The strange logic of the 2026 election

Sunday, 18 January 2026

Vernon Small is a former political journalist and former Labour government adviser

OPINION: Is there something weird going on with this year’s election?

At their most basic, election campaigns are fundamentally about two competing narratives.

It’s time for a change, or don’t put it all at risk.

It’s rare for a change message to bed-in after a single term, especially with conservative management-focused administrations.

Trust, leadership or major crises can play their part in any election. But domestic issues trump foreign policy every time.

Axiomatically, the most important factor in weighing change against risk is the state of the economy - and its subsets, unemployment and the cost of living.

On many of these usual yardsticks, the 2026 election is shaping up as a paradox.

Despite its resurgence in the polls, Labour has not yet drilled home the “time for a change” theme.

By the same token, National has clearly failed so far to convince voters that it has made sufficient headway - either in getting the country “back on track”, or achieving “growth, growth, growth” - to make a switch too risky.

So for the first time in the 77 years since National first took office, a one-term National (or National-led) government is a real possibility.

You can’t really blame this on the current government’s lust for reform over steady-as-you-go managerialism. In most cases its extensive change programme is either about turning back the previous government’s programme or turning back the clock on things like social reform, race relations or climate change.

Only in areas such as planning reform are they moving forward, albeit after taking a back-step first by reinstating the Resource Management Act. And even here, Chris Bishop’s brave (but politically fraught) stance on flooding the housing market and driving down house prices is under extreme pressure from Auckland suburbs and from within the Government.

On leadership, Christopher Luxon is clearly not inspiring, or convincing voters that he is even heading in the direction of the track. The disappointment gap is wide.

Neither is there anything particularly new or charismatic about Chris Hipkins that wasn’t evident when he was turfed out in 2023.

To add to the anomalies, international policy is not shaping up to be as anodyne an issue as it usually is, come election time.

For the first time in decades - perhaps since the 1981 Springbok Tour and the nuclear-free debate later that decade - international affairs could have a big influence.

The Trump administration’s position, be it towards Ukraine, NATO, Russia, Greenland, Venezuela, international institutions, the rules-based order or on tariffs, is everywhere the major global issue.

It is not something that can be relegated to election-campaign wallpaper in Aotearoa.

Despite Kiwi politicians’ instinct to keep their heads below the ferns, when it comes to confronting the US, our parties will be under pressure to take a stance on the sorts of issues US voters are considering, as well as on our attitude towards the US, its stances and the alternative views inside America.

That will be exacerbated by a coincidence of timing.

The mid-term elections in the US are set down for the first week in November.

We will know in the next month or so when Luxon intends to hold our election, but indications are it will be either a few days before or a few days after the important November 3 US mid-terms.

They will engender a huge amount of international focus because they could determine if the Trump regime will be reined in by one or two hostile branches of government - either the Senate or the House of Representatives, or possibly both - going the Democrats’ way.

And that’s the rundown of issues for 2026 before we even get to the economy.

The Government will be hoping that Treasury’s relatively bullish assessment of the impact of Trump’s tariff policy are borne out, but the longer-term effects are still uncertain.

World share markets have had a good run, especially those in the US, but the amount of borrowing to sustain that has been high and opinions are divided on whether the AI boom is a bust in the making.

At the very least, the risk of a major share market correction would throw a spanner in to the election year machine, though that may work for the incumbent.

There is a growing sense of muted optimism among consumers and businesses that might help - supported by the usual Clayton’s growth engine - immigration. But the retail and hospitality sectors are still under the cosh.

The baked-in effects of high inflation from the likes of local body rates, insurance, levies and subsidy withdrawals will make it harder for the Government to sell its message that it is heading the country in the right direction.

Another year of high energy costs will not help, although increases in train are mostly driven by transmission costs. Hydro storage levels are good and the gas shortage has eased somewhat so the Government may avoid another round of provincial industry closures that were so bad for confidence in 2025.

There is still some stimulus to flow through from lower mortgage costs although cuts are at or nearing an end, as is the inflation cycle. Official forecasts show a small but gradual improvement in unemployment - but not a lot before the election - and a sluggish but improving growth outlook.

It all adds up to a mixed picture on the cost of living and the economy for the Government.

The Opposition has been sharpening its message that this government promised to make things better but has made things worse.

The polls and opinion surveys suggest the public has bought that message to some extent, with Labour ahead of National as the party best trusted to address the issue.

Whether in the heat of the campaign, the public will put aside Labour’s outgoing record and accept an argument that amounts to “yes it was bad under us, but they made it worse” is a moot point.

But when voters rate Labour consistently ahead of National, just two years after giving them a drubbing, it is shaping as one of the weirdest election campaigns for years.