Both sides reckon the election is in the bag, one of them is wrong – Thomas Coughlan

Prime Minister Christopher Luxon and Labour leader Chris Hipkins have clashed over cost-of-living policy this week. Photo / Mark Mitchell

THE FACTS:

• Labour and National clashed on cost-of-living policy this week.
• Labour criticised the rollout of National’s FamilyBoost tax credit. While 60,000 families received a FamilyBoost credit, only 153 have received the maximum credit available in all quarters.
• National accused Labour of a lack of policy.

Do we have a collective noun for a group of tiny violins?

A chamber… a band... an orchestra?

You could hardly do worse than a Parliament if this week’s experience in the House of Representatives was anything to go by.

Prime Minister Christopher Luxon was the first to pick up a bow, arco-ing at his opposite number, “fricken” Chris Hipkins, lamenting Labour’s paucity of policy.

Hipkins pizzicato-ed back in cheeky staccato, saying Labour was taking its time, thank you very much, making sure its policies added up – and noting that in Opposition, Luxon’s National Party was not exactly forthcoming with policy either.

There is rich, marbled hypocrisy in this sad symphony of self-indulgence and hurt feelings.

Luxon, who left announcing the vast bulk of his election policy until election year, can hardly turn around and tell Labour it needs to start releasing a manifesto with nearly half of the Parliamentary term still to run.

Likewise, Hipkins and Labour can hardly defend their lack of policy in Opposition, having spent most of their second term in Government pestering Luxon and National for not coming out with policy earlier.

Both sides have an unedifying tendency to feel a bit sorry for themselves: National feels Labour and the media hounded it to release policy in Opposition in a way Labour isn’t being hounded now; Labour feels the opposite, that they’re simply enjoying the same policy-free privileges National once took advantage of.

The impasse is a symptom of a curious feature of the 2026 election: both sides think they’ve got a very good shot at winning.

Most elections don’t feel this close.

There’s a theory of elections that they are not so much left versus right, but change versus status quo. The last election, months out, was very obviously “change”; 2020 was very obviously “status quo”, 2017 was “status quo” too until it became “change”.

The outcomes of 2014, 2011 and 2008 were obvious before the first campaign ad ever ran.

It’s too early to be definitive. At this point before the last election you would have expected it to be far closer than it ended up being. Could anyone, in mid-2016, have predicted what the Government would look like at the end of 2017?

But if little changes, particularly if Luxon and Hipkins remain in post, it’s easy to see why both sides think they’ve got a clear path to power.

For the coalition, it looks like this: the polls are close right now because a sluggish economy is eroding voters’ faith in the Government’s ability to make their lives better.

However, Labour has made a lot of expensive promises – chief among them restoring the old pay equity regime – that it will struggle to pay for without tax changes that might test its centrist instincts. As the election draws closer, and the coalition focuses minds on those taxes plus the radicalism of the Greens and Te Pāti Māori, a clearer polling lead will open – or so the theory wishfully goes.

The economy is probably going to improve before election day, boosting polling and the Nats reckon that if cost-of-living is top of voters’ minds, running an election on hiking taxes (and a tax burden that the Greens and Te Pāti Māori might hike further in coalition talks) is probably not a winner.

The 2014 election was a foregone conclusion for National and Sir John Key. Photo / John Stone

If you’re a veteran of the 2011 and 2014 campaigns, as some in National are (the party’s likely campaign chairman Chris Bishop entered Parliament in the 2014 election), that would look like a fairly obvious script for 2026 and a reason to feel confident.

It’s also why the party is so keen to get Labour to spill its tax policy. It’s easy in 2025 to be grumpy about the status quo, but promising serious change requires serious money to back it.

The numbers are challenging. A capital gains tax (CGT), which Labour is almost certain to run on, raises some money, but not quickly enough.

Sir Michael Cullen’s Tax Working Group’s CGT netted 0.1% of GDP in the first year, growing to 0.6% over the four-year forecast period – or about $7.3 billion cumulatively over the four years from a hypothetical Labour Government’s first budget in 2027.

Say Labour reverses the Government’s interest deductibility changes (which might reduce the amount of capital gains available for taxing) for $2.9b in revenue on top of the CGT, then they’ll have put together one of the largest increases in taxation by a major party in the MMP era, but they’ll still be more than $2b short of what they need to make good on the promise to restore pay equity.

There are options. Labour could run larger deficits in the short term to make up for the fact a CGT raises quite a lot of money after about a decade, but you’d be a brave Opposition to run on very large tax increases and increased borrowing.

There’s a reason why National is so keen to force Labour into releasing their tax plan. It’s because they know new taxes will only pay for a portion of what they need.

Other fiscal decisions such as borrowing and spending cuts will be required and those decisions are usually only published in a party’s fiscal plan weeks before an election. National published its 2023 fiscal plan less than a week before early voting started.

These are more fraught and challenging fiscal decisions than any Labour Opposition has faced in recent times and that’s before you even consider whether it’s wise to plough all of that increased taxing, cutting and borrowing into one promise, pay equity, leaving very little other money for promises in other portfolios.

Without any real policy, Labour is a party for anyone who is angry at the Government. Once it has policy, particularly tax policy, there’s a risk the coalition of frustration backing Labour will fracture.

There are choices: Labour could raid Investment Boost for $6b, but that would risk losing wavering private sector workers in the interest of people hit by pay equity, who are probably voting left anyway; you could water down the pay equity commitment, but risk an ugly civil war with the Greens.

There are no easy choices here, which is precisely why National is keen to force Labour into making them.

Labour leader Chris Hipkins says the party will take its time on election policies to ensure they add up. Photo/ Mark Mitchell

Labour has an equally clear path to power.

If you weren’t to look at the messy party vote polling, it might be wise to place a large bet on Labour winning the election.

For months, the right track/wrong track indicator in several polls has been in the negatives, showing, on balance, voters think the country is going in the wrong direction. A recent Talbot-Mills corporate poll found 76% of voters thought the economy was “not so good” or “poor” compared to 23% who considered it “good” or “excellent”. Some 21% think it will get better, while 37% think it will get worse.

The June Ipsos issues monitor, which asks voters which party they think is the best at handling the issues of the day, found voters trusted National best on three of the top 20 issues. Labour was even ahead on “cost of living” issues.

These are what pollsters call leading indicators. They tell you which direction voters are heading.

Going back to the theory of elections as change versus status quo, these indicators strongly suggest 2026 will be another election of change.

Labour is outgunning National online. As of Friday, its last 20 Facebook reels garnered 49,000 views, National’s averaged just 32,000.

The Labour world is learning all the right lessons from the Trump campaign. The left has a raft of podcasts, mainly fronted by men (more genteel and less given to mad conspiracy than their American counterparts), which tend to run very long, digging deep into many of the Government’s flaws.

The ratings are far from Joe Rogan levels but they aren’t half bad either – and it’s quite unlike anything on the right, which seems a wee bit, well, 2023.

That election, both parties quietly agreed, was a battle for young women, particularly young mothers, who felt particularly squeezed by the cost of living. Labour seems to have quite effectively pivoted to hoover up young men too.

Both parties publicly reckon the other side’s chances are slim. Labour’s path back to the Beehive looks a bit like the hopeful “missing million” that famously failed to mobilise the last time it was out of power.

The critique of National’s chances harks back to that era too. Its anti-tax scare campaigns of 2011 and 2014 belong to a different time – pre-Brexit, pre-Trump. Back then, a popular leader and a few liked titans of industry could gather round, tell voters their populist economic instincts would be bad for the economy and ultimately backfire on them.

These days, anyone making that argument is more likely to be given the middle finger.