John Armstrong 's Opinion

John Armstrong is the Herald's chief political commentator

John Armstrong: Nats play long game for hearts and minds

34 comments
Bill English. Photo / Greg Bowker
Bill English. Photo / Greg Bowker

The Road to Economic Salvation is not so much paved with good intentions as littered with countless, soon-forgotten "vision" documents and their worthy, but illusory promises of halcyon days ahead.

Who remembers Labour's Knowledge Wave? Or its imaginatively-entitled successor, Economic Transformation? Likewise National's Path to 2010 back in the 1990s. Or, more recently, Don Brash's Act-instigated 2025 Taskforce.

Did anyone even notice National's 120-point action plan which appeared out of the blue in last year's election campaign after Labour's taunts the governing party lacked an economic development model beyond digging up national parks in search of minerals? That economic wish-list has now been superseded by a new (some would say recycled) Business Growth Agenda.

Such homages to economic growth - Brash's more intellectually rigorous contribution being a notable exception - frequently turn out to be little more than over-written statements of the bleeding obvious when it comes to suggesting what needs to be done to reinvigorate the New Zealand economy.

The fundamentals haven't changed. New Zealand remains a very small country a long way from everywhere. Many of the issues raised in Jim Bolger's Path to 2010 document - opening up new export markets, skills shortages, lagging infrastructure - are still plaguing the country nearly 20 years later, judging by the first two booklets of six due for release outlining National's Business Growth Agenda.

What has changed is a greater willingness to commit to targets, the principal one being an increase in exports from 30 to 40 per cent of GDP by 2025, something which will be tougher to achieve than it sounds.

The creators of such vision documents usually have an ulterior motive, however. The material is often produced to fill the political vacuum when a Government has run out of manifesto promises to implement or simply run out of ideas.

The purpose of these exercises is to show government is very busy and focused on the country's long-term needs rather than short-term fixes.

However, the current exercise isn't simply about National setting the agenda. It's also about squashing any threat Labour might pose to National remaining the voters' preferred choice as manager of the economy in the lead-up to the 2014 election.

National knows it is vulnerable - particularly on economic growth, or rather the lack of it.

Ignoring the inexplicably high last quarterly GDP figure, growth has barely touched the 2 per cent mark in the last couple of years.

This has yet to hurt National, however. This is in part because Bill English has used every opportunity to persuade people to look at what is happening in Europe and to lower their expectations accordingly of when the local economy will start to show signs of real recovery.

He has also sought to marginalise Labour by referring to the major Opposition party as "Planet Labour" - a place where the global financial crisis never happened and governments can still borrow at will. This tactic may seem corny. But it is simple and easily comprehended. It works.

English also constantly harks back to Labour's last couple of years or so in power which were marked by large hikes in government spending. Labour has yet to convince anyone it would be far more parsimonious next time, in part because it isn't sure itself that it wants to be.

And with good reason. Come 2014, the electorate may be sick and tired of National's ultra-orthodox, belt-tightening policies and cry out for a dose of Keynesian-style stimulation of economic activity.

In the meantime, however, Steven Joyce, the other half of National's economic double-act, is doing his utmost to paint any Labour-Green government as anti-growth.

He is doing so by forcing voters to confront the fact that they cannot have growth without some detrimental consequences to the environment. He and National are punting that economic growth is the priority for most voters and they will thus come down on National's side of the argument.

Crucially, National's messaging comes in short sound-bytes. It wants economic growth. But bad times make that difficult. Labour had good times. Labour squandered the opportunity.

Labour's pitch is more complicated. It lacks for a pithy label like Planet Labour to pin on National. Labour's latest effort - an "economic road test" of National's record since it returned to power - is at least a start. But the 30-page paper also offers an insight into why Labour is not making significant dents in National's economic credibility.

The road test highlights National's failure to close the income gap with Australia, along with the latest migration figures which show the exodus across the Tasman reaching a record of close to 54,000.

The paper also zeroes in on the deteriorating current account deficit and worsening worker productivity. But telling as they are, such indicators do not impinge on people's lives in any direct or detrimental fashion.

Labour makes much of unemployment being up by 57,000 under National. But this increase follows historic lows. In short, job losses are not at levels where people fear they will be next.

In contrast, the economic indicators which really matter to people - namely those showing the squeeze on their wallets - have arguably run in National's favour.

Take interest rates. A family with a 20-year $200,000 mortgage is better off to the tune of around $80 a week since National came to power.

While consumer prices were rising by more than 5 per cent last year, inflation has since slipped below 2 per cent.

For those who got wage increases in the last year, the private sector average was above 4 per cent.

But many did not get an increase. And the help from lower interest rates will inevitably be swallowed up by rising prices.

Meanwhile, economic modelling by the Treasury shows that the stimulatory effect of policies which saw National - to use its own language - take the rough edges off recession through tax cuts and not slashing income assistance for families is now abating. The economy is now, instead, coming under pressure from domestically-induced contractionary forces brought on by cuts in Government spending. Those forces will only be further strengthened as National gets closer to its target date for getting the Government's books back into surplus. Meanwhile, the much-vaunted Christchurch rebuild has still to come to the rescue on the other side of the ledger.

Add a couple of further international shocks - such as a major slowdown in the Chinese and Australian economies - and National campaigning on its economic record in 2014 begins to look more than a little problematic, vision document or not.

Hence the skirmishing now between the two major parties to gain the early advantage.

- NZ Herald

John Armstrong

John Armstrong is the Herald's chief political commentator

Herald political correspondent John Armstrong has been covering politics at a national level for nearly 30 years. Based in the Press Gallery at Parliament in Wellington, John has worked for the Herald since 1987. John was named Best Columnist at the 2013 Canon Media Awards and was a previous winner of Qantas media awards as best political columnist. Prior to joining the Herald, John worked at Parliament for the New Zealand Press Association. A graduate of Canterbury University's journalism school, John began his career in journalism in 1981 on the Christchurch Star. John has a Masters of Arts degree in political science from Canterbury.

Read more by John Armstrong

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on production apcf03 at 21 Dec 2014 10:21:46 Processing Time: 388ms