Liam Dann: Congratulations Labour, now for the really hard bit

The next three years will be challenging for the Ardern government. Photo / Dean Purcell

OPINION:

It feels like this was the landslide victory that history demanded.

Jacinda Ardern and her team have been rewarded for keeping New Zealanders safe through one of the most difficult times the world has faced since World War 2.

But if this election campaign hasn't provided the challenge it might otherwise have, the next three years certainly will.

Not only does the new Ardern Government still face the logistics of dealing with a global pandemic and an economic crisis, their relative success so far means supporters are already demanding that they deal with poverty, inequality and the cost of housing.

If there is one thing that New Zealand's economists agree on it is that we have not yet felt the real force of the economic downturn.

The first lockdown in March brought with it a sense of unprecedented panic and fear about the economy.

No one could say what closed borders meant or how grim the fallout would be as Covid swept the world.

It was, for a time, not clear the global financial system could hold.

But it did. Central banks did their job, credit kept flowing and governments around the world were able to borrow big and pour billions of dollars of stimulus in to their economies.

That dynamic - the sense that things could have been much, much worse - has framed this election campaign nicely for Labour.

It has provided finance minister Grant Robertson with fair winds as nearly every piece of economic data has rolled in ahead of initial economic projections.

That won't last.

The numbers might not be as ugly as first feared, but unemployment is expected to peak at around seven or eight per cent next year.

The wage subsides have finished and Robertson will have to be more nuanced with where his fiscal stimulus is deployed.

With borders closed and no tourists to pump the economy through the usual peak of the season in February and March, GDP will be flat and next winter is shaping up like the toughest economic test so far.

New growth will depend on infrastructure programmes - which will need to be extremely well executed - policies to attract global investment, pivots to the tech sector, and ultimately, the logistics of progressively opening our borders.

That's not to say Robertson doesn't deserve some high praise.

He has been cool, calm and solid as a rock this year.

If anyone in this Government has maintained a baseline of business confidence - historically low though it may be - it is him.

If the anecdotes are to be believed then many true-blue business voters ticked the red box for the first time in this election - essentially to limit the influence of the Green party.

They will still be nervous.

While the wealth tax has been ruled out - there is still a sense that where New Zealand First was a handbrake on the most left-leaning Labour policies, the Greens will be cheerleaders.

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Business is worried about the extra costs that a centre-left government will impose as they struggle to survive and rebuild.

They are largely resigned to the employment law changes - a higher minimum wage and sick leave increases. That's what Labour governments do.

But they are perhaps most fearful of being shut out of the decision-making process around borders, infrastructure, skills and other key economic policies.

In the past few weeks Robertson has assured them he has been listening and will continue to listen.

He shares a passion for the same economic challenges as business groups - lifting productivity, diversifying this economy and moving our exports up the value chain.

Ultimately there are some key difference, some lines he won't cross on issues like asset sales and private sector involvement in government.

But he knows he needs business on side to rebuild this economy.