Blundering on towards free trade…

John Key has expressed some frustration that world leaders are not as enthusiastic as he is to complete the so-called Doha round of free trade talks. At the APEC meeting in Peru our new Prime Minister expressed disappointment at the draft of the final communiqué. He wanted it toughened up to push free trade harder before the meeting finished.

It’s not surprising other countries are wary of free trade and highly ironic that New Zealand is the example most likely to convince them to be more cautious.

The effect here of our unilateral decision to reduce tariff barriers and subsidies has been to downgrade and stifle our local industries with floods of cheap imports. We are still losing a steady stream of manufacturing jobs with the enormous social costs ignored by politicians. We are the example of what not to do.

But New Zealand blunders on. We now want to negotiate free trade agreements but only after we have given away all our bargaining chips. Our latest negotiations will be with the so-called P4 countries – New Zealand, Singapore, Brunei and Chile. The US decided in September to join with Australia and Peru also now keen. Others may join before negotiations begin in March but whoever is there it will be the US which dominates. So what could we expect from an expanded P4 agreement?

Canterbury University’s Bill Rosenburg has analysed the free trade agreement between the US and Australia and points to the 2008 US annual report on “Foreign Trade Barriers” which lists what the US regards as New Zealand “trade barriers” that it wants modified or removed. So what can we expect?

For a start the US doesn’t like our Pharmac which bulk buys drugs and saves New Zealand hundreds of millions every year. This is money American drug companies believe should be in their pockets. The US will also argue for time extensions for medicine patents, again to bolster the profits of their pharmaceutical giants. In other words we are likely to face paying more for medicine.

Our schools, universities will face greater costs through paying more for copyright if the US has its way. This is a large cost to Australia in its free trade agreement with the US and is designed to increase income for American entertainment, publishing and IT corporations.

Our investment rules and regulations will come under serious and determined attack despite already being among the weakest in the world. The US will want their corporate investors to be able to buy strategic infrastructure such as our major ports and airports as well as less strategic assets. They will want unfettered access to purchase land and opportunities to take advantage of commercialisation of our public services such as health and education. Labour government ministers have previously requested the European Union to open up the public education systems of its member countries to foreign investment under GATS (The General Agreement on Trade in Services) so we don’t have much of a leg to stand on to prevent the US demanding the same from New Zealand.

The US will also argue for measures to protect their investments in New Zealand by opening up our government to compensation claims from American corporations. For example if New Zealand were to pass government regulation in areas such as tax laws or protection of the environment which result in decreased profits for the US investor then they would be able to claim compensation. Decisions on compensation are made by secretive trade tribunals at the World Trade Organisation in Geneva. Measures such as this are becoming a regular feature of trade and investment agreements. There are already dozens of examples when corporations have gained hundreds of millions in compensation from hapless governments.

A local example might be if a US company purchased a timber processing plant and the New Zealand government later regulates to clean up the local river from toxic chemicals released by the plant. The US investor could then seek compensation and we would be powerless to prevent it.

This is just one of the many ways free trade extends the powers of multinational corporations and decreases the powers of elected governments.

We would gain little in return. The US farming lobby is politically powerful and well resourced. It will vehemently resist allowing New Zealand agricultural products into its markets to undermine its own agribusinesses and family farmers.

Last year the Australians achieved agricultural access only many years into the distant future when they negotiated their own free-trade agreement with the US and for us the mirage will be no closer.

We have already sacrificed so much on the free trade altar with so little in return. In blindly pursuing free trade John Key is as blinkered as our previous government.

The Maori Party is wrong

From whatever way you look at the deal between National and the Maori Party it’s a hopeless, cringe-inducing arrangement and a disaster for most Maori.

How could they have reached such a lame-duck agreement? Significant progress for Maori is dead in the water once more.

Compare it with the deal signed between National and Act. Like the Maori Party agreement there are two MPs who become ministers outside cabinet in return for support on confidence and supply. However the ACT agreement has several policy concessions and specific mechanisms to set in motion policy development for further concessions down the line.

The Maori Party deal has none of this. There are no policy concessions but simply agreements to review the foreshore and seabed legislation and the future of the Maori seats. What’s worse is that neither of these are bread and butter issues for Maori families involved in the day to day struggle to make ends meet.

The Maori Party say National did not have to do a deal with them and so anything they got is better than nothing. Hone Harawira says they were offered more in three days by National than they were offered over three years by Labour. That might be true but it misses the point.

Even if they decided to go with National they were in a stronger negotiating position than Act because Act had nowhere else to go. It had no option but a coalition deal with National. Where are the policy concessions the Maori Party could have extracted?

National is the big winner from the deal. It gains 70 votes for confidence and supply and goes into the next election with greater coalition options. Most importantly however it gives National political cover as it moves to implement what will be deeply unpopular policies as the global financial crisis hits the real economy hard in the next year. As I’ve said before it won’t be the global bankers and currency traders, of which John Key is a card-carrying member, who pay the price for their greed and stupidity. Instead it will be Maori who disproportionately suffer the greatest. And when the inevitable motions of no confidence in the government are tabled in parliament it will be the Maori Party MPs who are wheeled out to defend the degradation of Maori families and communities by unemployment.

In all the self-justifying statements made last week to defend dealing with National there was only one I saw which made any real sense. It came from Syd Keepa of the Maori runanga within the trade union movement. Syd said he could see value in the Maori Party doing a deal with National if it meant the extreme right wing of National and Act would be kept in check. From the experiences of the 1990s it was a well-made observation but in this context it is somewhat misplaced because John Key’s main objective will be to contain Act if he is to have any hope of being re-elected in 2011.

The process we observed last week is what is often described as “elite-pacting” whereby the leadership of a dominant political grouping, National in this case, woos and seduces the leadership of a potentially strong opponent. Tariana Turia’s comment that John Key seems a nice man sums it up.

In this deal National gained a great deal but gave up nothing of significance. The Maori Party gained nothing of importance but has been neutralised in the process.

The world is full of examples where grassroots movements are undermined and derailed by co-opting the leadership. The US government for example uses a mixture of assassination and co-option while the corporate sector internationally feted the leadership of the South Africa’s ANC before it came to power and through the process successfully reversed the ANC’s economic policies. The principles of the Freedom Charter were abandoned and free-market policies drove the post-apartheid economy much to the delight and relief of the wealthy. Fourteen years on and the majority of black South Africans are worse off than ever.

The Maori Party are right to be scathing of Labour’s treatment of Maori and Maori issues. Despite nine years of strong economic growth and huge government surpluses Labour left low-income families to struggle and as Tariana Turia said just last week, 27% of Maori children still grow up in poverty. Labour has no solution but even a person with the shortest memory would know the Maori Party should be even more scathing of National.

With their coalition agreement with National the Maori Party has blown it.

In doing so they have in a single week moved from aspirational movement to co-opted doormat.

Key faces cabinet isolation

Waking up on Sunday morning was different to most post-election days after a change in government. Usually the euphoria of the winners is greater and the depths of despair of the losers is deeper. Not so this time when an eerie feeling of sameness seems to hang in the air.

In part this is because while National and Act will form a government their win has not been the landslide it would have been under first past the post. In fact had New Zealand first gained just an extra 0.7% of the party vote then the Maori Party would be the kingmakers and we would probably be looking at a coalition government run again by Helen Clark.

The more important reason for the ho-hum post election mood is that there are no longer the sharp differences in policy which have often characterised Labour/ National politics. Labour has moved so far to the right it has on many issues passed John Key while he has been moving National’s policies closer to the centre.

John Key can run a right-wing government comfortably just by following Labour’s key economic policies.

In post election interviews Key has restated for the umpteenth time he wants to form a compassionate, inclusive government. He says he has rejected hard-right politics and there is no place in his cabinet for Labour’s hard-right Finance Minister from the 1980s, Roger Douglas.

John Key has reinforced this message with his intention to develop a relationship with the Maori Party as part of his government in some way or other.

But is this more centrist position credible? The answer is almost certainly no. John Key will be under heavy pressure to adopt more hard-right policies.

Consider the makeup of his cabinet. National has been careful to keep its front bench off the TV screens during the election campaign for good reason. Figures like Maurice Williamson, Lockwood Smith, Murray McCully, Tony Ryall and Nick Smith and are all associated with the darker days of the 1990s. They grew up in politics selling state assets, cutting benefits, slashing government spending, increasing student fees, contracting out government services and rewarding the rich.

Have any of these leopards changes their spots? Not as far as Lockwood Smith is concerned. He’s told us they have simply swallowed some dead fish to get elected. Also in cabinet will be Rodney Hide whose behaviour post-election has been typically aggressive. He is confident not just because he brings five MPs to support National but because he knows he will have a lot of John Key’s cabinet backing him up. There are plenty of National MPs looking for a decent feed after a diet of dead fish. Hide will have plenty of support as the pugnacious tail determined to wag the National dog.

In his cabinet John Key could well be the sole moderate voice.

Also to be factored in is the approaching economic storm which has only yet been glimpsed in the distance. The economic forecasts for the incoming government are likely to be far worse than we have seen predicted so far.

In times of turmoil such as this politicians seize opportunities to push hard line policies.

The political right has well-rehearsed and practised approach. Firstly keep on with tax cuts and even extend them while maintaining government expenditure in the short term. When government income drops, borrow and then when the spending becomes unsustainable deep cuts in big spending areas such as health, education and social welfare become inevitable. In the last couple of weeks in Ireland, once a poster-child for the Business Roundtable and now an economic mess, there have been large marches by pensioners and students protesting against government moves to cut spending and reduce standards of living.

Nothing is surer than most in National will try to push the same kind of medicine onto working New Zealanders while insulating bankers and the wealthy from the effects of their stupidity and greed.

In this context National’s olive branch to the Maori party is smart politics. John Key knows economic catastrophe is around the corner and having the Maori Party on board will help provide political cover for very unpopular policies. We all know that those who suffer the economic crisis will be working New Zealanders and their families and disproportionately they will be Maori.

There is no need to doubt John Key’s honesty in trying to put together an inclusive government but this political novice will likely be the most centrist person in his cabinet and when the economic crisis bites hard he will be the most isolated.

The real question is the extent to which he will remain more than a figurehead.

Neither of the two main parties deserves anyone’s vote

The problem with the election next Saturday is that either Helen Clark or John Key will become Prime Minister.

It’s not a joyful prospect because neither leader nor the parties they represent deserve to govern. They are essentially the same beast in different clothing. Labour the confirmed free-market party tells us it has a more human face while National the unrepentant free-market party tells us it has more compassion.

Both put business interests first by adhering to the myth that what’s good for business is good for people. Neither have any vision.

In the past nine years Labour has aimed to make itself the natural party of government just as National did successfully from 1948 to 1984, a period broken by just two single-term Labour governments.

In doing so Labour has moved far to the right and sought to “inoculate itself” from National Party attacks in areas where they perceive themselves vulnerable.

This has involved the most stupid and expensive sentencing policy among developed countries. We are second only to the US in our rates of imprisonment among the OECD.

Similarly on race relations Labour moved swiftly to rid itself of the “closing the gaps” strategy and rooted out alleged Maori privilege in the wake of former National Party leader Don Brash’s Orewa speech.

Even on privatisation Labour has been second-rate. Yes it bought back our rail and took a stake in Air New Zealand but in each case only because the private sector ownership failed so dismally and taxpayers were needed to come in and clean up the mess. In the case of our rail network Labour paid hundreds of millions to the private owners as they walked away from the wreckage they created. Labour has also introduced all manner of so-called public/private partnerships which includes legislation to pave the way for road tolls.

On poverty Helen Clark claims to have done a great deal but how many more years of strong economic growth would it take for Labour to give all New Zealanders a fair go? Children born into poverty in Labour’s first year of government will be nine-years-old now and have known nothing different. When it comes to the crunch Helen Clark is promoting tax cuts ahead of child poverty and much needed funding in health and education.

On so many issues now Labour has moved to the right of National. Superannuation Fund investments, research and development funding, broadband, Kiwisaver and help for people made redundant come to mind. This reflects the ever growing political influence of big business in New Zealand politics rather than changed political opinions among voters.

On the other hand why would anyone vote for a party which has adopted policies it doesn’t support? National has been “swallowing dead fish” and is not prepared to stand up for what it believes in because it knows voters will be repulsed. It doesn’t deserve anyone’s vote.

With both National and Labour so similar on the policy front the government we get will depend more on the minor parties. In the first instance National comes with ACT alongside and Labour will have the Greens as allies and here the choices become clearer.

ACT is the embodiment of free-market misery. It claims to offer “more choice” but choices are always determined by the financial resources a person or family has available. In practice it means more choices for the rich at the expense of the poor. ACT’s policy to abolish the minimum wage says it all.

Perhaps the most encouraging sign for New Zealand is that despite the massive media exposure ACT leader Rodney Hide receives his party still polls below the margin of error. Rodney depends on wealthy Epsom voters to keep him in parliament. Perhaps they deserve each other.

Despite the Green Party receiving far less media coverage that ACT the Greens poll consistently above seven percent. They have much stronger social, industrial relations and environmental policies than Labour and for these alone they deserve recognition.

In economics the Greens are far too timid for my liking. They seek accommodations with market-first policies rather than charting an alternative course.

At this point in time the Maori Party still appears to be the power broker. It will be strongly attracted to National because here it is more likely to get greater autonomy in funding for Maori initiatives in areas such as health and education. On the other hand Labour will be offering to entrench the Maori seats.

But for the Maori Party to play politics with their post-election intention rules them out of receiving my vote.

For me it will be a reluctant party vote for the Greens but whatever the outcome of the election the most important political developments will occur outside parliament.