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Watching Brief: Election 2020 Special

Home Insights Watching Brief: Election 2020 Special

Matter of opinion

I see Red, I see Red, I see Red

Unlike the 2017 election, where things hung in the balance for five long weeks, there is little need to consult the Cabinet Manual on the formation of the Government and coalition agreements and confidence-and-supply. Labour's unprecedented MMP majority means it can do what it likes. Saying that, it will prefer that the Greens remain on side but it will need to offer them more than crumbs to get any agreement past the Greens' members. All will be clearer by the end of today and clearer still by the end of the weekend once the Green constituency has voted.
 
Whatever the outcome of negotiations with the Greens, and noting COVID-19 and the associated recession will still dominate, we can expect a Parliament of environment and resource reform. Policy work on a number of initiatives is well underway, including on reform of the Resource Management Act (founded on the Randerson Report), water (infrastructure and quality), and energy (hydrogen refuelling stations and pumped hydro). We can also expect to see specific initiatives around electric vehicles, waste deposit schemes and Auckland Light Rail. Climate change will remain high on the agenda, with understandable predictions being that James Shaw will be offered this portfolio. He has excelled as the Climate Change Minister working tirelessly to build consensus across parties and it will be a hard position for Green members to give up when they vote this weekend.
 
If Labour is hoping for nine years, it will of course have to deliver on housing and child poverty over the next three years, with its credibility seriously dented by over-promising and under-delivering in the first term.
 
We plan to produce a series of publications as announcements are made and the new Government emerges. In this Watching Brief edition we start with a stock-take of the key Labour policies and what to expect over the next three years. We provide some early commentary on how the Greens might impact the future Government, consider movement of minority parties, the rise of early voting and the electoral silence period and lastly answer some frequently asked questions around what happens next.

Key changes to expect

Labour policy direction

Introduction

Throughout the election campaign we saw criticism from all points on the political spectrum of campaigns light on policy. Labour certainly has plenty of work to do to meet its promise of a "transformational" Government, but the political mandate afforded to it means it has the power to hit the ground running, free of the complexities of the coalition and confidence-and-supply agreements that characterised the 52nd Parliament. It is also a chance to put the reviews and reports commissioned over the last three years to work.
 
The following section sets out expected developments in key policy areas, all of which are necessarily coloured by Labour's five point COVID-19 recovery plan, being to:
 
1. Invest in people, by enabling them to retrain for future jobs;
2. Create jobs;
3. Future-proof the economy, including by continuing the transition to a net-zero emissions economy;
4. Support small business;
5. Position New Zealand as a world-class trader and nation for investment.

Fiscal Management

As with all things in 2020, Labour's fiscal management policy is inherently tied to COVID-19. It plans to take a balanced and principled approach to fiscal management, focused on the careful management of Government finances, investment in critical public services and sustainable economic growth, and a stable revenue policy. Big ticket items include a commitment to an increase in the tax rate for income over $180,000 to 39c in the dollar (but no capital gains tax), as well as working with the OECD to address issues associated with tax payments by multinationals in New Zealand. Kiwis cannot bank on further significant assistance from the COVID-19 Response Recovery Fund; any further spend from the fund will be in critical circumstances only.

Health

Labour has acknowledged and accepted the direction of travel set out in the New Zealand Health and Disability System Review, led by Heather Simpson. One in the long list of the sixth Labour Government's reviews and working groups, the final report proposes major changes to the health and disability system. Key features include the end of DHB elections, the consolidation of DHBs and the development of two new bodies – Health New Zealand (a national body to oversee DHBs and provide policy direction) and the Māori Health Authority (to develop policy and guidance in relation to Māori health issues).
 
In addition to a range of COVID-19-related health commitments (including improved contact tracing, border management and access to vaccines), Labour has committed its second term to:

  • increased minimum sick leave entitlements for employees;
  • changes to ACC, including by updating chronic illness cover to include those caused through workplace exposure to harmful environments;
  • investments to reduced planned care waiting lists; and
  • increased mental health support for young persons.

Housing

Labour's failure to meaningfully address the housing crisis in its first term means its movement in the housing space will be under continued and significant scrutiny. You won't find KiwiBuild mentioned in its recent policy documents, but instead a central focus on repealing and replacing the Resource Management Act (RMA) to encourage more affordable housing. The independent review of the RMA led by Hon Tony Randerson QC recommended the legislation be replaced with two new pieces of legislation to support sustainable management and better strategic planning. Labour has committed to implementing the core recommendations of that report, and to working through other details through the Select Committee processes. While we can expect the Parliamentary process to begin on this major reform in the near future, we anticipate that the legislative process will be slow, given the significance of the reform. Updates to the Unit Titles Act are anticipated as well.
 
Additional policy commitments include:

  • establishing an Earthquake-prone Building Remediation Service, intended to speed up remediation of at-risk apartment buildings;
  • the introduction of mandatory Energy Efficiency Certificates for homeowners, increased regulation of property managers, and expanded healthy homes requirements; and
  • continued and increased movement in relation to progressive home ownership through Community Housing Providers and an Iwi Māori pathway.

Natural Environment

In addition to its commitment to replace the RMA, Labour plans to:

  • continue its focus on improving freshwater quality, and achieving a fair and efficient allocation of freshwater resources (including with regards to Māori interests).
  • develop a Managed Retreat and Climate Change Adaptation Act to help with the complexity of dealing with managed retreat from areas affected by climate change.
  • work with the agricultural sector to remove duplication of reporting requirements in an effort to achieve clean water, lowering emissions, and sustainable farming.
  • continue improvement of the fisheries sector towards sustainable measures, modernised fishing practice, and updated marine protected areas legislation.
  • implement a Waste Action Plan that includes phasing out single use and hard to recycle plastics by 2025, launching a $50 million fund to help New Zealand businesses develop and manufacture non-plastic alternatives, and standardising kerbside recycling. The previous Government's container deposit scheme will also progress through the next stages of its development.  

Climate Change and Energy

With or without the Greens, we expect Labour to continue its work on tackling the climate crisis. Existing policies that Labour has recommitted to include:

  • expanding the Just Transitions Unit to regions and communities beyond Taranaki (where it is currently working to transition the Taranaki economy away from oil and gas);
  • continuing to work towards the goal of planting one billion trees by 2028; and
  • continuing to work with New Zealand's freight network on sustainability and efficiency.

In terms of renewable energy, Labour plans to:

  • bring its 100% renewable energy electricity generation target forward by five years to 2030;
  • make further investigations and investments in dry year storage solutions, including pumped hydro;
  • increase funding to expand the low-emissions contestable fund to accelerate the uptake of electric vehicles; and
  • invest in emerging technologies, such as green hydrogen.

With a focus on transport emissions, Labour has committed to:

  • a nationwide roll-out of hydrogen refuelling stations;
  • funding to support businesses to lower their vehicle emissions, fuel efficiency standards for new vehicles and $70 million to help major industrial users decarbonise;
  • plans to prevent the installation of new low and medium temperature coal-fired burners;
  • decarbonisation of the public transport bus fleet by 2035; and
  • supporting agricultural climate change research programmes.

Infrastructure and Transport

Labour's Three Waters Review is already well underway, with legislation passed last term to establish a new regulator, and a further Bill introduced in mid-2020 to build the framework for the regulation of drinking water, waste water and storm water. We can expect to see this progress at pace in the new Parliamentary term. Additionally, as part of its five point COVID-19 plan, Labour has identified the drinking water upgrade as one of the key platforms for creating new jobs nation-wide.
 
Labour plans to continue investing in rebuilding hospitals around the country, building new schools and classrooms, building public and transitional homes.
 
Labour intends to continue to invest in road, rail, public transport and walking and cycling infrastructure, including:

  • Progressing the Auckland Transport Alignment Project, Let's Get Wellington Moving and developing a rapid transport network for Christchurch;
  • Building a light rail connection from the Auckland City centre to Māngere and the airport following the receipt of advice from the Ministry of Transport;
  • Continuing to invest in KiwiRail; and
  • Developing domestic rail workshops at places like Hillside and Woburn.

 
Labour intends to collaborate with stakeholders to agree on the future of the upper North Island's ports.

Workplace Relations

This Parliamentary term is likely to see a number of new employment initiatives, including:

  • Continued increases in the minimum wage.
  • The introduction of Fair Pay Agreement legislation. This is one of Labour's more significant proposals and extends one of its key 2017 policy platforms. The Fair Pay Agreement Working Group, led by Rt Hon Jim Bolger, provided a suite of recommendations to the Minister for Workplace Relations and Safety in December 2018, including a recommended system design where workers can initiate sector- or occupation-wide collective bargaining if a representation threshold or public interest test is met.
  • Implementing the recommendations of the Holidays Act Tripartite Taskforce, and making Matariki a public holiday from 2022.
  • Doubling minimum sick leave entitlements from 5 to 10 days per year.

Immigration

With the borders still closed, access to critical workers remains an ongoing area of concern for New Zealand businesses. Labour has committed to loosening border restrictions while still balancing the need for a secure border to protect against COVID-19. This includes a review of immigration criteria and dedicating portions of managed isolation facilities to critical workers, as well as establishing a new Investment Attraction Strategy to bring high value international investment to our shores.
 
In addition, Labour has committed to updating a range of immigration settings, including:

  • redeploying seasonal workers in New Zealand, to assist primary sector industries;
  • better addressing the needs of regional New Zealand to attract migrant workers; and
  • addressing migrant worker exploitation, including the possible implementation of modern slavery legislation (reflecting recent developments in the United Kingdom and Australia).

Foreign Affairs

Labour's 'top priority' in international relations is New Zealand's Pacific neighbourhood. Alongside this, Labour will prioritise a human rights approach to international affairs and contribute to UN-sanctioned peacekeeping and humanitarian missions. Labour has reiterated that they will open up travel bubbles, when it is safe to do so.

What impact will the Green Party have on Government, if any?

It was a night of firsts for the Green Party on 17 October. It picked up 10 seats, up two from the 52nd Parliament, and in doing so became the first support party in MMP history to increase their share of the vote following being in Government. Yet more impressive to many was the fact that amid a red tidal wave that swept 16 new electorate seats for Labour, 15 of which were taken from the National Party, Chlöe Swarbrick turned Auckland Central from blue to green. This makes Swarbrick the first Green Party MP to secure an electorate seat without the Labour Party's assistance or blessing, and the second ever to win an electorate seat for the party.
 
The Green Party's obvious successes on election night were, however, bittersweet; they did not translate to any leverage in the formation of the next Government. Labour gained enough seats to govern alone, and can now implement its agenda unfettered by any formal coalition or confidence-and-supply arrangements with minor parties.
 
There is an oversupply of speculation about where this leaves the Green Party. The Prime Minister has ruled out a formal coalition, but is evidently open to, and is currently "negotiating", a low-level supply arrangement on areas of cooperation. Green Party members are at odds about the merits of such an arrangement, cautioning that the more entrenched the party is in the new Government, the less critical of Government it can be. After the furore surrounding the Government's $11.7m loan to Green School New Zealand, the Green Party will be acutely aware that its members are not afraid to offer their own criticism if they think the Party is found wanting in Parliament. 
 
Any supply arrangement needs to be approved by 75 per cent of Green Party delegates to allow the Party to join the new Government (in whatever form it may take). Assuming it is approved, the details of the arrangement are set to be revealed by the end of this weekend and certainly before 2 November 2020, being the date on which the Prime Minister is expected to announce Ministerial positions.
 
Assuming an arrangement does proceed, the Green Party's last term in Government provides a loose indication of its potential impact on the next. In the 52nd Parliament, the Green Party held three Ministerial portfolios outside Cabinet, and one Parliamentary Under-Secretary role. This enabled the Green Party to influence policy for areas including climate change, transport, conservation and the environment, among others. To the extent that decarbonisation, protecting the natural environment and combatting climate change remain priorities for the Labour Party, the Green Party's familiarity and relative competency with the Ministerial portfolios governing these areas could see it retain a sphere of influence. The degree of any such influence, however, is likely to be lesser, where Labour knows it has the political mandate to push ahead with its own policy. The difficulty for the Greens will be remaining relevant – but they've clearly proved an ability to do so with this latest result.
 
From a policy perspective, the low-hanging fruit that could form the basis of a supply arrangement are the initiatives supported by both the Green and Labour Parties last term, but which were blocked by NZ First. These include:

  • Building a light rail connection from the Auckland CBD to Māngere and Auckland Airport.
  • A strategy to get more electric vehicles on the road. The previous Government's strategy comprised of:
    • a clean car discount or "feebate" scheme that made clean cars cheaper by charging a levy on polluting cars, which would be used to subsidise cleaner cars; and
    • a clean car standard that required importers to gradually reduce the average emissions of vehicles they brought into the country.
  • Fisheries sector reform. NZ First had delayed the rollout of mandatory cameras on fishing boats, and blocked plans for an independent review of the sector. This review, and the technical advisory panel conducting it, was established by the previous National Government to give expert advice on making fishing sustainable long-term. Reform for the sector is more likely now that NZ First is no longer in Government.
  • Passing the Sexual Violence Legislation Bill. All parties in Parliament supported this Bill last term, which aimed to reduce the trauma that sexual violence complainants may experience when they attend court and give evidence.

It would seem, at this stage at least, that the Green Party's impact on the new Government could be limited to helping the Labour Party carry out unfinished business. Any potential impact beyond this will become clear in the coming days.

Other points of interest

Where to for MMP?

For the first time since the introduction of the Mixed Member Proportional electoral system, a single party has the ability to govern New Zealand alone. Labour, with 49% of the vote, has an outright Parliamentary majority, and has confirmed that it will not be entering into a formal coalition agreement with the Greens.
 
NZ First's refusal to support policies such as Auckland's light rail proposals, capital gains tax, rental renegotiation, and electric vehicles was often referred to in the campaign as a 'handbrake' on Labour's previous term in Government, and particularly in respect of its "year of delivery". Such disagreements have been a feature of MMP Governments and prevented drastic policy changes – which were a key feature of the First Past the Post system, including shifts from Muldoon's protectionism and the free market policies of Lange's fourth Labour Government.
 
The outright majority that this election delivered is a situation not yet contemplated under MMP, and was seen as unlikely by many pundits. Prime Minister Ardern was quick to describe the majority as an endorsement of the work of the previous Government, and a mandate for Labour to accelerate its policy platform. Ultimately, the checks on the 2020-2023 Labour Government will be public accountability, and a desire to keep favour with first time Labour voters, in order to secure a third term.
 
As for the effect of an outright majority on New Zealand's (relatively new) electoral system, the next three years will be telling. New Zealand voted against doing away with MMP in 2011, and a shift back to the First Past the Post system seemed like an unlikely outcome. But now that we are back to a single-party Government with the power to push ahead with (possibly transformational) reform, public perceptions of MMP may again begin to shift.

Movement of minor parties

While the Labour Party is able to govern alone, minor party representation in Parliament continues, and the 2020 election saw some interesting movement in this space.

Enter the Māori Party

The Māori Party looks set to head back to Parliament after a win in the Māori electorate of Waiariki. Rawiri Waititi has won the seat by 415 votes, pending the outcome of the special votes count on 6 November. Waititi has said that the win shows there is a mood and appetite for the Māori Party to have a voice in Parliament. John Tamihere, current co-leader of the Māori Party, has stated that Waititi will take over his position as co-leader of the party after winning the seat. 
 
With polling numbers below 5 per cent, winning an electorate was the Māori Party's only realistic chance at getting back into Parliament. The party had no representation in Parliament last term, after Labour's Tamati Coffey won the Waiariki electorate in the 2017 election.

Farewell to NZ First

Two weeks on from the 2020 election, with only 2.7% of the vote, NZ First will not be returning to Parliament for the 2020 - 2023 term. Given the effect of their "opposition" existence in the previous coalition with Labour, NZ First's exit from Government may have a material effect on the direction of New Zealand policy.
 
Areas of interest to watch (in which NZ First has been particularly vocal) include:

  • forestry and agriculture (particularly with the departure of Regional Economic Development Minister Shane Jones);
  • the Provincial Growth Fund;
  • drug policy;
  • light rail; and
  • climate policy.

ACT's rise to fame

For the first time since 2011, ACT will have more than one MP in Parliament, thanks in part to the dismantling of National's base and David Seymour's success with the End of Life Choice Act. At the time of writing, the 8.1% ACT has achieved will give ACT 10 MPs. This may amplify the right-leaning voice in Parliament as, unlike National, ACT does not compete with Labour for centre-leaning voters and can be less restrained.
 
This has seen ACT willing to take contrarian stances in Parliament, such as voting against otherwise bi-partisan legislation such as the Zero Carbon Act and firearm reform. These are in line with ACT's general liberal viewpoint, alongside advocating for minimal state intervention – with its third ranking list MP Nicole McKee building a strong following for her response to the Government's efforts to control firearms. The fact that this has been rewarded with an increased proportion of the vote will likely see these stances continue.
 
The larger number of MPs in Parliament may lead to ACT having a more diverse range of viewpoints on issues going forward. As a much larger proportion of the opposition, they will now also be better represented in Select Committees and will likely have a greater platform to vocalise their criticisms of the Government through the media.

The rise of early voting and the electoral silence period

The 2020 election saw a significant increase in advance voting with 1,976,996 votes cast before election day, in contrast to 1,240,740 in 2017 and 717,519 in 2014. The rise of advanced voting has called into question whether the rules governing the electoral silence period are still fit for purpose.
 
The Electoral Act 1993 prohibits anyone from doing anything that may influence votes on election day, until voting closes at 7pm. The scope of the prohibition extends to:

  • campaign signs, billboards, and election and referendum advertising;
  • social media posts and websites;
  • election demonstrations, polls, and filming or taking photos in voting places.

Fines of up to $20,000 are issued for breaches of the rules.
 
With the majority of New Zealanders casting their vote in advance while campaigning is still in full swing, many are asking whether it is time to consider whether the election day advertising rules remain relevant. Key arguments include:

  • The rules risk infringing on a person's fundamental right to freedom of expression, protected under the New Zealand Bill of Rights Act 1990.
  • It is difficult to justify why a different set of rules exist on election day compared to the advance voting period.
  • The restrictions were designed for print media and broadcasting, and are increasingly difficult to enforce with the advent of the internet and social media.

The only real justification put forward in previous reviews is that New Zealanders value the tradition of an election day free of advertising and political content. However, the matter has been considered in inquiries and reviews following general elections:

  • Following the 2014 election, the Justice and Electoral Committee recommended additional restrictions on advertising within 10 metres of the entrance of advance voting places (ie outside the election day silence period). These changes were later introduced by amendments to the Electoral Act.
  • After the 2017 General Election, the Electoral Commission raised the inconsistencies between campaign rules during the advance voting period and the rules on election day itself, and encouraged the Government to reconsider the rules.
  • While the Justice Committee considered the issues in its Inquiry into the 2017 General Election and 2016 Local Elections it did not recommend any significant changes to the election day advertising rules.

It will be interesting to see whether any further consideration will be given to changing the rules in the 2020 post-election Select Committee review.

Where to from here? Our FAQs

When will we know the makeup of the new Government?

As the Labour Party holds 64 seats in the new Parliament, they can choose to govern alone if they wish. However, Labour Party leader Jacinda Arden has signalled a willingness to work with the Green Party, although it is unlikely that this will be a formal coalition. Instead, any such agreement would likely be a lower level agreement in the form of confidence-and-supply, similar to the agreement between Labour and the Greens in the previous term.

Both Labour and the Greens are confident that a deal will be reached by this afternoon, Friday 30 October. After formal talks are done, the Greens co-leaders will take the deal back to a committee of its high-ranking delegates to vote on whether or not the deal should be accepted. If more than 75 per cent of those delegates support the deal, it will formally be adopted. If not, the Greens will not be a part of the Government.

Allocation of Ministerial positions, including appointment of the Deputy Prime Minister, is expected to occur next week. The most likely candidate for Deputy Prime Minister is Labour's deputy leader Kelvin Davis.

What about special votes?
Special votes are those that are not on the printed electoral roll, nor taken at a voting place. They can include:
  • post-in and overseas votes;
  • votes made by people who have enrolled after writ day, which this year was 13 September;
  • prisoners who are on remand and prisoners who have been sentenced to less than three years; and
  • people who have cast their vote from an electorate they are not enrolled in.
Special votes are still being counted. Official results, including special votes, will be released on Friday 6 November.
 
What about the referendums? Why is there a delay?

Referendum results were not counted on election night, as general election votes were given the priority. Preliminary referendum results (not including special votes) will be made available at 2pm on Friday 30 October. Official results, including special votes, will be released on Friday 6 November.
 

What are the next steps on the referendum issues if they pass?

If it passes, it will automatically come into effect 12 months after the date the final results are announced – being 6 November 2021. The 12-month delay is to provide enough time to set up the processes detailed in the legislation. If it fails, the End of Life Choice Act will be automatically repealed and will have no effect.

The Cannabis Legalisation and Control referendum is non-binding. This means that if it passes, Parliament will still need to go through the full law making process, including Select Committee. This means that the Bill (only in draft at this stage) could change from its current version once it is introduced and makes its way through the House. While the referendum is non-binding, Prime Minister Jacinda Ardern has committed to respecting the result. If the referendum passes, legislation is unlikely to be passed until late 2021 at the earliest.
 

Who looks after the country after an election but before a new Government is formed?

By convention, while a new Government is being formed, the incumbent Government is in “caretaker” mode. This is called the "caretaker convention". This “caretaker” Government can’t make any significant decisions unless there is an emergency or crisis. On urgent constitutional, economic, or other significant issues, the caretaker Government has to listen to the new incoming government.

While working as a caretaker Government, Ministers continue with their existing responsibilities until new ministerial appointments are made or their responsibilities are reassigned. Ministers who are not re-elected as MPs can act as caretaker Ministers.

This means that until the Government is officially formed, the pre-election Government is still the caretaker; Jacinda Ardern is still the Prime Minister, and Winston Peters is still the Deputy Prime Minister despite his party not making it back into Parliament.
 

When does Parliament next meet?

Sitting dates have not yet been announced for Parliament. However, Parliament must meet on or before 24 December (being six weeks after the last date for the return of the writ).
 

What happens in the first week of Parliament?

New Zealand’s 53rd Parliament will be formally opened with two ceremonies: the Commission Opening of Parliament, and the State Opening of Parliament the next day.

During the State Opening of Parliament, the Governor-General will deliver the Speech from the Throne. The Speech from the Throne is prepared following a process determined by the Prime Minister, and it is usual for the speech to announce, in broad terms, the Government’s policy and legislative proposals on the principal issues of the day.

Following the Speech from the Throne, the moving of the Address in Reply and subsequent debate are the first opportunity for the House to express confidence in the Government.
 

What happens to legislation not yet passed?

The Business Committee will determine a new Order Paper (being Parliament's agenda) once the Committee is formed. The new order paper will include legislation that had not completed the Parliamentary process in the 52nd Parliament, and new bills put forward by the incoming Government.
 

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