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Red Meat Sector conference 8 July 2013
Regulatory risk (delayed?)
Red Meat Sector conference
Colin James
8 July 2013
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Red Meat Sector conference 8 July 2013
Timescale of comments
• Out to 2018
• Goes through two elections here — change of govt
2017 if not before
• Sees through unwinding of QE, China adjustment
• Two big FTAs? Or neither?
• Climate change issues higher profile
• Maybe: US-China trade/security crunch; MidEast
mess
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Red Meat Sector conference 8 July 2013
Context
• Firm domestic growth through next 18 months,
slower thereafter
• Depends on global conditions — expect bumps
• Outlook good for high-end food
• 210m more households by 2025 on $US20,000 a
year; Chinese households on $US16,000-34,000
go from 14m to 168m by 2020; 3bn more in
“middle class” ($US10-100 a day) spending 2030
• But those straight-line projections; diversion risks
(China, water, food, geo-security)
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Red Meat Sector conference 8 July 2013
Domestic policy/political overview
• GDP growth dominates till next election
• National 55:45 to win third term — NZ First may
hold balance
• If National wins 2014, policy continuity (modified
a bit by deals with small parties)
• If Labour+Greens win 2014, major policy
reversals on RMA, local govt, labour
• Labour+Greens odds-on in 2017 if don’t win 2014
• If Labour+Greens win 2014, 50:50 National 2017
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Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English
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Joyce
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Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English
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Joyce
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Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English
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Joyce
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Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English
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Joyce
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Red Meat Sector conference 8 July 2013
A triangle at the top
Key
The strongest
line
English
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What happens if
this line frays?
Joyce
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Red Meat Sector conference 8 July 2013
A triangle at the top
Key
The strongest
line
English
What happens if
this line frays?
Joyce
Second tier of other sector-leading ministers
— corresponding to departmental sectors
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Red Meat Sector conference 8 July 2013
Till 2014 election: GDP growth is king
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Fiscal consolidation to reduce state crowdout
Balance, then debt reduction below 20% GDP
Improved asset management
Asset selldowns for investment funds
PPPs (but warily)
“Better public services”:efficiency, effectiveness
2014 budget won’t be a vote-buyer but some doles
Tax policy mainly tidy-ups
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Red Meat Sector conference 8 July 2013
Till 2014 election: GDP growth is king
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More mining, more irrigation
Research geared more to food/agriculture
Deregulation of labour market
Big RMA changes: economy trumps environment
Local councils required to get in line
Exceptions: re-regulation in finance and to deal
with political embarrassments (quake rules, mine
safety, very low wages — maybe more
• Has the economy rebalanced? Lab+Greens say no
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Red Meat Sector conference 8 July 2013
Till 2014 election: other policy
• FTAs: TPP, RCEP and whoever else will play; not
much trans-Tasman
• Climate change: all sectors firm target for 2020
but ministers wary about effect on GDP growth
• Education: more emphasis on technology,
professionalisation of teachers
• Health: increasing output; spending constraints
• Welfare: get them into jobs (actuarial/investment)
• Foreign policy: independent but friendlier to US
• A four-year fixed term?
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Red Meat Sector conference 8 July 2013
The 2014 election
• Alternative govt has taken shape: Lab+Greens
(+maybe others); voters have choice (unlike 2011)
• Polls give Nat big lead over Lab but little or
nothing above Lab+Greens
• Household finances/confidence key factor: so far,
so good but watch the global economy
• Leadership: Key popular but now some doubts;
Mar-April dip might be repeatable
• Norman looks too much like opposition leader for
Labour comfort; might stop Nat—>Lab transfers
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45%
0%
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National
40%
35%
25%
20%
10%
2009
2010
2011
Election
2011
60%
9/02/09
9/03/09
15/04/09
8/06/09
27/07/09
7/09/09
12/10/09
15/11/09
15/12/09
8/02/10
8/03/10
15/04/10
24/05/10
12/07/10
9/08/10
20/09/10
8/11/10
13/12/10
7/02/11
28/03/11
9/05/11
6/06/11
11/07/11
14/08/11
5/09/11
3/10/11
29/10/11
4/11/11
12/11/11
19/11/11
26//11/11
21/07/12
19/08/12
17/09/12
29/10/12
1/12/12
15/01/13
15/02/13
15/03/13
15/04/13
20/05/13
17/06/13
Red Meat Sector conference 8 July 2013
Polls still good for National but Lab+Green close
National v Labour (and Greens)
Average last 4 polls
55%
50%
30%
Labour
15%
Greens
5%
2012
2013
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Red Meat Sector conference 8 July 2013
Hypothetical 2014 election outcome — NOT forecast
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Nat has real prospect of 44%
ACT may get 1 seat (but needs new candidate)
Maori party 0-3 seats, let’s guess 2
Conservatives get 2011 2.7% (=3 seats if in Parlt)
Lab should get 35 at least (electorate score 2011)
Greens likely to be lower — but at least 8%
Mana 1 seat
NZ First 60:40 to clear 5%
Peter Dunne out
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Red Meat Sector conference 8 July 2013
Hypothetical election outcome—NOT a forecast
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National
ACT
Maori party
Conservatives
TOTAL NATIONAL
NZ First
Labour
Greens
LABOUR+GREENS
[Mana
44.2%
1.0%
1.4%
2.7%
49.3%
5.5%
35.0%
8.0%
43.0%
1.0%]
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Red Meat Sector conference 8 July 2013
Hypothetical result 1: Peters over 5%, Craig out
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National
44.2%
ACT
1.0%
Maori party
1.4%
Conservatives
2.7%
TOTAL NATIONAL SIDE
NZ First
5.5%
Labour
35.0%
Greens
8.0%
LABOUR+GREENS
[Mana
1.0%
55 seats
1 seat
2 seats
0 seat
58 seats
7 seats
44 seats
10 seats
54 seats
1 seat]
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Red Meat Sector conference 8 July 2013
Hypothetical result 2: Peters over 5%, Craig a seat
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National
44.2%
ACT
1.0%
Maori party
1.4%
Conservatives
2.7%
TOTAL NATIONAL SIDE
NZ First
5.5%
Labour
35.0%
Greens
8.0%
LABOUR+GREENS
[Mana
1.0%
54 seats
1 seat
2 seats
3 seats
60 seats
7 seats
42 seats
10 seats
52 seats
1 seat]
www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical result 3: Peters under 5%, Craig a seat
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National
44.2%
ACT
1.0%
Maori party
1.4%
Conservatives
2.7%
TOTAL NATIONAL SIDE
NZ First
4.5%
Labour
35.0%
Greens
8.0%
LABOUR+GREENS
[Mana
1.0%
57 seats
1 seat
2 seats
3 seats
63 seats
0 seats
46 seats
10 seats
56 seats
1 seat]
www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical result 4: Peters under 5%, Craig out
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National
44.2%
ACT
1.0%
Maori party
1.4%
Conservatives
2.7%
TOTAL NATIONAL SIDE
NZ First
4.5%
Labour
35.0%
Greens
8.0%
LABOUR+GREENS
[Mana
1.0%
59 seats
1 seat
2 seats
0 seat
62 seats
0 seats
46 seats
11 seats
57 seats
1 seat]
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Red Meat Sector conference 8 July 2013
Repeat — hypothetical NOT A FORECAST
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Take Nat down 1% and it gets more marginal
Likewise if ACT cannot get a credible candidate
If Dunne in, may add a seat (but very big “if”)
If Nat up 1%, chances improve
If Lab 38%+Green 8%, Nat in trouble
If Peters has balance of power, unclear if he goes
with Nat (is ex-Nat but angry at Key’s 2008
attacks) or Lab+Greens (doesn’t gell with Greens)
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Red Meat Sector conference 8 July 2013
Outcome 2014
• Election likely 29 Nov; Key may announce date
early Feb
• 55:45 National third term
• But support mix may make it difficult to manage
so might not see out full term: NZ First hard to
accommodate, Maori party needing more distance
• Key goes by end-2016 (if a loss he goes quickly)
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Red Meat Sector conference 8 July 2013
If Nat-led govt post-2014
• Policy continuity but qualified by:
—need to attend to voter preferences
—need to attend to small parties
—if Key retirement: Joyce, Collins, Adams?
—possible economic/other upsets so hasty fixes
—possible deregulatory over-reach
• Higher cabinet rank: Adams, Kaye, Bridges;
ministry posts: Goldsmith, Lotu-Iiga, Ross (Lee?)
• Leadership convulsions in Labour
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Red Meat Sector conference 8 July 2013
If Lab+Green-led govt post-2014
• Significant regulatory risk for business
• Would reverse/repeal several 2008-14 policies —
RMA, local govt, house consents, workplace law,
protest, Sky City; plus tougher on climate change
• “Seesaw factor” in policy: the bigger the 2008-14
“see”, the bigger the post-2014 “saw”
• More active economic policy: monetary, capital
gains tax, compulsory KiwiSaver, govt agency to
buy electricity, research tax credits, high-end
manufacturing, venture capital, apprenticeships
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Red Meat Sector conference 8 July 2013
If Lab+Green-led govt post-2014
• Balance budget (but some slippage?)
• Social policy focused on “child first”
• “Living wage” ($18.30 now) for state employees
and contractors/suppliers
• Greens push on social, environmental policy;
oppose mining (but Lab mostly prevails), oppose
FTAs (but Lab gets Nat support)
• NZ First push on immigration
• Would it last more than one term?
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Red Meat Sector conference 8 July 2013
2017 election and beyond
• If Nat third term 2014, 75:25 Lab+Green-led win
in following election
• IN SHORT: a Lab+Green govt sometime in the
next five years
• So regulatory risk is real but may be delayed
• If Lab+Green win 2014, 50:50 Nat back 2017
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Red Meat Sector conference 8 July 2013
Lab+Green govt post-2017
• Generally similar to post-2014, except that Y-gen
MPs more significant, baby-boomers/X-gen less
influential
—so Robertson, Ardern, Clark, Hipkins up
• Who would be leader/deputy after Shearer
dropped 2015?
• May not reverse as much policy as would have if
elected 2014: the longer between the “see” and the
“saw” (of policy seesaw) the better the chance of a
smaller (or no) “saw”
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Red Meat Sector conference 8 July 2013
Get ready for change
• If not 2014, then 2017
• Post-1984 orthodoxies not secure
• Regulatory risk significant
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Red Meat Sector conference 8 July 2013
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