Prime Minister Christopher Luxon with Health Minister Simeon Brown. Photo / Mark Mitchell
THE FACTS
There’s a view that the National Party’s re-election strategy will be based on two things: 1) Labour will call for a capital gains tax, and 2) Te Pāti Māori is scary.
On the other side, there’s a view that Labour’s hopes are pinned on just one thing: the hapless Christopher Luxon.
It’s not great when political parties rely on demonising or ridiculing the other side more than advancing a programme of their own, but nor is it new.
For much of my life, National’s strategy was to stoke fear of the trade unions.
These theories help answer the perplexing political question of the moment: Why hasn’t one side or the other pulled away in the polls?
Votes swirl around within the centre-left and the centre-right, but the two blocs remain pretty much in balance.
Perhaps Luxon is boosting Labour and suppressing support for National, while TPM is boosting National and suppressing Labour. We really don’t know.
Why is National making such a hash of things? I have four theories.
Theory 1 is that they’re not. They have a plan and it’s working.
Sure, David Seymour, Shane Jones and Winston Peters hog the headlines with their culture-war clamour. But maybe National doesn’t mind that they keep making Luxon look like a chump, because it provides cover for the party’s own ministers to get on with the things that matter to them.
In housing, education, health, the climate, agriculture, water, transport, energy, policing, corrections and welfare, Labour reforms are being rolled back, while conservative values and corporate opportunity are reasserted.
The theory holds until you get to the economy. Sir John Key exposed the problem for his party very clearly last month, in a speech at the event to launch the Deloitte State of the City report.
“The guts of what’s wrong is that the housing market is going down, not up,” he said.
“When house prices go up, everybody tells the pollsters, ‘Oh that’s terrible, my son or daughter can’t buy a house. I feel really bad.’ The technical term for that is ‘bulls***’.
“What they really do, is they say to their wife – or the wife says to her husband – ‘God, we paid $1 million for this house and it’s worth $1.7 million now.’ Quietly they go, ‘Oh, we feel rich’.
“And then they go and borrow a bit from the ANZ and they go on holiday and they upgrade their kitchen, they feel good about life. So when you have a negative wealth effect, they feel bad.”
National is not supposed to say this out loud, and not only because it undermines first-home buyers.
It’s a frank confession that our economy really is a housing market with bits tacked on, as commentator Bernard Hickey calls it.
It might make National voters feel good, but despite what Key thinks about holidays and kitchen upgrades, it doesn’t create growth and productivity.
On the contrary, it sucks investment away from productive commerce.
The rest of the economy is also in trouble. Economists tell us inflation has come down, but who’s listening when we all know the price of butter is telling the truth that matters?
Inflation is rising again, even as nurses, teachers, minimum-wage workers and much of the private sector face pay rises that will not keep pace.
And if you want to see into the real heart of National’s failing economic plan, check out infrastructure. The whole growth strategy is based on it.
The much-heralded National Infrastructure Plan, prepared by the Infrastructure Commission, Te Waihanga, and currently in draft form, has revealed that we should be spending $15 billion a year on “maintenance and renewals”.
That’s 60% of the anticipated infrastructure budget. Yet maintenance gets nothing like that focus in the Government’s plans for this sector.
It’s not hard to see, reading between the lines of Te Waihanga’s draft, that it believes the Government’s obsession with four-lane roads of national significance undermines our ability to create a fit-for-purpose economy.
At the same time, 17,000 people lost their jobs in the construction sector in the last 18 months and many of them have left the country. As Key told his audience last month, a lot of the tradies who remain are working three-day weeks.
“To win an election, you have to win where the tradies live,” he said.
Misdirected infrastructure plans and a collapsed construction sector do not signal a plan that’s working, either for economic benefit or winning votes.
Theory 2: National believes things will be better next year.
Anything’s possible, I guess, but the public is sceptical. Respondents in the most recent ANZ Roy Morgan survey said they thought inflation will rise above 5% sometime next year, while wages will grow at only half that rate.
Theory 3: They’re looking after their mates.
Government-appointed board members are getting a pay rise of up to 80%.
Interest-deductibility for landlords will cost the country $2.9 billion over four years.
The largely private early-childhood education sector has been protected. Importers of petrol-powered vehicles are back in favour.
At the big end of town, power companies, banks, supermarkets and forestry companies are facing neither reform nor meaningful controls.
Fossil-fuel companies have become Cabinet darlings, despite the damage they do to the planet and even despite there being very little evidence they will provide the “transition” fuels we need.
But not all National’s mates are being looked after. As Heather du Plessis-Allan noted last weekend, the cost of the “ban” on eftpos surcharges will be borne by small and medium enterprises.
Instead of stopping the banks from charging it, all the Government has done is stop retailers from passing it on. They’ll have to suck it up.
Which brings us to:
Theory 4: They don’t know what to do.
They don’t know how to decouple economic plans from the property market, climate plans from cows and cars, or trade from international relations.
They don’t know how to control the egos of their coalition partners’ leaders. Or how to confront the hard-right ideologies rising in both NZ First and Act.
They do a good thing, like banning mobile phones in schools, and then a bad thing, like raising speed limits, because they don’t know how to distinguish positive popularity from reactionary populism.
They don’t know how to say no to lobbyists, or what to do about banks and supermarkets. Most destructively of all, they don’t know how to abandon neoliberalism for reality.
The construction industry collapse is Exhibit A for that.
It was caused by the economic slump, but when the Government abandoned plans for thousands of new Kāinga Ora homes, it sounded the death knell.
A functional Government would have boosted public-sector construction: kept the jobs, built the industry, built more affordable homes, for heaven’s sake, because we really need all of those things.
Will National stick with Luxon into the next election?
For that matter, will Labour stick with Chris Hipkins?
Here’s a prediction. The answer to both questions is the same: Yes, unless the party starts to fall behind.
If that happens on either side, stand by for ruthless change.