It’s easy to blame Christopher Luxon for not projecting a sense of direction and so build public confidence the Government knows what it’s doing.
But the problem goes deeper.
National was elected after doing little to define what it wanted to achieve in office beyond vacuous slogans and waving $20 a week around west Auckland.
Instead, it just followed Ardern and Key’s empty but election-winning formulae.
But this time, the new Government has inherited an economic, fiscal, productivity and social crisis caused by 15 years of complacency and near-constant borrowing.
New Zealand is in its worst shape since the economic crisis of the early 1980s and the Great Depression of the early 1930s. And it has elected yet another Government determined not to confront that reality but to continue on its merry way of increasing spending while cutting taxes and borrowing evermore to bridge the difference.
According to the OECD this week, even with radical reforms to somehow double annual productivity growth, gross government debt will keep rising every year, hitting 100 per cent of GDP by 2050 and 150 per cent later that decade.
Greece’s 2010 economic crisis hit before its gross debt even reached 150 per cent of GDP.
New Zealand would default earlier than the 2050s, since doubling productivity growth is inconceivable without reforms that Luxon and Finance Minister Nicola Willis won’t consider, based on political advice from their mentors Sir John Key and Sir Bill English.
They forget that, according to the OECD, productivity growth halved under the Key-English Government from that achieved under the Bolger-Shipley and Clark Governments, and borrowing resumed. It goes without saying there was no improvement during the Ardern-Hipkins circus.
Undaunted, Luxon and Willis insist on plodding along like their mentors, as if it is still 2017 or even 2008, despite the outlook being nothing like the same.
In a speech that could have been written by English in 2008, Willis confessed yesterday that each time the Treasury has presented her with economic and fiscal forecasts, the data has worsened.
“Sadly,” she lamented, as if it were meant to reassure us, “I’ve learned to dread what comes out of the forecasters’ mouths when they come into my office.”
Yet, Luxon and Willis proclaim, there’s no cause for alarm nor any reason for policy adjustments.
According to Willis’ speech yesterday, “working towards a surplus”, “putting net debt as a percentage of GDP on a downward trajectory” and reducing government spending as a percentage of GDP are now just “longer-term objectives”.
That Key-English-style complacency should alarm anyone remotely acquainted with the forecasts Willis refers to.
Following Willis’ speech and ahead of its poll, the Taxpayers’ Union was stark: “New Zealand chooses to be poor because successive governments have kicked hard decisions down the road.”
It said that Willis can choose to “play it safe and deliver, in effect, Grant Roberston’s 7th Budget, or take the hard but necessary decisions to avoid locking in New Zealand’s economic drift and decline”.
Despite all such warnings, Luxon and Willis indicate the former. To use Winston Churchill’s words, they are “resolved to be irresolute, adamant for drift, solid for fluidity, all powerful to be impotent”.
The defence is that they dare not do anything to risk re-election.
But economists warning their economic and fiscal strategy will make things worse aren’t making partisan points. The warnings are coming because a longer recession followed by a permanent debt spiral is what complacency will deliver.
That will then undermine the stability of the coalition and National’s political prospects, risking the premature return of Labour in 2026 or earlier.
That’s the worst part of the story.
Like Key, Ardern and Luxon before him, Hipkins figures his best path to power is not rocking boats. Politically, he’s probably right.
But other Labourites argue that will just lead to a fourth consecutive unprepared and middling government. While that might have worked in the 2010s, from now on and beyond, bumbling along with slogans would doom a post-2026 Labour Government to the same sort of failure that meant they were kicked out in 2023 and which is undermining Luxon.
It’s quite clear New Zealand has an important and increasingly urgent choice to make about whether to reduce the size of the state and the indulgences it now pays to a majority of the population, raise tax rates, broaden the tax base, or a bit of all three.
The solutions aren’t obvious, or easy. But they must be identified, mandated by voters and implemented. Hipkins’s strategy indicates he’s not up for it.
Moreover, along with his National predecessors Hekia Parata and Nikki Kaye – also highly rated by Key and English – Hipkins led the disastrous liberal turn in the school system, including dumbed-down curricula, a failed qualifications system and the catastrophe of so-called modern learning environments.
As Covid Minister, he then failed to respond to Pfizer when they offered early access to the Covid vaccine, dooming Auckland to the long 2021 lockdown and the continuation of the horrendous MIQ system.
As Prime Minister, he wouldn’t make tough decisions to either cut spending or broaden the tax base. He proved unable to prevent successive ministerial scandals. Yet he might be Prime Minister again in 2026 or even sooner.
Voters deserve to know if Hipkins has learned anything and what he would do differently. After the lamentably cynical approach of Key, Ardern and Luxon, we are entitled to demand he engage seriously about the multiple unfolding crises and provide a detailed and challenging programme to escape them. Or he should make way for a Labour leader who might.
Disclosure: Matthew Hooton has more than 30 years’ experience in political and corporate communications and strategy for clients in Australasia, Asia, Europe and North America, including the National and Act parties, and the mayor of Auckland.
