Nobody skewered Barack Obama during his presidency like legendary comedian Dennis Miller. “It’s not all that dramatic with me and Obama,” Miller once told his audience. “It’s not racist, it’s not classist, it’s not ideological. It’s just that he’s an inept civil servant. He’s the guy at the toll booth who’s constantly giving out the wrong change.”
The same could be said about New Zealand Prime Minister Jacinda Ardern. She’s a brilliant politician, but has been a grossly incompetent administrator. And with her seismic re-election on Saturday, New Zealand is in for a dangerous three years.
“There is a distinct chance that if we don’t sort out our economic challenges quickly, New Zealand could end up a failed state,” says Oliver Hartwich, executive director of leading think tank the New Zealand Initiative.
Hartwich is right to be worried. New Zealand has been hit particularly hard by the Ardern government’s heavy-handed coronavirus response. Before COVID-19, tourism was New Zealand’s largest export industry, employing 8.4 per cent of its workforce and bringing in over one fifth of the country’s foreign exchange earnings. With corona, this key plank of the NZ economy has been shut down for the foreseeable future.
Fundamental economic indicators are even more concerning. According to the OECD, New Zealand’s GDP could fall by 10 per cent in 2020. Likewise, unemployment is tipped to rise to just under 9 per cent in 2021 as New Zealand’s $14bn corona wage subsidy program ends. Public debt will soar from 19 per cent of GDP in 2019 to 56 per cent in 2026.
Jacinda Ardern is perhaps the worst person to lead New Zealand through this economic turbulence. Her first term has been marked by political triumphs but public policy disasters. Ardern’s empathic — even admirable — responses to events like the Christchurch massacre and the White Island volcano have masked a damning suite of failures in government.
Ardern squeaked into office in 2017 promising to deliver 100,000 homes within a decade, but ultimately built just over 500. Other projects, like a rail link from Auckland airport to the CBD and a new hospital for Dunedin were attempted, but quickly abandoned. The $3bn Provincial Growth Fund — extracted by Winston Peters in coalition negotiations — has created more jobs in Wellington than it has in the regions. Labour came to government promising to drive down carbon emissions, homelessness and child poverty; all three have risen.
As for what Ardern has planned for a second term, the details are patchy. Labour ran something of a “small target” strategy during the election, relying on the Prime Minister’s star power and perceived success in warding off the coronavirus.
But from what we do know about their “policy-lite” platform, Labour will likely exacerbate New Zealand’s economic woes. Hiking income tax, re-regulating the industrial relations system and a bloodcurdling plan for 100 per cent renewable energy by 2030 could turn the corona-induced economic shock into a permanent state of impoverishment for thousands of Kiwis. Worse-still is the possibility — still not ruled out at time of writing — that Ardern will go into coalition with the Green Party, with their plans for a new “wealth tax” and climate change evangelism on par with the Greens’ Australian counterparts.
The great shame is that just three years ago, we could look to New Zealand as a beacon of good government and sensible economic and social reforms.
Over their nine years, the National Party governments of John Key and Bill English cut income and company taxes, brought the budget back to surplus, reformed the labour market and privatised state assets.
The hefty economic windfall was deployed towards a revamped welfare system inspired by what Key and English called “social investment”. The leaner but substantially better-targeted spend led to dramatic improvements in everything from welfare dependency and school attendance to crime rates.
But sadly, the National Party that submitted itself to the people on Saturday night was a shell of its old self in government. It put forward a mixed bag of policies — some decent, like repealing planning laws and temporary tax cuts to kickstart the economy, and some just silly, like introducing a target for electric vehicles. In any event, the opposition failed to put forward a clear, coherent alternative to Labour.
Throw in the spectacle of having three leaders in five months, constant infighting, and a $4bn hole in its pre-election costings, the Nationals were clearly nowhere near “match fit” in 2020. They got the shellacking they deserved.
But the surge in support for the libertarian ACT party — which went from 0.5 per cent of the vote to 8 per cent — shows that there is still a constituency for lower taxes and smaller government. In other words, many were looking for an alternative to Labour’s agenda, but the Nationals just didn’t offer it.
The end result should be familiar to Australians. Alarmingly, there are strong parallels between the political dynamics in New Zealand and the state of Victoria: A first-term Labour government that has steamrolled a weak and divided opposition, a popular leader with a big mandate and a hard-left political temperament, a degraded and politicised public sector, and a largely uncritical and compliant media.
The only hope for New Zealand now is that, whatever horrifying plans that Labour has in store, Jacinda Ardern is just as hopeless at actually implementing them in her second term as she was in her first.