New Zealand’s Ruling Labour Party Launches Bid For Third Term

New Zealand’s ruling Labour Party launched its campaign for a third term, promising more cost-of-living relief if it prevails in the October election and attacking opposition policies as “cruel.”

(Bloomberg) — New Zealand’s ruling Labour Party launched its campaign for a third term, promising more cost-of-living relief if it prevails in the October election and attacking opposition policies as “cruel.”

Speaking to party faithful Saturday in Auckland, Prime Minister Chris Hipkins said Labour would expand free dental care to everyone under the age of 30 if re-elected. He urged voters not to be seduced by the opposition’s offer of tax cuts, saying they would result in big reductions to public services.

“There’s a multi-billion-dollar hole in their tax swindle,” he said. “Where is that money going to come from? Massive cuts to public services, and to the types of support that so many Kiwi families rely on.”

Labour is trailing the main opposition National Party in opinion polls and has just six weeks to win back support before the Oct. 14 vote. The campaign pits Hipkins, a seasoned politician with a down-to-earth demeanor, against National leader Christopher Luxon, a former high-flying businessman who entered parliament less than three years ago.

Neither has the charisma or star-power of Jacinda Ardern, who unexpectedly resigned as prime minister in January and was replaced by Hipkins.

The election takes place against the backdrop of a cost-of-living crisis and a weak economy, with both main parties claiming they are best placed to manage the recovery.

While off its peak, inflation is still running at 6% and mortgage rates have soared after the central bank raised interest rates rapidly to defuse price pressures. The economy entered a mild recession at the end of last year and is forecast to succumb to another one this year as households reduce spending.

‘Growing Again’

Hipkins said the economy “is turning the corner,” with inflation coming down, unemployment of 3.6% close to record lows, and wages rising. 

“After a tough start to the year with cyclones and flooding, there are signs our economy is growing again,” he said.

National, whose campaign slogan is “Get our country back on track,” has pledged tax cuts that target families and middle-income households at a cost of NZ$14.6 billion ($8.7 billion). 

The package would be partly funded by allowing foreigners to buy houses worth more than NZ$2 million and applying a 15% tax on those purchases, partially repealing Labour’s foreign buyer ban.

Hipkins, with his slogan “In It For You,” claims National won’t raise the revenue it expects from house sales to foreigners and will fund the shortfall with deeper cuts to benefits and public services. 

“More kids in poverty should not be how you fund tax cuts,” he said. “It’s cruel, and we are going to do everything we can in the next six weeks to stop that from happening.”

Labour is offering a package that comprises increased benefits for low-income families and the removal of the 15% Goods and Services Tax from fruit and vegetables at a cost of NZ$3.6 billion. 

On Saturday, Hipkins said Labour would also extend free basic dental care to those under 30 by mid-2026 at a cost of NZ$390 million. Currently, free dental care is available to children and young people until they turn 18. 

National launches its campaign tomorrow. Both parties are expected to unveil more policy after the Treasury’s Pre-election Economic and Fiscal Update on Sept. 12, which is likely to show a worsening fiscal outlook.

Electoral System

Under New Zealand’s system of proportional representation, left-leaning Labour or right-leaning National usually form a coalition government with the support of a smaller partner. 

Labour would turn to the Green Party and probably the tiny Maori Party to achieve a majority in the 120-seat parliament, while National would rely on the libertarian ACT Party and potentially the New Zealand First Party if it manages to return from the political wilderness.

At the last election in 2020, Ardern led Labour to the first outright majority since the current system was introduced in 1996, and Labour’s best result in more than 70 years. Since then, support for the party has slumped from 50% on election night three years ago to 29% in the latest 1 News/Verian poll. National’s support has climbed from 26% to 37%.

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