Chris Hipkins demonstrated enthusiasm borne of desperation in the second leaders' debate this week. After his lack lustre performance in the first debate and on the campaign trail generally, he needed to. But it is still unlikely to be enough to reverse Labour's declining fortunes.

What was notable about Hipkins' performance was his focus on National's policies and record when last in office, rather than his government's achievements or plans for a further term in office. It looked an implicit recognition that a change of government is likely, a quite remarkable concession from an incumbent Prime Minister.

Christopher Luxon, on the other hand, was the same figure he was in the earlier debate – on-message to an almost semi-robotic extent, largely unflustered by Hipkins’ barbs, and solid without being spectacular. While he had his moments, he did not land any telling hits on Hipkins. But he did not need to. Given National’s position in the polls, all he had to do was look and sound like a Prime Minister-in waiting, which he did.

He still had some weak moments – his unconvincing comments about working with New Zealand First stand out especially – but overall, his performance was a satisfactory one. Unlike Hipkins who is fighting frantically to recover lost territory, Luxon’s task now is to consolidate the ground he has already gained, meaning he does not need to be as frenetic as Hipkins is now becoming.

In fairness to Hipkins, though, Labour’s decline in public support is not all his fault. Eight months ago, he inherited a government that had already lost the confidence of a sizeable chunk of the population.

Analysis of all the opinion polls shows that Labour’s support has been in freefall for the last two years. In October 2021 Labour was averaging almost 43% in the polls – today it is averaging just under 27%. When Hipkins took over in January this year Labour’s rolling average support was just under 30%, about three percentage points higher than today. The important point to note is that the big plunge in Labour’s support occurred between October 2021 and the end of 2022 when Dame Jacinda Ardern was still Prime Minister.

There was a brief honeymoon resurgence of support for Labour in Hipkins’ first few weeks as Prime Minister while the policy bonfire was underway, although that was nowhere near back to October 2021 levels. It began to peter out from late April this year and as the election nears, now seems to be plummeting.

There are three possible explanations for this trend.

First, it is clear the main damage to Labour’s re-election prospects was done from the middle of 2021, almost eighteen months before Hipkins became Prime Minister. In hindsight, the government’s perceived slowness in winding back pandemic restrictions, alongside the mounting cost-of-living crisis brought about rising levels of public discontent. Compounding that was the second Auckland lockdown, which Ardern promised would be “short and sharp”, but which went on for over four months. Then Covid19 Minister Hipkins’ comments at the time that Aucklanders might to have book times to leave the city for their summer holidays was a final straw. Labour’s average poll support fell over 6% between then and the end of the Parliament occupation in February 2022, while National’s support rose nearly 10% over the same time.

Second, Labour’s rise in support during Hipkins’ first few weeks as Prime Minister when the policy bonfire was burning suggested people might have been prepared to give him a chance. However, when it became clear that the bonfire was simply about getting unpopular policies off the table, without replacing them with more popular alternatives, the freefall in Labour’s support resumed. The various policy announcements Hipkins has made during the election campaign have simply raised the retort that why is Labour only promoting these policies now, when it has had the best part of six years in office to have implemented them.

The third reason for the long-term decline in Labour’s support has been the rise of National since Luxon took over as party leader at the end of November 2021. At that time, National was averaging just under 27% in the polls, about twelve points lower than Labour, and still well short of the numbers need to form a government. Since then, the positions have almost reversed – National’s average support has risen 10%, while Labour has fallen by around 13%.

The inexorability of Labour’s long-term decline is what is fuelling the belated aggression in Hipkins’ approach as seen in the second leaders’ debate. But the long-term trend of declining Labour support, means that realistically he will not be able to overturn that trend in the little over two weeks until the election. With current polls suggesting half Labour’s current MPs will lose their seats, Hipkins’ new aggression is far more likely to be about saving as many of them as possible, to give Labour a reasonable chance of being a viable Opposition.

Consistent with that, and as last night’s debate showed, Hipkins’ strategy now is to tear as many holes as he can in Nationals’ policies rather than to promote his government’s own plans, let alone its achievements.

The toughest thing for Hipkins though, as the polls show, is that Labour was doomed long before he became Prime Minister. Nevertheless, as is the way with politics, he is the one who will have to shoulder the blame for its looming defeat.

 

In the wake of the first pre-election televised leaders’ debate the commentariat has reacted with predictable banality. The focus, masquerading as analysis, has been almost solely on who “won” or “lost”, rather than what the two leaders said. The debate has been variously compared to an All Blacks’ test, a boxing match, or dismissed as a “snorefest”.

Coincidentally, while Television One was screening the leaders’ debate, its sister channel, Television Two was screening the reality show Celebrity Treasure Island, where competitors challenge each other in a series of contests, and are steadily eliminated until there is only one survivor. The various commentators’ reactions suggest they wanted the leaders’ debate to be the political version of Celebrity Treasure Island.

Since Sir Keith Holyoake and Norman Kirk fronted up to a rowdy debate at Victoria University in 1969, televised leaders’ debates have been a feature of our election campaigns. Over the years, there have been moments of drama in each of them.

The 1969 debate was interrupted frequently by chants from anti-Vietnam war protestors led by the Progressive Youth Moment. The more they chanted, the more Holyoake played to the home television audience, saying “Keep on going, you’re getting me 100 votes a minute”. In 1984, there was Sir Robert Muldoon’s memorable “I love you too, Mr Lange” line at the end of their final debate, widely seen at the time as an early concession of his election defeat a week later. And who could ever forget Sir John Key’s “show me the money” line which destroyed Phil Goff’s campaign in 2014?

But these moments have been few and far between. The main purpose of leaders’ debates is to better inform voters of the policies and positions of the two most likely contenders to become Prime Minister at the ensuing election. They are not gladiatorial sporting contests, and do not deserve to be treated as such, a point too many of the commentators seem unwilling to acknowledge.

I am pleased this weeks’ debate was a straightforward, civilised affair, without histrionics and drama, where the two leaders treated each other with courtesy and respect and made their points in a considered way, without resorting to a slanging match. As such, each provided a good opportunity to assess not only what they had to say, but also their authority and conviction. I felt we had a better picture by the debate’s end of what both stand for, and their likely priorities in government.

On that basis, Christopher Luxon appeared more confident, concise, and certain than Chris Hipkins. Hipkins was able to draw on many aspects of his government’s record to bolster his arguments but was hampered by some of its failings over the last six years. Luxon appeared to have a more positive message, even if aspects of it were more contestable assertions than absolute facts, whereas, as the incumbent, Hipkins was inevitably on the defensive.

Given the overall situation, Hipkins needed a stronger performance than he was able to deliver. While he was predictable and competent, he is unlikely to have lifted Labour beyond its current standing. Luxon, more of an unknown quantity before the debate, with therefore less to lose, sounded authoritative and organised, and probably solidified rather than added to National’s current support. Overall, the evenness of the debate played more into Luxon’s hands than it did Hipkins’. Although there are more debates to come, Luxon’s performance has made it more difficult for Hipkins to come back more strongly in these without appearing strident and more desperate.

However, those still seeking a “knock-out blow” from the debates may be misjudging the current public mood. What they dismiss as “flat” and “uninspiring” may be more in tune with the current mood of voters than they imagine.

Over the last few years, the pandemic, and the uncertainties it has given rise to, have changed the world forever. On top of that, there have been the global economic crisis and political upheaval in Ukraine, the threats to stability in the Taiwan Straits, and the unprecedented series of adverse weather catastrophes, exemplified by the cyclones here earlier in the year. The cumulative effect of all these events, that have happened over a very short period, has shaken people’s confidence to an unparalleled degree. 

It may well therefore be that amid all this turmoil, people in New Zealand, like those elsewhere, are yearning for a restoration of certainty and predictability, so they can get their lives back on track. There may no longer be the attraction to so-called bold and inspirational leadership that there was a few years ago. Instead, a new era where solidity and reliability prevail over big, aspirational promises of change, may be upon us.

If that is so, then the commentators who lament the lack of drama in the leaders’ debate and the wider election campaign are missing the point. This may not be the year where big and bold is best, but rather one where who can do what they say they will do matters more. In that regard, both Hipkins and Luxon may well be more in touch with the public mood than the drama-seeking commentators might like.

 

 

The relief in some political and economic quarters that the Pre-Election Economic and Fiscal Update (PREFU) released earlier this week is not as bad as many were predicting obscures the reality that the government's books are in the worst state they have been for years. 

Whichever parties form the government after the election will have a major task on their hands to introduce more balance into the economy, if there is to be any realistic hope of returning to Budget surplus by 2026/27 as the PREFU predicts. 

 

In virtually every area, the economy is in a worse position than it was when the government last changed in 2017. It is therefore obvious and easy to blame this deterioration on the economic management of the current government, but that is a somewhat lazy response, which may not be all that accurate.

 

Most, but not all, of the decline and the build-up of debt levels has occurred because of the government’s response to the pandemic. Few would disagree that the government needed to keep essential services operating as economic activity became stifled by the pandemic response. Given our favourable debt to GDP ratio, the decision at the time to borrow around $53 billion looked conservative when compared to the borrowing programmes of other countries. It seemed the right thing to do to cushion to the greatest extent possible the adverse economic impacts the pandemic was likely to have on New Zealand households.

 

However, a couple of lessons from history were overlooked in the process. In 1974/75, in the wake of the first oil shock, the Rowling government borrowed heavily to protect New Zealanders from its worst impacts. By the time of the 1975 election, that policy was being derided by Robert Muldoon’s National Party as “borrow and hope”, and he was able to win a landslide election victory on the pledge he would “rebuild New Zealand’s shattered economy”. But his subsequent economic management, also based on the worthy premise of shielding New Zealanders from the worst impacts of a deteriorating international economic situation, led to even more borrowing. By the time of the 1984 election, Muldoon’s erratic, protectionist approach had stifled growth and productivity to the extent that New Zealand was literally days away from having to default on major loan repayments.

 

When the current government began its Covid-recovery borrowing plan in 2020, those few critics who dared raise the spectre of loans having to be repaid, with future economic activity compromised accordingly, were quickly shut down. In the prevailing atmosphere of the time, that any criticism or even questioning of anything the government was doing in response to the pandemic bordered on treason, it was easy ignore critical opinions. Since then, though, debt has ballooned to around $100 billion, with annual repayment levels now around $9 billion.

 

Of itself, that may not be so bad, certainly compared to other countries, were it not for the quality of much of the Covid19 recovery spending. A raft of assistance programmes was introduced which were costly, and cumbersome to access, with very little subsequent accountability for how the funding so advanced was being spent.

 

At the same time, there was little additional investment in critical areas like the health system – the best the government offered was the most comprehensive shake-up of the public health service in more than 20 years, which would take several years to become operational. Today, eighteen months after Te Whata Ora replaced the former district health boards, there has been no discernible improvement in the quality and scope of services provided to patients. Staff shortages remain throughout the system with critical services, like cancer treatment, having to close in some areas as a result. This week’s pledge from the government to train more than 300 additional doctors by 2027 is three years too late – investing in improving medical and nursing capacity should have been a priority for the post-pandemic response, not left to be tossed out as a last-minute election sweetener, to try to appease senior medical professionals currently taking unprecedented industrial action.

 

This goes to the heart of the country’s current economic problems, as identified by the PREFU. Rather than use the additional post-pandemic borrowing to improve the country’s health and physical infrastructure, the government undertook too much unproductive expenditure that has shown no long-term return to the country, while still incurring debt that must be repaid. As in earlier times, initial relief that people were being spared the immediate impact of the worst of circumstances, quickly evaporated when it was realised that the debt incurred not only lives on long after the crisis has passed, but also limits the scope of future government actions. Belatedly, both the Prime Minister and the Minister of Finance seem to be acknowledging the public frustration their approach has bought about.

 

This is Labour’s dilemma. The poor quality of much of its additional spending is becoming clear, leading it to announce billions of dollars of spending cuts to reduce the debt it has run up. And proposals, like this week’s announcement to train more doctors, simply invite the criticism of why these were not priorities when the first pandemic recovery borrowing occurred three years ago. Despite the Prime Minister’s lament to the contrary, the public’s yearning for something better is perfectly understandable.

 

The PREFU’s message is clear: after the last three wasted years, the next government needs to control its spending to enable debt levels to be reduced and the Budget to return to surplus. Implicit in that is a stronger focus on the quality and purpose of government spending. But that is no licence for a widespread slash and burn policy. Rather, the unfocused and poorly prioritised approach of the last few years needs to be replaced by a greater discipline and emphasis on productive physical and social infrastructural investment, ahead of pet projects and other worthy, but essentially “nice to have” ones.

 

The balance required to achieve this will test the capacity of whoever is in government after the election. To avoid future generations being saddled with the consequences of the debt already incurred, there must be a start to the hard but necessary work of recovery.