Political pundits note a strong relationship between the mood or “right track/wrong track” question in polls and a governing party’s chances of re-election.
Most recently, the Helen Clark Labour Government, though generally well regarded, had the misfortune to strike an election as the Global Financial Crisis hit and, in 2008, lost to John Key’s National Party.
The NZ economy will be the big issue in this year’s general election.
Polls published this week again showed that it is shaping up to be another knife-edge MMP outcome.
The TVNZ Kantar poll predicted a bare two-seat majority for a National/Act government, the Horizon Poll indicated an equally narrow win for a Labour/Green coalition without the need for support from the Māori Party and the Herald “Poll of Polls” has a narrow win to the same combination.
This year’s Budget may ultimately go some way to turning the mood numbers around, but also to cement in a key Labour Party constituency in advance of the election.
A clear target of this Budget were the women voters who float between the two big parties.
This was a key support group for the Clark Government, which was attracted away by John Key’s “family man” image and they returned to Labour when Jacinda Ardern arrived.
The expanded access to early childhood education will be worth $133 a week to a family in my own whānau.
Dropping the $5 prescription charge was also aimed firmly at women and folks with families.
The instant reaction from National’s deputy leader Nicola Willis was a vow to restore the prescription charge should National win in October.
This was exactly the wrong response and although there was a partial back-off in subsequent days, it is Willis’ immediate reaction that will stick in voters’ minds.
Christopher Luxon’s mentor Sir John Key would not have made such a mistake. As he once wisely pointed out, “every dollar of government spending has its own constituency”.
The mood numbers have been negative concerning for at least a year though not dramatically so and Labour will be wanting to see these turn positive if its chances of success are to improve.
As the always perceptive ANZ chief economist Sharon Zollner pointed out, the so-called “Misery Index” (a simple addition of the inflation and unemployment rates) is not particularly high, largely because of the near record low rate of joblessness.
Company liquidations, a certain sign of distress in the business sector, are still way below prepandemic levels and at 1556 last year are nowhere near the 3433 insolvencies in 2009 when the Global Financial Crisis hit.
It is true that inflation remains high, though the increase in the average hourly wage is well ahead of inflation. Those on fixed incomes will be under pressure, especially from food price rises.
It seems, however, that Adrian Orr of the Reserve Bank believes that despite the seemingly free-spending Budget, inflation will come down as the year progresses and the 25-basis point increase in the OCR announced on Wednesday was at the lower end of predictions.
There’s another side to inflation. There must by definition be as many lenders as there are borrowers and those on the lender side of the equation are winning.
My own modest nest-egg after years of niggardly interest payments is now getting me at least a decent out-to-lunch once a week.
Robertson’s Budget caught the Opposition by surprise and the now normal attempt to damn it with a negative label (remember the “chewing gum Budget?”) came to nothing.
Willis’ reaction to the axing of prescription costs dominated the National Party’s post-Budget coverage and there appeared to be no agreed theme for the party’s post-Budget statements.
Luxon has done well to unite a small caucus with a recent fractured past, but he now needs to refine and focus National’s attack on the Government and clarify his party’s economic policy.
As the election approaches the pressure will increase on Luxon to explain how National’s economic policy makes sense.
Grant Robertson has labelled National’s policy of simultaneously cutting taxes, reducing debt, and increasing spending on health and education as a “Bermuda Triangle”.
Whatever the outcome in October, it will have been down to the economy, stupid.
* Mike Williams grew up in Hawke’s Bay and is a former Labour Party president.
