Five items on Ardern’s to-do list Shamubeel Eaqub

The new Labour-led Government faces a new term to manage the lingering and ongoing risks of the Covid-19 pandemic and begin the economic rebuild.

The landslide victory was a vote of confidence in the leadership and stewardship through the pandemic. The new Government will have much on their plate, but don’t expect largescale and bold changes.

Jacinda Ardern as prime minister has been a pragmatic and centrist leader. Quick and bold to act in crises, but cautious with large-scale disruption.

A Labour Government will surely have learnt the lesson of the pandemic response.

When information is made available, and communicated well, the majority of New Zealanders will get on board. Even when there are stark trade-offs, for example through the first intense lockdown, the level of compliance was high. That was a huge display of collectivism based around a broad consensus.

Building genuine consensus on issues is possible, and is the necessary ingredient for enduring large-scale policy changes. This has not happened during this election campaign. Instead, the landslide this term will be hoarded to prepare the ground for future change.

Politicians can look to make changes in three ways. By tinkering with existing policies, introducing new policies, or changing the goals of what we want to achieve. Expect more of the first two from this term.

The make-up of government and what they do will have an unusually large bearing on the economy.

Since the 1990s, the Reserve Bank has been in charge of managing the economy.

But now, interest rates are near zero and despite the Reserve Bank’s protestations, it has little control over the economy. Instead, government’s fiscal and regulatory agenda will be the key drivers.

This thinking has not yet permeated the public service. New Zealand urgently needs an industrial strategy, and an upgrade in our 1980s thinking of government finance and borrowing – which has been a handbrake on long termism in our borrowing and investing behaviour.

The IMF, long an ardent supporter of austerity and low debt, now urges countries like New Zealand to borrow and invest to beat the pandemicinduced recession.

The main thing we need from this Government is to keep a steady hand on the stimulus tiller. That means spending more than taxes until the economy is on surer footing. That spending needs to be focussed on not just short-term sugar hit to the economy, but also the infrastructure for long-term growth.

Here are the five other big things I think the Government will do: 1. Change the pact with the Reserve Bank.

Implement a financial stability agreement that requires the Reserve Bank to consider the amount of debt in the economy and where it ends up. A booming housing market in the biggest recession in a century is proof enough the Reserve Bank’s current oversight of banks and financial stability is not fit for purpose.

2. Make welfare payments more generous. The Covid Income Related Payments were brought in because when someone loses their job and go on to the benefit, their income falls by 25 per cent to 80 per cent. Some way to smooth that and to have higher welfare payments are necessary.

The Welfare Advisory Group had a raft of policies to implement.

3. Broaden the shovel-ready list. The Government will stimulate the economy with large-scale investment. This will inject money immediately and boost long term growth. But large infrastructure projects take time and directing money towards smaller projects such as retrofitting homes to make them warm and dry, and encouraging housing supply towards social and rental markets will help relieve growing housing stress among renters. With the Provincial Growth Fund being unwound, there will need to be a move toward a more structured approach to regional economic development.

4. Climate change is our nuclear moment according to our prime minister. But progress is still too slow. We should expect the Government to move faster on encouraging electric vehicles, charging infrastructure, public transport and other reforms.

5. Foreign policy will be more front and centre. The rise of populism and anti-globalism also suggest the consensus of increasing global integration and cooperation, which was a progressive idea, is now degenerating. Intensifying tensions between the US and China show that we cannot rest on our past relationships. Instead, foreign policy will be increasingly important.

The new Government will use its landslide to toe a centrist and pragmatic line this term. But expect to see plenty of work to build the basis for more substantial change for consideration in the next election.