MMP was expected to break the old Parliamentary duopoly of National and Labour and lead to far more inclusive and diverse political debate. Certainly, the increase in the number of parties in Parliament has spread the range of views being heard in the House, but it is doubtful that this has led to a greater level of debate about those views.

Contrary to what some might imagine, Parliamentary debates are not free-ranging expressions of opinion, where differing ideas and policies are contested. They are extremely regimented. Most debates are time limited, with speaking times (ten minutes per speaker) and speaking order pre-determined evenly between the government and Opposition sides of the House. A typical debate comprises twelve speeches, with each of the six parties currently in the House getting at least one call.

Debates have therefore become occasions to state party positions, rather to contest differing ideas. Consequently, MPs often appear to be no more than the delegates of their respective party when speaking in the House, rather than legislators debating the merits of specific legislation. In short, contemporary political debate has become all about political parties rehearsing established political opinions to their respective political audiences, rather than debating new ideas and seeking to reach consensus about the best way forward.

The same tactic also applies to the wider approach most parties take to promoting their interests. In this respect, it is worth recalling Hillary Clinton’s observation that good political stories always contain a “goodie” and a “baddie”.  So, when the parties tell their stories to their supporters, they are always the
“goodie” identifying the “baddie” they are fighting to protect the country from, as the reason why people should vote for them.

The current spat between New Zealand First leader Winston Peters and Green MP Ricardo Menéndez March is a case in point. The row is less about Menéndez March’s use of Aotearoa to describe New Zealand than it is about asserting the respective brands of New Zealand First and the Green Party.

To traditionalist, anti-multicultural New Zealand First, the very presence in Parliament of Mexican immigrant Menéndez March is bad enough, but his reference to Aotearoa instead of New Zealand was wokeness in the extreme. Peters’ comments were therefore a dog-whistle to those voters who hold similar views, that New Zealand First is in their corner.

The obverse applies in the case of the Green Party. To them, Menéndez March was showing proper respect to tangata whenua by referring to New Zealand by its original name and acknowledging their traditional rights and role. But neither New Zealand First nor the Green Party has any real interest in debating their respective positions with each other – the far more important point for both was to window dress where they stood for the benefit of their supporters.

The same goes for ACT and Te Pāti Māori and their dispute over the Treaty Principles Bill. Each desperately needs to be able to portray the other as intolerant, unreasonable and anti-democratic to validate its own position and strengthen its appeal to its core supporters. Again, it is less about reasoned debate of differing points of view than an absolute statement of an unshakeable position. The last thing either seek or want is any form of compromise or reasoned discussion.

This sharpening political fundamentalism is creating a difficult problem for both National and Labour, more traditionally broad churches than narrow lines of opinion. It is more acute for National at present, simply because it is the leading party of government.

Prime Minister Luxon often looks hamstrung by the extreme or unreasonable positions of his support partners. While he cannot endorse them, because they are not what his party stands for, he cannot reject them outright either, because that would destroy his coalition government. But pretending the differences are not there at all, as Luxon often appears to do, is the worst position of all. It leaves the government looking weak and indecisive. Therefore, to resolve this dilemma, National needs to better develop its own political story, complete with its own “goodies” and “baddies”, instead of just hoping, as currently appears to be the case, that its tick-box list of achievements will carry the day.

It is a smaller but similar problem for Labour at present. However, it will grow as the election nears and more attention is paid to the radical policies of the Green Party and Te Pāti Māori and how they might be accommodated in a future Labour-led government. Opposition leader Hipkins is frequently critical of Prime Minister Luxon’s current difficulties, seemingly unrealising that precisely the same challenges are lurking just around the corner for him in the run-up to the election.

The demise of political debate as it used to be, in favour of the fervent, dogmatic statement of party opinion as incontrovertible fact as we have now, has dramatically changed the nature of political discourse around the world. The absolutist way the Trump Administration and its allies operate is the obvious extreme example. But our political system is not immune from these features. The redefinition here of political debate to be less about the exchange of ideas than the statement of pre-determined positions should be viewed with increasing concern, rather than just becoming accepted, the way it seems to be.

Over fifty years ago, the satirical television show Monty Python’s Flying Circus attacked the then emerging lowest-common-denominator approach to resolving complex issues in a skit where the existence of God was decided in a wrestling match, by two falls to a submission.

Sadly, that is precisely the same approach we are taking to complex political issues today.

The first opinion polls of the year send a mighty wake-up call to the coalition government, but they are not the death knell some might think. Polls are always a snapshot in time, subject to particular influences at the time they were taken. A more accurate assessment emerges from the trends that they disclose over time, rather than the result of any one individual poll.

In this regard, a rolling average of the polls shows that while an election held today would be extremely close, the coalition government is still marginally ahead of the Opposition bloc. However, that lead has been reducing steadily. While for most of 2024 the difference between the two blocs did not move much since the 2023 election, National’s support has fallen sharply since September/October, with Labour’s increasing, although not as sharply.

Nevertheless, the National-led coalition is more precariously positioned at present than each of the last two Labour-led governments were at similar stages in the previous two Parliaments. For example, at the equivalent point in in 2019, the Labour-led coalition was leading the centre right bloc by almost 12 percentage points. And at the same point in the last Parliamentary term, in 2022, the Labour-led bloc still had a substantial lead over National and its allies.

Much can of course change between now and election day. By the start of 2019, National was beginning to open a small lead over Labour, only to see that completely obliterated by the onset of Covid19, and Labour’s historic election landslide later that year. Similarly, in 2022 Labour’s comfortable lead over National waned and fell away altogether during the year. Labour’s handling of Covid19 was no longer an asset and was turning people off in droves, leading to the government’s defeat in 2023.

Therefore, it is far too soon to draw firm conclusions about the implications of the parties’ current ratings for the 2026 election outcome. However, some general observations can be made, based on the figures.

The first is that unlike any other lead party of government under MMP, National has no electoral fat to draw upon when times get tough. Its 38% party vote share at the last election – far lower than the vote share of the Key and Ardern governments when they were first elected – means it has no reservoir of support to draw upon.

Its current polling average of just under 33% of the party vote is at least ten percentage points below what it should be for the party to be confident of re-election in two years’ time. Of arguably more concern for the government is that National does not yet appear to have a strategy for growing its vote share to this extent.

At the same time, the situation is not all that rosy for Labour. The polling average shows its vote share has grown by only about three percentage points in the last six months, leaving it still well below the level of support it would need to lead a government after the next election.

Of the minor parties, support for the Greens and ACT has been relatively stable since the last election. Both are on average rating less than a percentage point higher than at the election. Although one recent poll showed New Zealand First’s support hovering around the 5% party vote threshold level, its support on average has not moved from the 6.6% party vote level it recorded on election day. Given New Zealand First’s historic propensity to perform far better at election time than it ever does in opinion polls during a Parliamentary term, that leaves it in a comfortable position at present.

Te Pāti Māori looks to have more than doubled its party vote support since last year’s election – to around 5.4% according to the latest polling averages. But it is unlikely to see this rise in support translate into a significant increase in its number of seats at the next election. This is because all its seats are electorate seats. If it holds all these seats at the next election and wins around 5.4% of the party vote as current polls suggest, it would still only be entitled to the six electorate seats.

This creates a potential problem for Labour should it be in a position to form a government after the next election. Most of the new votes Te Pāti Māori could attract will likely have come from Labour, given Māori voters’ historic links to the Labour Party, but the return in terms of seats won for the centre left bloc may not be as great as it might be had those voters stayed loyal to Labour.

A further complication for Labour is that Te Pāti Māori is almost certain to make policy demands – like the establishment of an independent Treaty of Waitangi Commissioner with the power to veto government actions about the Treaty – that Labour will find difficult to accept in whole or part,  without risking alienating conservative elements of its own core constituency. Hipkins’ vacillation on the issue demonstrates Labour’s problem: it cannot afford to be too dismissive of Te Pāti Māori’s demands because it is unlikely to be able to form a government without them, but, if it is too agreeable, it risks not getting enough votes of its own to be in a government-forming position.

While ACT and the Greens have uncompromisingly nailed their colours to the National and Labour masts respectively, New Zealand First has been somewhat more ambivalent about its options. At this stage, however, there appears to still be too much bad blood between New Zealand First and Labour, following the experience of the 2017-2020 coalition, to see a Labour-led government involving New Zealand First as a viable option.

All this suggests that the next election is still the National-led coalition’s to lose. However, more antics of the type seen from David Seymour of late could hasten that process.

 

From the Prime Minister’s state of the nation speech onwards National has made it very clear that its unrelenting focus this year will be on catching the economic growth wave. It clearly hopes that this, along with Reserve Bank-engineered falling interest rates and, unless Donald Trump gets too much in the way, steadily falling inflation, will both help it to overcome stubbornly high unemployment rates and give the “squeezed middle” sufficient incentive to vote National once again at next year’s election.

But despite the constant talk about going for growth, National has so far revealed very little about specifically how it intends to achieve that. The closest any Minister has come to spelling out a plan has been New Zealand First Resources Minister Shane Jones with his commitment to more mineral exploration. While there is arguably considerable potential value in exploiting some of the country’s mineral reserves, that policy alone is unlikely to satisfy National’s growth objectives, even if all the conservation and environmental issues involved with more mining can ever be resolved.

In any case, New Zealand should have long learnt through bitter experience that governments picking winners in whatever sector is not a viable long-term way to achieve sustainable economic growth and development. Businesses seeking to invest in New Zealand, be they local or foreign, need assurance about the long-term investment and business environment before they commit to the economy in a way that will foster growth.

That is where the “bold” package of tax reform Finance and Economic Growth Minister Willis is mooting for this year’s Budget becomes critical. New Zealand’s current business tax rates are no longer competitive nor conducive to encouraging new business to locate here, or existing export businesses to stay.

Our current corporate tax rate of 28 cents in the dollar is out of line with countries we like to imitate where we can – in Ireland the corporate tax rate is 12.5%, and it is 17% in Singapore. Australia has a two-tier system of 25% for companies with a turnover of less than $A50 million, and 30% for those above that figure. In the United States the federal corporate tax rate is currently 21% although President Trump has pledged to reduce that to 15%. China’s corporate tax rate is 25%, with lower rates for some low-profit companies.

New Zealand’s current 28% corporate tax rate was set back in 2011, when I was Minister of Revenue. I had also overseen an earlier review, in 2007, which had led to the rate being reduced from 33% to 30% in that year’s Budget. However, prior to that, the last time corporate taxes had been reviewed was nearly twenty years earlier in 1988, following the 1987 Sharemarket Crash.

Only two business tax reductions in the last 36 years, and the last one nearly 14 years ago, at a time of considerable change and turmoil not only shows how badly New Zealand has lagged other countries, especially at a time when the international movement of capital and technology has never been more rapid. It also shows the extent to which successive New Zealand governments have failed to appreciate the role competitive corporate tax rates can play in attracting and retaining investment and jobs.  Without investment and jobs, and the wealth they create, it is increasingly difficult for modern societies like ours to fulfil all the responsibilities citizens expect.

So, Nicola Willis has a lot of catching up to do to both restore competitiveness in New Zealand’s corporate tax rates, and to stimulate the long-term investment that should flow from that. There will almost certainly be a significant short-term revenue loss from reducing corporate tax rates to a more competitive level. Part of her bold strategy will be having to absorb this, at least until the gains from the new rates start to flow in terms of new investment. Whatever she does, she must resist the temptation to try to offset potential revenue losses by new or additional taxes elsewhere that will nullify the benefits of lowering corporate taxes.

And should she make a change in this year’s Budget, she needs to then commit to regular reviews – say five yearly – to ensure that the new rates remain internationally attractive and competitive. Ireland and Singapore have shown that once it is underway, the bandwagon effect of competitive corporate tax rates gathers momentum exponentially, and the gains quickly flow.

Many have dismissed Prime Minister Luxon’s “growth” as just rhetoric so far, more about deflecting criticism at the start of the new political year of the government’s performance to date. Willis’ proclamation she is prepared to be “bold” offers not only the hope that she understands the need to reform our corporate tax rate, but also that she will now get on with the job of doing something about it. It will be to the country’s benefit.

 

The debate about privatising state assets has reared its head again, with calls by the ACT leader for the government to sell off more assets to help balance its books and the Prime Minister’s now typical vaguely ambiguous, non-committal response.

However, it is largely yesterday’s debate, more reminiscent of the late 1980s and early 1990s than today. At that time, there was a case for the government to divest itself of many assets and businesses that successive governments had acquired over time, only to see their performance fail to improve significantly under government ownership.

However, those days have gone. Many of those entities have been sold, but that process has been the subject of ongoing criticism because the sales themselves were botched.  The net result was often a worse business and service outcome. In some instances – railways and Air New Zealand, for example – a subsequent government has had to buy back the assets to prevent their total collapse.

In any case, as many analysts, including Sir John Key, have pointed out, there are not that many assets remaining that it would appropriate to sell in part or in whole, and that the economic impact of doing so is unlikely to be substantial. So, all we are really left with is what Sir Michael Cullen would have described as an “ideological burp” from the ACT Party.

However, that is not to say that there is not a strong case for considering the performance of some of the government’s largest business assets. That performance can certainly be improved.

Housing is a good example. There has long been a tradition, famously initiated by the first Labour Government in 1938, of comprehensive public housing provision by the state to help people in need. Today, the government’s housing agency, Kāinga Ora – Homes and Communities, owns around 72,000 rental properties across New Zealand. It is the country’s largest landlord. In addition, local authorities own around 14,000 rental properties. Taken together, central and local government agencies provide rental accommodation for around 400,000 people.

But the system is not without substantial problems. Although the waiting list for public housing has been declining, Ministry of Social Development figures still show more than 22,000 people waiting an average 344 days to get into public housing. Differing eligibility criteria between Kāinga Ora housing and local authority housing mean the situation is uneven across the country. Because of those variable standards, the quality of accommodation provided is also often uneven and not well-suited to the needs of tenants.

The original premise of state housing was that it would transitory, to help people through difficult circumstances. That has been long lost sight of. Concessional rental rates and non-fixed-term tenancies mean that for many tenants public housing has become a long-term way of life, rather than a transition, often shutting out deserving cases on the waiting list.

Maintenance of the housing stock has been a perennial problem, leading previous governments and councils to sell properties, rather than invest in their upgrading. Successive governments have sold more than 31,000 state houses in recent years. On the other hand, more than 16,000 new houses have been added to the government’s stock since 2017, and a further almost 2,700 are planned to be built over the next eighteen months, with 3,000 existing homes being upgraded. Even so, total public housing stock is still declining.

All this raises the question of whether there is a better way for managing the country’s under-pressure central and local government housing stock more consistently and even-handedly. Consideration should be given to bringing the entire central government and local government public housing stock under onje organisation – a revamped Kāinga Ora – Homes and Communities. The new Kāinga Ora could then be more sharply focused as a property management company. It would be required to utilise the skills and expertise of the private sector home construction companies, advertising the homes of one’s dreams on television every night, to help better manage the existing stock and plan the future development of public housing in New Zealand.

This is not a new idea, even if it has fallen into disuse in recent years – it was, after all, a partnership between Fletcher Construction and the first Labour Government that enabled the design and building of the state housing programme from the late 1930s.

The same model of involving the private sector in the operation, management and upgrading of government property could equally be applied to other areas where the government is struggling to manage and maintain substantial property portfolios – schools and hospitals, for example. Here again, the government could establish a separate property management company, drawing on relevant private sector asset management expertise to maximise the government’s return on its health and education assets and improve overall economic performance.

The focus on this new entity would be on the buildings and would exclude the delivery of health and education services and staffing so as not to compromise the continued public ownership of those services. It would be solely about managing public assets better.

Discussion around these concepts, and how they could be applied to the contemporary public benefit, appeal as far more relevant than reverting to yesterday’s ideological prescriptions the way the ACT Party is.  

This week, the rituals that herald the start of each Parliamentary year begin.

Both the major parties are holding their traditional two-day start-of-year Caucus retreats. National is meeting in Hamilton and Labour is in Palmerston North. Caucus retreats rarely yield anything of value but are useful mechanisms for demonstrating Party bonhomie and outward unity, especially after tough times like a Cabinet reshuffle, or a demoralising return to Opposition after years in government. The overriding impression both parties will want to leave after their retreats is that they are fired up, confident and ready to face the challenges of the political year which begins in earnest when Parliament resumes next week.

But before too much of the hot air generated at the retreats fades away, the parties will dutifully trek to Ratana Pā for the commemoration services this weekend of the 152^nd anniversary of the birth of Tahupōtiki Wiremu Rātana, founder of the Rātana Church and political movement. Again, the process follows a set ritual – the separate formal welcome of the government and opposition parties onto the marae, followed by the often-frank speeches on the paepae, refreshments and the farewell.

When Parliament resumes next week, the first item of business will be the presentation of the Prime Minister’s Statement, which is supposed to set out the broad thrust of the government’s legislative plans for the year ahead. That is followed by a debate, lasting up to 13 hours, and spread over several days, ostensibly on the Statement’s contents, but wide-ranging over any aspect of the government’s performance, and other matters besides.

That process will be more drawn out this year because after resuming next week, earlier than in recent years, Parliament will go into a one week recess the following week to allow for the annual Waitangi Day Commemorations to take place.

At the end of the debate on the Prime Minister’s Statement, there will be the first vote of confidence of the year, which the government will need to win to continue in office. Then, both the House and the select committees can settle into their respective work patterns for the year ahead. As this is the second year of the government’s term it is also likely to be its busiest. Last year was about a new government settling into its work and developing the legislation necessary to give effect to its policy programme. Next year will be about tidying up loose ends and battening down the hatches before the election, due sometime in the latter quarter of the year.

This year will also be the time when Members of Parliament start to think about their futures and whether they wish to seek a further term at next year’s election. Typically, around a quarter to as third of Parliament stands down (either voluntarily or involuntarily) at each election. It will therefore not be unexpected to start to see a stream of upcoming retirements announced from around the middle of the year.

There is an added complication this year. In March, the Representation Commission is due to release draft new electorate boundaries for the 2026 election for public consultation. They will be finalised by August. The law currently fixes the number of electorates in the South Island at 16. However, this year because of the increase in the South Island’s population recorded in the 2023 Census, the number of North Island electorate seats will be reduced by one to ensure North Island electorates remain approximately the same population size as their South Island counterparts.

There has been speculation that because of wider population changes in Wellington and Auckland either the Epsom or Ōhāriu seats may be abolished, which would have implications for both the sitting members for those electorates. In Wellington, the three existing electorates of Rongatai, Wellington Central and Ōhāriu are all under the new electorate population quota making it difficult to see how all three can be retained. It is a similar story in Auckland with Epsom and its near neighbours all below the new quota.

Whatever happens, there will be ramifications beyond the electorate eventually chosen for abolition, which nearby MPs will weigh up when deciding whether to stand again, unless of course they are able to flee to the safety of a good place on the party list. From the end of the coming year, all parties will be starting to reveal the new candidates they have attracted to run both in electorates and on the party list in 2026.

There are two other unusual features to watch for in the first half of 2025. Around the end of May, pursuant to the Coalition Agreement, David Seymour will replace Winston Peters as Deputy Prime Minister until the next election. While that transfer is expected to go smoothly, the interesting point to watch will be whether it leads to any change in the dynamic of relationships within the Coalition, particularly since Peters, with a clear eye to the next election, has promised to be more assertive in pursuing New Zealand First’s interests once freed of being Deputy Prime Minister.

Second, and over the same period, will be the select committee process regarding the Treaty Principles Bill. How that proceeds, both in terms of how the submissions eventually chosen to be heard by the committee are treated, and the nature of the evidence presented, will be extremely testing, even if the Bill remains headed for eventual defeat. Unless it is carefully and wisely managed, the process has the capacity to completely dominate and thereby derail much of the rest of the government’s programme.

Once those items have been dealt with, the second ritual aspect of the Parliamentary year – the procedures around the presentation of the Budget and the scrutiny and accountability processes associated with that – kick in and will see Parliament through until it rises just before next Christmas.