RICHARD PREBBLE: Election 2026 a toss-up as Luxon India deal, AI revolution reshape economy

I asked ChatGPT to assess my 17 predictions for 2025.

Two were wrong.

I said the Ukraine War would end and that the US Constitution would constrain US President Donald Trump.

ChatGPT judged eight predictions, such as my calls that the economy would recover and that the next election would be a toss-up, to be unresolved.

With those consumer warnings, I predict that it is over for Te Pāti Māori. One or more of their MPs, perhaps flying new flags, may survive.

The Greens will be returned and should hold all three of their electorate seats.

Labour holds just 17 of the country’s 72 electorate seats. (They hold a further 17 list seats.) Its pipeline from student politics to working in Parliament to member of Parliament produces politicians whose expertise is politics. Labour’s professional politicians will campaign well, but producing practical solutions requires wider experience. Expect slogans rather than workable policy.

Chris Hipkins will win the leaders’ debates but debates rarely decide elections.

Policies such as a capital gains tax attract votes from the Greens and Te Pāti Māori, but elections are won in the centre.

Governments must run on their record.

National holds the finance portfolio and therefore carries responsibility for a slow recovery.

Lower interest rates and stable rents will ease cost-of-living pressures.

Unlike the past, when growth relied on immigration and house prices, economic growth in 2026 will be export-led.

Prime Minister Christopher Luxon spent political capital in pursuit of what commentators dismissed as an implausible goal – a free-trade agreement with India.

Former Prime Minister Jacinda Ardern was far more internationally famous, but her signature initiative, the “Christchurch Call” was symbolic and produced no measurable change.

A free-trade agreement with the world’s most populous nation, soon to be the third-largest economy, will be a genuine game-changer.

Luxon’s plan to double exports, also dismissed as implausible, is still challenging but now achievable.

I have visited India. Its dynamism is unmistakable.

When New Zealand negotiated an agreement to support China’s admission to the World Trade Organisation no one predicted that would lead to China becoming our largest trading partner.

Forecasts of future trade with India are far too conservative.

Trade follows air links. Direct flights to India, not scheduled until 2028, should be brought forward to capture the trade and tourism opportunities.

Luxon has also held the coalition together.

Luxon’s achievements will lead to a re-evaluation of his Prime Ministership.

Although being in coalition under MMP typically disadvantages minor parties, both Act and New Zealand First will easily be re-elected.

I stand by my prediction that the election is a toss-up. If the economy improves, as I expect, the coalition will be re-elected – with one proviso.

Without questioning the acuity of either leader, there are good reasons why travel insurance premiums dramatically increase with age. Having leaders who will be 80 years old is a risk for both New Zealand First and US Republicans.

I predict 2026 will be a difficult year for President Trump. I am no expert on American law, but I expect the Supreme Court to rule that only Congress can set tariffs.

While there are legal ways to reimpose tariffs, a ruling that the Trump tariffs are unlawful would be a severe blow.

Trump claims his tariffs target China. In 2026 it will be obvious that China, through its control of rare earths, has won the trade war. Trump has weakened America and its allies and strengthened China.

Despite the economic lunacy of tariffs, the US economy has proved resilient. What commentators miss, and cannot easily measure, is the liberating effect of deregulation.

Technologies such as small-scale nuclear and deep geothermal energy that have been held back by red tape will make remarkable progress.

It never pays to bet against America.

Commentators predict a toss-up for control of the House and continued Republican dominance of the Senate. The impact of electoral swings is frequently underestimated.

The Democratic Party will win the House and have victories in supposedly safe Republican Senate seats.

Trump will end 2026 a lame-duck president in serious difficulty.

Europe has regulated itself into stagnation. The continent needs the Ukraine War to end.

Having suffered around 1.118 million dead or wounded, the Black Sea fleet humiliated, Sweden and Finland joining Nato, it is Putin who is afraid to stop the war.

Dictators always look strong until they suddenly fall. Democracies look messy, but elections allow change.

More in hope, I think the Ukraine War will end.

The Middle East is beyond my pay grade.

Artificial intelligence represents the biggest change since the Industrial Revolution.

MPs used to ask around 14,000 written questions a year: now using AI, it’s nearly 30,000. Each question can absorb hours, sometimes days, of officials’ time.

To respond to AI the Government must adopt AI.

The biggest change in 2026 is the AI revolution that will accelerate.

The Honourable Richard Prebble CBE is a former member of the New Zealand Parliament. Initially a member of the Labour Party, he joined the newly formed ACT New Zealand party under Roger Douglas in 1996, becoming its leader from 1996 to 2004.