The coup attempt – ongoing divisions in Act
The turmoil within the party at the end of last year – when Roger Douglas led an abortive leadership coup against Rodney Hide – was hard for outsiders to comprehend. After all, here was a minor party that had finally, after nearly 15 years, made it into government – albeit with ministerial positions outside of Cabinet – and it very quietly nearly tore itself apart. Viewing this from outside, it all seemed like madness – especially when you take into account that the rebel Act MPs had all come into Parliament on the coattails of their leader winning the electorate of Epsom.
Yet, if you look closely at the history of the Act Party, you’ll see that such internal schisms are fairly ordinary and regular. The coup was therefore just a continuation of what we’ve seen many times previously in the guise of splits from the likes of Deborah Coddington, Roger Douglas, Murial Newman, Richard Prebble at each others' throats, and hardly putting on a unified face to the party.
Traditionally the biggest schism in the party has always been between the social liberals and the social conservatives. This was a battle between on the one hand, urban rightwingers who believed in such things as civil liberties, and various ‘progressive’ social and moral policies, and on the other hand, rightwing social conservatives – often from a more rural outlook – who wanted greater emphasis on law and order, on traditional values, anti-environmentalism, anti-political correctness. This internal division is now fairly much resolved, with the social conservatives – epitomized within the caucus by David Garrett – clearly in control.
The second schism in the party has been between the populist, pragmatic and high-visibility Hide, and the more ideologically-pure neoliberal faction represented by Roger Douglas. This internal divisions has become reinvigorated since the 2008 election, and is the most salient one today. Indeed this is partly because Roger Douglas – the founder of the party – was brought back in 2008 as an election candidate – and subsequently a list MP – to revitalise the party’s image and support, but also as a policy-focused counterweight to Hide’s more populist approach. This has caused ongoing friction in government. Hide’s faction wants to work cooperatively, compliantly, and relatively quietly with the senior National Party in government. Hide wants to play the ‘stability card’ – show the public that Act can be a responsible and mature junior coalition partner.
This pragmatic shift is also relevant in other ways that Rodney Hide has driven the party since he took over the leadership in 2004. He’s pushed the party away from its traditional role of ‘holding the government to account’, and from being confrontation and negative. As John Boscawen has written in a chapter on the Act Party in the book Key to Victory,
this retreat was motivated by a new ethos where the party would become more positive in style and tone in an attempt to make its image more palatable to a wider range of voters. Furthermore, the party decided it would like to be seen as more positive about New Zealand, and abandon controversial issues around the Treaty and Maori policies that the party saw as having been misconstrued as anti-Maori in the past (Boscawen, 2010: pp.88-89).
Hide has thus being trying to reinvent the party and shed the seriousness of the party and make it more likeable.
Roger Douglas by contrast, wants to, as usual, be a bit more visible and outspoken. He wants to admonish the National Government for not doing enough, for not pushing through economic reform, and for not being bold and rightwing enough. So Douglas spent the first year in Parliament speaking up and giving renegade public speeches telling the government what it was doing wrong and what it should be doing. He was effectively playing a similar role to Hone Hawira in the Maori Party. And, of course, neither renegades were appreciated by either their party leadership nor by the Prime Minister and the National Party. Significantly, when it came to Roger Douglas’ attempted coup against leader Rodney Hide, John Key stepped in and made it clear he would sack fellow plotter and deputy Act leader Heather Roy from her Consumer Affairs ministerial position. What’s more, Key let the plotters know that he would consider calling a snap election, which would have killed Act.
This was strong leadership from John Key. In contrast, Hide appeared to let Roger Douglas walk all over him. Surely an attempted plotter would normally be expelled or severely reprimanded? But he is Roger Douglas – the founder of the party and originator of Rogernomics – so he got away with it. Yet you have to wonder about Hide's leadership skills in allowing all of this to happen. But perhaps Hide was wary of taking a hard-line approach, possibly noting what had happened to the Alliance party, when similar events occurred within that party when it was in coalition with Labour. In that case, leader Jim Anderton dealt a heavy hand to quell internal party dissent and that led to the party imploding and a snap election being called by Helen Clark. Hide has avoided such a meltdown.
Act’s self-inflicted junketing
We got a greater insight into leader Rodney Hide’s leadership and political flaws prior to the coup when he self-inflicted the biggest injury to the Act Party’s image and reputation yet. In June 2009 he took his girlfriend on junkets to Britain, Hawaii, the US and Canada, and it was a taxpayer-funded junket which appeared incredibly hypocritical because it seemed to go against Act’s high-profile campaigning against such activity. Thus, this scandal injured the party more than it would do for any other political party. Here was the so-called ‘perk-buster’ showing that he was now the ‘perk-meister’. Act’s whole reputation and narrative has been built up on the idea of opposition to excessive government expenditure and waste, and with one serious judgement of error, Act’s very strong brand was severely tainted. And it has previously been a pretty strong political brand. After all, the fact is that Act has been the only minor party to break through into Parliament without already having an incumbent MP – that’s a testament to its strong political brand. Originally it was very clear what the party stood for – and this ‘perkbusting’, the opposition to government extravagance, the slogan “values not politics” was all part of the brand that garnered the Act Party 6% of the vote in 1996, and then 7% in 1999 and 2002. Now the party is on about 1.5% in the opinion polls because it doesn’t really seem to stand for anything in politics.
We also shouldn’t forget that Hide’s junketing was not the Act Party’s only MP expenses scandal in 2009. Roger Douglas also made himself and the Act party unpopular by taking his own business-class family trip to London, funded by the taxpayer.
Achievements and setbacks in government
When a balance sheet is drawn up about Act’s achievements and failures in its first year in government, the party is likely to essentially find itself in debt. It’s been spending up its political capital, making embarrassing mistakes, compromising itself by endorsing a relatively status quo government, and achieving very little that relates to the core of what the party is about.
There have been a few significant achievements – such as the local government reform underway and the partial opening up of ACC to competition. Yet, as Hide has admitted in his own end-of-year newsletter to party members, there has been significant lack of progress on key parts of the Act programme:
In most other areas of our 20 Point Plan there is little or no progress: little has been done to cut government waste, while tax cuts were cancelled; the bureaucracy is largely untouched; resource management changes have been useful but limited in scope; there has been some useful rationalisation in the health sector, but no important changes in welfare or to help families at risk, or to immigration and labour policies; no privatisation; some substantial and overdue investments in roading infrastructure, offset by more dubious investments in rail and broadband; nothing significant in housing; and some woeful backward steps with the emissions trading scheme (ETS) (Leaders Update, December 2009).
Added to this failure, would be the 2025 Taskforce to analyse New Zealand’s productivity decline. Although Act were successful in getting it established, and in getting Don Brash appointed as Chair, inside the party there was some shock at how dismissive Key was of the final report. Furthermore, although National also made a sop to Act with an agreement to introduce a Three Strikes sentencing policy, this was heavily watered-down version of the Act Party policy, and was hardly one of Act’s core aims anyhow.
Governing arrangements – the ‘death zone’ for minor parties
Just after the 2008 election, Rodney Hide talked of the ‘death zone’ that minor parties occupy in a coalition, and this seems to be an ongoing problem for his own party. The experience of coalition governments under MMP has been very negative for all minor parties – they have often been overshadowed by their larger coalition partner, and they’ve had trouble finding a happy medium between being cooperative and retaining their own distinctive policy identity (Arseneau, 2010: p.288). In some cases junior coalition partners have been punished for being too compliant, yet at other times minor parties have been chastised for failing to be cooperative enough. From the minor parties' perspective, there is a conundrum in which voters have tended to penalize them regardless of whether a party joins the Government, sits on the cross-benches. Furthermore, if a party is too close to a major party in government then the minor loses its identity, but if it is too far away it risks being irrelevant, and if it pushes too had for its principles then it gets blamed for instability.
This is a perennial problem all around the world. As one academic researcher has noted, ‘It is extraordinarily difficult for a small party in government with a large rival to get noticed, implement some of its policies, and avoid a serious flogging at the next election’ (Mitchell 2003, p.217). In fact, research everywhere has found that minor partners in government get punished disproportionately by electors.
So far, under MMP in New Zealand, every minor party that has formally been part of the government, has subsequently lost support in the following election. Being in coalition with major parties has been the ‘kiss of death’ for the Alliance and New Zealand First, and other minor parties such as the Progressives and United Future have also lost significant support after being in government. So it’d be interesting to see whether Act and the Maori Party can reverse this trend. So far, Act’s chances of improving or retaining its support at the next election don’t look good.
The Act Party - a hostage to National
Overall you'd have to say that the Maori Party has got far more out of National than Act has. You get the sense that National and John Key don't mind if they disappoint or irritate Act, yet they clearly do their best to keep the Maori Party happy. This is partly because the centrist Maori Party is the true coalition kingmakers, and Act are more like the jilted princess.
This is why Act is essentially hostage and captive to National. Act is intrinsically a ‘flank party’. If you think about the party system in New Zealand as existing on a left-right spectrum, you’ve got Labour and National near the centre – Labour perhaps on the centre-left and National on the centre-right. And to the left of Labour and the right of National you have the outlying ‘flank parties’. These parties are hostage to their bigger sister or brother parties because they have no ability to leverage the major parties in coalition negotiations. Act therefore has nowhere credibly to go apart from National, so their votes are somehow worth less. And it’s also because Key is trying to retain National’s centrist image. What we have at the moment is a relatively conservative rather than reforming government.
This all leads to a sense within the Act Party of political impotency, which must be incredibly frustrated at the moment, increasing the pressures on the leadership. While those from the pragmatic wing of the party – such as Rodney Hide – are happy to make small progress towards their goals in government, people like Roger Douglas who are in the more radical and principled wing of the party are getting impatient with National, and they don’t see Act as getting enough real policy wins.
Parallels with the Alliance party – preventing implosion
Prior to the current government, we had experienced four parliamentary terms under the MMP system, during which there was only one term in which a major party was in coalition with a junior party further out to its ideological flank – that was the Labour-Alliance government of 1999-2002. All three other governing arrangements have involved major parties in coalitions with parties such as United Future and New Zealand First – parties that are more towards the centre of politics than the senior party in coalition.
Thus the current National-Act coalition is in some ways a mirror image of the Labour-Alliance coalition, having one major centre-oriented party in coalition with a more radical junior party.
Being a flank party in an alliance with a major party puts a lot of pressure on the minor party. And if you remember back to those days of the early 2000s, you’ll actually see a lot of similarities between the difficulties that Act is currently going through and the experiences of the Alliance in coalition with Labour. Ultimately the Alliance imploded due to the immense compromises it had to make to keep Labour happy. And just as we saw recently with a leadership challenge to Rodney Hide, there was in 2001 a schism in the Alliance leadership of Jim Anderton versus Laila Harre and Matt McCarten.
Rodney Hide is essentially playing the same role as Jim Anderton did – trying to have his party undertake the cooperative and compliant function in government, and trying to keep more radical members of his party under control. It’s just a question of whether he can ultimately do this more successfully than Anderton did.
Roger Douglas, in contrast, is playing a similar role to that of Matt McCarten and Laila Harre who were listening to membership concerns about the Alliance’s distinctiveness being killed off by Anderton who was ready to compromise on anything. The question is: what will Roger Douglas and those more principled Act Party members do if and when Act faces their own Afghanistan situation?
The exhaustion of minor parties?
The Act Party isn’t the only minor party to be in the doledrums. All the minor parties are currently struggling to fulfill their potential, and thus fewer voters see them as relevant. Although votes for minor parties reached an all-time high at the first MMP election in 1996 when 38% cast party votes for minor parties, since then public support has nearly halved. In 2008 only 21% of party votes went to minor parties, and if you look at current opinion polls, only about 12% of voters support any of the numerous minor parties. Effectively we have shifted back to a first-past-the-post two-horse race mindset.
What can Act do to improve its fortunes?
In one sense, there’s not much Act can do to retain its relevance due to the fact that it’s core reason for existing – to implement neoliberal economic reform – is deeply discredited at the moment. Since the mid-1990s – but more so since the financial crisis – the idea of extending a neoliberal, Rogernomics-style programme has been anathema to New Zealand voters. Very few people really want more radical rightwing reform. So Rodney Hide and Act really are swimming against the political tide. Rather than being on ‘the side of history’, as the party might have felt when it was formed, Act has been in retreat. It has slowly jettisoned both its original policies and its raison d’etre of implementing Roger Douglas’ ‘unfinished business’.
If Act is going to survive and regain its reputation as a party of principle or radicalism, it needs to find a way to retain its policy distinctiveness and avoid the shift into populism. While the major parties are more susceptible to the blandness brought about by the chase for the ‘floating voter’ and the attempt to be ‘all things to all people’, minor parties like Act are often more relevant and interesting to voters when they present more principled and ideological electoral options. By being less cautious than the major parties, by being ideologically clearer, and more committed to their policies, Act could bolster its support base. Act therefore needs to be bolder rather than keep diluting its policies in order to offend the fewest voters. Therefore Act might find a continued reason to exist by retaining a strong role for policy innovation and differentiation from the more centrist National Party.
Ultimately to survive, the party needs to focus on issues neglected by the major parties, drawing attention to long-hidden concerns that might force the major parties to take notice. After all, when the public mood towards National eventually starts to sour, and the public looks around for a party to cast a protest vote for to indicate dissatisfaction with ‘politics as usual’, Act will be better placed to receive that vote. At the moment, this seems unlikely, because Act is too often quietly just saying “me too” to whatever the current government does.
Originally, of course, the Act Party was founded in the early 1990s to be an ‘ideas party’ of economic liberalism, but under the leadership of Richard Prebble and then Rodney Hide the party successfully expanded its appeal to be a more pragmatic and populist party of social conservatism. Now with its plummeting support – Act has no core support base, nor any degree of strongly identifying voters – perhaps it’s time to go back to first intentions.
Such a strategy would mean going with the Roger Douglas faction, who wants to reassert the Act Party’s identity and radicalism. This would effectively attempt to reposition Act as being beyond ‘captive party’ status on National’s right-flank by becoming more critical of National.
There are other political issues on the horizon that could resuscitate the Act Party. The 2011 referendum on MMP will give Act an unusual opportunity to campaign for an end to their own existence. What I mean by this is that Act is likely to campaign to get voters to vote for a change in electoral systems, which is ironic since the Act Party benefits from MMP. But interestingly, in a recently released survey, it was shown that 79% of Act voters oppose MMP. In contrast, voters for other minor parties are happy to retain it - with 85% of Green voters and 70% of New Zealand First voters in support of MMP (Levine and Roberts, 2010).
But ultimately the future of the Act Party depends on which of the two factions eventually wins out – the Rodney Hide pragmatists, or the Roger Douglas radicals. Currently the pragmatists have won the day – with the help of John Key’s intervention. But for just how long will they be able to rule?
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Thanks to Geoffrey Miller for input into the analysis.
