If you think NZ politics is bizarre, take a look at the UK's Brexit mess

by Jane Clifton / 17 July, 2018
British Foreign Secretary Boris Johnson: time to go. Photo/Getty Images

British Foreign Secretary Boris Johnson: time to go. Photo/Getty Images

RelatedArticlesModule - UK Brexit mess NZ politics
The next person who says New Zealand politics is Mickey Mouse deserves to be sentenced to a week-long seminar on the permutations of Brexit.

It helps to see Britain’s quest for full sovereignty in terms of those adventure horror movies in which a group of 20-somethings sets off on the trip of a lifetime only to get lost in jungle or forest and then be systematically terrorised by mutant hill people, Satanists or supernatural forces with a mysterious purpose.

Prime Minister Theresa May, despite whining “I never wanted to go on this stupid trip in the first place” (she’s a Remainer), is the goody two shoes who vowed to get everyone out safely once it became clear hideous peril lay behind every bush. She immediately lost her parliamentary majority, then seven ministers in seven months. Now she’s had to tell her chums: there is no way out. We’re trapped here forever, and the best I can do is a deal that allows the evil mutant Eurocrats to have their way with us at their leisure.

Talk about “Close your eyes and think of England.” Britons voted to leave the European Union because they wanted EU immigration slashed, and to be free of EU authority. Under the deal May has negotiated, they get neither wish, and also lose the benefits of EU membership.

After arch-Brexiteer and foreign Secretary Boris Johnson quit in disgust, Acting Prime Minister Winston Peters, who is rather a Johnson fan, forgot his gravitas kit and eagerly predicted a coup against May. In leaderly terms, anticipating the demise of a fellow PM is as unseemly as saying “Fight fight fight!”

It’s also an unreliable prediction. May may richly deserve a coup, but no putative successor has the power or charm to budge the EU any further, and her caucus knows it. Britons chose not to hear it before voting to end their 43-year tenure, but the EU has the power, through the European Court of Justice, border security imperatives and, not least, the mighty lever of trade, to keep Britain locked into its rules.

It can check out, as it’s attempting via a customs union permutation and a new set of common rules, but it can never leave. The extra chorus of Hotel California might go: And now there’s no room service/The pool and bar’ve run dry/Any more of your nonsense, we’ll see your exports fry-y-y.

We have our own Hotel California no-go areas, but unlike Brexit, ours endure because they’re popular across the board. However bogus, unhealthy and perverse past oppositions have called the creation of KiwiBank and the Working for Families tax rebates, it’s hard to imagine a future government abolishing either. The same goes for baby bonuses, winter-fuel subsidies and free student loans. They may rankle ideologically, economists may doubt their efficacy and fairness and authorities such as the OECD may tut-tut, but once a government has given people something, woe betide one that tries to take it away.

Yeah-nah Kiwibuild

This is why, despite rechristening it KiwiHoax, Opposition leader Simon Bridges is not vowing to ditch KiwiBuild. He’d look a right charlie if hundreds of happy households had got into KiwiHoax homes by the time National regains office, and the new Government was stuck with a policy of: “We’re having no more of that sort of wildly popular thing.”

But given the wider factors impinging on KiwiBuild, it’s hard to see how there’d be much of it to put a halt to. Without rationalising resource consent rules, making building products cheaper and importing a temporary army of qualified tradespeople, the Government simply cannot quickly or affordably build a large number of houses for low-income people. The only roadblock it’s willing to tackle is importing more tradies – but here we’re in competition with the rest of the developed world, so they won’t come cheap.

Resource-consent reform remains an eternal jigsaw of which half the pieces are regularly nibbled by invisible mice and the other half belong to someone else’s jigsaw. As for building costs, that’s what is called a Competition Regulatory Issue of Some Complexity – a roundabout way of saying as, “Business already hates us; we’re not going there.”

So the Government is trying to move obliquely via special purpose funding vehicles (SPVs) to fund sewerage, water and roads so at least the infrastructure cost to housing developments can be kept from becoming yet another obstacle. The Nats decry this as a further hoax, but it was its former finance minister, Steven Joyce, who never met a new acronym he didn’t covet, who set officials to work on SPVs’ potential.

The point of such standalone funding authorities is to spread the cost of increasingly expensive projects so there are no distortionary or unfair cost bulges – and sometimes just to ensure something can get funding quickly enough to enable further development of other infrastructure.

The trouble is, our first SPV is proposed by Auckland Council to pay for sewer pipes, which most people would argue the council itself should fund, and which would be levied as a separate cost on top of rates. The virtue of this is quite lost on most observers, but so far the Government is on board because it spares the council’s already groaning books another $1.2 billion debt.

Down the gurgler

No wonder its instant nickname is the Toilet Tax – though it’s more a Dunny Dodge. Rather than a smart adjunct to development financing, this would be a cosmetic money-go-round to disguise the fact that yet another council simply isn’t allowed to do any more borrowing. The choice is: SPV or no pipe (aka sewerage-apalooza for future Aucklanders).

So many councils are in this fix that we could end up with an SPV patchwork across other local bodies, in effect allowing them to levy their own new taxes – not exactly catnip to voters. But since local bodies can no longer afford to provide what they’re statutorily charged with providing, what are the options? Why, yes, another Regulatory Issue of Some Complexity. Given the gnawing resentment over the sacking of Canterbury’s regional council in 2010, what government wants re-centralisation of local infrastructure on its achievement list? But would letting councils tax us be even more unpopular?

On reflection, closing one’s eyes and thinking of Brexit is comparatively relaxing.

This article was first published in the July 21, 2018 issue of the New Zealand Listener.

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