Richard Prebble: Why Aussie election is bad news for Ardern – New Zealand Herald

Prime Minister Jacinda Ardern. Photo / Mark Mitchell

OPINION:

A change in government in Australia often foreshadows a change in New Zealand too.

The electoral success of the independent "Teal" candidates is a warning to politicians to take climate change seriously, but the killer issue was inflation.

On the eve of the election, the Roy Morgan economic confidence survey revealed a majority of Australians were pessimistic and expecting inflation.

The Roy Morgan survey for New Zealand shows we are even more pessimistic and have even higher inflationary expectations.

Governments are rarely re-elected when the majority of voters are pessimistic about the economy and inflation.

Last week will prove crucial for the electoral prospects of the Labour/Green Government. It included the release of the Government's Emissions Reduction Plan and Grant Robertson's fourth "Wellbeing Budget".

The Government's climate change response is a hodgepodge of spending. Included in the initiatives are proposals that have nothing to do with the climate, such as a change to NCEA and tertiary education, unemployment insurance, tikanga programmes and so on. The big winner from the $3 billion package is corporate New Zealand.

James Shaw, the minister responsible, was unable to explain why the Climate Change Commission's recommendations have been largely ignored. A headline on a comment piece on the Herald website saying "James Shaw is toast" summed up the environmental movement's reaction.

If the Australian election is a guide, next election a new environmental party will contest for the climate change vote.

The reaction to the Budget was also a disappointment. At a 30-year high, inflation is the number one issue.

As late as March, Jacinda Ardern was on breakfast TV denying that the cost of living is a crisis. Grant Robertson has rejected the Reserve Bank governor's advice that to tame inflation, along with central banks tightening monetary policy, governments must also exercise fiscal restraint.

Although it is clear that inflation is not transitory, Robertson refuses to take the tough decisions needed to combat rising prices. The Finance Minister has proceeded with record spending. He admits his budget will be inflationary.

We have the lunacy of the central bank applying the brakes and the Government the accelerator.

We also have the madness of trying to reduce the effects of inflation by yet more spending.

When the Government announced a "temporary" easing of fuel excise duty and a "temporary" public transport subsidy, this column predicted that it would find both measures difficult to remove. So it has proved. The Budget announced further "temporary" extensions.

No government has been able to end the totally unjustifiable free ferry trips to Waiheke Island for Gold Card holders. Come November, why would the Government be able to take away $27 a week from 2.1 million voters? By then, many mortgagors will be experiencing financial hardship.

The Government is borrowing from the future to increase today's incomes. It is unsustainable.

Treasury's prediction that inflation will exceed the Reserve Bank mandate through to the election raises many questions:

Has Labour abandoned the Policy Targets Agreement whereby the Reserve Bank is required to keep inflation between 1 per cent and 3 per cent?

Will Wednesday's Reserve Bank Monetary Policy Statement will reveal if the bank is following its mandate, or whether it is just trying to moderate inflation?

How credible is Grant Robertson's claim that inflation has peaked?

No union can accept pay rises of less than inflation. And a business that does not pass on costs risks going broke.

Inflation has given the Government record tax revenue. Now inflation will reduce what that revenue can buy. The telephone number Labour has thrown at health will be eaten away by inflation.

Labour is losing economic credibility and National is gaining it. When Christopher Luxon became leader, he could have chosen a rainbow of issues. When the Government was claiming inflation was transitory, the Opposition leader made the smart decision to focus on the cost of living.

The polls now say National is more competent to handle the economy.

Act also rose in the latest poll. Act has put forward a costed alternative Budget, and the party has said where it would reduce government spending.

National has yet to nominate a single government ministry that would not be missed. In Australia, the unwillingness of both the Liberals and Labor to take tough decisions saw both parties' primary vote fall. There is a message in that for National.

Parliament is closed this week so Labour can sell the Budget and the Greens their climate response package. Already both have failed to convince a key constituency, their own activists.

There is not a single Labour Party member who bought raffle tickets so a Labour Government could provide temporary income support.

There is not one Green Party member who door-knocked so Green MPs could provide corporate welfare.

Enthusiasm is something the polls cannot measure but it is vital. Enthusiasm motivates volunteers to donate, door-knock, deliver pamphlets, enrol and vote.

A UN job must be looking more and more attractive to Ardern.

- Richard Prebble is a former leader of the Act Party and former member of the Labour Party.

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Richard Prebble: Why Aussie election is bad news for Ardern - New Zealand Herald