Luxon, like NZ, is bogged down with the hand-brake jammed on

I wrote at the beginning of the year that Aotearoa’s political economy felt like it was in stall mode. The Government, the Prime Minister Christopher Luxon, the National Party and the electorate at large seemed unable to change course or gain momentum, but were also unable to reverse. The ‘handbrake’ of Winston Peters was locked on and no one could work out how to pry his 81-year-old claws off the lever. If anything, it looked set to be locked on even harder after the end of this current election year.

So nothing has changed.

With 87 days left until the election, the handbrake is still on and National’s farcical failure to fire Luxon today only reinforced where the power lies, and who is blocking progress. Luxon was able to scare his caucus just enough about the consequences for the Government of a leadership change that would blow apart his ‘deal’ with Peters that enough of his MPs backed off.

Luxon said this afternoon he won the ‘full support’ of his ‘united’ caucus after a second vote of confidence in his leadership in less than four months. His 52-second string of workshopped phrases through a jutting jaw and gritted teeth convinced no one and meant nothing. For the record, here’s the bowl of word salad (bolding mine):

“As you know, this is an absolutely pivotal election with some very, very serious issues at stake for New Zealand.

“We think we have made tremendous progress as a government, rebuilding economic growth, financial discipline, restoring law and order and certainly strengthening education and healthcare. But we also acknowledge that we have a lot more to do.

“Our plan to fix the basics and to build the future is a positive plan, a very positive plan, to help new Zealand realise the innate potential that it has.

“There was a confidence vote in my leadership this morning at our caucus meeting and I have the full support of our caucus and our caucus is united and it is determined to win this election.

“Our focus is on National’s positive plan to fix the basics and build the future so that we realise the incredible potential that sits in this country and that we set it up for our kids and our grandkids so that they can do better than we can.

“It’s also an opportunity to frame the choice for voters which is crystal clear on November the 7th. An opposition that wants to take New Zealand backwards, or a National government that wants to fix the basics and build the future with a plan that takes New Zealand forward.”

“We’re going back to work, and we’re moving on.” PM Christopher Luxon after an emergency in-person caucus meeting in Wellington.

Just as he did in late April after his first failed attempt to quash dissent, Luxon then turned and walked out on the assembled media without answering questions.

There’s many problems with Luxon’s words and his choices about how they were delivered, and how he ensured they weren’t questioned.

Firstly, his claimed achievements about rebuilding economic growth are just plain wrong. Gross National Disposable Income per capita has fallen in the last three years. Inflation is above the Reserve Bank’s 1-3% target range again and the central bank is expected to hike again at least once more before the election.

Luxon’s much-vaunted 90-day plans are mostly failing to achieve their targets and he hasn’t talked about them for months. His plan to fix the basics and build the future is actually based on further reducing already-reduced spending on infrastructure, research and development spending and continuing to squeeze down the size of Government towards 30% of GDP. His pledge to achieve ‘growth, growth, growth’ in 2025 failed. And it’s failing in 2026.

Luxon is the most unpopular PM in modern history after just one term in office. His caucus know it, but again failed to execute him. This is all because of Luxon’s original sin: which was to give away to NZ First and ACT a set of policies and Cabinet positions that were unnecessary for National to govern. They were also both deeply unpopular with National’s own supporters, and not expected or debated by the electorate at large in 2023.

Secondly, the words themselves reflect Luxon as a person and a leader. They are inauthentic. It feels like being told that something that is not true IS true, we just need to look harder for longer to see it the way he does.

Clearly, he does not have the full support of his caucus. They are not united. Taking New Zealand forward actually means contracting the economy by squeezing down the size of Government without households or businesses having the balance sheet strength or confidence or borrowing permissions to step forward to fill the gap.

We’re way past that stage of hearing something new and waiting to see if it works out because we still have faith in the person saying it and the statements line up with what feels true. That’s gone now. It just sounds like blah…blah…blah.

The phone is off the hook and is still blaring. Everyone hates the sound, but just can’t seem to cut off the line.

Again, that’s because Winston Peters, 81, holds the power and looks set to be even more powerful after November 7, especially after this week’s events. Luxon was always Peters’ plaything after the deal Luxon accepted in a thoughtless rush to become PM before Christmas 2023.

He didn’t understand how deeply divisive the NZ First and ACT attacks on Te Tiriti would be. He didn’t understand the sinking-lid strategy wouldn’t work to growth the economy in an economy that is still a housing market with LVRs and DTIs tacked firmly on. He didn’t understand New Zealand‘s economy or its social fabric.

He still doesn’t.

Yet, he’s still PM.

And now we’re all very, very sure the political economy is stuck in the mud.

With the handbrake on and the engine stalled.

Many thanks

Bernard

PS: I’m overseas on leave so posting will have to be sporadic. I thought this would be a quiet period before the final turn to the election.