Political scientist Jennifer Lees-Marshment studies the impact of modern marketing on democratic politics, and she identifies a critical shift that took place in the 1990s and early 2000s.
It was when mainstream political parties evolved from using marketing techniques to communicate their policies to voters, towards using consumer research and brand management to generate their policy manifestos.
Now they offer whatever they think voters want rather than what the party might believe in, what the nation might need or what the government could credibly deliver.
We’re living through the consequences of this mode of politics. In 2017, Labour promised to build 100,000 houses without any coherent scheme to deliver them. In 2023, then prime minister Chris Hipkins and his finance minister Grant Robertson pledged to lower the cost of living by removing GST from fruit and vegetables – to near-unanimous criticism from economists that the supermarket duopoly would simply use its market power to capture all the value.
Christopher Luxon also campaigned on reducing the cost of living, and that, too, was marketing. His government has relied on monetary policy from the Reserve Bank to reduce inflation and then taken credit for the results.
But whereas Labour fell well short of its house-building target, inflation has come down under the National-led government (of course, it began to decline under Labour). The official cash rate has fallen from 5.5% last July to 3.75% with the latest Reserve Bank’s announcement. Mortgagees with hundreds of billions of dollars in floating or short-term fixed mortgages are set to refix at lower rates over the first half of this year.
Sceptical and upset
Yet voters are still telling pollsters they’re upset about the cost of living and are increasingly sceptical about Luxon, his government and their efforts to get the nation back on track.
On current trends, the most likely outcome of the 2026 election is a Labour-New Zealand First-Green arrangement.
Why are voters so angry? Well, the cost of living is still very high: a couple of quarters in which the average household income increase is slightly ahead of the CPI doesn’t make up for years of going backwards.
As the Democratic Party recently found in the US, voters know the difference between headline economic indicators and their actual financial conditions, even if politicians do not.
Drilling deeper into the inflation data, we still see significant price rises over the past year – notably in insurance, rates, healthcare services and energy – that are unavoidable costs for many families.
Adding to the gloom is the ongoing slump in property after the bubble caused by the Covid stimulus burst. For more than 30 years, ever-growing house prices were the engine of middle-class wealth creation. When families refixed their mortgages, they used the extra equity to finance a new car, kitchen renovation or winter trip to Fiji. Now, they’re realising their incomes alone don’t come close to supporting the lifestyles they feel entitled to.
Breaking our addiction to property investment is getting the nation back on track, but if you are hundreds of thousands of dollars under water on your mortgage and struggling to afford your rates and insurance, there’s no comfort in knowing you’re taking one for the economic future of the nation.
What’s an unpopular government to do? Blame someone else, obviously, and the lidless eye of the Beehive has fallen upon the electricity sector, the banks and especially the supermarkets.
In a recent speech, Finance Minister Nicola Willis identified lack of competition as a key weakness in the economy, a driver of high prices and low productivity. She declared war on the supermarkets and their lobbyists and invited new players to enter the grocery market, offering close collaboration between her government and potential disrupters.
A major admission
It is a major breakthrough to have a senior politician concede that lack of competition is an acute problem and that it is their responsibility to solve it. Previous governments have preferred to capitulate to industry lobbyists by deliberately underpowering the Commerce Commission, then insisting that solving problems of market failure is the commission’s problem rather than theirs.
In 2022, Labour instructed the commission to hold an inquiry into the grocery sector. This found lack of competition has led to some of the highest grocery prices and most profitable supermarkets in the world, and in response, Labour appointed a separate Grocery Commissioner to do next to nothing alongside the commission.
Next to nothing is always the preferred option in Wellington, but National is realising, to its horror, that instead of the comfortable three terms in power it is accustomed to, presiding over the nation’s gradual decline with dignity and good humour, voters are willing to inflict on it the unprecedented embarrassment of a single-term of government.
Desperate times call for desperate remedies, so Willis is prepared to do something, but the nature of this “thing” is still unclear. Her speech mentions red tape, of course, and reducing compliance costs for a potential third player. But even if her government fast-tracked the construction of dozens of new supermarkets, these wouldn’t be operational by the election; it would take years for prices to stabilise.
The obvious solution is to compel the existing supermarkets to sell some of their existing brands to this (still hypothetical) third player, diluting market concentration overnight.
This would be a radical step for a centre-right government, but with more rates rises and increases in household energy prices on the way, it might be the only viable choice.
Otherwise, all the tough talk about taking on the supermarkets and getting prices down will have just been more marketing.
