So why is Labour and Ardern struggling when the economy is so strong?
For the deep left this government is doing most things right; recentralising and renationalising like Socialism 101. For the centrists the economy is performing well, and anyone with a house or two is a now a millionaire. Workers and the not-working haven’t been subsidised so much in 30 years.
Most of their policies particularly in the economic realm are correct.
They have passed pro-market climate legislation, stupendous infrastructure spending, supported unions, propped up vulnerable families and vulnerable businesses alike. They went into debt to save society like any decent leadership would.
Poverty hasn’t exploded, property has de-frothed but not imploded, exports are high, unemployment low and wage rises strong.
So why the heck is Labour having such a hard time selling their economic record?
Let’s put aside all other portfolios and concentrate on Finance. Outside the leadership head-to-head it’s the only portfolio that matters.
One word: inflation. The job market is still hot, even with the Reserve Bank raising rates. But inflation in housing, rent, food, electricity and fuel is outpacing wage growth, and that’s what people feel on a daily basis. So politicians who have a focus on bringing costs down – like newly elected Mayor Wayne Brown – reap sentimental rewards without yet trying. Never mind that New Zealand inflation has little to do with anything Robertson has done, but rather of a paradigm shift in the global economy that has come with the end of the “cheaper is superior” model.
The past 40 years of our economy and that of the developed world has been predicated on cheap money, cheap labour, and cheap energy. Cheap tourists, cheap fruit pickers, cheap public services, cheap welfare.
Now with the United States Federal Reserve consistently raising rates and with the end of global quantitative easing, cheap money has gone.
Cheap energy went the minute Russia invaded Ukraine. We are probably heading for insecure energy.
Cheap labour has gone too as any restaurateur, hotelier or orchardist will tell you. Business owners complaining about wages going up tend to be Koru Club and Northern Club members doing everything they can to keep profit margins at record highs. Or they just sell out and enjoy life.
I am amazed that people are still writing about wage inflation as though it’s entirely a bad thing. It’s only a bad thing for corporate C-suites and Ministers of Ministries doing everything they can to keep private profit margins and public tax income defended at near record highs: from cutting workers (in the case of retail outlets, bank tellers, oversized tech groups) to cutting services by stealth (like health, fire and emergency, and tertiary education), or supermarket portion sizes. Everyone wears the pain of superprofits, taxpayer and worker alike.
The problem is that if you don’t pay people at some point, the maths stops working. The race to the wage bottom is theirs but it is extracted from waged time taken from our families for as long and far as the horizon of the time of our remaining lives.
Robertson and Ardern came to power inside Labour because they promised nothing other than inflated words, and on that they have delivered. The real problem is that actual economic inflation was always going to go up for a certain period of time, then after nearly half a century easy money and outsourcing came to an end. Robertson’s fiscal spending has little to do with the larger paradigm shift we are going through. Pass the parcel stopped with Labour. And yet Labour as also the Democrats are taking the heat for inflation, which is making it difficult for them to message all their gains.
So, what do to?
Robertson needs to set out, often, how he and his team are reigning in our corporations and pressuring costs down. The DIRA legislation to require Ministers to appoint a majority to the Fonterra pricing committee. The new powers of the Commerce Commission. The vast COVID subsidies to business. The tens of billions turning massive construction companies into subbies in return for increasing network productivity. Hundreds of millions to shore up council utilities particularly water, in turn supporting all businesses reliant on water. The massive subsidies by paying for apprenticeships. The huge support for local business in buying back Kiwibank, support and investment opportunity for NZSuper and ACC. Why doesn’t Robertson just set out his stall about the purpose of Labour with business?
Big business owes this government big time, but Robertson is failing to state why he has earned their fealty. Labour has done successful charm offensives to business before and they have worked. That is the piece in Labour politics we are missing right now.
Ardern fans herself about corporate price gouging about once a year, but every reporting cycle gives increasing data to back up the fact that companies are using their disproportionate power to keep their profit margins constant rather than sharing the pain that the rest of us are feeling. If Robertson doesn’t message better by demonstrating how they will continue to reign in New Zealand’s major corporations nd their margins, Labour will end up like the luckless Efeso Collins who offered the lesson in promising no public corporate control and unending spending then wondering … why.
Roberston must deliver a smarter message about the Labour economic record with business: it’s his part in stopping Labour losing.