A new Prime Minister, a revitalised Cabinet, and possibly revised priorities – but is the political and, importantly, economic landscape much different?
Certainly some within the news media were excited by the changes which Chris Hipkins announced yesterday or – before the announcement – by the prospect of changes in Cabinet personnel and priorities.
The NZ Herald, for example, headlined a report: “Chris Hipkins’ and Labour’s popularity soars in new polls”.
Readers of the text of that article would have found that while Labour had bounced up five or so points, Labour plus the Greens were still trailing National and ACT.
The following day, the same newspaper over another report had the headline “Snap election: Is it Hipkins’ wisest option?”
But with inflation running at 7.2%, and showing little sign yet of slowing down, it makes little political sense to fight an election on cost-of-living issues.
Meanwhile Luke Malpass, Stuff’s Political Editor, was telling his readers:
“The first Chris Hipkins cabinet is a game of two halves. The top team – Hipkins
kitchen cabinet – is basically made up of the same familiar faces we have seen
in the Government for years, sans Jacinda Ardern.
“The top five are Chris Hipkins, Grant Robertson, Carmel Sepuloni, Kelvin Davis and Megan Woods.
“It is also a story of new faces and a revamped outer ministry – some in areas that will get significant air time over the coming months.
“The biggest bolters into ministry positions are, like Hipkins, Wellington-based. MP for Mana Barbara Edmonds comes in as Minister for Internal Affairs and Minister for Pacific Peoples, while Ginny Andersen MP for Hutt will get Minister for the Digital Economy and Communications, as well as Minister for Seniors, and Minister for Small Business”.
Columnist Simon Wilson in the NZ Herald writes that progressive tax reform would be the most “bread-and-butter” thing Hipkins could do. Wilson suggests the new PM could announce he will lower tax on middle and low-income earners, paid for by higher taxes on the wealthy.
Other ideas from Wilson include promises of free dental care and “a lot more” affordable homes.
The last, though, might only remind voters of the Ardern government’s most abject failure.
While the political pundits are excited by Hipkins and his Cabinet changes, the hard political truth is the Reserve Bank will almost certainly be raising the Official Cash Rate again later this month as it seeks to squeeze inflation out of the system. This means the economy could fall into recession which, even if it is relatively short in duration, nevertheless will be painful.
As Richard Prebble argues, the reason governments should never let inflation get to 7.2% is because there is no painless way to reduce entrenched inflation…
“There is nothing Hipkins can do about the ‘poverty effect’ (from falling house
prices). Those with mortgages will have a double-whammy: higher mortgage
costs and a house that has lost value.”
So, New Zealanders awaiting the results of Hipkins’ focus on bread-and-butter issues for relief from the economic pain of high inflation will have to be extremely patient.
The excitement of recent political changes may soon dissipate.
One thought on “Much excitement as Hipkins gets down to business – but can he defeat inflation with his devotion to “bread-and-butter” issues?”
Sorry to report, no excitement here until Hipkins pulls 3 Waters in its entirety, along with the insidious hate speech bill and the deeply racist replacement legislation for the RMA. Methinks he speaks with forked tongue.
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