But in doing so, we raised expectations about what a centre-right government could do to help. Three years on, while interest rates and rents are lower, the general price level is 9% higher and, understandably, voters are still angry. <\/p>\n
The economy is also not delivering stronger growth, but this isn\u2019t the coalition\u2019s fault. While governments can wreck an economy in three years, they don\u2019t and can\u2019t immediately return it to health over a parliamentary term \u2013 they can only lay the foundations for longer-term success. And international factors, such as the Iran war and Trump\u2019s tariffs, haven\u2019t helped. <\/p>\n
Rightly or wrongly, the coalition now owns the cost of living crisis politically, in the sense that voters believe the state of the economy and the cost of living are primarily the fault of the people currently in the Beehive. And, rightly or wrongly, voters are punishing them for it. The left is now riding the wave of voter angst that swept them out. <\/p>\n
But Labour needs to be careful. Because as much as politicians are talking about getting the cost of living under control, there are no short-term fixes to bring prices down. <\/p>\n
The Reserve Bank can limit future price rises, but Covid-19 inflation \u2013 about 30% since the start of the pandemic \u2013 is now baked in. Barring a deep recession, yesterday\u2019s prices are gone. <\/p>\n
The prices of certain goods and services can fall over a longer period of time with the right policies in place \u2013 an important qualifier \u2013 but not over a term of Parliament. <\/p>\n
Global oil prices might ease, but there is nothing the New Zealand Government can do about that. The effectiveness of plans to bring down the cost of groceries is highly uncertain. Bringing down the cost of housing is a long-term project. <\/p>\n
Governments can introduce bans, regulations and subsidies, but there\u2019s no free lunch. Costs don\u2019t disappear; they are simply transferred as governments raise taxes, and businesses recoup them elsewhere. <\/p>\n
In short, it\u2019s the number one concern for voters, and the next government will be able to do little about it, at least over the next three years. <\/p>\n
The other side of the cost-of-living crisis equation \u2013 wages \u2013 is under-discussed. Real wages have been flat for about five years, so the average worker isn\u2019t any better off than they were in 2021. Productivity drives wages and that has been weak for many years. Political parties regularly talk about productivity but aren\u2019t likely to produce policy that will improve it. <\/p>\n
It\u2019s little surprise then that Chris Hipkins and Labour have been slightly more measured about what the cost of living would look like under a left-wing government. It has attacked the coalition\u2019s record effectively, but it hasn\u2019t made sweeping promises. <\/p>\n
While some of its policies \u2013 like three free GP visits a year and a three-year freeze on fuel excise tax increases \u2013 are unwise and will have unintended consequences, much of its offering on the cost of living is specific and measured, or simply commits to no more than stronger competition, pricing transparency or longer-term price reductions. In short, Labour seems to have learned a lesson from the coalition\u2019s experience. But its claims are still likely to clash unfavourably with reality if it takes office. <\/p>\n
On the other hand, the economy might start to bounce back to healthy growth over the next three years, but if it does, it\u2019s unlikely to have anything to do with Labour\u2019s economic plan. <\/p>\n
There\u2019s a graph that does the rounds on social media from time to time. It shows how the cost of various goods and services have tracked in the United States since 2000. <\/p>\n
The cost of healthcare, education and housing are all up significantly. The price of cars, clothing, consumer appliances and software are all either flat or falling. The former are all either directly provided by or heavily regulated by government, and the latter are dominated by private enterprise. <\/p>\n
The lesson you might take from this is that governments and politicians need to get out of the way and leave the market to provide goods and services as far as possible while providing direct financial support through the welfare system to New Zealanders who genuinely can\u2019t afford the basics. <\/p>\n
But politicians have a genetic predisposition requiring them to be involved in micromanaging the economic affairs of the nation \u2013 even centre-right politicians claim to want to \u201cmanage the economy\u201d \u2013 and most voters want them to do so. Until that changes, we\u2019re going to be stuck paying more for everything than we need to. <\/p>\n
Andrew Ketels was the Act Party\u2019s chief of staff from 2020 to 2025 and has worked as an adviser to the National Party. He is now head of government relations for corporate affairs firm Sherson Willis.<\/p>\n