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Coalition agreement and confidence and supply arrangement detail

A clearer picture of what the new Labour-led Government will look like and what its ‘change agenda’ might mean is now emerging following the signing of a coalition agreement between Labour and NZ First and a confidence and supply agreement between Labour and the Greens.  Ministers have been assigned portfolios today. They will be sworn in on Thursday and cabinet will meet briefly on that day. The Ministry is detailed below.

The agreements detail the policy concessions Labour made to secure the support of NZ First and the Greens to form a Government. The agreements do not cover all Government policy – only the policies they specifically agreed and which depart from Labour policy. With very few exceptions (the controversial water tax being one), the first 100 day plan which Labour campaigned on is now Government policy.

Under this coalition there will be significant funding flowing into the regions, infrastructure and essential services. And while the negotiators have been mindful of business concerns about the impact of any cut to immigration on their businesses (and ultimately economic growth) the new Government is still committed to a reduction in migrant numbers.

The detail of the governing arrangements shows NZ First’s emphasis on regional economic development and the Green Party’s focus on climate change. Neither NZ First nor the Greens got all they wanted in these deals, but both still made substantial gains nonetheless. NZ First has four Ministers inside Cabinet, including Rt Hon Winston Peters as Deputy Prime Minister and Foreign Minister, and one Parliamentary Under-Secretary. The Greens have three Ministers outside Cabinet and one Under-Secretary.

Prime Minister-designate Jacinda Ardern said the agreements were incorporated within Labour’s existing fiscal framework that envisages budget surpluses and debt repayment.

Following the formal signing and release of the Labour-NZ First and Labour-Green agreement the soon-to-be-sworn-in Finance Minister Grant Robertson confirmed via Twitter, ‘All our policies stand unless they have been changed in agreements.’ 

Key Labour party policies

Amongst Labour’s policies not mentioned in the NZ First and Green agreements will proceed.  Among these are:

  • Workplace: A number of changes including:

- increasing the minimum wage (see below)
- increasing paid parental leave to 26 weeks per year from 1 July 2018
- strengthening union protections, including introducing industry pay agreements (the extent and shape of this election promise is not yet clear)
- amending the 90 day trial period so dismissed workers can seek ‘referee service’
- amending the Equal Pay Act to provide all women in female dominated workforces access to collective bargaining and the courts to settle claims. Labour will also take measures to ensure NZ employment law applies to foreign workers in NZ.

  • Immigration: Labour’s policy calls for a 20-30,000 cut in immigration numbers. The Party’s calculation shows they aim to achieve this through targeting work visas (an estimated cut of 5,000-8000 migrants) and student visas for low-value courses and post study work rights for lower level qualification graduates.
  • Housing: TheKiwiBuild programme will build 100,000 high quality, affordable homes over 10 years, with 50 percent in Auckland. The Healthy Homes Guarantee Bill, requiring all rentals to be warm and dry will be introduced.
  • Tertiary education: The three years' free policy will be introduced, starting with one year fees free full-time equivalent for everyone starting tertiary education or training for the first time from 1 January 2018, and extending this to three years’ free by 2024. Living cost allowances will also be increased.
  • NZ super: Resume contributions to the New Zealand Superannuation Fund while retaining the provision of universal superannuation at age 65.
  • Tax: The Tax Working Group will be established, signalling a wide ranging review of tax settings and policy.

Labour-NZ First agreement highlights

  • Foreign ownership. There is no mention of Labour policy for a formal ban on foreign buying of existing houses, however Ms Ardern advised that Labour and NZ First had agreed on a ‘mechanism’ to ban foreign buying suggesting the likelihood of the use of stamp duties to achieve this.  (This would allow for compliance with free trade agreements, which don’t permit an outright ban on foreign ownership). There is to be a comprehensive register of foreign-owned land and housing.
  • Central bank reform. There is an agreement to a review and reform of the Reserve Bank Act to include employment as well as inflation targets.
  • Regional development. A $1 billion per year Regional Development Fund which includes significant investment in regional rail, planting 100 million trees/year, large scale capital projects and commissioning a feasibility study on options for moving Ports of Auckland, including giving serious consideration to Northport (Whangarei) and recognition of the potential for aquaculture in promoting regional economic growth. This also includes a commitment to relocate government functions to the regions, the re-establish the New Zealand Forestry Service and a significant increase in Department of Conservation funding.
  • Climate change. Introducing a Zero Carbon Act and an independent Climate Change Commission.
  • Electricity: A full review into retail power pricing.
  • Tax: Increased penalties for corporate fraud and tax evasion.
  • Procurement: Reform of government procurement rules to give New Zealand companies greater access. 
  • Housing: Establish a Housing Commission. This is a version of Labour’s Affordable Housing Authority, which is designed to work with private developers to fast track housing developments in cities.
  • Minimum wage: Progressively increasing the Minimum Wage to $20 per hour by 2020
  • Irrigation. Honouring existing Crown Irrigation investments but closing out any further commitments.
  • Water: A royalty on exports of bottled water but no water tax.

Labour-Green agreement highlights

  • Climate change: A Zero Carbon Act with the aim of a net zero emissions economy by 2050 and a Climate Change Commission.
  • Land Transport: Reprioritise National Land Transport Fund spending to increase investment in rail in cities and regions. Cancel Auckland’s East-West motorway link and begin work on a light rail line from Auckland city to the airport.
  • Green industry: A Government-backed Green Investment Fund of $100 million to kick start investment in low carbon industries. A substantial increase in Budget funds for home insulation.

And then ...

The Labour-NZ First coalition Government with Green Party support on confidence and supply will also see:

  • An additional 1800 new police officers over three years.
  • The re-establishment of the Mental Health Commission.
  • Potentially a referendum on euthanasia.An annual free health check for senior citizens, including an eye check as part of the SuperGold card.
  • A teen health check for all year nine students and free doctor's visits for all under 14s.
  • An increase in funding for alcohol and drug addiction services.
  • A museum at Waitangi to commemorate the Māori Battalion.
  • A return the racing industry to ‘what it was good at’ and return a greater proportion of industry tax to the racing codes.
  • Work towards a Free Trade Agreement with the Russia-Belarus-Kazakhstan Customs Union and initiate Closer Commonwealth Economic Relations.

The Ministry 

Jacinda Arden, Prime Minister, National Security and Intelligence, Child Poverty Reduction, Arts Culture and Heritage

Rt Hon Winston Peters, Deputy Prime Minister, State Owned Enterprises, Racing

Kelvin Davis, Crown/Maori Relations, Corrections, Tourism, Associate Education (Maori Education)

Grant Robertson, Finance, Sport and Recreation, Associate Arts Culture and Heritage

Phil Twyford, Housing and Urban Development, Transport

Dr Megan Woods, Energy and Resources, Greater Christchurch Regeneration, Research, Science and Innovation, Earthquake Commission

Chris Hipkins, Education, State Services, Leader of the House, Ministerial Services

Andrew Little, Justice, Courts, GSCB, NZSIS, Pike River Reentry, Treaty of Waitangi Negotiations

Carmel Sepuloni, Social Development, Disability Issues, Associate Arts Culture and Heritage, Associate Minister, Pacific Peoples

Dr David Clark, Health, Associate Finance

Hon David Parker, Attorney-General, Economic Development, Environment, Trade and Export Growth, Associate Finance

Hon Nanaia Mahuta, Maori Development, Local Government Associate Environment

Stuart Nash, Police, Fisheries, Revenue, Small Business

Iain Lees-Galloway, Workplace Relations and Safety, Immigration, ACC, Deputy Leader of the House

Jenny Salesa, Building and Construction, Ethnic Communities, Associate Education, Associate  Health, Associate  Housing and Urban Development

Hon Damien O’Connor, Agriculture, Biosecurity, Food Safety, Rural Communities, Associate Trade and Export Growth

Clare Curran, Broadcasting, Communications and Digital Media, Government Digital Services, Associate ACC, Associate State Services (Open Government)

Ron Mark, Defence, Veterans

Tracey Martin, Children, Internal Affairs, Seniors, Associate Education

Hon Shane Jones, Forestry, Infrastructure, Regional Economic Development, Associate Finance, Associate Transport

Kris Faafoi, Civil Defence, Commerce and Consumer Affairs, Associate Immigration

Peeni Henare, Community and Voluntary Sector, Whanau Ora, Youth, Associate Social Development

Willie Jackson, Employment, Associate Maori Development

Aupito William Sio, Pacific Peoples, Associate Courts, Associate Justice

Meka Whaitiri, Customs, Associate Agriculture, Associate Crown/Maori Relations, Associate Local Government

Support Party Ministers

James Shaw, Climate Change, Statistics, Associate Finance

Julie Anne Genter, Women, Associate Health, Associate Transport

Eugenie Sage, Conservation, Land Information, Associate Environment

Parliamentary Undersecretaries

Michael Wood, Ethnic Communities

Fletcher Tabuteau, Foreign Affairs, Regional Economic Development

Jan Logie, Justice (Domestic and Sexual Violence Issues)

 

Commentary

When Winston Peters announced his decision to join the Labour Party in coalition to form a Government he observed, ‘Far too many New Zealanders have come to view today's capitalism not as their friend but as their foe.  Capitalism must regain its human face.’

This has long been the view of many senior Labour figures, though they prefer to couch it in kinder terms, referring to the symptoms of economic imbalance such as homelessness and regional drift.

Labour’s intention was to recalibrate the New Zealand economy to focus on a more equitable sharing of the benefits of economic growth. In NZ First and the Greens it has found two willing partners.

While the negotiation period was characterised as being all about the power of NZ First to be king or queen maker, the final agreements show that both NZ First and the Greens have achieved much. The Greens may be outside Cabinet, but they have influence in key environmental portfolios and they retain a degree of independence which they should be expected to exercise from time to time.

The final arrangements also reflect that, whatever the push and pull of tribal politics, a broad agreement exists on policy between the three parties.

But it is a Labour-led Government and Labour holds key portfolios including Finance, Health, Education, Housing, Immigration, Transport, Justice and Labour and Social Development.

Jacinda Ardern is the first NZ PM who has only known MMP Parliaments. She brings to this governing arrangement not just her comparative youth, but also a different mindset about how Governments can and should work under the MMP system. From the outset she is signalling her Government will be looking to be a ‘partnership’ leader. Before she was sworn in she was already offering to work with small and medium businesses to look at tax relief as a quid pro quo for the proposed increases in minimum wage payouts. As the policies roll out, look for more of this.

As for Mr Peters, he was well regarded previously in the Foreign Affairs portfolio. This coalition arrangement was and is about his legacy on the body politic. He can be expected to be conscientious and highly incentivised to ensure this Government, supported by him, lasts the full three year term.

Ministers will take some time to settle in. They will be receiving hefty briefing papers from their ministries and departments and hundreds of approaches from sectoral interest groups and representatives.

What we do know is that this Labour Government will trend very carefully with business. When Rt Hon Helen Clark was elected in 1999 there was a stand off with business that lasted a year. NZ business leaders have already signalled that won’t happen in 2017 and Prime Minister designate Jacinda Ardern and her Finance Minister Grant Robertson will work to ensure it doesn’t.

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Linda Clark2
Linda Clark

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Wellington

+64 4 915 0862

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