On “keeping your powder dry”

Written By: - Date published: 12:00 pm, November 20th, 2009 - 41 comments
Categories: monetary policy, phil goff - Tags:


Reproduced with permission from No Right Turn for a viewpoint on the process of policy formation.

This morning, Labour leader Phil Goff announced that he was abandoning the NeoLiberal consensus on monetary policy, with the aim of getting a monetary policy that works for the many rather than the rich few. But specifics were few and far between – and Labour’s Finance Spokesperson David Cunliffe has said that there won’t be any, at least not until “nearer the election”.

Its a particularly irritating example of the politician’s meme of “keeping their powder dry”. The common wisdom among politicians and beltway “journalists” is that oppositions should do this, to prevent criticism and to avoid having good ideas stolen by the government. But the former amounts to lying to the public (and doesn’t work anyway, as well as making you look like you are full of waffle), while the latter is actively counterproductive. After all, if the goal is to implement your policies, isn’t having them stolen and implemented by the government a good thing?

But I forget: the goal isn’t policy change, but power. And to politicians, policy – the stuff that affects our lives for better or worse – is simply a means to an end, a rhetorical prop in pursuit of that goal.

Update: OK, so that last bit was a bit harsh. I have a deep vein of cynicism about politicians which I should keep under better control. But as someone who loves detail, thinks the merits of policy actually matter, and that people can decide on complex matters of policy for themselves, this “keep your powder dry” approach followed by politicians and excused incessantly by their beltway stenographers frustrates me intensely. Moreso when I see how different things could be.

Look at the Greens. They don’t keep their powder dry. They release their policy details. And they’ve won their arguments by doing so. Even National, who just a few short years ago were deep in denial about climate change, now realise they have to look “credible” on those issues (they don’t, but they realise they have to try).

“Keeping your powder dry” is refusing to have the argument. Which means in turn that you don’t win it. That might not matter to politicians – after all, does winning arguments with the public win votes? If not, do they need to care about the views of anyone outside parliament? – but as someone who believes in an active democratic citizenry, it matters to me.

Update: Also see NRT’s On “keeping your powder dry” II

lprent: My comments overleaf.

This was requested by rocky as a guest post. But I thought I’d attach my opinion about why this approach to policy formation is being used.  Personally I find this a welcome approach – signaling an area of policy change in advance.

There has been a broad agreement inside the party for a long time even from the economic drys (like me) that we’d hit the end of the usefulness of the strong single focus of the Reserve Bank Act. Its effect on carry money increasing the volatility of the exchange rate has been hurting the export based industries that I work in.

However there hasn’t been a broad agreement about what needs to change. It has been decades since we have seen the debilitating double digit inflation figures that plagued my early life, but people of my age still vividly remember it.

Whatever we do it will not be simple to make it work effectively, and that will require considerable political support from inside the party. The debate inside the party is likely to be pretty robust between now and the detail. That takes time because Labour is a broad party in the range of views inside it – probably more so than any other party in NZ.

Announcing a change in direction like this frees up that debate inside the party for the next year about what is important and reasonable to do. Similarly it does the same across the left (and right if they stop being stupidly reflexive). It also signals to the world markets that the rules will change – so there are no surprises. NRT is looking for something that isn’t agreed yet. Phil is signalling that Labour is starting to review what it intends.

Update: I read Phil Goff’s comments hidden in the business pages of Granny this morning. I have no idea how he keeps using my arguments. I can assure readers that it is just a confluence of opinion.

Opposition Leader Phil Goff said the monetary policy regime adopted 20 years ago had worked reasonably well for a decade.

“But increasingly over the the past decade and most particularly in my role as Minister of Trade, I saw the huge difficulties being caused both by the level of the exchange rate and its volatility.”

Goff acknowledged the importance of keeping inflation and inflation expectations down.

“I’m part of the generation that remembers double-digit inflation under Muldoon,” he said. “We won’t throw the baby out with the bathwater. Price stability is important.”

But he questioned whether it should be the sole objective of monetary policy and whether the tools at the bank’s disposal were adequate.

But Goff said: “You can’t say we can’t put up alternative ideas [in opposition]. That is what our role is and the rating agencies know that when in government Labour has pursued responsible economic policies. But they would equally say what worries them about NZ is that it has run a current account deficit for as long as it has, and it would be stupid for us, or the Government, not to consider what alternatives might allow better performance.”

41 comments on “On “keeping your powder dry” ”

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  1. Duncan 1
    20 November 2009 at 12:10 pm

    Good comments Lynn. This is a thoroughly misinformed post from No Right Turn. Goff is just saying that the old way isn’t working and that Labour’s going to look at alternatives, it’s about opening up a debate, not hiding policy from the public. For god’s sake, they’ve only been in opposition a year.

    NRT should be welcoming this and contributing to the discussion, not showing of his political ignorance and running down his allies.

    • Idiot/Savant 1.1
      20 November 2009 at 2:28 pm

      NRT should be welcoming this and contributing to the discussion, not showing of his political ignorance and running down his allies.

      Oh fuck off. I didn’t accept this sort of vacuity from National before the election (neither did the writers here, BTW), and I’m not going to apply a different standard to Labour simply because we’re “on the same side”.

  2. rocky 2
    20 November 2009 at 12:13 pm

    Thanks for posting this Lynn. No Right Turn’s post resonated with me as I too get annoyed with this whole “no detailed policy” thing. I want to make up my mind based on an actual policy, not a sound byte or two. I do happen to agree that if the plan this time is to signal that we should be having a debate and the lack of detail is for that reason, that is acceptable. In general though, I love that when I want to know more about a Green Party policy, I can go to their website and download the full policy document. Why can’t Labour do the same?

    • ghostwhowalksnz 2.1
      20 November 2009 at 12:19 pm

      When you will never be the principal party in government this approach is easy.

      • rocky 2.1.1
        20 November 2009 at 12:26 pm

        Could you please explain for me why being a “principal party” makes any difference?

        • fizzleplug 2.1.1.1
          20 November 2009 at 12:43 pm

          I would assume it is to do with the fact that a party such as the the Greens know they will never be in a position of true power, so they want their policies out there and able to be used by those in power. Which makes sense, they are making a difference as best they can in their circumstances. Whereas a party like Labour or National will want to keep their specific policies close to their chest, as they expect to be back in power at some point.

          • Idiot/Savant 2.1.1.1.1
            20 November 2009 at 2:37 pm

            And this is something I don’t understand. If the goal is to change the world for the better by doing X, does it really matter who does it?

            To give some random but concrete examples:
            I don’t give a damn who reduces emissions, I just want it done.
            I don’t give a damn who extends paid parental leave, I just want it done.
            I don’t give a damn who repeals provocation, I just want it done.

            Labour may be more likely to do some of those things than National. Labour may give us more and be more trustworthy at managing the implementation. But at the end of the day, if by some miracle National does them, I’m not going to turn my nose up at it; I’m going to thank them for implementing left-wing policy.

            • fizzleplug 2.1.1.1.1.1
              20 November 2009 at 2:52 pm

              Yes, but you are thinking about things from your perspective (and I guess the perspective of the world at large). But they all want their legacies, Right, Left, Centre, and Peter Dunne.

              Which is why who implements it is almost as important as what gets implemented.

            • Idiot/Savant 2.1.1.1.1.2
              20 November 2009 at 2:58 pm

              Yes, but you are thinking about things from your perspective (and I guess the perspective of the world at large).

              Yes, as a citizen, rather than a politician or a party hack. And if their desire for a “legacy” or to showboat gets in the way of doing things, then fuck them, I’m going to call them on it.

            • Jenny 2.1.1.1.1.3
              21 November 2009 at 1:01 pm

              I agree. By raising these things now, you are throwing down the challenge to the National Government.

              The voters can then ask the Nats; “Well why aren’t you following these policies?”

              Keeping ‘your powder dry’ seems counterproductive to me.

        • Lew 2.1.1.2
          20 November 2009 at 2:31 pm

          Rocky, minor parties rarely, if ever, have to put up. They can talk cheap, usually without the responsibility of ever being held to their statements.

          Policy, for a minor party like the Greens or ACT, is polemic. In the rare cases when a minor party has to actually deliver on their promises rather than just talking about them, we tend to get the sort of debacle we’re now seeing with local government.

          L

        • ghostwhowalksnz 2.1.1.3
          20 November 2009 at 2:40 pm

          Ask the Bikoi riders about ‘details’.
          And to think the Greens can have actual put in place details is absurd, even their flagship stuff is broadbrush. But if you think thats enough detail to set in place, fine you just have a lot ‘faith’

        • ghostwhowalksnz 2.1.1.4
          20 November 2009 at 2:49 pm

          Heres the greens policy on ‘ Economics’ and Monetary policy

          Monetary Policy
          Inflation is now being driven by new factors such as the world prices of oil and food, a carbon price to address climate change, and shortages of key resources. These cannot easily be controlled by changing interest rates, the one tool available to the Reserve Bank. The Green Party proposes:
          Better coordination of monetary and fiscal policy.
          Economic policies to minimise the effects of resource shortage driven price shocks.
          Measures to limit future asset (especially house) price inflation.
          Consideration of a more actively managed exchange rate through measures designed to reduce the attractiveness and profitability of currency speculation.
          http://www.greens.org.nz/policy/economic

          This is a ‘detail’ policy??

          You must be dreaming . But at least the Greens are honest here just a few bullet points to make the right noises.
          Wheres NRT to moan about this

          • rocky 2.1.1.4.1
            20 November 2009 at 4:11 pm

            I didn’t say the Greens have a detailed monetary policy. On policies they are vocal and active on they tend to have very detailed policy documents. That page on their website you linked to is their economic policy, and it’s great that it is bullet points so you can get a straightforward idea of their economic policies. You’ll notice that some parts of their economic policy refer you to more detailed policies on those specific areas – and those are the areas where the Greens are most active.

  3. Herodotus 3
    20 November 2009 at 12:16 pm

    It does for me expose Phil to a potential power struggle. What happens if there is little/no change in the monetary policy, this could be seen as a non supportive caucus. He could isolate himself in a very public way. I hope Annette & himself have done the work behind the scenes getting on board the movers & shakers within caucus.

    • lprent 3.1
      20 November 2009 at 1:13 pm

      I’d say the issue has been the other way around. Goff (and Annette) would have been arguing about why it was needed.

      From discussions I’ve had around Labour for the last couple of decades, getting agreement to change the Reserve Bank Act would be easy. I’ve spent considerable time arguing the dismal viewpoint that for all of its known flaws, we had to support the RBA to stomp out the expectation of inflation. Almost everyone else was arguing that it should be changed to reduce its vice-like grip on the economy.

      The expectation of inflation has massively diminished to the point where businesses and people do not factor it in as a major issue – therefore it doesn’t distort the economy in the manner of the 70’s and 80’s.

      Of course opening the question up will cause some interesting discussion. Damn near everyone has a different view about HOW the targets should be changed.

  4. ghostwhowalksnz 4
    20 November 2009 at 12:17 pm

    Since when is NRT such an expert on everything he needs the details

    Look at the Super city. Even now only are a a few of the ‘details’ being revealed. Its the way to get things done. The old Roger Douglas steamroller is no longer valid

    • Idiot/Savant 4.1
      20 November 2009 at 2:45 pm

      Since when is NRT such an expert on everything he needs the details

      While Plato and hisauthoritarian successors may beg to differ, there is no techne of government. As a citizen in a democracy I am capable of judging between policy alternatives and deciding what I want. But in order to effectively judge between those alternatives, I need to know what they actually are.

  5. mickysavage 5
    20 November 2009 at 12:25 pm

    I think it is harsh. There are plenty of clues about which direction the policy is likely to head including here.

    The party needs to go through a process to get agreement on any proposals. This is not something that you can finalise in a press release,

  6. gingercrush 6
    20 November 2009 at 12:45 pm

    I too disagree with NRT’s viewpoint and would agree more with Iprents. But I don’t see how one can conclude that Idiot/Savant is politically ignorant or running down the left simply because of an opinion he has.

    • lprent 6.1
      20 November 2009 at 1:21 pm

      Nope. I suspect it is because he hasn’t had to actively work in the often uncomfortable partnership that constitutes a party to the degree that I have had to. And I seldom get involved in being bothered with actually hammering out policy – I just generally make my views known for consideration.

      Pretty frequently I read comments by some of the more simple, including in the media, that attribute a mind to the ‘party’. It is like trying to say that ‘The Standard’ has a collective mind – it just displays a rather inexperienced and simplistic view on the world. It is more like that every organization (including this site’s authors) I’ve worked in or with has a characteristic. The ones that work have an acceptance of the importance of agreeing to disagree.

      Labour lost those who were unable to live with that to either Act or the Alliance long ago. However it still means a lot of work to get to the point of finding out what we can agree on and making that the core of policy, learning what we disagree on, and making a decision on what will be actually done

  7. tc 7
    20 November 2009 at 12:58 pm

    But aren’t these good reasons to get the ducks in a row then go to the pulpit with some agreed detail that the party backs and understands ? Rather than have a public announcement that amounts to ” we’re going to have a rethink….again ” which JK siezed on.

    I just think this kind of process gives NACT another stick to beat Phil with and why the rush ? This could have been produced mid 2010 with all angles covered off as a done deal so I agree with the comment that he’s inviting a power struggle here…..an open one.

    Phil needs to be personable and keep it simple over the obvious smoking holes in this government…….I feel he’s added a sideshow, as it has no bearing on anything till 2011 and beyond IF they get back in, when he should be focused on the main stage of this do nothing gov’t.

    • lprent 7.1
      20 November 2009 at 1:26 pm

      It would be worse if someone had just written a policy and then tried to foist it on the party membership.

      Rodger Douglas did that in the 80’s with the inevitable consequences.

      It doesn’t work anywhere. If you do it in any organisation I’ve been in, the skills will walk.

    • Geek 7.2
      20 November 2009 at 1:48 pm

      Have to agree with tc here. There is so much that Labour can attack the government on at the moment. They can use real numbers to discredit National on both ACC and the ETS. Even my slow brain has picked up on the fact that what they are coming out with is crap.

      As much a Phil needs to be setting down a direction for the party and an image of himself as leader it has to be a firm one. Something that he can answer to and engage the media and public on. By coming out and saying “We will do this” and not being able to say how he has left himself open for attack.

      If Labour want to win the next election they will have to switch the focus so that it is what they will do right as well as what National have done wrong. This is switching the focus away from what they are doing wrong without giving a strong “this is what we are going to do right” counter. I bet Key is rubbing his hands together in glee over this.

  8. The Voice of Reason 8
    20 November 2009 at 1:03 pm

    “I love that when I want to know more about a Green Party policy, I can go to their website and download the full policy document. Why can’t Labour do the same?”

    D’oh! Does nobody use Google anymore?

    http://www.labour.org.nz/content/labour-policy

    When you go to the link, you’ll find it is the policy Labour took into the election. It needs changing. Best way to do that is to join the party and be part of the new breed that is going to help win the next election. Goff is right to raise the debate without dictating the answers. It’s over to us to contribute our ideas for renewal.

    • rocky 8.1
      20 November 2009 at 2:02 pm

      Yep the Election Manifesto is great for having all election policies in one place. Less great is that there doesn’t seem to be version created for the web – ie, structured so you can find content easily. The Election Manifesto is also irrelevant in times like this when new policy is announced.

      Best way to do that is to join the party and be part of the new breed that is going to help win the next election.

      I’m already a member of the Labour Party.

      Goff is right to raise the debate without dictating the answers.

      In this case I agree – it’s such a huge debate and one that hasn’t really occurred in mainstream politics in the past 20 years. Not releasing too much policy is good as you leave it all open to ideas. At some point they should form a detailed policy from the feedback they get.

      There are other scenarios where I get extremely frustrated at Labour’s lack of policy. For example at least 4 MPs have spoken out publicly against factory farming, but there is still no policy, or confirmation from the leadership that this is Labour’s view.

    • The Voice of Reason 8.2
      20 November 2009 at 3:34 pm

      Cheers, Rocky.

      I wasn’t specifically asking for you to join Labour, though it’s great to read that you’re a member. The party needs more folk like yourself if we are going to be able to win back political leadership in NZ and I hope more and more Standard readers actually do join. It costs bugger all, about the price of a couple of beers in your average inner city bar, and members get to actually make a difference, rather than just talk about the need for change.

      Can’t really comment on the web content at labour.org.nz. It’s beyond my technical abilities to even put in a smiley face at the end of this sentence, but if you know anyone willing to help with an upgrade, I bet they’d be welcome with open arms. 🙂 (IrishBill: there you go ;))

      • rocky 8.2.1
        20 November 2009 at 7:01 pm

        I’d happily help Labour with their website, but I suspect the problems are more to do with content than the technical issues. When there’s good content, a better structure can be formed to make finding the right content easy.

  9. Draco T Bastard 9
    20 November 2009 at 1:11 pm

    Labour seems to be opening the monetary policy for discussion which is what is needed before any policy details can be determined. It’s unfortunate that they seem to be having the discussion behind closed doors but I think that is more poor wording on DC’s part than anything. I would expect this to be up on Labour’s blog quite a bit over the next year or so and probably some polling as well.

    • prism 9.1
      20 November 2009 at 2:54 pm

      It is really bold of Labour to announce this change. They have indicated that they are going to do something important, that they will have to study it over the next months/year, and then announce it. Better not be premature when it is a big policy change that affects everything we do in this country, and underlays everything we say.

  10. Geek 10
    20 November 2009 at 1:52 pm

    It does need to be open to debate but this wasn’t the time to do it. Come up with some ideas and direction on the matter. By making this statment he is switching emdia focus to himself and away from nationals failings.

    This would be a good thing if he had something to engage the media on, but instead he can only say “We are talking about it but have no idea’s”. Hate to say it but this is exactly what he has been attacking Key for.

  11. Idiot/Savant 11
    20 November 2009 at 2:23 pm

    NRT is looking for something that isn’t agreed yet.

    And by way of a response, I think its all in that sentence. Rereading the speech, Goff does suggest that he doesn’t actually have anything yet – “Labour believes they are vital questions and New Zealand needs new answers. We will be studying the options closely.” But it was overshadowed by the big news that he was explicitly abandoning monetarism.

    More importantly, the natural response to any announcement like this is “how, exactly”, and on policy this important, you’d better have at least some answers. If the party hasn’t agreed those answers, or even the options, then its better to wait until they have. Otherwise, you just look either shifty, or a dick.

    • lprent 11.1
      20 November 2009 at 2:30 pm

      Yeah, but this has been a policy that has been on the immovable stack for so long, that there are cobwebs on everyones ideas. We also didn’t agree in the first place, it was more a need to do something to keep inflation under control and keep it under control. It was pretty much a crisis response both when instituted and subsequently.

      Now it isn’t – so it can get done the usual way.

      This will get debated at next years conference and the earlier regionals. Between then and now there is sufficent time for it to get blatted around the LEC’s and branch meetings as well as media and here.

    • The Voice of Reason 11.2
      20 November 2009 at 2:42 pm

      Dunno about ‘shifty or a dick’, but perhaps a little under prepared for an obvious question about what the alternatives are. It’s been a great week for Phil Goff, anyway.

      I think the open question styleis is consistant with how Labour is trying to rebuild trust in the electorate; by asking people what they want. Its a good start to say the old way isn’t working and even better to take it the people for solutions.

      The relentless focus on inflation must be modified. Low inflation has not saved 28 bakery jobs in Manaia, but sure as hell, the high dollar took them away. So let’s start the debate about what targets are really needed. Well done, Phil.

  12. felix 12
    20 November 2009 at 2:30 pm

    I have to agree with I/S on this.

    You have to have something to discuss or you lose the ability to set the agenda.

    Also Goff doesn’t need to be using Key’s tired old “we’re having a bit of a look at it” lines.

  13. Geek 13
    20 November 2009 at 2:35 pm

    Exactly what I was thinking Felix.

  14. Galeandra 14
    21 November 2009 at 7:58 am

    Me too Felix.
    It’s interesting to see the reponse to Goff’s comments to date.
    It’s important that he begins to define issues for discussion both within and without the Labour brand, and is proactive in placing this agenda on the table. The lack of enthusiasm from Nact/business so far is IMO to do with the electoral impact of the cost inflation that would eventuate if our currency was operating in a band that reflected its true worth. The lazy cynicism won’t go unnoticed electorally , and the debate will do much to revalidate labour as a genuine opposition. A timely speech.

  15. Macro 15
    22 November 2009 at 4:05 pm

    Have just finished reading Bryan Gould’s book “The Democracy Sham” (How Globalisation devalues your vote). He pulls no punches in showing consistently how neo-liberal monetary policies have persistently lead to poorer under-performing economies. In the past 25 years NZ has moved from one of the most equitable countries in the world to the most unequal economy second only in discrepancy of the distribution of wealth to USA. The only ones to have benefited from the implementation of the neo-liberal policies have been the top 5 to 10 % of income earners.
    There is a way out of this mess – its great to hear that Labour have finally decided to cast off the yoke of Neo-liberalism. I await the the release of more detail though!

  16. Macro 16
    22 November 2009 at 6:14 pm

    The very same! The book was published last year and is well worth the read!