Covid shaped New Zealand’s election result

After winning admiration for the way she has dealt with the COVID-19 pandemic, there was little doubt Jacinda Ardern was headed for a big victory in New Zealand’s election on Saturday. Few among even her most enthusiastic supporters, however, expected her Labour Party to win 49.1 per cent of the vote and 64 seats in the 120-member parliament. It was the party’s best result since 1946. For the first time since then, Labour will be able to govern on its own. The expectation, however, is that to shore up support on its left flank it will again govern in a so-called progressive alliance with the Green Party. The minor party won 7.6 per cent of the vote and will have 10 seats under the country’s electoral system. At the 2017 election Labour won 36.89 per cent of the vote and the governing centre-right National Party 44.5 per cent. Ms Ardern had to scramble for support, eventually winning the backing of the Greens and Winston Peters’ New Zealand First party. On Saturday the once dominant National Party under Judith Collins, its third leader in a year, was reduced to 26.5 per cent of the vote and 35 seats. NZ First, with 2.7 per cent, fell short of the 5 per cent threshold to win seats.

Ms Ardern should be under no illusions about the challenges she faces. As economics editor Adam Creighton wrote on Saturday, New Zealand “in the space of half a year has blown its savings, smashed its two pistons of economic growth — tourism and immigration — and embarked on one of the world’s most ambitious money creation programs”. Net migration of 86,000 across the year to March will collapse to 5000 this year, with little prospect of revival until there is a COVID-19 vaccine. The country’s gross domestic product tumbled 12 per cent in the June quarter, almost twice as much as Australia’s. Extra spending and lost tax revenue was equivalent to almost 20 per cent of New Zealand’s GDP.

Ms Ardern must honour her pledge to “govern from the centre”. It will help that she will not rely on the Greens for survival, even if they are in alliance with her. With the OECD projecting 8.9 per cent unemployment, urgent macro-economic reform is needed to recover from the downturn and, as Creighton put it, to “shake the economy out of its funk”. Yet Labour’s platform centred largely on planting one billion trees, a 100 per cent renewable energy target by 2030 and big spending on health, education and wage subsidy schemes. “Jacindamania” over Ms Ardern’s COVID-19 success worked at the polling booth. But it masked her policy failures and New Zealand’s deepening economic crisis. The landslide puts Ms Ardern in a position of power few NZ prime ministers have enjoyed. She has the numbers to achieve hard-headed economic reforms the Greens may not like but the country needs. She will have no excuses for failing to deliver.