May 31, 2008

Early Election: No Way

This is a bit of a brave call as we haven't seen the One News and TV3 polls that are due out tomorrow (a surge in labour support could change things) but we are surprised at the number of people who have talked to us in the last three days about an early election being called over the failure of the climate change legislation.

We don't see any strong argument in favour of Labour going early (unless there is a surge in support indicated by polls). Imagine the optics of holding a poll while the electricity isn't working? Parker has made this scenario a real possibility.

No, 18 October and 1 November and 15 November are far more likely dates than anything soon.

1 October sees two important developments - tax cuts and the entry into force of the China FTA. These are good news stories that the Government will want to play upon. By election day people will have actually seen extra money in their bank accounts. Exporters will be smiling and import prices on some goods from China will be even lower.

And don't forget by October we might also have seen an interest rate cut.

With regard to the climate change legislation we see a real chance that it will pass. We can't see the Greens voting against the legislation at the end of the day. Winston will still be on the lap, and the Maori Party may join in (having chosen not to listen to Maori business). In some ways this will be good. When the elderly realise how damaging the ETS is for their interests, and when they remember that Winston voted for it, they will exact revenge at the ballot box - no more Winston.

But it does mean that when National take over in December, they will face the difficult job of changing the ETS into a model that actually works for New Zealand.

If the PM senses that there is a risk of defeat over the legislation she won't allow a vote to occur. The Bill will just be left sitting, along with many others that won't see the light of day this side of the election.