If Labour wins a third term, current polls suggest it would rely for every measure on the agreement of the Greens and Te Pāti Māori (TPM).
That Government would be a disaster. From her Christchurch and Covid peaks, Prime Minister Jacinda Ardern has already become highly polarising. Jacindamaniacs still do daily battle on social media, but near-constant media attention through the two years of the Covid-19 pandemic means Ardern has overstayed her welcome in too many voters' living rooms and daily commutes.
Ardern's popularity is not in freefall but is trending in only one direction. There is no evidence that either of the continuity candidates, Finance Minister Grant Robertson or Covid-19 Response Minister Chris Hipkins, would do any better. A left-leaning alternative, such as Revenue Minister and Thomas Piketty fan David Parker, or Energy Minister and former Alliance activist Megan Woods, would only see Labour drift further away from the median voter.
On the two main economic issues of the day, the cost of living crisis and public demands for tax relief, Labour is already offside with the median voter and a majority of its own supporters. Absent terrorist attacks or plague, this is how it's always been for Ardern's Government. It struggled in the polls through 2018 and much of 2019. As late as February 2020, it was on track to become New Zealand's first one-term Government for nearly 50 years.
The Budget, now less than a fortnight away, is unlikely to placate voters on grocery bills or tax, with Robertson indicating most of his $6 billion in extra spending will go on restructuring the health system and — probably futilely — combating climate change and rising sea levels.
The world's top five greenhouse gas producers — China, the United States, India, the EU and Russia — are together responsible for more than half the world's emissions and are more focused on geopolitics right now. The European Union may further reduce emissions if it stops powering itself with Russian oil and gas and Germany readopts nuclear energy, but there's little sign the others will do anything like what climate scientists say is required to stop runaway warming.
Even if they do, the NZ Sea Rise programme, funded by the Ministry of Business, Innovation and Employment, tells us tectonic movement and compacting sedimentary basins are at least as big a threat to much of our coastline and infrastructure as global warming.
If Robertson is truly listening to the latest science, he will rebalance his climate-change spend away from so-called mitigation (trying to reduce our 0.15 per cent contribution to global emissions faster) to adaptation (working out what to do about the climate change and sea-level rises we are doomed to face anyway).
The Finance Minister hailed yesterday's news that the fiscal deficit for the nine months to March 31 was $4.1b below that forecast in December's half-year economic and fiscal update (HYEFU), giving him more cash to play with.
Beehive strategists hope for a further economic and thus fiscal upswing over the next 18 months to allow for tax cuts and other handouts for the median voter in 2023.
With a bit of luck, Labour could adopt all of National's current tax-cut policy, except for abolishing the top 39 per cent rate. That is, for all but the top 5 per cent of earners, Ardern could go into her leaders' debates with National's Christopher Luxon promising the same extra cash in the pocket. Robertson's announcement this week of new debt targets was also an attempt to prop up Labour's dwindling credibility on fiscal responsibility.
More likely, the Government — and voters — are going to be disappointed, with the economic forecasts on which they are currently relying being too optimistic. The numbers will be updated in 13 days in the Budget Economic and Fiscal Update, but does anyone now believe December's HYEFU numbers that inflation will be just 3.1 per cent in 2022/23, with tax revenue increasing 11 per cent but Robertson's spending falling by 6 per cent?
Since inflation was beaten in the early 1990s, New Zealanders have become used to their wages rising faster than prices. This year, prices are rising twice as fast as wages while interest rates are set to soar.
Robertson will face a fearsome public-sector pay round in 2023, with union bosses unlikely to convince their members to moderate their demands to help him balance the books for the election campaign. He will have very little room for either threshold adjustments or a big pre-election spending splash.
"Spending the lot" to undermine the Opposition's fiscal plans is another option, but it didn't work for Robert Muldoon or Michael Cullen in 1972 and 2008. Such fiscal sabotage is unlikely to appeal any better to 2023's median voters, already worried about paying back the $62b Robertson borrowed for Covid and finding the $31b a year his Infrastructure Commission says we need for its infrastructure strategy, including to get Aucklanders walking, cycling and catching trains, to upgrade roads and build windmills, and to deliver Ardern's "nuclear-free moment". While Labour is ideologically limited to using taxes and borrowing for infrastructure, National promises to "innovate on finance", hinting at a free or at least cheaper lunch.
Labour's still top-notch political machine may yet allow Ardern to scrape home with Green and TPM coalition partners. Backed by Labour activists angry about the $1 trillion transfer of wealth to property owners that Ardern has already overseen, the Greens and TPM would inevitably push her much further away from the home-owning median voter who supported her so strongly in 2020.
That, along with the alarming economic and geopolitical outlook, profound internal division and the usual arrogance and boredom of third-term Governments, would quickly see a Labour-Green-TPM Government unravel like the Lange-Palmer-Moore and Bolger-Peters-Shipley fiascos in 1987-1990 and 1996-1999 and, to a lesser extent, the Clark-Peters arrangement in 2005-2008.
The unravelling may even come sooner, over the next 16 months. Already, 17 Labour MPs are set to lose their jobs on election day, while others wonder what the past five years have all been about, with all Ardern's major 2017 promises proving illusory as the $1 trillion has cascaded upwards from the young and poor to the old and well-off.
The worst of it is that Luxon and his barely middling team now have no incentive to say, do or even bother thinking anything much. Their best strategy is to sit back, watch and wait.