It's a giddy time... for now

National is enjoying the onset of what should be a long honeymoon. Are there any black clouds looming?

The weather is warming and summer’s started early. John Key’s first days have gone nicely. Three support agreements negotiated in record time. A number of nice photo ops. Invitations to chats with Kev and Gordon. Sign up with the Governor-General. And the prospect of wee trip to Peru to rub shoulders with George. It makes one giddy.

While the business of government will get considerably more difficult, the next few months should continue rather blissfully for the new administration and its supporters. The House will sit for a few weeks before Christmas. Key legislation (ie. tax cuts) can be ushered through to rapturous approval.

Labour will be grinding its teeth at the prospect of an extended National honeymoon. But given the thumping election win, it’s churlish to complain too much. Phil Goff will find the next few months tough – but he’ll need to grit his molars, cop some media flak, and stay the course.

Unless National stuffs things up spectacularly, they should get through to the budget in May in robust health. But just as Napoleon found winters to be rather difficult, so it is for governments – moods darken and woes tend to become exacerbated.

New governments do, however, have quite a store of political capital and tend to get through any first winter slump. What determines longetivity is how quickly they burn through their capital as they get down to the difficult business of managing expectations.

Despite the current harmony, it’s possible to discern some looming areas of friction. There are some weak ministers to target. But most problematic for National will be the Act-Maori Party nexus.

Rodney Hide is a rather determined individual. And he and Act did not come into government to pursue dirigiste Keynesian notions of economic management. Act desperately wants less government, and it will achieve that wherever it can.

Yet they’ve already suffered a couple of setbacks. Act was thwarted on a ministerial role for Douglas. They are likely to be stymied on an agenda for central government privatisation and large spending cuts. It would seem then that their chief opportunity lies in local government, the portfolio area granted to Rodney Hide.

Act’s policy prescription for local government is pure, orthodox neo-liberalism. It includes:

· Local government shedding its commercial activity, thereby eliminating the need to separate regulatory and commercial functions between local and regional councils.

· Roads and piped water to be supplied on a fully commercial basis.

· Abolish the local government power of general competency.

· Require councils to focus on their core functions.

· Ensure there is much greater scrutiny of regulations that undermine property rights.

· Promote contracting out of many council services.

To the uninterested, such stuff looks prosaic, benign even. Few people will be concerned by abolishing council’s ‘power of general competency’ given they have no idea what it means. What it foreshadows, however, is a rather significant rewriting of the Local Government Act 2002.

Goals such as supplying roads and water on a ‘fully commercial basis’ will create some, well, interesting debates. Fancy a toll road, anyone? A nice new water meter perhaps? Oh, and here’s the bill, sir.

Act’s local government agenda, if pursued, will present real problems for the Maori Party. Act is right that rates are a blunt, imperfect revenue gathering mechanism. But so too are the alternatives. Replacing rates with user-pays will have an extremely regressive impact on the people who constitute the Maori Party’s core constituency.

But how much damage could the local government portfolio cause to a government’s health? Well, quite a lot, actually.

In an overseas example, Margaret Thatcher came to grief for a number of crimes, but what really did her in was her determination to fund local government with the poll tax.

Here, in 1998, a little known Wellingtonian named Leonie Gill started a grassroots campaign to oppose the Wellington City Council’s move to sell its Wellington Airport stake. That ended with Winston Peters and New Zealand First’s coalition agreement with National being ripped up.

Local government might soon get very interesting.