It has long been the view of this columnist that the inevitability of lower interest rates and great discretionary income would propel the Coalition parties to a comfortable reelection in 2026.
That remains the most likely outcome. But you have to wonder whether ministers in the Beehive might be frustrated that the polls aren’t moving in that direction.
Instead, the public mood has gradually hardened towards the three party government. It still leads most polls, but only narrowly, and the Labour Party has pulled ahead as the most capable of handling three of voters’ top five issues.
Ipsos NZ asked voters which issues were most pressing, and which party was best able to manage them. Labour won inflation/cost of living, healthcare, and housing, while the National Party picked up ‘the economy’ and law & order.
Delve deeper into second tier issues (which mostly don’t swing elections) and Labour dominates. National features just once, with defence/foreign affairs/terrorism, while none of the minor coalition parties appear at all — even though the Greens and Te Pati Maori do.
The same poll gave the Coalition Government a depressing 4.3/10 score, with only the faintest silver lining in the fact it was an improvement from 4.2 last month. Labour’s lowest score was 4.5—shortly after Jacinda Ardern resigned—and its high was 7.6, in mid-2020 when Covid was briefly eliminated.
This weak approval rating may relate to the coalition failing to deliver as much cost of living relief as voters imagined they might. National has dropped from 39% of survey respondents thinking they are best to handle inflation to just 31%. The Act Party from 7% to just 4%.
Healthcare and hospitals has become one of the leading issues for New Zealanders, who mostly think Labour (40%) would do a better job than National (24%).
Ipsos quoted one respondent as saying: “Pay teachers, nurses properly. Bring back pay equity. Invest in hospitals and refuse to pay the private hospital costs to ‘bring down waiting lists’ — aka privatisation by the back door.”
The economy broadly is the third most important issue for voters but, unlike inflation, it is rising back towards its usual spot near the top of the hierarchy. National is still five percentage points ahead of Labour here but its lead has narrowed from 25 points a year ago.
“Too [many] job cuts, but no employment creation. Economy is too dependent on export and tourism only,” one Ipsos survey respondent was quoted as saying.
Even on law & order, arguably National’s strongest issue, the gap between the two major parties has closed from 20 percentage points to just eight points. Although, it is worth noting most of Ipsos’ selected comments called for the Government to be even tougher on crime.
One said: “They need to introduce the death penalty for all serious crimes, regardless of age. They need to deport criminals who were not born in NZ.”
Then there was a Taxpayers’ Union poll who seemingly defied their Atlas Network masters (for clarity, this is sarcasm), and reported Labour had become the most-popular party with 34.8% of voter support to National’s 33.5%.
However, the TPU poll suggested the Coalition could still form the next government with 62 seats between them, down from 68 today, thanks to a weak result for the Greens and TPM.
Watch the rates
Perhaps the number to watch is not the political polls but the Reserve Bank’s ‘Yields on loans (B6)’ and specifically ‘Residential mortgage loans (fixed)’. This is a measure of what households are paying on their home loans and is one of drivers of the cost of living crisis.
Inflation was the sickness which sparked the cost of living crisis but it is now fueled by the cure: high interest rates and slow wage growth. The average mortgage rate has fallen from a peak of 6.34% to 5.92% and will keep falling towards 5% as borrowers refix.
Household discretionary incomes will rise as the average rate falls, which in turn should lead to more spending and more employment. Infometrics estimated, at the start of the year, that an Official Cash Rate of 3.25% by the middle of 2025 would mean an extra $45 million a week available for spending.
Perhaps as the lower rates settle in and the economy returns to steady growth, voters will feel more warmly towards the National Party and its coalition partners. But halfway through the term, the public’s patience seems to be wearing thin.
38 Comments
The Coalition have an inability to be bold.
In some ways you can't blame them given the crazy nastiness of those on the government teat demanding more.
Ever noticed the media claims of how bad things are (eg you won't get that operation) which arise when there is a pay claim.
So prevalent the electorate are falling for it.
Probably a good thing that an increasing majority don't trust the mainstream media anymore, for good reasons
https://democracyproject.nz/2024/04/09/bryce-edwards-whats-to-blame-for…
Whatever is going on now will be superseded by whatever is going on in twelve months time.
KH;
"the crazy nastiness of those on the government teat demanding more:. Would that include those in the health service, early years teachers and many others I could name?
While you're naming your straw men, spare a thought for Labours ~18000 / 40% increase in Public service staffing in 6 years - with no significant improvement in public services.
linklater - yes indeed.
Inability to be bold. That is the National party who are the leaders of the coalition. For them or against them (they never get my vote) the purpose of a conservative party should be avoiding boldness. They extrapolate from the many examples of the unintended consequences of bold actions. Tempted to give examples but think of your own. Sometimes a bold action works: votes for women, universal education but for politicians usually it doesn't.
The average mortgage rate has fallen from a peak of 6.34% to 5.92% and will keep falling towards 5% as borrowers refix.
The OCR was cut way to slowly...so the recovery is on drip feed. The "Is the country moving in the right direction" question many pollsters use is telling, the majority asked do not think so.
I do not think Hippy can lead Labour to a win, they will roll him within 3 months of the election unless the unions force a vote before, that would involve the non union members and the unions etc arguing publicaly , which may put the electorate off if Labour looked divided.... + Greens + TPM debacle.
The unions will have already decided if they feel they have the numbers inside Labour MP caucus to get their man/woman in within 3 months date.
The Scarlet Witch destroyed NZ and its economy, setting things back by 10 years.
At the election, we needed a recognition of this, bold action and a bold leader.
Instead we got Uncle Fester a.k.a. Luxon.
He is the antithesis of Bold and has an a addiction to appease everyone by speaking from both sides of the mouth. More depressingly the National party seems unable to provide a new leader.
In the meantime we meander further into economic malaise and acute shortages of critical services.
Local councils continue to gouge the ratepayer with their profligate spending.
Time for real change and an alternative for NZ'ers to consider.
ACT and NZ first to combine: Next election Winston can be trusted. With a following wind and the protest vote a 30% share of the total vote. No chance of going with the Marxists (Labour and innumerate Greens).
Bold Action, Bold Leaders and the New Zealand we deserve.
To make an impact the new BOLD leadership need to action the following ten things:.....
Increasingly hearing from die in the ditch National voters (including some involved with past selection in their local electorate) that their party vote will Goto NZF or ACT next round, while staying blue at electorate level. They will never vote Labour, but think that the current National leadership is outclassed by current economic problems.
With an incoming global Recession triggered by de-globalisation, the answers are seem beyond Willis
Likely that measure will include me. I was on here often enough pre the last election with concern to the potential of WP/NZF being required to form a coalition. I was wrong and I am now very glad about that presence. Both ACT & NZF and their leaders have been able to shore and enliven the bland going on boring face of National. Whether by design or chance the set up is holding up. Luxon is not a natural politician, in ordinary life hardly a fault, and obviously a poor flag bearer of news, but best to stay with how it is rather than try to become something that he is not. For instance some may recall the ill fated attempt by PM Palmer blowing his trumpet around the Beehive.
I think Bishop or Mitchell would make a better PM, but Nationals weakness IMHO is the intellectual engagement of Willis vs past Finance Ministers.
Talking slowly does not show intelligence, I am not sure there is anyone inside National with the required background, very sad for a party who is meant to represent Business.
Why does NZ never get better then English Lit or Arts as finance ministers?
If you put someone with an actual grasp of our economic problems in that position, they'd want to do things that would be very unpopular. Ignorance and shallowness are pretty much a prerequisite for being an electable minister of finance in the "extend and pretend" era of politics.
Does that mean you rate Grant Robertson higher than Willis?
Robertson was an Arts grad - Political science.
If you think the economy is getting worse and the nats can't handle it, why on earth would you vote for the "more of the same, but faster" policies of ACT or the delusional promises of NZF?
Because recent memories of Labour are too fresh for now, and there seems to be no other party on the horizon like Reform in the UK
its the least dirty shirt theory. I think NZ is ripe for a new party, its most likely to come from a breakaway Right within Labour and then build from there. It would look and act more like the Australian Labour party, have a strong policy agenda on super an and compulsary Kiwisaver, be for business but still want workers protected, it would probably be fore a capital gains tax but not a wealth tax, def for stamp duties over 1mil housing.
With a sample size of 11,500 people, it found that if a general election were to happen tomorrow, Nigel Farage's Reform UK would win 271 seats - the most of any party.
Labour would secure just 178 seats, less than half of the 411 it won last year.
The Tories would fall to fourth place behind the Liberal Democrats, with just 46 Conservative MPs.
The Liberal Democrats, meanwhile, would gain nine extra seats to build a Commons caucus of 81 MPs, while the SNP would once again be the largest party in Scotland.
By and large, the electorate finds it much easier to vote for what it doesn’t want. Labour was booted out in 2023 from an outright majority, unprecedented under normal MMP circumstances, to the worst defeat of any government, that is percentage of seats lost, in modern times. Since then there has been no sign of any lesson learnt or resultant change and in fact their situation is even more unsteady as they will now have to persuade the electorate that the unruly and raucous behaviour of the Greens and TPM will produce acceptable coalition partners. That is in itself a good example of why the electorate finds it much easier to vote for what it doesn’t want or if you like, takes the other fork in the road.
It seems everyone’s waiting for 2% mortgage rates, high immigration and the housing scheme to get back into gear.
The reality is our export earners are going really well so that side has improved remarkably well - probably can’t get much better. (I see Hipkins blaming the government for the price of butter- really!!)
2% rates were an aberration that caused the high inflation which haunts everyone and thing.
Tax cuts probably should have been allocated to health and infrastructure but everyone wants a free lunch.
Its hard grind,like it is in nearly all countries around the world, for the majority.
Unless we are prepared to reallocate things like NZ super (means tested) and drive productivity etc no party will make any difference.
What will the masses vote for?
Not everybody Jack Lumber: I am one of many not "waiting for 2% mortgage rates, high immigration and the housing scheme to get back into gear."
Should have said “most” !!
Inflation was the sickness which sparked the cost of living crisis but it is now fueled by the cure: high interest rates and slow wage growth.
Good lord, Dan. Where to start? Operating profit margins for All NZ Industries held at broadly 11% through the early 2020s - nudging up a fraction in 2021/22 when the good times were rolling (and extra profits could be made). This means that NZ industries in aggregate held margins steady while import prices spiked post-Cvid and while RBNZ hiked debt-servicing costs to the moon through 2022 and 2023.
That passthrough of higher import prices drove inflation initially, and the passthrough of debt servicing costs sustained the inflationary period and the cost of living crisis. Business annual debt servicing costs increased by $10bn between 2021 and 2024!!! Who paid that bill if margins stayed the same? We did through higher prices.
Higher debt servicing costs (the transfer of billions from spenders to savers) eventually crashed the economy proper in 2024 of course. Rate hikes hit harder in countries like NZ that have stupidly high levels of private debt.
Now, contrary to random reckons, higher rates did not stop real wage growth, which returned happily while rate hikes continued. Why? Because people gotta eat, pay their spiralling insurance bills and rates, service mortgages etc. Wages responded to the cost of living, and increasing debt servicing costs pushed the cost of living higher throug the business cost-passthrough and mortgage channels.
Now, anyone on here can try giving me a lecture on how interest rates work. But, the evidence is really, really clear. A global inflation pulse smashed into our economy. Rate hikes exacerbated the cost of living impact, and, as a bonus, crashed our economy, killing jobs, closing businesses and sending tens of thousands of kiwis offshore.
Inflation is predominately local and caused by an increase in the money supply. Economics 101
The Labour government and RBNZ created the problem.
Some countries did not print money and increase their national debt during COVID period and did not see elevated inflation.
Never vote for a Socialist party is the lesson.
Wow, thank you for those valuable insights. For your information, plenty of countries increased their debt by more than NZ (relative to gdp) and NZ was middle of the pack on inflation (the height of which largely reflected countries reliance on imported fossil fuels).
I am guessing you're not one for facts though?
Agree look at the UK and USA
We've been over this many times before, inflation was at least significantly driven by three demand pulses: one from monetary policy, one from the suppression of service industries shifting demand to durable goods, and another as demand shifted back from durable goods to services. I'm not debating that there was a supply problem too but when the total volume of inflation-adjusted consumption increased at higher rates than normal, I find it very hard to view our inflation as purely supply-driven.
The "Covid broke our supply chains" narrative is partially true, but shouldn't be used as a convenient excuse not to learn the lessons of the monetary overreaction and especially the effects of the services-durables demand shift which was caused by lockdowns and closed borders. The latter has barely been acknowledged by economists or politicians, perhaps because it doesn't offer much of an ideological attack line for anyone. But it's something we should be learning from - closing down part of the economy can create pressure in unrelated parts.
We disagreed before and still. That's OK!
I genuinely do not think inflation in NZ would have been any different on the way up if rbnz had closed shop in 2019 and left rates where they were. I am firmly of the view though - based on hard evidence - that inflation persisted longer in NZ because higher rates pushed up the cost of living and prices and wages responded.
I am firmly of the view though - based on hard evidence - that inflation persisted longer in NZ because higher rates pushed up the cost of living and prices and wages responded.
But what is inflation if it doesn't include the expansion of private money? Surely if the price of money were kept artificially low, it's also going to put pressure on the price of other goods and services through land price appreciation.
The supply shock was one of, if not the most significant drivers of inflation during covid. By far the most evidence to support it - factual and anecdotal.
So how on earth did inflation-adjusted consumption of so many durable goods surge so much? It's a weird supply shock that causes an increase in total goods delivered.
Supply squeezes and demand excesses can look very similar, they both cause pressure throughout the supply chain and with modern market information the timing of price adjustment can be near synchronous throughout the chain. So it's easy to see what we want to see, especially in a case like covid where both things were undoubtedly happening to some extent.
Total amount shifted indicates which factor was dominant though, and it was pretty clearly demand that drove much of the initial goods inflation. Later services inflation was much more complex and jfoe is right that interest rates contributed significantly to services inflation (albeit whilst probably reducing inflation in other parts of the economy).
In amongst all that we also had substantial volatility in exchange rates, oil prices and food prices, much of it beyond our control.
Wonderful to see your vague Cherry Picking.
Given you statement on imported "fossil fuel inflation" can you apply your Critical Thinking regarding the explosion in RE prices and the subsequent crash.
I wanted you to validated you theory on Inflation...?
Kindest Regards
Yes, RE boomed because borrowing costs dropped and our tax policy incentivises property investment. RE then crashed because rates were hiked hard. What's that got to do with the price of stuff, which is basically the cost of imports / exports plus wages and margin.
What's that got to do with the price of stuff, which is basically the cost of imports / exports plus wages and margin.
There has to be a relationship between the price of goods and services and broad money expansion that is primarily used to buy assets, not for productive purposes.
Over the past 20 years, Japan’s broad money supply increased at an annualized per capita rate of 2.9%, compared to 6.2% in the U,S. and 5.5% in the EU. Aotearoa is approx 5% over same time period.
And we know country has the lowest inflation.
You will struggle to find that relationship in the data, and when you do, it tends to be causal from inflation to broad money not the other way round.
You must be an "Arts Graduate".
The Quantity Theory of Money:
- Friedman's monetarism builds upon the quantity theory of money, which suggests that the price level is directly proportional to the money supply.
- The equation MV = PT (where M is money supply, V is velocity of money, P is price level, and T is the volume of transactions) illustrates this relationship.
- Friedman's restatement of the quantity theory emphasized the stability of velocity (the rate at which money circulates).
Why do commentators write 'It has long been the view of this columnist that ...' instead of simply writing 'I have thought for a long time that ...?
"the view of this columnist" implies opinions publicly stated in this column. That's distinct from privately held views which Dan may have never aired, and which may even conflict with his public opinions. Someone's public opinions can be softened for agreeability, or strengthened to seem authoritative. Think of Boris Johnson writing two opposing columns on brexit...
Garrulous
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