It is difficult not to see Sir Trevor Mallard’s sacking as New Zealand’s Ambassador to Ireland as anything other than an act of political vengeance by Foreign Minister Winston Peters. After all, there has been considerable antagonistic history between the pair, culminating in then-Speaker Mallard’s trespassing of Peters during the 2022 occupation of Parliament’s grounds by Covid19 protestors.

But Mallard should never have been appointed to a diplomatic post in the first place. His lengthy Parliamentary career had been frequently punctuated by aggressive outbursts – he was thrown out of the Chamber for abuse and misbehaviour more than anyone else during his time in Parliament – showing clearly that he lacked the necessary skills to be a credible diplomat or external representative of New Zealand. His appointment owed far more to political patronage by then Prime Minister Ardern.

It may be a simple coincidence that two of Labour’s highest profile appointments – Phil Goff in London and now Mallard – have been terminated early by Peters, even if Goff’s demise was largely self-inflicted. Nevertheless, they highlight the risks involved in appointing former politicians to diplomatic posts for which they may not be temperamentally suited. Peters’ comment on Mallard’s dismissal that there should be no more such political appointments was understandable in the current circumstances, even if it went a little too far.

London, Washington, Canberra and increasingly Beijing are New Zealand’s most important diplomatic posts. Over the years, from the early 1950s when former National Minister Sir Frederick Doidge was posted to London, there has been a succession of former National and Labour Ministers (including a former Deputy Prime Minister and two former Speakers) serving as New Zealand’s High Commissioner to Britain. Similarly, since Sir Walter Nash was posted to Washington in the 1940s (while continuing to serve as Deputy Prime Minister and Minister of Finance!) there has been a parade of former Ministers, including three former Prime Ministers, appointed Ambassador to the United States.

However, political appointments have been less common to the Canberra post, and curiously, there have so far been no political appointments as Ambassador to China, arguably likely to become our most important post in the future.

The argument for political appointments in key (and attractive) posts like London and Washington is that former politicians have political contacts and can therefore open doors that may prove difficult for career diplomats. This may have been so in the days when communications and travel connections were less easy, but it is a more difficult argument to sustain today. After all, if necessary, today a Minister or a Prime Minister can be in either capital in little more than 24 hours, or, as the round table meetings between the world’s leaders on Ukraine have shown, connected instantly by satellite. The position is still a little different in the United States, however, where status counts much more, and where, when we had former Prime Ministers as our Ambassador, unexpected doors opened more readily.

But beyond these appointments, the advantage of former politicians in diplomatic roles is far less obvious and does, as Peters states, snub the talents and experience of professional diplomats who might have otherwise expected those appointments. Indeed, when political appointments have been made, senior diplomats have frequently been appointed to those embassies in supporting roles, to cover for and support the political appointee.

Some political diplomatic appointments have proved to be remarkably successful. Others have been significantly less so, leading to the inevitable conclusion that their appointment has been more about getting someone out of the way, or repaying political favours.

But Peters’ statement that the days of political appointments are over goes a step too far. While such appointments should be rare, and even then, for time-limited specific purposes with appointees required to submit their resignations upon a change of government, it would be unwise to rule them out altogether. Nevertheless, his comments are a timely warning to any of his current government colleagues, and even those who may serve in a future Labour-led government, that contemplating a comfortable diplomatic retirement is likely to become increasingly unrealistic.

From the days of the legendary Sir Carl Berendsen in the 1920s through to the 1940s, New Zealand has produced some outstanding diplomats who have played significant roles in some of the major international events of their times. Since Berendsen’s day, our Ministry of Foreign Affairs has been well regarded for its professionalism and competence, even if it has sometimes appeared a little too cautious to external observers. There is no reason why it cannot continue to attract and provide highly skilled professional diplomats able to serve effectively at the highest level.

The unnecessary controversies surrounding the Goff and Mallard appointments are unfortunate examples of what can happen when politicians chose to reward their own ahead of relying on professional diplomatic expertise. Each detracted from the calibre of New Zealand’s international representation, which is why their early termination was reasonable.

The political commentariat was at its most skittish following the release of two public opinion polls last Monday.

The Taxpayers Union/Curia poll released in the morning projected a hung Parliament, with neither the centre-right nor the centre-left blocs able to claim a majority. That prospect excited much idle speculation for most of the day about what that eventuality could mean.

However, that evening’s TVOne/Varian poll showed the coalition government being re-elected with a reduced majority, despite the falling popularity of the Prime Minister. That immediately set off a round of comment about how long the Prime Minister could last and whether National MPs would move to replace him, completely ignoring the fact that the last time a party replaced its leader in government and went on to win the next election was 85 years ago in 1940.

In all the excitement no-one dared comment that opinion polls are but a snapshot in time, so cannot be considered in isolation. The trend they disclose is far more significant than the result of any individual poll. In that regard, the long-term rolling average of polls still shows the coalition government having the numbers to form a government, even though its majority would be smaller than at the last election. Moreover, only once since then – in March this year – has the polling average showed the Labour/Greens/Te Māori bloc ahead of the coalition government.

One trend that all the polls has showed since February this year has been steadily rising support for New Zealand First. Consequently, at this stage, New Zealand First’s performance looks like being the largest determinant of the result of next year’s election and which group of parties will form the next government. And it is therefore worth recalling that in its four stints in government New Zealand First has twice worked with Labour and twice with National, so potentially could work with either side once more, allowing the commentariat to trot out the “kingmaker” label yet again.

However, New Zealand First’s influence on next year’s election outcome is likely to be different from the traditional post-election dance it has engaged in when in a position to do so. Since 2023, New Zealand First has consistently and frequently ruled out working again with Labour under Hipkins’ leadership, due to residual bad blood from the 2017-2020 coalition experience. On that basis, with Hipkins looking increasingly entrenched as Labour’s leader, at least until the election, it seems reasonable to assume that New Zealand First will not be part of any governing arrangement with Labour so long as he is around.

But that does not mean that New Zealand First will have no influence on whether Labour leads the next government. Its influence will come from the size of its vote share at the election. In short, the more votes New Zealand First garners, the less likely it will be that Labour will be able to form a government.

At present, the soft votes National is shedding look to be going to New Zealand First – they are not crossing the line to Labour. On present numbers, to be able to lead a government after the next election, Labour needs to be converting to its cause more of those voters now deserting National, rather than seeing them just decamp to New Zealand First, and remain within the coalition’s bloc.

This is especially so with support for the Green Party on average hardly having moved above the support it had at election time, and Te Pati Māori’s volatility as a potential governing partner. Labour therefore needs to be actively going after the voters now switching to New Zealand First from National, rather than lethargically standing by, as seems to be the case at present. Otherwise, the likelihood it will be able to form a government after the next election will be lower.

New Zealand First poses just as big, though different, a problem for National. While New Zealand First’s increasing support is not yet threatening the coalition’s hold on power, it is threatening to destabilise its dynamics. At the last election, New Zealand and ACT together accounted for 28% of the coalition’s voter support – on today’s current polling average they make up almost 36% of its support. New Zealand first’s proportion has risen from just under 12% of the coalition’s vote at election time to almost 18% on today’s figures. To maintain its grip on power and not have its influence further reduced, National will therefore also be keen to see New Zealand First’s current support diminish, and for those voters to return to National at the next election.

While National and Labour continue to be portrayed as wallowing, the opportunities for New Zealand First and to a lesser extent ACT will prosper. Given that ACT has nowhere else to go politically than supporting National, New Zealand First with its record of having previously worked with both sides of politics seems set to continue to gain from voter disillusionment, at least in the short-term.

That is why New Zealand First’s next election result will probably determine who forms the next government, and why, for different reasons, it is in National’s and Labour’s interests for New Zealand First’s support to be brought to ground before then.

 

 

Albert Einstein apparently once said "insanity is doing the same thing over and over again and expecting different results."

Earlier this week it was reported that the Labour Party's Policy Council is recommending the Party include introducing a capital gains tax in its policy for the next election. If that recommendation subsequently becomes part of Labour's policy, it will confirm the accuracy of Einstein's alleged comment.

Labour has flirted with the idea of a capital gains tax since the late 1980s when a tax advisory committee recommended to the then fourth Labour Government that such a tax be introduced. The government rejected the idea then fearing the public backlash, and Labour resisted internal pressure to promote capital gains tax for the next twenty years.

Finally, in 2011 and even more explicitly in 2014, Labour went to the electorate proposing the introduction of such a tax. It was resoundingly defeated at both elections. But Labour did not accept the electorate’s rejection of its tax ideas.

By 2017, the capital gains tax was back on Labour’s agenda, although this time the party stopped short of specifically proposing it. Rather, it suggested establishing an independent tax working group to examine all aspects of the tax system, including capital gains tax. When that working group, chaired by former Labour Finance Minister Sir Michael Cullen, duly recommended the introduction of a capital gains tax, the die seemed cast. Even more so when Cullen prophetically observed that it was “now or never” for a capital gains tax, because political pressure was likely to make the idea even more difficult in the future.

However, when the crunch came, Prime Minister Ardern – a self-confessed long-time capital gains tax supporter – baulked at going beyond her talk, and abandoned the idea, saying it lacked popular support. In 2019 she pledged never to introduce a capital gains tax so long as she was Prime Minister.

In 2023, new Prime Minister Hipkins overruled a plan from his Finance and Revenue Ministers for a tax-switch, reducing personal taxes but introducing a capital gains and possibly a wealth tax to compensate for the revenue loss. In words akin to Ardern’s, he said those ideas would be off the agenda while he was Prime Minister.

One would have thought that after more than a decade of first promoting then backing away from the idea of a capital gains tax Labour should have by then have learnt its lesson. But no; no sooner was the Party back in Opposition at the end of 2023, than party activists were again raising the spectre of a capital gains tax, claiming – in complete denial and contravention of recent history – that Labour’s failure to introduce a capital gains when in government contributed strongly to its defeat in 2023.

To placate some of these death-wish activists more concerned with political purity than winning elections, last year’s party conference referred the question of a capital gains or a wealth tax to the party’s Policy Council for consideration.

Reports that the Policy Council now wants a capital gains tax could place Hipkins in a near impossible situation. He is smart enough to know that the chances of being able to persuade the public now that a capital gains is a political winner when he and three of the party’s leaders before him either could not or would not do so over the last decade are close to zero. Moreover, he also knows his own credibility would be shattered if he now opted for a capital gains tax having so vigorously ruled it out in government barely two years ago.

But overruling the Policy Council and potentially the party’s ruling New Zealand Council a little further down the track is unlikely to be a feasible option either. Many in the party resented Hipkins’ “Captain’s Call” rejecting the capital gains/wealth tax option in 2023 and are unlikely to tolerate his being consistent and doing so again this time around. A second “Captain’s Call” might be a step too far.

However, the last thing Labour can afford right now is a distracting and divisive debate on this issue. Against the odds, it has a strong chance of becoming the government again next year, given the present government’s performance and the wallowing state of the economy. It already has enough ammunition to mount a strong campaign in 2026 and does not need to let itself be sidetracked by issues that have historically worked against it. So how Hipkins manages the ongoing internal party debate from here and maintains his personal credibility will be intriguing to watch.

Meanwhile, all this is mana to National, at a time when it needs it. No doubt it will be already preparing a fear campaign about the impact of capital gains taxes on things like the family farm, the holiday house and boat, and other assets New Zealanders enjoy or aspire to. Again, history suggests such a campaign will produce the same results as previous attempts to introduce a capital gains tax.

Therefore, rather than allow itself to get bogged down in another rerun of a long-standing political argument it has consistently failed to win, Labour should heed the rueful observation of Sir Michael Cullen after the Ardern government abandoned his tax working group’s capital gains tax plan. He said:” "The problem we have is New Zealanders seem not to want an inheritance tax, or a wealth tax, or a land tax or a capital gains tax but they still want to complain about growing inequality of wealth. Clearly that is a political position that has to be recognised, but it is not a satisfactory one.”

Labour therefore ought to be taking the opportunity to promote constructive reforms about tax enforcement, collection and compliance to boost fairness and equity, rather than continuing to flog the capital gains tax dead horse.

That Oppositions do not win elections, but governments lose them is a well-established political maxim. Elections are essentially a judgement on the performance of the government of the day. Seldom does the capability of the Opposition to govern come into the calculation, if the government has lost public favour. Elections are therefore more about getting rid of an unpopular government than the risk of installing an often-unprepared Opposition in power.

Moreover, voters often have short memories. A recent poll showed many people believe it is time for another group of parties to govern in New Zealand, despite it being less than two years since that same group was unceremoniously turfed out of office and does not yet seem to fully appreciate the reasons why. Indeed, although the Opposition has not yet released any specific policy, its general attitude seems to be that it will just pick up where it left off last time and resume the same sort of policy approach and style of government voters rejected so clearly at the last election.

That is why Labour was able to get away last week with criticising the government's handling of the ongoing cost-of-living crisis without offering any alternative of its own, because, frankly, as the Opposition, its views do not matter. Next year's election will be more a referendum on the government's performance than a critique of the Opposition's alternative.

This is not unique to New Zealand. Last year's Labour landslide victory in the British general election was more a repudiation of fourteen years of Conservative rule, than an endorsement of Labour. Now, having rejected the Conservatives so overwhelmingly, and to date being less than impressed with Labour's offering, it is hardly surprising that British voters are flocking in droves to the untried Reform Party.

The New Zealand equivalent of that phenomenon has been the increase in support for minor parties, New Zealand First and the Greens in particular. So much so that the next election, and which parties form the next government, could come down to how well the minor parties perform, rather than the major parties they could be expected to align with in government.

Given that context, it is not altogether surprising that there is mounting speculation the current government could be the country’s first one-term government in 50 years. But, so far, the evidence for that happening is not strong. The National/ACT/ New Zealand bloc has led in most opinion polls since the end of 2021. Today, the latest rolling average of polls shows the coalition government ahead of its rivals by just under 4%, and still able to form a majority government. At the same point in the electoral cycle three years ago, the then Labour Government was trailing the then-Opposition National/ACT/ New Zealand bloc by just under 5%.

Nevertheless, National’s position is precarious. Its vulnerability, which this column has highlighted many times previously, is its increasing dependence on its coalition partners to get across the electoral line. Until recently, the Prime Minister has shrugged this point aside, saying it is just one of the realities of MMP.

However, in recent weeks there has been a perceptible change in the government’s tempo, with a slew of major policy announcements from National in a variety of areas, from a new infrastructure plan, a new funding model for general practices, an end to building open-plan classrooms, and even the controversial changes to electoral enrolment provisions, National has shown a new determination in seeking to dominate the political agenda on its terms. No longer does it seem happy to let its coalition partners control the policy agenda as they appear to have done throughout the government’s term.

With the election just over a year away National looks to have moved centre-stage in terms of the government’s performance.  It knows that to win the next election the coalition government needs to first lock-in the support of those who voted for it last time, before trying to drag in additional other voters from across the political divide. So, National’s current moves are a deliberate attempt to claw back supporters who may have deserted it for ACT or New Zealand First, because they have seen them as more boldly defined. Without locking-in that core government support into National’s column, National’s position will become shakier and its prospects more uncertain.

Things are not quite as challenging for Labour, however. Because it is in its first term in Opposition and because one-term governments are a rarity – only two (both Labour) in the last century – while there may be increasing hope, there is not yet any real expectation that it can win in 2026. That immediately relieves some of the pressure of expectation of returning to office so quickly.

Similarly, because governments lose elections rather than Oppositions win them, the level of scrutiny on Labour’s promises will always be less than that on the government’s promises. That will change a little as the election nears, but for Labour, right now, the longer it can keep getting away with criticising the government and not offering any constructive alternative, the better.

None of this means a Labour-bloc victory at the next election is unlikely or impossible. With polls showing increasing disapproval of the country’s current direction, it must be acknowledged there is a greater chance of this occurring. And yet again, it will be a case of the government losing, rather than the Opposition winning.