Winston is back in Parliament, and had a good first week in the House. His chosen issue of wasteful spending under the whanau ora programme is a good one for him (and one I approve of). Labour and Greens are reluctant to go there, as they worry that they may be seen as being against the aims of whanau ora, which is seeking to improve the lives of whanau.

But also note:

There has been a fascinating series of exchanges between the Speaker and Peters. Peters complains that the PM has not answered his question, and the Speaker points out it is totally unreasonable to expect the PM to be able to answer a supplementary question on details of a small grant, when the primary question did not refer to the grant in question. Despite being told this on Tuesday and Wednesday, Peters persisted with this approach, and again on Thursday got the same reply from the PM. If he is smart, he will take the advice of Mr Speaker, and start providing details of the alleged wasteful spending in the primary question. But maybe secrecy is so ingrained with him, he can’t bear to reveal his target in advance.

I also look at the Greens and Labour.

If National had received around 5,000 fewer party votes, or if National voters in Epsom and Ohariu had failed to vote for the ACT and United Future candidates respectively, then the conflict over treaty clauses in SOEs would be critical. …

Parliament resumes next week, so should have no shortage of things to write about then.

I’m not sure if Aucklanders are aware how much is at stake with this Auckland plan. Do they want a city where almost half the dwellings are apartments?

The other impact of this proposed intensification will be on house prices. Currently there are 400,000 houses and 100,000 apartments for 1.5 million Aucklanders. By 2040 there would be 2.5 million Aucklanders competing for only 500,000 houses. I can’t think of anything more guaranteed to push house prices up massively so only the rich can afford one.

House prices are deemed to start to become moderately unaffordable when the median house price is three times the median income, seriously unaffordable at four times and severely unaffordable at five times.

In Auckland the median house price is currently 6.4 times the median income.

Under the draft Auckland plan, Auckland could by 2040 end up like Hong Kong – where house prices are more than ten times the median household income. Again, this will restrict ownership to the wealthy, but also lead to rents significantly increasing as a proportion of income. Already a growing number of families are paying more than 30% of their income in rent. Under the intensification plan, some families could end up having to spend over half their income on rent.

I conclude:

Auckland needs to grow outwards as well as upwards. A plan to have 75% of new dwellings occur within the current urban limit is too draconian. A 50/50 split would be a far better balance for Auckland’s future. The Government and the Productivity Commission have both asked the Council to alter their plan, to allow the city to grow outwards as well as upwards. I hope they listen.

If they don’t, I pity those under 20, who will have to live with the consequences.

The Labour Party could bounce back quickly from its heavy election defeat if it heeds the testimony of one of its candidates in a contributed column we published on Friday. Josie Pagani wrote: “We didn’t sound aspirational, we sounded miserable. We were turning up on people’s doorsteps telling them their lives were gloomy …

“The hardest week to door- knock,” she said, “was when we were telling people who had just come home from a day’s work earning the minimum wage, that it was a great idea to extend their Working for Families tax credit to beneficiaries.” She could see them thinking, ‘so what’s the point of working my guts out all week while someone sitting at home on the dole gets the same tax credit as me?’

In a long line of bad policies (and a few good ones), this one was arguably the worst.

Labour’s new leadership will be listening to the likes of Ms Pagani. It has some highly aspirational young candidates who could have expected to come into Parliament if the party had not polled so low in November.

And if their list ranking had not protected incumbents.

If Labour can go to the next election with well-developed ideas for helping people who aspire to work hard, make sound choices, raise happy and healthy children, maybe start a business and invest their savings, it will strike a strong chord. If it can tell people only that they are poor, deprived, under-valued, and obese, it will not give the Government a run for our money.

Wouldn’t it be amazing to have Labour go into an election not vowing to punish the well off and raise taxes on them?

The industrial action at the Ports of Auckland has reached the point, when a compromise solution is about as likely as there being a compromise solution over the Falkland Islands.

Instead, like the Falkland Islands, there will be a war, and there will be a winner and a loser. There will also be the significant possibility of casualties from other parties.

The two combatants are the Ports of Auckland (POAL) management team led by Field Marshall Toby Gibson and the Maritime Union of New Zealand (MUNZ) led by Generalissimus Garry Parsloe.

The stakes are high for both sides. The losing side will be humiliated and powerless.

I also look at who else faces being dragged onto this war.

But quibbles after the fact do not alter the impression that after a slow start, the response has been effective. If the Rena has been our worst maritime environmental disaster, it could have been much worse.

But I quibble over one aspect:

That plan, as far as it goes, was strikingly successful this time. Though countless seabirds perished from the slick, the beaches were cleaned so quickly and efficiently that they were safe for swimming, fishing and other activities before Christmas.

Countless? They have in fact been counted and it is around 2,000.

Incidentally possums and other predators kill around 500,000 birds a week in New Zealand. They just do it without cameras around generally!

• ACT MP of the Year – Rodney Hide
• Maori Party MP of the Year – Te Ururoa Flavell
• Green MP of the Year – Gareth Hughes
• Labour Mp of the Year – Damien O’Connor
• National MP of the Year – Gerry Brownlee
• MP of the Year – John Key

I still believe a term limit of say six terms would be a good thing for New Zealand. If MPs knew that they had a maximum tenure in Parliament, I believe they would focus more on what they could achieve during that limited time, rather than be focused on how to get re-elected time after time after time.

Arguably one could also have a term limit for the top job of Prime Minister also. Isn’t nine years enough for any one person to make a contribution?

I hope the constitutional review will consider term limits as an issue.

Many National supporters were frustrated at the lack of reform in National’s first term.

They saw National cancels its planned income tax cuts for 2010 and 2011, rather than cut interest free student loans and Working for Families. They saw a soaring deficit, and the Government’s response was to slow the rate of spending increase only. They saw a ban on asset sales, despite this being common amongst centre-right and centre-left Governments around the world.

National’s second term is looking to be far more pleasing to those who want to see a reform agenda. This doesn’t just mean a more right wing agenda. The Hawke/Keating Governments in Australia were good reformers, as was Tony Blair in the UK and Bill Clinton in the US. Even Julia Gillard is undertaking some quite good reforms.

So what are the areas of reform for John Key’s second term?

Industrial Relations

The current industrial action at Ports of Auckland is a good reminder that we still lose too much money through strikes and lockouts. Many people are staggered that an unskilled job can pay an average of over $90,000 a year and still have people on strike over it.

I also cover asset part-sales, welfare reform, education and spending.

Sir Roger Douglas has departed the political stage again but he may have left another enduring monument in Act’s agreement with National this week. A law to cap increases in government spending could prove to be as effective as one of his great legacies of the 1980s, the Reserve Bank’s inflation target.

Like the monetary target, the spending cap will sometimes be honoured in the breach but the target is no less effective for that. When it is breached, there needs to be a good reason, and a credible path set to bring inflation back into line. So it will be for the fiscal cap.

I think many have under-estimated the political power the cap will have.

It is too easy, as the previous government proved, to take on ever larger commitments when business is booming, the workforce is fully employed and tax revenue is providing budget surpluses. The country hardly noticed that state spending was steadily becoming a greater proportion of the economy in the years that surpluses also enabled continuing reductions of public debt.

More generous medical subsidies, paid maternity leave, early education, interest-free student loans, higher public service pay rates, a “super goldcard” are not the kind of expenses that can be wound back when the business cycle turns down and revenue drops. They instantly become entitlements that a future government fears to threaten.

Exactly. And the sad reality may be that the days of debt fuelled 3%+ growth could be in the past for-ever. In a new debt-averse world, with Europe taking a decade or more to get its debt under control, we may never get growth again like we have had in the 1990s and 2000s.  We may need to get used to 2% growth being the norm. This is why we need to stop Governments from imposing costs on New Zealand we can’t pay for.

Ultimately, of course, a parliamentary majority can do whatever it wants in this country and no Parliament can bind the next. A statutory spending restriction can be breached and even repealed as readily as the Bill of Rights Act. That act requires the Attorney-General to alert Parliament to proposed legislation that would breach the rights enshrined. The public takes note, the government needs a convincing case to proceed in political safety.

Laws of such limited power should not be under-rated. The lack of any stronger sanction is a strength, it makes it harder for a future government to repeal a statute that can do more than keep governments honest.

And hopefully it will increase the financial literacy of the public. We will know how much more a Government is planning to spend over the baseline amount per capita.

National has been not much keener than Labour on a legislated spending limit but it is already living within the limit agreed with Act. The cap is a credit not only to Sir Roger who has long argued for it, but to the recently deceased director of the Business Roundtable, Roger Kerr, who maintained a lonely watch against rising public expenditure, and Don Brash whose brief leadership of Act restored its focus on economic fundamentals.

Fiscal responsibility is a prosaic, thankless contribution to public welfare but if government spending rises no faster than population growth and low inflation from here on, we should all be better off.

Absolutely. If you look at all OECD countries over the last fifty years, those who manage to have the state consume a lower proportion of GDP have on average much much higher economic growth than those with a higher proportion.

Now it is a balancing act of course. If the state only consumed 5% of GDP, then we’d probably have no publicly funded schools or hospitals. But the current level of state spending is the highest in our history, so I don’t think drawing a line at today’s spending level and saying real spending per capita should not increase beyond today’s level is if anything a little on the generous side.

As a National supporter, I know National will not always be in Government. I think a David Shearer led Labour Party will pose more of a threat to National, than any alternative leader. But I still hope that the Labour Caucus will elect Shearer as their leader, as if there is to be a Labour Government, I think the sort of policies we would get under a Shearer administration would be far better than we had under Helen Clark and Michael Cullen, or were offered by Phil Goff.

Shearer is backed by many reformers within Labour. A likely area of reform is around list ranking and candidate selection – specifically the heavy influence union affiliates get in these decisions. Many in the caucus are upset that new MPs such as Carmel Sepuloni, Kelvin Davis and Stuart Nash were ranked below longer serving MPs with union backgrounds. They lost some of their most promising talent from 2008. If a Shearer led Labour can reform the party so that it operates on a one person, one vote principle then Labour is far more likely to regain the votes of its former supporters.

It will be interesting to see how Cunliffe and Shearer do on The Nation tomorrow.

This means that Winston Peters will decide who gets to be Prime Minister of New Zealand for the third time out of six MMP elections. In 1996 he chose Jim Bolger over Helen Clark, in 2005 he chose Helen Clark over Don Brash and if he holds the balance of power in 2011, make no mistake he will choose Phil Goff over John Key, and there will be a Government that can only pass a law if it can get the Greens, Winston, Hone, and the Maori Party to all agree to it.

And imagine the blowout in spending and debt!

Again polls have shown a certain reluctance for National voters to tactically vote for ACT. I speak often to many National supporters in Epsom. To a person, they all want National to have a coalition partner to the right (economically) of National. The debate is whether ACT in its crippled state is worth saving, or whether you do the humane thing and put it to sleep with some electoral euthanasia, allowing a new party to arise phoenix like from the ashes.

The prospect of Winston Peters installing Phil Goff as Prime Minister should be sufficient to resolve that debate. If they do not vote for John Banks, then a change of Government becomes significantly more likely.

Epsom voters now have a clear choice.

MMP is perfect for demagogues such as Peters. He selects who will be on his party list, and they become MPs based on his personal popularity, despite the fact 99% of New Zealanders could not tell you who the top six candidates on his list are. Their loyalty is purely to him, not to the New Zealand public.

STV will still deliver broadly proportional results, but candidates will have to actually be someone whom voters rank high enough with their ballots, to elect to Parliament. This should result in a significant improvement of the quality of candidates, if there is no backdoor through a party list.

I will blog more fully next week on the merits of STV.

It is hard to imagine Hone Harawira would settle for anything less than Maori Affairs. He would not trust any Department headed up and/or staffed by Pakeha mofos.

Andrew Williams would put his hand up to be Minister of Local Government, bringing all his diplomatic skills to the job. That anguished scream you hear is Len Brown jumping out his Auckland Town Hall office window.

Who knows what bauble Winston Peters would take. He’s already had so many – Deputy PM, Treasurer, Foreign Minister. As he is a lawyer, perhaps he would become the nation’s Attorney-General?

The Greens would be very fortunate. On their current polling Phil Goff would have to make their entire current caucus Ministers of the Crown. Catherine Delahunty would be a shoo-in to be Treaty Negotiations Minister. Has any Ngati Pakeha ever been more supportive of Maori aspiration than Catherine?

This is what people may wake up to on the 27th of November. I do see the bright side though:

As a blogger and political commentator, such a Government would be wonderful. Every day would be wonderfully exciting as Phil Goff (who struggles to have discipline even over his own caucus) tries to get Winston and Hone to agree on what laws he is allowed to pass. With a one vote majority, every single MP and party would have a veto over all Government decisions. This would mean that no one can predict in advance what the Government will do. The biggest beneficiary of such an election result would be the iPredict predictions market.

It would be a blogger’s dream!

But you can take these street surveys too far. Off memory, in 2008 a street survey of 100 people was reported by the Herald with great prominence as showing Judith Tizard retaining her seat. She lost of course.

This time we have a street survey of just 47 people in Epsom, that generates a story. It says:

John Banks has some support in the wealthy suburb of Remuera, but is less popular on the liberal fringes of the Epsom electorate, according to a Herald street survey.

A poll of 47 Epsom voters yesterday found the National candidate ahead of Act’s Mr Banks by 22 votes to 20.

It is ridiculous to do a story on a street poll of 47. First of all, you have the sampling problem – that in fact it is a poll of people who happened to be out on a street – in no way random.

But even if you overlook the fact it is a street poll, the sample size is ridiculously low.  The margin of error is 14.7%!

I generally regard 300 as the minimum acceptable for an electorate poll. That gives a 5.8% margin of error. A sample of 47 is close to useless.

I think the reason is because the public are not convinced Phil Goff and Labour believe in them (their policies) themselves. This is hugely important to voters. They will vote for a party if they believe the party is sincere and believes in its policies – even if they themselves do not agree with them all. …

So if you change you policies and your position, especially from just three months earlier, you need to make the case for why you have changed your stance.

The same applies to Labour’s stance on the Government’s books. Labour spent two and a half year attacking every single decision the Government took to reduce spending to get New Zealand out of the projected permanent deficit that Treasury projected at the end of 2008. They not only opposed every spending cut that the Government made, they actually argued that the Government should be spending massively more like Obama did. Right up until 2011 they were arguing that it was more important to borrow and spend to (temporarily) boost the domestic economy than to keep a lid on spending.

Then a few months ago, they realised that the voters were becoming very worried about debt, in light of the on-going troubles in Europe, and suddenly Labour stopped arguing that the Government should spend more, and said that they would spend and borrow pretty much the same as National was.

Labour’s problem again, is whether voters will believe them. It doesn’t really matter that much what numbers they announce today as their fiscal plan. The bigger issue is whether voters actually believe that the current Labour caucus really believes in spending restraint, when they have spent two and a half years arguing against it at every opportunity.

The full column is at the NZ Herald.