Inflation fallout, Ardern's future and internal polls: Claire Trevett and Thomas Coughlan answer your politics questions

After days of dodging the "c" word, Prime Minister Jacinda Ardern finally relented this morning.

Yes, many families are facing a cost-of-living crisis, she told RNZ - although the important thing is not what it's called, but what we do about it.

Nobody's arguing there, least of all National, which has offered plenty of suggestions as it senses a winning argument and hones its line of attack.

Adding to National's newfound zest: the latest 1News-Kantar poll, released last Thursday, which saw National overtake Labour for the first time in more than two years.

National leader Christopher Luxon in the House on December 15, 2021. Photo / Mark Mitchell

In a live Q&A with Herald Premium subscribers this afternoon, political editor Claire Trevett and senior political reporter Thomas Coughlan fielded questions about that bombshell poll - plus inflation, Jacinda Ardern's future, the influence of the Māori caucus and much more.

Here's a roundup of today's discussion:

Mark Y: Do you find it interesting that since this poll has come out, Ardern has finally acknowledged the cost of living crisis and is now talking about relief at the pump? How is NZ meant to get ahead when we have a Government that only does something when the polls show support is dropping? I would say if the polls were different, Labour would be doing nothing about this.

Claire T: The timing of the poll four days before the Government decided to move on the cost of petrol may be a coincidence, or may not, but it is certainly a change of tune to what they were saying in the middle of last week!

Labour's own polling will have shown it starting to lose more ground than it was comfortable with on the critical metric of economic management, and the cost of living has been rising as an issue since the end of last year.

While the spike to the cost of fuel isn't necessarily its fault, it is its problem - and it is one it does have the ability to do something about. Whatever they do is likely to be time-limited - more a tax pause than a permanent change.

Damian S: How closely does the TVNZ poll line up with the internal polls?

Claire T: The PM said this morning their internal Talbot Mills polling was different to the 1News Kantar Public poll - I haven't seen the latest TM poll, but have been told it is not as dire for Labour as the 1 News poll - but still not great and within the margin of error. As for National's polling, the next Taxpayers Union Curia poll is due this week some time so we'll know then.

The last Taxpayers Union Curia poll in mid-February showed National was getting close to Labour though: it had Labour on 42 and National on 38. A lot has happened since then.

James H: To Claire, do you believe there is any likelihood that JA might step down before the next election?

Claire T: I have not had any indication that this might happen, with the caveat of that old "never say never" saying.

As a general rule, a leader stays as long as they are their party's best chance of success at the next election. I'm sure her love of the job waxes and wanes at various points, but the PM is still that person, and has said that it is her job to see this through.

Sir John Key was the exception to that general rule, of course - he pretty much admitted he didn't want to be unpopular so left before that happened. I don't know if this PM is as sensitive to that particular measure!

[Update: Ardern was asked if she intended to stand at the next election at this afternoon's cost-of-living announcement. She said yes (eventually).]

James W: Question to Claire. In your opinion piece published on the 12th there is the line - "Ardern's refusal to admit to any such crisis has echoes of former PM Sir John Key's refusal to admit to the same. Governments cannot afford to admit to a crisis on their watch." Historically is this something that happens with every election? Does the phrase become a buzzword in the media and exaggerate the hype for the opposition?

Claire T: The Opposition rather than the media are usually the ones who start to push the "crisis" word for an issue. When Labour was in Opposition, it wanted a housing crisis declared. To its credit, its ministers do now sometimes refer to the "housing crisis" - but they kind of have to, since things have got even worse since then. Whether something is technically a "crisis" or not is a matter of opinion in such cases, but it's fair to say on both housing and cost of living things are pretty bad.

Di Z: I wonder how much the Government will be able to do to counter National's attacks? Is cutting fuel tax enough?

Thomas C: We're more than a year away from the likely date of the next election. National's poll result will be incredibly morale boosting. If the party is disciplined and can come up with some good ideas, they can extend that lead and ride the momentum right to the election (a bit like John Key did).

National is also lucky in that it appears inflation might not be going anywhere fast. This will likely hurt the Government and help the opposition without anyone having to lift a finger. Although National will be wary of promising too much - it can't fix inflation any more than Labour can.

I wouldn't write Labour off either. Jacinda Ardern is less popular than before, but still quite popular. They're a strong, disciplined team, who know how to win elections. They've got two budgets to go, and while Labour is looking a bit tired, I don't think the wheels are coming off (to mix metaphors).

Don't write them off just yet.

Marcus A: Why do we have such an enormous government sector in such a tiny country? Our population is less than half that of London and yet we're burdened with central and local government that is disproportionately enormous. It costs the country a fortune to run and delivers awful value for money.

Thomas C: I'm going to have to disagree with you there Marcus, New Zealand actually has a small and relatively cheap Government.

By most counts, public spending as a percentage of GDP in the UK, fluctuates between 40-50 per cent.

Here, it's about 30-40 per cent (a bit higher now because of Covid).

The tax take here is relatively low as a percentage of GDP too - just over or just under 30 per cent of GDP most years. In most European countries its over 40.

There are lots of problems with the New Zealand Government, and it can be pretty bloated in places, but on the whole it's quite lean.

Warren B: When any politician doesn't answer the question, why can't the interviewer respond to the interviewee with "you didn't answer the question"? I'm not talking about Parliament with the Speaker adjudicating, but like on Breakfast TV this morning. Q: "Would you consider a price freeze on petrol?" A: "I don't agree the tax cuts for the..." Didn't even come close.

Thomas C: Hi Warren. Sometimes they do actually. I was listening to Jack Tame on Q&A yesterday and he told Nanaia Mahuta quite plainly that she had not answered his question. But yes, you've put you're finger on one of the most frustrating parts of my job! Politicians not answering the question.

David E: What is the impact of NZ cancelling oil exploration on current energy costs?

Thomas C: Hi David. Wish I could answer that question, but I must say it's a bit outside my skillset.

As you rightly say, the ban was only on exploration, so current permits were allowed to be exploited. There were some concerns about firms pulling investment from NZ as the Government clearly signalled its intentions to exit the industry. This made New Zealand more dependent on foreign supplies.

Then again, if dairy is any example, producing the goods yourself for export, doesn't insulate domestic consumers from the vicissitudes of international commodity prices.

Anyway, that's my 2c - Maybe save the question for a Q&A with one of my business colleagues!

James H: How big will energy (specifically oil and gas) play in the next election? Governments are pushing hard to get rid of fossil fuels, and we have shut down our only refinery, yet the supply side constraints on crude oil post pandemic (pushed further by what is unfolding in Ukraine) appear to be showing that high energy prices are very unpalatable to the general public.

Thomas C: I'd say they'll be a huge feature of the election. If people can't afford to drive and have no other option, they're likely to express their feelings at the ballot box.

The latest read on inflation is that it'll likely stick around into next year (election year), which will be bad for the Government.

Anna S: How much do you think the anti-mandate protests contributed to the turnaround in the poll figures? In my circle many thought it had been poorly handled, and it started a conversation about if the mandates were justified, and how much control a government should be allowed to exert.

Thomas C: I don't think they contributed much at all to be honest, but there's not a lot of data on it.

Simon K: What is the Māori's Party's likelihood of retaining the Waiariki seat next year do you think, given they are unlikely to get above 5 per cent at current polling?

Claire T: It could depend who Labour puts up in the seat. I'd say Rawiri Waititi will hold it if Labour puts up Tamati Coffey again, and probably against any other contender - after all he won the seat from Coffey in an election in which there was a massive swing toward Labour. In fact, he may have been the only one to take a seat from a sitting Labour MP.

The Māori electorates are often hard to pick, but Waititi and Deborah Ngarewa-Packer have so far done a pretty impressive job of being back in Parliament, especially for two new MPs. It wouldn't surprise me if they win another seat back as well.

Michael M: Why do you think the smaller parties such as TOP and NZ First are not picking up support as voters become less enamoured with the Government? Is it because support for the big two is sticky?

Thomas C: Yes. The theory is that many people think they've got no hope of getting to 5 per cent, so they take their vote elsewhere.

Huco S: Will National continue the process initiated by Labour to have one national healthcare system? What is National going to do about the backlog of elective surgery? What is National going to do about the [Immigration] Department and the shortage of specialised labour and seasonal workers?

Thomas C: So far National have opposed the health reforms, but it depends on how far advanced they are. I haven't asked National this question under Luxon's leadership, but I'm guessing it would depend on the state of the reforms.

The heavy lifting of the reforms will be this year, when we begin the transfer to the new system, so National will have its work cut out if it wants to completely reverse the reforms.

John S: Did Labour once hire Luxon on a working group?

Thomas C: Yes (kind of). He chaired her business advisory council.

Stephen G: In your experience is there really much difference between National and Labour on the big issues? For example it feels to me that both accept that The Treaty of Waitangi established an equal partnership between Māori and the Crown and will continue He [Puapua] to its inevitable end, division and conflict.

Thomas C: Hi Stephen. I think there is. There's less of a difference between Labour and National than there is between Labour and Act, for instance.

On those issues, neither National, nor Labour are actually committed to He Puapua as policy. Both have a history of looking at co-governance arrangements, although in different ways.

National created novel ways of expressing Māori governance and ownership in treaty settlements (look at the way Te Urewera is managed as part of the Tūhoe settlement for instance). Labour has taken that a bit further and looked at co-governance in areas like water services (Three Waters).

Graeme P: Will Winston return like a phoenix from the flames?

Thomas C: Never rule it out ...

David C: Given the huge rises we have seen in rents and lack of rentals do you see a u-turn in taxing interest on landlords?

Thomas C: Depends who wins the election. Labour want to keep it, National will axe it. Labour won't reverse their own policy while they're in office.

Bruce W: Would National consider serious tax reform? Say, to complement taxation of production (i.e., income) and consumption (through GST), by adopting central government taxation of wealth, or land? Say, a broad-based, no exceptions (as for GST) land tax, covering all residential, commercial, and rural land? And using the proceeds to ease up on income tax. (A flat rate land tax probably would be progressive, given the distribution of land holdings?) Without fundamental reform, isn't the debate about tax (bracket creep, family tax credits, etc, etc) mostly tinkering at the margins? A lot of debating energy expended, that achieves very little if anything?

Thomas C: I don't think it's in National's nature currently to consider those kinds of tax reforms.

Those ideas are coming from the Greens, TOP, and possibly Labour, which is investigating how much tax wealthy people pay.

You are right that it is a problem National will eventually have to solve. People's earnings from regular income are diminishing meaning those people who pay tax via their income carry a greater tax burden than others. This gives a massive leg up to people who make money in areas like property.

Have a read of the 2018 tax working group issues paper if you're interested. It raised similar concerns.

Michael I: Inflation, once it gets traction, tends to become intractable and keep going, and those of us with longer memories can remember that it blighted our lives for many years, to such a massive extent, that the Govt of the day had to bring in requirements on the Reserve Bank Act to dampen it down. Since then house prices have shot through the roof (which was a tad inconvenient) and so they were excluded from the figures! Will National endeavour to curb the massive inflationary pressures OF house price rises, or just try hard to ignore it, as is the track record of BOTH parties in the recent past?

Thomas C: Hi Michael. Great question. Actually it's one that's bemused everyone in Wellington in recent years. What you're seeing at the moment is a debate over what the Reserve Bank's job is. In Government, Labour have asked the Reserve Bank to maintain price stability, aim for maximum sustainable employment, and have regard for sustainable house prices.

National wants to strip that focus back to just price stability, fearing that the Bank's focused so much on stimulating the economy, it's generated ordinary CPI inflation (think groceries) and house price inflation.

At the same time, the Bank and Treasury have recently published research saying that structurally lower domestic and international interest rates over the last 30 or so years have bumped up house prices (not much the bank can do about that).

Anyway - lots of problems, no real solutions (sorry!).

Murray J: The minimum wage rate keeps increasing to compensate for the increased cost of living . The living wage rate will also need review/ increase. Business is then passing it on by increasing prices - all contributing to inflation. How can this cycle end?

Thomas C: Hi Murray, Yes - eventually you get into an inflation spiral, where wages and prices spiral all out of control. That really is a worst-case scenario, and hopefully we can avoid it.

My guess is that before we get to that point, rising interest rates will take the heat out of the economy, possibly through an interest rate induced recession. My colleague Liam has written about this in much more detail here. Worth a read if you're interested.

Alfred T: In recent months much of the criticism of the PM has become childish and at times extremely personal and nasty. We have seen very angry and unpleasant behaviour towards her when she has gone out in public. Do you feel this is a trend? Is it a concern? I believe that, whoever is in government, our elected representatives (and our media) should be safe and not threatened the way our present PM is, and that those who take pleasure from her discomfort may not realise it sets a precedent for the next PM, whether it is Luxon or whoever.

Claire T: Personal attacks and slurs have long been the lot for Prime Ministers - both Sir John Key and Helen Clark faced it at times, though not for as long as Ardern now has. It is uncomfortable to watch, but most people see unreasonable behaviour as just that.

The PM has had to make decisions during Covid-19 that impact on people's lives in ways that not many, if any of her predecessors have had to do - and that was always going to be difficult to sustain for a long period of time. So those people who have been affected seem to have got angrier.

Social media is also more a feature for Ardern than it was in the days of Key and Clark which would not help. Ardern is responding in the only way she really can - defending her decisions and trying not to take it personally. She will no doubt be hoping it abates once things like mandates and vaccine passes are stripped back.

Grant H: With the recent turnaround in the poll numbers - what does this mean for the rest of Labour's contentious policies such as 3 Waters, health reform, FPAs, climate change spend up, Maori co-governance plans, etc?

Thomas C: Good question. I'd say FPAs are safe. They're very important for Labour's union base. They will be inflationary, but Labour will make the case that it'll allow workers to keep up with the rising cost of living. Expect lots of political arguments over how much cups of coffee cost when staff are paid more!

Climate change spending will already have been signed off for this budget, and it gets its own hypothecated spend this year, so ministers can't raid the kitty.

Co-governance in some form is likely to go ahead if Three Waters reform actually happens. I do wonder whether the Government will pull the pin on it, however.

Roger W: Roger Douglas was able to get GST passed despite public anger. Why couldn't Labour get CGT, Three Waters, supermarket reform when they had the votes?

Thomas C: A very good question! I think you've almost answered it yourself. The memory of Roger Douglas in Labour is very strong, particularly the way he forced through unpopular reforms. His lingering unpopularity is one of the reasons governments tend to take things slower these days.

MMP also makes things far more fragile. The CGT was killed by Labour's MMP coalition partner, NZ First.

Three Waters is still going ahead for now, and could pass before the end of the term. Likewise the proposal to reform supermarkets was an election promise, Labour then got the Commerce Commission to study possible options, which only finished last week. I'd expect those reforms will pass, as they have generic support from both Labour and National.

Richard F: We understand the Labour Māori Caucus has a significant amount of power in this Government (disproportionate to the number of seats it holds) and that if any one "party" could vote the government down, it would be Labour's own Māori Caucus. What are your views on this? Thank you.

Claire T: On technical numbers, if all of Labour's Māori caucus decided to split from the mother ship on any issue they could indeed vote the government down. Since that would involve them siding with National and Act, I can't see it happening however.

I'm sure the Māori ministers within that caucus do have influence and push on issues in Cabinet - that's their job.

Michael H: Bracket creep is a real problem for NZ. Do you think this will be part of the changes that are discussed? Also, the top tax bracket, we need our best people here and not leaving for greener pastures, what do you think the chances are of this Labour Govt ever removing this change?

Thomas C: Hi Michael, I believe the changes discussed today will be strictly related to the cost of fuel - so no bracket changes. There won't be any tax movement in the budget this year either. Could bracket changes in next year's election budget? Possibly. Tax cuts are very popular, but they're also very expensive. I'd expect Labour to use any tax changes to further some of its social goals. My colleague Brian Fallow looked at some proposals from the 2018 tax working group, which might give some idea of where Labour might be heading on tax.

Chuck B: Did Trevor Mallard's action in turning on the sprinklers and the loud music make the job of the police more difficult?

Claire T: Hi Chuck, I don't think the Police were overly enamoured with it, not least because the music gave them headaches. I was surprised to learn Trevor Mallard had gone ahead with it despite the Police being less than enthusiastic, but it is still unknown exactly what Police said to Mallard before he deployed his tactics. I like to think he would have stopped immediately if the reaction had got too heated.

As for its effect, I was there through the weekend all this played out, and came to conclusion that it didn't make things any better but nor did it necessarily make them worse. It didn't seem to make the protesters more aggressive - they just sang and danced through every song every time they played.

It might have made them more determined to stick it out, but they were pretty determined by then anyway - given even the cyclone on the same weekend didn't do much. It kept the protesters busy for a while, at least, building drains and the like.

Michael H: How many press secretaries does the PM have and how does it compare to previous PMs?

Claire T: She has five press secretaries: a chief, a deputy, and three beneath them. John Key and Bill English had four. I think Helen Clark had three or four too.

Chuck B: If the Government repeals Three Strikes, will National and Act reinstate it?

Claire T: Good question, we'll ask. Since both oppose it being repealed, I'd say so. Maybe National will remain non-committal to use it as a chip if it is in a position to form a Government with Act at some point.

Alfred T: Luxon has presented little in the way of policy (other than the same old vague promises about tax cuts), and until very recently National has appeared to be a shambles. To what extent do you feel the latest poll is much more about tiredness with Covid, and general grumpiness, than an indication that voters are convinced National has something to offer? Also, do you feel there is the potential for anti-Maori sentiment to be stirred up for political purposes, along the old Don Brash lines?

Thomas C: Yes, Luxon hasn't got a new tentpole policy that is his own yet. As local government spokesman he floated the idea of letting councils keep the GST raised on rates.

As leader, most policies have either been reacting to circumstances as they arise (like RAT surveillance in schools for Omicron) or reheating previous National policies (this bracket policy belongs to Simon Bridges).

He has signalled that he thinks National was too policy-heavy at the last election, and got bogged down a bit. National will however need some policies and I'm guessing we'll see a few of them popping up this year, before a policy binge next year (election year!)

It's only been a few months.

Marlene H: Much is being made of the polls undertaken in this country at the moment, particularly the last one. This can always be just a snapshot of how a group of electors feel about current issues at that particular moment in time. How relevant do you think these polls have been in the past and how relevant are they today? After all, they are very small samples of around 1000 people.

Claire T: Yes, polls are a snapshot in time which is why it pays not to take any one poll as the gospel truth.

The snapshot in time polls have the advantage of telling us how people are responding to a major development - such as National's recent leadership change to Christopher Luxon, or the Budget.

But what is more important is the trend that is shown over time in any given poll - all polls have shown Labour consistently dropping in support since early 2021, although things have been more volatile on the right between Act and National. Closer to an election, they can be useful predictors of an outcome.

The established polling companies have a pretty good track record and sound methodology when it comes to selecting the 1000 and weighting the results.

Mike B: Do you think there is a adequate pressure on the Government that might result in a loosening of the gathering restrictions? Asking as we have our wedding on the 10th of April.

Claire T: The answer is in Omicron, my friend. The PM has said restrictions will be unwound pretty quickly once Omicron peaks and fades again, and hospitalisations drop. That is expected to be over the next couple of weeks. So you could get lucky but a contingency plan might be wise. All the best for the big day, whenever it happens!