It is precisely this brand of arrogance that has come to define the National-led Coalition of Chaos, and New Zealanders are now paying a very heavy price for it.
Let us begin with the Minister of Finance. Nicola Willis holds a degree in English literature and a postgraduate diploma in journalism, credentials that would serve her admirably as a book reviewer or a parliamentary press gallery correspondent, but which represent a curious qualification for the stewardship of a $400 billion economy.
One might charitably observe that some of New Zealand's more capable Finance Ministers have also lacked formal economics training. The difference, however, is one of disposition. Where her predecessors such as Bill English listened to advisers, Willis has demonstrated a troubling tendency to do precisely the opposite.
When fifteen or more of the country's leading economists wrote open letters warning that her austerity programme would deepen and prolong the recession: that you cannot, as the PSA put it with admirable clarity, cut your way to prosperity. Willis's response was, in essence, to disagree and move on. The $43 billion in spending cuts she regards as a badge of honour are, in the view of those who actually study these things, a principal reason why New Zealand's economic recovery has been so anaemic, so halting, and so persistently disappointing.
The consequences of this ideological stubbornness are now documented not merely in the arguments of domestic critics, but in the assessments of global financial institutions. Fitch, the international credit ratings agency, has placed New Zealand's AA+ rating on negative outlook, warning that debt reduction is becoming "more difficult to envisage" as fiscal consolidation has been repeatedly delayed.
General government gross debt is now forecast to rise to 56% of GDP by June 2027, a figure that sits grotesquely above the 36.1% projection made when New Zealand was last upgraded in September 2022. That the delays have occurred across successive governments does not absolve the current administration; it indicts it, for it was handed a roadmap of warnings and chose to ignore them.
Meanwhile, Reuters has laid bare the structural fragility that underlies the government's cheerful forecasts. For decades, New Zealand has relied upon a rising housing market to engineer economic recoveries. That playbook has now failed.
On Monday, Reuters reported:
New Zealand struggles to regain economic mojo without housing recovery
At the same time, economic growth cooled in the fourth quarter, data showed last week, with construction slumping and consumer spending weak, even before the massive distruptions created by the war. The unemployment rate stands at a decade-high of 5.4%.
...
Government efforts to stoke growth have been lacklustre, even with an election looming on November 7 that is sure to be dominated by voter dissatisfaction over the economy. Prime Minister Christopher Luxon has offered little aimed at reviving the labour market, which is still reeling from waves of public sector layoffs last year.
Even after the Reserve Bank slashed the Official Cash Rate from 5.5% to 2.25%, house prices remain some 20% below their pandemic peak, hollowing out the wealth effect upon which so many households depended. Borrowers are being squeezed, construction projects lie stalled, and a wave of New Zealanders, precisely the professionals and entrepreneurs a genuine growth strategy would seek to retain, have lost hope and are quietly departing for better opportunities in Australia.
Into this fraught domestic picture now falls the additional chaos of Donald Trump's war in the Middle East. Oil price inflation is pushing up borrowing costs globally, potentially forcing the Reserve Bank into a more hawkish stance at precisely the moment the economy can least afford it. New Zealand's substantial dependence on energy imports makes it acutely vulnerable.
Christopher Luxon, a former airline chief executive who has consistently demonstrated that managing a corporate balance sheet is rather different from governing a sovereign nation, appears to have no coherent response to this gathering storm beyond the ritual recitation of talking points about fiscal responsibility, the same fiscal responsibility, one might note, that Fitch has just formally called into question. It's that kind of incompetence that New Zealanders are starting to notice en masse.
Yesterday, The Guardian reported:
New Zealand PM’s ratings dip as fragile economy fails to impress before November election, poll shows
National leader Christopher Luxon drops in preferred PM stakes with rise in people saying country heading in wrong direction
The RNZ-Reid Research poll, released on Monday, also found a growing number of people felt that New Zealand was heading in the wrong direction.
Luxon slid two points to 17.3% in the preferred prime minister stakes – his lowest result across major polls since he became leader in 2023. Labour’s Chris Hipkins also dipped 0.4 points, to 20.7%.
The prime minister’s net favourability – the difference between those who rate his performance as good versus poor – has also dropped from -14 in January to -20.6, his weakest result in the Reid Research series since he became National’s leader in 2021.
Meanwhile, Luxon’s National party has slipped nearly five points behind the main opposition party, Labour. If an election were held today, the parliamentary left and rights blocs would face a hung parliament.
The cruellest irony of this government's tenure is that its most zealous cuts have fallen upon the very investments in science, in public services, in wages, and in housing infrastructure, that might have produced the growth it so loudly claims to want.
While minimum wage workers have absorbed a third consecutive real-terms pay cut, and while $12 billion was stripped from pay equity settlements affecting predominantly female workers, landlords have had their interest deductibility restored and tobacco companies have breathed a sigh of relief to the tune of $3.2 billion dollars.
New Zealand deserves better than a Finance Minister with an English literature degree who dismisses the warnings of fifteen economists, led by a Prime Minister who cannot read a room and remains fluent only in the corporate double-speak. Reuters did not mince words: Luxon has offered little aimed at reviving a labour market still reeling from the waves of public sector layoffs his own government inflicted. The Coalition of Chaos has not merely failed to provide a growth strategy. It has actively dismantled the conditions under which one might have been possible.
