The essence of politics is often described as about the contest of ideas. But really the political process is primarily about the pursuit and retention of power. Without power, it is very difficult to promote, let alone implement, ideas, no matter how worthy they might be.

A good example of this occurred in Wellington last week when a high-level meeting was convened to consider the future of “Let’s Get Wellington Moving” (LGWM), a “vibrant plan” conceived in 2014 to “transform” Wellington’s transport future. It has been projected to cost around $4 billion over the next 30 years, with central government expected to provide around $2.5 billion of that amount. LGWM has been bogged down in controversy over some of its proposals for some time, and little progress has occurred. The National Party has expressed misgivings about LGWM and has confirmed since the election that as the incoming government it will not be supporting significant aspects of the proposal.

Against that background, the pathos of last week’s high-level meeting was obvious. It was called by the city’s Green Mayor and involved Wellington’s two new Green MPs, and one Labour MP, to work out a way to save LGWM. Given the changed national political environment, it was no more than a symbolic waste of time. LGWM’s future will be determined by the new government, not the Mayor and three local MPs opposed to the government. LGWM looks set to be the first of many issues over the next few years when the impotent pleadings of Wellington’s local leaders will run a distant second to the priorities of the National-led government.

In that regard, it is worth noting that that for the first time in almost 30 years, there is not a government Minister holding a Wellington city electorate, making it even harder for the city’s voice to be heard at the highest level. Over the years, Wellington has benefited from having local MPs as Ministers. Major projects like the development of the iconic national Museum, Te Papa Tongarewa, the upgrading of the city’s urban rail services, and the construction, after a century of delays, of the Transmission Gully highway north of the city would not have occurred without it.

Now, with the city facing even greater infrastructural challenges such as upgrading its aging water reticulation system and improving its seismic resilience, the city will probably need to rely on gaining the ear of incoming Finance Minister Nicola Willis, a list MP based in Wellington. Yet she was not part of the Mayor’s recent round-table discussion, a telling example of a lack of political nous, especially since she will have a larger say than the Mayor or any of the local MPs in determining the future of the LGWM project.

Along with the pursuit and retention of power, the essence of politics is also about the art of the possible, that is, recognising current reality and adapting to it. The awkward truth for Wellington is that while it shifted left at the recent election, the rest of the country shifted right. Wellington is now a political outlier and no amount of virtuous clinging to previously held positions is going to change that. Wellington’s leaders need to quickly come to grips with the new political realities and develop the pragmatism required to achieve at least some of what they want. Simply shouting from the sidelines about what “should” be rather than acknowledging what now “will” be, will leave them looking impotent and irrelevant.

Of course, our local leaders should be advocating for the city’s interests, but they ought to be focusing on what is achievable, rather than what they consider is desirable. As LGWM’s lack of progress over the years shows, there is a time when stalled idealism needs to give way to incremental movement on points of common agreement.

Although the winds of political change have rendered Wellington’s three electorate MPs irrelevant for the immediate future, they have created an opportunity for the Wellington City Council. The Mayor and Council should be well placed to become the dominant advocates for the city’s future, with the potential to be taken more seriously by the government than the sidelined local MPs. However, the chronic dysfunction that has plagued the Wellington City Council for about two decades now makes it unlikely that it could ever arrive at an agreed and coherent local position, let alone one that central government could address practically. A classic case of opportunity lost.

The latest revelations that there is a potential $1 billion blow-out in the Council’s long-term budget heighten the sense of financial crisis now surrounding it, which deals a further massive blow to the credibility of the Labour/Greens majority which has controlled the Wellington City Council for some time. So long as that perception remains, the new government, with its clear regard for fiscal rectitude, is even less likely to place much reliance on the Wellington City Council’s future spending plans.

Wellington will only get moving once it has a coherent and financially robust plan to put before central government. This will require much more realistic leadership than holding cosy little meetings between the Mayor and the city’s local non-government MPs to mourn the loss of LGWM as they want it.

It is the reality of who holds political power and who does not, and Wellington now looks set to learn that the hard way.  

In the wake of last week's election some have asked why no consideration has been given to a grand coalition between National and Labour to limit the influence of ACT and New Zealand First. After all, they say, grand coalitions have worked in other countries, so why not in New Zealand, given that the differences between the two major parties often appear so wafer thin?

 

The best current example of a grand coalition is in Ireland where the two main parties, Fianna Fail and Fine Gael, came together in 2020. But this is Ireland's first grand coalition and the reasons behind it are specific to Ireland’s history and circumstances which are not readily applicable to New Zealand.

 

Fianna Fail (the Soldiers of Destiny) and Fine Gael (Sons of Ireland) were formed in the early 1930s following Ireland's 1919-1921 civil war, and the country’s partition in 1922. Fianna Fail was formed by Eamon de Valera after he broke with Sinn Fein (the political wing of the outlawed Irish Republican Army). It favoured a united Irish state, whereas Fine Gael supported the Treaty with Britain that Michael Collins negotiated, and which had led to the establishment of the Irish Free State and Northern Ireland.

 

Since 1932 Fianna Fail has been the dominant party of government. Whenever Fine Gael has been in power it has usually been in coalition with Labour, or more recently, the Greens. Between them, Fianna Fail and Fine Gael have followed a remarkably consistent policy approach. For example, both Fianna Fail and Fine Gael-led governments oversaw Ireland's rise as the economic Celtic Tiger in the 1980s, and then its recovery from the 2008 Global Financial Crisis. The differences between them are far less ideological than existential, and are still primarily based on the events of 1922. Their common enemy throughout has been Sinn Fein.

 

But Sinn Fein has been on the rise in recent years, winning 36 of 160 seats in the Irish Parliament at the last election and becoming the largest party in this year's local Northern Ireland elections. The 2020 election left neither Fianna Fail nor Fine Gael able to form a government without including Sinn Fein, a step, given their history, that was too extreme for either to consider. It was therefore easier for them both to set aside a century's division over what happened in 1922 to form the grand coalition, than to contemplate letting Sinn Fein anywhere near power.

 

The history of National and Labour in New Zealand has been quite different, based on ideology, despite the wafer thin differences between them both today. National was formed in 1936 as an amalgamation of the conservative, rural Reform Party and the more liberal United Party to oppose what both then regarded as the socialist Labour government.

 

But over the years, a more comfortable pattern has developed, whereby Labour governments propose, National Oppositions oppose, and then modify once in government. Christopher Luxon's incoming government is likely to be no different in that regard. That pattern, despite reasonably frequent changes of government (there have been more changes of government here in the last 40 years than in Britain, Australia, or Canada) has left us in a generally stable situation.

 

That means there has so far been no reason for National and Labour to seriously consider working together, and every reason for them to keep on pretending their ideological differences are too great for them to ever think about doing so. (A War Cabinet formed between the two in 1940 to deal solely with war issues had lasted barely two years before National walked out in 1942.) While the move to MMP in 1996 introduced more diversity into New Zealand politics – over 100 parties have been formed under MMP but only 6 have made it to Parliament – the dominance of National and Labour has remained. Although their combined vote share at last week’s election was the lowest for over 20 years, none of the other parties in Parliament currently poses a numerical, let alone existential, threat to their duopoly. So there is no reason for National and Labour to consider working together in a grand coalition.

 

A grand coalition only became an issue in Ireland when a small party with a policy agenda neither of the major parties could accept won nearly a quarter of the seats in Parliament, and it seemed impossible to form a government without them. It would take a similar turn of events in New Zealand to make a grand coalition a possibility. But it is hard to see that happening any time soon. Although they are both parties on the rise, neither the Greens (10.6% of the party vote) nor Te Pati Maori (2.5% of the party vote) look likely to be winning around a quarter of the seats in Parliament in the foreseeable future. So long as they, or ACT and New Zealand First, continue to secure vote shares at around their current levels, there will be no shortage of potential coalition partners for National or Labour.

 

Therefore, like the Tweeedledum and Tweedledee of New Zealand politics they have become, National and Labour will happily carry on their own separate ways as they have done for nearly 80 years. Their staunch belief the differences between them are insurmountable and the lack of any real threat to the system they have established over the years give neither of them the incentive to ever consider a grand coalition.

 

 

 

The last National Party campaign leaflet received in my letterbox this week urged me to "Please party vote National". Unlike the bold promise of "A Brighter Future" under Sir John Key, or Dame Jacinda Ardern's positive "Let's Do This", National's message looked like more like a plea for help than a call to arms.

 

In a way, it summed up the whole election campaign. None of the parties – perhaps apart from Te Pati Māori, seeking to appeal to a distinct constituency – has offered anything substantially different from what is already happening. The election campaign has been far less a contest of ideas, than one of which grouping of parties dislike each other least but think they can manage the status quo best.

 

Labour’s campaign has focused almost entirely on what a National/ACT government might do. Its own achievements over six years in government have been barely mentioned. In part, this is because its delivery of the transformational approach Ardern promised in 2017 has been so abysmal, and in part, it is because Labour’s prospects of being able to continue in government have been diminishing for months now. Even this week as the polls show a slight improvement in Labour’s position, but still not enough to remain in government, the negative attacks continue.

 

National’s campaign has fluctuated from the quiet confidence of a party being a government-in-waiting two or three weeks ago, and not wanting to do anything to upset a seemingly unstoppable wave to power, to something far more hesitant after the own goal regarding New Zealand First. National now realises opening the door to New Zealand First was a major tactical blunder, hence its current panic. Its previous hopes of a clean National/ACT coalition have all but evaporated, and the prospect of New Zealand First attempting to once more hold the country to ransom looms ever larger. No wonder it is now delivering the plaintive and desperate "Please party vote National" message.

 

Key’s warning about the country waking up to “limboland” this coming Sunday now looks set to come to pass. While a National-led government of some type is still the most likely election outcome, it may take some time to finalise. New Zealand First has always delayed entering negotiations until the final election results have been declared. That will not be until November 3, meaning any talks involving New Zealand First could still be underway when the Port Waikato by-election occurs on November 25. If there is a prospect, depending on results on Saturday, of National and ACT not needing New Zealand First after the by-election, they may prefer to drag discussions with New Zealand First out until that time.

 

Ardern’s last-minute message to Labour supporters to “Vote for what you believe in” is far more ambiguous than Key’s blunt warning. She goes on to spell out in her video message the things that are important to her. But, given the current environment of an overwhelming mood for change, her message could encourage those who voted Labour for the first time in their lives in the 2020 pandemic election to cast their votes elsewhere this time around. While her message is closest to expressing a vision for the future that has been lacking elsewhere throughout the campaign, it is probably too little, too late to have a marked effect on Labour’s chances.

 

Labour’s negativity during the campaign and its indifferent record over the last six years inspires little confidence that a new Labour-led government can get on top of the cost-of-living crisis or restore economic growth. Despite a nearly 70% increase in public spending since Labour came to power there remains little confidence it knows how to improve critical public services in health and education.

 

Doubts about National’s tax policy and overall fiscal plans are detracting from its economic credibility. While polls still show National rates significantly higher than Labour on economic management and other key issues, its responses to criticisms during the campaign have reduced those rankings somewhat. In its favour, though, is its discipline. Unlike Labour, where numerous MPs have either dismissed its chances of victory or disagreed with Hipkins’ call not to introduce wealth and capital gains taxes, National’s MPs and candidates have remained focused and on-message.  

 

So, at the end of the campaign it looks like coming down to this. Labour wants your vote to keep National, ACT and New Zealand First out. The concessions it may have to make to the Greens and Te Pati Māori are secondary considerations. National just wants to be back in power and will do “whatever it takes” to get there. What sacrifices it might make to New Zealand First to do so are also unknown, but National says it will be able to manage them.

 

Both Labour and National have fallen into the trap of assuming voters see the world they way they do. They assume their coded warnings and messages to their presumed supporters about the risks of voting for the other side will be heeded in the polling booths.

 

But in an environment where the common theme seems to be a mood for change – however that is defined and whatever form it may take – and where the election campaign has been so staid, these messages and warnings may not be enough to secure people’s loyalty.

 

In the privacy of the polling booth voters may yet have the last laugh.

It has not been a good week for civil liberties in New Zealand.

First was the Police’s confirmation that their Tactical Response model launched earlier this year is built around a multi-million dollar programme known as SearchX. This programme is based on data-driven policing. That has been highly controversial in the United States and Britain, where it has been accused of intensifying police racial biases, compounded by a lack of transparency.

While SearchX has many undoubted advantages in helping the Police track and monitor suspected criminals, gangs and potential terrorists, the Police only disclosed its existence this week in response to an Official Information Act request from Radio New Zealand. SearchX has apparently been in operation for a nearly a year now.

The official papers show that the Police, presumably mindful of the reactions in other countries, were worried there was a “high risk” to the project. The papers note that “If adverse media attention occurs then the project may be delayed or closed." Hence their silence until SearchX was fully operational.

What is most alarming and controversial about this project, which many will see as a vital tool in crime fighting and enhancing domestic security is the lack of scrutiny that has accompanied its development. This is especially so given the controversies of recent years where there has been much public criticism of Police profiling tactics as racially biased. While those claims have been routinely denied, it is strange to say the least that the Police have been so secretive about rolling out SearchX when it has been subject to the same criticisms overseas.

Of further concern has been the complete silence of Police Minister Ginny Andersen. As part of the self-proclaimed “most transparent government ever”, she has either been kept in the dark by the Police because they regard SearchX as an operational matter outside the Minister’s purview or has been happy to go along with their plans. But given the controversy SearchX type systems have attracted in other countries the public is entitled to some assurances about what safeguards are in place to prevent SearchX overreach, and what the overall accountability of the Police is over SearchX’s operations. To date, there have been no such public assurances.

But the Police’s move is not an isolated occurrence. Radio New Zealand has also revealed this week the existence of MI, a 115-person strong intelligence unit established within the Ministry of Business, Innovation and Employment, (MBIE) to provide intelligence on all aspects of the Ministry’s responsibilities. While MI works in conjunction with the established intelligence agencies, the SIS and the GCSB, and is headed by a former intelligence agency official, it is not subject to any of the legislation governing the way the intelligence agencies operate. Nor does it come within the scope of the Inspector General of Security and Intelligence to review its operations. Like SearchX, it is literally a law unto itself.

Over the last six years the role of MBIE has expanded greatly to have fingers in virtually every aspect of the machinery of government. During the Covid19 pandemic it became the government’s “go to” department on nearly everything and took over many functions previously exercised in other agencies. Most notable was its supplanting of the government’s specialist medicines buying agency, PHARMAC, as the lead agency in the procurement and supply of Covid19 vaccines, and its operation of the now infamous MIQ scheme. It hardly covered itself in glory in either of these instances.

The notion that this flawed Ministry should now be developing its own intelligence service with no external accountability is of concern and smacks of extreme bureaucratic overreach. While there may be a case for developing more specialist intelligence in areas like immigration fraud, people smuggling or money laundering, that should be done under the purview of the existing intelligence agencies, appropriately resourced, and subject to all their legislative controls and accountabilities. It is unacceptable that a meddling Ministry like MBIE, with a very indifferent record of performance, should be able to develop its own spy network, accountable to no-one.

But once more this “most transparent government ever” has been utterly silent on what is happening. Either it does not know and has been kept in the dark by MBIE – possible but unlikely – or it has been tacitly complicit in what has been happening. The bottom line is that its silence is unacceptable – particularly during an election campaign when voters are deciding which political parties can be trusted to protect their rights and govern fairly in their interests.

There is already mounting concern in New Zealand about the growing influence of AI and the impact that will have on personal privacy and the lives and freedoms of individual citizens. People everywhere are looking to governments to protect them against such unwarranted intrusions on their lifestyles. Both SearchX and MI will be drawing heavily on AI and the information it amasses, but the government has shown no interest in protecting the rights of citizens against what is happening.

While Labour is guilty of allowing, either intentionally or by omission, the development of these appalling intrusions on personal rights and freedoms, they are by no means the only ones to blame. So far, to their collective shame, neither National, ACT, the Greens, New Zealand First, or even Te Pati Māori have spoken out against what is happening.

In the heat of the election campaign they cannot all have forgotten their most basic responsibility is to protect the rights and freedoms of the citizens they seek to represent.  

 

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.