A racist attack on two mosques left 51 people dead. A deadly volcanic eruption. Coronavirus pandemic.
In her nearly six years in office, New Zealand’s Prime Minister Jacinda Ardern has deftly weathered one sudden disaster after another and journey to re-election in 2020. But behind the scenes, New Zealand’s longstanding economic problems — like expensive housing and high costs of living — continue to simmer.
Now, with the national election less than nine months away and a few days later Her shocking resignationThe future of Ms Ardern’s Liberal Labor Party will depend on how voters feel about how she and her government have tackled those issues. And with economic momentum falling, interest rates rising and inflation slashing household budgets, critics, including those in the opposition centre-right National Party, will seek to blame her.
The weight of those issues will fall on the shoulders of Chris Hipkins, the current health secretary, who was nominated at a caucus on Saturday to lead the party and thus the country. The nomination is expected to be officially confirmed on Sunday.
Brad Olsen, chief economist at Infometrics, a consulting firm, said: “The legacy of government seems, depending on who you talk to, either the absolute worst or the greatest ever. “. “The truth is there’s a bit more between those two points.”
On Thursday, when Ms Ardern announced her plans to step down, among her detractors was Ben Buist, 49. Speaking in downtown Christchurch, he told of struggling with the country’s cost of living crisis and trying to get affordable housing.
“Where are all the houses she said she would build?” he said, referring to a top campaign promise building 100,000 new homes, a pledge that helped bring Ms Ardern to power. Only a small fraction of those homes were built during her tenure.
Brian Easton, an independent economist in the country, said that when Ms Ardern scored a surprise win in 2017, the New Zealand economy was about the average globally. “And it still is, today — except the world economy is performing less efficiently, and so is New Zealand’s economy,” he said.
The country has a small, open and exceptionally uncompetitive economy. Its moniker — “trembling archipelago” — is the correct word: driven by global events, highly susceptible to changes in the Chinese economy, and often at risk. natural disaster, as it lies on many earthquake fault lines.
As Ms Ardern prepares to step down next month without a clear successor, critics say little has changed on the economy. In regards to income, New Zealand is the 12th most expensive country in the world to live in, with expensive housing being a major concern. Private debt – which includes household debt and student loans – accounts for about 147 percent of gross domestic productcompared with 154 percent in the United States and 133 per cent in Australia.
Addressing child poverty, which Ms. Ardern promises to be a personal priority, is on a downward trend but still higher than in comparable economies, especially for single household. Inequality remains flat, with the top 10 per cent of New Zealanders still holding about half of the country’s household net worth.
Ardern’s opponents point to a multitude of new problems and what they see as inadequate solutions to old ones. But economists say that, especially on questions about inflation and recession risk, governments don’t always have the answers.
“There is always a kind of tracking that pulls in politics into the economy, but the economy doesn’t really care about who owns it,” said Shamubeel Eaqub, an economist in Auckland, New Zealand’s largest city. permission. “The cycle of the economy is not the job of the government. That is silly.”
But it will be cold consolation to voters squeezed by pocket worries. Ms. Ardern’s government has tried to claim the record low unemployment rate without being responsible for inflation, pointing out instead, at 7.2 percentrates are largely consistent with rates of comparable economies.
“The average Kiwi doesn’t care if our inflation is lower than it is in the US or UK — they just care if it affects them,” Mr. Olsen said. “Most of the time, most people don’t really care what the root cause is — they just want to see it fixed.”
Since December, polls show support for Labor at 33 percentcompared with 38 percent for the National Party.
Ms Ardern campaigned on a platform of “transformational change” that many experts say she failed to deliver. She ruled out potentially powerful policy levers such as capital gains tax and an increased retirement age.
Most of the government’s economic policy comes not directly from Ms. Ardern but from Grant Robertson, the country’s deputy prime minister and finance minister. The progress made in transforming the economy has mostly been in the less glamorous sectors, where it could take years or even decades for beneficial effects to be seen, Mr. Eaqub said. they.
In housing policy, for example, Ms. Ardern’s government amended a longstanding law to promote the construction of flats and essentially ban zoning of single-family homes in urban areas. big city.
“In the interest of hindsight, I think reforms in the housing sector will be seen as transformative,” Mr. Eaqub said.
But in the immediate future, homeowners in New Zealand have more pressing concerns. New Zealand house prices fell 12 percent last year, after a strong increase for many years. Previous governments – both Labor and the centre-right National Party – have also failed to rein in skyrocketing housing prices, a problem that dates back to the early 2000s. As for over-borrowers, Especially for those who have to tighten their budgets as interest rates rise, the threat of a further drop in home prices is extremely worrying.
“There is a legacy of people paying too much for their housing,” Mr. Easton said. “Especially with low interest rates going up right now, that means there are people now who are really struggling with paying off their housing debt.”
Morgan Godfery, a political commentator and senior lecturer at the University of Otago in Dunedin, said some analysts have confidence in Ms Ardern’s government on the housing front, saying her administration still leads began a historic effort that succeeded in actually building more housing.
“Her government has built more homes than any other government since the 1970s,” he said. “These are past achievements without much comment.”
Perhaps Ardern’s greatest legacy, economically and otherwise, is the government’s swift response to the coronavirus pandemic, both in terms of the public health response and the economic support available to citizens and businesses. New Zealand industry.
“New Zealand came out better than most. “We’ve had stronger economic growth, lower unemployment,” Mr Eaqub said. “But now we are facing the same problems as other countries. And the underlying problems in our economy are slowly being resolved.”
Whoever wins the planned October election will have to deal with similar hurdles faced by successor governments, including Ms Ardern’s.
Mr. Olson of Infometrics said that housing, inequality, poverty and health care are issues that are always on the forefront and leaders cannot ignore.
“I don’t think that’s an option,” he said.
Emanuel Stoakes Reporting contributions from Christchurch, New Zealand.
