The government and its surrogates continue to spin the Pre-election Economic and Fiscal Update hard. The government is to be congratulated on making a mess of the economy but not completely destroying it.
Even taking its assumptions of government spending restraint at face value, however, the PREFU offered a sobering view of the country’s economic health. With high interest rates and slow growth, unemployment is projected to peak at 5.4% by early 2025.
Meanwhile, the government grapples with a gaping OBEGAL deficit of $11.4 billion and accumulated cash deficits of $34.4 billion, indicating a need for additional funding sources. Expenses in social security and health sectors are predicted to rise, while net debt is expected to peak at 22.8% of GDP in 2024/25.
What looks to be a tough job market, reduced job security and renewed housing affordability problems suggest challenging times ahead.
You’ll never guess what Luxon thought…
National's Christopher Luxon has delivered a biting critique.
Luxon says that government profligacy had led to a surge in spending by $6.5 billion and government debt by $13 billion. The much-promised return to surplus has been postponed for the third time, while debt is feared to balloon over $100 billion in the coming year. This all comes, the National Party leader notes, as wages lagging behind inflation and living costs spiralling up.
While Luxon's critique may have had a touch of the dramatic, there’s no doubt people are feeling grim.
Beyond the turning point
Unsurprisingly, a recent polling has indicated a discernible shift in the political landscape, with voters moving against Labour.
This morning, the Guardian’s Essential poll showed National leading with 34.5% compared to Labour's 26.9%. That poll included undecideds. In the most recent Newshub-Reid Research poll, which did not, National secured a commanding 40.9% against Labour's 26.8%. The earlier Taxpayers' Union-Curia poll mirrored this trend, putting National ahead at 35% and Labour at 26.5%.
There is a consistent theme here, with the last Roy Morgan poll showing Labour's support drop to 24% while National held steady at 31% and a poll by the Dominion Post having National at 36% and Labour at 26%.
Obviously these surveys are not entirely in lockstep, but the broader trends are:
National has a solid lead over Labour.
Labour is in the “death zone” of the 20s.
Smaller parties such as Greens and ACT are gaining traction.
The effect of momentum
It used to be considered an iron-rule of elections that undecided voters would usually break for the challenger. The theory was that it is harder for incumbents to win back wavering support. As the election draws near and the incumbent still hasn't been able to secure their vote, these undecided voters are more likely to take a chance on the challenger, hoping for change. The challenger represents a new possibility, a potential for improvement over what's currently in place.
The extent of this effect has been cast into doubt from time to time. In this context of this election, however, it may well be a factor. It’s hard to see many people with doubts about the government deciding from this point on that they like the government after all.