Source: ASB Bank
Young Kiwi could play a pivotal role in a close election, with ASB economists identifying youth turnout as a key variable for this election.
ASB’s special election note released today identifies five important themes shaping the economic backdrop to the election, spanning the cost of living, youth turnout, a more fragmented political landscape, fiscal pressures, and infrastructure investment.
Young people have a lot at stake, but the question will be whether they turn up to vote. Enrolment is now closed and same day enrolment is not available this election. Latest enrolment data shows youth enrolment is down around 2%. However, a significant surge in enrolments earlier in the year suggests young people are paying attention to the election and its outcome.
Youth have plenty of reasons to be paying attention. The labour market has softened considerably, youth unemployment is at a multi-decade high, and younger New Zealanders are also navigating the cost of living.
“Historically, younger people are less likely to enrol and less likely to vote, so the question now is whether that apparent interest translates into turnout. In a close election, whether younger Kiwi make it to the ballot box could be influential,” says ASB Economist Wesley Tanuvasa.
The youth turnout question sits within a much broader economic backdrop facing New Zealand, with the cost of living still front of mind for voters.
ASB Senior Economist Mark Smith says “New Zealanders have come through a difficult few years, and for many households the pressure hasn’t disappeared. The challenge is that some of New Zealand’s longer-term economic pressures aren’t going away either.”
“We need to rebuild our fiscal buffers, invest substantially in infrastructure, and prepare for the growing costs of an ageing population. It’s a balancing act of what New Zealand needs today and the decisions that will put us in a stronger position tomorrow,” says Mark.
Rates, fuel, energy, and food costs have generally risen faster than incomes through the post-COVID period, while surveys cite inflation and the cost of living as a top concern. At the same time, ASB economists point to a more fragmented political landscape, which could produce a wider range of potential fiscal outcomes.
The next Government will also inherit significant fiscal and infrastructure challenges. Core Crown debt has risen from below 6% of GDP in 2007 to more than 40% today, while ASB estimates New Zealand faces an infrastructure deficit of around $200 billion and around $1 trillion of infrastructure investment requirements over the next 30 years.
“We need to invest in infrastructure that can support productivity and resilience. But we also need to be realistic about how much the economy can absorb at once,” says Mark.
“Trying to do everything immediately risks running into capacity constraints and putting more pressure on inflation.”
And some of the biggest pressures extend well beyond the next electoral cycle. By 2065, New Zealand is projected to have just two people aged 15–64 for every person aged over 65, down from seven in the 1960s.
Mark says that “elections naturally focus attention on the next few years, but some of our biggest economic challenges are decades in the making.”
“There aren’t any easy answers. But the next Government has an opportunity to get ahead of some of these pressures, rather than leave future governments with even tougher choices.”