Politics '06 - Shaking off the Election Hangover

It has been some time now between drinks for Network Politics. But, as all political junkies will testify, an election binge can take a very heavy toll. Some level of political fatigue amongst the public, media and commentators is inevitable during the election hangover period. But, even for seasoned political late-nighters such as Network Politics, waking up to the David Benson-Pope affair was a cruel tonic for the headache.

With the passing of the election, it is very difficult to see politics '06 reaching the same festive heights of 2004 and 2005. The kind of revelry generated by the Orewa speech, Foreshore & Seabed legislation, tax debate, Exclusive Brethren and the election itself should remain a somewhat hazy memory.

On top of the fatigue factor, the various parties with a stake in the current Government (Labour, New Zealand First and United Future) all have a very powerful incentive to keep the political ship on a calm and steady course this year. Clark, Peters and Dunne will face the brunt of public backlash if their Frankenstein coalition comes apart at the seams - and they know it.

"Clark, Peters and Dunne will face the brunt of public backlash if their Frankenstein coalition comes apart at the seams - and they know it."

Nevertheless, politics is a long-term game played over the course of three years. An intelligent party will be positioning itself in 2006 and laying the platform for success in 2008.

So, to kick off Network Politics for the year we have briefly previewed the position, opportunities and risks of each of the Parliamentary parties (relevant parties that is - sorry Jim):

Labour - 2005 was the election Labour couldn't lose. 2008 (2007 perhaps) is stacking up as the election it can't win. Keith Holyoake was the last PM to secure a 4^th term. Collectively, lined up against Labour are the forces of general voter fatigue, the economy and its precarious hold on Parliament - which is greatly constraining its legislative and policy options. For the meantime, all those party to the present governing arrangements (namely UF and NZ First) have every reason to hold the ship together. But give us 18 months and that goodwill and collective interest will wane. If Clark can hold on in 2008, she can truly be regarded as a political genius.

National - Decimated in 2002, National is rejuvenated, optimistic and utterly determined to dislodge the Clark regime. Having re-secured their base on the right flank, National has already hinted its intention to soften some policies in order to attract more voters in the centre - e.g. race relations, taxation. It has also taken the calculated step of raising the immigration issue, at a time when Winston Peters is tied up in his foreign affairs straight-jacket and unable to defend his space. The leadership question does hang over the party. It is very difficult to see Brash holding on through to the next election. Even without John Key actively looking to supplant him, media speculation, media questioning and media pressure may make Brash's position untenable. A John Key/Katherine Rich election ticket also looks just too powerful for the Party to resist.

New Zealand First - Winston Peters just looks so terribly awkward and unnatural as the voice of diplomatic calm and reason. Having spent the last fifteen years of his political career fanning political flames, stirring and taking every opportunity to de-stabilise, Network Politics couldn't help but be amused at the sight of Peters urging the Fijians to talk and find an "amicable" solution. Having ridden out the obsessive media campaign that followed him into office, Winston has managed to keep his head down. He does have every incentive to hold this patch-work government together for, say, 18 - 24 months. Sooner or later, however, we can expect him to start playing for profile and distancing New Zealand First from Labour.

The Greens - It took a very solid kick in the teeth from their social democratic neighbours and near Parliamentary obliteration on election night, but it looks like the Greens have finally found some political sense. Having coddled up to Labour during the last term and election campaign, and having forsaken much of their own identity in the process (which almost saw them extinguished by the 5 per cent threshold), Jeannette Fitzsimmons has signaled a much more aggressive stance towards Labour in the past couple of months. Amongst other things she has stated the Greens will no longer support Labour simply because they are not National. The loss of Rod Donald was a major blow. He gave the party a face of moderation. However, the party, indeed the movement, is now deeply rooted and much bigger than any individual. The Greens also have time. With a half decent strategy, they should chew into the left flank of Labour's support base at the next election.

ACT - The party with most to gain this term. Rodney Hide scrapped wonderfully to hold onto Epsom, but otherwise he was utterly dreadful as party leader. He has surely learnt that ACT will succeed or otherwise on the basis of its ability to carve out a political niche and convey its policies and its political brand to the public, not his personal talents as a private investigator. ACT's best opportunity will arise from National's intention to fight for the political centre. This will create a lot of breathing room for the party - after Brash had suffocated it for much of the previous term. Hide only needs to hold the line on race relations and taxation issues to grow his constituency. ACT should also learn from the Greens mistake and avoid becoming too overtly friendly with its political big brother. Post-election is the time to sit down, apologise and hold hands.

United Future - This term will be a real test of relevance for United Future and the next election may just stretch Peter Dunne beyond the ritual loyalty of the people of Ohariu-Belmont. National must already have its sights set firmly on Dunne's long-time safehouse. United Future's 'commonsense' branding has also worn very thin. Dunne really needs some flagship policy wins, but that will be very difficult with just three votes in the House.

Maori Party - Sitting outside the Government will enable the Maori Party to grandstand, but it will struggle to achieve anything constructive in terms of policy changes. Clark needs and wants the Maori Party to fail. She wants to make it clear that, while the Maori Party can scream, holler, grandstand and promise the moon, the hard reality is that Labour is the only party that can actually deliver policy for Maori. In the short-term, the very presence of the Maori Party in Parliament and its honeymoon profile should sustain its popularity, but longer-term, if Labour can squeeze it to the sidelines and starve it of policy 'wins', Clark can erode its relevance.

The Winds of Regulatory Change Blow Strong

Adidas did it. So did Travolta, Hasslehoff, big collars, and the colour pink. Now, economic regulation looks set to enjoy its own period of retro favour. As with many high level policy questions - whether to centralize or decentralize, whether to pursue outputs or outcomes - the prevailing mood and theory oscillates. All the signs suggest we are drifting back into a period of greater regulatory intervention.

The energy sector is already deep in the throes of a regulator backlash. Commerce Commission Chair, Paula Rebstock, has come down hard on the gas lines sector (signaling the intention to control pricing) and declared outright war on Transpower. Her campaign to exert extended controls over Transpower's pricing looms as one helluva showdown this year.

Telecom is also squarely in the gun. It was a rare and not insignificant feat for telecommunications regulation to achieve specific mention in the Prime Minister's opening address to Parliament. That is usually the reserve of traditional soap box themes, such as health, education and Peter Jackson movies. But Helen Clark, ever the adept judge of public mood, knows a good bandwagon when she sees one. The National Business Review even labeling Telecom a "handbrake to the nation". Telecommunications Minister, David Cunliffe, is under heavy media and public pressure to introduce significant regulatory change in the fixed line and mobile sectors. It will require some very tough decisions. But with the media stirring up the public and consumers, it will take some very powerful and clever persuasion on the part of the incumbents to hold the Alamo much longer.

"Telecom is also squarely in the gun. It was a rare and not insignificant feat for telecommunications regulation to achieve specific mention in the Prime Minister's opening address to Parliament."

The proponents of intervention maintain that natural monopolies are gauging consumers (e.g. lines companies) and/or presenting a hurdle to competition that is constraining innovation and progress (e.g. broadband uptake, mobile costs). Conversely, the incumbent infrastructure providers insist that regulatory intervention destroys the incentive (e.g. Telecom) and capacity (e.g. Transpower) to invest in new infrastructure and technology.

When it comes to protecting their position and averting further regulatory intervention, Transpower and the lines companies are better placed than the telcos. The one thing that scares the Government more than rising electricity bills is the risk of an electricity blackout. While energy security and energy supply remain political priorities, and while it remains accepted wisdom that more capacity needs to be built, the Government will be less inclined to intervene (although the Commerce Commission does have considerable powers of its own).

To this point, it has largely been the network-type 'natural monopolies' feeling the heat (e.g. telcos and lines companies). But this sort of mood tends to snowball with momentum. Airports and port companies alike might well feel a little nervous.

Interestingly, it may be government officials who prove to be the strongest allies of the besieged natural monopolists. Contrary to some perceptions that all officials favour regulation because it extends their role and influence, there is actually a fairly strong non-interventionist bent within Wellington economic policy circles. After close to two decades of a general commitment to light-handed regulation in New Zealand (flowing all the way back to the deregulatory period of the mid 1980s), it will take considerable persuasion to shift some quite well entrenched philosophies.