New Zealand has never been this divided ... is that our economic problem? – Liam Dann
It is now just six weeks until the general election.
Specifically, it is 42 days until the Sunday morning, when (based on current polling) more than half the electorate will wake up and go: “Ugh, this doesn’t look good”.
Collectively, our two major parties are at their lowest levels of support ... possibly ever.
In New Zealand, the lowest percentage of the vote a major party has ever had and still managed to form a coalition government is 33.8%, for National in 1996.
That was New Zealand’s first MMP election.
It was New Zealand First’s second, but the first of many where that party held the balance of power.
Globally, things can get messier than that.
In Germany and the Netherlands, parties with less than 25% of the vote have pulled together coalition governments.
We aren’t that bad yet, but things appear to be heading that way.
It looks like 30% might be enough of the vote for either Labour or National to form a government – depending on how the minor party numbers fall.
And that suggests the nation has never been this divided.
In the past, it has probably been more polarised – the 1981 Springbok tour comes to mind. But that was a much cleaner division.
There was more or less a binary split. Cultural division lined up more cleanly with the economic division.
We had one big division (give or take a few Social Credit guys) but a high degree of unity on either side.
In 2026 the divisions are far messier.
Even the current coalition partners are aggressively opposed to many of each other’s policies.
Act hates National and NZ First’s interventionist plans to address grocery competition and compel KiwiSaver.
NZ First hates National and Act trade policy.
The vote was messy in 1996 as well.
I looked 30 years back for some parallels, but (apart from Winston Peters) there aren’t many.
The economy was coming off a period of strong GDP growth. Inflation was under control at 2.3%.
Unemployment was technically higher at 6%, but it was on its way down from a peak of 11% in the early 1990s.
So why was the electorate so divided?
The textbook view is that the wide voter spread represented a delayed backlash against the radical reforms the country had been through since 1984.
Both major parties were responsible for those, and MMP allowed voters to express their sense of dissatisfaction.
The prospect of smaller parties having some real sway in government was a novelty and so had real momentum.
NZ First got 13%, The Alliance 10.1% and Act got 6.1.
A conservative party called the Christian Coalition nearly made it into Parliament with 4.3%.
Why is everyone so divided this time?
Well, for starters, there are myriad “culture war” issues and all the social dislocation of social media that adds a layer of complexity.
Allow me to make a big sidestep past all that stuff!
But, when it comes to voting, there’s that famous old saying: it’s the economy, stupid.
I think one of the big issues right now is that everyone agrees the economy is broken but nobody agrees on how to fix it.
The economy is an amorphous beast that presents completely differently to different people.
Ask a dairy farmer how the economy is going right now and you might get a different answer to a young Auckland professional.
Fonterra just delivered the largest annual net profit in New Zealand corporate history ($2.6 billion).
Farmers are headed into their third bumper season of commodity prices.
I don’t think I’ve seen New Zealand’s rural economy this strong in my lifetime.
The economy is (in the context in which Bill Clinton’s 1992 US presidential campaign manager James Carville made the point) the way the economy feels to voters – and specifically swing voters.
There is a lot of poverty in New Zealand, and it would be easy to swing to an extreme example to highlight the other end of the economy.
But instead, just consider a middle-class worker in their 30s or early 40s.
If they have a family, then this is the age when they are likely to be most cash-strapped.
One partner might not be working, or has to work part-time. Or they are paying for childcare.
They have a big mortgage, but because they’ve only owned for a few years, their property is worth less than what they paid for it.
Rising interest rates are going to hit them hard.
They drive a lot. They have to get the kids to school and football practice.
As petrol prices head back towards $3.50 a litre, that’s squeezing their cashflow even further.
Even if they are managing to keep their head above water – just – they are probably dealing with a high level of anxiety about job security.
Every second conversation they have is about AI and its capacity to take their job.
Meanwhile, ongoing cost pressure is forcing their employer to go through a fresh redundancy round almost every year.
It is hardly surprising that they aren’t out there splashing the cash.
In short, for most ordinary people, the economy is all about inflation, wage growth and unemployment.
The rest of it – from GDP to the current account deficit to business confidence and the Performance of Manufacturing Index – doesn’t mean too much.
These are the places where the economists have been seeing positive signs.
They can extrapolate to say: we’ll probably see employment and wage growth pick up – if we don’t cop any more external shocks.
But this remains a theoretical recovery for most people.
We’ve had about three years of theoretical recovery already, so I suspect the average voter is sceptical.
Even though election day is looming, the final shape of whatever coalition we get might not be decided for some time.
In fact, based on past MMP experience, we might not get a new coalition until Christmas.
Then New Zealand shuts down for the summer.
Which means we might not have a government doing much actual governing for the next four months.
Perhaps that will be a good thing. We’ll get a long rest from the political noise.
We can stop worrying about how we’re governed for a while and just get down to business.
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.
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