Inflation is the re-election killer
This is a more hostile political environment than 2009, and Luxon would do well to follow the examples of Saint Benedict and Ronald Reagan.
The motto of the abbey at Monte Cassino, founded by Saint Benedict is "succisa virescit" or “cut down, it grows again”. A tree that has been pruned will grow back stronger and healthier. But can the same be said of a government’s popularity?
The latest 1News Verian poll shows some pruning of National’s re-election prospects.
If an election were held today, the survey suggests National would likely find itself out of government, replaced by a Labour-led coalition with the Greens and Te Pāti Māori. National remains the largest party at 36%, but its coalition partners have faded in strength. Were this to be replicated in 2026, Luxon would not have the numbers to keep his job.
This polling data should neither be ignored nor cause for panic by the government. As I wrote a few weeks ago, this was always going to be a challenging time for the government and re-election was never something to be taken for granted. The economy just sucks too much.
It’s no good looking for comparisons to the incoming John Key government of 2008. The world economy had just suffered a dramatic crash, reaching rock bottom before Key took office. Nobody really blamed National and there was still a sense of catastrophe, images of Wall Street in disarray, traders clutched their heads in despair, still fresh in everyone’s mind.
At the same time, when National, New Zealand, like much of the world, was poised for recovery. The Global Financial Crisis was, after all, a crisis – a state of sharp but fast transition. What New Zealand faces today are much more protracted and persistent challenges. It is a different type of pain, more like torture than trauma.
Crucially, the economic challenges of 2009 did not include stubborn inflation. Over the course of that year, the Reserve Bank was able to slash its benchmark official cash rate to just 2.5%. Today, it’s more than twice that and there’s no indication of a cut in rates any time soon.
When it comes to incumbent governments, inflation is the re-election killer.
Day in, day out it immiserates ordinary people by making the necessities of life harder to afford while killing off discretionary spending on the things that make life enjoyable. While it’s doing this, it causes high interest rates, which increases mortgage payments, further depressing that discretionary spending, and deters business investment, creating unemployment.
So as long as inflation remains elevated, New Zealanders will find themselves caught in a crossfire that breeds discontent with the government, for while the electorate may overlook ideological deviations, the unforgiving element is the tangible deterioration of their daily lives.
That’s what killed the Hipkins government. Excuses about the inflation being imported didn’t wash. People elect governments to fix problems not explain them.
Re-election for Christopher Luxon therefore hinges on his ability to restore New Zealanders discretionary spending. This means conquering inflation first. And that means political pain in the short term because the country has become accustomed to gluttonous public spending over the past six years and going on a diet is never fun.
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