NZ set for stronger regional role

Under the country’s voting system, many New Zealanders were not expecting a definitive result so soon after Saturday’s election. But the two-term Labour government, formerly led by Jacinda Ardern and more recently by Chris Hipkins, was swept from office in a groundswell of dissatisfaction with its economic performance. Labour has left New Zealand with massive debt, 6 per cent inflation, high interest rates and falling real incomes. Ms Ardern’s signature policy to provide hundreds of thousands of low-cost houses was an abject failure.

The new prime minister will be the leader of the centre-right National Party, Christopher Luxon, 53, a former chief executive of Air New Zealand. He will govern in coalition with the free-market libertarian ACT party. Their platform is sound: tax relief, public sector cuts, lifting the pension age to 67, significantly increasing the defence budget, and a tougher approach to law and order. They control 61 seats in the parliament of 121 members. But with a strong showing by minor parties and counting yet to be finalised, it will be November 3 before the government’s final make-up is settled. Mr Luxon may need to invite veteran MP Winston Peters, 78, and his NZ First party to play kingmaker.

Wearing an All Blacks jersey on Sunday morning (a painful sight for Australian rugby fans), Mr Luxon nominated building up New Zealand’s relationship with our country as a major foreign policy objective. That should strengthen New Zealand’s role in the Asia-Pacific region, especially because during the campaign Mr Luxon said he was open to joining the AUKUS pact. He is interested in being part of Pillar Two. It covers the supply of advanced defence technology such as cyber capabilities, artificial intelligence, quantum technologies and undersea capabilities needed for Australia’s nuclear-powered submarines. At this stage, both sides of politics in New Zealand, unfortunately, continue to uphold the ban on nuclear-powered and armed ships imposed by David Lange’s Labour government in 1984. That would be likely to limit the security benefits New Zealand would stand to gain under AUKUS. In light of the Asia-Pacific’s deteriorating strategic climate, defence and foreign policy had a higher-than-normal role during the election campaign. ACT leader David Seymour, 40, is hawkish on geostrategic and security issues, and campaigned to double New Zealand’s defence spending from 1 to 2 per cent of GDP. A National-ACT government would be more aligned on defence of the Indo-Pacific with Anthony Albanese’s government than the New Zealand Labour Party, he said. New Zealand should “participate proportionately in the Anzac defence force” and cannot expect Australia or the US to come to its aid unconditionally, Mr Seymour argued. “At the moment we’re not capable of (participating) but we have to pull our weight.’’ Conscious of China’s coercive trade policies, the National-ACT coalition is committed to broadening New Zealand’s economic relationships and pursuing a free-trade agreement with India.

Reconciliation between Maoris (who make up 17 per cent of New Zealand’s population) and non-Maoris is generally regarded as a success, with seven Maori-only seats set aside to ensure representation in parliament. Labour’s pivot towards the Maori language and culture, especially under Ms Ardern, caused tensions, however. A recent Dominion Post/Freshwater Strategy poll showed 50 per cent of Kiwis want a return to solely English names for government departments, which are now also known by their Maori equivalent. Labour delayed plans to make road signs bilingual amid public anger over the move. Cultural tensions and a health system struggling to keep pace with need will be among the domestic challenges the new government faces. It will be judged by voters primarily on economic issues, especially the cost of living and tax. And from Australia’s perspective, its intention to engage more in regional defence and security is welcome.