On that stupid coalition deal…

So, the usual right-wing suspects are fomenting mischief about a possible National-Greens coalition, and it’s definitely not going away, at least not until Peters announces his decision, because it creates a false impression of pressure upon New Zealand First to side with National. Let’s discuss why and why not from a Green perspective, and I promise to take it seriously, possibly more seriously than it deserves. Advance warning: this will be long.

The whys are obvious: you could change the National Party’s trajectory, you could extract environmental concessions, you could prove that you care about the economy. (which is a very blue-green talking point: the Greens do care about the economy, they just disagree with National on what should be emphasized and how it should work)

These are worthy goals I agree with, and I will even concede that in the long term it may be possible to consider that, (probably at the beginning of a National government, however, not at the end) but I think that people who say the Greens should reach out are ignoring some relevant facts in favour of their dream coalition, and for those who voted National, are projecting their own party’s responsibility to develop a fair and just environmental and climate policy onto potential coalition partners.

The why nots, however, are numerous.

Let’s first talk about trust. The Green Party has, in fact, already approached National about working together on issues they can agree on, way back in 2009 when they first became government, (which was the appropriate time to have the discussion on whether and how the two could work together, I will note, something New Zealand First never respects) and managed to briefly convince National to extend Labour’s promise to subsidize insulation of homes, on the grounds that long-term it actually saves money on health spending. A sound investment, a classic win-win-win Green policy that National could share the credit for, and to their credit, they did take the Greens up on it. On that single policy. And then made no effort to continue the relationship, because for National, coalitions and allies are about political expediency, not about building long-term relationships, and it was not politically expedient for them to be seen as working too closely with the Greens. Sure, we now know there are the less-than-1%-of-National-voters signing that petition, but they would be risking a lot more enthusiastic and widespread support from certain businesses and farmers who are enthusiastic donors and volunteers.

Of course, that first failing is minor compared to things like the Todd Barclay scandal, Bill English rorting the rules (and if it wasn’t a rort, why did we change the rules to clarify it shouldn’t be done?) to claim a $48,000 housing allowance and only paying $34,000 back, the numerous instances the government has courted the oil industry, and their continued refusal to phase out fossil fuel power plants and fossil fuel extraction in New Zealand.

If the Greens can’t trust National to honour that agreement and to behave like a reasonable and ethical government, to take opportunities that would make them look centrist and reasonable without committing either party to any type of formal arrangement, how can they be trusted in a coalition?

Next, let’s talk about values/principles, and to be fair, let’s also talk about Labour and New Zealand First, too, because discussion of a National-Green coalition should, reasonably, be taken alongside its current alternative of a Labour-New Zealand First-Green coalition. We’ll return to whether the Greens can trust that alternative coalition at the end.

The National Party states its values here. You will note the strategic lack of mention about their alignment with farmers and business. You will also note that the environment is dead last on their list, with no mention of it “not being least.”

The Labour Party’s principles can be found in §1.2 of this document. (their website is currently still in campaign mode, so their values aren’t easily found) To summarise: democracy, communal ownership of natural resources, economic and democratic participation and access, co-operative economic relations, dignity & work, people over property rights, Te Tiriti o Waitangi, peace and social justice, human rights. These all sound pretty good, but we’ll get back to that.

And New Zealand First’s can be found here. As you’d expect, nationalism is first and populism makes the list, but there’s also some surprisingly progressive stuff in there from time to time, such as on education, health, welfare, and yes, even the environment. On the other hand, they also want lower taxes, a refocusing of foreign policy away from parts of the world outside of the pacific, (yet I’m sure it will still include the UK and US somehow, lol) and more referenda.

For comparison, the Greens’ fundamental values are also available here. (They aren’t yet on the new website, which also means they haven’t been updated to include the fifth fundamental value, Te Tiriti o Waitangi) The Greens keep their list short, but interpret those principles broadly. For instance, non-violence extends into not just supporting peace, but positive political campaigning, too.

Now let’s look a bit more holistically at how each grouping would or wouldn’t be compatible with each other.

National’s values start with “loyalty to our head of state,” an obvious reference to monarchism. The Greens are officially republicans. Not a good start. They continue on to national and personal security, which is coded language for militarism and tough-on-crime policing. Non-violence is right there in the Green charter, hmm, also pretty terrible match. Both parties do agree on equal citizenship, although the Greens want a bit more than “equal opportunity,” they believe in social justice, and that with limited resources on our planet, they must be used in a way that benefits everyone fairly, and this contrasts to a later National value, competitive enterprise. They do, largely, agree on individual freedom and choice, but National feels that this applies to the economy more than society, and the Greens feel the opposite. The Greens believe in consensus decision-making and social justice, and the National Party believes in limited government. They do, apparently, agree in principle to sustainable development, however the emphasis on that one is tricky. The Greens believe in sustainable development. The Nats believe in sustainable development. To me, this looks like a recipe for co-operation from the cross benches at best, until such a time as National modernizes its values further, or proves it can be counted on to prioritize sustainability.

Secondly, let’s look at the “three-headed monster.” On paper, Labour and the Greens are very compatible. Their values look mostly the same. In practice, the Greens’ problem with Labour is one of emphasis, to the point where many Greens view Labour as little better than National, a party changed by decades of compromise away from its values for electoral expediency that isn’t doing enough, and whose voters are targets to become future Green supporters. There is an uneasy peace between the two. Yes, they’re friends now, but that’s only because they’re worried about short term problems. It is an alliance of convenience, with Labour detractors viewing the Greens as too radical, unwilling to compromise and a bunch of dreamers. That’s not to say that there aren’t friendly feelings as well. The two parties are by a large margin each others’ preferred coalition partners, and not all members of either party are skeptics.

New Zealand First and Labour have a lot of commonality, too. They both agree that immigration rules are too loose, despite our immigration policy being so right-wing that US Republicans have it on their wishlist and the German AfD party of neo-nazi nationalists are using it as an example of what they’d like to do. They both agree in state intervention into the economy, in limited but actually effective environmentalism, in retaining state assets, in fighting corruption¹, in improving skills for New Zealanders, in revitalizing the export economy, in working out the details of a Pike River re-entry, and in spending more in health and education. They disagree on some details in those areas, pretty substantially on Māori affairs, rights for women and queer people², and Labour’s will-they-won’t-they flirtations with republicanism. But the big sticking point is probably tax. New Zealand First loves Labour’s economics on expenditure, but hates it on revenue. They are classic Muldoon-style don’t-tax-and-still-spend interventionists, wheras Labour believes in something approaching a fair taxation system, where state benefits accrue responsibilities to the state, and we decide on benefits and responsibilities democratically.

The hardest part of this alliance is New Zealand First and the Greens. Given my rathers, I would prefer that the Greens never had to work with New Zealand First. The parties could not be more different on immigration. This is an extension of the larger problem: Greens are out-and-out liberals, and New Zealand First are the most conservative party in Parliament. Seriously, conservative religious groups endorse them ahead of National and ACT. So a three-party coalition would be a government whose social policy focus was mainly on education and health, the areas where all three agree, with a much larger focus on economic reform away from neoliberalism and towards policies that benefit regional and rural New Zealand, which is the area where strangely, New Zealand First is much more enthusiastic than Labour, and would find the Greens an enthusiastic ally. There would likely be Green concessions on more hawkish immigration policy, in return for Labour and New Zealand First concessions on stronger environmental protections and more urgent action on climate change³. There is also likely to be three-party agreement on rail transport, and most of the core policy to solve the housing crisis, but with a three-way divergence on tax’s contribution to that problem, with NZF ideologically opposed, Labour hesistant, and the Greens ready to plunge in. What looks like an incompatible mess when viewed from both extremes might just be doable with a resurgent Labour Party in the middle to glue it all together.

And here I have essentially moved on to policy concessions. Some of the Greens’ most important policies, such as the Zero Carbon Act, a Capital Gains tax to adjust the housing market in concert with other policies, and so on, only seem realistic right now when negotiating with Labour. The best our happy little mischief-makers suggest that National would give the Greens is their levy on nitrate pollution, (although with no accompanying commitment to spend the results on transitioning to cleaner farming practice like the Greens propose) enhanced funding on predator-free New Zealand, a reversal on their loosening of water standards, and increased “targets” on poverty and emissions reduction. These policy concessions can be dismissed out of hand once we look at the fourth factor.

The Greens, a party run by its own base, have decided democratically to rule out a National coalition before the election, based on their record, and to avoid doubt. This is smart politics. The Greens have been hurt in previous elections by allegations they were considering working more closely with National. Even reaching out for the policy-based MoU was transmuted into a possible coalition by eager commercial political journalists looking to fill column-inches, and significantly confused supporters and hurt the campaign in 2011, which I know first-hand because I volunteered for it.

So, any discussion of a coalition with National also has to discuss the Green Party’s commitments to its own supporters and members, too, as these petitioners and right-wing commentators are suggesting that the Green Party break at least one of those commitments, which would probably result in the party splitting at best, or imploding at worst.

Right-wing commentators (who, conveniently, often have some background connection to groups closely aligned to National or ACT) have suggested that Metiria’s unfortunate resignation will leave James Shaw open to consider a more pragmatic deal. Firstly, that’s insulting to James, who is just as commited to Green values and principles as Metiria was, even if his policy emphasis is in a different area than her, it doesn’t mean he doesn’t care about her issues and support her stand for better treatment of beneficiaries. Secondly, it misunderstands the Green Party’s internal structure. The co-leaders aren’t elected dictators like in other parties. They formulate tactics and strategy, they lead caucus and are head spokespeople, but they don’t actually make coalition decisions, or decide the party list, or electorate selection, and they consult on those decisions they do make, so that the party is behind them, and their leadership is more about being head candidates rather than actually controlling the party. That work is for the party executive, the policy committees, the various co-conveners (“Co-Cos,” the equivalent of party presidents, branch presidents, and sub-group presidents) and the members.

Any coalition deal must pass a vote at a Special General Meeting. This means every branch sends delegates that are instructed by the consensus of that branch on the issues on the meeting’s agenda. (for AGMs, this includes whether to continue supporting the co-leaders, which is more of a symbolic tradition, as there is a hatred for backroom politics and spills within the party- which is why Kennedy Graham hasn’t been welcomed back immediately despite his credentials. For SGMs, it’s usually exclusively about the Greens’ position on supporting the next government) You need a 75% positive vote to pass, so a deal with National would need to be one with overwhelming support from Green members, not just however many of the 8 thousand-odd petition signers are actually Green members. There is no realistic way that anything National is realistically willing to offer the Greens would survive such a vote, even if we do slightly better policy concessions out of National than Farrar seems to think we would get, which I think probably represents a reasonable guess at National’s best unprompted offer to the Greens.

This isn’t to say that a National-Green alliance is permanently out of reach. But the ball is, and has been, in National’s court if that want to resume a productive relationship right now, not in the Greens’, and it will take longer than the duration of post-election negotiations to conclude. It would require a genuine transformation of the party towards a more blue-green posture, and is why the Green Party and CDU in Germany have been able to work together at the state level- because in Germany, bluegreens are actually influential within their political movement, they are trustworthy, and therefore there was values alignment and trust between the two parties that allowed a coalition to work, so it wasn’t just about a cynical policy alignment, like New Zealand First has previously favoured when working with National.

addition: Oh, and while we’re talking about betraying bases, let’s talk briefly about the Progressive Green Party, a right-wing split from the Greens in the 1996 election. They got 0.26% of the vote. Now, maybe the bluegreens of today are stronger than that, but even if we assume they have twice the votes that their petition indicates they have, they would still struggle to earn a list seat if they, say, split off an electorate MP from the National Party for the 2020 election. So there’s no indication that bluegreens would provide more support to the Greens than sticking to their principles.

Ardern, Shaw, and English are in a room…

I’d like to share for you a scene from my head:

She takes a long drink of water. It’s been a hard day of negotiating.
“So, we think we know what he’s after. Do you?”

He replies. “Yes, we’ve got it about sussed.”

Shaw joins the conversation: “So, let’s get serious now. Which of us is it going to be?”

And then the bidding starts:

“We’ll be quiet about roads for six years if you do it,” says English.

Ardern counters with: “Oh yeah? We won’t put the boot in about Canterbury if you take him.”

Shaw issues a gentle reminder. “Well, if both sides fail to do a deal and he abstains, you’re kinda stuck being a minority government, Bill.”

English stares him down and says: “Okay, so we concede to him we’ll cancel the tax cuts and spend it on some of his priorities and health, and I won’t say it was your idea. Let’s hope we don’t see each other again in three years.”

…This is how I imagine things going next week at the moment in my head, but of course, in reality National wants their first turn at four terms, and Labour would like to dethrone English before he can pick up any momentum, even if it means a three-way deal with two significant junior partners. And there are people, like those Metiria talked about, who can’t afford another three years of this government.

But it’s definitely not fun being stuck in a position where the three adults around the table are forced to trade favours with a nationalist. There is a real possibility that he’ll drag down a National government with him, and that he’ll manage to arrest the momentum Labour has been enjoying and lock them out from developing a stronger negotiating position in three years if he successfully steals the spotlight enough.

Now is a time for at least our side to be fair but tough. If National wants to sell the country to get Winston, let them over-bargain and have their government suffer for it, then beat them in three years. Having the Greens at the table, rather than waiting to be called by Labour like the Alliance was, would be Ardern’s smartest move. Clark’s negotiations in ’96 suffered badly for her not being able to promise that the Alliance would accept a deal without modicifation, when they should have been at the table to tell both parties themselves. There are certainly sticking points. NZF won’t want to move on environmental rules that impact farmers too harshly. The Greens won’t want to move on immigration. And Labour will be reluctant to be as radical on the economy as both the Greens and New Zealand First would like.

Let’s not even entertain the notion, that some National supporters who seem content to spend plenty of time talking on social media but have made no discernable progress in moving the politics of their own party, have put forward that it is somehow obligatory for the Greens and National to at least try to work together. We can talk if National changes its tune, but right now there’s no credibility and no trust between the two movements. That there is more room with New Zealand First, who our leaders had to remind everyone in the media is in fact a party that engages in racism, is saying something.

The reason the two parties won’t work together is because the Greens will compromise on practical matters, but not their values, and the Nats will compromise their values, but not oppose their donors, who don’t like Green ideas, and aren’t so sure about green ideas, either. If bluegreens are really so desperate to get a coalition, all 6,500 of them, they should be working on making National greener first before asking. This is because their economic policies are fundamentally opposed to the Greens’ philosophy, so it would take stronger environmental concessions to make them competitive with Labour, which they have not made, and show no indications of considering. Most of National’s environmental policy is little more than a green-wash marketing gimmick, and the Greens can’t even get behind Labour’s greenwash attempts.

I expect we’re in for a wild ride, but who’s heading down the stream and who’s waiting behind safely onshore on this one is anyone’s guess at this stage. I am currently of the tentative view that the ride is not sufficiently safe for the left to jump in enthusiastically, but it looks like they’re at least toeing the water. All we know is that Winston, surprisingly reasonably¹, schooled the media that we do in fact have an MMP system now, not an FPP one, and that they should perhaps have covered his party a bit more before the election rather than playing catchup, which is half-reasonable if you forget that the reason we didn’t see Winston until afterwards is because he refused to show to debates that didn’t feature Ardern and English. (In reality, we should probably have four “tiers” of debates: all-party debates where it’s acceptable to send deputies or senior MPs, smaller-party debates where only over-threshold parties should do the same, list-party debates where Greens, NZF, Labour and National all get together, and Leaders’ Debates which we got far TOO many of this time around.)

It was the night before the election, and all through the House…

Not a pollster was stirring, not even Patrick Gower’s pet mouse.

Okay, enough of that silliness, I have been too busy to write detailed thoughts on politics, but I HAVE been busy graphically explaining even more of the state of play on social media.

We now appear to have had the two final polls of election season, thus I feel relatively confident giving you the average results and the final results of the two major New Zealand polls. (Unlike some, I believe Roy Morgan is roughly as reliable as Reid Research’s/Newshub’s poll and Colmar Brunton’s/TVNZ’s one, it’s just done so infrequently that it’s not sufficently up to date now to be of use)

Let’s start by comparing the base seats we would expect to see in both of the major polls.

The Colmar Brunton narrowly paints Peters below the Party vote threshold. (until you consider the margin of error, where he potentially comes back in with a 52.3% probability over 2,000 simulations) I’ve been pretty strict that I haven’t assumed the Greens will win Nelson or that NZF will retain Northland, as the polling shows a small but significant gap in Nelson, and Northland was taken from the Government in a by-election. I imagine Peters is capable of winning it on his own merits now as he is an incumbent, but assuming those things without a poll to back it up makes me very uncomfortable, and nobody polled Northland or Ilam this election, and these could reasonably be assumed to be key electorates. This scenario is a hung Parliament, assuming it is dead-on, (and of course, it won’t be) but once you factor in the margins of error, there are probably a lot more ways for a left-wing coalition to win than a right-wing one, as there are more ways for them to have been underestimated, if Peters did end up losing his electorate and below threshold.

The Reid Research poll shows Peters’ party in coequal status with the Greens, and likely required for either side to form a coalition. If NZF abstains in this scenario, National can then govern, but every bill would require either NZF support or at least the Greens to cross the floor. That’s a very unstable arrangement, meaning either a National-NZF or Labour-Green-NZF coalition would be required if this poll is bang on.

But again, that doesn’t really give us the full picture. Let’s look at margins of error:

These double-ring graphs, or nested donuts, show us the bounds of each coalition arrangement. A coalition can govern if they make it past the bottom centre of the inner or outer ring. As no coalitions pass the centre in both rings, nobody is expected to govern outright. I have placed a stronger NZF in National’s bloc because that generally favours them more in forming a government, but they have of course expressed no clear preference, so should be viewed as a wild card. These scenarios are all four of them highly unlikely. In reality, the edges of the margin of error are so far out from normal statistical polling that lining them all up together like this is even less likely than the poll itself being rogue and some of the results being outside of those margins. To get a better idea about what these polls mean, we need to run simulations.

These graphs represent a lot more obscured work than the other two, which are just me plugging single-poll stats into the override column on my averaging spreadsheet.

The Colmar Brunton one represents 400 simulated elections, and what share of them each grouping “won.” I omit ACT from the National scenario’s name, but they are there in some of the outcomes. (I do allow for a chance for ACT or the Māori party to lose electorates, and even for Mana to win Te Tai Tokerau)

And the appalling circle of black doom on my right is a collection of 1,000 simulations, (I made it easier to do more as I went along) of which precisely four are too small to show and rounded out of the results, with 2 Māori Party governments showing up on the very edge, and 2 “crossovers” where either the Māori Party must work with National and NZF and maybe ACT, or NZF must work with Labour, the Greens, and the Māori party and maybe MANA, or one of the two has to abstain in order for Parliament not to be hung.

I have a healthy amount of skepticism about the changes to Reid Research’s poll methodology and the addition of online panels. While the two last results were superficially a bit similar, both the one-off Horizonpoll and Reid Research have been friendlier to National and New Zealand First than the other polls. It’s difficult to fairly compare Horizon without past results, but taken with its commonality with the two most recent Reid Research polls in showing either National or New Zealand First at unexpectedly high

So that covers the last two polls. The average is, as you’d expect, somewhere between them, with a little weirdness thrown in from using the older polls to moderate them a little bit. When looking at the average we should consider the trend of the most recent polls, which both agree that Labour is dropping a bit, National is not as high as the two latest polls suggest, although maybe higher than the average does, that the Greens are rising, however they are in sharp disagreement about whether NZF is rising or falling, however not to the level where we can be sure the reality isn’t simply that they stayed still or rose very slowly from 6% to, say, 6.2%.

I went a bit overboard for the simulations and did 2,000, just to be really sure, so there should be a fair approach there to decently representing the probability of what kind of Parliament we see after Saturday’s count comes in. I don’t pretend to know for sure exactly how the specials will bump things once they’re counted, but they have in the past tended to lose National a seat and gain the Greens one, and many young people registered during advance voting, which was newly available this year, and cast special votes at the same time, which might suggest that Labour will also start doing well in the specials.

While it’s often said of the minor parties that NZF routinely underpolls and Greens routinely overpoll, this is not exactly true. What tends to happen is that NZF has an upward trend that may be explained purely in lag between the poll and changes in attitude of voters on election day, while the Greens are usually in a downwards trend on election day that might also continue. This year, NZF had been in a downwards trend until the very last poll, and the Greens were in a consistent upward trend, although all three big polling organisations disagreed as to how much. I wouldn’t be surprised if we see NZF poll at somewhere around 5-6%, and the Greens poll between 7-8%, but it’s possible that the saying really is true and we will see the reverse trend.

Overall, it’s likely to be a close election, and there is a small possibility of Labour eking out a government if the polls haven’t been underestimating them and their potential partners, but it will need a large shift back from New Zealand First’s apparent recent gains if that is to be the case.

To everyone who hasn’t yet enrolled to vote, or is not yet sure they’re enrolled, you have until your nearest advance voting place closes to enroll, or until midnight if you want to enroll online and then cast a special vote on election day. (this may be easier if you are working and your advance voting place does not stay open late, as your employer is legally required to give you a reasonable amount of leave to vote if you work on Saturday)

Good luck voting on election day. Due to our weirdly restrictive laws, I won’t be able to post anything too political until polls close, (I can currently tell you that I voted both ticks for the Greens, assuming you didn’t ask me before I told you, but I couldn’t have said that on election day!) even though New Zealenders overseas almost certainly will be taunting us on social media, and an amount of us comparable to the combined support of the Labour and Green parties added together have already voted despite us advertising, exhorting, and persuading them throughout the entire period. Presumably before the next election, we may need to think about putting some light restrictions on the advance voting period that aren’t there now, and lifting many heavy restrictions currently on election day, especially the bans from individuals who aren’t candidates talking to each other on social media.

Another final thing that bears amplifying is that some people have reported Electoral staff are giving incorrect information to Māori voters, telling them there are certain independent Māori parties they can’t vote for if they’re on the general roll, (they are not allowed to even discuss what parties you might vote for, and the only time they should talk about whether you can is if they’re reassuring you every party on your ballot is a valid choice) or trying to give voters on the Māori Roll ballots for a general electorate, or failing to identify voters on the general roll and so assuming they are not enrolled at all, or directing them to put the correct ballot for their electorate in the wrong ballot box for a different electorate. That last one is a small error, as it is generally rectified when a polling place’s ballots are counted, as counters confirm all ballots do belong in the box they were submitted to, and simply move them to another pile if not. But the first two errors could potentially persuade voters to change their party vote or disqualify their vote altogether, which is a Really Big Deal. Anyone who might be identified, correctly or incorrectly as Māori, will hopefully be aware of what their correct electorate is, which roll they are registered on, that like everyone else they don’t need ID or an easyvote card in order to vote, and that once you’ve confirmed you have the ballot for the correct electorate, all options in each column are valid to be ticked once.

Good luck to everyone who hasn’t yet voted. Your Party Vote is the more important of the two to how Parliament shapes up, but your electorate vote is also relevant, especially if you live in any of the Māori electorates, in Ilam, Northland, Nelson, or Epsom, with those last two being three-way races. Ilam could return an independent, Northland could retain Peters, Nelson could see the second ever Green electorate MP, and while Epsom has a healthy lead for David Seymour, he is by far one of the worst MPs in Parliament, and if he wasn’t being thrown a safe seat by national repeatedly, would likely be gone by now.

State of play

A little bit of technical catch-up.

I have updated my metapolling data for 2017 to include the election season thus far. The results are as follows:

National: 41.5% ±3.05%
Labour: 39.6% ±3.03%
New Zealand First: 8.8% ±1.75%
Greens: 6% ±1.47%
TOP: 1.6% ±0.77%
Māori Party: 1.5% ±0.75%
(Assume 2 electorates won)
ACT Party: 0.3% ±0.15%
(Assume 1 electorate won)
United Future: 0%
(Assume 0 electorates won)

Projected seats: 121
Majority requires 61 votes.

As this average stands, New Zealand First does most likely look to narrowly hold the balance of power if nothing changes, however that’s not entirely the reality of the situation, as I’ve stated before that polls are like taking a series of still pictures and using them to describe the motion of a dancer or a race. We have to consider possibilities like whether we could be viewing from a bad angle that makes the wrong racer appear to be in the lead, that perhaps one racer is behind but is rapidly gaining ground, or of course, to go to our other analogy, that the motion is so fast that we’re missing parts of the dance between polls. This is why looking at both averages and individual polls is important. That last one we won’t be so concerned about at the moment, given that the only large event that’s happened recently is Joyce’s now thoroughly-debunked claim of a gaping fiscal hole in Labour’s budget. Instead the hole was under his feet this entire time, and no other significant political events appear to have abbutted this one so it’s unlikely we need to worry about conflating two different causes for changes in polling. We’re not in a situation like where Metiria Turei and Andrew Little both resigned so close to each other it and it was difficult to tease apart the effects of one event from another.

The first thing we need to look at is the margin of error.

To the left is a nested donut chart, my traditional form to show MoE visually. The inner ring, as labelled, represents a best-case for potential left-wing coalitions assuming every party is out by the maximum MoE on their individual votes, and also the worst-case for parties that might consider a right-wing coalition. (As the balance has shifted to Labour in polling and NZF is considered undeclared, I have moved them to National’s bloc for the purposes of determining their size) The outer ring is the same scenario for the parties needed for a right-wing coalition. As you can see, we’re perched between on one side, a disaster scenario where the Greens are out of Parliament, NZ First are the kingmakers, and the left needs them and the Māori Party to work together to form a government, and on the other side, a dream team with an outright Labour-Greens majority and a friendly Māori Party potentially inside the coalition if Labour wants to secure extra votes in case it needs to hold by-elections this term, or ready to step in for help on conscience votes where NZF and National might be aligned and Labour might suffer defectors.

The other way to look at margins of error is to simulate elections using numbers generated within random ranges that reflect the margin of error. This approach is even better than simply looking at the two most extreme scenarios, as you can simply evaluate the number of seats to see which blocs can form governments in each simulation, rinse and repeat several times, and calculate probabilities based on the frequency of each outcome from there. I’ve actually started on this as well, (there is a LOT of copy-and-paste tedium to build a spreadsheet to do this. My current simulation runs 10 full MMP elections based on manually inputted electorate win probabilities (we have at least one electorate poll for all the critical races other than TTT and Nelson, even if none of those polls seem to be hugely reliable, but it’s better than assuming who will win) and party vote polling shares, with threshold cutoffs included) and under this metric we tend to have about 9:1 odds that New Zealand First is the kingmaker, using the results from my metapoll average. (the minority report being a Māori Party decision between Labour+Greens and National+ACT+NZF. I’ll get back to you more on this with more exact probabilities on social media once I’ve got my model built to simulate 100 or 1,000 elections at once, but for now I’m just running ten simulations ten times and doing the arithmetic mentally to get an impression of the odds) It’s main limitation is that it currently can’t handle small parties winning multiple electorates.

The other thing to consider is the direction of travel. As you can see to the right, the latest released poll by Colmar Brunton actually shows that the trend is towards the Māori Party, and not New Zealand First, being the potential Queenmaker. (I gendered the word this way because they have been clear that their members are indicating a preference for coalition with Labour, although it will require a formal post-election consultation with members as per their rules, so they are still open to working with National if they are not the deciding vote, and Labour’s preference isn’t completely in the bag)

I expect the average will soon start showing this as the overall expected outcome too, as I run a harsher formula to cut off input from old polls during election season, where I square the overall result of my weighting factors instead of just multiplying them all. (It’s still counting a couple of old polls back in June for a fraction of a percent, so it’s not unreasonably strict. I do this because there are far fewer polls run outside of election season) This is in addition to one weighting factor being towards polls closer to election day.

In terms of the modelling approach, going off CB’s numbers (which is roughly the direction where I expect the trend to lead us) we seem to have something like a 45/40/15 split in likely governments. In order, those numbers represent: NZF kingmaker, Māori Party queenmaker, outright Labour-Green government.

This is good news, and reason to feel optimistic. We just need a little more hard campaigning to push those Green, Māori, and maybe Labour Party numbers up a bit more in order to reduce the probability that Labour actually needs Winston, and we’ll have a strong progressive government. Ideally, we want that NZF kingmaker chance well below 20%.

The actual implications of a Capital Gains Tax

I’ve been banging the drum on this issue a bit recently, but what we’re not being told about National’s recent criticism of Labour on taxes is that they don’t actually just hate a CGT because it’s a tax, even though their loathing for taxes they themselves don’t raise, (remember, they took in huge amounts of extra tax by raising GST) is well-known. Let’s set aside for a minute Labour’s position on one, and focus on what the Greens want to do, so that we can talk about an actual CGT rather than about political uncertainty, which I promise to come back to at the end.

Now, the reason National dislike a CGT is because the upper echelons of the Party is full to the brim with people who make money off speculation, which a country with a CGT still allows, but doesn’t privilege as a loophole around income taxes. To them, this tax is economic policy that hurts their preferred method of making money, and equalizes a playing field that they have enjoyed seeing as tilted to those with sufficient capital to make money off capital gains.

The Greens want a comprehensive capital gains tax on real realized gains¹, with an exemption for the family home², which means you will never be forced to sell an asset because it becomes more valuable, in fact, taxes will only ever be paid if the owner of an asset makes a profit (after considering inflation) when they choose to sell. There is only a very small class of people for whom this would impact their day-to-day income, and thus their ability to “go shopping,” and that is people who live primarily off speculation in assets, a profession we should want to wipe out. If they’re professional investors, we want their income to be based on dividends, a financial reward for investing your capital in the productive economy. That sort of virtuous cycle is why we call our economic system “capitalism,” whatever your wider critiques of it. (and I have many)

What this will do in addition to collecting revenue is reduce the value of houses, farms, and other assets that are being bought for speculative purposes³. This might seem like a bad thing for property owners, however it really isn’t. If you buy and sell two properties in the same market, (eg. two farms in Canterbury) for the same value, you’ll likely be no better or worse off for the tax. (the sellers in each transaction will account for the tax in their asking price, but those prices will be depressed by more than the tax adjustment due to the lack of speculative demand) You might get hit badly if the CGT policy has been more effective in deflating prices in the area you want to sell than in the area you want to buy, but it’s not going to be implemented in isolation. A CGT together with a crackdown on investments to launder money, a government program to build thousands of affordable houses, and rule changes that genuinely incentivise people building and buying houses to that are occupied, should all act to depress house prices in all the overheated markets, while leaving the reasonably priced markets, such as the regions, roughly the same.

This might seem like a bad thing for business owners, who might one day want to sell their interest in a business, but it really isn’t. Why, you say? Not every business owner who sells will want to buy new assets for a new business afterwards, so it’s not like the tax balances out somehow. Instead, the benefit comes before the point of transaction, in terms of the availability of capital. Because speculative investments that allow for quick profit will now be taxed, productive investments in businesses of all sizes will become much more attractive. This means that investors will likely to be very happy to sink capital into your venture on a long-term basis, so long as they can expect periodic dividends. This will make starting ventures easier, seeking capital injections to expand easier, and, ironically enough, put local ventures on a more equal ground to ones with overseas owners, because they will have competing local capital. Even without re-investing a cent, this will stimulate the economy. And even though businesses founded before the CGT was implemented will have had to get capital the hard way in comparison, they’ll have an incumbent advantage in the marketplace, and they can always leverage the newly available capital to expand, too.

Now, onto Labour’s handling of tax uncertainty. It is fair to critique Jacinda Ardern’s statement that labour has been transparent about what it wants to do with the tax reform side of housing policy, and whether that would involve a capital gains tax that could apply to farm- and business sales. She has been clear, but she hasn’t been transparent. A transparent party would have told us what option they provisionally favour before going to the working group. However, that doesn’t mean that Bill English is being fair to her in saying she has to have numbers on such a proposal if it’s really just a sense of what option Labour favours going in to the working group. The whole point of having experts advise you is to listen to their opinions on the numbers, so if you’re genuinely going in to a reform process open to expert advice, the numbers in your starting proposal aren’t definite in the first place. If English were really sincerely critiquing her position as either a policy maker or an economist, he would know this. His crocodile tears on taxes affecting “hard-working kiwis” are nonsense. None of his economic or tax policy is sufficiently aimed at kiwis on or below the average wage.

In addition, as I’ve said above, the only people who need numbers on a CGT to know if they can go buy groceries are professional speculators. Your average waged employee won’t ever be taxed under the Greens’ proposal, and Labour is very likely to implement the same safeguards against unfairness in a CGT, but these average workers might well benefit from it in terms of being able to buy a house more easily, or being able to find a job more easily in a new business, or even being able to get capital to start their own business more easily, something every bit as much a kiwi dream for some people as owning a house.

So when you vote, ask yourself: what kind of economy do you want, and who’s got the policies to support it? Because if you want an economy dominated by big corporate farms where the actual workers are largely paid wages by overseas owners, overseas companies who can afford to set up businesses in a capital-poor environment, and people sitting on untenanted property portfolio or serially renovating houses, then you should probably re-elect the government. But if you want a diversified economy with a growing tech sector, fueled by renewable energy and maybe even some high-quality manufacturing jobs, and responsible mining that restores the environment after its done so we can keep making electronics, then you should vote to change the government. Because there’s more to voting for the economy than just finding the person who sounds most economically literate.

It’s quite possible to know what’s going on in the economy and still be captured by the interests of the current winners in the economy, like the government, or even be captured by irrational fears⁴ that immigration hurts the economy, like New Zealand First, but we should look at what the likely effects of economic policy would be, and also for the two long-standing governing parties, National and Labour, we should look at their record on economic indicators⁵. Those things both make it clear that only a progressive government, with the Greens moderating Labour’s policies to make them more about ordinary people and to commit them to a CGT or similarly effective policy to reform our economy, will deliver real economic prosperity decades into the future.