Luxon & Co., est. 2023

How are the Three Amigos doing?

On the night of New Zealand’s last election (14 October 2023) the incumbent prime minister, Chris Hipkins, conceded defeat to National’s Christopher Luxon. It took three weeks to deliver the final election results, and three more to finalise coalition agreements with NZ First and ACT parties.

A year has passed since the election, so how are the parties performing in the polls now, and what are the prospects for Luxon’s government?

I was invited to talk about this with Dave Hull on Stuff’s Newsable podcast and with Wallace Chapman and the Panel on Radio NZ.

National “won” the 2023 election with an unimpressive 38.1 percent of the party vote, 11.2 percentage-points ahead of Labour.

What’s more, the three-party coalition government formed by Luxon had no honeymoon. An IPSOS poll in early 2024 rated the new government at 4.6 – on a scale from zero (‘abysmal’) to ten (‘outstanding’). That’s as poor a rating as the previous Labour government had got before losing the election (4.7).

Since then, National has mostly been polling below its election result of 38.1. By comparison, National under prime minister John Key was polling in the 50s in 2009.

National’s two coalition partners, ACT and NZ First, are now polling slightly above their election results, which were 8.6 and 6.1 percent respectively. That’s unusual, as minor parties tend to decline after going into coalitions. But the overall count means that the present three-party government would return to office if an election were held tomorrow – according to polls.

The all-important centrist swing-voters seem unimpressed with Luxon and his mates Seymour and Peters, but, when they look across the aisle, they see things that trouble them even more: the Greens and Te Pāti Māori, without whom Labour couldn’t form a government – on present polling. The Greens have been hit by scandals, and TPM want to establish a Māori parliament and get rid of the monarchy. Should TPM follow the example of Sinn Féin in Northern Ireland and abstain from taking their seats after the next election?

Labour, Greens and TPM are all polling fairly close (give or take random variations) to their 2023 election figures.

Across all six parties, then, voter support doesn’t seem to have shifted much in the intervening year. Sooner or later, though, the wave breaks. Will it break to the left or to the right?

Some of the toughest criticisms of the Luxon government are coming from economically orthodox voices. While it’s good that inflation and interest-rates are coming down, the economy is so feeble that finance minister Willis won’t be able to balance the budget, and future governments could be destined for structural deficit and rising debt. As a small trading nation, New Zealand cannot afford to carry the high levels of debt that larger wealthier nations have. NZD is nothing like a reserve currency and is easily dumped. Is NZ Inc heading for debt-spiral and credit downgrade? If so, long-term declines in the quality and quantity of public services and infrastructure could be expected. Publicly-owned vessels running aground would become emblematic of the Kiwi ship of state, if they’re not already.

God defend New Zealand!

To help scuttle it, there’s rising unemployment, an exodus of young Kiwis, and the financial and intellectual bankruptcy of universities. (It’s good to learn about NZ history and the Treaty, which I’ve done myself, but making it compulsory makes a university look provincial, contributes little to future prosperity, and just pisses off those students who have other priorities.) The loss of human capital could be permanent, and not that easy to restock with immigrants. The future incomes to be reaped through innovations in AI are much more likely to end up in Silicon Valley than in NZ-owned companies.

People can debate the unfairness of taxation policies or the number of public servants, but that’s now akin to arguing over who should sit where in the lifeboats. The way forward is – as always – to adapt to the real world, look to the future, and earn our living. If you’re able-bodied and not at the helm, then get rowing.

So a free-trade agreement with India is a good idea. The Clark government signed an FTA with China, in force since 2008. India and China are returning to their historical positions as the world’s economic powerhouses. Doing business with them does have political problems attached. But the US, UK and EU have powerful domestic lobby-groups that resist agricultural imports, so they’re difficult too, as friends often are.

These aren’t matters of left versus right. They’re of bipartisan concern. Many people wrongly assume that there’s an opposition between aiming for better public services and aiming for a stronger economy. The two goals support one another, and they both require hard work.

Luxon’s coalition isn’t exactly getting the country’s mojo back, as promised, but it’s hanging on, ahead in the polls (just), even in the face of numerous controversies. The next 12 months will be critical for their prospects at the 2026 election.

After all the talk about getting things done, delivering and growing the economy, they need to produce something tangible. If, in addition to that, the opposition continues to look unpromising or even scary to centrist middle-class voters, then Luxon would probably squeak in for a second term. But let’s wait and see.