While not yet as bad as in the 1970s, the term for this is stagflation, and even the Treasury now warns that “high-frequency data provides further evidence that growth slowed in the June quarter” and that “near-term inflation pressures have increased”.
Private-sector economic forecasters are even more pessimistic, and the Reserve Bank’s Kiwi-GDP forecaster continues to indicate June quarter GDP declined by 0.3%. Massey University’s GDPLive indicates the economy continued its decline through July.
This is more than 18 months since Luxon purported to unveil his “plan” and six months since his big “going for growth” speech in Auckland.
In fact, Luxon has no plan of the sort that might transform New Zealand’s prospects the way Argentina’s President Javier Milei has turned around his country’s economy in less than 18 months, as detailed by Richard Prebble on Wednesday.
Announcements said to be part of Luxon’s “plan” usually have the appearance of being dreamed up overnight based on focus-group sessions, like banning surcharges on debit, credit and Eftpos payments.
While Luxon claimed the ban “ensures” that a mandated $90 million reduction in credit-card fees would “flow through to consumers”, Finance Minister Nicola Willis was more orthodox in saying businesses would make their own decisions.
The surcharge ban is probably good politics, since it will perhaps marginally benefit those using their cards, phones and watches while imposing a tiny cost to those who use cash.
But we can only pray that Luxon and Willis understand that shifting $90m from banks to consumers is irrelevant in the context of a $430 billion economy, including the $7.2b the banks made in profits last year.
Like so many of the “announcements” the Government has made in the past two weeks, like the $80m for a new medical school and the reannouncement of $6b of government infrastructure projects, the surcharge ban is, at most, a rounding error.
When he speaks of doubling down on his plan, even Luxon surely did well enough at primary-school maths to know that two times nothing is still nothing.
Underlining the emptiness of his plan and his approach to politics generally is that the past two weeks of frenetic media activity can be explained by the Beehive knowing that all the major polling companies are currently in the field and expected to release results over the next fortnight.
In political strategy, this is known as “pumping the polls”, where populist activity occurs during a polling period to try to score a better number for a candidate or party.
Even if this improves the result by only a couple of points, the candidate or party can claim growing support.
Luxon had better hope that is what has happened, because on the results of the next fortnight’s polls his future as Prime Minister depends.
National MPs are increasingly twitchy not so much about the Government’s polling, but about National’s and Luxon’s.
As they look around the caucus room, National MPs know that one in six of them may not be back at the next election, based on the past few months of polls.
But those set to lose their seats may be the lucky ones, since while the same polls suggest the coalition would be narrowly re-elected by just a seat or two, National would be even weaker in a second Luxon Government than in the current one.
Luxon would of course keep his Botany seat but, the way things are heading, National would have no more than a couple of list MPs, and perhaps none.
Off the top of the list, Willis and Speaker Gerry Brownlee would probably scrape in – but not comfortably – and Infrastructure Minister Chris Bishop would survive if he retained his Hutt South electorate.
But it would be bye-bye for Justice Minister Paul Goldsmith and anyone else relying on a list seat, including any new talent National wanted to attract.
Blame for this tends to be directed towards Luxon, who has never polled better than his party, which has also failed to get out of the 30s under his leadership.
As preferred Prime Minister, Luxon is usually about level with Labour leader Chris Hipkins.
But Luxon’s net favourability number has almost always been under zero, often catastrophically so.
More people also think the country is heading in the wrong direction than say it is on the right track. Astonishingly, National fell behind Labour this June over who is best to manage inflation and the cost of living.
Among voters’ top 20 issues, National was ahead only on the economy – marginally – and on law and order and defence. Recent changes to Luxon’s media schedule may help a bit.
On the narrow question of media tactics, it is better for a Prime Minister to appear on Mike Hosking Breakfast and its lower-rating competitors on a Monday rather than a Tuesday.
But Luxon’s problems do not so much concern his choice of media and social-media channels and when he uses them.
The real problem is that too many swing voters just have a visceral dislike and disrespect of the man, and that he seems incapable of engaging seriously – scripted or unscripted – on issues as they arise, or of talking in more than banalities.
Were the economy clearly on the mend, this might not matter as much. But having nothing meaningful to say to Hosking or his competitors and bombarding social-media users with brain-dead messaging about non-existent plans “starting to work” is not what the times call for.
Nor does Luxon do himself any favours by telling everyone how hard he works. No one cares. Some of the greatest leaders in history did the lightest hours.
What matters is voters perceiving that a Prime Minister offers some sense of what they want to achieve that is independent from their focus groups, a clear strategy to deliver that objective even if aspects of it are unpopular, and a genuine sense of connection with the country’s past, present and future.
A Prime Minister should be able to speak knowledgeably about all these things, not revert to childlike slogans under even the softest questioning.
Luxon is already living on borrowed time. He had better hope the forthcoming polls buy him a little more time to try again to prove that he has at least some of the attributes his job demands.
