Heather Roy's Diary 30 September 2005
Still Waters Run Deep
The official line from the leaders of the main parties is that we are simply waiting until the special votes are counted
before governing coalitions are announced, but the 'specials' are unlikely to alter the fundamental calculations of
power. It follows therefore that the long silence on the political front can only be explained by furious negotiations
between party leaders, which are not reaching a conclusion at any speed.
I have to admit at that I have no particular personal insights into the key negotiations, as ACT is not a "kingmaker".
We have always said we would support any party that promotes the policies we advocate “ for obvious reasons this means
that ACT will only support a National led government. The swing parties are United Future, New Zealand First and the
Maori Party.
None of these have made any unequivocal commitment to Labour or National. The first two pledged to talk to the largest
party first. However, given Labour's tiny lead over National, they could plausibly declare it a dead heat.
You'll recall that the election night results (in terms of seats) were as follows:
Labour: 50 National 49 New Zealand First 7 Green Party 6 Maori Party 4 United Future 3 ACT New Zealand 2 Jim Anderton's
Progressives 1
The special votes may well favour the Maori Party as a high number of these were cast in the Maori electorates. This
being the case the size of the parliament may be reduced from the present 122 to 121. According to the formula used that
loss of one seat, would result in one less National MP.
Under this scenario for National to govern it will need the active or passive support of ACT, New Zealand First, United
Future and the Maori Party. At first glance this would seem an impossible task but given Peter Dunne's "bottom lines"
about the Greens participating in Cabinet it would appear he is considering his options. And Helen Clark cannot have
improved her chances of a deal with the Maori party by infamously describing them as "The last cab on the rank".
As for New Zealand First we should remember that Winston Peters solemnly promised the electorate before the election
that he would take no longer than 3 weeks after the election before announcing which main party he would support. He is
now two thirds of the way into his self imposed time limit.
Who wants to be in Government?
The question inevitably arises as to whether or not it is desirable to be in government. The omens are not good - last
month the current account deficit reached a record $1.1 billion deficit. At this point things get confusing because one
of the main issues during the election was the government's record $7.4 billion deficit and the need to return this to
New Zealanders through tax cuts.
The issue was a legitimate one but the government is not the same thing as the country. As a nation we - families and
companies - are spending more than we earn at a substantial rate so our total balance of payments (the current account)
is in the red. This debt is quite separate from government spending and the $7.4 billion government surplus.
The current account deficit is not in itself a cause for panic but it does suggest that the New Zealand dollar needs to
fall. That will cause a rise in interest rates, which in turn will slow the property market. The property market has
been a little overheated with mortgage repayments becoming seriously out of kilter with rental incomes.
All these problems point to a slowing in the economy and the government of the day is likely to be blamed. A rickety
coalition will be an easy target and will find it difficult to take decisive action on any front. Going into government
right now may not be all it seems but it is widely thought that neither leader of the two big parties will survive if
they don't become Prime Minister.
ENDS