THE FACTS
Why is the economy getting worse under National? Why is there little confidence it will improve under Labour? Why is society more fractured, why does it feel like we’re drifting, why is there so little trust?
Everyone’s got answers. It’s the global economic conditions, it’s post-Covid social trauma, it’s the fear that comes from living in a world where we know more floods are on their way.
But a quarter of the way into the 21st century, those things have become our reality. They’re the new norm. The question is: why can’t our major political parties manage them?
Voters decided Labour had lost the plot in 2023 and tossed it from office. There’s every sign voters will do the same to National next year, and then what? Three years of another Labour-led Government, another rejection, and then another three years after that? It can’t last.
In Britain, Europe and America, it hasn’t lasted.
Nigel Farage’s radical-right Reform Party is now the most popular party in Britain. This month the Guardian’s poll tracker had Reform on 31%, 10 points ahead of Labour and 14 points ahead of the Conservatives.
That’s a shocking indictment of the mainstream parties. In many European countries, several similar parties have simply collapsed.
In the United States, Donald Trump sacked the Republican Party from within, rather than destroying it from without as Farage is doing to his opponents. But the result is the same. Faith in mainstream politics has been shattered, extremism is on the march.
We like to think we’re not like that. Opinion polls reveal stubbornly consistent support for National and Labour. But for how long?
A poll last week recorded a small but unmistakable slip for the major parties, with National dropping into the 20s and Labour not much better. Even if it’s not yet the start of something bigger, are we really immune? Why would we be?
A government that cannot offer ordinary New Zealanders an end to the pain of cost-of-living increases will not last in office. A government incapable of stopping the tide of despair among health professionals should be the same.
Why isn’t National doing more to fix this? Why didn’t Labour when it was last in power?
They’re both culpable, but the question weighs more heavily on National, because it is the Government. Even if it does seem to be looking away.
The little things can say so much. Last week, a crisis of retailer confidence erupted on Queen St, involving public safety, crime, homelessness, mental health and economic frustration. The Prime Minister came to Auckland to announce a new covered roof for a tennis stadium. Was he having a laugh?
There are lots of reasons the mainstream parties are stuck. But how about this: they’re too scared to change.
Scared of the market, scared of voters, scared of each other.
Former Bill Clinton adviser James Carville was once asked if he’d like to be reincarnated as a President or a pope. Neither, he replied, he’d come back as the bond market, because “you can intimidate everybody”.
Even Trump has had to learn this: a few months ago the American bond market forced him to reduce some of his tariffs.
In Britain, Rachel Reeves learned the same lesson. The Chancellor of the Exchequer in Sir Keir Starmer’s British Labour Government included big welfare cuts in her budget plans this year.
A backbench revolt and enormous public opposition forced her to backtrack, but that roused the fury of traders, who pushed the bond market nearly to the brink of collapse.
That’s not regarded as treason, simply as the way the world works. Our governments operate inside the guardrails of neoliberalism.
Here at home, Finance Minister Nicola Willis insists she has not adopted austerity policies, but everything from transport to healthcare is clearly underfunded. And yet the Treasury insists we are at our “fiscal limits” and cannot borrow more, so Willis can see no way through. Grant Robertson, her predecessor in the job, was much the same.
Treasury’s neoliberal orthodoxy is an outrage. Debt sits at 40% of Government revenue, or 45% of GDP, which is barely half the OECD average. The Crown pays net annual interest on that debt of $2 billion a year, or a mere 1.2% of its revenue.
Economic and political analyst Bernard Hickey has a useful analogy. “Just imagine if you went to your banker to borrow money for a medical procedure to save a child’s life,” he wrote recently.
You tell them your mortgage is worth 40% of your income and the service payments take 1.2% of your annual salary. “Would you expect your banker to say no?”
Most first-home mortgages, he pointed out, are worth 500% of household income and you’ll probably be paying 30% of your annual income a year in interest costs.
And yet, instead of borrowing more to build the infrastructure for the services that everyone knows we desperately need, spending is cut. That’s austerity.
We have 40 years of experience telling us it doesn’t work, but the markets and their servants in Treasury insist it does. It doesn’t build the economy, doesn’t attract capital and it continues to undermine confidence, among businesses as well as households.
Just as the Herald’s Mood of the Boardroom survey revealed two weeks ago.
Caught between neoliberal demands for spending cuts and popular horror at the result of those cuts, Governments seek an uneasy compromise.
Most people seem to believe this is a vote-winning strategy, but why? It creates unsafe drinking water, congested roads, power shortages and hospital EDs overwhelmed by demand.
The trouble with centrism for its own sake is that it’s not a strategy for success but for managing failure. And failure, as the slide to Trump and Farage suggests, is no longer acceptable.
Anyone who’s ever had anything to do with National and Labour will know most of their people are deeply tribal. The other side is the enemy.
In some ways, it’s true. National and Labour have a whole range of sharply divergent views, on everything from crime to climate action. And on those things, they should take the good fight to each other. Politics thrives in healthy debate.
But those parties also share an underlying economic philosophy – or perhaps, as suggested above, they are both trapped by that philosophy.
This ought to make it possible for them to collaborate rather more than they do.
More to the point, isn’t a greater degree of collaboration essential now? Democracy is under threat and basic services are in crisis. And crisis responses require everyone to help.
Long-term planning also needs non-partisan commitments. The lack of public trust and confidence does too: he waka eke noa.
I’m not advocating the don’t-offend-anybody politics of centrism. I’m calling for collaboration on tough decisions that stuck-in-the-middle-without-a-clue centrism stops anybody from making.
Because National and Labour are not the enemy. The real enemy is an economy that can’t fix the hospitals and politicians too timid to try.
And it’s Nigel Farage – our own versions, that is. Because we have a few, inside and outside Parliament.
This is part one of a two-part column. Next week: A solution – and a great example of how it works.