At last New Zealand has a government. Nine weeks after the election under the new mixed-member proportional system the National Party of Prime Minister Jim Bolger has been returned to office in coalition with Winston Peters’ New Zealand First Party. It will mean a complete change in New Zealand politics.
The previous cross-in-box, single-member-electorate system invariably delivered majority governments. It was winner take all, often with one or other the major parties taking government with 40 per cent or so of the vote. And in the absence of the constraints of and upper house or state parliaments, as in Australia or Canada, it meant the New Zealand Government could do what it liked. It has meant for New Zealand a decade of quite radical changes: deregulation and privatisation; virtual elimination of tariffs; an unfettered labour market; the removal of currency and other financial controls and rigid statutory constraints of fiscal and monetary policies that have put low inflation (below 2 per cent) as the be-all and end-all of government financial management.
The radical economic changes had radical social consequences. There have been many benefits, but there has also been great dislocation and uncertainty. Reduction in the public-sector deficit, reduction in overseas debt, greater economic opportunity and more jobs have been counter-balanced by redundancies, cut-backs in government services and job insecurity. It caused New Zealanders to demand and get a change in the electoral system to bring some tempering influences into the political system.
And so now New Zealanders have the mercurial Mr Peters as Deputy Prime Minister. It proves the old adage: there is only one thing worse than not getting what you want; and that’s getting it.
Mr Peters was once a Cabinet Minister in a National Party Government, but was expelled for disloyalty and for being seen to put himself before the party. He formed the Maori-based New Zealand First Party and in the election campaigned by telling voters to vote New Zealand first if they wanted to see the end of Mr Bolger’s Government. And now he is supporting that very government after nine weeks of heavy negotiation with alternately the Nationals and the Labour Party. One might suspect that those negotiations centred more around what Mr Peters might get to advance the cause of himself and his party than the cause of New Zealand and New Zealanders. Labour apparently was not prepared, unlike the Nationals, to give him control of the Government’s finances with the Treasury portfolio.
On the policy side, Mr Peters faced the choice of being seen in the next three years to be incessantly forcing social softness and nationalistic protection and more public ownership on a financial tight and free-trade National Government or being seen to import fiscal rectitude on a social soft Labour Government. The former role would better suit a populist like Mr Peters.
Superficially, it may seem that for the next three years, Mr Bolger will be at Mr Peters’ mercy. On every issue there is disagreement, Mr Peters can threaten to pull out of the government unless he gets his way. But that threat can only be exercised once and in many respects Mr Peters would have more to lose than Mr Bolger. Labour might not want second-hand goods, preferring to govern in minority or even allow Mr Bolger to finish the term alone. Labour’s Helen Clark has expressed disappointment at not getting the Prime Ministership, but she might be secretly relieved given the terms it might come on.
In any event, New Zealanders will see a different sort of politics: one of compromise rather than the tyranny of the majority. New Zealand might also see a re-emergence of the legislative arm of government which hitherto had been a rubber stamp for the will of the majority government. Such a state gives a more active role for the Opposition which hitherto has been powerless in the face of the numbers … though this would be more likely with a minority government than a coalition. Further, in this more precarious situation … with power tantalisingly close for the Opposition … the Government is less likely to succumb to vice of arrogance. In all, there are some advantages to the new situation, that can out-weigh the disadvantages.
The challenge for Mr Bolger is to guide his new government with sensible compromises and consensus-building on policy rather than shows of acrimonious wins and losses within the coalition and both parties in government will need to put short-term individual interests aside in favour of the interest of the broad community if the government is too survive.
The challenge for Mr Peters is to live up to his own propaganda. He says he puts New Zealand first. He says he has the interest of his constituents at heart. He has probably already aroused the suspicion of many of his supporters by going into coalition with the Nationals given opinion polling which suggest that a great majority of New Zealand First supporters would have preferred a coalition with Labour. He will have to prove them wrong by tempering the extremes of National Party policy without succumbing to grandstanding.
There will be another tempering force on Mr Peters. The Electoral Act 1993 requires a parliamentary select committee to begin reviewing the MMP system in 2000 and to report to Parliament by mid-2002. The committee must also consider whether there should be a further referendum on changes to the electoral system. If Mr Peters makes a hash of it he may find the major parties ganging up on him to get rid of the electoral system which put him in his present position of power.