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What Would National Have to Do to Lose? Third

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What Would National Have to Do to Lose? Third HUGO Assessing the economic and political environmentvision in New Zealand September 16 2014 Confidential to HUGO members What would National have to do to lose? Page 2 National’s poll support has settled at a little above 48%, just enough to allow it to govern with the help of Act, United Future and, perhaps, the Maori party. Any slide towards 45% will bring NZ First into play. It would take a huge shift in opinion now for National to lose this Saturday. Third term priorities Page 3 In the unlikely event it’s elected with a clear majority, National would move fast on stalled labour market and environmental law reform. If constrained, as expected, by support partners, it will focus on taking the sting out of problem areas, including income inequality, housing affordability, and the balance between private and public transport investment. Dude, where’s my inflation? Page 7 The Reserve Bank’s latest monetary policy statement underscores how little inflation is showing up in the NZ economy as yet. That’s partly the high kiwi dollar, but also reflects strong business investment driving greater productivity, high labour participation rates and a 50,000 net boost to the workforce. A terms of trade rebound is expected too. Who will lead Labour? Page 6 Assuming a National party win, the question of Labour’s leadership will inevitably arise. David Cunliffe may try to hang on, but there’s no escaping he’s done no better and, in some respects, worse than David Shearer. Grant Robertson looks the obvious contender. Life after Winston Page 6 It would be unkind to ask right now, but who will lead NZ First into the 2017 election? As Winston Peters looked both left and right on the Monday of election week and will almost certainly help form a govt, is the 70 year-old this year warming a seat for Shane Jones? Headwinds in China Page 8 The economic news from China for August was a lot worse on several fronts than markets had expected. The Aussie dollar took an early hammering, as a proxy for the Chinese economy. Russia sanctions hurt global dairy market Page 7 Russia’s ban on imports of dairy products from the EU will see European milk enter the small global market, just as NZ dairy farmers turn in excellent early spring production conditions. Forecasts at a glance INFLATION GROWTH $ v $US $ v $A WORLD GROWTH TRADING PARTNERS ann % change ann avg % change spot rate spot rate annual avg % change annual avg % change December 2015 2.7% 3.4% 73.0c 89.0c 3.2% 4.1% December 2016 3.1% 1.8% 67.0c 88.5c 3.3% 4.2% December 2017 2.7% 1.2% 63.1c 88.5c 3.1% 4.0% Contact: [email protected]. No responsibility is accepted for acts or omissions by clients as a result of items herein. Text finalised September 16 © The Hugo Group 2014 HUGOvision September 16 2014 THE ELECTION National on the last stretch well of belligerence towards Key, Peters this week simultaneously anointed Bill English and David placed for third term Parker as appropriately sobre finance ministers while National rode out the Hager saga and probably will deriding the Greens’ desire for a co-deputy prime ride out the Dotcom dagger on “mass surveillance”. ministership. He trailed a coat for a Labour-NZ Focus groups were unclear what the real point of the First coalition and has raised the prospect of sitting Hager stuff was and whether it was material to good on the cross-benches – though if he did that without government and thought all politicians do it anyway. committing to vote for confidence and supply, that That left National sitting at an average of 48.6% in the would not fit his declared commitment to “stability”. polls by midweek last week on the back of improved Craig’s lot, being new to Parliament and a disparate household finances and his personality. As the table bunch, might initially be more difficult to manage but shows, that would be enough to govern with only it should be do-able, though there could be a risk of David Seymour (ACT, Epsom) and Peter Dunne instability if they didn’t settle in. (United Future, Ohariu). If the Maori party wins But short of a sudden surge for Labour, a left- either two electorate seats (that is, holds Te Ururoa led coalition still looks very unlikely. Labour is Flavell’s and one of the two retiring grandees’ seats languishing in the mid-20s because voters don’t see it on which polling is equivocal) or one electorate seat as a government lead party. It didn’t help Labour that plus a party vote seat, National could drop 3% and the Greens sniffed around National last week. still govern with its 2008-14 support team. The Greens have come through the campaign still If National’s party vote support drops further or polling around 12%-13%, some of that at Labour’s one of the above seats does not materialise, John cost. But they are still not in government. Key will need Winston Peters/New Zealand First Internet Mana has not fired. The latest average or Colin Craig’s Conservatives if they climb another was 1.6%. It is still conceivable, but only just, that percentage point on their latest 3.9% average. there will be a late surge on the back of the Dotcom Either is do-able but would come at a cost that is “reveal” on September 15. But there is no evidence not easily quantifiable in advance. After a period yet of any such surge. National, Labour, Greens Three small parties Average last 4 polls since 20 June Average last 4 polls since 20 June 60% 8% 55% National 7% 50% NZ First 45% 6% 40% 5% 35% 30% Labour 4% 25% Conservatives 3% 20% Greens 15% 2% 10% Internet-Mana 1% 5% 0% 0% 2/7 4/7 6/7 8/7 1/8 3/8 5/8 7/8 9/8 2/9 4/9 6/9 8/9 2/7 4/7 6/7 8/7 1/8 3/8 5/8 7/8 9/8 2/9 4/9 6/9 8/9 11/8 11/8 22/6 24/6 26/6 28/6 30/6 10/7 12/7 14/7 16/7 18/7 20/7 22/7 24/7 26/7 28/7 30/7 13/8 15/8 17/8 19/8 21/8 23/8 25/8 27/8 29/8 31/8 11/8 11/8 22/6 24/6 26/6 28/6 30/6 10/7 12/7 14/7 16/7 18/7 20/7 22/7 24/7 26/7 28/7 30/7 13/8 15/8 17/8 19/8 21/8 23/8 25/8 27/8 29/8 31/8 National's lead over Labour+Greens The result on the latest averages Average last 4 polls since 20 June 15% • National 48.6% 61 seats • ACT/United 0.7% 2 seats 12% • Conservatives 3.9% 0 seats • TOTAL NATIONAL SIDE 63 seats 9% • Maori party 1.0% 2 seats* • NZ First 6.9% 8 seats 6% • Labour 24.3% 30 seats • Greens 12.8% 16 seats 3% • LABOUR+GREENS 46 seats 0% • [Mana-Internet 1.6% 2 seats] 2/7 4/7 6/7 8/7 1/8 3/8 5/8 7/8 9/8 2/9 4/9 6/9 8/9 11/8 11/8 22/6 24/6 26/6 28/6 30/6 10/7 12/7 14/7 16/7 18/7 20/7 22/7 24/7 26/7 28/7 30/7 13/8 15/8 17/8 19/8 21/8 23/8 25/8 27/8 29/8 31/8 [* The Maori party is assigned two seats, with one an “overhang”] 2 HUGOvision September 16 2014 THE ELECTION National in a third term: some • a proactive approach to oil and minerals development and to irrigation to boost agriculture strategic ambitions and horticulture, both subject to support party The “triangle” of John Key as presenter, Bill English constraints and to the strategic reworking of as strategic thinker and policy developer and Steven natural resources policy (see below); Joyce as project manager will still be in place in a • education reform, now focused on third term if re-elected – and will in effect apply even professionalisation of teachers (see below); if Winston Peters is a senior minister. Key has said he will serve out the whole of a third term if re-elected • public service reform with much more emphasis and that is believable (but not 100% certain). English on cross-portfolio cooperation, based on “sectors”, has gone on the list, which is usually a signal of each with a lead agency and lead minister; impending retirement. If he is intending this to be his • welfare reform based on an “investment” approach, last term, there is a question over who would deliver arguably the government’s most important the 2017 budget. Steven Joyce is unchallengeable innovation, moving past mere “spending” (see also as leader if Key goes and he wants the job. Note below); that Key told his biographer, John Roughan, that he • restructuring of government science and research would contemplate a fourth term as Prime Minister, programmes and an aim to boost government although that was before the tarnishing effect of the investment to 0.8% of GDP; and Dirty Politics saga.
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