The next question after 'will Luxon really go?' is, of course, 'will that work?'

By Chris Trotter*

At least two prominent political commentators are alluding publicly to the imminence of a leadership spill in the National Party. Matthew Hooton and Duncan Garner have both written recently about the National Party’s growing dissatisfaction with Prime Minister Christopher Luxon’s performance. This sort of commentary would be much easier for conservatives to dismiss were it coming from the usual left-wing suspects, but neither Hooton nor Garner fall into that category. If the Centre (let alone the Right) cannot hold, then things are most certainly falling apart.

The next question after “Will Luxon really go?” is, of course, “Will that work?” The answer to that question lies not so much in the efficacy of Luxon’s successor as it does in the perceived strength of the Centre-Left alternative.

Chris Hipkins is pulling out all the stops to convince New Zealanders that Labour can indeed assemble a more effective and efficient coalition government than the fractious assemblage currently running the country. He used the occasion of his (rather belated) State of the Nation address to the Auckland Chamber of Commerce on Friday (7/3/25) to reassure the business community that his party is committed to comporting itself in a thoroughly non-threatening fashion.

As proof of these moderate intentions, Hipkins later announced a reshuffled, ‘all the talents’, shadow-cabinet – presumably committed to rolling out equally non-threatening policies. It is many years since horses crowded the nation’s streets, but even if they were still there, we may be certain that Labour has nothing planned that would frighten them even a little.

Does that mean that Labour has abandoned all thought of raising taxes, or, even worse, imposing that perennial horse-frightener – a Capital Gains Tax (CGT)? Not at all. It simply means that, in marked contrast to earlier Labour leaders, Hipkins intends to make the case for Labour’s revenue-enhancing policies well before the formal campaign launches in September/October 2026.

In this regard, Labour will be able to draw on the widespread global support for CGTs. New Zealand remains an outlier among the members of the OECD for the disinclination of its political leadership – Left as well as Right – to introduce a comprehensive tax on capital gains. Beset by the same demographic pressures as the rest of the developed world, the New Zealand state remains unusually reliant on income and sales taxes to pay for its core services. As the cost of these services, health in particular, continues to grow, the ability of the state to pay for them, without increasing its revenue, must be called into question.

Finance Minister Nicola Willis’s willingness to meet her government’s core obligations by incurring more and more debt will, as her Treasury advisers were quick to point out, very rapidly become economically unsustainable. But diluting those obligations, by reducing or privatising core public services will, even more rapidly, become politically unsustainable.

The present government’s economic and political difficulties are attributable almost entirely to its unfathomable decision to slash billions off the state’s income by cutting taxes when virtually every part of the state apparatus was crying out for more, and just about every responsible economist was arguing against it. Attempting to resolve the inevitable (and self-imposed) fiscal crisis by cutting state expenditure, has only compounded the Coalition’s difficulties.

On its face the Coalition’s behaviour seems self-defeating, which is why left-leaning commentator Rob Campbell’s latest contribution to The Post is so intriguing. In brief, Campbell sees a great deal more method than madness in the Coalition’s behaviour.

Stripping away its pious posturings and well-worn excuses, the former trade union leader reveals what he considers to be five key shifts at the heart of the Coalition’s policies:

• From public to private investment and delivery.
• From an emergent bi-cultural, back to a colonial nation.
• From universal to user charges.
• From regulated to market-use of resources.
• From limits on, to incentives for, private investment returns.

The temptation for Hipkins and his colleagues to pledge themselves to rolling-back the Coalition’s right-wing policy transitions will be strong. If they succumb, it would require an incoming centre-left government to reprioritise:

• Public provision over private enterprise.
• Tino rangatiratanga over colonial institutions.
• Universal provision over user pays.
• Rational regulation over laissez-faire.
• The public good over private interest.

This isn’t quite the pitch Hipkins made to the Auckland Chamber of Commerce. His purpose there was to play up the continuities embedded in National and Labour policy – especially with regard to the restoration of New Zealand’s decrepit infrastructure. Picking up on the growing disquiet at the Coalition’s apparent obsession with tearing down everything Labour had built, Hipkins was also careful to reassure his audience that while Labour might amend the policies of its predecessor, it does not share its affinity for the wrecking-ball.

The name for this approach is “the small-target strategy”. The idea being that the less one’s opponents have to aim at, the less they can hit. Keir Starmer’s emphatic 2024 victory over the British Conservatives represented a huge vindication of the strategy, which might also be described as relying upon your opponent’s failures, rather than your own party’s policies, to carry you into office. Or, as Napoleon expressed the same idea: “Never interrupt your enemy when he’s making a mistake.” Bold and detailed policies are a dangerous distraction.

In the context of MMP, however, one’s own party’s commendable policy discipline can easily be compromised by the wild policy incontinence of one’s putative coalition partners. A strong and measured argument in favour of introducing a CGT on the part of Labour could all-too-easily be undermined by the Greens trumpeting a swingeing Wealth Tax on the non-tax-paying rich. And even that degree of fiscal radicalism might be overwhelmed by Te Pāti Māori demanding that full compensation for the crimes of colonisation be paid to tangata whenua.

Small wonder, then, that Hipkins is asking all those New Zealanders anxious to be rid of the National-Act-NZ First Coalition to play it safe by making sure that Labour receives by far the largest share of the anti-government Party Vote. Keeping the parliamentary representation of Labour’s potential coalition partners as small as possible will also limit dramatically their ability to demand excessive and/or outlandish policy concessions.

A Green Party heading into the election with 15 percent of the vote is much more likely to make trouble for Labour than a Green Party hovering just above the 5 percent threshold. A Te Pāti Māori facing stiff competition from Labour in all the Māori seats, and registering insufficient voter support to crest the MMP threshold, will find it harder to justify the angry performative politics at which it excels.

The chances of Labour winning back all those voters who deserted it for the Right in 2023 would, of course, be seriously enhanced if Hipkins felt confident enough in his position to execute what might be called a “Newsom Turn”.

Gavin Newsom, the Democratic Governor of California, last week turned his face against his party’s uncompromising support for transgenderism. By coming out against biological males participating in sports formerly restricted to biological females, Newsom signalled that he would run for President in 2028 on a “non-woke” policy platform. His decision is the strongest signal yet that the Democratic National Committee’s hold on the party’s ideological direction is faltering.

A similar signal from Hipkins, indicating that Labour’s infatuation with Identity Politics was also waning, would hasten the return of the tens-of-thousands of supporters alienated by Labour’s 2020-23 policies. The true test of Hipkins’ leadership, however, would be whether or not he could prevent tens-of-thousands of outraged “progressives” responding to his “Newsom Turn” by deserting Labour for the Greens and Te Pāti Māori.

Clearly, Christopher Luxon is not the only politician with leadership problems.

*Chris Trotter has been writing and commenting professionally about New Zealand politics for more than 30 years. He writes a weekly column for interest.co.nz. His work may also be found at http://bowalleyroad.blogspot.com.