On Sunday night I wrote about how Labour has every chance to win the Northcote by-election. Now the question is - how do they go about realising that chance to make history by becoming the first Government to win a seat off the opposition in a by-election?
Winning in Northcote for Labour is more important than most people realise, and it's not just about netting themselves another MP in Parliament at National's expense. A successful campaign in Northcote for Labour would lay the foundation for it to make inroads against National's strongholds across northern Auckland. These electorates are important in that they combine both high turnout and high party votes for National. Denting that Auckland suburban firewall while maintaining their gains elsewhere could guarantee Labour the ability to govern alone in 2020. Electorates like Northcote, North Shore, and Upper Harbour, all share enough similarities with other suburban electorates where Labour has done well to suggest that Labour can make more gains in them, almost exclusively at National's expense too.
The first, and most obvious step, is choosing a good candidate. Labour is relatively fortunate in that on the North Shore they have a host of upcoming politicians who are finding their feet in local body politics. In my last blog I made it quite clear I think North Shore Councillor Richard Hills would be an ideal candidate. He's local, he's smart, he's hard working, he's likeable, and while he lost to Jonathan Coleman in Northcote 2014, he enjoyed remarkable success in the 2016 local body elections. The 2014 result isn't one anyone should put too much stock in, mainly in light of how poorly Labour did across the country in that election.
The sooner Labour does select a candidate, the sooner they're able to get their campaign proper underway. It was an advantage they put to good effect in Mt Roskill where Michael Wood his the ground running several weeks before National's Parmjeet Parmar was able to. While not faced with National in Mt Albert, it also wasn't a secret who Labour was going to run there either, with Jacinda Ardern unofficially selected in that seat as soon as David Shearer announced his resignation.
Next is Labour deploying their much hyped ground game in Northcote. As an electorate Northcote is relatively compact, measuring about 30km² - roughly 6km from east to west, and 5km from north to south. That makes putting an effective ground campaign into action much easier than the larger suburban or provincial electorates around New Zealand. Labour has talked up a big game with regards to their on the ground campaign, and if they're able to quite literally walk the talk, Northcote is an ideal electorate to do it in.
The third step is to map out plenty of visits for Jacinda Ardern, Grant Robertson, and Phil Twyford to campaign with Labour's candidate. Given the immense popularity of Ardern, it makes sense to use her at least once a week with the candidate, if not twice a week. The popularity and goodwill toward's Labour's top triumvirate is pretty high right now, and they'd be silly not to utilise it and hope some of it rubs off on their candidate. Ardern, Robertson, and Twyford are the Government's most capable ministers, and chances are for Twyford a lot of the issues that will pop up will be in his portfolio areas too.
As always, you have to be mindful of not taking too much of the spotlight away from the candidate, but I think at this stage in the term the benefits of being seen campaigning with Ardern outweigh any downsides of being seen to be too dependent on her star power.
The only thing that might limit this is if the by-election campaign overlaps with Ardern's baby arriving. That being said, Ardern turning up to help Labour's candidate campaign with her new baby in her arms could well be the most iconic campaign moment in our political history.
The next thing Labour will need to do is find some good initiatives to announce for not just Northcote, but to also use as tools for the 2020 campaign across the North Shore. National did this exceptionally well with transport projects in the past, and Northcote and the wider North Shore are well placed for the same sort of pork barrelling that is just close enough in the future to be worth switching your vote for, but is also far enough away that Labour can get mileage out of it for the 2020, and maybe even 2023 elections...
The most obvious of these that springs to mind is not only bringing forward the start date of the Additional Waitematā Harbour Crossing to the early to mid-2020s, but also commit to building commuter rail in the North Shore too. To some extent that decision is made by the fact that the Additional Waitematā Harbour Crossing project calls for rail tunnels to be included in the project. Actually committing to a commuter rail network on the North Shore along with the crossing, which includes more roading, would be an ideal way for Labour to create a piece of policy that should win them votes north of the Harbour Bridge.
While National will be able to attack the policy as unaffordable, and as an example of splashing cash for votes, my gut feel is that those lines play better with the electorates who aren't benefitting from said cash splashing. Whereas those who are set to be beneficiaries of that spending are generally pretty happy to be shown some love by the Government.
The one part of this that might come back to bite Labour if they bring forward these projects is where they, especially the rail network, might impact on people's homes. It'll need to be an issue that Labour and their candidate are ready to sensitively manage, and don't be surprised if National uses it as an opportunity to push for a reform of the Public Works Act to improve the way in which people are compensated for the impact a project has on their property in line with European models.
The other thing that's useful, and this is true for both Labour and National though whichever party is best resourced to utilise this remains to be seen, is that Northcote's snug geographical boundaries make it relatively easy to target with advertising on social media, especially Facebook. A quick look at Facebook's ad tool suggests there's about 58,000 people aged over 18 on Facebook who are roughly within Northcote's boundaries. Taking the estimated performance of each party in each age group from the 2017 election, Labour would appear to have the edge in the ability to target potential supporters on Facebook. With those aged 18-44 voting more for Labour than was the average across the country in 2017, Northcote on Facebook turns up a potential audience of 40,000 people. That leaves around 18,000 for National to target aged 45 and over. Of course there will also be a variety of other factors that come into play on how political parties want to target their online advertising.
Finally, Labour needs to do whatever is necessary to ensure that neither New Zealand First or the Green Party stand candidates in the by-election. The easiest way for Labour to do this is to offer policy concessions to both parties. It may be what Newshub's Patrick Gower would call a dirty deal, but for Labour it might just be the deal they have to do to win Northcote.
For New Zealand First, not standing in Northcote is a no brainer. Following Winston Peters' decision to go with Labour, rather than with National, New Zealand First has already likely shed most of its supports who were sympathetic to National back to the blue team, which means in Northcote they're only going to be taking votes away from Labour's candidate.
For the Green Party though, the calculus is more complex. They're nearly exclusively in competition with Labour for support. Like other electorates with significant young and affluent populations where the Green Party has done well, Northcote does have the potential to deliver more party votes for the Green Party in 2020 than it historically has done. Running a candidate for the Greens will help their visibility going forward in a seat that can do better for them. The Greens, as a confidence and supply partner, have also made a point of displaying an independent streak to the Government at late, and running a candidate would support that. To convince the Green Party to not run a candidate in the seat will take a lot of concessions from Labour, one of which may be a deal to stand aside in a seat for them in the 2020 election.
Underpinning all of this is that Labour's path to victory relies in them maximising the turnout of every single possible voter who is going to vote for their candidate, and hoping that National isn't able to do the same. While Ardern didn't cause a youthquake, there was enough of an upturn in that demographic to suggest that in the short term, while Ardern's popularity is at its strongest, there's more Labour can gain out of that demographic, and Northcote is demographically well positioned for Labour in that regard.
That's enough delving into what Labour could do to win Northcote. I'm hopeful that next time I'll be able to write a bit about how National could win the seat. I say win, because with the incumbent MP leaving, it's not so much about defending a seat National already held as it is a new National Party candidate setting out to win it for the first time, which is a challenge for any candidate to do.
On 16 November Revenue Minister Stuart Nash wasn't in Question Time following an embarrassing gaffe where he'd advocated for the introduction of GST on online goods imported from overseas. Finance Minister Grant Robertson was forced to slap down Nash, saying that it would be considered as part of the government's tax working group.
Nash was also set to get caught up in Kelvin Davis' disastrous stint as Acting Prime Minister, where he was to be asked questions from National's Chris Bishop.
When asked why Nash wasn't in Question Time to front up to questions, his office claimed that Nash had been delayed in Auckland after attending a chartered accountants conference and hadn't made it back to Wellington until after Question Time.
Given this, I asked of Stuart Nash's office for a copy of his Ministerial diary for that day, including "actual flights taken". It turns out, Nash wasn't delayed in Auckland. He was back in Wellington and interviewing a potential advisor until 2.15pm.
Either Nash's office lied to Radio New Zealand when asked about why he had dodged Question Time, or they've supplied incorrect information in replying to my OIA. Either way, it's another entry in the list of mounting embarrassments for Stuart Nash who was meant to be one of Labour's raising stars, but only seems to be lowering the bar for ministerial incompetence.
With Labour traditionally struggling for economic credibility, they're doing themselves no favours with pressure mounting on them to explain how they're going to pay for all the policies they've agreed to in their coalition agreement with New Zealand First, and their confidence and supply agreement with the Green Party.
Of the policies in those agreements, it's notable that only two have a price tag attached to them. They are the $1 billion a year Provincial Pork Barrel (Regional Development Fund) for New Zealand First, and a $100m Green Investment Fund for the Green Party.
Grant Robertson poured fuel on the fire when he appeared on The Nation and was repeatedly pushed by host Lisa Owen on releasing costings. Robertson also erred when he tried to claim that Labour hadn't had access to the public service to cost the policies they'd agreed to, a claim which has now been shown to be false, with Treasury confirming that they had worked on costing policies for Labour during the negotiations to form a new government.
With Robertson's misleading comments spectacularly exposed, the pressure piled on when Labour announced they were increasing student allowances by approximately $50 a week. What Labour failed to do when they made that announcement was to also reveal how much the increase was going to cost, with Tertiary Education Minister Chris Hipkins offering a bumbling excuse that essentially boiled down to that the government would release the costings once they'd figured out how much it would cost.
It was an amazingly cavalier attitude to take about the spending of tax payer's money. Not withstanding the fact that increasing student allowances is a good move, to announce the increase without purportedly knowing the full cost of that increase, suggests a carefree attitude to responsible management of the government finances that plays right into National's hands.
The pressure is clearly showing. Labour was forced to cave after a day and release costings on the student allowance increasing, with it costing around $700 million over four years, less than what they'd originally anticipated it would when they announced the idea in opposition back in April.
Whether or not you agree with National's finance spokesperson Steven Joyce's claim of an $11 billion hole in Labour's fiscal plan, Labour are doing themselves no favours by mangling the financial side of announcements. If Labour wants to dispel doubts about their economic credibility, then they need to be upfront about the costs of new policies as they announce them, and ensure that their mini-Budget, should it be announced, stacks up perfectly.
Newly minted Finance Minister Grant Robertson will be wanting to put this weekend's appearance on The Nation behind him very quickly. Finally subjected to some meaningful scrutiny about both the deals made by Labour to win the Government benches, as well as their own much vaunted fiscal plan, Robertson struggled to present a coherent narrative of what lies ahead for the government's books and economy under the new Labour-led Government and, it turns out, misled the public over what he knows about the cost of the new policies they'll have to fund.
I can't think of another Finance Minister who has inherited one of the strongest growing economies in the developed world, with books that are back in the black with surpluses projected to grow strongly over the next five years, who in their first major interview spent most of it trying to dampen down how well he'd do, and effectively saying that his Deputy Prime Minister Winston Peters was wrong in his forecasts of economic doom and gloom.
As some background, the Pre-election Economic and Fiscal Update released in August 2017, projected surpluses ranging from $3.7b in the current financial year, eventually rising to $6.4b in 2020/21. PREFU also projects economic growth to grow from around 3% now to 3.7% in in 2019, before easing back to 2.3% in 2021. Suffice to say these are some of the strongest numbers in the OECD, and they're numbers that New Zealand, and especially the National Party who led the country to them after inheriting a country deep in recession from Helen Clark's Labour-led Government, navigated us through the Global Finance Crisis that followed, and successfully managed the country's books through not one, but three major earthquakes.
Simply put, a lot of work has been done to ensure that New Zealand's economy and government books are in the hugely enviable position they are in now.
Robertson's first wobble was when Lisa Owen compared his rosy economic outlook with that of his Deputy Prime Minister, Winston Peters.
Lisa Owen: "Is Winston Peters wrong when he's predicting a downturn in the economic rockstar economy?"
Grant Robertson: "Look, there's a range of views on that, and there's certainly headwinds..."
Lisa Owen: "No no, I'm asking about his. Because he stated it very clearly on the day you guys were announced as the winners per se, he said 'Bad times around the corner', so is he wrong?"
Grant Robertson: "That is possible."
This is some fantastic ammunition for the National Party when the House resumes in a couple of weeks time. National will be able to put both the Prime Minister Jacinda Ardern, and Finance Minister, on the spot over and over again about their disagreement with Winston Peters on the country's economic prospects.
For a politician with his experience, which includes nine years as an MP and several more working in the office of Helen Clack when she was Prime Minister where he earned the title H3, Robertson should have handled this much better. He should have acknowledge that Winston Peters is rightfully concerned about possible economic uncertainty around the world stemming from Brexit, credit issues in China, and protectionist movements in our major trading partners. Instead, Robertson set himself at odds with Labour's coalition partner. It was a dopey move on the third day of the new government.
Robertson then went on to talk about ensuring there was fat in the system to deal with economic shocks. Lisa Owen then skewered Robertson on the lack of the fat in Labour's fiscal plan now that all these additional policies need to be funded due to Labour's coalition and confidence and supply deals with New Zealand First and the Green Party respectively.
What's important to note is that, as per the above tweet, Robertson has already publicly committed that unless otherwise changed by the agreements, Labour's policies remain the same. E.g. Labour will be largely sticking to the spending track as outlined in their fiscal plan, so they need to find a way to fund all these new programmes, such as Winston Peters' Provincial Pork Barrel (otherwise known as the Regional Economic Development Fund) on top of the spending that they're already committed themselves to.
This exchange between Lisa Owen and Grant Robertson was telling, and may well come back to haunt Robertson yet.
Lisa Owen: "Have you costed all of those, and how much are they going to cost?"
Grant Robertson: "So in the process of the negotiations we look very carefully at each of the commitments we were putting in there, and made our best estimate of the cost. Obviously when you're in opposition you have a certain amount of resources to do that. We are absolutely confident that we can meet the expenditure that is in there and actually still meet our Budget Responsibility Rules."
Lisa: "Can you give us a number? How much do all the things that you've signed up for, how much do they cost?"
Grant: "Aw look we've got estimates but that's the,"
Lisa: "Oh come on, what's the estimate?"
Grant: "Well no because I don't want to do that till"
Lisa: "It's the public purse."
Grant: "Well that's the very point, Lisa. It is the public purse. And we now have the ability to work with the public service to refine the estimates we've made. But I can give you my assurance that it fits within the confines of our Budget Responsibility Rules."
First of all, former Finance Minister and National Party spokesperson Steven Joyce pointed out that parties have full access to the public sector for policy costings during the coalition negotiation process. So Robertson's line that he can't release the numbers because he needs the public service to look at them first doesn't seem to be factual.
That blunder aside, what do Labour's Budget Responsibility rules propose?
The first rule is that Labour has committed to delivering a surplus every year "unless there is a significant natural event or a major economic shock or crisis." So Robertson can't let the Budget slip into deficit to fund these promises, otherwise he's broken the first rule of this document, as deals to get into government hardly fit into any of the caveats Labour added to their commitment.
Labour's second rule is that they'll reduce net core Crown debt to 20% within five years of taking office - meaning they'd hit the target two years later than National had planned to. There's no caveats explicitly mentioned on this one, but I don't think anyone would begrudge those from Rule 1 being applied here. That still means Labour can't push out there debt reduction target beyond 2021/22 to fund the new policies from their deal making.
Rule 3 is one area where Labour might have some wiggle room, so long as Labour is able to get the NZ Super Fund to over $63b by 2022/23, they could play around with the scale of their contributions to the NZ Super Fund, reducing the amount in early years and compensating that with larger amounts in later years, as well as relying on the fund continuing its impressive return on its investments too.
In Rule 4 Labour has committed itself to $8b in additional health spending, $6b more in education, and $5b in income assistance for families. They'll have some room to move here, though they have boxed themselves into a corner with their perpetual (and dubious) claims of a $1.7b hole in the health budget. So as to not make a mockery of themselves, they'll need to at least maintain that as they readjust their numbers to accommodate their spending promises.
The other issues is that Labour has committed to keeping government expenditure as a share of the economy to within the 29%. Again there's some room for movement here, but it needs to balanced against Labour staying in surplus each year too.
Rule 5 is all about tax and, it's important to note, there's no anticipated additional revenues forecast from changes to personal tax rates, and Labour did explicitly rule these out during the campaign. It's hard to see where Robertson would manage to break Rule 5 during his mini-Budget, but stranger things have happened.
Lisa Owen: "It's a four year Budget, looking out - forecast - so how much gets sucked up in the first year, second year, third year, fourth year?"
Grant Robertson: "That's exactly what you'll find when we produce our detailed budget. What we know is that we have the funding to do this."
Lisa: "So are you not confident of the estimates that you've already done?"
Grant: "Well as an opposition party you've only got so many resources and we're confident that with the information we have they're correct. The beauty of now being in government is that we actually get to test those estimates, but I am completely confident."
Oh, there we are again. Robertson again stumbles repeating that little white lie about not having access to the public service to cost your coalition and confidence and supply agreements.
Lisa Owen: "Would you agree that it's an accurate reflection to say that your budget is tight, really tight?"
Grant Robertson: "Look, I've never denied the fact that we're ambitious about what we want to do, and we want to make investments. But Lisa if we just look at this in a one..."
Lisa: "So it's tight?"
Grant: "I've never denied that, I've never denied that."
Lisa: "If your economic premises that you base it on, for example if growth doesn't peak out at 3.7%. If we have the 10 year downward slum that some predict for 2018, then you're in trouble with your money?"
Grant: "No I don't think we are."
Actually Grant, you are in trouble. Where you start to run into problems is that whereas the PREFU's forecasts are based on immigration numbers naturally returning to historic rates, Labour is actively looking to slash immigration numbers by nearly half. Labour's changes may actually have an even greater impact than intended, especially when combined with Labour, New Zealand First, and the Green Party all looking to restrict foreign investment in New Zealand, and renegotiate crucial free trade agreements. Treasury's PREFU takes into account the potential for external economic risks from events like Brexit and the like, but it hasn't taken into impact what will happen when Labour starts introducing the changes required by their own policies and their coalition agreement.
There's also the question of KiwiBuild, Labour's assumptions behind the capital recycling of the $2b investment into it rest on the housing market remaining relatively buoyant over that 10 year period. The problem here is that we're already seeing Auckland's property market cool off significantly, and if immigration is slashed as they're proposing to do, demand is going to drop off as well. Labour is more than likely going to have to pump more money into KiwiBuild to deliver their promises 100,000 new houses, or they're going to have to downscale it. Something will have to give.
What this suggests is that far from Labour's numbers being tight, Labour is going to either have to massage the numbers in such a way as to make a farce of both their mini-Budget and their Budget Responsibility Rules, or they're going to have to start breaking promises.
My guess is that unless Grant Robertson pulls off a miracle in the next few weeks, he is going to regret giving assurances that his numbers add up and still fit within his Budget responsibility rules, or he'll burn a lot of political capital by pulling off some very questionable financial contortions to make everything work. My pick is on the later, and when he does it, National will have a field day with him in the House.
What Labour may well be counting on is that in three years' time, nobody will remember the potential omnishambles that we might be about to see.
Labour is in full crisis mode as Finance spokesman Grant Robertson publicly admitted today that Labour's changing positions and inability to communicate a coherent tax policy has been a failure. They're now reverting to the previous tax policy of Andrew Little, which held that any proposed changes to taxation from Labour's tax working group would be campaigned on in the 2020 election.
Throughout August Labour had visibly shifted away from Andrew Little's sensible policy of waiting until a second term to implement any tax changes. It was a sensible policy by Little, who was borrowing from Key's 2008 playbook of ruling out any asset sales until a second term where they'd campaign on them in the 2011 election. Earn the trust of voters over your first term, then they'll trust you to make more significant changes in your second term.
That was until August, when Jacinda publicly rebuked her deputy Kelvin Davis and stated that Labour would be free to implement any tax changes before the 2020 election.
What followed was a comedy of errors from Jacinda as she was forced to back away from the numerous new taxes being proposed by senior members of her caucus. She first had to rule out changes to income tax, then rule out a capital gains tax on the family home, then rule out a land tax on the land under the family home, and now Grant Robertson has had to emerge and announce that Labour is reverting back to Plan A.
Politically this is an utter disaster for Labour. While Grant's announcement today is the right decision to make, Labour should never have allowed the tax circus that's been running for the past month to take place, and it demonstrates a huge lack of political nous and leadership from senior Labour figures, and some of the blame has to go on the back office who are advising them and not just their MPs.
Confronted with their meteoric rise in the polls, it seems that Labour's leadership, campaign, and policy teams all got ahead of themselves in believing Jacinda's popularity would allow them to have a much more ambitious policy programme in their first term than they had originally planned.
In doing so they opened up a chink in their new found armour that National has driven a lance through and exposed a lot of rust on the inside. As I wrote back when Jacinda first became leader, Labour's problems have always gone a lot deeper than just their leadership, and their inability to stick to a coherent position on tax policy confirms this. Eight weeks was never going to be enough time for Jacinda to fix those internal issues, but regardless of the election outcome, hopefully she does takes steps to rectify it soon.