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Who minds the constitution while scandal plays?

  • September 14th, 2006

Remember the beginning of last week? National was demanding a fresh election because it was too late to prosecute the Prime Minister for electoral corruption.

There’s a more solid constitutional reason to dissolve Parliament if anyone is interested. The government has admitted that it can’t pass its tax bill for international investments. Instead we are now offered the “Shewan proposal” but at 5% instead of 3%. Dr Cullen claims it is much the same.

That claim will not be just to save face. He may be doing it to save the government.

Under our constitution when a governing party can’t pass a money bill the Governor General is supposed to get a new government which can. That could be by a coalition reshuffle, or a fresh election.

This supply bill convention ensures that the Crown can pay the public servants. But it is also a leadership test. When squabbling in the House makes it unclear whether anyone is in charge, then out they must all go, to give us a chance to choose a new set who can promise leadership.

As summarised in Philip Joseph’s Constitutional and Administrative Law in New Zealand the “convention… obliges a government that is defeated on a confidence issue either to resign or to request a dissolution and fresh elections.”

David McGee’s Parliamentary Practice in New Zealand says “a government refusing to act appropriately in such a circumstance could, it has been suggested, be dismissed by the Governor General.  Indeed the Governor General may be obliged to do so to preserve constitutional government.” Further, “a government retains the confidence of the House for so long as it can avoid defeat on important Parliamentary votes – those that involve a question of confidence”.

Our political founders feared that democracy would not provide leadership, that the delays and uncertainties of debate would handicap democratic peoples, in mortal struggle with peoples ruled by smart and decisive dictators. Dictators have ruled more countries for much longer than democratic leaders.

Our forebears remembered Athens, which invented democracy. It did not last long, defeated by the Spartan militarists. They remembered too that Athens’ democracy and the mob decided to kill Socrates.

Anyone with practical experience of “rule by committee” knows that democracy can be a good way to toss out bad governors, but a hopeless way to govern.  Our forebears evolved representative government (rather than ‘participatory democracy’) to give us leadership by time limited “elected dictators”. We got the decisiveness of concentrated leadership. The safeguard against abuse of power is our right to toss them out as soon as they can no longer persuade us to entrust our money to them.

The Governor General’s duty to call fresh elections when a government can’t command a majority vote for “supply bills”, dates back to the earliest years of Parliamentary government. The absolute monarch’s divine right to rule was overcome by the need to get followers to volunteer their money. The king’s plans for war (or a palace or wild parties) relied on assembling enough wealthy men willing to tax themselves and their fellow subjects to fund the plan.

The question is whether a defeat on the international investment tax shows that our minority government can no longer lead. In Britain, by convention, a government in such an uncertain position would feel obliged to call for a specific confidence debate and vote. Jenny Shipley did that to confirm her majority in September 1998.

As a technical ploy Dr Cullen may claim that the Government was always ready to accept whatever the Select Committee comes up with so this is not really a defeat.


The government may also argue that that the only vote that counts is the third reading vote, and that the convention need not apply.  As McGee says “it is… the practice to regard those provisions of a tax bill setting the annual tax rates (without which there could be no assessment tax) as inherently raising questions of confidence.  Other provisions of tax bills are not inherently confidence matters”.

The international investment tax bill contained rates, but the right constitutional answer should turn on what this policy derailment says about confidence and the ability to provide leadership, not lawyerly hair splitting.

This is not the first important tax policy to be derailed.  The carbon tax dropped off the agenda when the government saw that it could not get through.

Our new Governor General will not be eager to explore the constitutional convention so soon in his term.  But, as Ralph Waters, the retiring CEO of  Fletcher Building in effect said last week, New Zealand is dithering in a growing crisis.

If we’ve lost our mechanism for tossing out leaders who can’t lead we’ll all bear the price. The misguided vote for the “consensus’ style of MMP got rid of the more decisive first past the post. If our governments cannot develop, announce and implement their policies, and it is unclear until any bill has passed just where decision-making power rests, that price may be heavy indeed.  In the meantime, Dr Cullen should have our sympathy, swimming in uncharted constitutional waters.

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