• Winston Peters has spent decades gaming MMP to keep himself in the position of king (or queen) maker. Asks Danyl Mclauchlan, are we really going to make it even easier for politicians like him?

    Winston Peters, by Jacky Carpenter.

    By Danyl Mclauchlan, The Spinoff*

    The Green Party has put forward a members bill which, among other things, advocates lowering the MMP threshold from 5% to 4%. Let us set aside the terrible, terrible optics of a political party that is part of the government, and hovering just above the 5% threshold in the recent round of polls – and which routinely under-performs the polls on election day – attempting to alter the electoral system to its own advantage and consider the 5% threshold itself.

    It is obviously unfair and distortionary. A party that gets 5% of the vote gets six seats in parliament, while a party that gets 4.9% gets zero. Why should 131,508 voters (5% of the turnout in the 2017 election) have their votes translated into seats into Parliament, and a slightly smaller number have their votes nullified? And the threshold distorts the decision making process around who to vote for if their favoured party is in that danger zone. Does a Green voter vote Green, with the risk that their vote will get wiped out, or switch to Labour, who they support less but whose vote carries essentially zero risk?

    A 4% threshold still has these problems, but because the threshold is lower the unfairness and distortion are reduced. Why not lower it to 1%? Or whatever percentage is enough to capture a single seat in parliament (this number shifts around, depending on various factors). The assumption is that this would lead to a proliferation of weird minor parties and lead to the instability we see in, for example, Israeli politics.

    But New Zealand seems to be heading in the opposite direction, drifting back towards the two party system MMP was designed to prevent, and the 5% threshold seems to play a key role in this. It’s just too high for aspiring new parties to breach and it’s endangering both the current minor parties. So lowering the threshold to 4% seems like a moderate step to address this. And prior to the last election I was a strong advocate of a 4% threshold for all the reasons I just described. Now I’m not so sure.

    A few years ago I was arguing with the recently departed and much missed political commentator Rob Hosking and he told me the parable of Chesterton’s Fence. The conservative essayist and novelist G K Chesterton wrote about two farmers walking down a trail. They come across a fence blocking their way. The first farmer suggests they get rid of it; the second farmer replies, “First let’s figure out why the fence is here. Then we can decide whether we should get rid of it.” This is a very flattering way for conservatives to think about their role in politics: silly old progressives keep trying to abolish customs and traditions without understanding them, while conservatives patiently prevent them from hurting themselves and everyone else.

    But it seems relevant with regard to the 5% threshold. Our version of MMP was copied from the German system and the threshold was there to prevent the rise of extremist political parties, something that nation was apprehensive about for obvious reasons. That didn’t seem like a realistic fear for New Zealand so copying such a high threshold seemed unjustifiable. But now that we’re seeing a global rise of extremist parties, a fascist government in Brazil, etc, it no longer seems like such an abstract fear.

    But my main problem with lowering the threshold is that it will also probably save New Zealand First, and it will make the New Zealand First model of politics so much more viable.

    This is a model in which you fundraise from exploitative, extractive industries (fishing, forestry), campaign on populist issues (Peters’ flagship policies in 2017 were lower immigration, a referendum to ditch the Māori seats and to remove GST on fruit and vegetables), ditch all of your policies and issues as soon as the election is over, and use your position in the political centre to maximise your personal power.

    It means Peters gets to operate as a de facto co-prime minister, he gets to veto any attempts to regulate his corporate donors, he gets to unilaterally change our long-standing foreign policy towards China without bothering to tell the actual prime minister, let alone the Cabinet, his deputy gets given three billion dollars to just give away to whoever he wants, and none of this has any mandate from the public whatsoever. Nobody wanted or voted for any of this, not even New Zealand First’s voters, but here we all are.

    The 5% threshold hasn’t saved us from Peters but this is because he’s one of the most brilliant politicians the country has ever seen. His model is a very successful hack of the MMP system, but you have to be Peters to pull it off – otherwise everyone would do it: after all, you get near total political power with virtually no votes.

    But Peters was kicked out of parliament after his last shambolic tenure in government and, based on the current polls, he’ll be wiped out at the next election, so it is (hopefully) not a sustainable model, even for him. The 5% threshold is what protects us from countless imitators reproducing the hack and wrecking our government. That is what the fence is protecting us from. We’d be fools to lower it.

    *This article first ran on The Spinoff here and is used with permission. Danyl Mclauchlan is a contributing writer for The Spinoff.

    source https://www.interest.co.nz/opinion/98450/winston-peters-has-spent-decades-gaming-mmp-keep-himself-position-king-or-queen-maker

  • A review of things you need to know before you go home on Monday; more TD rate cuts; Barfoot sales slump; TPP now a big deal; Dashboard updated, swaps rise; NZD stable, & more

    Here are the main things you need to know before you leave work today.


    no changes to be reported today.


    Kiwibank today reduced some term deposit fees. You can follow all the many recent movements here. February sales fell in AUCKLAND Barfoot & Thomson’s sales in February fell -29% compared to the same month last year. In 474, its sales volumes were the lowest we have seen in February and the lowest of any month since December 2008. (Our record goes back to 2001.) Average prices fell -3.2% in relation to January and average selling prices fell -1%. Sales volume was lower in February than January in five of the past six years and this year is no exception. Sales volumes in March are generally about + 70% higher than the average for January and February. So this sets a test for March 2019 in 960. If it reaches that level, it will be the lowest month in March in nine years. The March average over the past decade is a sales level of 1,210 transactions across the Barfoots residential network.


    Statsitcs NZ today pointed out that bidirectional trade with TPP countries represents almost a third of trade and is almost touching $ 50 billion / year. By comparison, China, our single largest non-TPP trading partner, accounts for only 20% of our total two-way trade. New Zealand’s three main trading partners – China, Australia and the EU – accounted for almost half of total trade with the rest of the world. Total exports of goods and services were $ 82.3 billion, an increase of + 6.8% over 2017, while total imports were of $ 80.8 billion, an increase of + 11.6% compared to 2017. Also interesting is that 70% of our trade with the EU is with countries other than the United Kingdom. (We will discuss more about this separately, soon.) PANEL UPDATE Now, we’ve updated the data for the RBNZ Panel on our Key Bank Metrics tool, now covering four quarters of 2018.


    The stock markets opened today today strongly.

    New Zealand and Australia are up about +0.7% while they are also enthusiastic in Hong Kong (up +0.2% in early trade), Tokyo (+0.8%) and Shanghai (+1.3%). Expectations are high that the US President will cave in his trade negotiations with China, accept a deal from China to buy more soybeans, and declare victory.

    We all know that Aussie building approvals are declining and that is because of a slump in the apartment market. January data out today shows that in the year to January, apartment building approvals are down -18% and more than -50% on a January-2019 vs January 2018 basis. But also worrying for them is that house approvals are starting to slip as well and now taking 12-month-on-12-month data into negative territory too. For all that, the industry in Australia saw green shoots in the data, noting it wasn’t as bad as for December. Good luck with that.

    Local swap rates are firmer today by about +1 bps, except at the long end where they are up +4 bps. The UST 10yr yield is up +3 bps at 2.72%. Their 2-10 curve is higher at +20 bps while their 1-5 curve remains inverted at -3 bps. The Aussie Govt 10yr is up +4 bps to 2.15%, the China Govt 10yr is up +2 bps at 3.21%, while the NZ Govt 10 yr is up +1 bp so far today to 2.21%. The 90 day bank bill rate is unchanged at 1.89%.

    The bitcoin price is unchanged from this time on Friday at US$3,802.

    The NZD remains at 68.1 USc. And we are little-changed against the Aussie at 96.1 AUc, and at 59.9 euro cents. That leaves the TWI-5 at 72.6.

    This chart is animated here. For previous users, the animation process has been updated and works better now.

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