A hung parliament for Britain

Britain is going to have a hung parliament. Here are the results:



Here's what could happen:

First Past the Post is more of a racing game than a democracy. As we can see the Liberal Democrats got 23%. However that's bairly a fifth of the seats that Labour's 29.0% have. First Past the Post is pretty archaic. It seems that Clegg is talking to differnet parties and pushing for electorial reform. The Tories wont have it, in my view. They have a long history of taking democracy from smaller parties and enjoying it for too long. Labour pretty much has to if they want to keep having power. BBC's political editor Nick Robinson had some thoughts on this: "While [Robinson] doubted the Lib Dems would take up the offer of a formal coalition, they might be prepared to let Mr Cameron govern by not voting down the Queen's Speech or Budget. Taking that option would allow them not to be tainted by decisions they did not like."

Right now there is a pull between Britains finances and getting a much better democracy. They can have both. There is concern that a hung parliament will not address the UK government's debt. The pound fell quite a bit as some stock brokers didn't like the prospect of a hung parliament. International ratings agencies Moody's and Standard & Poor's however say that the hung parliament verdict would not affect their top-level assessments. Moody's said the unclear outcome "does not directly threaten" Britain's coveted AAA rating. S&P said that the nation's AAA long-term sovereign rating with a negative outlook was unchanged. "The complexion of the new government is not, in itself, a factor for us," said S&P. "Instead, our focus is on whether the government's fiscal consolidation plan to be unveiled in due course is likely or not to put the UK government debt burden on a downward trajectory over the medium term."

However this opportunity for electorial reform does not come around once in a blue moon. It comes once in a blue eclipse. It's been over 35 years since Britain last had a hung parliament and it seems Labour will accept electorial reform if they get a coalition deal. The Conservatives have offered an "all party committee of inquiry on political and electoral reform", but no promise of reform. For Britain's sake I hope they can have the democratic freedom we have here.

The NZHistory website can share with us why New Zealand changed to MMP from FPP: "As critics pointed out, the FPP system tended to create Parliaments quite different in composition to those that the voters appeared to want. The answer, some people argued, was a system of proportional representation in which each party's share of the seats in Parliament would be close to its share of the overall vote." It's not rocket science. People want their vote to mean something and it usually hasn't in Britain for a long time, until today. As well as this:

"In the early 1990s Jim Bolger's National government found itself under increasing pressure to respond to public demands for electoral reform. It agreed to hold an indicative referendum (that is, one that was not binding on the government) on the issue on 19 September 1992. That date, incidentally, was the 99th anniversary of the signing into law of New Zealand's last great electoral reform – the women's suffrage legislation of 1893." New Zealand only got MMP after hard pressure in a small country with both parties still wanting to hold power. It was a power game and a hot issue. Labour or National in the next election could of used a binding referendum policy to win in the 1995 election. It was a political deadlock. For Britain's size, this reform opportunity is a chance they may not have again for many years.

As the UK's ex-prime minister Harold Wilson said, “A week is a long time in politics.” If we take that view, 35 years is nearly an eternity. That is why I doubt Nick Clegg will back down on reform. It would go against everything him, his party and other small parties fought for for years. If the Conservatives didn't sort out a electorial reform deal they would look irresponsible to the public and seem childish. They would be seen as not sucking up their pride and doing the deal. However for Cameron to promise reform it seems to me would seal his political death as the Tory leader. A Labour-Lib minority government maybe a possibility.

Here's a fancy chart from The Institute for Government (page 17) adapted for the UK elections:



The Institute for Government charity can give us some thought on how a minority Labour-Lib Coalition could work: "Our research suggests that minority governments can be successful if they do not seek to govern as if they were in a majority. In other words, it becomes necessary to develop good relationships with opposition parties, and to be prepared to debate, to negotiate and to compromise." Should a labour-liberal democrat minority coalition happen, they might spend the next six months trying to create electorial reform. Then they could hold another election based on a chosen system like Preferencial Vote or MMP. That'd be after this term however, Labour wanting to enjoying whatever amount of power they have now.

Happy to hear that Caroline, leader of the UK Green Party won in the Brighton Pavilion region.

B-Day 2010 (NZ Budget-Day)

New Zealand is coming up to the annual government budget on the 20th of May. It's where the government plans to put its money into. English has said the government would be cutting "low quality" spending. A pretty vague thing to say that could be used later to to describe anything that gets axed. They'd also be raising GST to 15%. This contrasts with what the Bill English said in 2008 about raising GST: "We won’t be doing that … it’s not our policy”

Last budget National did a u-turn on taxcuts, which they said would be essential in boosting the economy. It's interesting reading this from Brian Easton in 2009 and knowing what National decided to do in the last budget. He explained that in order for taxcuts to happen: "A 10% government expenses cut will almost certainly have to heavily target the big ticket items of education, health and welfare." This is pretty much what has happened. Except of course for no tax cuts. Not for the poor and middle class anyway.

It's been signaled that there will be tax cuts in this budget: "Prime Minister John Key pledged to give across-the-board tax cuts in his statement to Parliament yesterday on his plans for the year. There would be upfront increases in social welfare benefits, superannuation and working for family payments to compensate for the GST rise."

Can this country afford taxcuts to do what it's doing now? Healthwise, Educationwise and Welfarewise? Not to mention all the other wises out there such as Justicewise, Conservationwise and Defencewise.

These taxcuts will largely benefit wealthy people. As the Sunday Star Times shares with us: "The Sunday Star-Times understands the government has settled on lowering the tax rate for those earning between $14,000 to $48,000 – which represents the bulk of wage earners – from 21% to 19%. The May budget is also expected to lower the tax rate for those earning up to $14,000 from 12.5% to 10%.The Star-Times also understands the government will, in one hit, lower the top rate for those earning more than $70,000 from 38% to 33%, rather than doing it gradually."

Almost all benefit goes to the rich. We will lose out as a society. This tax cut discriminates against the poor whose tax is reduced by 2% compared to the 5% of the wealthy. While it could be argued the wealthier pay more in tax, they are more capable in handling it compared to poor. Also the wealthier generally achieve their wealth because of the poorer and their wealth has often been boosted by their ethnicity, sex and their own family's socio-economic status. As for New Zealand's middle-class, any hope of extra change is offset by GST. While it's good to reduce consumption, not everybody can. Especially for those in poverty who have to deal with the challenges of being poor. This means generally being less healthy, and being able to afford less nutritious food like fruit, meat or vegetables. It also means discrimination from people viewing living on the beneft as a "dream", like feeding your family on baked beans and sausages is a dream. GST will affect these families the most who cannot easily cut consumption, especially as food prices continue to change.

The poors tax contribution is miniscule compared to the rich, they are the ones affected more by poverty and that poverty discriminates against minorities. We know unemployment is a factor in the causes of crime and the government thinks the solution is to lock criminals up and throw away the key. There's no guarantee that higher growth = higher employment. While New Zealands economy may grow, there's only so many jobs to go around. For businesses jobs cost money. If you can get somebody more qualified to do more for the same amount of money they will do it. Considering the governments record on job cutting, there probably wont be many jobs for the unemployed to enter into. Especially if they've got a criminal record. And as Marty G at The Standard points out, this government hasn't exactly been keen on supporting New Zealand businesses.

Little will be done with these taxcuts to reduce the amount of inequality causing problems in our society. Nearly 14 years ago the social policy journal reported that unemployment was highest for people under 20 and over 55, males, Māori and Pacific Islanders. They reported the cause was partly due to a lack of education, qualification and lack of employment in rural areas. Unfortunately these facts are still relevant to New Zealand today.

Social Service Caritas Aotearoa New Zealand(2008, p. 14) explain that: "The level of inequality is uneven across New Zealand society... Inequality is also reflected in ethnicity – outcomes are poorer for Maori and Pacific Islanders than for Pakeha and Asian New Zealanders" These taxcuts will also do little to reduce child poverty. As the Child Poverty Action Group(p. 5) explain: "While work is very important for reducing poverty and increasing overall wellbeing, a “work first” policy is not sufficient to eliminate child poverty. Parental or child illness and disability, physical and social isolation including poor access to services, fewer employment opportunities and lack of support may all act to preclude parents from paid work.”

So while National would like to increase Working for Families, they haven't specified how much and the poorer children will be left out. While a Whanau Ora co-ordinator/provider who can work cross-culturally sounds nice, it will probably take away from what we already have. It's likely Peter will be robbed to pay Paul. Except the thief will say it was to stop Paul's "low quality" spending as Bill English likes to put it. "Ministers have agreed that Whanau Ora will be financially neutral - funded by reprioritising existing funding in votes Health, Social Development and Maori Affairs. Those details will be set out in the budget." Reprioritising is a vague word and doesn't give much understanding of what will be a priority. These Whanau Ora co-ordinators may want to co-ordinate with other agencies, but their may not be much left of them to co-ordinate with.

Brian Easton has some thoughts on this upcoming budget. He feels raising taxes is probably the most ethical thing we can do right now: "We have very high overseas debt, which we are not addressing, and the ongoing fiscal deficit is making it worse. If nothing is done, our credit rating will be downgraded and interest rates will rise[...] Even so, to avoid a credit downgrading we are also going to have to cut government spending. I don’t know what, and I don’t know when. But I do know that even if it is phased in, it will create difficulties for ordinary New Zealanders – which is why I favour raising taxes as part of the adjustment.

He has also shared insight from Peter Lindert into what raising taxes can do: "In his book Growing Public: Social Spending and Economic Growth Since the Eighteenth Century, Peter Lindert points out that European countries have much more efficient tax gathering systems. They are able to raise higher taxes to fund a more comprehensive welfare state than the US. On the basis of the evidence, he concludes that their “net social costs of transfers, and the taxes that finance them, are essentially zero. They do not bring the GDP costs that much of the Anglo-American literature has imagined.” He goes on: “High budget democracies show more care in choosing the design of taxes and transfers so as to avoid compromising growth … Broad universalism in taxes and entitlements fosters growth better than the low-budget countries’ preferences for strict means testing and complicated tax compromises.”

This country has problems with its health, education and welfare sector caused by cost cutting and other factors. It looks like this coming budget will probably worsen these. If our tax system was made more progressive one like Britain, Australia or Canada's it would likely help fix our problems.

"The welfare state, warts and all, is one of the more noble achievements of those people we call New Zealanders. A failure to develop that achievement would represent a failure of the nation... The Welfare State has been a community response to historical change. To go against this historical thrust would be to abandon New Zealand as a community." - Brian Easton, 1979, p. 177 in "Social Policy and the Welfare State in New Zealand"

Revised 6/5/10, 1:40 PM