Prime Minister Christopher Luxon and Finance Minister Nicola Willis give their first joint interview since getting into Government. Photo / Mark Mitchell
The coalition Government marked its first six months in power this week and Prime Minister Christopher Luxon and Finance Minister Nicola Willis sat down with the NZ Herald for their first joint interview since then.
It is being done in honour of their first Budget next Thursday – a Budget they promise will deliver some surprises (”good ones”) and “bold moves” even as it faces into the blizzard of grim economic forecasts and delivering on the tax cuts pledge.
It is also an opportunity for a stock take on the relationship between the Prime Minister and Finance Minister.
It is one of the most scrutinised relationships in politics – and the most important.
Breakdowns in that relationship can and have led to breakdowns in Governments.
Asked what they have learned about each other over those six months, Willis says she had known Luxon was “efficient, businesslike and ‘getting things done’.”
What she had not known about was his enthusiastic, almost unstoppable, “chatter”.
“You also really like talking it out. You love chatting. You’re very social. You like being in a room with people and verbalising and talking it through. You’re not hyper-efficient. You enjoy people.”
In return, Luxon says he has discovered Willis has “a wicked sense of humour”.
He had a painful brush with that sense of humour just before the interview.
It was a totally deserved one. He and Willis were inspecting his newish digital photo frame, one of the few personal items in a very spartan office.
He had brought it to add a homely touch to his “gilded cage” - the ninth-floor office of the Prime Minister.
Willis then narked on him, telling us the first time she saw his new photo frame the photo displayed was a portrait of himself.
She was merciless in her mockery. She even took a selfie of herself next to the photo in question, which she shows off.
She laughs and laughs and notes that she totally understood why he would want photos of himself to look at, saying somebody might want to start the day looking at something that inspired them.
“So here you are, starting your day looking at an image of yourself to motivate you.”
He takes it very well, laughing and trying to explain that at that stage he had not curated the photos that would rotate through it.
The exchange dispels any doubt Willis might defer easily to Luxon and whether he can handle having the mickey taken out of him.
Back in 2007, Sir Bill English famously referred to the relationship between himself and then National leader Sir John Key as “I grind away, John just bounces from one cloud to another.”
The pair became a formidable partnership as Prime Minister and Finance Minister.
Less quoted was English’s remark that when push came to shove, Key had the final say.
When Luxon and Willis are asked who gets the last word in a disagreement, Luxon says they “just sit down and work it out”.
There’s only one answer Willis can give to that same question.
It takes a prompt to get that answer – and she says it would be Luxon who got the last word.
“He’s the boss.”
Luxon laughs and Willis keeps going to make up for her tardy initial response.
“He’s in charge. There’s a ranking in this building and the number one position is Prime Minister. So when the Prime Minister says something, we make it happen.”
She makes it clear she makes him work for it: “But we also will say, ‘Prime Minister, have you considered this? And what about this?’”
Luxon has greatly enjoyed that moment of deference - but adds in that he tries to run a collaborative “low hierarchy” show.
Both agree that theirs is a crucial relationship in a government.
They are often found in each other’s offices, preferring to talk face-to-face where possible.
They meet to debrief most nights when both are in Wellington, either in the office or for dinner in the nearby restaurants Huxleys or the Backbencher.
They catch up by phone if they are apart. Willis is a frequent visitor to Luxon’s office.
“I’m up and down to this office all the time. It’s like any team. We are kind of bouncing off each other and discussing the pros and cons of different options, and we come to decisions together.”
There are also regular meetings with the so-called ‘kitchen Cabinet’ (or in Luxon language, “the strategy team”.). They are the top-tier National Party ministers, rather than the wider coalition grouping. They discuss policy and coalition management issues.
Those ministers are Chris Bishop, Simeon Brown, Paul Goldsmith, Willis and Luxon. “Whenever we need to, we grab that group together,” Luxon said. “That group still is really critical for the National Party management side of things. That’s the group we’ve worked with from the beginning.”
Luxon refers to the Willis-Luxon relationship as a “really tight partnership” forged from its beginning in Opposition when they took over the National Party after the 2020 election and the leadership changes leading up to it.
Willis: “We have to be really aligned because so much of what we are trying to do requires a coherent economic and finance strategy. It will only be as coherent as our alignment is. We have to be on the same page.”
The job split Luxon and Willis have is similar to that of Key and English – Willis is charged with the economic platform and the social investment side. Luxon points to the similar roles of Key and English, saying the social and economic side do need to sit together.
Willis says Luxon’s involvement is in the overall strategy. “[He is] really good at helicoptering up and saying ‘what’s the big picture here? What are the important pieces of work we need to be prioritising? What are the bits we are getting bogged down in the detail of which are less important?”
There are some limits for Willis when it comes to doing what the boss says.
Willis admits she has not read the list of self-help management books Luxon has prescribed to everyone from ministers to public department heads - the same public sector heads she is in charge of as Public Service Minister.
“It’s only because I have been working so hard, Prime Minister, to deliver on the agenda we have shaped together. Obviously when I next have a holiday, then I can go buy the list because obviously there’s a lot of self-improvement to do.”
Her delivery makes it quite obvious she will not be reading his books on holiday or at any other time.
Asked who was the ideas person and who was the pragmatist who tended to rein things in, Willis and Luxon said it went both ways.
“You have some very ... um ... big ideas,” Willis says to Luxon. “And I think actually that has been quite good that sometimes we will catch on to each other’s ideas and reinforce the confidence around them. There have been one or two cases of that.”
Luxon sets out Willis’ role as being “getting creative at trying to find a way through how we make the finances work to deliver that goal. Which is pretty cool.”
However, Willis has more experience with the reality of politics, and the difficulties in living up to Luxon’s mantra of “getting things done”.
Asked what she thinks has frustrated him most about politics, Willis says it is the pace.
“He’s used to a businesslike pace. You made a decision, you execute. Whereas both through parliamentary processes but also official processes, things just take longer. And I think from time to time you find that frustrating,” Willis says to him.
He does not disagree.
The next milestone is in the Government’s first Budget on Thursday, a Budget which has so far been defined by the word “cuts” - tax cuts, and spending cuts to help pay for it all.
Willis has described it as a Budget that is neither a spend-up nor austerity – but one that charted the middle course.
She points to forecasts she says are getting worse and worse, to the structural deficit, the funding pressures on core public services such as education and health, rising debt and the date for a return to surplus disappearing further and further over the horizon in forecasts.
“When you look through history and see other situations where an incoming Government has had to deal with that much all at once, sometimes there can be a desire to act really dramatically. The approach we are taking is to say, ‘these are the problems’. We don’t solve them all in the first Budget. But we have to show people there is a path out of the mess, it is credible and we can deliver on it. That’s what we are doing.”
The last Government that faced a similar situation was the National Government in 2008, which was up against the Global Financial Crisis. Willis was a staffer for Key. English – a fan of slow reform and predictable, no-surprises Budgets - is a mentor of hers.
So will her Budget have any big surprises beyond tax cuts, or will it be predictable?
“I think we’ll still do things as a Government that will surprise people and that will be bold. Absolutely.”
Luxon chips in to promise “tough choices and bold decisions”.
Will those surprises be good or bad? “Good,” they both say.
Willis is not concerned about her critics arguing about the timing of tax cuts and concerns about how far the spending cuts and staff cuts will go.
She says there was both a principled reason for adjusting the tax thresholds and a personal one (which is also a political one).
“Both the PM and I have looked a lot of New Zealanders in the eye and said ‘relief is coming’.”
It will be the first of three Budgets. Luxon says they have sketched out “at quite a high level” what will happen in each of those three but one aim of the first was to set in place the discipline needed for the rest of the term.
Willis said the measures agreed to in the coalition agreements with Act and NZ First also have to be spread over the three Budgets.
And while this Budget would set the foundation for the next two Budgets, Willis was also aware that advance planning could easily be undone by events.
“I would just be frank about the fact that circumstances will evolve, things will change and issues will emerge that will mean we have to react, that we cannot foresee now and I think we need to be open to that.”
In the meantime, the two will not even break the pre-Budget Cone of Silence by revealing what Budget Day traditions they might set up for themselves. “You’ll just have to wait until Budget Day,” Luxon says.
Six more sleeps.
Claire Trevett is the NZ Herald’s political editor, based at Parliament in Wellington. She started at the Herald in 2003 and joined the Press Gallery team in 2007. She is a life member of the Parliamentary Press Gallery.
