NZ Politics

Jacinda turned up her nose at every opportunity to use her popularity to do some good. To her, making real change wasn't worth losing a few percentage points in the polls.

Hipkins can't follow in her footsteps if he wants to win. People want things to change.

My impression was that Labour's overwhelming majority after 2020 has also been extremely fragile, largely made up from soft National voters who were disillusioned by National's leadership problems, and tightly connected to the Covid response.

This doesn't excuse not doing anything, but the dilemma for Labour from a political perspective was that as soon as it started addressing anything besides Covid people started to remember they had other options.

I like MMP a hell of a lot more than what we had before it, but one of the interesting things with FPP was that governments could still win with a minority of support if they had their tactics right, and this is a big part of why there was such a push to shift away from it. Muldoon's National came out of the 1978 election with 51 seats from 39.8% of votes compared with Labour's 40 seats from 40.4% and Social Credit's 1 seat from 16.1% of the vote. In 1981 he did it again, winning 47 from 38.8% to Labour's 43 from 39.0% and SC's 2 from 20.7%. This was the era of Think Big, with massive borrowing and spending on some huge but often very controversial government projects.

By comparison, MMP often devolves into two big parties scrapping over a handful of swing voters, who resist change, whilst taking their base for granted and hoping they don't lose too much of it to the parties more on the fringes, but even if they do they assume they can make a deal with those fringe parties. Parties are constantly watching the polls, and opposition leaders from both major parties are repeatedly getting rolled if they don't appear to be getting the popular support high enough. To-date since MMP began (with the exception of Helen Clark who remained in opposition after '96), no major party leader has remained leader to the following election after leading through an election loss. Some opposition leaders have even been rolled before having a chance to contest their first election. That's quite different from FPP, where it'd be common for a party to keep a consistent leader through several lost elections before sometimes finally winning an election. (MMP also makes leadership changes more possible because when you can simply go to #1 on the party list to be guaranteed re-election, any MP can be a candidate rather than only those holding a safe seat.)

Governments and oppositions under MMP are terrified of losing short term popular support because without it, they definitely can't win the next election, and significant change of nearly any kind tends to lead to loss of at least some support - at least amongst people who reliably vote.

Break the duopoly. There are various ways to do it. The recent report from Westpac has some decent ideas:

"Our view is that the reforms do not go far enough to effectively stimulate competition," writes Paul Clarke, an industry economist with the bank.

"We acknowledge that breaking up the existing retail hegemony is complex, fraught with unintended consequences and may impose short term costs on customers. The industry, sanctioned by regulators, has actively pursued economies of scale through mergers and acquisitions (and hence horizontal and vertical integration) since the early 1980s.

"The impact has been to give the duopoly the kind of control that makes it much easier to set prices at the checkout till.

"This consolidation process needs to be reversed if Government is looking to improve the lot of the average Kiwi over the longer term."

The report recommends the Government set out a strategy road map that identifies the key milestones that need to be achieved to level the competitive playing field. That would need to be backed up by appropriate legislation: "The sector will not unbundle voluntarily."

Westpac's report argued that the first step is the vertical separation of the supply chain – creating a clean break between manufacturers and wholesalers, and then between wholesalers and retailers.

"That means that the duopoly will have to choose where it wants to operate and sell off those parts that it doesn’t," it says.

The second step is horizontal separation at the retail level. Both Foodstuffs and Woolworths NZ would be forced to sell off some of their individual retail brands to independent retailers, possibly extending as far as the selling off specific outlets.

"Again, that assumes the existence of buyers, who may be put off by the big structural changes occurring within the sector. While that is a big assumption, new entrants may be enticed by attractive returns that are on offer."

Finally, the Government must create the conditions to encourage online grocery shopping. "Digitalisation is fundamentally changing how goods destined for retail are supplied and how retailers and consumers interact with each other," the report says. "The idea of supplier ecosystems that dropship directly to customers on behalf of online retail is already here, and there is no reason why, with some modifications, that cannot be extended to grocery shopping.

It cites the exampled of online supermarket Supie, which it says is clearly making waves. "Other new entrants are needed."