Calm in a crisis won’t be enough for a second-term Ardern
Published in Australian Financial Review (Sydney), 15 October 2020
New Zealanders will elect a new Parliament on Saturday, but the election result is a foregone conclusion. Unless all pollsters have been consistently wrong for the past months, Prime Minister Jacinda Ardern can prepare for a second term in office.
The only remaining uncertainty, so it seems, is just how emphatic Ardern’s election victory will be. Will Ardern be able only to dump her New Zealand First coalition partner and govern with the Greens, her party’s other supporting partner? Or will NZ Labour govern in its own right? And with how large a majority?
However, Ardern’s expected triumph masks more sobering realities for New Zealand. Her first term was largely disappointing, even on its own measures. The economic outlook looks grim, and the next government’s policies are unlikely to change that.
When, three years ago, Ardern rose from obscurity to lead NZ Labour to election victory, she did so with great promises. Her administration would be unlike any New Zealand had seen before: kind, modern, caring, open and transparent. In a word: transformational.
Ardern also promised the blue of the sky: Swimmable rivers! Affordable housing! An end to child poverty! Slashing carbon emissions! Public transport!
And to the few remaining naysayers, her response was the 2017 election slogan: “Let’s do this!”
Three years later, none of Ardern’s big policy promises materialised. Not even close.
Without the crises she experienced she would stand no chance of re-election.
Ardern pledged to build 100,000 affordable homes over a decade under her flagship KiwiBuild policy – and delivered 548. She wanted to end homelessness – only to see the waiting list for state housing rise 331 per cent. She wanted to end child poverty – but the number of children living in material hardship crept up to 13.4 per cent in 2019 from 12.7 per cent in 2017.
And instead of leading New Zealand towards carbon neutrality, total emissions over Ardern’s first term are projected to have shot up by 17 per cent.
The list of failures include the inability to construct a public rail link between Auckland Airport and Auckland’s CBD, to build a new hospital for Dunedin (not started yet) or to plant a billion trees by 2027 (of which there are 963 million to go).
Even where Ardern’s government occasionally delivered on its promises, the outcomes were disappointing. Student fees for the first year of studies were slashed – only to see first-year enrolments drop.
Fortunately for Ardern, elections are not won on achievements. Especially not after a term overshadowed by disaster and catastrophe.
Whether it was the Christchurch terror attack, the White Island volcano eruption or the COVID-19 pandemic, Ardern proved a brilliant communicator.
Whatever Ardern lacks in analysis, strategy, execution and evaluation, she makes up for in crisis communications. Her handling of the media, her ability to find the right words at the right time, and her skill to set the tone and agenda are world-class.
Where other world leaders stumbled through the COVID-19 crisis, Ardern flawlessly hammered home the government’s approach, expectations and measures. Her Bachelor of Communication Studies in public relations and political science from the University of Waikato obviously came in handy.
In the years ahead, Ardern will need a different skillset. The economy will require all her attention.
This week, the International Monetary Fund released its projections to 2025. For New Zealand, they were sobering. Not just because the IMF said the deterioration of New Zealand’s structural government deficit is the second-worst in the world. But also because New Zealand belongs to just a handful of countries for which projected real GDP per capita in 2025 is below the 2019 level.
By 2025, GDP per capita in New Zealand will be 98.4 per cent of what it was in 2019, while Australia’s will be 102.7 per cent. Over the same period, New Zealand’s public debt will shoot up by more than 30 per cent of GDP to around 56 per cent.
To deal with these challenges, New Zealand would need to try its utmost to lift productivity and grow its economy. Yet there is no hint of a plan to achieve that. On the contrary, Ardern’s party intends to increase income taxes for top earners, lift the already high minimum wage and – to round it all off – introduce a new public holiday while increasing sick leave entitlements. You could not make it up.
If the Greens become NZ Labour’s coalition partner, the country’s policy predicament would be even worse. The Greens are hostile to free trade. They are fundamentalist on renewable energy policies. And they are committed to further tax increases and new taxes such as a wealth tax.
To navigate through this dire future takes more than optimism, kindness and speaking skills. The country’s problems are economic – and they cannot be camouflaged by good rhetoric.
In her first term, Ardern thrived on crisis management. Without the crises she experienced she would stand no chance of re-election.
But in her second term, Ardern will need to show if she can actually solve an economic crisis of epic proportions.
Kiwis are an optimistic bunch. That is why they look likely to give Ardern a second chance – and a second term.