Will the "transformation" promised by Jacinda Ardern in her first term as PM be delivered or will a new generation force change as the boomers once did? An essay by Colin James.
To talk about what lies "beyond Jacinda" is not to say the Prime Minister is transitory. Jacinda Ardern has demonstrated the requisite skills and resilience to see through this second term and, if she wants, have a fair shot at a third term.
But her Government needs to be seen in a wider and longer context. The wider context is a rapidly changing, turbulent and seriously challenging external world. The longer context is a decade ahead of climate, ecosystem and new-technology forces that will require major policy change and during which will rise a generation with different ideas of how that policy should change. Do Ardern and her X- and Y-generation contemporaries have the mentality to make those big changes or will they be left to a rising generation with a different mentality and different ideas?
In short, are Ardern and her X and Y contemporaries tiptoe-through-the-tulips types or striders up and over the mountain pass? Yes, they do things differently from their boomer parents, but are they sufficiently different to bring about real change in this challenging era?
My sense from October 2017 was always that Labour would get a second term, with 41-43% of the vote plus the Greens on 6-7%. Ardern's commanding leadership in managing Covid-19 added maybe 6-8%, fetching Labour up at 50.01%, an unprecedented single-party majority under MMP in this country. (Scotland has had that under MMP for several terms.)
That made the 2020 election unusual, to say the least. So did Labour's astonishing electorate wins off National, most notably the seat built around Sid Holland's crusty Fendalton; young Green star Chlöe Swarbrick's Auckland Central gig; National's close-to-record 19 percentage-point fall in its vote, three leadership changes and Judith Collins' mixed-messaging and Trump-lite stumbles; despairing National voters going Labour or piling into Act; and the humiliating exit of Winston Peters after three months of sad, desperate attacks on the parties with which he had been in government.
This has set Labour up for a credible bid for a third term in 2023 with the Greens, who, with some influence but also ability to stay distinctive, should be able to hold above 5%. Although one never says never in politics, a new destabilising shock – a house price crash, say – may disrupt our politics or the Government may make a disastrous mistake.
Some think Ardern will not see out the term and instead go off to look after her daughter, Neve. I am not among them. She has a duty to voters and her party to see through this term and fight the 2023 election, and the residual Mormon inside her takes duty seriously. In any case, Deputy Prime Minister Grant Robertson would take over and his stature has risen.
A big part of Labour's third-term potential is that National has work to do. It has to recover the combination of a strong moderate-liberal tendency in constructive tension with a strong moderate-conservative tendency, which characterised its robust spells in the 1950s-60s and the 11 years under John Key and Bill English. It has to find a saleable, unifying leader. It has to rebuild policy to look through the 2020s instead of holding on to the 1990s-2010s. It needs to rethink and rebuild the party organisation's ossified "corporate" structure adopted in 2003. Even when it does build its vote, some of that will come back off Act – whose leader, David Seymour, will have a job on his hands managing a disparate bunch of new MPs – and so not add to the right's overall total.
An Aurora named Ardern
Contrast Labour. It is remarkably united and buoyant with an active membership, including many young people. It has at the top a tight duo of two friends: a Prime Minister and Finance Minister joined at the hip. And Labour has a macro-personality Prime Minister – that is, a leader who floats above day-to-day politics and draws voters into an entrancing aurora, as Key did, though at a lesser altitude. Unlike two other macropersonalities, France's Emmanuel Macron and Canada's Justin Trudeau, whose glows have dimmed, Ardern's has gone on warming. Three years on from magnetising mobs after bursting from her political chrysalis as Labour's leader, she was still being mobbed this past campaign. Many conservatives fell under this spell.
She has proved far tougher underneath than she looks on the surface. Her grasp of detail, firmness and inclusiveness in managing Covid and communicating the Government's measures pushed her already strong personal approval ratings stratospheric. She somehow wove "we" the Government and "you" the people into one seamless whole: you are us, we are you.
We in this tiny country are living in a little bubble. By the standards of most advanced-economy liberal democracies, we are stable. Pre-Covid, the economy was going reasonably – and still is. The two main parties of the past 85 years are still the two main parties. There is not widespread anger at the ruling elites. Extremist and populist parties here operate at the margins.
Outside this bubble, the world is in disruptive change – economically, technologically, demographically and climatically. This change is faster and greater than in the 1970s and 1980s. And it is more likely to accelerate than decelerate through the 2020s.
Covid is a symptom and agent of that transition. We will try to go back to the way things were, but even if we think we have got there, we will find the rules have changed. And it will take us some time to work out just how the rules have changed and then what to do about that.
First, globalisation. Globalisation of trade stalled after the global financial crisis of 2007-09. Rising protectionism, particularly but not only by the US under Donald Trump, has compounded that, and Covid has exposed the fragility of just-in-time complex global supply chains and revived an interest in self-sustainability in essential goods. The US has blocked appointments to the World Trade Organisation appellate body, so the WTO can no longer undo actions that undermine free and fair trade. The rules-based international order a small country needs has frayed.
But globalisation is not dead. Global companies and global supply chains still operate. Global finance continues to integrate and increase its share of the global economy. That plus central bank money-printing have driven a huge increase in global corporate, personal and government debt – from 180% of global GDP in 2006 to 320% in 2019. Covid has pushed that up to 365%. Zombie companies and junk bonds pose threats to financial stability and to a rebuild of productivity. The threat of a severe global financial shock, bigger than that of 2007-09, is high.
Digital services continue to globalise, because such services can be done anywhere, operating through networks rather than supply chains. Software is a growing ingredient of manufacturing and can be transferred worldwide in seconds with no need for ships or planes. Digital services have increased people-to-people connectivity: the Black Lives Matter movement, for example, spread fast and wide.
Globalisation of people – mass migration – slowed before Covid, then stopped. But the push-pull factors have not disappeared. A major pull factor is the ageing of populations in rich and getting-rich countries.
The global economy and global politics are rebalancing as China flexes its economic and political muscles and other rising countries assert a greater place. China is a fascist state, operating under the "leader principle". It is increasingly assertive, verging on aggressive, claiming global pre-eminence. Russia is also fascist. The Middle East ranges from unstable to turmoil. How long will it be before China takes over Taiwan? Ten years from now, will China and India have settled their differences?
Mind the gap
Within liberal democracies, widening wealth and income disparities have generated populist responses: mixes of nativism, nationalism, nostalgia and resentment at self-perpetuating privileged elites. Hence Donald Trump's America-first, Boris Johnson's Brexit, the rise of extreme left and right parties across Europe and autocracy in Turkey, Hungary and Poland.
That's all on the surface. For five centuries or so, the pre-eminent ideas about how to run societies, economies, nations and the world were generated in Europe and offshoots of Europe and embedded by colonisation and economic dominance – so we felt mainstream.
That half-millennium ascendancy is ending. No one knows what follows, but the contest of ideas is full on. For example, China says its version of state-managed capitalism and social surveillance is the new way.
China is confident. The democracies are not. Within democracies, the economic orthodoxy of the past 40 years is under sustained scrutiny, critique and criticism – not least in such papers as the Financial Times and the Economist. Here, the Treasury produced in 2015 "well-being economics", a major departure from the 1980s orthodoxy. But there is no ready-made alternative text for liberal-democratic capitalism sitting on the shelf, as US economist Milton Friedman's was when Keynesianism went ragged in the early 1970s.
For small nations, navigating this global disorder will require coalitions of the willing. New Zealand has been active in the development of four such coalitions.
But wait, there's more: accelerating climate change, emerging shortages of water and other necessities, overexploitation of natural resources and more pandemics are telling us to change our habits. Add society-changing technologies: artificial intelligence mining huge amounts of data and driving robots; artificial protein and high-rise urban "gardens" challenging traditional agriculture; and gene editing, which holds the promise that we may incisively improve – or distort – plants, animals and humans.
These changes are largely generated globally, but their effect is local so they require local responses. Climate change and ecosystem degradation are the commanding examples. And the time spans available to develop those responses are short.
Meanwhile, there are the home-grown challenges. One is the embedded inequalities of opportunity to be the full contributing citizens that article three of the Treaty of Waitangi enjoins us to ensure. A second is unfinished Treaty business. The Treaty can never be "settled", as Ihumātao has brought into focus. Associated with that is the winding journey towards biculturalism, complicated by a surging multicultural social mix. A third challenge is the unsettling changing nature of "work" and incomes from "work".
A fourth is our continued dependence on the "quarry economy": we mine water and natural resources more than human ingenuities. Associated with that is a fifth challenge: our critical economic overdependence on China, which will be challenged by incoming US President Joe Biden's determination to rebuild the transatlantic democratic alignment of values and global positioning that will pressure New Zealand to line up.
Elders and betters
Responding to these challenges requires the sort of mentality shift that fired up the cohort born from 1942 to 1961 that ran the post-1984 revolution.
That cohort acted in three main ways, first in the wider community, then inside government: it expressed a strong self-confidence in art, craft, fiction and poetry, music, dance and performing arts, which pointed to an independent, self-defining nation. Tied to that, the cohort started down a bicultural journey towards Aotearoa/New Zealand, and it opened up our society and economy so we could respond more agilely to outside pressures and change.
This swing from the settled "modest affluence for all" and "a time of mildness and hope" that characterised the two decades after World War II upset our politics and gave us MMP. Former Labour Prime Minister Helen Clark edged us into a "third way", accepting the much more open economy and society and aiming to anchor the country to a new centre built around and heeding middle New Zealand as it had adjusted after 1992. There were some collectivist modifications in tax, workplace law, prefunding national superannuation for "boomers", KiwiSaver, environmental protection and a start on greenhouse-gas emissions reduction.
The Key-English Government broadly accepted that "third way" with some individualist modifications: pro-market, pro-business, pro-farmers, pro-better-off-people and wariness of too much environmental and climate change action where it added to business, personal or government costs.
That Government's main innovation was English's search for a better way to develop social policy and deliver social services, guided by data. That evolved into "social investment", which the Treasury made into "well-being economics". Whānau Ora, the Māori Party's principal contribution while it was attached to National, fitted that rethink and devolution.
The Key-English Government was the last dominated by the 1942-61 cohort and those born in the six or seven years after 1961. Clark was born in 1950. Key and English were born in 1961.
A fifth of the 2017 Parliament was under 40 (Generation Y) on election day 2017 and 37% were 45 or under. Adding in the older Xs (up to age 48) took the total over 40%. Half the Cabinet were Xs and Ys and most of the key ministers were: Ardern was 37 (Y generation) and friend and close colleague Robertson was 45 (X generation). Politics were in generational change.
I have not done a detailed age analysis of the new Parliament. But a quick look through the new MPs suggests more than half of are Xs and Ys or younger.
The new Parliament is also far more female: 48% of MPs are women. Those with Māori whakapapa are 21%, Pasifika 10% and other ethnicities 10%, including among the new MPs a Maldivian, a Mexican and an Eritrean. New Zealand is more bicultural and more multi-ethnic. So is Parliament. A quarter of the new ministry is Māori and there are three Pasifika, an Indian and the Maldivian, Ayesha Verrall.
Change is in the air and on the ground. But how much change? How far can Ardern reach beyond herself?
To recap: the Xs and Ys are the sons and daughters of the 1942-61 cohort. They grew up in different circumstances from those of their parents. Xs and Ys who made it into Parliament almost all went to university and had to pay fees many times higher than their parents paid. They were children or teenagers during the 1984-92 values revolution so have never known the earlier protected New Zealand that Winston Peters yearned to revisit and rebuild. They have known only an independent Aotearoa/New Zealand en route to a bicultural nation, a morally and civilly liberal society and a relatively lightly regulated, open economy. The Xs can scarcely recall a Parliament not elected under MMP and the Ys have known only MMP.
In short, the Xs and Ys grew up in a different society, morality and economy from the society their parents grew up in and then radically refashioned. Those formative influences have sculpted different personal, social, economic and political priorities and ambitions.
It was not surprising, therefore, that Ardern proclaimed a "government of transformation" in the Speech from the Throne in December 2017.
But in its first term, her Government was at most formative, not transformative. Where Clark made a virtue of underpromising and overdelivering, Ardern overpromised and underdelivered. The 2017-20 Government was more a repair shop than an innovative enterprise of deep reform. It focused on plugging the $11.7 billion hole left by National in 2017 in health services, education, public housing, welfare benefits and "child-poverty reduction" – and in the buildings and other infrastructure those services need.
In 2017, Ardern called climate change "my generation's nuclear-free moment". Green Party co-leader James Shaw did produce new legislation, a 2050 net-zero emissions target and a commission with five-year emissions reduction budgets. There was agreement with the dairy industry to reach agreement.
But there was little real action on the ground through the likes of solar panels on roofs, electrification of the public-sector light-vehicle fleet and regulations to make offices and other big buildings more carbon-efficient. Since we will have to adapt to significant sea-level rise and other effects, a clear plan on how to do this is needed, not least to enable local and regional councils to act. Shaw, the Climate Change Minister, is due to bring in adaptation legislation this year.
Labour promised a "just transition" to a different "future of work". Robertson ran a two-year "commission" on it in 2015-16. So far, there are grand designs but not much more than framing. Education Minister Chris Hipkins has been adjusting the 2010s education system rather than building one for the digitised 2020s. He opted for more central control when the need is for individualised learning so people can switch activities as the economy evolves under the impact of digital technology.
Then there is – or, rather, is not – tax reform. Ardern didn't abandon a capital gains tax only while the Peters brake was on. She banned it from Labour policy while she is leader. So, some people will go on paying no tax on some of their income. In the election campaign, she banned a tax on wealth, a major determinant of generational material inequality. Labour's campaign tax policy was skimpy, centred on a six-percentage-point rise in tax on taxable incomes over $180,000. There has been little so far from Labour on environmental taxes to replace some of the tax on income and consumption, as canvassed in the expert advisory group – that is, taxing pollution, damage to the environment and conversion of the natural "commons" into private profit.
So it went across wide swathes of policy. On the Tuesday after the October 17 election, Robertson declared the Welfare Expert Advisory Group's February 2019 report a "blueprint" for policy this term. But a blueprint is not an action plan. Because tax and welfare were sent off to separate working groups, the tangled muddle of tax, benefits, rebates, special allowances and phase-downs endures where benefits and low earned income intersect. There have been substantial increases in social programmes, including public housing, and – Covid-willing – that trajectory will continue, but principally in the form of more treatment of symptoms rather than building a brave new world curing causes.
Where's my mandate?
A clue to the Ardern-Robertson mentality lies in Ardern's announcement when she dumped a capital gains tax that she didn't have a mandate. But mandates don't come from heaven. They are built – best by leaders who subscribe to Director-General of Health Ashley Bloomfield's designation of leadership as "an invitation to collective action".
In effect, by ruling out a capital gains tax for as long as she is leader, Ardern said she would not try to build a mandate for it.
While shackled to Peters in the first term, Labour had a reason and excuse for limits on action. Not all shortfalls could be put down to his "brake" on "extremists", but there were many roadblocks or go-slows. Ardern's insistence on "consensus" meant all policy was tested by New Zealand First against a 300-page summary of its pre-election policies.
The New Zealand First brake has gone. But its reminder of middle New Zealand's unenthusiasm for radical change remains and Ardern and Robertson are keenly aware of that. The election win has enticed them to talk up a responsibility for the centre.
Last year, Covid was an absorbing distraction from other matters, a sapper of physical and nervous energy and a heavy cost on the Government's books.
Still, there is room for Ardern and Robertson to flex political muscles if they choose. They could take command of the language of politics and move middle New Zealand onto their territory of politics from its usual place on National's side.
That potential lies in "well-being economics", which the pair bought into while in Opposition. This aims to widen the assessment of how well the Government and the country are doing from a tight focus on GDP and the condition of financial and physical capital to also measure success, including economic success, by how healthy our natural resources, our social cohesion and our human capability are. This expansion was written into the Public Finance Act last year so these other factors have to be reported on in each Budget.
Money isn't everything
Intuitively, most people would agree with the broad logic – even if not the detail. Money is important and so are the jobs from which the money comes. But most people also bother about the likes of how they get on with their neighbours, how well they are, whether their kids are doing well at school and whether they can swim safely. Prosperity is much more than stuff.
Moreover, Robertson did declare on the Monday after the election that he would persist with "well-being budgets" and the words were included in the Speech from the Throne, opening Parliament.
There are two large problems – among many – with well-being economics. One is getting rigorous, reliable numbers. There are gaping holes that may take years to fill. The other large problem is developing the programmes that can address shortfalls and working out how to get government agencies (and ego-loaded ministers and patch-focused chief executives) to work collegially, including with not-for-profits and local councils. Attempts to get co-operative collegiality over the past two and a half decades and the past two years have foundered.
But if Ardern were to use her mandate from Covid and carry through on her push-on-hard-and-fast rhetoric when announcing the new Cabinet, she might have something of "well-being" to show by the 2023 election. She might by then have built a mandate for "well-being" that would enable policy priorities to be reordered to deliver an equitable society with genuine opportunity for all. Not least, she might have reduced the disparities for Māori and headed off a regeneration of the Māori Party or the emergence of a similar force.
One way to change the language is for all ministers to use the well-being word at every opportunity: a state house is lifting the "well-being of those who will move in", a road will improve the "well-being of the communities it serves", and so on. But generally, through the latter part of 2020, ministers scarcely used the word.
With National weak, Ardern has political space to push real reform. Will she? Can she? Will Robertson? Can he?
Until Covid, Robertson stuck to fiscal and monetary orthodoxy. Ardern told me back in 2018 that earns Labour a "licence to govern" – that is, tolerance by business and other sceptics. That is a clue to their cautious mentality.
Take Ardern's focus on "child poverty reduction". A true "well-being" approach would require a more comprehensive set of programmes than benefits, grants, higher minimum wages and school lunches. The answer to the question "what is the most important infrastructure investment?" is not "roads" or "sewers" or "water pipes" or "hospitals". It is "children". Poverty reduction is palliative (as is much of social policy); investment aims to build society from the ground up.
Maybe I have underestimated Ardern and Robertson. Maybe in this term they will be bold and commanding now they have full power and a reshaped Cabinet. In managing Covid, Ardern did show she could build a mandate for her actions. Robertson has begun to shuffle away from the ageing monetary orthodoxy as house prices continue to soar, risking a destructive crash. But Ardern said after the election that future progress towards her "transformation" would be incremental.
That echoes English's "incremental radicalism", by which he meant small steps over time resulting in an outcome that would have been radical if all done in the first year. Incremental steps do not unnerve or anger middle New Zealand as policy shocks do. But incremental radicalism can mature into radical change only over many terms of government. English had not got there after three terms (and in any case, the words "English" and "radical" don't fit easily in a sentence). So for Ardern's "incremental transformation" to be truly transformative, she will need multiple terms and/or large increments – or more receptivity in middle New Zealand, perhaps driven by a shock or two.
The rising cohort
There is a different mood among those aged 15-30 who will become a force over the next decade and a half or so as they push up against the Xs and Ys. Small indicators here are schoolkids' climate strikes, the Ihumātao occupation, the election of teens and twentysomethings to local councils and the big rise in under-35 voting percentages in the October election. Overseas, this youthful activism has been evident strikingly in Hong Kong and Chile and significantly in Iraq and even Russia.
These post-Xs and -Ys echo the 1942-61 cohort in the years before, then during, their 1968 pushy explosions of self-righteous, know-it-all protest and clamour in the US, Europe and elsewhere, including here. Those outbursts did not overturn the established order. Richard Nixon, Charles de Gaulle and Leonid Brezhnev asserted control. Here, Sir Keith Holyoake and conservative National stayed in charge. Within the Labour Party, misogynistic old men stayed in control of the organisation and Norman Kirk was unmoved as leader.
Except that Kirk turned out to be a pivot between the old and the incoming new. In Government after 1972, he was conservative on moral, societal and labour and economic issues. That held to the orthodoxies of the 1940s-60s. But he wanted an independent, anti-nuclear New Zealand, canned the Springbok tour in 1973 (after saying before the 1972 election he wouldn't) and talked of "partnership with Māori" in running the country. That all pointed towards the big changes of the 1980s.
Is Ardern similarly a pivot? Is she in effect holding to much of the 2000s "third way" while pointing toward a post-Xs and -Ys 2030s well-being-focused, climate-change-active Aotearoa/New Zealand?
History does not repeat. But, properly discounted, it can help us ask questions about what is in front of us.
The younger cohorts now in their teens and twenties are restive. The activists among them, who seem to be growing in number and voice, want major economic, social and environmental policy change. Their share of the electorate will grow. For a third term, if Ardern wants to set Labour up as the "usual party of government" through the 2020s, she and Labour will need a "licence to govern" from this younger cohort.
Take climate change. For most over-fifties, action on climate change is a "yes, unless" matter: "yes, something should be done, unless it costs me too much or otherwise disturbs my life too much". For most under-thirties and more particularly for those under 25, it is just "yes": a matter that has to be dealt with, the urgency is growing with every passing half-measure. For them, "unless" is "unless something is done, and quickly, there will be disaster for me and my children".
Not invented there
Of course, the post-Xs and -Ys have not invented agitation for action on climate change and we should expect a step-up in action from this Government this term. Plenty of over-fifties and Xs and Ys are on the case. But nor did the 1942-61 cohort invent opposition to sport with South Africa and nuclear weapons. Those movements began in the 1950s. But it was when the 1942-61-ers populated, then took over, those and other movements for change, including, notably, opposition to the Vietnam War, that they developed unstoppable momentum.
Similarly, unless ex-Mormon Ardern and ex-Presbyterian Robertson have a Damascene moment, it is the post-Xs and -Ys who will build the mandate for big change, if there is to be big change –and note that "if". These "beyond-Jacindas" are starting in Ardern's time and some Xs and Ys are with them. But their time in power is a decade or more away.
The 1942-61-ers were of a mind for big change. That was the endogenous factor, as it is with the post-Xs and -Ys, the "beyond-Jacindas". The 1942-61-ers constituted a transformative wave. There was also an exogenous factor: global events and shocks in the lead-up to 1984 strained New Zealand's international connections, economy and society. So too now, as I noted earlier: global rebalancing, instability and a potential serious shock, climate change and ecosystem failures, the digital revolution and genetic and associated technologies that will reshape our societies potentially enable wider democratic engagement, improve healthcare and education and make producing things and delivering services easier and more precise. That combination of endogenous and exogenous influences will demand big policy change.
Don't rule out an Ardern-Robertson Damascene moment leading to serious policy change. Never say never in politics. But on the evidence so far, don't count on such a moment – even less so for any National-led government later this decade; Ruth Richardson apart, radical change does not come easily to Nationalists.
If there is no such moment, get set for the "beyond-Jacindas". By comparison with them, the "actual Jacinda" bubble of moderacy may be remembered wistfully by the Xs and Ys as a "time of mildness and hope" as, in the 1980s, parents of the 1942-61-ers remembered the 1950s.