When green means stop

By Joanne Black

Monday 1st July 2002

Latest polling suggests a Labour-Green alliance is probable. But, as Joanne Black reports, that means a whole lot more for business than just a GE moratorium. Oh dear.

It may be impolite to ring Opposition politicians in an election year and ask them what they think Labour will do in its second term. There is, after all, the small matter of an election that still needs to be got out of the way. There may even be a party other than Labour that thinks it could win - though if there is, that party hasn't yet registered with the Electoral Commission.

It's possible Labour will be able to go it alone. It did, after all, get 53% support in the latest National Business Review-HP Invent poll in early June and Helen Clark is determined to build on that. But MMP promotes coalition government, so it's a fair bet Labour will be in coalition. In that case, the Greens (which polled 7.2% in the NBR research, against Jim Anderton's Progressive Coalition at 1.3% and the Alliance at 0.5%) are logical partners. Green co-leaders Rod Donald and Jeanette Fitzsimons, after their taste of power, are keen to be in government. And the two parties have a lot in common, despite their current posturing on the genetic engineering issue.

Does it matter for business? Yes, it does. The government believes one reason for its popularity is its predictability. It did what it said it would do, regarding ACC, the Employment Relations Act (ERA) and benchmarking National Superannuation. Since then, it's done nothing too radical. Radical is out. Radical is so 20th century, man. People want to know that the Ministry of Social Development won't change its name again before the next phone book's published.

"There's a general feeling of calm out there, which is clearly reflecting in the polls," Commerce Minister Paul Swain says. "What people don't want is anywhere towards that ACT agenda of privatising hospitals, privatising education; a few people making dough and no one else getting anything."

The Greens, until they frightened Labour with their non-negotiable demand that the genetic engineering moratorium be extended, had seemed moderate and reasonable. But look behind that reasonableness, and there are real policies there, they are radical, and they are not going to be music to the ears of businesses.

"The Greens are open. They don't even like economic growth or profit," says ACT finance spokesman Rodney Hide. "In the record of parliament's finance and expenditure committee you'll find we're all there with a witness giving evidence and someone will say, 'Now look, we're all sitting round this table and we all want the economy to grow' and Rod Donald will say, 'Well, that's not right'."

Of course Hide would say that, but Donald openly agrees his recollection is correct. Donald believes economic growth is merely a means to end, not an end in itself. The Greens aren't believers in GDP as a form of measurement; they prefer "GMP", genuine measures of progress, a three-pronged measure that includes not only economic indicators but social ones. GMP includes factors like unemployment, infant mortality and adult literacy - then there are the environmental factors.

"What we will do is bring in a suite of eco taxes. The first one is a carbon tax but we also want to bring in a toxic tax and a waste tax and one or two other things," Donald says. "The outcome is that businesses that are doing good will be happy and those that are engaged in, in our view, unhelpful activity, won't be happy."

But aren't primary producers, New Zealand's major wealth creators, likely to be hardest hit? "That depends," says Donald. "Anyone involved in organic agriculture will be just fine." The Greens would have the first $5000 of income earned tax-free and reduce company tax. The tax system would become a tool to encourage environmentally friendly business. "We say fixating on rapid growth is not only ignoring the purpose of growth but also increasing the destruction of the environment," says Donald.

"There you go," says Hide. "The Green ideology is not to favour economic growth or business. They think business is exploitative. Imagine what Sue Kedgley would do for our primary production."

While there was alarm in business circles three years ago at the prospect of Labour's coalition with the Alliance, business has learned to live with the government, even if they don't always like it. Having got its "winter of discontent" big legislative items out of the way early in this term, including reintroducing ACC's monopoly on accident insurance and replacing the Employment Contracts Act (ECA) with the ERA, business has at least had certainty. "It's fair to say that after a pretty rocky start, the Labour-led government has progressively taken a good deal more ownership of sensible business policies. There are a number of areas where they have moved very much in a constructive direction," Wellington Regional Chamber of Commerce chief executive Philip Lewin says.

Hide thinks a coalition with the Greens would be a completely different matter. "They've said they won't compromise [their stance on genetic modification] and I think everyone believes them. It's hard to imagine attracting investment and entrepreneurship and excitement to New Zealand if you're banning one of the great technological breakthroughs of our lifetime."

Left to its own devices, Swain says Labour is keen to keep business onside, but not interfere too much. He told Unlimited that no big legislative changes were planned that would affect business in Labour's second term. The party wants to focus on promoting the knowledge economy, on innovations strategy, on regional economic development, on talent and skills issues, and on areas like information communication, technology industries and biotechnology.

Labour's aim remains a return to the top half of the OECD table, although former Reserve Bank Governor and National list candidate Don Brash can't see how Labour's prescription, much less the Greens, will get the country there. "Some of the things that irritate the business community are not easy for a centre-left government dependent on the Greens to rectify. There's still a concern that the tax system involves a lot of things that are pretty unhelpful - not even mentioning the rate." He thinks income disparity is set to get worse unless the country can lift its growth rate.

Lewin, a former diplomat, also applauds the government's engagement with the rest of the world in foreign policy, another area where the Greens and Labour are likely to diverge. Donald says the Greens want an inquiry into how well New Zealand's two free trade agreements, with Singapore and Australia, have worked for New Zealand. He says he's confident the results will show neither stacks up. Labour is still pursuing a free trade deal with the US, but Donald doesn't think it will happen.

Swain says the business community should know that under a Labour government, "the partnership approach we've been trying to engage in in the last three years will expand. No economy can make progress unless the business community and government are pushing in the same direction."

But the business community's biggest fear right now, as the Greens rise in the polls, may be that no economy will make progress when the next government's likely coalition partners can't even agree what the direction is, let alone how to drive towards it.

Joanne Black
joblack@xtra.co.nz

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