PM Jacinda Ardern deserves our thanks and respect for her crisis leadership, but she ultimately failed to deliver on her own transformational promises because of her fiscal conservatism.
I wrote and said publicly last year there was a non-negligible but real chance she would retire just before Christmas or early this year before the resumption of Parliament and in time for a new Labour leader to prepare for the election. I saw a retirement as possible, in part because of the intense pressures of the job over her five years in charge, and in part because Ardern has, bit by bit, ruled out many new policy areas for Labour.
She also knew she had become personally and viscerally unpopular with a section of the electorate, some of whom are swinging voters able to bring in a new Government. But it’s fair to say this is a surprise and a complete shock to most. It completely throws open the prospects for this year’s election, which is now set to be on October 14. I said it was possible, but never believed it was probable. It’s still a shock.
Ardern will be replaced by a new Labour leader and Prime Minister if two-thirds of the Labour caucus agree on a new leader in a vote on Sunday, but (in theory) without her deputy Grant Robertson as a candidate. He has said he will not stand again, but I think there’s a chance the caucus will beg him to do it, given he remains the most popular and accomplished politician in the caucus.
If Robertson is resolute about not taking the job, the vaguely viable candidates to replace her include Cabinet ministers Chris Hipkins, Michael Wood, Megan Woods and Kiri Allan.
In my view, only Robertson would be able to revive Labour enough to reverse National’s lead in the polls and win the election. Hipkins is most likely to win the caucus vote, in my view, given his experience and resolve under pressure.
The ultimate tragedy of Jacinda Ardern, the politician
She promised so much in 2017, won the enthusiasm of so many, and ultimately failed to deliver. She wasn’t transformational, but did some extraordinarily good things in two of the biggest crisis moments in Aotearoa’s modern history. Her commitment to fiscal orthodoxy and limiting the tax take to 30% of GDP, along with ruling out capital gains or wealth taxes, meant she could not achieve what she promised on housing, transport, climate change and child poverty.
She ruled out so many pathways that there were few places for Labour to go with its reforming instincts. I think that is ultimately why she is leaving. I had a column written and unpublished on why should should retire now to open up pathways to reform. Procrastination is never a good idea..some of it is repurposed here.
In the end, she deserves our utmost respect and thanks. She was instinctively extraordinary with her responses and leadership after the Christchurch attacks and the arrival of Covid. Ultimately though, her innate conservatism, including on the issue of cannabis reform, means she will never be seen as a transformational Prime Minister.
However, she was an extraordinary one who worked brutally hard for five years, sacrificed much personally and was both gracious and empathetic. In front of the camera, and behind. She certainly does not deserve the enmity of those who protested against her last year outside Parliament.
So what happens now? And will it make a difference?
Everything is up in the air with no clear successor. A popular replacement with a new set of policies might have upset the trajectory of National and ACT, which at this stage appeared to be on track for victory, but there is no obvious candidate or set of policies beyond Ardern’s that are in prospect.
My current view is this cements the likelihood of a National-ACT victory on October 14, with no fundamental change in tax, Government spending or social policies, other than the reversal of Labour’s interest deductibility and bright-line measures, along with the truncation of Three Waters, the removal of the clean car rebate scheme and no follow-through on a levy on farm emissions.
From a purely political and financial view, it’s more likely to lower interest rates, increase residential land prices, increase net migration, increase nominal GDP, lower the Budget deficit, lower net debt-to-GDP, further restrict productivity growth, slow real wage growth and increase the emigration of young New Zealanders who come from renting families.
But many stranger things have happened. A week is a long time in politics. A few quiet weeks over summer turned out to be much more consequential for our political economy than we expected.
Or maybe not consequential at all.
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