When the lights go out next winter, so will the light go out on Labour’s hope of a fourth term. And that comes down to the national interest.
Next winter inflation will be in its second year above 3 per cent. That is the Reserve Bank’s projection. It will change the way we think about prices after 15 years of low inflation.
Next winter unemployment will still be relatively low but jobs will not be quite so plentiful as in the recent past because GDP growth is in a slow patch — a necessary rebalancing after a long spell of outrunning our resources and debt-driven consumer spending. Most forecasters agree with the Reserve Bank on this.
Next winter interest rates will still be where they are now or a bit higher. House prices will be static or a bit lower. Lots of households will be squeezed, even if the price of petrol does drop. That is the Reserve Bank’s projection and it is not wildly adrift from the general run of forecasts.
None of the above is reason for despair. We live in a flexible and responsive economy and the world economy is still ticking along, even if seriously unbalanced.
But the more sober economy of mid-2007 will not be the rollicking, low-inflation, house-bubbling economy of mid-2004, 18 months from the 2005 election. It will not be the best starting point for Labour 18 months or less before the 2008 election.
A government needs about an 18-month lead-in for an economic upswing to feed into the public mood and then into party support.
Add in power cuts next winter and the prospect all but evaporates of a lift in mood in time for the election.
Actually, power cuts next winter are an “if” not a “when”. The rains came in the nick of time this autumn and last week’s blackout in Auckland was at least arguably a freak. Why fuss?
But next year the rains might not come. And then we will be very close to the margin. Genesis’s new combined-cycle generating plant at Huntly is set to start up in April and experts say a new generator doesn’t just go at the flick of a switch but can take months to fully commission. “Months” would take you well into winter.
And the national grid will not be in much better shape than now — and that shape, according to Meridian chief executive Keith Turner, an engineer, is fragile.
Don Brash’s National party bears some of the blame for this for underinvesting (in almost everything) as the government in the 1990s.
But it is Helen Clark’s Labour party which put in place a bizarre regulatory system that even it says it has to fix. It is Labour which has failed to inject into the Resource Management Act a truly strong national interest dimension to expedite new generation and transmission. And it capitulated to farmer and nimby protests last year against Transpower’s proposed new line to Auckland.
What were Labour’s priorities last election? More health services for old folk (plus no more on-road driving tests for over-80s). A massive transfer of funds to the children of the middle classes by abolishing interest on their student loans. And a big extra dollop of money for middle-income families to counter Brash’s deep (and dubiously deliverable) tax cut promises.
And, oh, yes, roads. Roads are a sore spot in Auckland so roads came up to the top of the list to lower the heat in the election.
But at least roads are future-thinking, not past-thinking or present-thinking.
And the government did at last move last year on early childhood education to get economically usable educational outcomes 15 years from now from some of the many disadvantaged kids who have for decades been sidelined, to the economic and social cost of all of the rest of us.
But the resources devoted to these kids are tepid compared with spending on the old.
Then take science, the basis for the innovation that will enhance those kids’ material prospects 20 years from now and the subject of much grand rhetoric from the government.
There have been improvements in the amount and shape of funding but far short of the amount needed for an economic step-change 20 years hence. Scientists are still scrapping over scraps.
The political focus is on the grandmas and grandpas — at the expense of the grandkids.
Where is the national interest in that? Buried in the vote count.
Visiting this week has been a Prime Minister who thinks differently. His government is pouring massive funds into science.
Sure, Lee Hsien Loong’s party, perennially in government by huge majorities, makes an farce of democracy and it skimps on human rights.
But Lee’s Singapore spends on the future. New Zealand’s election last year was a contest of bribes for the moment.
Where did the national interest go? Into the National and Labour interest.
That’s representative democracy. If you find you are standing in a cold shower in the dark next winter, that is what you told your representatives you wanted.
They have simply been your good and faithful servants. If you want investment in the future, that’s what you have to tell them.