Published in the Australian Financial Review (Sydney), 7 September 2017
A country is going to the polls. The economy is doing well. Fiscal forecasts show substantial budget surpluses. Government is led by an experienced politician. So, what election outcome would one expect?
Well, in the case of Australia, this combination of circumstances did not stop John Howard from losing office in 2007. When New Zealand goes to the polls on September 23, we will see if Prime Minister Bill English meets the same fate.
To international observers, the New Zealand election 2017 has a déjà vu feeling to it. There are reminiscences of past elections in Australia, Britain and even Germany.
To start with the Australian parallels, this New Zealand election has more than a whiff of Kevin ’07 about it. Just as Australia in 2007, New Zealand in 2017 has an economy and public finances in good shape.
In New Zealand’s case, the health of the economy is perhaps an even bigger achievement than that of John Howard in the early 2000s. That is because New Zealand performed well against considerable headwinds.
There was the global financial crisis, which hit New Zealand harder than Australia. There were the Canterbury earthquakes, which in proportional terms are among the largest natural disasters ever to affect any country. And then there was a downturn in dairy prices, hitting a major New Zealand export industry hard.
Despite all of this, New Zealand’s economy kept expanding. Unemployment stands at the lowest rate since the GFC. Over the past year some 76,000 new jobs were created while labour force participation remains high at 70 per cent.
With a record like that, it should be easy for any government to seek re-election. But as we know, elections are not only fought on records. Sometimes, a fresh face can sway voters from a government that voters perceive to have been in power for too long. Just ask John Howard.
Whereas in Australia 2007, it was Kevin from Queensland shaking up the political scene, in New Zealand 2017 it is Jacinda from Hamilton.
After the Labour Party dumped their hard-working but luckless leader Andrew Little, his deputy Jacinda Ardern took over. The 37-year-old has been a member of Parliament since 2008. She previously worked as a staffer to former Prime Minister Helen Clark and spent time in the UK Cabinet Office during the Blair years.
Just as Kevin Rudd in opposition was careful not to look like a dramatic change but just a fresher face, Ardern tries the same approach on New Zealanders. Youthful, dynamic and, as she likes to describe herself, “relentlessly positive”, she brings a vibe to the election that stands in stark contrast to solid but sober Prime Minister Bill English. At the same time, Ardern is cautious not to scare anyone with too much policy deviation from the current administration.
Labour has detected a weakness in the government’s performance in the housing market. House price inflation has run strong over the nine years in which the National Party led the government. Dissatisfaction with housing affordability is the government’s greatest weakness – and the opposition’s best opportunity.
New Zealand Labour’s campaign has all the hallmarks of Kevin Rudd’s 2007 campaign – which itself took its inspiration from Tony Blair’s 1997 landslide victory in the UK. And though history is unlikely to be kind to either Blair or Rudd, one cannot deny that both were fantastic at combining a mood for change with promises of continuity and stability. Blair even subscribed to the Tories’ spending plans – while New Zealand Labour emphasised the need for budget surpluses.
For incumbent governments, it is hard to defend against such campaigning. In New Zealand’s case, the government’s position is even more difficult.
The National Party faces the challenge of a renewed Labour Party on the left. At the same time, there is a populist and nationalist threat on the right with New Zealand First under their charismatic and populist leader Winston Peters. To make it more complicated, both National and Labour are careful not to attack New Zealand First. That is because in most realistic post-election scenarios, Peters will be the king or queen maker – despite a dearth of serious policy thinking on his side.
And therefore, this election could also show a parallel with Germany. Back in 2005, when Angela Merkel first ran for Chancellor, she expected to win a substantial majority – just as Bill English did before Jacindamania set in.
In the end, Merkel found herself just narrowly ahead of the Social Democrats and had little option but to embrace them in a Grand Coalition, which previously was regarded as unthinkable.
This New Zealand election has already surprised observers by being less predictable than anyone would have imagined. An unexpected coalition outcome would be a fitting conclusion to it.