Bookmaking on horse racing events was made illegal in New Zealand in 1911. Until 1949, the only legal form of betting was on-course at race meetings. When off-course betting was legalised in 1949, consistent with the statist approach of the time, a single national agency, the Totalisator Agency Board, was established to regulate and control betting in New Zealand.

Like most aged, monopolistic government agencies, it has struggled to keep up with the times, including the growth of on-line, offshore betting on sporting events other than just horse racing; on-line casinos; and other forms of gaming, like Lotto. The TAB’s ongoing financial viability has been an issue for some years now.

But because of mounting social concern about the proliferation of gaming opportunities and the impact on vulnerable people, as well as potential links to organised crime, no government has been prepared to abolish the TAB in favour of a competitive, properly regulated private sector market for betting. So, the current antiquated monopoly has remained, and increasingly frustrated punters have sought better returns from the range of mainly Australian and other offshore betting agencies now available online.

Against that background, the government’s announcement of a new strategic 25-year partnership between the TAB and the British betting Entain that will guarantee our racing industry additional funding of nearly $1 billion over the next five years seems sensible. At the same time, the government is proposing to extend the TAB’s current monopoly for racing and sports betting to cover online betting.

In other words, all forms of betting, other than through the TAB, are likely to be outlawed, effectively entrenching the intent of the establishment of the TAB, three quarters of a century ago. It is not clear whether this is a component of the Entain deal or separate from it. How this might be achieved without resort to Chinese-like censorship of New Zealanders’ online access is another matter altogether, raising its own questions about the extent to which the government is prepared to go to protect the TAB monopoly.

The racing industry’s delight at this latest windfall is drowning out other more concerning aspects of this new deal, specifically related to conflict of interest.

This has been a problem that has dogged the Hipkins’ government in recent months. First came the unfortunate case of former Minister Stuart Nash who proved himself incapable of separating his private connections from his Ministerial responsibilities. Then there was the situation surrounding Minister Kiri Allen and her now infamous speech at the Radio New Zealand farewell to her partner. In both cases, Prime Minister Hipkins was very slow to act, only dismissing Nash when it became impossible to retain him any longer, and declining any action regarding Allen, even after it became clear her speech was no accident.

In doing so, the Prime Minister appears to have relied on an overly literal interpretation of the Cabinet office rules regarding conflict of interest. There was arguably no material gain for both Nash and Allen from their actions, apparently explaining Hipkins’ reluctance to act. Nash fell in the end more because the egregious nature of his overall conduct, rather than any specific benefit gained, made it impossible to retain him. Allen’s remarks have so far been ignored by those at whom they were aimed and consequently, the Prime Minister.

However, the Cabinet Manual also makes the point that “public perception is a very important factor” in dealing with Ministers’ interests. In other words, the perception of a potential conflict of interest is as important as an actual conflict. This latter point is relevant to the government’s decisions regarding the TAB, specifically the proposal to extend the TAB’s current monopoly for racing and sports betting to cover all online betting.

Racing Minister Kieran McAnulty, who made the announcement, was previously a bookmaker for seven years with the TAB. There is no suggestion that he stands in any way to gain materially from the extension of the TAB’s bookmaking monopoly, but his involvement in, and presumably as Minister leadership of this plan, is of concern. It fails the Cabinet Manual’s “public perception” test and simply looks like an ex-bookie looking after his former colleagues.

While McAnulty’s expertise in the area is relevant to the issue, and should not be disregarded, it was unwise to have him fronting the issue, given his career background. At the very least, to avoid any perception of conflict of interest, the announcement should have been made by another Minister, possibly the Minister of Internal Affairs who already has responsibility for gaming matters.

Beyond that, and again from a perception perspective, given the sensitivity of matters relating to the TAB, it was unwise for Hipkins to have made McAnulty the Minister responsible for the TAB in the first place. But, given the lax approach he took to Nash and Allen and their potential conflicts, it is probably not surprising.

There is a danger in all governments of Ministers being seen to be the captives of the sector groups they represent. This is especially so when Ministers come from the sector group concerned. The Minister of Education, a former principal and teachers’ union official, has already risked looking like the unions’ plaything when it comes to the current salary negotiations. Similarly, the Minister of Health, a former Ministry of Health medical officer, comes across as more the protector of current health sector vested interests than the leader of the changes the public health system so desperately requires. McAnulty now risks being cast in the same light with respect to the current proposed TAB changes.

For his sake – he has so far proved to be an effective Minister in other areas – and for the government’s credibility, given that it is already riven by conflicts of interest, perceived or otherwise, the Prime Minister needs to move McAnulty aside from matters relating to the TAB. Otherwise, once again, perceptions risk becoming reality.

 

 

Budgets today are as much a political statement of a government’s intent as they are an economic management plan. They are a balance between what a government aspires to do, and what it can achieve in practice. As such, they are always compromises. Grant Robertson’s six Budgets show this – the first three were severely constrained by the shackle of Quixotic coalition partner New Zealand First, and the last three by the spectres of Covid19 and now, the disastrous January cyclones. Should this be his last Budget, he will leave office never having been able to present a truly “Labour” Budget, for reasons completely beyond his control. 

All these factors influenced the formation of this year’s Budget. It had two primary objectives. First, it needed to show a clear response to the ongoing social and economic ravages brought about by the pandemic, and more recently the summer’s devastating cyclones. At the same time, it had to do something to alleviate the impact of the rising cost-of-living crisis on average households. Its second objective was to set a political platform for Labour’s re-election campaign over the next five months. Robertson faced the classic dilemma of balancing the country’s longer term economic and developmental requirements against the government’s shorter-term imperative of securing its re-election. 

Prime Minister Hipkins had promised a “bread and butter” Budget, and Robertson has not disappointed in that regard. Rather than deliver assistance to families struggling with the rising cost-of-living through boosting Working for Families tax credits, he has opted for a more targeted approach. Extending the 20 free hours of the early childhood education scheme to 2-year-olds will help only those households currently with 2–3-year-olds, not all families facing rising childcare costs. Abolishing prescription co-payments may also help, but it is questionable whether these two measures will do much to help families already struggling to put food on the table. 

Similarly, free public transport for primary school aged children, and half fares for those up to the age of 25 is a pragmatic replacement for the blanket half-price transport scheme that has been in place for the last eighteen months as a cost-of-living relief measure. But it only applies to those living in cities or major towns where public transport is available. And the complete removal from the start of July of the fuel subsidy will hit hard those families relying on car transport to get to work or the kids to school, potentially negating the impact of the cost-of-living measures. 

The National Resilience Plan was a necessary response to the cyclones, but the initial impact will be limited as the focus is properly on long-term infrastructural development, with many details yet to be worked out. The $71 billion package, funded largely by borrowing, is substantial but there must be questions about the national capacity to deliver, given current labour market conditions, and immigration settings. 

The big picture looks a little less grim than that painted last year but is still far from rosy. A recession may now be avoided, ironically not because of any government policy initiatives, but rather because of post cyclone recovery investment. Inflation is predicted to drop to 3% by next September, but GDP is predicted to fall sharply over the next year. The return to a Budget surplus is pushed out a further year to 2025/26. 

Overall, the Budget is neither an election winner nor loser for the government. While young families look the immediate winners from the Budget, the impact on most other households – aside from the prescription charge abolition – is at best neutral. Reduced public transport costs for those under 25 will be offset by rising fuel costs after the subsidy goes in July. Meanwhile, those on fixed incomes, along with the economy’s productive sectors – industry, small businesses, agriculture, and horticulture – have been largely ignored. There is still no sense Robertson, and his colleagues have any idea how to grow the economy to generate the long-term income needed to sustainably fund their social programmes. 

Labour is gambling that its extension of 20 hours free early childhood education to 2-year-olds (estimated to save the small number of eligible households around $133 a week, but not until March next year) and the abolition of prescription charges will pay a significant political dividend. However, that looks to be overly optimistic. In March, ASB economists estimated that households were already likely to have to spend an extra $150 a week over 2023 to keep up with rising costs. With the fuel subsidy coming off at the end of June, rents and mortgages still rising, and the limited early childhood education relief still around 10 months away, the government has not yet done enough for those families to feel better off. 

Nevertheless, Robertson’s “no frills” Budget was probably the best he could do in the circumstances, given the constrained fiscal position. This is more a “bits and pieces” Budget than the “bread and butter” Budget Hipkins promised. Of itself, it is not a viable election springboard for the government. 

So, while the Budget has not set Labour off on a roll into the election campaign, as some undoubtedly hoped it would, it has put the focus more sharply on National. Christopher Luxon and his colleagues now need to show whether, and how, in the same circumstances they could have done any better.

 

 

Christopher Luxon’s announcement ruling out any post-election working arrangement between National and Te Pati Māori is more predictable than bold. Realistically, such an arrangement had never been likely, and recent events have merely confirmed that. So, Luxon’s announcement simply acknowledges the inevitable, but gets in first, sparing National the ignominy of being spurned later by Te Pati Māori. 

Beyond that, Luxon’s move at this point is a potentially smart one, although not without a measure of risk. By portraying a government of Labour, the Greens and Te Pati Māori as a “coalition of chaos” he is certainly trying to capitalise on the confusion of the last week or so. He is also trying to link Prime Minister Chris Hipkins into that by implying that he would not be able to run an effective government if he needed to rely on the Greens and Te Pati Māori. By unspoken contrast, he is planting the seed that a National/ACT government would be much more straightforward and effective. 

In so doing he has thrown down the gauntlet to the Prime Minister. While it is generally accepted that a future Labour-led government will have to involve the Greens, the position is not so clear regarding Te Pati Māori, with Hipkins so far ducking questions on whether they could be part of a future governing arrangement. Luxon is trying to force Labour’s hand – to rule Te Pati Māori in or out of its government formation calculations. And here is where things get interesting. 

If Hipkins says Labour can work with Te Pati Māori in government, Luxon will be able to home in on what concessions Labour will be prepared to make to achieve this. He will be hoping that he can reinforce his “coalition of chaos” message this way. For his part, Hipkins will be wary of giving away too much too soon, for fear of either alienating Te Pati Māori altogether (unlikely) or giving credence to Luxon’s portrayal. 

Luxon’s calculated risk is that there are more potential National voters who will be concerned about the possible involvement of Te Pati Māori in government than not. To them, his announcement provides comfort and certainty about what they might expect of a National-led government. 

Hipkins will be similarly mindful of scaring away some of his soft support if he embraces Te Pati Maori too fervently at this point. At the same time, he will know full well that if he distances himself too much from Te Pati Māori, he runs the risk of alienating some of his own support, especially among Māori voters. Hipkins’ emerging dilemma will be observed by Luxon with relish. 

Luxon’s announcement also creates problems for Te Pati Māori. At the weekend it boldly proclaimed it would be the “kingmaker” at this year’s election. By ruling it out as an option for government, Luxon reduces Te Pati Māori’s role significantly. Now, instead of being the party that could determine the shape of the next government as it clearly hoped, the best the party can wish for is being in some sort of governing partnership with Labour and the Greens. So, rather than being the independent voice of Māori that is has consistently promised to be, Te Pati Māori has now ended up being dependent on Labour to progress its aims. 

This may not please those of its supporters who imagined Te Pati Māori being able to leverage influence between both Labour and National to the overall benefit of Māori. Being at best a potential bit-player in a future Labour/Greens government – likely of itself to be a fraught relationship, given the Greens’ frustration with Labour’s general lack of progress on climate change – is not what those more conservative supporters of Te Pati Māori had in mind. 

Te Pati Māori’s leadership is sharp – the way it recruited Meka Whaitiri shows that – so, will not take Luxon’s rejection lying down. A smart move in these circumstances might therefore be for it to announce that should it hold the balance of power after the election, it will not formally join any government arrangement. Instead, it would sit on the crossbenches, and treat each issue on a case-by-case basis, whichever of the main parties leads the next government. That way, it could retain its mana, and meet the aspirations of its supporters. Given the polls showing neither Labour/Greens nor National/ACT winning a majority at present, such a move would put Te Pati Māori in a genuinely pivotal position. 

Luxon’s move has put the pressure firmly on the Prime Minister to state where Labour stands. The longer Hipkins avoids a definite answer, the longer he will fuel suspicion that a Labour/Greens/ Te Pati Māori arrangement is on the cards. 

For the first time in a while, National has taken the political initiative by raising the spectre of the “coalition of chaos”. How Labour and Te Pati Māori choose to respond could well determine the election outcome.

The government’s decision to retain existing Covid19 settings for at least the next couple of months continues the same streak of stubborn arrogance that has detracted from the rest of its otherwise balanced and comprehensive approach to the pandemic since its outbreak over three years ago.

Inexplicably, throughout the pandemic response the government consistently ignored or overlooked overseas advice or experience in reaching decisions, preferring instead to re-invent the wheel for itself.

One of the reasons for the delays in getting vaccines in the early days for New Zealanders was because of the government’s unwillingness to accept overseas vaccine approvals as satisfactory for New Zealand. So, the verification procedure for vaccines that were being safely jabbed in arms the world over had to start from the beginning all over again before those same vaccines were approved for local use.

It was a similar story with self-testing equipment. When most other countries started making RAT tests, or similar tests, available to citizens from early 2021 so they could test their own exposure to the virus, our government prevaricated. Then Covid19 Response Minister Hipkins was worried New Zealanders might not use such tests “properly”, and that might lead to adverse consequences.

New Zealand retained lockdowns long after most other countries abandoned them as too socially disruptive and ineffective against new variants like Delta and Omicron. We clung to the notion that somehow we could do what no other country had done and beat the virus, without any negative social costs.

This week’s decision smacks of the same arrogant “New Zealand is different, and we know best” approach of earlier times. According to Health Minister Verrall, more work needs to be done on whether testing to return to work earlier than the seven days for people who are not symptomatic or are mild cases, could be a safe and effective approach.

Yet, Te Punaha Matatini principal investigator, and disease modelling expert, Professor Michael Plank says the “direction of travel” internationally has been to drop isolation requirements and treat Covid19 “alongside all the other important public health issues that we have to deal with.” Britain abandoned mandatory isolation a year ago, and Australia did so late last year.

There are already anecdotal reports here of people thwarting Covid19 isolation requirements to avoid having to take time off work by simply not reporting when they have the virus. Is our government naïve enough to believe that as the economy worsens, and pressure on jobs increases, that trend will not become more pronounced, especially if restrictions are prolonged?

Professor Plank’s team’s modelling results would have been available to Ministers before the latest Cabinet discussion. Any questions, along the lines now being posed by Minister Verrall, could have been put directly to the modellers. Given current international practice, Verrall’s call for more information seems an unnecessary excuse for inaction.

Epidemiologist Professor Michael Baker has argued for the retention of existing restrictions, but his reasoning seems to be less to do with Covid19 than other health matters. According to Baker, “self-isolation protects people from lots of dangerous respiratory illnesses including flu, whooping cough and other nasties that are doing the rounds.” The implication of his remarks that self-isolation should become a near permanent feature of our health response to annual viruses goes way beyond any other suggestions.

But perhaps that is where the government is heading? Verrall’s justification for retaining isolation requirements made no direct reference to Baker’s suggestions. But, given the potential pressures in the months ahead on our stretched public health services, there is some logic, albeit extreme, in what he is saying. So, is he being quietly encouraged to float an idea that the government might stealthily adopt over the next little while in the interests of taking seasonal pressure off the health system?

Plank’s modelling and what is happening internationally shows there is no compelling evidence for keeping isolation requirements in place in New Zealand insofar as Covid19 is concerned. Nor is doing so likely to be a popular move politically, with most sectors of the community keen to move on from the Covid19 era. Verrall’s excuse for not doing so now looks very weak, unless, of course, the government has another agenda in mind that it does not yet want to acknowledge, but for which continuing Covid19 restrictions is a convenient cover.

With the public perception of a public health service in crisis, and a reform programme that looks incoherent and disorganised, the last thing the government would want in the lead-up to the election, is the health service overrun by, and unable to cope with all the usual winter ailments. Far better, therefore, and certainly more cynical politics, to follow Baker’s suggestion and keep the Covid19 restrictions on for a little longer in the hope of keeping a lid on the spread of this year’s annual winter bugs.

Three years on, the government still seems determined to milk every political advantage it can from Covid19

 

 

Something is remiss in the way Ministers are being reminded of the potential conflict between their private interests and their public responsibilities if recent circumstances are anything to go by.

The Cabinet Manual, is the “primary authority on the conduct of Cabinet government” and “provides authoritative guidance” on how Ministers should operate. It requires a confidential annual meeting between the Cabinet Office and each individual Minister to discuss their situation, and how any potential conflicts of interest might be managed. It also makes clear that the primary role of a Minister is setting the policy direction for their portfolio and securing the necessary funding for those initiatives in the annual Budget round. While Ministers are accountable to Parliament and the Prime Minister for the overall performance of their department, they are not directly responsible for that department’s operational decisions which are taken to give effect to the government’s policies. And Ministers must always ensure the separation of powers between the Executive branch of government (the Cabinet) and the Judiciary (the Courts and law enforcement agencies) is maintained.

The Cabinet Manual also makes it clear that Ministers cannot intercede on behalf of family or close associates on official matters of interest to them, nor can they promote family members for official appointments, or use any information they gain through their Ministerial roles in a way that gives special benefit to any external groups.

It is all prudent common sense, really. However, recent Ministerial practice suggests that the processes by which the Cabinet Office advises Ministers each year about their responsibilities and managing any potential conflicts are not being taken as seriously as they have been previously. There is also an emerging view among some Ministers that in these days of feelings- rather than rules-based politics, these rules and conventions do not really apply to them, and that they can best judge for themselves how to manage such situations.

The circumstances surrounding both disgraced former Minister Stuart Nash and now Minister Kiri Allan suggest at best a cavalier disregard for the provisions of the Cabinet Manual regarding their own situations. Nash’s transgressions have been well aired, and do not require repetition. He has been properly dismissed by the Prime Minister and is planning to leave politics altogether.

But Allan’s situation is somewhat different and ongoing. Her breach was to make remarks that appeared critical of Radio New Zealand for not having promoted her fiancée at the function marking her fiancée’s departure from the organisation. Allan later claimed that the remarks were made in a personal capacity and has apologised to the Prime Minister for them.

This is a frankly disingenuous excuse. Allan is the Minister of Justice and an experienced public lawyer, so should understand the clear provisions of the Cabinet Manual regarding promoting family interests, better that most in Parliament. Her claim that she made her remarks in a personal capacity at a private function implies a personal naivety that does not wash either. As an intelligent person she knew full well what she was doing, and what the impact would be. It is hard to see that her remarks, no matter how strongly they were personally felt, made in the presence of board members, were anything more than a deliberate shot across the bows of Radio New Zealand.

Radio New Zealand is a public entity, with statutory autonomy regarding editorial opinion and staffing. Any comment by a Minister in any public setting that is either a direct or implied interference in that autonomy, or an attempt to promote the interests of family, however obliquely, is a breach of the Cabinet Manual provisions, as egregious as those that led to the downfall of Stuart Nash.

Of particular concern is the inconsistent and reluctant approach of the Prime Minister. He was very slow to act decisively on the Nash case, only doing so when the mounting evidence made it impossible for him to ignore the situation any longer. By contrast, his rebuke to Allan was extraordinarily mild, and smacked of differing standards. While it is perfectly understandable that he would have been extremely reluctant to stand aside another Minister for breach of Cabinet Manual standards with just a few months to go before the election, the inconsistency is inexcusable, and ultimately reflects poorly on his judgment.

The Cabinet Manual makes it clear that all Ministers are directly accountable to the Prime Minister for their performance and conduct, and that he is accountable to Parliament for the overall performance of his government. He cannot therefore brush aside the lapses of conduct that we have seen in recent weeks as nothing to do with him, the way he seems intent on doing. Nor, in fairness to his Ministers, or his own personal credibility, can he be seen to be applying different standards to different Ministers, the way he has been.

The Prime Minister has commissioned a review of the Cabinet Manual to upgrade and strengthen the provisions around the management of conflicts of interest. That is all very well but as the Cabinet Manual is already explicit on this point the review risks looking like window-dressing for election purposes. What is required right now is for its provisions to be upheld.   

All of which comes back to how seriously Ministers are following the Cabinet Manual provisions. In the light of the Nash and Allan incidents, and to restore confidence that Ministers do understand and will abide by the rules, it might now be timely for the Prime Minister and the Cabinet Secretary to jointly meet each individual Minister to assess their individual situations and identify any potential conflicts likely to emerge over the balance of the government’s term, well before they arise.

At the very least, this would stop the Prime Minister being caught on the hop by the conduct of Ministers who have not comprehended the Cabinet Manual provisions, or worse, think that they can ignore them.            

 In his first two months as Prime Minister Chris Hipkins impressed for his directness, clarity and determination, and the assured way in which he transitioned into his new role. His everyman style, from the hoodie to the more than occasional meat pie, won many positive comments. The methodical but decisive way in which he dismantled or pushed to one side those aspects of Ardernism, so dear to the Labour Party, but increasingly egregious to the public, has been impressive. Taken together, they have led to speculation he could become the first Prime Minister since Peter Fraser eighty years ago to win re-election in his own right, after having taken over during a Parliamentary term.

However, it all changed this week, through the way Hipkins dealt with crises surrounding two of his Ministers, Stuart Nash and Marama Davidson. In both instances, he looked panicked, hesitant, and uncertain, and no longer in control of events. 

The sacking of Stuart Nash was inevitable, following the revelations over the last couple of weeks about various actions he had taken as a Minister that were in breach of the provisions of the Cabinet Manual. After this week’s news of an email sent to funders detailing Cabinet discussions, Nash reportedly offered Hipkins his resignation from the Cabinet. But Hipkins was determined to appear strong and decisive, so decided instead to proactively dismiss Nash, rather than just accept his offer of resignation. 

But, in reality, Hipkins’ decision looked far less that of a Prime Minister in control, and much more a “mea culpa” for not having dismissed Nash when allegations first arose against him a couple of weeks ago. Then, Hipkins gave Nash at least two final warnings about his behaviour, and Nash, for his part, assured Hipkins there were no more skeletons in his closet. Hipkins was too willing to ignore the patterns of Nash’s behaviour and seemed oblivious to the prospect of more incidents coming to light, to the embarrassment of Nash and the government. 

While Hipkins’ decision this week may have got rid of Nash, it has not got rid of the problem. Investigations are already underway into what other inappropriate actions Nash may have taken as a Minister over the last five years. At the same time, and more worryingly for the Prime Minister, investigations have also begun into the role of the Prime Minister’s Office and what officials there knew about what Nash was up to, and why they chose not to inform both the Prime Minister and his predecessor about what they knew. 

The net effect is that the Prime Minister has lost control of the Nash issue. Hipkins does not know what other inappropriate actions by Nash the current investigations may find, or how damaging they may be. And because of the involvement of the Prime Minister’s Office during his predecessor’s time, he now faces accusations of a cover-up by his officials over the matter. In the meantime, the Nash issue looks likely to rumble on for some time to come, disrupting Hipkins’ momentum as it does so. Had Hipkins acted more decisively earlier, and dismissed Nash then, instead of just issuing a series of final warnings, it is likely the matter would have blown over by now. However, now, his initial indecision could up by derailing his government altogether. 

One thing the Nash saga this week has done is deflect attention from another errant Minister, the Greens’ Marama Davidson. Her inflammatory comments at the weekend about who perpetrates sexual violence earned a Prime Ministerial rebuke of sorts, but that was as far as it went. Davidson has subsequently refused to either withdraw or apologise to the wider public for her comments, appearing instead to double-down on them when challenged. 

As with Nash, Davidson’s responses this week suggest it is very likely she has not learned from the incident, and there is no consequent guarantee she will not make similar outbursts in the future, to the frustration of the Prime Minister. At the very least, Hipkins should have stood Davidson down from her role as Minister for Family Violence Prevention, and he should have had an urgent discussion with her co-leader about whether she should be replaced as a Minister altogether. By not acting decisively, Hipkins looks as though he is hoping the Nash affair will let Davidson’s transgressions slide by almost unnoticed. 

What is surprising is that Hipkins has not learned from the early stages of the Nash affair and seems set to repeat the same mistakes all over again. As he did with Nash, the Prime Minister is just keeping his fingers crossed Davidson will not transgress again. All of which leaves him looking weak and no longer in control of the government’s narrative. 

In just a week, Hipkins’ positive, cheery approach and the confidence it was inspiring, has taken a mighty hit. He no longer looks like a Prime Minister in firm and decisive control of his government and its agenda. His indecision and timidity have left him looking distracted, to the detriment of the government’s agenda. 

Time is marching on. There are just over seven months to the election. The last thing the Prime Minister needs is to be distracted from the big tasks requiring his attention in that time, by having to put out persistent fires in his own ranks. Yet his initial failures to act decisively in the Nash case, and now potentially the Davidson situation as well, have left him exactly in that situation. Against the backdrop of likely more embarrassing revelations about Nash, and more divisive and explosive comments from Davidson (not to mention any other Ministers yet to go rogue!) the Prime Minister now faces an almighty challenge in trying to recapture the control of the political agenda he and his government were enjoying barely a week ago.

 

 

 

 

 

Thirty years ago, after a marathon Parliamentary sitting, the Bolger National government passed the Maritime Transport Act which deregulated coastal shipping by abolishing cabotage. Cabotage was the practice which restricted the operation of sea, air, or other transport services within a country to that country’s domestic operators only.

The abolition of cabotage meant that New Zealand’s coastal shipping services were opened to direct competition from overseas shipping lines. According to the argument at the time, it was more efficient to allow foreign vessels coming here to transport their cargo around the coast themselves, rather than requiring them to unload at major ports to smaller, New Zealand-operated coastal vessels. Abolishing cabotage, it was said, would cut transport costs, make deliveries more efficient through greater economies of scale, and provide a better service overall to consumers.

It was predicated on the assumption the overseas shipping companies would welcome the opportunity to compete directly around the New Zealand coast, and that the days of slow and sometimes unreliable local services were over. Conveniently overlooked in this argument was New Zealand’s previous experience with the Conference Lines – the cartel of mainly British-owned shipping companies that had dominated New Zealand’s maritime trade from the 1880s through to the advent of containerisation in the late 1960s. The Conference Lines had set charges and determined tonnages to be shipped to Britain on their terms and always in their own interests.

The naïve assumption of the 1990s was that a more competitive international shipping environment brought on by containerisation would be different. It would not lead to the type of restrictive practices of the Conference Lines once coastal shipping was deregulated, or so it was said. Implicit in this was a view that the New Zealand coastal market was big enough for overseas shipping companies to want to play in. What was overlooked was that New Zealand is a small market at the end of most trade routes, and therefore unlikely to be sufficiently attractive to international shipping companies to invest too much effort in. They simply wanted to arrive here, unload their cargoes, reload, and sail to their next overseas port, as quickly as possible.

The first casualty of coastal shipping deregulation was the local shipping industry itself. The small coasters that had served provincial ports up and down the country quickly disappeared. They were replaced not by overseas ships bringing cargoes to those ports, but by rail services between ports in some cases, but more commonly by trucks that could operate more flexible services. The Cook Strait ferries, unreliable as they have become, are now our only significant coastal shipping services.

Over the years, overseas shipping companies have steadily reduced or terminated their services to New Zealand, making our supply lines even more vulnerable than already determined by our geography. The disruption caused to international trade by the pandemic has massively intensified that problem.

At the same time rising concern about carbon emissions has raised questions about the environmental sustainability of large container vessels sailing around the New Zealand coast. The devastation to regions like Tairawhiti and Hawkes Bay during the recent cyclones, and disruption to road and rail transport networks have raised their own concerns about whether our shipping network remains fit for purpose.

The recent announcement by global shipping giant Maersk that it is terminating its national coastal shipping service from next month after less than a year in operation introduces further uncertainty into the domestic shipping market. Maersk is intending to ship goods to New Zealand through an Australian port on a weekly basis, rather than several New Zealand ports, which it says will lead to better and more flexible services and connections to overseas markets. Maersk will be continuing its direct services to west coast North American ports from New Zealand.

The promises of better services to New Zealand consumers have a familiar, if unbelievable, ring to them, going back to the days of the Conference Lines and the “home boats” serving the British market. Our already vulnerable shipping links are likely to become more tenuous as a result.

The combination of rising concern about emission levels and the environmental safety of big container vessels (remember the Rena?), the vulnerability of regional communities to adverse weather events, and the apparent indifference of international shipping companies to New Zealand’s circumstances, raise the question of whether, and how, a more responsive coastal shipping service could be re-established. A return to cabotage is unlikely and undesirable, but there is a case for reviewing the Maritime Transport Act and looking afresh at the feasibility of establishing a modern coastal shipping service. 

Our state highways are deteriorating because of increased heavy usage, our rail services are perennially struggling, with their vulnerability to adverse weather and the consequences for regional communities now dramatically exposed. Therefore, reconsidering the role and place of coastal shipping must surely be a priority for the next government as part of its approach to climate change, reinforcing community resilience and developing national infrastructure.