Christopher Luxon leadership strain - what’s the strategy on the ninth floor? - Audrey Young

Some have accused Prime Minister Christopher Luxon of being weak - but he is dealing with challenging coalition partners. Photo / Mark Mitchell

Last week’s fall in the GDP threw a spanner in the works of New Zealand’s economic recovery - and added to the Prime Minister’s challenges. Audrey Young explores what it will mean for his strategy.

There was one personal upside for Christopher Luxon in last week’s ugly GDP tumble.

People switched from calling for his resignation as Prime Minister, to calling for Nicola Willis’ resignation as Finance Minister.

She became the target for former Finance Minister and Act founder Sir Roger Douglas, and for Auckland University economist Robert McCulloch.

Luxon’s defence of Willis was characteristically studded with superlatives.

“I don’t think there’s a single New Zealander that could do a better job than Nicola Willis,” he said.

“Nicola Willis is the best finance minister New Zealand’s ever going to have,” he said.

Ever? That’s quite some claim, but it is also straight out of the Luxon playbook – which is to talk up whatever he is talking about, and if people aren’t convinced, talk it up at length.

No amount of talk, however, prepared people for the -0.9 % GDP decline for the June quarter, a complete reversal of the previous quarter in which the economy grew by 0.9%.

It was particularly ironic given that in January, Luxon declared 2025 the year of growth, and made Willis the Minister for Economic Growth.

That was his big strategy this year: to strongly brand National as it competed with assertive coalition partners Act and NZ First, and to closely associate the party with the pending economic recovery.

But the recovery is still pending in most voters’ experience.

The GDP figures confirmed it and reinforced the narrative of a first-term Government and Prime Minister in trouble.

He is in limbo land – not in so much trouble that there’s a compelling case to dump him as leader, but not doing well enough to stop people talking about his performance.

A few weeks ago, when Parliament was last in recess, Luxon held drinks for the Press Gallery on the Ninth Floor of the Beehive with only one day’s notice.

There was immediate suspicion that it was done in a bid to curry favour with the media after it criticised him for overhyping the launch of the Amazon data centre.

It wasn’t actually fair to Luxon, nor to the gallery. The event had been mooted several weeks earlier but not confirmed. But some thought Luxon was desperate enough to stoop to that.

The last thing any leader wants is to be seen as there for the sake of being there. They need to have a plan and be confident in it, yet be flexible enough to change tack if required.

Ruth Richardson - former Finance Minister and board member of the Taxpayers' Union. Photo / Supplied.

The National Party backbenchers invited former Finance Minister Ruth Richardson in to speak to them a couple of months ago in her capacity as chair of the Taxpayers’ Union board.

Her self-confidence and uncompromising views about fiscal discipline and turnarounds may well have inspired some of the MPs.

However, a brief acquaintance with history will also have reminded them that National came within a hair’s breadth of losing the election that followed, due to the drastic measures taken at the time.

So what will happen now in Luxon’s turnaround strategy? In the short term there is likely to be no major change.

The Government is of a mood to “hold its nerve” and persevere with current settings, in the belief that they are right, in the hope that the GDP figure will be revised down, as they sometimes are, and that the green shoots of recovery are underway.

Luxon won’t be satisfying calls on the right for a much bolder slash-and-burn approach to Government spending, and to sack many more thousands of public servants.

There is likely to be greater attention to his messaging: the content and delivery. The addition of experienced senior press secretary Jo Black to Luxon’s communications team a few months ago is a plus.

There are likely to be refinements to policy, such as his $413 million school property announcement yesterday with Education Minister Erica Stanford, to fund capital spending in all schools, rather than waiting for the stimulus of mega projects under the fast-track process.

There is likely to be greater attention given to Auckland business to acknowledge their importance to the economy – former National leader and Auckland Business Chamber chief executive Simon Bridges last month called for greater attention from the Government.

Chief Executives’ ratings of ministers in the annual Mood of the Boardroom are always highly anticipated, as they will be tomorrow.

Nobody expects Luxon or Willis to do brilliantly. But in their defence, they are dealing with coalition partners who have opposing instincts: one for a hands-off government, and one for an interventionist Government.

Luxon cops it from all sides when people don’t like what he is doing. But when people don’t like what David Seymour is doing or saying, or when people don’t like what Winston Peters is doing or saying, Luxon is accused of being weak.

The difficulty of managing a coalition with such leaders cannot be underestimated. And while it is debatable who should take credit and by how much, inflation and interest rates have come down under Luxon and Willis’ watch, education reforms are underway, and the Government is delivering what it promised on law and order.

If only those green shoots would stop misbehaving.