by Rob Hosking
Former Reserve Bank governor Don Brash’s abrupt departure from the rarefied world of monetary policy for the bear-pit of politics caught the political world by surprise. Perhaps it should not have done so.
The government’s initial reaction to Dr Brash’s unexpected announcement was mixed – Minister of Finance Michael Cullen was commendably gracious, noting Dr Brash’s intellectual calibre and also observing that "one has to feel a little sorry for (National’s current finance spokesman) David Carter."
Prime Minister Helen Clark took a more political tack, questioning Dr Brash’s ethics. The attack has been kept up from Labour and its acolytes. Phrases like "throwback to the 1980s", "back to the future" and "Ruth Richardson in drag" have been heard.
A more likely comparison would in fact not be the feisty former Minister of Finance, but rather former National and Act MP Derek Quigley. Both Dr Brash and Quigley have a rather earnest ardor about them, both are policy ‘wonks’ and, to borrow a rugby analogy, prefer to play the ball rather than the man.
One policy ‘ball’ we might see some shift on within National is on superannuation. The party’s policy released thus far involves a rejection of the ’hands-off’ approach of the past 15 years and includes tax incentives to save.
That policy leaves room for some form of mandatory savings scheme – and there are some within National’s caucus who have come to favour that option. The advent of Dr Brash looks likely to add weight to that group – he is on record as being in favour of a compulsory approach.
That said, he is hardly a zealous convert to the issue.
"On balance, I would probably be a supporter of some kind of mandatory savings scheme as one contribution to improving our growth performance," Dr Brash said in his speech to the ‘Knowledge Wave’ conference last year.
He made it clear he is not firmly convinced, but in the absence of anything better of offer, a mandatory scheme is probably, in his view, the best we are likely to get.
"But the case is not yet conclusively proven, and I would prefer to see more informed debate on the subject."
If – as appears likely – Dr Brash is elected at the end of the year, that could open up some interesting debates within National on the topic. That is especially so as he does not favour the party’s current incentives-based approach to superannuation.
Dr Brash has, in recent years, been giving speeches with much emphasis on what he could not do as governor of the Reserve Bank, and covering broad areas such as economic growth, employment, social issues and property rights. Those speeches have at times sounded rather wistful. While a primary purpose of those speeches has been to try to educate New Zealanders not to expect too much of monetary policy, there has, at times, been more than a hint that Dr Brash would dearly have loved to get stuck into those issues.
One issue undoubtedly high on his list is savings, or the question about consumption today versus consumption tomorrow. One of Dr Brash’s least popular public stands as governor has been to criticise New Zealanders’ lack of savings, and our tendency to put most of our investments into housing and other property.
Are they the questions of a "throwback" as Labour is beginning to characterise them? The taunt from the government is a well-aimed one – Dr Brash is, in many New Zealanders minds, associated with the era of radical (and unpleasant) economic reform. One of the main thrusts of Bill English’s first few months as National Party leader is that he has tried to move the party on from the economic reform years. Indeed, the task English has taken on is to redefine the political right in this country – a massive job, and one which is going to take some time.
Yet the taunt from the Left about Dr Brash being yesterday’s man raising yesterday’s issues has a high element of spin. The questions Dr Brash has been raising since he stood down (and put forward previously in a far more cautious way) are issues that have divided Western politics since the Industrial Revolution, if not before. It is a sign of the government’s unconscious hubris that it believes the 1999 election settled those issues once and for all.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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