DON BRASH: AT THE END OF YEAR TWO, HOW ARE THEY DOING?

With less than a year to go to the next general election, polls suggest that the current Government could well lose to a Labour-led coalition, despite the mess which the last Labour Government left just two years ago.  Is that negativity warranted?

There are all kinds of criteria one might use to assess the Government but in recent years I have consistently used just five.

First, has the Government taken any significant steps to improve our longstanding record of appallingly slow productivity growth, a record which has seen us drift backwards in terms of living standards over many years – not backwards in absolute terms but backwards relative to other countries which we used to compare favourably against. 

Certainly measured in terms of real GDP per capita, we have made minimal progress over the last two years.  Indeed, we may well have gone backwards in absolute terms to a modest extent.  Too many of our citizens have assessed our relative living standards and voted with their feet, heading to Australia or other places.

But in this policy area I give the Government a good mark: in several areas, they have taken decisions which will, in time, have a highly beneficial effect on our productivity growth – they appear on track to make fundamental changes to our planning laws, to the way we deal with building consents, to our policy towards foreign investment and to the way we price road use and deal with traffic congestion.  The changes made in the Education portfolio are already having substantial and positive impact on the ability of our children to read, write and do mathematics – a consequence both of major changes in the curriculum, in the way in which reading and maths are taught, and in the design of many classrooms.

The fact that house prices have stopped rising over the last couple of years may have had a beneficial effect on productivity growth in the longer term also.  There is some evidence that where house prices rise consistently, year after year, productivity suffers.  That’s hardly surprising: why take the risk of building a business, or investing in new technology, when buying a housing portfolio with a great deal of relatively inexpensive bank finance is an almost riskless way of earning a tax-free gain? 

It is a matter of great regret that the Prime Minister is on record, like his predecessor Jacinda Ardern, of wanting house prices to resume their steady growth and yes plenty of voters would be happy with the Government if that were the case.  Fortunately, his Housing Minister seems intent on deflating the housing bubble, and certainly the measures which Mr Bishop has taken over the last couple of years have meant that house prices relative to incomes have declined gradually but quite significantly.   It’s only a few years since the median house price in Auckland was some 11 times the median household income in Auckland.  It’s now under eight times – still too high, and seriously unaffordable by most measures, but a big improvement on what it was just three or four years ago. 

In obliging local councils to make more land available for housing, the Government has dealt with the major single cause of unaffordable housing.  When tiny fragments of land miles from the centre of town cost many hundreds of thousands of dollars, affordable housing is a pipe-dream.  And the Government seems intent on encouraging the financing of residential infrastructure – roads and pipes – to be undertaken through long-term debt, not by loading that cost onto the price of sections.  So I also give the Government high marks in improving the affordability of housing.   Because more families own houses than don’t, there was always going to be a political cost for any Government which began to deflate the housing bubble: this Government is well on its way to that goal, and is suffering in the polls as a consequence.  But the policy changes are much needed.

In a third important policy area – the area of treating all New Zealanders equally, regardless of race – I give the Government a 50% mark. 

On the one hand, they have amended the Marine and Coastal Area to reflect Parliament’s original intention in 2011 (to make successful claims for Customary Marine Title dependent on claimants establishing that they have had continuous and exclusive use of the relevant piece of coastline since 1840); they have removed Section 127 from the Education and Training Act (which had required schools to “give priority to” the Treaty, te ao Maori, matauranga Maori and so on); they have refused to resolve Treaty grievances with tribes which refuse to acknowledge that the Treaty made the Crown sovereign; and they required all local councils which had introduced Maori wards without a mandate from their ratepayers to have a referendum as to whether those Maori wards should continue.

On the other hand, they refused to pass ACT’s attempt to define what the Treaty means in 2025, the Treaty Principles Bill; they have not yet honoured their commitment to New Zealand First to remove references to “the principles of the Treaty” from legislation; they made no attempt to campaign against Maori wards in the referenda, with the result that in 18 cities and districts Maori wards remain in existence; and they have certainly made no attempt to scrap separate Maori electorates, despite commitments made by Bill English, John Key and me when we were National Party leaders and the total absurdity of having such racially-based representation when 35% of the current Cabinet are Maori, none of whom were elected in Maori electorates.  (It is almost 40 years since the Royal Commission on the Electoral System recommended that Maori electorates be scrapped if MMP were adopted as our electoral system, as it was, almost 30 years ago.)

So a less than overwhelming achievement in this policy area, particularly where all three parties in the Coalition Government claim to believe in equal citizenship.

In the fourth area of great policy importance to me – and, whether they know it or not, to all New Zealanders – the long-term outlook for government debt is extremely serious, and the Government has taken no effective steps to deal with that situation.  Yes, “doing a Ruth Richardson” to government spending in the Government’s first Budget would have been politically difficult, and perhaps raising the age at which New Zealanders become eligible for New Zealand Superannuation would have been literally impossible given Mr Peters’ strong opposition to any such change.

But no serious observer believes that our present fiscal track is sustainable, given the fiscal consequences of our gradually ageing population.  It’s sobering to reflect that a National Government raised the age of eligibility for New Zealand Super from 60 to 65 over just 10 years in the ‘nineties, with scarcely any public opposition.  (Perhaps people were preoccupied at the time by National breaking its promise to scrap the Labour Government’s surcharge on superannuation.)  The age of eligibility clearly needs to rise, or we need to find some other policy to deal with the rapidly escalating cost of the scheme as it currently stands.  In this area, so far at least the Government has failed, and mandating higher contributions to KiwiSaver, as the Prime Minister proposes if National is elected for another term, won’t fix the fiscal problem unless he envisages scaling back New Zealand Super for those who have enough savings of their own.

And finally, foreign policy.   Tragically, this is another policy area where the Government is totally failing.  A few years ago, we could genuinely claim to have had some measure of independence in our foreign policy.  Though long one of the Five Eyes countries, this was an intelligence-sharing group, involving no formal obligation to go to war with anybody.  We maintained a cordial relationship with both the US and China, raising issues where we disagreed with both countries when necessary.

The Ardern Government began sidling up to NATO and behaving as if China might one day be an enemy, but this Government has nailed its colours to the US mast, talked openly about the need for “interoperability” with US armed forces, discussed the possibility of joining “AUKUS Pillar II” – a grouping of countries which are explicitly anti-China – and on at least two occasions has sailed a naval vessel through the Taiwan Strait, most recently in early November, knowing that China regards that as a hostile act and despite our having formally acknowledged more than 50 years ago that Taiwan is a part of China.

The reality is that China poses no military threat to New Zealand – or at least, it doesn’t as long as we don’t join any other countries threatening China.  I recommend an interview on TVNZ’s Q+A programme on 30 November between Jack Tame and Sam Roggeveen of Australia’s Lowy Institute.  Dr Roggeveen explained that China is doing what any other Great Power would do – wanting to push another Great Power off its front verandah.  He speculated how the US would react if China had 70,000 troops stationed in Canada, and an aircraft carrier permanently based in Cuba.  He suggested that the US wouldn’t tolerate that for a moment.  And yet we appear intent on quite deliberately supporting America’s intention to stay on China’s front verandah, and to hell with the consequences.

Where does that leave me?  Out of a possible 5, I give the Government 2.5.  But at this stage, I certainly plan to vote for one of the coalition parties because a Labour-led coalition with the Greens and Te Pati Maori would on the face of it score very substantially less – perhaps even a zero.

Don Brash

30 November 2025