21 October 2017
Prime Minister elect Jacinda Ardern was interviewed by Lisa Owen on ‘The Nation’ this morning. I was invited to be on the panel with Newshub’s Lloyd Burr and Alex Tarrant from interest.co.nz. Some of our comments screened this morning and there is extended commentary that will be on air tomorrow morning (TV3 at 10am).
Although there is much about the negotiations and policy wins with NZ First and the Green Party that will be announced on Tuesday next week (24 October), the interview did give some insights into the direction of the new Government. There was a question as to whether policies will be nationalistic. Jacinda Ardern clearly doesn’t like this term but my view is we can expect more inward looking initiaitives with policies that are more protectionist and interventionalist than we’ve had in the past 9 years.
Of particular note were the following:
- All three government parties maintain that the economy is not heading in the right direction and leaves too many kiwis in vulnerable situations. No proof of this is proffered (other than we have the “worst” child poverty and homelessness figures) but it is worth noting in response that just ahead of the election 60% of New Zealanders thought NZ was heading in the right direction. We also have very low interest rates, low inflation, dropping unemployment and NZ enjoys one of the few budget surpluses in the OECD – all of which put us in a relatively strong economic position.
- When you listen carefully to the list of areas that the Labour/NZ First/Green Government are going to tackle it is clear this will be a big spending beast. The obvious question is ‘How will all of these initiatives be funded?’ No-one as yet seems to be asking the new PM this, though she has volunteered that National’s tax cuts are gone. The two ways that the government can raise funding is by taxing more or by borrowing. The position of economic stability achieved over the past nine years through the fiscally responsible policies of the previous government is unlikely to last. Business is worried and individuals should be too.
- Much of the focus of today’s interview was on housing and immigration. Ardern agreed that the housing market is beginning to cool and will continue to cool – not good news for home owners. Alex Tarrant has published an article in this issue on interest.co.nz
- On immigration, it appears that Winston Peters will not get his very low target and Labour wins that battle by maintaining its pre-election target of 20,000 – 30,000 fewer immigrants per year. What isn’t clear is how seasonal work in the provinces will be staffed when this is work New Zealanders won’t do, or what is likely to happen with the huge foreign student (full fee paying) market that our Tertiary Education institutions rely on to survive. Expect grief in both of these areas.
- Climate Change, Pike River Mine, drilling for fossil fuels were other topics touched on, alongside Ministerial posts but few details were revealed. We’ll have to wait until Tuesday for these. There is plenty of educated guessing going on as to which MPs will be Ministers and receive their warrants on Thursday next week.
Jacinda Ardern was looking confident and positive in this interview. However she has very quickly become adept at avoiding answering questions. Motherhood and apple pie statements work in a honeymoon period with voters, but at some point the public (and media) will demand details and proof of assertions made and policy positions adopted. New Zealand’s new Prime Minister, after a meteoric rise, will be tested soon. She hasn’t been a Minister – a huge step up from MP – and the PM role is another leap again so she will need to surround herself with experienced operators to bridge the gaps. Managing her disparate bedfellows will also be a test of another sort. I predict the Greens will behave with respect, but whether Winston Peter’s can do the same is yet to be seen. Perhaps leaving a legacy is more important to him this time around and for the first time he may work constructively to last the distance. Time will tell.