Will Luxon and Willis do an Abbott and Hockey?
In 2013 Tony Abbott became Prime Minister of Australia. The LiberalNational coalition had won power on the back of a few key issues cleverly deployed to brutal political effect. Abbott was never particularly well liked as a leader in political polls. But he was extremely effective at identifying and prosecuting issues, namely criticising any spending initiative as a new tax. He was a master of three-word slogans: stop the boats, cut the waste, slash the debt.
However, terrified of losing the election, he made a bunch of promises to retain a lot of Labor spending near the end of the campaign – even including not cutting the budget of the national broadcaster, the ABC.
Abbott deposed a rabble of a Labor government that had rolled two PMs – Kevin Rudd and Julia Gillard, with Rudd going from rolled to roller and reclaiming the leadership. It was an internal game of thrones. It was also a government pushed further on many left-wing issues than voters wanted, as well as failing some basic tests of competence.
Although the Ardern and Hipkins governments had little in common with the bastardry and backbiting of Rudd, Gillard and Rudd, both those governments inherited little debt (no debt in Australia’s case) and Budget surpluses.
That was 2013. In 2014 Tony Abbott and his Treasurer, Joe Hockey, handed down their first Budget.
There was even a sort of comedically serious photo of Abbott gripping Hockey’s hand when discussing how bad Australia’s debt and deficits were in a photo shoot just prior to the Budget.
Hockey had previously given a speech in London about ending the so-called Age of Entitlement in Australia. He and Abbott thought they had tilled the ground for the level of fiscal repair that they thought Australia required. They hadn’t. Not even close.
Subsequently the 2014 Budget broke a whole pile of promises, made cuts to a bunch of government services and introduced – shock, horror – a $7 co-payment to visit the GP. Hockey talked the language of lifters vs leaners. Good Australians were the former, not the latter.
Anyway, the upshot was that then opposition leader Bill Shorten – who had been up to his ears in the various Labor leadership spills as a factional boss – hammered the conservative side for being unfair. It stuck. The Budget was a political disaster. Hockey would only deliver one more. And despite a massive mining boom, Australia wouldn’t see a Budget surplus for another nine years.
The upshot was that at the start of 2015, Abbott lost a Liberal party room vote of no confidence to an empty chair. By September 2015, facing dreadful polling, he was rolled by Malcolm Turnbull, who squeaked in to win the 2016 election.
Now that was a mad period in Australian politics, during which the lucky country went through more prime ministers than Italy. And New Zealand is not Australia.
But the Luxon Government faces the same very real risk as it calibrates the politics of the May Budget. The steady trickle of job losses in the public service is now increasing to something more than that. As government accounts for a third of the economy, those cutbacks are being felt throughout the economy.
In the Budget, Nicola Willis will be laying out exactly how it is all going to look. What it is all the spending cuts are in aid of, what trade-offs and choices are made and whether those choices will actually set New Zealand back onto a sound fiscal track, which the country has not been on for most of the past two decades.
Or will it pay for some very modest tax cuts, which are helpful but not even enough to hand back bracket creep to middle-income New Zealanders?
Will it be a Budget that really does try to cut deep and then give the Government three years to reap the benefits of that, or will it be a so-so effort that reins in some spending.
The Government’s approach to date has been far more corporate than political.
It is basically demanding budget cuts of virtually all departments instead of just abolishing departments and programmes it thinks are no good.
There are also problems rumbling away, such as the police pay round, which is being negotiated.
For Christopher Luxon, who prefers to operate in high-level generalities and sticking to the script, the individual stories and human face of reduction will be tough. Learning to balance the right combination of empathy and conviction is a difficult path to tread. It will be a test of his political mettle.
This is an issue for Luxon in a way it isn’t for Winston Peters and David Seymour. ACT is happy the public service is smaller, as is NZ First. But Peters mounted his own defence of what is to come in a speech on Sunday. Hidden away behind headline-grabbing remarks around Nazis and so on, he also gave National a whack while essentially arguing that spending also needed to be brought under control (and that National can’t do it responsibly without Peters).
For the Government more generally, with the Budget will come the litmus test of where the centre of New Zealand politics is and whether, between Willis and Luxon, the ground has been sufficiently tilled.
The other problem they will need to confront is how to relate the Government pulling back with the cost-of-living hit to the personal circumstances of many voters. Luxon relates just about everything to reducing the cost of living, but the line is rarely direct.
Much of politics is essentially abstract. The Reserve Bank target will help because of X, the landlord mortgage tax deduction will help because of Y, and so on and so on. What this Government practically does – or doesn’t do – will be one to watch.
The Government was elected on trimming back the state – but the abstract idea of that for many people and the practical reality could turn out to be two different things.
The extent to which the Government has laid the groundwork will matter.
In Australia a decade ago, Abbott absolutely smashed the Labor opposition, got a big majority. He was a man – for all his idiosyncrasies, weirdness and cultural warriorness – who had considerable political skills and at one time had a very good sense of the median Australian.
Luxon had a victory, but not a great result for National, and is currently not a popular prime minister. He is leading a Government that by its nature has an element of instability. That’s MMP. Getting this Budget right will matter.
On Wednesday, the Budget Policy Statement comes out. This sets the parameters of the May Budget, what the operating allowances will be.
It will give the first clue over the real nature of the what the Government has planned.
We will start to see what Willis has in store. New Zealand is in a recession. Prices are high. Global uncertainty is significant. In addition to that, overall, New Zealanders are getting poorer per person. One of this Government’s main theses is that money and public servants in does not mean outcomes out and that New Zealanders understand that.
The theory is probably on the money. And National has primed the public a lot more than Abbott and Hockey did.
But just how reality lands in a country where many are doing it tough, and with an experienced opposition leader, is another matter.
Abbott deposed a rabble of a Labor government that had rolled two PMs – Kevin Rudd and Julia Gillard, with Rudd going from rolled to roller... It was an internal game of thrones.