The O'Brien Column: Greens would be foolish to push their luck on revolutionary policy

By Peter V O'Brien

Friday 2nd August 2002

Much of the post-election comment from senior business and investment people seemed to gratuitously ignore the comment embodied in Saturday's result.

The electorate decided what it wanted and, in doing so, opted for centrist politics.

A large proportion of party votes moved from one section of the right of centre to others, and the fringe was unchanged. Labour, the main left-of-centre grouping, held its own, while those further to the left were static or in retreat.

It was no surprise to read about businesspeople bemoaning the possibility of uncertainty and government on an issue-by-issue basis. They said that in 1996 and 1999 but life went on.

People with special agendas at both ends of the political and economic spectrum should realise the days of cosy chats on the telephone or in ministerial offices to decide the nation's destiny have gone.

They went when a form of proportional representation replaced the first-past-the-post system, irrespective of whether MMP is a desirable process or whether other systems would be better.

An unlikely massive shift in economic and monetary policy would be required before Saturday's results had an effect on our local investments.

A Labour minority coalition will not precipitate such action. Any pressure from the Greens for disruptive change would be swiftly countered through revised groupings, even one-off, to dispose of the perceived threat.

In that context, it was interesting to see a former Aotearoa Legalise Cannabis Party and McGillicuddy Serious Party candidate make it to Parliament on the Green Party list.

New Zealanders have not controlled the movements of their investment markets and currency since the 1980s.

They will continue to lack control unless there is a revival of the once-voguish concept of Fortress New Zealand.

Labour has no plans for Fortress New Zealand. The Greens' policies seem allied to the idea that the country can stand alone on some economic issues but it would take more than eight people to get those views into legalisation.

Investors will be interested in how Labour handles monetary policy. The party has indicated it could amend the Reserve Bank Act to allow for flexibility in handling inflationary pressure in the 0-3% target.

The first indication could come with the appointment of a new bank governor, an appointment to be made by the finance minister after the bank's board has vetted applications.

It will be interesting to see the reaction of retired bank governor and now National list MP Don Brash to the appointment.

United Future can be expected to keep watch on economic and monetary policy closely.

The party concentrated on social issues during the campaign but its parliamentary line-up suggests it would be a brake on any Green or Labour-left inspired upheavals.

Local equity investors react to specific government actions at any time but they also watch international trends, such as recent volatility.

The volatility has a direct impact on New Zealand when overseas-managed funds and other substantial international investors quit equities in favour of bonds or cash.

There is an interaction between local monetary policy, set through the Reserve Bank's official cash rate (OCR), interest rates and the currency.

Changes to the OCR affect other interest rates, making them more or less attractive to overseas investors. Consequent investment flows in or out influence the dollar's international value.

The dollar reacts to factors other than interest rates, local and international, and the government has limited control over their impact.

Apparent boardroom worries about the Greens' influence on actions that affect such matters is strange, given Labour's record (assuming it is maintained as centrist left) and its probable recognition that the electorate did not give any mandate for massive change.

The Greens could gain ground on various social issues but would be foolish to push their luck on revolutionary economic, fiscal and monetary policies.

United Future is intriguing. The party campaigned mainly on social issues, particularly those related to family life and similar matters. They obviously have an economic context.

Much has been made of the party's apparent Christian-based values. They can spill over to concepts of economic justice.

It is not this column's brief to analyse such issues but the backgrounds of some United Future MPs are disclosed in their potted biographies are worth noting. List MP Gordon Copeland is financial administrator of Wellington's Catholic archdiocese, a post involving considerable financial acumen. He has held senior positions in business.

Others come from small business, legal and educational careers.

They are unlikely to advocate turning the economy and consequently business and financial markets into strange byways.

The makeup of the new Parliament could result, with apologies to Kermit, in it not being much fun being green.

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