National makes economic pitch after Trump tariffs setback
If the 10-minute cost of living sermon delivered by Prime Minister Christopher Luxon and Finance Minister Nicola Willis on Monday left any doubts about where National sees its re-election hopes living (or dying), they were dispelled at the party's annual conference on Saturday.
With just four hours open to the media, a full hour was set aside for a not-so-pithily titled session on 'growing the economy to reduce the cost of living for all New Zealanders' – the same time allocated to health, education, law and order, and rural issues combined.
Two of Luxon's more reliable performers, Willis and Infrastructure Minister Chris Bishop, led the session alongside Tourism Minister Louise Upston in a further sign of the importance placed by the party on assuring members and the wider public they, rather than Labour, are best placed to look after the bottom line.
It was a message hammered by Luxon during his own address to the party faithful in Christchurch, saying the fiscal conditions the coalition had inherited from the last Labour government were 'the worst in a generation'.
'The national debt had tripled, inflation hit a thirty-year high, homeowners were crushed by a surge in interest rates, and critical growth industries like agriculture and energy were under constant siege.'
While the Government had made progress, many New Zealanders were still struggling to keep up with the cost of living, the Prime Minister conceded.
The solution, at least in part? According to Luxon, 'we have to say yes to letting it happen'.
'We can't afford to leave any stone unturned, shut down whole sectors, or just sit around and hope that conditions will improve.'
That was the argument behind the policy centrepiece of his speech – a loosening of the rules around granting permits (or concessions, as they are formally known) for commercial activities on Department of Conservation land, while also introducing a charge for foreign tourists at four locations where they made up more than 80 percent of all visitors: Cathedral Cove, Tongariro Crossing, Milford Sound, and Mount Cook.
Exactly how the latter element will be put into practice remains somewhat uncertain: 'We have to organise and sort out how that's going to work, but there are ways and means to do that,' Conservation Minister Tama Potaka told journalists, with the four chosen sites functioning as a trial before any wider rollout.
Senior ministers Nicola Willis and Chris Bishop led National's defence on its handling of the economy. Photo: Sam Sachdeva
The changes to concessions on conservation land attracted criticism from Forest and Bird, which claimed they would 'make it easier to sell off or commercially exploit these areas'.
That is an argument unlikely to win favour with the current coalition, as demonstrated by Bishop channelling his inner Shane Jones as he promised the Government's resource management reforms would make it easier to build new wind farms (among other projects).
'We've got the best wind in the world, and we spent years arguing about how we could build wind farms that don't result in the death of just one bird or one lizard, one snail.'
It is clear he views the replacement of the much maligned Resource Management Act as a legacy-defining moment for himself and the coalition, emphasising the billions of dollars in compliance costs in the coming decades that could be eradicated with successful reforms.
'That's why I don't get a lot of sleep. That's what keeps me up at night, worrying about it, because we have got to get it right.'
As David Parker found, however, such lofty ambitions can swiftly be undone by a political successor, and National will need to find a faster economic fix if it is to be in government long enough for any RMA reforms to bear fruit.
One such 'quick win' – the decision to ban surcharges on in-store card payments – has not proved universally popular, with one delegate questioning National's claim to be the party of small business.
'Under [Sir John] Key, we got Mondayisation [of public holidays]. Under Cindy [Dame Jacinda Ardern], we got Matariki, more recently, an extra percent in KiwiSaver, sick days gone from five to 10 days, and now you're looking at getting rid of merchant fees.
'Now the interchange fee is only part of it, so I think we need to reassess that.'
Another party member, who worked with small businesses run by migrants and refugees, said many were struggling to pay wages, rent and other costs in the current environment.
In return, Willis offered sympathy – 'man oh man, it has been a tough time to be a small business in New Zealand' – but also indicated there was little room for new state support.
'We know where growth and prosperity comes from, and it doesn't actually come from the Government saying, 'I'll write you a cheque. It comes from the Government saying, 'I'll get out of the way and I'll make sure that business people can go and invest and do things and make things and hire people'.'
An economic boost could be around the corner, she suggested, with more households due to move onto lower interest rates for their mortgages and free up money to pump back into the economy.
That is certainly possible, but there is one rather large complicating factor: the impact of United States President Donald Trump's tariffs. While the Reserve Bank has indicated the tariffs are unlikely to have an inflationary impact on the New Zealand economy, it has also noted household spending and business investment are both significantly hampered by economic uncertainty such as that attached to the Trump tariffs.
Friday's unpleasant surprise that New Zealand exports would face a 15 percent tariff into the US, rather than the 10 percent announced back in April, has led the Government to take a slightly more assertive approach to what Luxon labelled a 'rather late decision' from the Trump administration.
Trade and Investment Minister Todd McClay told the audience he had spoken to US Trade Representative Jamieson Greer on Saturday morning, and was dispatching his 'top trade diplomat' – Vangelis Vitalis – to Washington DC next week for talks.
It seems difficult to see Greer or Trump making an exception for New Zealand, however, given 15 percent is the new 'floor' for any country that does not buy more from the US than it sends in the other direction.
As Luxon noted, every other country is dealing with the same challenging environment and must forge ahead regardless; any self-pity would risk being seen as hypocrisy, anyway, given he and his ministers have hardly offered Labour any credit for the impact of the Covid-19 pandemic on its economic performance in government.
'We can navigate some pretty choppy seas to get to the destination we want to get to, but for that to happen, you've got to have the right people with the hands on the tiller, which is us,' the Prime Minister said.
Luxon was at pains to emphasise the coalition was only halfway into its term, with 'a lot of work to do as a government' – but next year's election is creeping ever closer, and he will need some luck to come his way if the economy is to be a trump card rather than a Trump-addled drag on National's vote in 2026.
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