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.
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