True Blues meet True Greens as economy falters

19:09, Nov 14 2012

Last week's unemployment statistics hit the Government, its official forecasters, and all cheerleaders for current economic policy settings like a ton of bricks.

At 7.3 per cent of the work force and the third quarterly rise in a row for unemployment as measured by the Household Labour Force Survey, there was nowhere to hide from the fact that these were ugly jobless numbers.

Yesterday's unexpectedly weak retail sales figures for the September quarter are further evidence of an economy that outperformed expectations in the first half of the year, only to falter in the second half.

Some of this will be the slowdown in Australia, knocked on from the slowdown in China, although my eldest daughter's decision to seek work in Melbourne last month doesn't seem so bad now.

The Aussies created an unexpectedly large 10,000 new jobs in their September quarter employment figures.

For Opposition parties, the weak portents have given new life to the refrain that new economic policy settings are needed, while for the Government, the refrain is as ever: "This is why we have to keep on keeping on."


For the Opposition, this mainly means having a stab at lowering the exchange rate using various blunt instruments which other countries have found can work for a while, but neither reliably nor necessarily for long, and sometimes at great cost.

For the Government, however, it means upping the ante on a policy drive that increasingly pits its short-term economic growth imperatives against New Zealand's environmental imperatives.

Under leadership from Economic Development Minister Steven Joyce, the Government looks increasingly willing to differentiate itself politically by pushing harder for growth while accusing opponents who raise environmental objections as wanting to have their cake and eat it.

The line goes: if we can't intensify agriculture, drill for oil and gas, mine coal or offshore ironsands, or (fill in your pet industrial project here), then obviously we are passing up opportunities for the economy to grow faster. It's not a bad line, politically, and one that polling will confirm resonates with most voters.

As if to ram the point home, on the same day as the bleak unemployment figures, the Government's petroleum and minerals agency released a draft of areas it wants oil and gas explorers to bid for next year.

A day later, Climate Change Minister Tim Groser announced New Zealand was abandoning the so-called Kyoto 2 process, which the Government judges is dead in the water and will not lead to a new global commitment on climate change action to replace Kyoto 1, which runs out next month.

That announcement came immediately after the passage of legislation freezing the emissions trading scheme until the world gets its act together on a warming planet.

Unsurprisingly, the decision to jump on board the alternative to Kyoto 2, using the non-binding UN Framework Convention on climate change, was greeted as betrayal by most green policy watchers. That's understandable, but may prove misguided. For the first time in a long time, there is momentum in the United States for action on climate change, following President Barack Obama's re-election in the wake of Hurricane Sandy.

There is also fresh leadership in China.

Both China and the US have always been regarded as vital to any progress on global climate change action. Both have also rejected the Kyoto Protocol process, but are willing to work under the UNCF. New Zealand is joining them.

Meanwhile, world leaders meet in Doha next month for the fourth global climate change summit since the 2009 failure in Copenhagen. The prospects for progress at Doha look transformed as a result of recent events. Maybe now is the right time for New Zealand to back an alternative process that could get legs, even if it annoys the Europeans, whose efforts to create a carbon market have been such a failure.

What looks a flinty-faced, par for the course move by an increasingly anti-green Government may be enlightened. If the world makes progress on climate change, there will be no excuse not to revive the ETS.

Two major environmental reports are out today: one from the Pure Advantage lobby on green growth opportunities for New Zealand, the other from the Land and Water Forum on freshwater policy.

Neither looks likely to get much of a trot from this administration. Ministers see Pure Advantage as a Labour Party plot, while the LAWF experiment in consensus-making has lost its champion in former environment minister Nick Smith.

Unless either report conclusively answers the Beehive question du jour, "will it make the boat go faster?", then it seems the Government is willing to sacrifice green for true blue old-fashioned growth.

For a pro-industry, pro-green Labour Party, this failure of political imagination creates a gap to step into, if it chooses.