Where will the votes come from to get Labour a third term?
Prime Minister Ardern promised Parliament this week that Labour would lead New Zealand to “… emerge stronger than ever before.”
In many respects that is true already in efficiency, resilience, and government responsiveness.
But the Prime Minister didn’t communicate what an improved New Zealand would look like.
This government can’t wait three months to re-set itself.
Democratic politics is a popularity contest, and right now a third term is not looking good.
Public Health
The protesters on Parliament grounds may well be incoherent and may yet learn to love “I Write The Songs”, but they are posing the right questions of the government at the right time. We all owe this Labour government a debt of gratitude for their globally outstanding response to the pandamic. But operating the country in a crisis for three years, on top of the multiple other crises we have endured, shows that they can manage but not that they can lead.
The vaccination mandates and the enforced isolation were useful for a time but they need to be replaced with something softer: civil emergencies should suspend human rights for the minimum time possible and that time is up.
No one has any idea whether the entire DHB restructure will deliver any better health outcomes at all, and nor is there any evidence that it will fix the gaping holes in our public health system that the COVID variants have ruthlessly exposed. It is up to the government to demonstrate that it will, because as the Prime Minister points out there are multiple variants still, and “winter is coming”.
The public health “thanks” vote will by 2023 have completely evaporated.
Economy and Budget
Headline unemployment and underemployment is down to historic levels, economic growth is strong, industry and trade are strong though tested. The next stats come out just before Budget is released.
We are showing all the signs of drastic skill shortages in particular areas – which more locals will train for rather than be imported. This is good pressure to have.
But is the government guiding New Zealand to an improved economy? It has done so much with unprecedented wage subsidies and tens of billions of infrastructure investment. The current government has essentially underwritten the wages and salaries of most workers.
The government is expending huge effort taking the place of near-absent worker unions with new comprehensive job-loss compensation, higher minimum wages, stronger collective wage bargaining, and more. Little of that will enable us to be more productive, more efficient, more competitive, or more innovative.
We are well overdue for a government budget that sets out far more than what the government spends, and actually gives strong investment and regulatory signals to markets.
None need be grateful that poverty hasn’t massively expanded over this political term, though it is uncommon for it to be a political issue when unemployment is so low.
Overall it is in the handling of the economy that the government will neutralise the main political attacks through to 2023.
Carbon Zero Plan
We are three months from the 2022-23 budget and three months from the Carbon Zero plan. The Carbon Zero plan will be comprehensive and it will have a very high media and public impact. In the transport sector for example one of the draft targets is to reduce vehicle kilometres travelled by cars and light vehicles by 20% by 2035 through providing better travel options. To remind ourselves, here’s the consultation document.
It will no matter how it is spun be viewed as creeping socialism from a government that is already right in our face.
There are frankly zero new votes in this plan.
Transport
This government has set out the enormous Auckland light rail plan, but unless there is a strong mandate at the next election this project has a less than even chance of occurring. The Wellington plan is patchy but now coming out of design and into build. Until at least 2030 New Zealand has functioning public transport systems capable of shifting emissions significantly in just two of its cities: Auckland and Wellington.
Electric car sales are strong, but our national car fleet is rapidly ageing as available household cash goes into rent or mortgage payments. The government continues to prefer public transport subsidies and capital projects to provide mode choice, rather than regulating old combustion cars out. This approach only works for Auckland and Wellington, not the rest of the country. Again, nothing politically positive for the government out of this.
Energy
In energy, the government has not yet shown how it will deal with two massive issues. The first is the price of petrol and diesel. Carbon trading and global instability will likely increase the cost of petrol further, and without local refining or much storage we are increasingly at the whim of international market spikes and troughs. Powerless government and political risk go hand in hand.
The second is in our electricity bills. This government like most before it is being played by the Tiwai Point owners, and while wind and solar generation is increasing it is the Tiwai Point question that is holding up the entire renewables sector. Government weakness with its generators has led to our highest-ever use of coal since the 1950s. The Lake Onslow battery project isn’t commercially viable since it would only be used for backup, and runs the same high risk of early death as the light rail project. There is no sign the government plans to gain political capital out of price regulation in electricity.
Housing
As I’ve noted before, this government is more interventionist and more active in housing regulation, tax, and construction than any government in the last 50 years. Despite this, rent on median average consumes nearly half of what households earn. That’s higher even than Canada and Australia which have also had real estate booms. Housing construction is booming, consents are up, and the enforced pause on immigration is allowing supply to catch up.
We have a long, long way to go before we are at the inflation points of the late 1980s, but every half % point interest rate increase (of which there will likely be several in 2022) will have a similar disposable income impact on those who own houses as those who rent.
The question of regulating the price of rent will be politically explosive, and to not too fine a point on it almost everyone in parliament owns a rental house.
Water
We have to go back 50 years to find water as an electoral issue, but the 3-Waters programme even has the potential to make the 2022 local government elections slightly interesting – which is some feat. Government hasn’t spelled out what the remaining role for local or regional councils is once it has taken water management off them. It hasn’t recognised that water, like petrol and broadband, has a deep implied reliance across the whole of society. There are still a few around who remember what previous whole-of-network reforms did to us in telecomms, electricity, and rail. Like the health reforms, none can be sure whether water prices will be cheaper or fair, nor how this new form of commercialised supplier + operator oligopoly will work.
This government has left most of its reform initiatives to its last year of the term and they are converging into a godawful mess.
Conclusion
Since the 2020 election this government has seen a precipitous fall in popularity and the Opposition are close to being able to propose an alternative government.
Where will this government gain back the voters it has lost?
Can it improve sufficiently inside 12 months?
How far the tide goes out from its historic high depends on just 12 months of performance from May 2022.
After that the die is cast.
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