By Eric Crampton 27/09/2017


So. All of Left-Twitter figures that anyone wanting a blue-green coalition are either shills for National who want to destroy the Greens, because coalition would destroy the Greens, or useful idiots for those shills.

Count me as one of the idiots then, because some of the objections just aren’t making sense to me – or if they are right, they perhaps don’t work in the way that’s being suggested.

Received Wisdom from Twitter-Left is that if James Shaw were to bring a substantive environmental policy offer to his party’s members for approval, the act of doing so would destroy the Greens by bringing to the fore an internal schism between the Greens’ social and economic left, and the Greens’ environmentalists. The differences between those groups can be papered over in opposition, but cannot be in any coalition other than one with the left. And simply presenting an offer would reveal the Greens’ leader as a traitor to the Left faction.

Let’s suppose that’s the case – I certainly don’t have particular insight into the Greens’ internal workings.

But if it is true, then that is also a terrible opportunity for anyone who did want to destroy the Greens: offer a very substantial environmental policy bundle, knowing it would not be brought to the Greens members. Failure to present the option to the members, for the environmental wing, should be as strong a betrayal as presenting the option would be for the left wing. This should be the case except where preference intensity among the Greens’ left is much stronger than preference intensity among the environmental wing – which is possible. Pre-commitment to preferences for self-destruction over deviations from a pure line might be part of that.

That then gives National a near no-lose proposition. Make the strongest sincere environmental policy bundle offer they can credibly offer. If it’s accepted, they get that coalition with the Greens. If it isn’t, it’s riven the Green Party. And if National then forms a government with NZ First instead, it gives National the ability to bat back any Green complaint about environmental policy with a reminder of what was rejected. The risk: publicly making the offer annoys Winston Peters and then brings about a Labour-led coalition.

But what would be a good environmental offer that National could make?

water quality

The Greens’ biggest environmental policy concern this election has been water quality – at least as far as I could tell. Without iPredict around, I didn’t pay as much attention as I have in prior years.

So, the first part of the offer would give the Greens a mandate to deliver a system to improve water quality. They get Ministry for the Environment. What makes a deal there acceptable to both the Greens and National? Rather than run the whole things through taxes, set up a trading regime that respects existing drawing rights as property rights, and existing consents for effluent discharge. Set a catchment-level cap on water extraction so that the aquifer is sustainable, set a minimum river flow so that the river is a river, then run the kind of trading regime that Raffensperger and Milke designed.

I started sketching this out here, but there are a lot of details yet to be worked out. We’re soon to be starting a research report trying to figure out some of those details, and I rather expect that the Greens might prefer to set those details rather than leave them to others.

At the same time, set catchment-level caps on total nutrient flow to the lakes and let trading work similarly. Taupo’s nutrient management regime is a place to start looking – but again there are lots of details to be worked out. Give the Greens a mandate to work those out.

And make the whole thing sweeter by setting a budget item to buy extra water volumes in the rivers where the money can do the most good for water quality, and to buy further nitrate reductions in catchments where it’s high enough value to do that.

That set-up has a lot of desirable characteristics. Instead of farmers being offside and fighting the whole thing, they wind up with a property right that they find valuable – and that would be eroded if somebody proposed abolishing the system. The same mechanism that makes it impossible to reverse Canada’s terrible dairy quota management system would mean that nobody could worsen environmental quality by either scrapping the system or by doubling or tripling allocations.

What else could be in the bundle? Perhaps Associate Minister of Transport with a mandate to set up nation-wide road-user charging that’s time-of-day and congestion sensitive. Road pricing has to get addressed in the next couple decades as electric cars make a hash of petrol excise as a way funding roads. You likely to apply the kind of RUC framework used for diesel over to electrics, but likely with a phase-in to avoid discouraging electric uptake. There would be fun balancing in that, and I expect the Greens would like to be the ones to get to do it. And if you had road pricing right, that would also tell you whether it makes sense to build more roads in the first place – why not a hold on new big roading projects pending real cost-benefit assessment informed by the prices people are willing to pay to use roads at different times of day? Maybe the time-shifting you get just by having a congestion charge is enough to mean you don’t need as many new roads.

And add in a path towards including all sectors in the ETS that’s triggered by trading partners’ accessions – basically, the more other dairy-producing places that have a carbon price, the closer New Zealand should be to having full agricultural inclusion in the ETS. But there are important things to wrestle with there too: too quick accession by NZ could increase global GHG emissions by shifting production to more carbon-intensive places.

Count me as one of the honest idiots in this mess. It’s all wheels within wheels, and the whole thing has a bit of a tar-baby feel to it: “No, National, please don’t make us a very sound policy offer with lots of environmental concessions in it. That’s the last thing we’d want! It would destroy us if you did it. Please don’t do it!” And where Shaw has spent the last few years developing an immunity to Iocane powder, who knows what level anybody’s playing this game at.

If an offer to the Greens skews things against a coalition with Winston, that makes things more complicated – though I don’t know why he should be the only one able to play both sides. Leaving that to one side, I still think National should offer a sincere strong environmental policy bundle to the Greens.

And for what it’s worth, this is not the first time such a coalition has here been proposed:


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