● Heather du Plessis-Allan
It’s so banal that it’s embarrassing to repeat, but it’s true: what wins elections? The economy, stupid. That’s why the timing of Covid-19 coronavirus could hardly be more awkward for the Government.
This virus is going to hurt us economically and we’re going to be feeling it just as we’re heading into the election.
Which might explain why Grant Robertson is talking up just how bad coronavirus might yet get. He’s given two speeches and several interviews this week hammering out the likely economic impacts, clearly in a bid to seed the idea that, if things go wobbly, you should blame coronavirus and not the Government.
On Monday, Robertson appeared at the Prime Minister’s post-Cabinet press conference to outline three possible scenarios. One: it’s a short, sharp global shock that we feel hard, but then we’re through it in the second half of the year. Two: this thing spreads and we suffer for longer, feeling the economic effects for the rest of the year. That’s becoming more likely now as this virus keeps spreading. Scenario three is a global pandemic leading to a global recession.
Then, on Thursday at an Auckland Chamber of Commerce speech he described the virus as “one of the biggest uncertainties that the global economy has seen in recent times”. In other words — in red ink and in bold — this is serious.
Getting that “blame coronavirus” message out early is smart. Labour already suffers from the persistent perception that they’re not as good at running the economy as the other lot are. Of course, no one can blame Labour for coronavirus’ arrival, but opponents might yet accuse them of mishandling the attempts to keep it out.
And, anything that sounds like “they made this worse” could only reinforce that “can’t run the economy” narrative.
That criticism is emerging already. The university sector’s been particularly vocal, claiming it stands to lose $170 million if travel restrictions keep their international students out. The universities have proven very good at making noise in the past, so they’re formidable opponents.
They want the travel restrictions waived for incoming students and they’re making sure everyone knows that.
The hospitality sector wants tax cuts, the tourism sector needs help. So far, the pleas for help have been cordial, but the longer this goes on, the greater the risk of criticism.
Business confidence is falling again. The latest ANZ survey shows a drop, even though only a third of the survey was taken after travel restrictions were imposed. Again, in the lead-up to an election, it’s uncomfortable to have the words “business confidence falling” floating about to remind us of all that shade the business community threw at the Government for months.
There is a potential upside here for the Government — it could use this downturn to justify increased spending during the budget and election. Robertson is hinting that New Zealanders need to have the blow cushioned by the Government. There are range of tools from benefit increases to tax cuts to hand outs.
If that works well, this could become Robertson’s hero moment. The Christchurch Earthquake was a hero moment for Bill English and John Key. They ended up earning the credit for steering the country through a difficult emotional and economic time, and voters forgave the years of ongoing deficits.
Worst-case scenario, it doesn’t work, the old narrative kicks in, and Labour gets punished for coronavirus at the election.
●
Heather du Plessis-Allan hosts Drive on Newstalk ZB, weekdays, 4pm-7pm