Matthew Hooton: National Party finance voice Nicola Willis – reluctant revolutionary?


Nicola Willis is open to a cuppa with revolutionary Finance Minister Ruth Richardson but her inclinations are more John Key, Bill English and Steven Joyce’s moderate orthodoxy.

She worked closely with all three at Parliament and during her five years at Fonterra.

English in particular has influenced National’s latest shadow Finance Minister, the one most likely to get the real job since the party left Government in 2017.

Previously responsible for education and housing, Willis can effortlessly reprise English’s case for social investment.

Similarly, just as English wasn’t a 1980s or 1990s radical, Willis shares his commitment to the consensus that nevertheless emerged, including the importance of price stability, labour-market flexibility, a broad-based and low-rate tax system, fiscal prudence over the business cycle, and open and competitive markets. She accepts that Finance Ministers have to get these things right, by which she means maintain the broad consensus that prevailed from 1991 until early 2020.

Where colleagues say Willis is more interesting — or more boring, depending on your point of view — is her emphasis on the machinery of government.

Working for Key, she saw that prime ministerial pronouncements don’t always accord with subsequent events. The Ardern Government’s failures on KiwiBuild, child poverty, inequality and mental health have underlined to her that the Beehive announcing a new policy and allocating some cash is not the same as implementing it.

Willis shrinks from concluding that Wellington’s continual failure means the Government should retreat from building infrastructure or providing high-quality social services.

Instead, she thinks the lion’s share of a Finance Minister’s job should be overseeing and, where necessary, driving the bureaucracy to deliver what ministers have funded and promised. That would make her a Finance Minister in the Joyce or Bill Birch mode.

Like them with ultra-fast broadband and energy, expect infrastructure to be a Willis priority were she to take Grant Robertson’s job next year. She thinks successive New Zealand governments have been insufficiently innovative in how they have facilitated and funded major projects.

Willis’ colleagues from politics and Fonterra agree she is a workaholic.

Key rates her highly. She helped craft his early speeches as leader of the Opposition when he boldly positioned National back to the centre. Famously, she played Helen Clark so well in Key’s 2008 debate preparation that campaign strategists called the sessions off early, for fear the candidate would lose confidence before the real thing.

Key, who then employed Willis as a strategist and adviser, says she is extremely bright, strategically smart, an effective communicator and will slowly undermine Robertson, whom he picks to underestimate her.

Colleagues from Willis’ time at Fonterra say she was skilled at identifying how commercial objectives could be positively positioned to governments and policymakers here and abroad.

Her roles at Fonterra included general manager of strategy deployment, where her job was to try to embed at the operational level the grand plans made by head office. As global director of stakeholder affairs, she worked with business units and government officials in Indonesia, China, Malaysia and Sri Lanka. As general manager, nutrient management, she led operational management of Fonterra-owned farms.

Her choice of Fonterra for her time in the private sector was based on her belief in the importance of the primary, manufacturing and distribution sectors. Hopefully, her role as a government relations manager in her first year or two at Fonterra also taught her that the power of Wellington lobbyists and special interests needs to be cut back to its pre-2008 size so the free market allocates more resources rather than politicians and bureaucrats.

Willis’ plans may yet be thwarted by Act leader David Seymour, who is making it known he is keen on the finance job.

Seymour could point to National previously making Winston Peters Treasurer in 1996, but that was on the assumption — which proved largely correct — that Peters would be outworked and out-thought by Birch, theoretically his subordinate. No one thinks Seymour would be another Peters.

Unless Act’s vote remains well above 10 per cent and Seymour indicates he may not support a National-led Government on confidence and supply — surely mutually exclusive scenarios — Christopher Luxon will regard his bid as out of the question. Nothing about Luxon and Willis’ leadership so far indicates they back the radical reform that Seymour would demand.

Yet Willis may have no choice but to be the most important Finance Minister since Richardson. Unlike her mentor English, who took over from Michael Cullen in 2008, Willis would not inherit anything like the stable post-1991 consensus as understood until early 2020.

Price stability is no longer the Reserve Bank’s singular focus. Instead, inflation has been allowed to get out of control, both that imported through supply-chain disruptions and that fuelled by the bank’s money-printing and belief that inflation is something it can just “look through”.

Willis is orthodox on inflation. On Parliament’s finance and expenditure select committee, she has already had prickly encounters with Reserve Bank governor Adrian Orr. Her assertive questioning suggests she thinks he left the monetary hose on for too long after Covid. Orr may not be sacked, but it would be made clear his job is to restore price stability as soon as possible rather than his other preoccupations.

Willis will also need to restore orthodox fiscal policy after Robertson’s $62 billion Covid spend-up. Fantasy projects like Michael Wood’s $29b tram to Auckland airport — which will cost every household in the country $15,000, even ignoring the inevitability of further budget blowouts — will, at least, be subject to more sceptical analysis.

But Willis’ greatest challenge will be to shift the political culture back from the Muldoonery that Ardern and Robertson have rebuilt. The bizarre spectacle of a desperate Prime Minister announcing changes to the price of petrol and bus fares “from midnight tonight” is back for the first time since 1984, when Ardern was 4 and Willis 3.

Even without the worst economic downturn since the 1930s as a result of the war in Ukraine, and the risk New Zealand suddenly has to find new markets to replace China, just as we had to replace Britain in 1973, Willis will inherit the sort of basket-case economy and policy shambles that Richardson faced in 1990.

MMP and Willis’ own inclinations mean her response will be more careful than Richardson’s. But the urgency to restore the basic fundamentals of economic management to avoid catastrophe will be no less. Willis may find herself a reluctant revolutionary.

Source: Read Full Article