Source: Radio New Zealand
New Zealanders are really starting to feel the pinch from the United States and Israel’s attacks as fuel prices get close to $4/litre at the pump. RNZ / Quin Tauetau
Analysis – An unexpected address from the Prime Minister in Wellington this week spoke volumes about the economic crisis the government is staring down the barrel of.
Finance Minister Nicola Willis and the minister responsible for fuel security, Shane Jones, have been doing the heavy lifting on what the impacts may or may not be for New Zealand’s economy if the conflict in Iran drags on.
Already suffering a cost of living crisis, New Zealanders are really starting to feel the pinch from the United States and Israel’s attacks as fuel prices soar past $3 at the pump and the flow-on effects mean almost everything else – food, services, flights – also climb to unaffordable levels.
It’s an attack on the economy and that’s an issue National has pinned its electoral hopes on in November after promising in 2023 to get the country back on track.
Late last year Labour surpassed National as the party most trusted to respond to the economic challenges, and in the most recent Ipsos Monitor this month the two parties were neck-and-neck on the issue.
Labour is also seen as more capable on inflation and cost of living.
That’s no small concern for the major governing party as it prepares for a tightly-contested election, while simultaneously dealing with an economic shock not of its own making.
Enter Christopher Luxon.
While the foreign affairs’ nuances of the war in Iran are certainly not Luxon’s forte, on the economy he feels more comfortable and has a reputation at least as a former chief executive for knowing what he’s talking about on that front.
But until Thursday he wasn’t doing the talking – Willis and Jones were.
Luxon had tasked the pair with leading the work and then jumped on a plane for four days to the Pacific at about the exact time the situation reports got bleaker back home.
The ministerial advisory group is having online meetings every morning to get updates from officials, and Willis has been doing blanket coverage media interviews and press conferences for the past couple of weeks.
Jones has taken the lead on the fuel security element and has been very much second in command.
So not surprising Luxon chose to high-tail it down to the Beehive for a face-to-face meeting with his officials on Thursday morning about what the state of play is.
For the seven days prior he’d only been receiving updates via reports and phone calls and was keen to hear the lay of the land from those at the coal face of the government’s response.
It led to a last-minute decision to hold a media conference at Parliament, alongside Willis, where the substance of what the government was doing hadn’t changed but the tone certainly had.
The purpose of the media conference was two-fold: tell New Zealanders they need to be realistic about what might be coming down the line and how bad it might get, and put the prime minister in charge of a looming crisis.
The hope for National is that it can claw back the narrative of being a safe pair of hands when the economy is in choppy seas, but the flip side is that if things do get worse before they get better and things haven’t improved at all for Kiwis’ backpockets come the election, then it’s Luxon and Willis who will wear all of it.
The war coming to an end soon is crucial to their success because even if it does end in the next week or three, the lag effect is such that it will still take time for the economy to bounce back.
With an election just shy of eight months away, it isn’t a lot of runway.
The biggest take-away from Thursday’s update was the work being done to prepare cost-of-living relief for some people if the pain at the pump, the supermarket, and almost everywhere else, continues.
Willis has signalled she’s tasked Inland Revenue with finding the best way to get targeted, temporary, and timely funding to those working Kiwis who will be impacted the most.
The biggest problem she has isn’t how to administer it, but when to pull the trigger on it.
Go too early and the government books end up looking worse for longer, but go too late and voters feel like they’ve been abandoned.
Expect discussions on the specifics of that payment to be high on the agenda at Monday’s Cabinet meeting.
National has talked a big game on being fiscally prudent.
If there’s even a whiff of Willis and Luxon sliding into cost-of-living relief creep to try keep as many voters as possible happy in the months ahead, it will be deputy prime minister and Act leader David Seymour shouting the loudest.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
