
Previous suggestions from local authorities that they be allowed to mop up GST payments in their jurisdictions, for instance, to provide additional revenue for investment have largely been ignored.
What’s not so well known is that Cabinet minister Phil Twyford was deputed late last year to look into the role of the state in New Zealand. This came off the back of obvious under-performance by New Zealand when it comes to infrastructure, at a time when the rebirth of a Ministry of Works had also been talked about.
It is unclear, however, just what due diligence has been done on the impact of increased immigration in this area and whether a Big State is the ultimate solution.
Having occasionally been prone to radical tendencies, I would say this is not necessarily a bad thing.
But our most notable recent revolution — think the 1980s Labour Government’s reforms (or as Roger Douglas would have put it, “Tina”, for “there is no alternative”) — was jumped upon by a business sector intent on making big bucks as the state divested its commercial assets to the private sector via privatisation, either through listing companies or via trade sales.
Professor Jane Kelsey chronicled this in her seminal work Rolling Back the State.
Now the state is rolling back in again as the Government moves to centralise 20 district health boards into one central body and similarly pull polytechnics into one organisation.
It doesn’t stop there.
Moves which impinge on our constitution, particularly as it gives regard to Ma¯ori rights, are happening outside of the acknowledged norms. Like, for instance, the Royal Commission which examined the road to MMP.
This remains possible in a unicameral system where the Government of the day (in this case Labour) has a majority and, apart from equity issues, also sees the electoral utility of potentially mopping up the Ma¯ori seats and Ma¯ori vote if it gives in to its Ma¯ori Cabinet Ministers.
This is neither right nor honest. What is on the table now is significant. If the Labour Government is to bring New Zealand with it, it should look at establishing a Royal Commission rather than use a guise to pursue its own electoral interest.
Underpinning the revolution which is underway at Cabinet level is a growing sense that a bureaucracy feeling its oats is calling the tune.
Time for more transparency.