Danyl McLauchlan: Notes towards an alt-centrist manifesto

Danyl McLauchlan: Notes towards an alt-centrist manifesto

Two of the most significant policy disputes in the run-up to New Zealand’s 2023 election took place within our major parties rather than between them. In May Christopher Luxon pulled out of the cross-party agreement on housing densification – a policy developed by his own deputy leader – and in July Chris Hipkins confirmed he’d killed Labour’s plans to introduce a wealth or capital gains tax, a scheme developed by his finance and revenue ministers.

There are internal squabbles in every movement but these two carry enormous significance. National is supposed to be the party of free markets – but here they are pulling out of a bi-partisan agreement to deregulate the housing market (the government currently spends about $2 billion a year on the accommodation supplement to subsidise the cost of housing because the market is so broken). While Labour is supposed to be the party of, y’know – labour, but here they are continuing to exempt capital from the tax system and offsetting the cost by increasing the tax burden on middle-income earners.

These are important issues. Housing is “the everything problem” – so many health, welfare, education and macroeconomic issues are downstream from the housing crisis, while international economic agencies like the OECD and IMF have been screaming at us for decades to patch up our economy by fixing our broken tax system. But this was the election in which our political leaders declared, very loudly, that they weren’t here to fix the nation’s deep and evident problems. They were here to ensure that things remained broken and they were prepared to go against the nominal values of their own parties to do so.

A recent Radio New Zealand analysis of political donations found that the property industry has lavished $1.3 million on National since 2021, and points out that their policies – restoring tax deductibility for landlords; scaling back the bright-line test – will deliver hundreds of millions to the sector. And consider Labour’s key fiscal policy this election: the GST exemption on fruit and vegetables. It was heavily criticised by economists who pointed out that the bulk of the gains would go to the supermarket duopoly instead of consumers. Another RNZ investigation described the close relationshipsbetween Labour and the supermarkets: Jacinda Ardern’s former deputy press secretary is head of public relations for Woolworths; Chris Hipkins’ Chief of Staff was a lobbyist for the sector – he famously resigned a day before taking up his role in the Prime Minister’s Office – and he arranged dinners between Countdown executives and ministers, including Grant Robertson. No one can say that all this money and influence bought any specific policy or benefited an individual company. But if we look at the major parties and ask “Who do they really represent and why?” the answer repeatedly points to the contamination of our politics by money and vested interests.

There’s this inevitable post-election argument playing out about whether Labour were too left-wing or too centrist. To me this feels like the wrong framework. Take free dental care. This was a good left-wing policy – in theory– but even if Labour somehow won the election it felt inevitable that by 2026 Hipkins would be struggling to explain how he’d spent billions of dollars on the scheme without delivering any actual dental treatment to anyone (“As I’ve indicated we’ve faced some challenges but we’re making great progress.”). Did a single voter believe that this promise would be kept?

One day after the election the New Zealand Herald reported that the Ministry of Social Development was spending $36 million on an online job search platform: part of its multi-billion dollar Te Pae Tawhiti scheme. Treasury strongly advised against this, noting that unemployed people already used existing platforms like Seek and Student Job Search, and heavily criticising the lack of policy analysis around the scheme. The government approved it anyway: The work will be delivered by private sector providers and the Herald noted:

In 2021-22, the last financial year for which the figures are public, MSD spent $15m on consultants and contractors for work on Te Pae Tawhiti. Of that, $5.9m went on Accenture “business improvement specialists” and $5.5m on PwC “business improvement specialists”.

Is this left-wing? Superficially yes: the state is spending money on the welfare system. But . . . is it? This is a recurring theme of the last government: some worthy-sounding progressive project – climate, public transport, mental health funding, water infrastructure reform  – is eventually unveiled as a revenue stream for the private sector, delivering negligible benefits to the public. Whose interests are really being represented here?

My contention is that this government was simultaneously too centrist and not centrist enough and I predict the next government will be the same. Instead of an economy that is built around either an interventionist state or free markets we have a hybrid of private and public sector solutions that never seem to solve anything; they deliver little value to the public, vast profits to private sector providers and high salaries to the senior public servants provisioning them, who seem to be completely unaccountable – no matter how dire their performance. There aren’t traditional left-wing or right-wing solutions to this. What are the left going to change about the public sector that will turn it into an efficient mechanism for building things and serving the public? What will the right change about our economy that will grow productivity and introduce competition into sectors like banking and groceries?

The alternative to our current model of oligarchic centrism is a model I think of as alt-centrism because I can’t think of a better term. The alt-centrist manifesto demands:

●      A high quality public sector that delivers services like health, education, welfare and a criminal justice system, and builds and maintains the infrastructure required to support a modern nation-state. It delivers this by setting clear targets, monitoring the quality of its spend to ensure it is delivering value and recalibrating when it isn’t. And all of this is done in an accountable and transparent manner. There is not, for eg a vast communications apparatus designed to conceal each agency’s activities from the public. Ministers and their staff do not collaborate to suppress statistics about the performance of the health and education systems and then lie about it. The corrections department should not, eg, let convicted murderers out on electronic monitoring when they know the monitors don’t work. And so on.

●      Competitive free markets. This innovative new economic model – proposed in 1776, but which New Zealand has mostly failed to adopt, preferring a commercial sector dominated by cartels, private monopolies, price-fixing and rent-seeking – would allow developers to construct new homes when house prices were high. It would incentivise new supermarkets to enter the grocery sector – and it would be illegal for the current duopoly to use anti-competitive tactics to prevent this. Overpriced domestic building materials would have to compete against cheaper imports. Investors could put their money into innovative well-run companies that made great products instead of whatever firm had the best lobbyists able to extract the most corporate welfare.

●      A low-rate, broad based tax system including a tax on either land or capital, so that the tax system isn’t deliberately distorting the entire economy and the government doesn’t need to covertly increase everyone’s income taxes every year to compensate for the gigantic hole in the revenue stream. .

●      More politicians! The number of seats in the House has been fixed at around 120 since the mid 1990s and our population has increased by about 1.5 million since then. People are cynical about MPs – and they should be – but they’re the only people in the political system who are even vaguely incentivised to act in the interests of the wider public. There should be more of them. But their operational funding needs to be ring-fenced, compelling them to spend it on policy work not consumer marketing (so that they know what they want to do when they enter government instead of convening a torrent of working groups to figure this out).

●      And we need reform around donations, lobbying and conflicts of interest – all enforced by a (competent) independent body that investigates and prosecutes political corruption. And the legislation around this needs to be written by the judiciary, not the politicians.

New Zealand is a liberal-democratic-free market-social welfare state – Francis Fukuyama’s End of History model. But – as Fukuyama pointed out – all of the institutions that make the model work are vulnerable to oligarchic capture. Over time the people who manage them reorient them towards their own self-interest. The best we can do is monitor them and reform things when they get too corrupt and dysfunctional.

I believe they’re getting too corrupt and dysfunctional. Transparency International, the NGO devoted to fighting global corruption ranks New Zealand second equal least corrupt nation in the world (behind Finland and alongside Denmark) in its perceptions of corruption survey. Yet, hilariously,RNZ reported earlier this year that the New Zealand branch of Transparency is quietly being funded and resourced by the state security services – the SIS and GCSB – alongside the big consulting firms: KPMG, Deloitte and PwC. And they’ve engaged a secret group of lobbyists to advise them on ethics in the lobbying industry. This is such an overwrought metaphor for our political culture: murky collaborations of state, private sector and NGOs fraught with conflicts of interest and concealed behind screens of public relations gibberish. Everything is compromised, captured; slowly transforming into the opposite of whatever it’s supposed to be. The party of labour privileges capital over labour; the free market party is anti-free market. The transparency watchdog is opaque and bankrolled by corporations and intelligence agencies.

Alt-centrism is the banal yet radical notion that our economic and political systems should work the way they’re supposed to. I’m not sure what this looks like in practical terms (occupying the public service commissioner’s office until he agrees to assess the value of public spending? Handing out copies of Caro’s Power Broker and Burnham’s Managerial Revolution on street corners?) I suspect it looks like David Parker when he stood down as revenue minister rather than promote a tax policy neither he – nor, one suspects, anyone else in his caucus – believed in. Politics is the art of compromise; parties can’t work if someone flounces off every time the leadership makes a concession to political reality. But there’s a difference between compromising a party’s principles and abandoning them – and it’s appropriate for MPs, members and other influential actors to raise their voices or exit their organisations when they see this happening.

Are there many votes available to politicians or parties adopting an alt-centrist platform? Probably not. They’d antagonise thousands of the wealthiest and most influential people in the country while any gains from the changes would come slowly; in the teeth of fierce resistance.  But listening to the valedictory speeches at the end of the last parliament I was struck by the hollowness of so many political careers, even as described by the MPs themselves. They sat on some committees, went on a speaker’s tour; maybe made it to a ministerial office where they implemented the policy agenda imposed on them by their officials and their party. There are a few exceptions to this. But not very many. And these careers come at enormous cost: long hours, intense scrutiny, weeks away from their families. If politicians and their parties aren’t there to do difficult things in the interests of the public, why are they there at all?


Danyl McLauchlan writes about politics, economics, science and philosophy – mostly for the Listener. He is also the author of two novels and a recent essay collection, Tranquillity and Ruin.

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