When is a Prime Minister a political person and when the voice of the nation?
Opening the Pukeahu National War Memorial Park in Wellington on April 18, John Key said: “I feel proud of the decision to make Pukeahu a reality…
“The commitment and dedication that has gone into creating this space reflects how strongly everyone involved wanted to ensure that the National War Memorial finally had the setting it deserved.
“I am one of those people.”
Was this Key giving voice to the nation? Or was he voicing John Key, eminent person?
Pukeahu is a national expression, not a narrowly prime ministerial one. This national event called for statesmanlike personal humility and pride in the nation, not pride in bloke-Key.
He was personalising something that is the nation’s. (At Gallipoli he hit the correct tone.)
Bloke Key was back in the news last week for “horsing around” with a young woman’s ponytail.
It was the sort of immaturity blokes often indulge and is hardly a hanging offence — except that Key himself made Iain Rennie’s mishandling of Roger Sutton’s bloke-immaturity into a last-warning-before-hanging.
Key the macro-personality will be forgiven by the great majority, as his dealings with Whale Oil were. But each time he does some over-blokey thing a few more moderate conservatives take a step back from him.
More than other leaders, a macro-personality personalises the role as well as exercising it.
Take his personalisation of pension reform, saying he would resign from Parliament if there is change.
In effect, that says: “I outrank the national interest.” And that “I” factor also outranks the interests of younger generations, including those of the age of the ponytail wearer.
The pension is a long-term, intergenerational fiscal matter, the future funding of which bothers the Treasury — and many others — a lot.
Also, overplaying the “I” factor carries political risk. The budget is an example.
Next month’s budget is now likely to project a deficit for this July-June fiscal year instead of the surplus the 2014 budget projected.
That surplus was claimed as evidence of fine fiscal control — and fine leadership. It was heavily played up in the election campaign.
Now Key and Bill English are playing it down. Labour, the Greens and New Zealand First are playing it up.
In fact, the 2014 projection depended in part on sleight-of-hand, calling some road spending a “loan” to the Transport Agency (which depends for its funds on fuel taxes, which generate less revenue as engine efficiencies improve).
Last year’s big play on the “surplus” was “I”-factor politics.
Economically, whether there is a small surplus or a small deficit does not matter. What matters is where the structural balance is headed.
And that direction has been positive since the initial shock from the global financial crisis (GFC) and later derailment by the Christchurch earthquakes.
English can also point to factors over which he has little or no control.
One is lower commodity prices and so less tax on lower dairy farm profits and lower oil royalties.
Another is the impact on world inflation — and so on inflation here — of the wild money-printing in the United States (now ended), Europe (now under way) and Japan (full on).
Prices rising more slowly translate into more slowly rising GST receipts. And if wages as a result rise more slowly, fiscal drag — the rise in tax’s proportion of income if tax thresholds don’t rise — is gentler.
Low inflation means lower interest rates than projected a year ago. Those receiving interest pay less tax.
In short, the world didn’t go according to the 2014 budget plan. Most of the departures from that plan are pluses for most New Zealanders. So not getting a surplus will paradoxically be a good thing — except for the politics, the “I” factor.
But what about fiscal 2015-16?
One of English’s drives in his first six budgets was to get government agencies to do “more with less”. New-spending allowances ranged from zero to small.
Compare one Australian state’s “savage” recent reduction of new health spending to 7 per cent with English’s record of around 3 per cent.
But can it continue? Health board finances are either in a poor state or being squared by squeezing services. Sometime English is going to have to ease the straightjacket or pay a political price. Among other things, technology relentlessly drives health costs up.
How English sets new-spending allowances in a low-inflation environment will be a feature of the budget.
Underlying this “profit-and-loss” dimension is the government balance sheet. A lot of work is going on there.
It won’t feature big in the budget on May 21. But don’t be surprised if later this year English shifts the focus of future budgets to take liabilities, assets and net equity into account as a truer measure of fiscal management than the operating surplus.
Note: management. The “I” factor has no place there. Good management is about palpable costs and benefits for the nation.