Has Christopher Luxon caught the incumbency curse?

Tuesday, 30 April 2024

ANALYSIS: The last few years have been a terrible time for serving governments the world over.

Ever since inflation started to pick up in late 2021, voters have punished those in power – whether they are of left or right. In New Zealand, National started to consistently outpoll Labour at around this point. In the United Kingdom, Labour started to outpoll the governing Conservatives. Joe Biden’s approval rating tanked.

This incumbency curse has coincided with several elections with huge changes in power. In 2022, governments changed in Australia, Italy, and South Korea. And in 2023 New Zealand dumped Labour.

Now just six months into governing Christopher Luxon seems to have caught something of the incumbency curse himself.

Monday’s 1 News/Verian Poll, which showed National out of power, should not be over-read. It is just one poll, and as National pollster David Farrar pointed out on Twitter/X, other long-run Governments have been outpolled by the opposition early on before – including Labour in 1999 and 2018. A lot would change if NZ First were above the threshold, which is a result within the margin of error.

But the wider bad vibe is not contained in that single poll. Roy Morgan’s March survey found for the first time since the change of Government more Kiwis thought the country was on the “wrong track” (54%) than the “right track” (35%). Consumer confidence has also fallen significantly and the 1 News poll contained a drop in good feeling about the economy.

These figures may not so cleanly translate into how someone votes, but they are the ones that should be keeping Beehive strategists up at night. They are a leading indicator of how people who might not be particularly engaged in party politics feel about the direction of the country.

It’s unsurprising that New Zealanders are not feeling good about the economy. Inflation is persistent and the country is in a second shallow recession. Rents and interest rates stay high while petrol has crept back towards NZ$3. This last one is crucial – a Labour insider a long time ago told me that the party would never win the 2023 election if petrol was over 3 bucks a litre, and it was in the weeks surrounding that election.

This incumbency curse is not the entire game. The actions of individual governments and MPs still matter, they are not simply bits of flotsam floating on the tide of economic forces outside of their control. If your household finances are in the toilet but every headline you see is about the Government directly addressing that issue, you might cut them some slack. Not so much if a lot of headlines are instead about the Government rolling back smoking laws, delivering tax relief for landlords, fiddling with the status of the Treaty, or indeed failing to deliver light rail in Auckland.

This focus must be coupled with some shifting of the blame. Government MPs are naturally desperate to push all of these economic issues onto Labour, using almost every media spot possible to throw a jab. There is precedent for this working – the UK Tories were able to ride quite a lot of rough economic seas through the early 2010s by blaming the last Labour Government for “spending all the money”. There is still a strong possibility that National manages to pull this off and keep the economic bad vibes quarantined away from the public’s view of them for months to come.

Another related route involves harnessing this negative sentiment and redirecting it towards some other institution. Biden was able to largely turn the US 2022 midterms into a referendum on the Supreme Court’s decision on abortion, rather than his own term in Government. For a few weeks Rishi Sunak, leader of the party in power since 2010 in the UK, tried to paint himself as a change candidate battling down the Westminster consensus.

Sunak has now turned to a “wait and hope” strategy – cutting taxes several times and pushing off the election date for as long as possible to see if the economy turns the corner. This plan won’t work for Sunak – the die is truly cast – but it could for Luxon. New Zealand is still at least two years from another election and the economic vibe could be a lot better by then, especially if the Reserve Bank has seriously cut rates by then.

At that point, the incumbency curse might flip into something of an incumbency bonus. The trick will be getting to that far-off place intact, without the coalition partners panicking over their low ratings and causing trouble for the Government. One bad poll is not going to cause as much disunion or dismay as the Opposition might like. But a string of them could.