Labour soul searching begins as drums beat

Leadership dilemma after election's crushing defeat

The last time a major party crashed out of Government with a result like Labour’s, it didn’t survive. It was the Great Depression. The hostile economic environment rocked the political establishment, breeding unwieldy Parliaments with shifting governing coalitions. The governing parties, Reform and United, collapsed under the pressure of the challenging economic environment, returning election results in the twenties and teens.

Going back that far is quite unfair on Labour. The MMP electoral system means a result in the twenties isn’t fatal, but it’s still an ignominious record for Labour to have held: The worst result of an incumbent major party in the MMP era.

The temptation after a result like that is to change — and change everything. How could anything have been right, when everything went wrong.

But there are some cool heads in the party that caution against that kind of thinking.

The argument, and it is a persuasive one, is that this election was essentially unwinnable. The misfortunes endured by the Government this term resist hyperbole. If there is a God, the almost biblical challenges visited upon Labour this term left little doubt as to his voting intention.

And while the sheer hopelessness of the 2023 campaign means Labour strategists, candidates and volunteers can sleep easy knowing there really wasn’t anything they could have done to win, the fact the campaign was lost before it even began means those in the party who are rightly asking themselves what they could have done better have no clear answer.

Did Chris Hipkins make the right call on the wealth tax? Should Labour have tacked to the right more on law and order? Should Hipkins have ditched co-governance arrangements on Three Waters?

None of these questions can actually be answered conclusively. Hipkins could have taken the opposite path on all these issues and achieved the same, better, or worse. It’s simply impossible to know. It wasn’t any one thing that burned Labour this election. It was a Government vanquished, quite simply, by very bad vibes, and a disciplined, formidable opposition that capitalised on them.

Already, critics of the current regime are privately rushing to fill the vacuum, most notably David Parker, the chief architect of Labour’s wealth tax plans.

Labour must have a confidence vote in its leader within three months of the election. It’s looking likely that this will happen sooner rather than later — that is unless Hipkins chooses to resign, triggering a leadership contest.

If there is a challenge — and there isn’t a formal one now — it’s looking likely that Parker would be the main challenger, motivated by the belief that Hipkins’ call to scotch a wealth tax back in April, ahead of the Budget, was the wrong one.

This potential challenge is far more advanced than Labour is publicly letting on, with some in caucus thinking Parker is already doing the numbers. It has been suggested he has the backing of Phil Twyford, who on the current count may not even be an MP in the next Parliament (he is 30 votes behind in his Te Atatu¯ electorate). Neither is talking about the speculation of their colleagues.

In Tuesday’s caucus meeting, it was agreed it would be hasty to proceed before the final results are announced on November 3, but the dissenters wanted some rules around how the party would talk about the leadership ahead of that time. The question was whether there should be rules that barred MPs from expressing explicit confidence in Hipkins as leader, or should they put themselves in a holding pattern, not explicitly expressing confidence in anyone in particular until the final count was in and Hipkins either resigned, was challenged, or had his leadership put to the mandatory postelection confidence vote.

Instead, caucus resolved to allow MPs the freedom to explicitly back Hipkins as leader — and many did. After the meeting ran an hour long, Hipkins emerged at the head of a phalanx of senior frontbenchers.

Some MPs think Parker may have between seven and 10 MPs behind him. He was interim leader in 2014 and ran unsuccessfully in the leadership contest that year, coming third.

Crucially, the other major backer of the wealth tax, Grant Robertson, is said to be firmly behind Hipkins. Another potential future leader, Carmel Sepuloni, is also behind Hipkins. There is a view that Parker may be bluffing in return for policy concessions, but it’s not clear what these can be, given Hipkins has ruled out the tax Parker craves.

The pro-Hipkins faction thinks that whatever kept turnout low in Labour heartlands and precipitated the massive swing to National in blue and marginal seats, it probably wasn’t a wealth tax. Parker, for all his many talents, is not going to send South Auckland stampeding to the polls like Jacinda Ardern did.

The argument for keeping Hipkins is a complicated one. Unless Robertson’s road to Damascus leads him to the Leader’s Office (and this is unlikely, he seems keen to retire before the term is out), Hipkins seems the best leader for now. He might not win in 2026, but he might get Labour into a position where someone else could win in 2029.

He’s a formidable debater and has enough of the mongrel in him to make quite a good opposition leader. As Prime Minister, Hipkins struggled to clearly articulate the differences between himself and the other Chris. In opposition, we won’t have to try, as National and Christopher Luxon get to work ripping up popular climate and economic policies. Hipkins won’t need to distinguish himself from Luxon — Luxon will do that for him.

With Robertson definitely going before the end of the term, the consensus is that soon-to-be former Revenue Minister Barbara Edmonds should replace him. Edmonds has an Ardern-like shyness, and like Ardern, will need to be talked into taking the job.

Having worked in Parliament as a staffer (first under National, then Labour) for nearly a decade, always for the Revenue Minister, Edmonds would have more direct finance experience than any other recent spokesperson in that role — including Robertson himself, and the next Finance Minister, Nicola Willis (both Robertson and Willis swotted up fast to become formidable in their portfolios).

The area Edmonds is lacking, and where Robertson’s loss will be felt acutely, is as a debater. Robertson is one of the House’s best performers, and his Thursday afternoon performances rallied the Labour troops through some of the hardest weeks in the last Parliament. Willis is an exceptional debater too, and while Edmonds might have the measure of Willis on policy, Willis will be hard to beat in the House.

The next election isn’t an uphill battle for Labour — it’s a cliff.

Most New Zealanders — including Chris Hipkins — weren’t alive to witness the last one-term Government.

The potted history of the Second Labour Government’s 1975 loss is that it was sealed by the death of the party’s beloved leader, Norm Kirk, but that’s only half the story.

That Government’s decline was also thanks to a protracted economic decline brought about by Britain’s entry to the European Economic Community (EEC) and the First Oil Shock — both occurring in 1973. The latter sent a barrel of oil from $3 to $20 virtually overnight and saw Labour implement emergency and unpopular speed limit reductions (sound familiar) as a way of saving fuel.

The only other one-term Government in the Labour-National era, the 1957-1960 Third Labour Government, was also swept from office on the back of an external economic shock.

Labour should look at these defeats, and its own, and take courage. There are no obvious economic tailwinds blowing at the incoming Government’s back. There is still a good chance of a “hard landing” to the current tightening cycle, and it has been a long time since any good economic news came out of China.

These challenges are now National’s problem. If Labour’s able to learn from National, and whip itself into shape by 2026, there’s a chance, however small, that the same economic forces that swept them from office might sweep them back in again.

Hipkins won’t need to distinguish himself from Luxon — Luxon will do that for him