The general election campaign sprang into life this week with the election of Jacinda Ardern as leader of the Labour Party. Until then it had been a big yawn as far as investment markets were concerned - mainly because of the figures in the accompanying table.
Support for Labour has steadily declined since the 2005 election, and opinion polls were indicating that the left-of-centre party would be no threat to National on September 23.
Labour's recent election peak was 41.3 per cent in 2002, when party leader Helen Clark gave National's Bill English a hiding. The post-election position was Labour with 52 seats, National 27 seats, New Zealand First 13, Act and the Greens with 9 each, United Future 8 and Jim Anderton's Progressive Party with two seats.
Clark beat Don Brash in 2005 - and formed a coalition with the Progressive Party supported by confidence and supply from NZ First and United Future - but since then it has been all downhill for Labour.
John Key defeated Clark in 2008 and had comprehensive victories over Labour's Phil Goff and David Cunliffe in 2011 and 2014 respectively. Following the 2014 election, National had 60 seats, Labour 32, Greens 14, NZ First 11, Maori Party 2, while Act and United Future had one each. National has governed since 2014 because of confidence and supply agreements with United Future, Act and the Maori Party.
Investment markets showed little interest in the upcoming election because the latest opinion polls had National in the 45-47 per cent range, Labour on only 24 per cent, the Greens 13-15 per cent and NZ First 11-13 per cent. There was a widely held view that Labour was plunging into the political abyss.
The only real interest was whether Winston Peters' NZ First would hold the balance of power and what he would demand to join a coalition government. There is no Kim Dotcom and the Internet Party this time around, nor a controversial policy such as Labour's 2014 proposal to dismantle the country's electricity market and replace it with a Pharmac-style agency called NZ Power.
However, the current election campaign came alive this week when 52-year-old Labour Party leader Andrew Little stepped down and was replaced by 37-year-old Jacinda Ardern. This represented a significant change in style and age, as well as gender.
This dramatic change raises the question whether Ardern can halt the dramatic slide in Labour support since the 2005 election. Her performance over the next seven weeks will determine whether Labour's problems are the message or the messenger. If it is the messenger only, then Ardern should be able to raise her party's percentage vote above its 2014 election level.
The change in Labour leadership coincided with the June quarter Household Labour Force Survey. Employment is usually an important election issue, particularly now because it has a strong influence on immigration.
The first point to note is that the country's unemployment rate has declined from a recent high of 6.7 per cent in September 2012, to 5.2 per cent at the end of 2016 and 4.8 per cent in the latest survey. Our 4.8 per cent unemployment rate compares with 5.5 per cent in Australia, 4.4 per cent in the United States and 5.9 per cent in the OECD group of countries.
New Zealand's 55-59 age group has an unemployment rate of only 2.7 per cent, and 3.1 per cent for the 60-64 age group.
Our employment rate - the extent to which people available for work are being used - is 76.1 per cent compared with 72.4 per cent in Australia, 70.0 per cent in the United States and the OECD's average of 67.4 per cent. These figures have been adjusted to standardised ILO guidelines.
The New Zealand economy created 181,000 additional jobs over the past two years, with 93 per cent of these being full-time employment and the remaining 7 per cent part-time.
Over the same two years, the Australian economy created 459,200 new jobs of which only 57 per cent were full-time.
Accordingly, the New Zealand economy has created 9.0 per cent more full-time jobs since mid-2015 while Australia has generated only 3.2 per cent additional full-time employment positions over the same period.
This largely explains why New Zealand is experiencing record net migration levels at present.
Nevertheless, we still have huge capacity constraints, including a shortage of skilled labour. For example, in 1973, when the country's population was only 3.0 million, we had 39,766 new dwelling consents, whereas we now have a population of 4.8 million and only 30,453 annual dwelling consents.
We clearly don't have enough skilled labour to meet our infrastructure and housing needs.
Consequently, the immigration policies of the major parties should be under the spotlight during the election campaign. These policies can be summarised as follows:
National wants to cut immigration by about 8500, from the current annual rate of 72,300, through a combination of measures including the restriction of low-skilled migrants to a three-year visa
Labour wants to reduce immigration by 30,000 per annum by cutting back on overseas students on low-level courses and curtailing the ability of these students to work
The Green Party policy is rather nebulous in its approach, but will "ensure that the setting of immigration levels would be reviewed on a regular basis and be based on factors including net population change"
[Jacinda Ardern's] performance over the next seven weeks will determine whether Labour's problems are the message or the messenger.
NZ First's policy is also rather vague, but it "is committed to a rigorous and strictly applied immigration policy that serves New Zealand's interests. Immigration should not be used as a source of cheap labour to undermine New Zealanders' pay and conditions"
Most New Zealand business owners and managers, particularly those in the building, information technology, hospitality and horticulture sectors, support the current immigration policies. This is because they face serious labour shortages that can only be resolved by attracting foreign workers.
Finally, it will be interesting to see how markets respond to the new Labour leader and a more exciting election campaign.
The first point to note is that markets don't like uncertainty and the Labour Party leadership change has made the outcome of next month's election less certain.
Residential housing sales activity could slow further as property investors will be concerned over several Labour Party policies, including restrictions on foreign buyers and the potential closure of tax loopholes that allow property investors to write off losses on rental property against other income.
The housing market could pick up, as it did after the 2014 election, if National remains the governing party.
The NZX has been rather subdued in the seven weeks before and after the past five elections. This was to be expected, as election campaigns create uncertainty and our MMP electoral system means there is usually no clear winner on election night. The immediate post-election periods are often characterised by coalition negotiations between the biggest seat winner and minor parties.
The NZX50 Gross Index has been down an average of 3.5 per cent in the seven weeks before the past five elections but this figure was strongly influenced by the 12.4 per cent plunge before the November 2008 election, which was at the height of the global financial crisis.
The NZX has fallen an average of 0.5 per cent in the seven weeks after an election but this figure was also heavily influenced by the poor performance of the NZX after the 2008 election, which was also mainly influenced by the GFC.
The NZ dollar/US dollar market has been one of the most volatile in the seven weeks before and after the past five elections. The Kiwi has fallen before four of the past five elections by an average of 4.9 per cent and has been relatively flat immediately after the elections.
The NZ$/US$ movements are more difficult to predict around next month's NZ vote because political developments in the United States are continuing to have a negative impact on the greenback.
• Brian Gaynor is an executive director of Milford Asset Management.