Today’s toxic economic and geopolitical mix makes the GFC and the 1997 Asian financial crisis look like tiddlywinks.
Only the turbulent economic reforms of the 1980s compare in terms of impact on households and mood.
While the Lange government made the 1980s reforms more painful than they needed to be, today’s economic difficulties are almost entirely outside of the control of the Ardern administration.
That’s what makes the politics so difficult.
The continuing war in Europe, residual Covid-19 restrictions, supply chain and labour issues, high food and energy prices, and global political instability are all partly to blame.
The world’s central banks have responded accordingly. Our reserve bank has increased the official cash rate by an astonishing 400 points since August last year.
In addition, Reserve Bank Governor Adrian Orr has admitted that he is attempting to “engineer” a recession to get inflation under control.
Hearing the Governor talk that way appears to have intensified voter resentment even further. Recessions are normally things that central banks, governments, Treasury officials, damn near everybody works desperately to avoid.
The political impact of this is serious. After all we have been through since 2020, we are now faced with the prospect of deteriorating living standards for the next two, three or even four years.
And if indeed the RBNZ’s plan is to send our economy into a recession, voters will rightly ask what the plan to get us out again is.
Even a newly elected government at the peak of its power would struggle to navigate these crocodile- and shark-infested waters.
But the difficult backdrop is only half the story.
Labour’s polling problems also stem from an unacceptable lack of focus over the past month.
In tough economic times, voters tend to concentrate more on the bottom of Maslow’s hierarchy of needs.
To retain the public’s confidence, governments need to be attuned to this shift and demonstrate that they are both in touch with the concerns of voters and have a plan to do something about it.
In the absence of that, voters will fill in the blanks themselves.
Although the Government has been working hard to address crime and ease the cost of living impacts, it has allowed a perception to take root that its mind is elsewhere.
While many initiatives on the Government’s agenda might be necessary, important and urgent, in politics your licence to work on this stuff is only granted if you can get the basics right.
While this all sounds a bit grim, Labour still has every opportunity to seize back the agenda after a well-needed summer break.
If the Government can demonstrate that it understands the pain voters are going through and that it has a plan to help, there is no reason it can’t build back lost support.
In addition to a Cabinet reshuffle reportedly due to take place in the new year, shuffling out some unnecessary policies and projects is probably also in order.
One thing is increasingly clear. If Labour is serious about closing the polling gap and pulling off a historic victory at next year’s election, decisive action is required.
Andrew Kirton was Labour’s General Secretary from 2016-2018. He now works in government relations for transtasman firm Anacta Consulting. He is married to a Labour MP.
