Customarily, changes of government in New Zealand coincide with a significant slump in its economic fortunes. With that in mind, the Prime Minister had good reason for confidence when he announced the general election would be held on September 20. A buoyant economy boasting forecast annual growth of 3.5 per cent and 6 per cent unemployment suggests this poll does not come at an auspicious time for the National Party's opponents. It is a common refrain but no less correct this time: in large measure, the election is the Government's to lose.

The Labour Party's prospects will depend not on questioning the overall economic wellbeing but on convincing enough voters that some boats will not rise on the incoming tide. It must argue persuasively that many people will not share in the prosperity, through wage rises, job opportunities, and decreasing inequality. That this, in effect, will be a situation where the rich get richer and there is little in it for many of the people who bore the worst of the belt-tightening over the past few years. If the Labour leader, David Cunliffe, cannot get this message across, his chances of success appear bleak.

Fortunately for that argument, in at least a couple of areas of basic household spending, people are about to be hit in the pocket. Power prices are rising, a situation that will attract added attention to Labour and the Greens' plan to introduce a single buyer of electricity generation. From tomorrow also, the holders of floating home mortgages will almost certainly face higher rates as the Reserve Bank embarks on a tighteningcycle by lifting the official cash rate from 2.5 per cent.

Further, it cannot be taken for granted that, in terms of recovery from the global financial crisis, the country is totally out of the woods. The Finance Minister revealed yesterday that despite the strong economic growth, government revenue was below forecast in the seven months to January 31.


Timing issues may be one reason for the tax shortfall, but the figures caused Bill English to note that while the Government remained on track for a surplus in 2014-15, the shortfall was still a challenge. That challenge would become all the greater if an international shock of some description were to send the economy into reverse.

The importance voters place on the economy has one plus for Mr Cunliffe. It puts in perspective his series of missteps over the past week or so, the most grievous of which was the disclosure that he set up a secret trust to handle anonymous donations to his campaign to become the Labour leader.

This was the cue for National MPs to queue up to describe him as "tricky", a description that quickly became so overworked as to be meaningless.

Indeed, if what Mr Cunliffe did was unwise and opened him to obvious claims of hypocrisy, it is unlikely to have been especially damaging. It is quite some time since people placed trust high among the characteristics they prize in politicians. The election on September 20 will not hinge on whether voters believe they can trust Mr Cunliffe.

Instead, it will depend on him, in effect, denting consumer confidence, which remains high even if not at the extravagant levels of business optimism.

The size of his task has been indicated by the fact that even the well-flagged rise in interest rates has not changed sentiment to the degree that might have been expected. But confidence could yet start to dwindle as missives from the banks relaying the bad news begin arriving by email and in letterboxes.

Mr Cunliffe must certainly expect so.