Sir Roger Douglas on Labour’s predicament

A guest post by Sir Roger Douglas:

The election was clearly an absolute disaster for Labour. The party’s inability to deal with the result is apparent for all to see.

Renewal has several parts and needs to start with a recognition of what went wrong and move towards the changes needed to rectify the situation.

Labour needs to acknowledge: 

• It lost touch with the feelings, concerns and expectations of voters.
• That in the process it lost credibility.
• That a lack of policy consistency and communications consistency cost it dearly.
• That winning back lost credibility will take time, and consistency will be absolutely vital.
• That voters often saw Labour as the voice of vested-interest groups, rather than average New Zealanders.
• That Labour failed to state clearly what it was trying to achieve and how it would go about implementing new approaches.
• That Labour locked itself into becoming the advocates of processes that could no longer achieve the goals the party set for itself.

So what does Labour need to do about their current situation?  Labour needs to: 

• Start by restating the social goals they stand for today – goals likely to be very similar to those spelled out by Walter Nash in 1939.
  • a reasonable standard of living
  • access to an adequate education
  • a good health service
  • a good income in retirement
  • a social welfare system that gives people a hand-up, rather than a hand out, and does not lock them into dependency
  • a society which gives people opportunities for self-fulfilment.

• That’s the easy part – the hard part is how does the party make those goals the foundation of a serious programme to transform New Zealand?
• To do this the party needs a vision of where it wants New Zealand to be in 25 years time.
• Next, are the current, or preferred means, capable of achieving these goals? The means Labour used in the 1930s no longer suffice.
• The question then becomes – can Labour do this? Are Labour members free to think in new, fresh ways?

That’s why they need time to work through the challenges which are:

• To realise that simply electing a new leader is not enough – the party needs a leader who is in tune with the new realities that exist in New Zealand.
• Positioning and consistency of policy and communication are vital.
• This new positioning and the policies need to reflect, and be in tune with the feelings, expectations, and concerns of most New Zealanders. The party needs to explain for example:
• The goals the policies seek to address.
• The importance of productivity and efficiency which old Labour did so well. The Party needs to explain that waste consumes resources that would otherwise be available to improve fairness.

For instance, that without efficiency, a more equitable society is impossible.  (This requires a big shift for the Labour Party of the past 15 years.)

• How the party will, in future, deal with privilege which remains widespread.
• How it will be the champion of ordinary New Zealanders, not the unions, not the teachers, not the nurses nor the social workers, as they do today.
• How Labour will deal with the fact that huge increases in spending on health and education have gone to the benefit of providers, rather than consumers. I acknowledge this is hard when the party has been the voice of nurses, doctors and teachers at the expense of the consumer for so long.
• Explain to supporters why high tax rates have a negative effect on jobs and real wages, and tend to lower productivity which is essential if wages are to rise.
• How the party will deal with middle-class capture in areas like university education where most of the beneficiaries of state spending are the children of people who could afford to pay more towards educating their offspring.
• How the party will free people from welfare dependency put there by institutions created in the 1930s, and stoked by policies devised in the 1970s.
• Why competition in the provision of government-funded services is just as important as it is in the private sector.
• Explain to New Zealand that there is no such thing as a free lunch e.g. tell people that healthcare now takes 56c of every dollar of all personal tax they pay instead of 40c a few years ago, and what Labour will do about it.
• Demonstrate that Labour has got to grips with poor incentives to work and how those poor incentives have encouraged socially destructive behaviour.
• How Labour will shift resources in education, housing, health and welfare in response to changing demands.
• How Labour will deal with uneven rates of government assistance (e.g. health) for different services and different categories of patients.
• Whether Labour will continue to provide universal access to many health and welfare services or instead move towards targeted assistance? And if there is to be change, what principles will drive it?
• How Labour will deal with government waste.

Getting this right will be vital for Labour – recognising that the present welfare system has changed people’s attitudes, and in the process has had effects on society. It is important to understand this if the policy the party goes forward with is to have any likelihood of working.

But, isn’t this simply moving into National party territory?

No – it need not be – why?

• Because National is the party of the status quo.
• Despite opposing many of the policies of the Clark government they now act as if those policies were their own.
• National has borrowed and added to New Zealand’s debt by $60 billion over the last six years rather than get to grips with wasteful expenditure.
• National has borrowed billions of dollars to fund consumption, rather than investment.
• National has spent billions of dollars each year on corporate welfare with little or no beneficial results to show for it, and all at the expense of the average New Zealander.
• National has run budget deficits, but a deficit of courage and imagination has been their main legacy.

National’s do nothing, sit-still, status-quo approach to economic and social policy provides Labour with a real opportunity to get back up on its feet.

What will it take?

• An upfront admission that Labour has got a lot of things wrong for the last nine to 15 years, and what has led to this conclusion.

• A set of principles that will guide Labour’s policy decision-making that New Zealanders understand and can measure. For instance:
  • Each genertion should pay for itself.
  • Each family should take as much responsibility as possible for its members.
  • State assistance should be a hand-up, rather than a hand-out.

• A set of principles like these would drive policy-making towards:
  • No personal income tax for low-income earners. This would limit churning where a lot of tax collected goes on the bureaucracy that then redistributes it.
  • A guaranteed minimum income for those in work.
  • Retirement – risk and healthcare savings accounts for all aimed at driving efficiency in these areas.

• Paid for by:
  • An end to corporate welfare.
  • An end to middle-class welfare capture.
  • Moving the age of retirment to 70 over 20 years.
  • Better efficiencies in health, education and welfare.
  • An end to Working for Families, once a guaranteed minimum income arrangement has been worked out carefully.

Labour also needs to explain: 

• That what is important to existing and potential Labour voters is people, not institutions. That Labour policy will in future put people ahead of institutions, unlike the current National party.
• That provider capture in health and education is a thing of the past, and that funding will instead go to the benefit of pupils, patients and other consumers, not to service providers. That is not to say providers would not do well. They will so long as consumers benefit.
• An all-out effort to reform the distribution of resources amongst the social service institutions to ensure resources move to the greatest need in terms of social goals.
• An end to corporate welfare and middle-class welfare, thus enabling tax reductions across the board, and especially for the lower paid.
• Reform of healthcare (following a review) including looking at individuals’ health savings accounts (Singapore style). Aim at better outcomes, greater efficiency, more fairness.
• Reform of education. Adopt as a basic principle that no one should fail. Make clear that the current 30% failure rate is not acceptable.
• Local government in Auckland has been a failure and Labour will change that.

But most of all, New Zealanders will need to believe Labour is for real. Working through these principles will take time.  A good strategy would be to have a locum tenens leader while the necessary work is undertaken. Always remember that any extreme left-wing policies usually hurt the poor, and the poor know it. Such policies would quickly see Labour back to where it is now.

Above all, a top-class opposition would be great for New Zealand.  What’s the chance of that – 5, 10, 15, 20, 25, 40, 50%?