Blog posts to be discontinued

It has become extremely time consuming to maintain the Better Democracy NZ blog as well as the Better Democracy NZ Facebook page. The Facebook page has received far more feedback and comments and appears to be far more reaching and far more interactive. So therefore I have decided to cease posts on this site and will focus on the Better Democracy NZ Facebook page.

If you want to maintain your interest in democracy, direct democracy and political discussions in New Zealand, please join us on Facebook just click here or search for Better Democracy NZ on Facebook.

The Better Democracy NZ website will be maintained as a point of contact for internet searchers.

Steve baron
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Our Facebook page

Have you been to our Facebook page and given us a thumbs up "Like"? We have been promoting it with advertising and finding there is far more interest here than our main website. If you register it makes it easier to receive updates.
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Petition to Stop Asset Sales by the National Government

Here's another Kiwi that thinks there should be a binding referendum on asset sales. If we had the Veto referendum as they do in Switzerland, there would be no worry about governments doing things the majority does not want to have. click here
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Afghan meeting

It was a pleasure to meet with the Afghan delegation of civic leaders on Monday 28th November.
They were accompanied by staff from Democracy International who are funded by USAID. They had many questions about New Zealand's political system as well as direct democracy. Evidently there are very few parties in Afghanistan and at present all Members of Parliament are independents. Even their vote in parliament is secret so no one knows how they vote and therefore every MP is unaccountable. This group plans to act as a lobby group to push for a better democracy.

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Email MP list updated

Wanting to email 1 or 121 MPs with the click of your mouse? I have updated our database as much as possible but will do so again in the next week or so when results are finalised.

Anyone can use this service to contact any or all MPs for any reason whatsoever. Simply go to http://www.betterdemocracy.co.nz/email_mps.php
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Bank account update

Here is a bank account update and the results from our Facebook advertising campaign. The withdrawls that say 'S.Baron Google ads' were payments to me for the Facebook adverts as I had to use my personal credit card as BDNZ does not have one to make such payments.

Transactions for Better Democracy NZ over 332 daysDownload transactions
Date
Description
Money out
Money in
Balance

26 Nov 2011 9500S.Baron Google a $40.55
28 Nov 2011 Current Balance $128.22
23 Nov 2011 9500S.Baron Google a $118.92
23 Nov 2011 Balance at close of day $168.77
17 Nov 2011 Transaction charge $1.20
17 Nov 2011 Balance at close of day $287.69
14 Nov 2011 9500S.Baron Google a $115.04
14 Nov 2011 Balance at close of day $288.89
7 Nov 2011 9500S.Baron Google a $112.19
7 Nov 2011 Balance at close of day $403.93
27 Oct 2011 9500S.Baron Google a $113.56
27 Oct 2011 Balance at close of day $516.12
17 Oct 2011 Transaction charge $1.60
17 Oct 2011 9500S.Baron Google a $121.13
17 Oct 2011 Balance at close of day $629.68
5 Oct 2011 9500S.Baron Google a $117.76
5 Oct 2011 Balance at close of day $752.41
26 Sep 2011 9500S.Baron Google a $112.00
26 Sep 2011 Balance at close of day $870.17
19 Sep 2011 Webme Development $40.25
19 Sep 2011 Balance at close of day $982.17
16 Sep 2011 Transaction charge $0.80
16 Sep 2011 Balance at close of day $1,022.42
22 Aug 2011 9500S.Baron Google a $36.69
22 Aug 2011 Balance at close of day $1,023.22
18 Aug 2011 9500S.Baron Google a $30.23
18 Aug 2011 Balance at close of day $1,059.91
17 Aug 2011 Transaction charge $2.40
17 Aug 2011 Balance at close of day $1,090.14
15 Aug 2011 9500S.Baron Google a $35.46
15 Aug 2011 Balance at close of day $1,092.54
5 Aug 2011 9500S.Baron Google a $29.83
5 Aug 2011 Balance at close of day $1,128.00
1 Aug 2011 9500S.Baron Google a $28.95
1 Aug 2011 Balance at close of day $1,157.83
26 Jul 2011 9500S.Baron Google a $29.03
26 Jul 2011 Balance at close of day $1,186.78
25 Jul 2011 9500S.Baron Google a $29.81
25 Jul 2011 9500S.Baron Google a $29.31
25 Jul 2011 Balance at close of day $1,215.81
15 Jul 2011 Transaction charge $0.40
15 Jul 2011 Balance at close of day $1,274.93
11 Jul 2011 9500S.Baron Google a $30.13
11 Jul 2011 Balance at close of day $1,275.33
1 Jan 2011 Opening balance for these transactions $1,305.46
Total Money in $0.00
Total Money out –$1,177.24
Difference –$1,177.24

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Steve Baron: Direct Democracy: Some Major Objections and Responses

Even though direct democracy has been successfully used in Switzerland for over 140 years, it still has its critics. Many see it as a

threat to representative democracy and something to be avoided at any cost. There have often been calls for the Citizens Initiated Referenda Act 1993 to be repealed. Former Prime Minister and law professor, Sir Geoffrey Palmer, when discussing the CIR Act in his book Bridled Power said:
The Act should be repealed. It appears to offer a chance for citizens to influence policy but in substance that opportunity is like a mirage in the desert. Referenda should be reserved for those few and important issues of constitution and conscience that should be bound by the people's voice.
Raymond Miller, an Auckland University political scientist and media commentator also suggested it should be repealed as recently as 2010 on the Q+A television show. It is rather surprising that people like this are calling for the CIR Act to be repealed when one would expect there to be calls for more participation from citizens, not less democracy.

There are numerous arguments against direct democracy and I will attempt to cover the major arguments as follows:

Voters not competent. One of the most common criticisms of direct democracy is that voters are not competent enough to make sensible decisions. One of the most prominent critics in this regard is Dr. David Magleby:
The majority of ballot measures are decided by voters who cannot comprehend the
printed description, who have only heard about the measure from a single source,
and who are ignorant about the measure except at the highly emotional level of
television advertising, the most prevalent source of information for those who have
heard of the proposition before voting. The absence of straightforward,
understandable, rational argumentation in initiative campaigns, combined with what
has been discovered about voting decision making in these situations, raises
serious questions about the integrity of the direct legislation process.
A number of academic studies have focused on how voters make their decisions and how they become informed. What has emerged from these studies is that voters rely on heuristic cues to make their decisions. Studies by Lupia and McCubbins show that voters do not need to know many details of a referendum to be able to vote as if they were fully informed. Voters rely on trusted groups, political parties, political organisations and, especially, trusted colleagues to help guide them. This is how many people make every day decisions and is little different from MPs who do exactly the same. It is impossible for all MPs to become fully informed on everything they are expected to vote on in parliament. Arguably, neither does the average MP appear to be any more intelligent or qualified than the average person on the street. Certainly, there is not any specific academic requirement to enter parliament.

As MPs are also forced to vote along party lines as directed by party leaders, their intelligence, integrity, and so on, may not necessarily come into the equation. In one study, Arthur Lupia examined voting patterns on five complicated California insurance propositions in 1988, that on the surface were hard to distinguish. Using exit surveys, he classified voters into 'informed' and 'uninformed' groups, based on whether they could correctly answer questions about the substance of the measures. He found that uninformed voters could emulate the voting patterns of informed voters simply by knowing the positions interest groups had taken on the referendums.

Another aspect to this criticism of voters was raised in James Surowiecki's book
The Wisdom Of Crowds. The book discussed British scientist Francis Galton
who was trying to prove that full male suffrage should not be extended beyond the
propertied classes (something we now take very much for granted). He was extremely
surprised when he attended a country fair and studied the results of an ox weighing
competition. His belief was that the uninformed and uneducated classes could not be
trusted to make sensible decisions. He analysed the result from around 800 people who entered this ox weighing competition. There were expert butchers who participated, but also many who knew nothing about animal weights, but had paid their sixpence in the hope of winning. The crowd guessed, on average, that the weight of the slaughtered ox would be 1,197 pounds. The official result was 1,198 pounds. Although he never offered the standard deviation figures, Galton later wrote, “The result seems more creditable to the trustworthiness of a democratic judgement than might have been expected”.

It can be argued that with modern technology and a much better educated society, voters are now far more capable than ever before in history, to make informed decisions. It has been shown that citizens who have greater rights of participation are also better informed politically, and direct democracy gives the Swiss more decision-making power, which is independent of government and empowers voters.

Referendum information is important. In Switzerland the government must distribute each and every voter with a referendum pamphlet highlighting the pros and cons, given in a constructive manner about the question to be decided on. In Switzerland this is distributed prior to the referendum with ample time for public debate. The Swiss government also makes a recommendation on the ballot paper. This does not happen in New Zealand and the only public information is what becomes available through various media outlets which is often lacking in investigative journalism skills due to cost-cutting by media conglomerates. These are weaknesses that need to be addressed in New Zealand and highlights further changes that are needed to the Citizens' Initiated Referenda Act 1993.

Voter self-interest. It is often argued that voters are incapable of balancing short-term benefits with long-term costs. Basically voters are selfish and will only support direct democracy initiatives and referendums that reduce taxes, such as the 1978 Proposition 13 in California, which concerned the issue of ever-increasing property taxes. This Proposition is often quoted as a glowing example of voter selfishness and that referendums like this have ruined the Californian economy. What most people do not know about this Proposition is that property taxes had risen steadily for a period of five years, even though the Californian government had amassed a surplus of over $5b, which made the public resent what they felt were unnecessary increases. Critics tend to overlook the fact that Proposition 9 in 1980, which would have halved state income taxes, failed. Such budget referendums have not ruined the Californian economy. Empirical evidence from Prof. Matsusaka has exposed that only 32 percent of the 2003-04 state spending was locked in by initiatives (and most of that would have been spent in these specific areas regardless) and lays blame on the inability of the Californian government to manage the budget.

The Swiss experience contradicts the assumption that voters are only self-interested. In a 1993 referendum, 54.5% of voters approved an increase in the price of petrol and diesel of 21 Swiss cents per litre. Again in 1993, two-thirds of voters had agreed to introduce national VAT and to use a future rise to benefit old-age pensions.

Tyranny of the majority. Before anyone should criticise direct democracy as a tool to
tyrannise minorities and remove civil rights, thought must be given to the atrocities
elected governments have imposed upon minorities and civil rights around the world.
Even here in New Zealand, governments have treated minority groups, such as Maori and
Chinese with disdain. Maori had huge amounts of their land confiscated from them and thousands of Maori were killed in the process. Chinese immigrants were especially treated harshly when a huge poll tax was imposed upon any Chinese wanting to enter New Zealand—a very racist policy. New Zealand is not the only example of this. The Australian government was notorious for the ill treatment of Aborigines, when the 'stolen generation' is taken into account. Aboriginal and Torres Straight children were removed from their families between 1869 and 1969 under Acts of Parliament. All of these minority groups who were tyrannised by elected governments—who supposedly protect minorities from tyranny of the majority—have only just recently received apologies from the government.

Referendums have however, sometimes been used against minorities. In 1910 an Oklahoma referendum disenfranchised black citizens and in 1920 a California referendum restricted the property rights of Japanese. However, almost all of the discriminatory 'Jim Crow' laws throughout the Southern states of America were brought about by elected representatives, not direct democracy. Moreover, as again highlighted by Prof. Matsusaka, the fact that racial minorities overwhelmingly support the initiative process, 57% versus 9% for blacks, and 73% versus 3% for Latinos in a 1997 poll, suggests that the risk of tyranny of the majority is small.

In contrast to the above, there have been numerous referendums that have supported the rights of minorities. As Prof. Geoffrey Walker explained in his book Initiative and Referendum: The People's Law, “Australian voters also rejected a referendum proposal to give the federal parliament power to legislate against the Communist Party. This was in 1951 when Stalin's terror was at its height in Russia.” In 1967, an Australian referendum to reform the constitution in relation to the position of Aboriginals received a 'Yes' vote of 90.8%, one of the highest affirmative referendums ever recorded in a democracy. Likewise, in 1978, a Californian state Senator launched a campaign to prohibit homosexuals from teaching in public schools, but it was soundly defeated. In the final analysis, on this matter, direct democracy does not appear to be any worse than elected representation, and is possibly even better.

In conclusion, the words of Prof. Vernon Bogdanor are pertinent, “In the last resort, the arguments against the referendum are also arguments against democracy, while acceptance of the referendum is but the logical consequence of accepting the democratic form of government”. The decision now for New Zealanders is whether they should continue to allow themselves to be largely excluded from the political decision-making process apart from one vote every three years, or instead, demand a more inclusive system of direct democracy that gives them more control over their government. There are a number of direct democracy tools that need to be considered by voters.

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Steve Baron: What would you tell Afghanistan about democracy?

What do you think of when I say the word 'democracy' and what do you even expect from your political system? It's an important subject, especially
when New Zealand is about to go to the polls, yet something most people often take for granted, especially given that over 20% of New Zealanders don't even bother to vote each election—and that number is growing. Just recently I have been forced to think even harder about our democracy because amongst the many emails I receive (most of which include offers to enlarge certain parts of my anatomy and Russian beauties offering me their undying love if I agree to marry them) was an email from Democracy International. This US based organization helps provide technical assistance and implements democracy and governance programs worldwide. It is financially supported by a grant from the U.S. Agency for International Development (USAID). They are bringing a delegation of civic leaders from Afghanistan to New Zealand to look at our political system, observe our elections and meet with various people with a background in elections. This group has been assembled to develop a comprehensive electoral and governance reform agenda and have asked me to meet with them to discuss New Zealand's democracy, along with my studies into direct democracy. For those of you who do not know me, I founded a group called Better Democracy New Zealand which has campaigned to improve our democracy through more use of direct democracy like that of Switzerland.


Most people would agree that voting is the cornerstone of a democracy. It is often said voting is a privilege that many New Zealander's died for during past wars to protect, so it must be cherished and valued. The more cynical say why bother voting, all it does is encourage those good for nothing politicians. Democracy is something we often take for granted, as mentioned above, over 20% of New Zealanders do not even bother to vote. The word democracy also means many things to many people. To some it's simply voting once every three years at a general election. Others, like myself, take a keen interest and have been actively involved to make New Zealand a better democracy by pressing for improvements to our political system.


I have to admit that I know very little about Afghanistan, but I do know their democracy is a far cry from what we have here in New Zealand. What I also know about Afghanistan is that it is one of the poorest nations in the world, has been invaded over the centuries by many military conquerors, civil war has been rife and it was recently ruled by an extremist government. Living in the idyllic nation we call New Zealand, I find it hard to imagine what it would be like to live under such conditions. So what is it these people will witness here in New Zealand? There is no doubt they will see one of the most democratic nations in the world. New Zealand certainly has free and fair elections regularly and individual rights are well protected under the New Zealand Bill of Rights Act 1990, although this Act is not entrenched and neither do we have a codified Constitution like that of the USA. The whole political process is all relatively transparent with little corruption. Citizens have easy access to their local MPs, and they can present petitions to parliament as well as make submissions to government select committees and other authorities. There is strong competition at elections between numerous political parties, although this is dominated by the National and Labour parties—all signs of an inclusive society and a strong democracy.

What I do find strange is that voters put so much faith in names like George Bush, Barrack Obama, Hamid Karzai, Abdullah Abdullah, John Key or Phil Goff and their various political parties. While elected representation is an acceptable and proven system (to some extent), does one leader or one party have all the answers and do they get public policy decisions right all the time? Are they always in sync with the wishes of the people who elected them? I think not and this is the downfall of elected representation and the blind faith voters give these people and their parties. To me, democracy certainly isn't just one day of democracy every three years on election day—that is simply an elected dictatorship. To me democracy means a true exchange of communication between the elected and the electorate, with the electorate being able to override the decisions of those we elect, when the electorate thinks it is important to do so because the next election years down the track often lets too much water flow under the bridge. Democracy also means putting forward public policies that are ignored by elected representatives and putting public policies on the political agenda that are often politically unpalatable to elected representatives. While many of us may have doubts about the intelligence of our neighbour, for me personally, I have more faith in the collective wisdom of three million New Zealand voters to make the ultimate decisions on public policy more than I do in the collective wisdom of 120 MPs who are bound by party ideology and party politics. This is the kind of democracy I will be encouraging the Afghan delegation to consider and press for in Afghanistan.

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Steve Baron: The Wisdom of Solomon Needed?

On top of voting for your local Member of Parliament (MP) and casting your Party vote this election, you also get to cast two other votes in the Electoral Referendum. It's not a difficult decision

and you don't need to have the wisdom of Solomon, or be a Political Scientist to make a sensible decision but it does require a bit of time and effort to understand the various options. In this article I hope to make these options more clear. It must also be kept in mind that this referendum has extremely important ramifications for New Zealand, perhaps even more important than who we elect as the government, because choosing an electoral system makes an enormous difference to the eventual make-up of future governments/parliaments.

The first decision you need to make in the referendum is whether or not you want to keep the current Mixed Member Proportional (MMP) system or switch to another electoral system. The second decision you need to make is whether you want First-Past-the-Post (FPP), Preferential Voting (PV), Single Transferable Voting (STV) or Supplementary Member Voting (SM), should the majority of New Zealanders decide to switch from the current MMP system. All very technical names and enough to turn any reader off right now, but stick with me as I explain each of them in due course.

If the majority of New Zealanders do decide to keep MMP, there will be an independent review of it by the Electoral Commission. If the majority of voters do want the electoral system to change, parliament will decide if there will be another referendum at the 2014 general elections to choose between MMP and the alternative voting system that gets the most support in the second question in the 2011 Referendum.

Let's now turn to an explanation of each voting system.

MMP: Five elections have passed since New Zealand changed from the old FPP system to the current MMP system in 1996. Under MMP there are 120 MPs and 70 electorates, including the Maori electorates. The other 50 MPs are elected from political party lists. You get two votes, one for an electorate MP to represent you and the candidate that gets the most votes wins (often with less than 50% of the vote). Your other vote is for the Party of your choice. Under current MMP rules, a political party that wins at least one electorate seat or 5% of the party vote, gets a share of the seats in Parliament that is about the same as its share of the party vote. The secret to MMP is understanding that the party vote is the most important vote because if a party gets 50% of the party vote for example, it will get 50% of the seats in parliament. It would be fair to say that MMP has produced a more diverse representation than FPP ever did. We now have more women elected, along with an increase in the number of Maori and Pacific Island MPs. MMP also reduces the number of so called 'wasted votes' which happened under FPP. Under MMP, coalition governments are the norm and the government of the day has less overall power, having to negotiate with coalition partners on various policies. On the negative side, there are a number of contentious issues surrounding MMP; the threshold parties must meet to be eligible for a share of list seats in parliament, voters being unable to change the order of candidates on a party list and 'back-door' MPs getting in through closed party lists after being rejected by their electorates. Other aspects like winning one electorate seat to qualify for the party vote percentage received (if it is less than the current 5% threshold requirement—as enjoyed by the ACT Party holding the Epsom seat) are a concern along with the fact that smaller parties may wield more power than is proportionate to their nationwide vote. Although all of these issues could easily be addressed in the independent review and changes could be made to rectify them.

FPP: Prior to the 1996 general elections, FPP was the system New Zealand had traditionally used, having been adopted from Britain when New Zealand was a colony. Under FPP there would be 120 MPs including the Maori electorates and you would get one vote to choose an MP to represent your electorate. The candidate receiving the most votes (usually less than 50%) wins. The government usually has total control over policy decisions and coalition governments are rare. Small parties find it particularly difficult to gain seats in parliament. The draw-backs with FPP are 'wrong winner' outcomes as was the case in the 1978 and 1981 elections. For example, the Labour Party received more votes than the National Party, but the National Party remained the government, because they won more electorate seats. That is how the previous FPP system worked. The second major draw-back is that of 'wasted votes'. For example, in 1978 the Social Credit Party (now Democrats for Social Credit) received 16% of the vote, but only one seat in Parliament. Later they received 21% of the vote in 1981 which gave them only two seats in Parliament and in 1984 the New Zealand Party received 12% of the vote, but no MPs—which is not particularly fair.

PV. This option allows you to rank the candidates – 1, 2, 3, etc. – in the order you prefer them. A candidate who gets more than half of all the first preference votes (that is votes marked “1”) wins. If no candidate gets more than half the first preference votes, the candidate with the fewest number “1” votes is eliminated and their votes go to the candidates each voter ranked next. This process is repeated until one candidate has more than half the votes. This system is likely to lead to a disproportionality of votes very similar to FPP and makes it harder for smaller parties to gain representation, although still offering voters the ability to select the order of their preferred candidates. Coalition governments are rare under this system. PV will certainly stop the most unpopular candidate from winning (as can happen under FPP). However, PV can allow popular candidates to be eliminated too early which makes this aspect of the system unappealing. PV is also susceptible to insincere voting as well as bullet voting. This is a tactic where even though a voter can select more than one candidate, they only rank their first preference. If enough people do this, the system effectively reverts to FPP, which may be undesirable if New Zealand wants a proportional system. Rules can be imposed to penalise this tactic, although this could possibly result in high numbers of spoiled ballots.

SM. Under SM there will still be 120 MPs with 90 being electorate MPs and the
other 30 MPs being supplementary seats filled from party lists proportionate to the percentage of Party votes received. Voters get two votes, one for your electorate MP and the other for the party of your choice. SM is very similar to MMP but far less proportionate. Professors Levine & Roberts concluded from their 2009 study that there would probably have been single-party majority governments on three occasions over the last five MMP elections and that the results of the 1996 to 2008 elections would have been three times more disproportionate than they were under MMP. Coalition governments are rare and there is an aspect of proportionality to the system, but effectively it is still FPP.

STV. Under this system there would still be 120 MPs. Each electorate would have more than one MP, including the Maori electorates. Each voter has a single vote that is transferable. Voters rank the individual candidates in the order they prefer from all the candidates. MPs are elected by receiving a minimum number of votes as defined by the quota formula (too complicated to mention here but mathematically formulated). Candidates who reach the quota from first preference votes are elected. If there are still electorate seats to fill, a two-step process follows. First, votes the elected candidates received beyond the quota are transferred to the candidates ranked next on those votes. Candidates who then reach the quota are elected. Second, if there are still electorate seats to fill, the lowest polling candidate is eliminated and their votes are transferred to the candidates ranked next on those votes. This two-step process is repeated until all the seats are filled. STV allows voters to signal strong preferences for candidates of one group/party but also support candidates from other groups/parties. The down side to STV is that very few people understand how it works, but that could also have been said of MMP initially. STV is also susceptible to bullet voting tactics as mentioned under PV. STV has a tendency to leave doubts in the mind of constituents as to who their MP actually is. It is also non-montonic, a technical term which means voters can penalise a candidate for ranking them 1 instead of 2, or 2 instead of 3. For example, more votes can create a loser as opposed to a winner. Twenty-two American cities tried STV between 1915 and the 1950s but there is now only one of these who still uses it although STV is still used in Ireland, the Australian and South African Senate, Malta, Tasmania and even in a number of local body elections in New Zealand. Although it may be used in these countries it has different rules in each, and can have differing results depending on various options and quota systems used. General feedback in the US States mentioned above concluded that STV reduced the quality of government and lawmakers lacked incentives to tackle controversial issues. Coalition governments and insincere voting are likely under STV.

In conclusion, while there is no “perfect” system, each of us have our own theories and thoughts as to what we expect from our electoral system and how it should operate. This is an opportunity to re-assess our electoral system and a chance to improve our democracy. As per usual, the devil is in the detail. Good luck with your decision.

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Steve Baron: Direct democracy in New Zealand

Direct democracy in New Zealand continues to be a work in progress. In 1893 New Zealand debated having a constitutional framework similar to Switzerland. Although never enacted, a Referendum Bill was introduced to parliament. However, the Bill only provided for non-binding, government-controlled referendums—in other words, plebiscites. This Bill was also re-introduced again in 1918 but failed. A statutory provision for constitutional referendums is also provided for under the Electoral Act 1993, section 268. This statutory provision is singularly entrenched which means that it can only be amended or repealed if passed by a 75% majority of all MPs, or by a majority in a referendum. Then, in 1984, Social Credit MP Garry Knapp introduced the Popular Initiatives Bill which would have enabled 100,000 voters to trigger a non-binding referendum. The Bill was deferred pending a Royal Commission on the Electoral System.

The Citizens' Initiated Referenda Act 1993 came about mostly due to broken election promises by the 1984 Labour government. These radical policies for the times caused immense frustration and anger amongst New Zealanders. People at that time felt they had been deceived. According to a number of academic surveys, MPs were less respected than ever before. As a nation we had lost confidence in our political representatives. This led to calls for a Royal Commission and during the 1981 and 1984 campaigns, the Labour Party promised to set one up to look into the electoral system. The Royal Commission on the Electoral System was established in early 1985. It made a number of radical suggestions, MMP being one of them, but did not support direct democracy and called referendums “blunt and crude devises”. Labour failed to implement the Royal Commission recommendations and although the National Party did not support them either, it took the opportunity during the 1990 elections to embarrass Labour by promising a referendum on the electoral system. When elected to government National also quickly broke election promises and trust in politicians plunged to an all time low.

This led to an outcry for citizens to have more control over their elected representatives in the form of Citizens' Initiated Referendums (CIR). The first calls for CIR in New Zealand were from dubitable origins by a group called the Coalition of Concerned Citizens in 1985. It was formed to fight gay rights legislation as this group had failed to stop the passage of Labour MP Fran Wilde's Bill to decriminalize homosexuality and ban discrimination on the grounds of sexual orientation. After CIR was rejected by the Royal Commission on the Electoral System, a lobby group within the National Party called National Reform, put pressure on the party and leader Jim Bolger to support the introduction of CIR at their 1989 party conference. National made an election promise in their 1990 manifesto to introduce CIR. National won this election and introduced the Citizens Initiated Referenda Bill to parliament in 1992 which was subsequently passed into law on 14 September 1993. The disappointment to many who were involved with the National Party at the time, was that these CIR were to be indicative. In other words, not binding on the government. This is a rather strange occurrence because in most countries CIR are binding on the government.

To date there have only ever been four successful citizens' initiatives in New Zealand: the New Zealand Professional Fire-Fighters Union initiative in 1995, Margaret Robertson's 1997 initiative to reduce the number of MPs to 99, the Norm Withers initiative for tougher prison sentencing also in 1997, and the 2009 anti-smacking initiative promoted by Sherryl Saville and Larry Baldock, a former United Future MP. New Zealand has also held government-initiated referendums (plebiscites) on off-course betting, compulsory military training, compulsory retirement savings, the term of parliament twice, and the voting system, but these are of course non-binding also. The reason there have only been four successful citizens' initiatives is because the signatures of 10% of those registered on the electoral roll are required to trigger a referendum—a very high figure and an aspect of the Citizens Initiated Referenda Act 1993 that needs addressing.

What issues are suitable for direct democracy? This is an issue that I discussed with John Key in 2004, prior to him becoming Prime Minister of New Zealand. He felt that any constitutional type change should go to referendum as well as putting free votes in parliament to referendum. My discussions with other politicians about what issues are suitable for referendums vary considerably. Some feel any issue is suitable to be put to referendum, and others suggest voters should not be allowed to decide on, for example, economic matters that may affect a government’s budget. One would expect that most CIR would be on social issues such as immigration, voluntary euthanasia, the death penalty, prostitution law reform, and so on. However, it should not be forgotten that the Swiss have used referendums on all matters imaginable, including matters of finance. The Swiss stubbornly refused to approve government spending at the height of Keynesian economic theory's popularity and economic experts argued that the Swiss were selfish and irresponsible. Swiss voters proved to be very wise in hindsight when unemployment and inflation hovered around one and two percent while the rest of the developed world suffered with uncontrolled stagflation. Perhaps it was just luck, but perhaps it was collective wisdom.

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British Constitutional Reform calls

CITIZEN-LED DEMOCRACY IS ESSENTIAL FOR SUSTAINABLE CONSTITUTIONAL REFORM Long before the Telegraph's exposure (2008) of expenses abuse by UK members of parliament, there was widespread. and deep public dissatisfaction, not only with our politicians but also with the system of government and our democracy. These new revelations of MPs' fiddling, greed and even dishonesty made many people angry and pushed prominent politicians, once again, to make promises of reform, promises which we know from experience they will not keep.

Critics have identified numerous areas of public governance which are in urgent need of reform, for instance the way we elect our MPs, the power of parliament to elect and control government, local government powers and our relationship to the European Union. This list could go on. All of this can seem overwhelming, not only to the average citizen but also to experts and members of the government. Where on earth should we start? Who -- which persons, groups or organisations -- should decide which are the areas of priority and who should work out and formulate the proposals for reform? Should we continue as hitherto to reform our constitution of state by de facto decree of a single government, as has been done before?

Most of the areas of public governance to which we refer above would in many if not most comparable countries be seen as matters of state constitution. In the UK there is no clear concept of constitution and no distinction between "ordinary" law and constitutional law. A single government acting on a vague (if any) electoral mandate can change constitution which may have been in force for hundreds of years by pushing a law through parliament with a majority of one vote, law which will likely endure for decades at least. To date no serious attempt has been made to involve the electorate in consideration of such changes.

In almost all modern states there is a clear distinction between constitutional and other law. Commonly, it is more difficult to change constitution. For instance, a "super-majority" of elected representatives may be required and an indication of regional consensus needed. These measures serve to indicate how importantly constitution is regarded. There are very good reasons to distinguish constitutional from other law and to treat it with more care.

For decades, across the world, it has been accepted and practised that only an electorate -- The People -- may enact a state constitution. In many countries, a number of them in Europe, NO change can be made to state constitution unless (a) the electorate has been informed and consulted (b) a broad and extended public debate has been enabled and organised (c) a referendum (plebiscite) has been held for the final decision.

In conclusion two aspects will be selected and the reason for their importance briefly explained.

Firstly, a constitution of state. The People should act to give themselves a charter or group of laws ("constitution") which defines the role of citizens and their relationships with political representatives, parliament, government, judiciary, aristocracy and monarchy. First principles of the new constitution should make clear that: All power in the country and state belongs to the people. In a prominent position should appear a statement that power shall be exercised by the People in ballots and elections; in other words plebiscites by which they decide on public issues in addition to electing persons to represent them in parliaments and councils.

A crucial question remains, namely, how can we make ourselves a modern constitution when the "constitution" and related tradition which we appear to possess provide no suitable tools for the job? Given the essential and fundamental role played and to be played by electorates in making and changing modern constitution (see above), it appears most urgent that we should give ourselves the instruments of citizen-led democracy in order, as a people, to make, re-write and modernise our state constitution. The principles behind the citizens' law proposal, veto-referendum and citizen-initiated plebiscite flow directly from the (denied by some) reality that "All power in the country and state belongs to the people". We could introduce guiding regulations to enable citizen-led democracy while at the same time extensively promoting public information and deliberation about renewing our constitution. A rapid learning process would be expected, leading to a discourse enriched by the acquisition of long-denied democratic rights. The electorate could then decide on constitution-building, perhaps in a step-wise fashion, section by section or "brick by brick".

Lets get on with the job!

I&R ~ GB Citizens' Initiative and Referendum Campaign for direct democracy in Britain http://www.iniref.org/

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Steve Baron: What is direct democracy?

Direct democracy is a concept that a growing number of citizens and states around the world are exploring and embracing. There are190 million people in Switzerland, Italy, Liechtenstein and 24 States in the USA who now embrace the referendum system. 70% of the US population now live in a state that gives them the right to vote on initiatives and referendums. To many people, direct democracy can mean different things. Some picture the classical/pre-modern (Athens) style of direct democracy where citizens meet in the town square and decide on important issues. Others see it as an opportunity to rid the world of devious self-serving politicians, where we can all sit at home and make all necessary political decisions via our laptops. Whatever it means to you, direct democracy has certainly become a much discussed topic over the last twenty or so years even though it has had numerous critics. Direct democracy would appear to offer citizens more control over controversial and polarizing issues that directly affect their lives. That is not to say that direct democracy is a replacement for representative democracy, only that it can be an adjunct to it. One definition has direct democracy as, “A form of state in which the sovereign power is held by the People, i.e., national sovereignty belongs directly to the People. The People also exercise their sovereignty directly, for example by means of popular legislation.”. My own definition would be: the right of citizens to initiate referendums on any issue, to veto legislation, and for these decisions to be binding on parliament. There are a number of parts to direct democracy: general elections, citizens' initiatives, referendums, recalls, and plebiscites. A lot of misunderstanding and confusion could be avoided if these issues were all clearly distinguished from one another, along with their procedures. Of course, there are also many forms of election systems but these will not be discussed here. The Citizens’ Initiated referendum allows for one or more citizens to put their own proposal on the political agenda once the required number of signatures have been collected to trigger the citizens’ initiative. It is interesting to note here that only about 10% of citizens' initiatives actually pass in Switzerland, the birthplace of direct democracy. The signature requirement range is from as low as 2% and sometimes as high as 15%. An Obligatory referendum is triggered automatically by law, usually by a constitution which requires that certain issues must be put before the voters for approval or rejection. A Veto referendum (Facultative or optional referendum in Switzerland) is when new laws, or changes to laws which have been passed by parliament, can be subject to a referendum if the required number of citizens demand it. The new law becomes effective if the majority of the votes were in favour of it. It is worth noting that of the more than 2,200 laws passed by the Swiss parliament since 1874, only 7% have been subjected to a Veto referendum. A Recall referendum can be launched to remove corrupt elected officials, or to remove elected representatives whose policies and performance are found wanting. A high profile example of this was when Governor Grey of California was replaced in a recall by actor Arnold Schwarzenegger. The recall operates in a similar fashion to the citizens' initiative where citizens collect the required amount of signatures, and once this has been achieved, a referendum is held to decide if a certain elected official will retain their position. The recall has two components, a 'yes' or 'no' vote for recall and the names of the replacement candidates. The recall measure is successful if it passes by a simple majority. In that case, the replacement candidate with the largest vote wins the office. If the recall measure fails, the replacement candidate votes are ignored. Referendums are often referred to as Plebiscites. However, Plebiscites really are quite different to referendums and are controlled by authorities; they are not referendums or initiatives and therefore arguably are not part of direct democracy. A plebiscite is a public consultation controlled from above by those in power (e.g., President, Prime Minister, and Parliament) who decide when and on what subject the people will be asked to vote or give their opinion. They are a way for those in power to manipulate citizens and have power over them. They are used to give some form of legitimacy for decisions that those in power have already taken. In Switzerland, for example, it is quite different from Nazi Germany during 1933-1945, where there were three manipulated plebiscites. In Switzerland, direct democracy means that a referendum process takes place either because a group of voters demands it, or because it is stipulated in the constitution, but the government cannot call the referendum, so therefore Switzerland does not have plebiscites and direct democracy in Switzerland cannot be controlled by the government. With citizens protesting around the world about corporate greed, a lack of government direction, poor fiscal management and party political agendas, along with the lack of trust citizens appear to have in their political representatives, one might expect the discussion about direct democracy to snowball even further. It might be expected that citizens around the world will eventually demand this political tool to reign in their political masters. New Zealand has toyed with direct democracy since 1993, but to date, governments here have mostly ignored the will of the people in the referendums that have been held. 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The campaigns for and against MMP are hotting up. It would be a shame if New Zealanders decided to go back to the dark ages. MMP can be tweaked to be an even better system than it is. Voting for MMP will bring about a review/changes. It's a shame the government has not made people aware of this so far. I talk with Amy Adams recently who is on the Select Committee? for the electoral review. She gave a speech almost totally against MMP and did not make the audience aware that voting for MMP would bring about a review until I prompted her and she looked rather sheepish. The government wants Supplementary Member because it will give them the total power they want to govern. CLICK ON THE TITLE OF THIS POST TO BE TAKEN TO OUR BLOG, TO POST YOUR COMMENT!
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Steve Baron: Governments & Governance: Where is the power?

The world is changing—political power is changing. Sovereign governments around the world are persistently signing their countries up to international agreements, laws and conventions, usually with the intention to strengthen human rights, improve free trade due to the increase in global trade, quell armed conflict and to address environmental concerns. The question for New Zealanders to consider though—is the government (and therefore New Zealanders) handing over power to an unknown group of outsiders who then control our destinies? Is there cause for concern or is this just the way the world is going and we simply need to jump on for the ride as this international governance is simply a new process or new method of governing? There now appears to be a growing disparity in power between governments and governance. Governments appear to becoming weaker and international governance much stronger than ever before. Governance is the act of governing but this is not necessarily the act of the government of a country, such as New Zealand. International agreements, laws and conventions are growing in stature and often influence governments who sign up to them. They often take precedence over domestic laws. As prominent New Zealand journalist, Colin James, once said, “In a globalised world international treaties and rule-making bodies increasingly shape domestic law and constrain domestic legislation and administration”. There are however, many who question the effectiveness of these international organisations. Even six months after the Asian tsunami disaster in 2004, many countries had not fully paid the money they had pledged to the United Nations (UN). The USA had paid 43 per cent, Canada 37 per cent and Australia 20 per cent. The International Monetary Fund (IMF) and the World Bank also have their critics. Joseph Stiglitz, a renowned economist, Nobel Laureate, Chairman of Bill Clinton's Council of Economic Advisor's and World Bank Chief Economist stated, “The IMF prescribed outmoded, inappropriate, if 'standard' solutions, without considering the effect on the people in the countries told to follow these policies”. Once the New Zealand government signs up to these international agreements, laws and conventions, it is then obligated to adhere to any subsequent changes that are made in these agreements. This consequently places significant power in the hands of these international authorities such as the UN, the IMF, the World Trade Organisation (WTO), the World Health Organization (WHO) or the World Bank, and citizens are effectively powerless to stop these decisions. Free trade agreements such as the Trans-Pacific Partnership Agreement (TPPA) are a concern to some New Zealanders. TPPWatch is a group of concerned unions, groups and individuals who have organised themselves to oppose this free trade agreement. This group has taken out advertisements in major newspapers highlighting their concerns and arguing the TPPA is a threat to New Zealand's democracy. For example, if New Zealand were to sign up to a free trade agreement with the USA, this may put pressure on the New Zealand government to remove the power Pharmac (New Zealand's pharmaceutical management agency) possesses to control the distribution and importation of medication to New Zealand. Some might argue this would be a good thing, however the Pharmac scheme has also brought many advantages via buying power to New Zealanders. Should citizens have the final say as to whether or not New Zealand becomes aligned with any international agreements, laws and conventions? Switzerland is an interesting example in this area. For a long time, the Swiss people refused to agree to become a member of the UN and still today, refuse to be members of the European Union (EU). The difference with Switzerland is that before the government can sign up to such agreements, the country must agree to the decision in a nationwide referendum. Switzerland voted against joining the EU in December 1992 but has still developed bilateral agreements to maintain competitiveness. In March 2001, the Swiss people again refused the chance to start accession negotiations with the EU. It was not until 2002, and after an intense and controversial debate, that the Swiss people finally agreed to becoming a full member of the UN in a referendum. Perhaps even, these international agreements, laws and conventions offer us a decentralisation of power and are possibly a real benefit to New Zealanders? Perhaps we should even embrace them as they may set new standards that are above what our own government might be prepared to implement? One advantage may be that this international governance involves a complex group of people and organisations which do not limit themselves by ideological political beliefs or agendas which are indoctrinated in New Zealand party politics? Unlike Switzerland, to date there seems to be very little public demand for citizens to have the final say in such decisions. It will be interesting to see if this desire grows. It must be said that the desire for direct democracy around the world seems to be growing. CLICK ON THE TITLE OF THIS POST TO BE TAKEN TO OUR BLOG, TO POST YOUR COMMENT!
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Steve Baron: New Zealand's Upper House of Parliament: Time to re-establish?

When the National Party came to power in 1949 it implemented an election policy to have the Upper House of parliament removed and in 1951 it ceased to exist—New Zealand became a unicameral parliament. This came about because during the first Labour government of 1935-1949, the Upper House had become markedly supportive of Labour and therefore seemed superfluous. There was little opposition to its removal because Prime Minister Sidney Holland had promised to search for a better type of Upper House. This never eventuated because of a perceived ineffectiveness of the Upper House and over time other parliamentary tools were initiated to constrain the abuse of power (at least to some extent). The unicameral system has, however, caused a concentration of power in the Cabinet where legislation is decided upon almost at will, although the introduction of the Mixed Member Proportional (MMP) voting system and subsequent coalition governments since 1996 have slightly reduced this concentration of power. Other small countries have also removed their Upper House. Denmark in 1953 (population 5.2 million), Sweden in 1970 (population 8.7 million) and Iceland in 1991 (population 300,000). According to the IPU Inter-Parliamentary Union the world parliamentary system split is 114 unicameral (59.38%) and 78 bicameral (40.63%). The OECD which includes 43 countries has roughly a 50/50 split, so therefore, New Zealand's unicameral system is not uncommon. In New Zealand, members of the Upper House were nominated by the government of the day for 7-year terms with no limit to the number of members. Around the world, members of the Upper House are appointed in many different ways and these upper houses have differing powers. In many federal states like Australia and the USA, the Upper House was designed to represent the regions or states of that country and are often referred to as the Senate. This is always an option for New Zealand with the possibility of having a representative from each region in a New Zealand Senate. The largest country without a second chamber is Portugal with a population of approximately 10 million. Although smaller countries do tend to have a unicameral system, it must be remembered that China with a population of 1.3 billion people is also unicameral. The goal of an Upper House is to represent different interests from those of the House of Representatives (Lower House/General Assembly). The Upper House's role is to revise and scrutinise legislation coming from the House of Representatives and acts as a check and balance, perhaps even ensuring the protection against 'tyranny of the majority'. It also has the ability to further delay or block controversial legislation as opposition parties try to do in the House of Representatives. The Upper House is often more independent from the General Assembly if it is directly elected. One major problem with a second chamber is that of gridlock and ineffectiveness, as when one chamber is more powerful than the other or almost identical to each other. One positive argument for an upper house is that it leads to more consensus government. It could also be argued that in a small country like New Zealand, it just isn't necessary to have an upper house of parliament. But that does mean one less check and balance and if we do not have such a check and balance what other alternatives are there? Perhaps a simple and effective answer is the Veto referendum, a direct democracy tool. A Veto referendum (Facultative or optional referendum in Switzerland) is when new laws, or changes to laws which have been passed by parliament, can be subject to a referendum if the required number of citizens demand it. The new law becomes effective if the majority of the votes were in favour of it. It is worth noting that of the more than 2,200 laws passed by the Swiss parliament since 1874, only 7% have been subjected to a Veto referendum. As a Critical Theorist, like Horkheimer, I also seek “to liberate human beings from the circumstances that enslave them.” Any political tool that gives citizens more control over our political process must, is in my view, be good for society. Our long established political methods and concepts must not simply be taken for granted, but need to be subjected to rigorous thought and appraisal on a regular basis. CLICK ON THE TITLE OF THIS POST TO BE TAKEN TO OUR BLOG, TO POST YOUR COMMENT!
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David Round: A Slippery Slope to Ruin

An interesting article by David Round on the New Zealand Centre for Political Research website, about the government's far reaching review of New Zealand's Constitution which is due in September 2013 and calls for public submissions.
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Steve Baron - Free Votes: Can We Trust MPs Morals & Principles?

Free votes (conscience votes) in parliament are not something the average voter ever gives much thought to—yet they often have a dramatic effect on our everyday lives. Many a controversial topic has been decided in parliament via a free vote. Some of these issues have included; homosexuality law reform, prostitution, gambling, abortion, euthanasia, the regulation of social issues such as pornography, Sunday trading, divorce and matrimonial property, adoption, the sale of alcohol, electoral reform, the compulsory wearing of seat belts, mandating the fencing of swimming pools, smoking in public places, child discipline and compulsory military training. Originally there were no political parties in the New Zealand parliament. Politicians were not obligated to vote in any particular manner, so therefore every vote in parliament at the time could be considered a free vote. The first political party in New Zealand, the New Zealand Liberal Party, governed from 1891 until 1912 and party MPs were expected to vote along party lines. The first officially recorded free vote in the New Zealand parliament was in 1893. Free votes came about because of new drinking laws being proposed towards the end of the 19th century, and were a safety valve for parties because some party members felt so strongly about certain issues. Initially, the use of free votes in parliament was slow and only two free votes had been held by 1900 and just nine by the end of the 1940s. Up until the 1940s there had been on average, 1.1 free votes in parliament each year. Since then, there has been an average of 2.1 free votes each year. When we look at the figures, 42% of all free votes have been related to the control and provision of alcohol, and 19% have been held on issues related to gambling. Generally speaking, the New Zealand public has accepted the use of free votes in parliament as a normal part of parliamentary business, especially when free votes are on moral or ethical issues that are unlikely to be party issues at the core of government. David Lindsey's 'Conscience Voting' chapter in Raymond Millers book New Zealand Government & Politics, raises an important issue when he refers to 'constituents': Conscience voting can be considered a politically useful mechanism for dealing with socially contentious issues. The unpredictability of the outcome provides an incentive, if not compulsion, for parliamentarians to consider more carefully their own views, those of their constituents and the implications of their vote. (emphasis added) What is important here is to consider whether the morals and principles of an MP are more important than the morals and principles of their constituents. Back in 2004 at an investment exposition he was attending, I spoke at some length with the then future Prime Minister John Key, specifically in regard to free votes and direct democracy. His comments were that free votes put MPs in a difficult position, or as he put it, “between a rock and a hard place because whatever we do is wrong in some person's eyes”. So how do politicians make decisions when it comes to free votes? From the politicians I have personally spoken to, there seem to be many options. Some vote based totally on their own conscience/morals/principals regardless of what others around them, including their electorate, want. Some try to gauge the public feeling, while others like Maurice Williamson, MP for Pakuranga (Auckland) say they actually poll their electorate first. For those who do wish to gauge the feeling of their electorate (if they are constituent MPs), and do not take any scientific poll, it becomes extremely difficult to make a decision because they may be influenced by a small number of people, not necessarily representative of the general public. It could be argued that it would be more democratic if citizens were asked to decide such conscience issues in a referendum, rather than leaving the decision to individual MPs in a free vote, if parliament is seeking a more consensus-based society. After all, are the morals and principles of an MP any more valuable or important than those of the public? This writer does not think so. In fact, given the undesirable record of MPs over a very long period of time, it could be easily argued that their morals and principles are inferior to those of the general public and therefore decisions made via free votes in parliament should be transferred to voters in a referendum. CLICK ON THE TITLE OF THIS POST TO BE TAKEN TO OUR BLOG, TO POST YOUR COMMENT!
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New Zealand: Parliamentary or People Sovereignty?

In 1840 the British government signed the Treaty of Waitangi with indigenous Maori tribes which gave Britain sovereignty over New Zealand. In 1852 the

New Zealand Constitution Act was passed to implement the British Westminster style of government, which is based on the doctrine of Parliamentary Sovereignty. British constitutional theorist, Prof. Alfred Dicey said that Parliamentary Sovereignty was, “the right to make or unmake any law whatever; and, further, that no person or body is recognised by the law of England as having a right to override or set aside the legislation of Parliament”. Given that New Zealand does not have a codified (written) constitution, this gives the government of the day supreme power, making it unaccountable to voters apart from once every three years at an election.

The core of the doctrine of Parliamentary Sovereignty is that parliament can do anything it likes except bind its successor. The principal behind this doctrine would appear to be that a single sovereign authority will control power much better perhaps, than the system used in the United States of America—the home of the most famous and oldest constitution which was founded in 1787. There, a written constitution, overseen by the separation of powers, and an elected president, effectively reduces Parliamentary Sovereignty.

The 20th century has seen an explosion in the introduction of constitutions around the world. A constitution is a powerful way for society to influence government as it puts a check and balance on government powers, promotes accountability, and protects the rights of minorities and all citizens. A constitution also critically restricts what a government is able to do in terms of passing laws. There are two types of constitutions, a codified constitution which is a single document, and an uncodified constitution which may exist across a number of documents. New Zealand's system is an uncodified system. Further, constitutions may be flexible or rigid in terms of their potential for challenge and modification. Britain and New Zealand are examples of flexible constitutions and are relatively easily changed, most often by a simple majority in parliament. Parts of the New Zealand constitution such as Section 268 of the Electoral Act 1993 are entrenched and require a 75% majority in parliament or the majority in a referendum to be changed. However, this is rather misleading because a simple majority in parliament can remove the entrenchment, thus making it possible for a simple majority to then change it. For example, the New Zealand Bill of Rights Act 1990 can be changed with a simple majority in parliament. These are important considerations for a society. If a government can change the rules of the game with a simple majority, it leaves the political system open to abuse and at the whim of the controlling party in government.

While New Zealand governments have been fairly democratic on a number of important issues, such as having national referendums to change the electoral system, it has not been so democratic on others. A good example of how easy it is to change laws in New Zealand was the removal of the right of citizens to appeal to the Privy Council in London. This was what most would consider a major constitutional change that should be agreed to by voters in a referendum. However, the Clark Labour government did just this in 2003 with a majority vote in parliament. In 1951 Parliamentary Sovereignty was also strengthened when parliament (or perhaps more accurately, the Party or Cabinet in power) removed the second chamber (Upper House) with a simple majority vote, and parliament became unicameral. What was surprising is that this important decision for a constitutional change was not even put to the people in a referendum.

Although it might be argued that Parliamentary Sovereignty has been limited for many years now, parliament still wields immense power over people's lives. Perhaps more than it should? In a bye-gone era, society at large was mostly uneducated and illiterate and people looked up to their elected representatives, who were the learned and successful people in society. This is not the case today. The vast majority of educated and successful people in society do not enter parliament. Arguably, the standard of elected representatives has dropped and their records leave a lot to be desired. Given huge improvements in education and a far more informed society, it is no surprise there are now more calls for the Parliamentary Sovereignty that still exists, to be reduced. Simply electing politicians once every three years is no longer satisfactory, given so much water can pass under the political bridge during this period, and so much damage can be done. The trend and demand for more public sovereignty is growing worldwide and also in New Zealand. Cabinet Government still holds too much power and it must be reduced if real democracy is to prevail. In my opinion, New Zealanders put a huge amount of faith in a benevolent dictatorship with few real checks and balances. So long as this faith is respected there is no need for concern. If not, the outcome does not bear thinking about and one has to
wonder why more precautions have not been put in place before the unthinkable happens. A codified constitution and the public's right to veto any government legislation may very well be the first steps in the right direction.
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2011 Electoral Referendum – A Calculated Political Manoeuvre by PM

I can assure readers that MMP, FPP, PV, SM and STV are not sexually transmitted diseases—but depending on which of these options New Zealanders choose in the electoral referendum at the next election, it will make an enormous difference to the eventual make-up of future governments and parliament.

When thinking about a voting system New Zealander's need to ask what it is they want from their electoral system. Is it best to have a system that creates a government that can govern alone, or a system that reflects the make-up of the population as a whole and the wishes of the average voter? Should voters have other checks and balances, like Switzerland's direct democracy system or is just one vote every three years enough? Another question to consider is why another referendum is being held so soon after the change from First-Past-The-Post to MMP?

Five elections have passed since the change in 1996. History tells us that prior to 1996 there was a real and pressing need for change. The main impetus was the 'wrong winner' outcome of the 1978 and 1981 elections. The Labour Party received more votes than the National Party, but the National Party remained the government, because they held more electorate seats. That is how the previous FPP system worked. The second major issue was that of 'wasted votes'. In 1978 the Social Credit Party received 16% of the vote, but only one seat in parliament. In 1981 they received 21% of the vote but only two seats in parliament. In 1984 the New Zealand Party received 12% of the vote, but no seats in Parliament. Citizens quite rightly perceived this as unfair and a huge waste of votes that counted for nothing.

Other options like preferential voting systems allow voters to rank candidates (and parties) in order of preference, but the outcome is not proportional in any way. Supplementary Member means there will still be 120 Members of Parliament with 90 electorate MPs, with the other 30 seats being supplementary seats filled by MPs from the political party lists. This effectively means a return to FPP with minor proportionality. Professors Levine & Roberts concluded in their 2009 study that there would probably have been single-party majority governments on three occasions over the last five MMP elections and that the results of the 1996 to 2008 elections would have been three times more disproportionate than they were under MMP. STV is a preferential system but again, it is not proportional and is effectively the same as FPP. Coalition governments are rare under any of these systems.

On the whole, there does not seem to be major problems with MMP and overall, New Zealander's seem to appreciate the proportionality that MMP offers. It would appear the public’s perceived problem with MMP are only minor issues that could easily be addressed by parliament.

The one-seat threshold could easily be removed to alleviate the disparity that was exposed at the 2008 election, where the Act Party with only one electorate seat were allocated five MPs, even though they received less votes than New Zealand First who did not received any representation with a higher vote than Act. It would also seem reasonable to reduce the party representation threshold from 5% to 4%, as initially recommended by the Royal Commission on the Electoral System. This gives the potential for more parties to be represented in parliament and reduce vote wastage. Voters could also have the option of making a preference selection from party lists and therefore have the opportunity to ensure an unwanted electorate MP does not get back into parliament through the present closed party lists.

If New Zealand wished for a more preferential system rather than simple majoritarianism, other options could still be considered for electorate seats. MMP still uses majoritarian voting in the electorate seats, which often means an MP wins the seat with far less than a majority vote. For example, if the votes are tallied up as 30%, 25%, 25% and 20% to four candidates, this means that the electorate MP with just 30% of the vote wins, a situation that hardly seems fair. Using a preferential system to decide electorate MPs may be far more representative of the average voter.

So why has Prime Minister Key called for this referendum? Perhaps this was simply an astute and calculated political manoeuvre from the Prime Minister who is in a no-lose situation. A change to any of the other systems offered in the referendum would only enhance the opportunity for National or Labour to govern without the need for a coalition—something they prefer. Given the political ratings, this is likely to be Mr Key's National Party. On top of this scenario, by offering voters the chance to 'kick the tyres' on MMP, he portrays himself as a man prepared to listen to the people—even though his government chose to ignore the outcome of a recent citizens initiated referendum.

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Donations: For Facebook promotion please

Just recently we have been promoting the Better Democracy NZ Facebook page ( click here ) with advertising on Facebook. We have had a great response and this has helped spread the message.

But it costs money! Any donations would be most welcomed to help us continue this promotion up until the election. To make a Paypal donation with your credit card click here. You may also donate directly to our bank account, Better Democracy NZ 03 1568 0261451 000

Thank you in advance :)

Steve
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Understanding the International Monetary System

To understand the future we need to consider the past. In the turmoil from the international credit crisis, bank defaults and sharemarket crashes, what does the future hold and how did this international monetary system develop to what it is today?

In this article I will examine the changes in the international monetary system over the last 100 years. I will explain how this system has developed from the days of merchantilism and the international gold standard, to the hybrid system of today. I will explain how these changes came about, why they were considered a good set of rules at that time and why they were eventually superseded by the next order. The possible return to the international gold standard will also be considered. As will the possibility of a world central bank along with a single world currency and finally, I will suggest a new consideration that needs to be examined to ensure the international monetary system is delivering its full potential.

Singer-songwriter Bob Dylan sung—The Times They Are a-Changin'—and so it has been with the international monetary system. Gone are the days when ordering a new vehicle from the Ford factory meant you would wait months, if not years, for it to arrive. You could also choose any colour, so long as it was black. Even then you had to be wealthy and usually apply to the government to be allowed to send domestic currency offshore to pay for that new vehicle. International financial transactions are now conducted with the click of a computer mouse, touch-pad or touch-screen. So, what is this system we call the international monetary system and just how has it evolved? Mark Carney, the Governor of the Bank of Canada gave his perspective in a speech to the Foreign Policy Association in New York City in November 2009. He described it thus: “The international monetary system consists of (i) exchange rate arrangements; (ii) capital flows; and (iii) a collection of institutions, rules, and conventions that govern its operation.”. Barry Eichengreen in his book Globalizing Capital described it as, the glue that binds national economies together. Its role is to lend order and stability to foreign exchange markets, to encourage the elimination of balance-of-payments problems, and to provide access to international credits in the event of disruptive shocks. But before we go any further, let's go back to the beginning and examine the path of the international monetary system since the days of merchantilism, when the monetary system evolved around that precious yellow metal we call gold.

The logic behind merchantilism was that gold and other precious metals symbolised a nation's wealth, and the goal was to encourage exports but discourage imports. Merchantilists assumed that trade was a zero-sum game and therefore, for every winner, there was also a loser. The fallacies of this logic were exposed by David Hume in 1752, with his specie-flow mechanism theory. This theory explained that it was not the amount of gold and silver a country held that was important, it was how many goods and services that could be bought with this gold and silver. So consequently, as gold and silver were amassed there was more currency in circulation (in the form of gold and silver) so this simply led to higher prices, therefore no one was better off. In fact most were probably worse off because that country's exports became far more expensive, so less goods were exported. Trade theory was expanded upon by Adam Smith in 1776 and David Ricardo in 1817, with their theories of absolute advantage and comparative advantage.

The international gold standard was the first major development in the international monetary system and was adopted by major countries from 1876 – 1913. Exchange rates were effectively fixed, because governments agreed to buy and sell gold at a fixed rate. This system of using gold to back national currencies ran quite smoothly until 1914 when World War I began. Problems continued right through until the end of World War II in 1944. These wars interrupted trade and the free movement of gold was suspended. The Great Depression of the 1930's was also a major problem with restrictions on trade causing this world wide depression to continue. At the time, countries were more concerned with their national economies rather than exchange rates and trade.

The next major development in the international monetary system was the Bretton Woods Agreement,1945-1971. Allied countries met and created the International Monetary Fund (IMF) and the World Bank after WWII. Article I stated its purpose as: “to promote international monetary cooperation, to facilitate the expansion and balanced growth of international trade, promote exchange rate stability, and to assist in the establishment of a multilateral system of payments”.

The reserve currency for which all signatories would fix their currency to was the US dollar. This is not surprising, because as Mundell also explained, “Historically, whenever there has been a superpower in the world, the currency of the superpower plays a central role in the international monetary system. This has been as true for the Babylonian shekel, the Persian daric, the Greek tetradrachma, the Macedonian stater, the Roman denarius, the Islamic dinar, the Italian ducat, the Spanish doubloon and the French livre as it has for the more familiar pounds sterling of the 19th century and the dollar of the 20th century.”

This system was seen as a tool to create a stable world monetary system, which made international balance of payment settlements much easier as well as world trade. Unfortunately the system started to fall apart in the 1960's when US President, Lyndon Johnson, started to fund his “Great Society” programme, which produced large deficits and created balance of payments problems. A number of external shocks then brought about a lack of confidence in the US dollar, which markets started to sell off. Then in 1971 US President, Richard Nixon, suspended official purchases or sales of gold. In 1973 the US dollar came under attack for being over-valued and many countries allowed their exchange rates to float against it, because it had become unsustainable for central banks to prop up their currencies due to a lack of large quantities of international reserves. Currencies were then traded on foreign exchange markets,which encouraged the free flow of money which has also opened up trade. Given current circumstance surrounding the US, it is unlikely this will continue for much longer without a dramatic economic turnaround in the US.

The IMF is an intrinsic part of the international monetary system and helps keep it stable. It is controlled by the governments of its member countries and represented through a Board of Governors. The Governor for each member country is usually the Minister of Finance or sometimes the Central Bank Governor. The IMF loans emergency funds money to countries that have found themselves in financial difficulties. This is often due to poor economic management or a financial crisis outside of their control although at present these problems have mostly been self inflicted. In order to qualify for these loans the country needs to meet certain criteria as stated from time to time by the IMF. The IMF is funded through quotas based on the size of the national economy. Surveillance and reporting of world capital markets has become a large part of the activities of the IMF. In many ways it might be considered a watchdog and now also considered as a lender of last resort. The IMF has also grown from the 44 states from the Bretton Woods days to now incorporate 187.

The World Bank was instituted at Bretton Woods at the same time as the IMF. The World Bank website states, “Our mission is to fight poverty with passion and professionalism for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity and forging partnerships in the public and private sectors.” The World Bank is made up of two unique development institutions. The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses on the world's poorest countries. These organisations provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management. The IMF and the World Bank do have their critics, Joseph Stiglitz, a renowned economist, Nobel Laureate, Chairman of Bill Clinton's Council of Economic Advisor's and World Bank Chief Economist stated, “The IMF prescribed outmoded, inappropriate, if 'standard' solutions, without considering the effect on the people in the countries told to follow these policies.”

An interesting development in the international monetary system has been the creation of the European Union and the Euro currency. In 1957, the Treaty of Rome was signed by Belgium, France, Germany, Italy, Luxembourg and the Netherlands forming what was to be known as the European Economic Community. This group had grown out of the 1951 Treaty of Paris that formed the European Steel and Coal Community, which was designed to help reconstruct the European economy after World War II had destroyed it. Today, this group has expanded into twenty-seven member countries and is now known as the European Union. In January 2002 a new currency called the Euro came into use in the European Union. The United Kingdom and Denmark chose to opt-out of the Euro and still use their own currency alongside the Euro.

The monetary union that was created is nothing new. Previous examples are the Latin monetary union, comprising France, Belgium, Switzerland, Italy and Greece, which existed from 1865 until 1927. The Scandinavian monetary union of Sweden, Denmark and Norway lasted from 1873 until 1924. The German Zollverein, which was a customs union between German principalities in 1834, is often held up as the most successful example. It produced a central bank, the Reichsbank, and a single currency, the Reichsmark, in 1875.

The concept of an EMU is to integrate independent states and their economies to help them achieve economic efficiencies, break down barriers that exist between the states and strengthen their resolve to any external shocks. By doing this, custom tariffs can be removed, free trade can flourish, goods - capital - labour will have free movement, and a single currency with a centralised and harmonized fiscal and economic policy will promote currency stability, growth and economic power for the region. For the EU this is controlled by the European Central Bank. The EU has had its problems ever since, with several countries needing expensive bail-outs. The EU has had its benefits however. Not the least being the opening up of trade and the removal of trade barriers between all members. Inflation has been stabilised and the likelihood of wars in the region has been dramatically reduced. Although the value of the Euro has continued to drop against the US dollar since first launched, it has acted as a major world currency and an alternative reserve currency to the US dollar. The jury is still out on its continuance and benefits to the international monetary system.

The Hybrid International Monetary System we now have has evolved since the Bretton Woods agreement fell apart in 1973 and now appears to have been broken into two blocs. Most advanced nations have floating exchange rates, but a larger number of emerging and less developed countries have opted to peg their currencies to currencies like the US dollar or the Euro. China, for example, originally fixed the renminbi to the US dollar but now fixes it against a basket of currencies. However, since the collapse of Argentina’s currency that was pegged to the US dollar, many are doubting that this is a feasible option. Others that moved from soft pegs to floats have been highly managed, but doubts must also be maintained about these actions as the same theory about the gold standard failing still applies in this situation. Small countries like New Zealand, have little power in their exchange rate interventions, because they do not have unlimited funds. Many speculators hold far more reserves in their investment funds and a country like New Zealand could never compete with them in exchange wars. According to a study by Eichengreen & Razo-Garcia, in the next two decades 30% of countries will have pegs, 30% will have floats, and 40% will have intermediate regimes. Compared to the current situation this shows that intermediate arrangements will have declined further, but only modestly.

In 2008 the world faced an international credit crisis, which threatened the international monetary system and continues to this day. This began with the collapse of investment banks like Lehman Brothers. This mostly came about due to sub-prime loans to people who could not afford to pay them back and consequently defaulted as property values plummeted. The world is still recovering and we know it is over yet. The credit crisis that has ensued has raised many issues that effect the international monetary system. In some ways this is not too different to the wave of crisis that swept through East Asian economies, Russia, Argentina, Brazil, and Turkey during the 1990s. They have made the world focus on financial mechanisms, governance, transparency and the threats that economic bubbles pose. It has also made world powers realise just how economically integrated the world has become. Due to the credit crisis, some commentators like US Congressman Dr. Ron Paul have called for a return to the gold standard.

Returning to the gold standard would appear highly unlikely. Nothing has changed in the world to expect that what happened back in the days of the original gold standard would not happen again. Gold in itself has very little intrinsic value or real use, just like fiat currency. Talk of a world currency is not new either. Harry Dexter White, the chief international economist at the U.S. Treasury from 1942 – 1944, floated the idea of a world currency he called the unitas. World renown British economist, John Maynard Keynes, floated the idea of a world currency he called the bancor. Neither took off at the time because there was an advantage for the country whose currency was the reserve currency, not having to balance their balance of payments. Although a world currency, by whatever name, may encourage world trade even more, and also remove uncertainties of currency fluctuation, the problems of a lack of fiscal responsibility and discipline that are currently affecting the EU will also haunt a world currency. There also needs to be competition between currencies, for as surely as communism failed due to lack of competition, so too would a single world currency. The major problems that need addressing by world powers are transparency in our financial institutions, public expenditure, deficits and limiting quantitative easing, all of which are the core of monetary stability and the international monetary system.

One issue rarely considered by economists or Reserve Bank Governors, is the cost of creating new money when it enters the financial system (not to be confused with quantitative easing). The money supply of a country usually needs to expand as the amount of goods and services in a country expands, so that there is enough money to purchase these good and services. This is a fine balancing act, too much money in circulation leads to inflation, but too little also leads to deflation, as was experienced during the Great Depression. However, as this money comes into circulation through government open market operations and consequently the money multiplier effect of the banking system, it enters society as an interest bearing debt. This cost has a compounding effect and must certainly create an unnecessary cost to society. If more money is required to keep the wheels of our monetary system greased, then perhaps governments need to find a way to inject this money into society without this cost? An empirical study into this cost would be an interesting exercise and perhaps an eye opener for future Ministers of Finance and Reserve Bank Governors. Perhaps the lead needs to be taken by a small country like New Zealand, to show the rest of the world how systems can be improved?

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