A by-election, a conference and a cost-of-living reset

Saturday, 6 September 2025

Luke Malpass is politics, business and economics editor.

OPINION: The by-election this weekend had nothing to do with the Government but a lot to do with the two parties running: Labour and Te Pāti Māori.

While Labour had framed it as being not a race against Te Pāti Māori, but a campaign against the Government, it was not really.

Were this a general electorate it might be a better indicator of where the party is at. Even then, by-elections are notoriously unreliable predictors of basically anything. Sometimes they are fought on local issues, sometimes national ones.

Without the focusing heat of a general election, by-elections are usually a race of one or two candidates against a much stronger force: apathy.

Māori electorates are localised, the voter turnout is low and they are very unpredictable.

Nevertheless it will be an indicator of where Labour is at in trying to regain the Māori seats.

In the historic landslide that was Labour’s election in 2020, the party would have given anything to have lost one of the many electorates it won - such as the blue ribbon Ilam - in order to win all the Māori seats and prevent a return to Parliament for Te Pāti Māori.

The reason, aside from the obvious that winning more is better, is that Te Pāti Māori makes Māori politics more difficult to navigate for Labour. It needs to win middle New Zealand in order to take votes from National while also calibrating a campaign appealing to mostly younger voters in Māori seats. Not easy.

So this by-election will be a good tester for Labour and the extent to which it has updated some of its campaign and tested out different economic messages.

Labour candidate Peeni Henare made much of the fact, in an interview with the Sunday Star-Times some time ago, that there needed to be more action and less haka - and hit back at what he says Te Pāti Māori encourages, which is “having to justify whether or not you're Māori or you're Māori enough”.

Instead, Labour will be hewing back to jobs, opportunity and aspiration. For Henare, a strong result will put some wind beneath his sails and claims for a more senior position heading into the 2026 election. Labour will also be looking for ways to try and reclaim more of the Māori electorates in the general election next year, so the by-election is potentially a good proving ground for that.

The by-election will have no effect on the Government, as witnessed by the fact that National didn’t bother to commit the time or the expense of fielding a candidate to take a shellacking.

It has been a tough few weeks for National, which continues to hover around 32% to 34% in the polls, while the coalition’s polling remains neck and neck with the centre-left bloc.

Within National there is a recognition of this, in particular what has been its approach to the cost of living.

Up until recently the strategy appears to have been to tie everything to cutting the cost of living. That was a strategic mistake. Given three years of high inflation, voters are most likely going to feel cheated by the high cost of living for years to come.

There is nothing that the Government can do about it, and sentiment will almost certainly lag the data, even when the economic data begins to turn in a meaningful way.

The other problem with just going on about the cost of living all the time is that it risks becoming an end in itself. Making the cost of living cheaper is good because it makes people’s lives easier, enabling them to pursue the things they want to.

Cheaper mince and butter might be very important, but it isn’t what is going to really get voters going in the absence of a fuller narrative about where New Zealand is going.

The only thing that the Government - and Luxon in particular - can then do is not to remind people about it day in and day out. As a result the communications and messaging is now understood to be focusing more on growth and economic opportunity than how much stuff costs.

To this end it looks pretty likely that there will be some sort of move in the major event space in the coming week or so. This could involve government policy settings or incentives in order to attract big events to New Zealand and to get a regular pipeline of them coming down. Think concerts, races and the like.

The Government remains convinced that its basic economic plan remains sound, but within its ranks, the competent parts of the coalition are less convinced about how the politics around it all has been managed.

There remains a basic belief that once things start to improve they will improve quite quickly and then it will be off to the races.

That, however, seems unlikely. While the economy may well pick up in the next couple of quarters (but equally, given the globally uncertain times in which we live, may not) it looks more to be at the long slow grind end of things. Especially the kitchen table economics.

The favoured method of wealth accumulation for decades - investment in the housing market - may well have run its course. Bricks and mortar will remain popular (in the Anglo-settler societies they do seem somewhat impervious to market conditions) but the whole thing relies on healthy capital gains.

Without capital gains well in excess of inflation, taking out long-run mortgages in low-yield rental properties is a recipe for simply losing money over a working lifetime, not building wealth. In fact, the Government’s policies are designed to make that sort if investment less attractive by making housing more affordable.

The fact that house prices around the country have taken a serious hit and don’t look like bouncing back any time soon will weigh on recovery and so will the past three years of inflation and the sharp rise in interest rates for anyone with a mortgage.

This period will have scarred a generation of borrowers who will likely have a more conservative approach to debt and saving than in the previous couple of decades.

Those are not bad things but they will weigh on recovery.

In the meantime the Tāmaki Makaurau by-election was held the same weekend as the NZ First annual conference. NZ First appears to be the recipient of cross National Party voters and on its way to getting around 10% at the next election.

Winston Peters has been striking a chord which should see the party in the position to build on its success, rather than scrapping for survival leading into the next election.

Wherever the economy ends up by about the middle of next year and who is to thank or blame for it, will be what the next year of politics is about.