The compromises of the Labour-led government’s first budget was a sign of the consultation required in a coalition, says Grant Thornton’s Greg Thompson.

MMP has bestowed a three-way coalition upon us and politics in New Zealand has now become a matter of consensus. This means that hard decisions are difficult to make and certain policies may inevitably become watered down to ones that are more palatable – not only for the red, black and green teams, but for the voting public at large. Any fractures in the coalition could lead to the disintegration of public confidence and an inability to make necessary policy adjustments needed placate the coalition and keep the peace.

While Budget 2018 sought to make good on election promises, a number of these have not been fully provisioned in the budget; they are awaiting the outcome of consultations that are currently underway. A sure sign that the age of consultation has well and truly arrived in New Zealand politics.

Last month it was widely reported that the government now has more reviews and working groups than coalition MPs. The list of 75 groups covers a multitude of issues and topics, from supporting our Māori communities right through to our freedom camper conundrum. A rough count reveals that political hot potatoes like technology, the environment, health and education each have six reviews and/or working groups each, followed by housing, agriculture, infrastructure, justice and the Christchurch regeneration, each of which have somewhere between three and five.

Take for example the Tax Working Group, grappling with the poison chalice of taxation principles and whether capital gains tax should be introduced. A combination of consultation and drip-feeding the opinions of the people into discussions leads to hard decisions becoming more mainstream and acceptable.  

The benefit of consultation is obtaining expert opinions to deliver acceptable outcomes. There’s also the hope that this collaborative, brains trust approach could yield outcomes not originally anticipated, ones that really benefit New Zealanders.

The problem with consultation arises from the slowdown in decision-making and delivery of outcomes versus the urgency of the change that is required. Other significant minuses are the additional cost of running the consultation, and the dilution of a clear direction that aligns with the ideology of the government of the day.

Ultimately, where a three-year term is accepted as being an unrealistic time frame in which to deliver real change, consultation enables a longer term view – and a belief among the voting public that things are happening, they are being heard, and that their views will be taken into account.  

It’s yet to be seen if our threescore and 15 committees will present us with a camel; at best, as Budget 2018 has indicated, we will receive a horse that perhaps doesn’t run as fast as the rest.

For further enquiries, please contact:

Greg Thompson
Partner and National Director, Tax 
Grant Thornton New Zealand 
T +64 4 495 3775
E greg.thompson@nz.gt.com