Budget tensions are becoming evident within the Coalition Government.
Winston Peters made numerous political points in his speech to the NZF annual conference. But the attack on his own government’s fiscal policies raised issues of substance.
‘Today in the Sunday Star Times, journalist and former advisor to the Labour Government, Vernon Small, refers to the ‘present government facing a fiscal hole’ of $5.6 billion. He’s right of course, but he’s wrong when he said that last year politicians were warned of that. Only one political party in the 2023 [election] campaigned to alert New Zealanders as to how bad things were. New Zealand First pointed out where optimistic predictions of others were false – such as the ‘House Buyers Tax’, and taxing on overseas online gambling.’
Small’s column has an interest even had Peters not referred to it. It was sufficiently confident to suggest he was relying upon a reasonably informed source. That does not mean Small’s estimate of the fiscal hole was correct. There has been a lower estimate of $3.6b, in contrast to a promised saving from expenditure reductions of $1.5b. I don’t think includes the promised tax cuts. The numbers are all over the place and probably do not add up. Small and Peters gloom was broadly confirmed by Minister of Finance Nicola Willis in her recent Budget Policy Statement.
Whatever, Peters seemed to be attacking the fiscal stance of his National and Act colleagues or perhaps even disclosing an internal Cabinet debate. What was the political purpose? Peters must have realised it would both embarrass his coalition partners and add to the instability of the coalition.
I do not know how advanced the internal Cabinet debate about the 31 May Budget is. However, it is usual at this stage in the process that the external task is to manage public perceptions – as Willis has been doing. I cannot recall an earlier New Zealand budget where the usual tensions have appeared so explicitly in public so soon.
There are two views of Peters which might help provide an answer.
One might be called ‘Winston First’, which was the title of a 1995 book, by Martin Hames commissioned by those with a neoliberal disposition. It portrayed Peters as an unprincipled self-seeking politician who cynically sought popular support for his personal ends. This was to explain why Peters left the National Cabinet in 1992, when it was in its full neoliberal glory. (Peters is not the only politician to be so explained by ideologists who cannot understand why anyone would disagree with them.) That he is a politician without principles seeking only personal gain is a widely held view by those on his left as well as on his right. Peters has sometimes reinforced the perception with populist stances he has taken.
Why would Winston First have publicised the fiscal critique? Its logic might be that it would precipitate events which would result in him becoming full prime minister.
That seems unlikely. Suppose the Coalition Government collapsed. There would be an election. Perhaps NZF’s share of the votes might rise, but a stronger possibility is that it would get blamed for any collapse. That is hardly a path to WP4PM, especially as Peters appears to be currently cutting off the possibility of an NZF coalition with the parties on the political left.
(We can rule out the relevance of a scenario in which the left wins an early election, fails again, and NZF is triumphant in 2028. Peters would be 83, older than Biden is today.)
The alternative to Winston First portrait might be called WPPPP: Winston Peters – principled, populist, politician. Perhaps ‘politician’ is redundant. It is there to remind us that he is continually seeking a coalition of the voting public to support him and that sometimes that coalition involves some strange bedfellows.
‘Populist’ is there because Peters in style and belief naturally connects with a broader population with its scepticism of the political elites. In turn, the elites do not connect with him. He does not fit their models of a Māori boy from a poor rural background who should be a deferential conservative or angry lefty. Peters is an angry conservative.
That is where ‘principle’ comes in. Peters has some deep principles which are poorly recognised – those of a rural working-class New Zealand Tory. This is not a well discussed political group (nor its urban equivalent) even though it is more common than is recognised; a chunk of the working class regularly votes on the right.
It has a view that New Zealand is a land of opportunity. While it may be sympathetic to those in difficulty, it is coupled with a suspicion of state welfare because it may sap initiative. The view is critical of the Brahmins on the left, who are considered out of touch with the common people (and often excessively woke), and of Big Commerce on the right. It is strongly New Zealand nationalist.
This philosophy was expressed by Peters in his 1979 maiden speech with its belief in ‘free enterprise’ and encouraging hard work, and his description of coming from a poor family which thrived by working together.
Peters loathes neo-liberals. It is not just a question of ACT taking up potential support of the non-left who dislike National from NZF. In 1993 Peters left the National party – he had been a member for twenty years – because of its neoliberal policies. Peters said in his 2017 speech anointing Labour as the main party of the next government:
‘The truth is that after 32 years of the neoliberal experiment the character and the quality of our country has changed dramatically, and much of it for the worse. ... Far too many New Zealanders have come to view today's capitalism, not as their friend, but as their foe. And they are not all wrong. That is why we believe that capitalism must regain its responsible – its human – face.’
So he sees NZF restraining ACT and the neoliberals in National the the Coalition Government. (Despite ACT having more of the voter numbers than NZF, it has less power because a party on a political extreme has fewer options. Additionally, Peters is politically more experienced and probably politically smarter than the leaders of National or ACT. Counterbalancing is not a vain objective.)
It is not an exaggeration to see the fiscal debate that is going on within today’s Cabinet involves tensions between the extreme-right and centre-right. WPPPP’s conference speech was bringing them into the open in order to weaken the neoliberals.
A final point: Peters is indicating that he had an unhappy time in the Labour between 2017 and 2020 and he appears to be in difficulties with the current Coalition Government. The one other time he has been inside a coalition Cabinet was between 1996 and 1998. (He was outside Cabinet in the 2005-2008 Clark-Cullen Government.) In 1998 Peters fell out with Jenny Shipley, who is a neoliberal. Earlier he had got on well with Jim Bolger, who is also a rural working-class Tory (his family farm was not affluent) and who has also expressed doubts about neoliberalism.