New Zealand’s politics has a prosperity problem

Saturday, 20 June 2026

Luke Malpass is associate editor at The Post.

OPINION: If there is any real doubt about why the Government has been struggling — and the National Party in particular — it is because people are squeezed in the present and pessimistic about the future.

During the last election campaign, Prime Minister Christopher Luxon talked a lot about 'the squeezed middle'. But while inflation came off its peaks (and now appears to be edging higher again), the middle has remained squeezed.

In the meantime, the language has shifted from the “squeezed middle” to the much less pithy and painfully focus-grouped phrase “low and middle-income working New Zealanders”.

The latest The Post/Freshwater Strategy Poll with Infrastructure New Zealand provides fresh evidence of why that matters.

The broader right direction/wrong direction numbers are the worst they have been since before this Government was elected. Fifty-seven per cent of people think the country is heading in the wrong direction, while just 27% think it is heading in the right direction.

The number of voters who think the economy will improve over the next 12 months has fallen, while slightly more think it will deteriorate.

According to the poll, only 30% think the economy will improve over that period, down four points since February. Meanwhile, 39% think it will worsen, up one point, while 26% expect it to remain much the same.

Overall, perceptions of household finances are little changed from February. But since the middle of 2025, the number of people who consider their financial circumstances troubled or impacted has risen from 35% to 45%, while the proportion feeling comfortable or confident has fallen from 30% to 23%.

The backdrop to all of this is the combination of Donald Trump's tariffs and the war in Iran.

What will be particularly concerning for the Government is that in June 2025, after the Budget and during the period when Trump's Liberation Day tariffs had smashed confidence, the gap between those feeling comfortable and those feeling troubled was 37% to 30%. The gap is narrower than it was in February, but it still sits at 45% to 23%.

Overall, 58% of people said they were not confident in the Government's economic plan, while 32% said they were. Those numbers are virtually unchanged from February.

The poll also reveals a constant but often hidden financial fragility in middle New Zealand with 19% of people not being able to pay an unexpected $600 bill. Another 18% would have to take out a loan, borrow money from family or friends, or sell possessions.

There is some better news for the Government. Seventy-one per cent of New Zealanders expect energy prices to increase over the next 12 months, down from 78% in February.

But the broad picture remains clear: most people still expect power prices to rise.

These numbers are not dramatically different from February, but their persistence is concerning. And it is this persistence that is driving politics here and overseas.

This is my last Saturday column for The Post. I'm moving to a different role at the paper and Henry Cooke is taking over.

I am not generally prone to mawkishness, but finishing this column has caused me to reflect on the larger political and economic trends that have changed New Zealand since I returned home to New Zealand in September 2019.

The biggest political change has been sentiment about the country's direction.

In 2019, New Zealanders were broadly content with the country's trajectory. That had been more or less the case since the beginning of the Clark Government, and aside from a brief interruption during the Global Financial Crisis until around the middle 0f 2022. It has been negative ever since.

For a remarkably long period, New Zealand public opinion was relatively impervious to political events. This put New Zealand out of step with other countries.

The reforms of the 1980s and 1990s, whatever one thinks of them, created the foundations for a long period of stability. The Clark Government increased spending while maintaining surpluses and paying down debt. It even established the New Zealand Superannuation Fund to invest what were then assumed to be ongoing surpluses.

Those surpluses disappeared after the Global Financial Crisis, before returning under the Key-English Government.

The basic thing I have come to realise is that the reforms of the 1980s and 1990s gave New Zealand's political system an extraordinary ability to coast (although the further away you get from it, the more the Clark Labour Government looks like a continuation of the disciplines forged over that period)

That has been true on both the left and the right. For some, those reforms are to be celebrated; for others, avoided or quietly ignored. But either way, much of the political class has governed atop the foundations they created rather than substantially adding to them.

This is not to lionise that reform era. It is simply to observe that New Zealand has been living off its institutional and economic inheritance for a long time.

Then came Covid-19 and a rapid expansion of public debt.

The last National Government's mistake was believing that sustainable fiscal repair could always be done slowly and incrementally. Politically it thought it had cracked the code of minimal pain and disruption.

The last Labour Government's mistake was assuming prosperity and increased growth was largely assured. It was not.

And the current Government, despite regularly invoking the lessons of the past three decades and talking about paying down Labour's debt, has continued to increase spending, deficits and debt while promising that the surplus will arrive later.

Everything, it seems, will be fixed in the future.

Those challenges would be substantial enough without an ageing population, rising geopolitical competition and the need for greater defence spending. Despite some facile arguments to the contrary, New Zealand will need to spend more on defence, if only as an instrument of foreign policy.

Much of politics still revolves around arguments over who were the goodies and baddies of the reform era, rather than how New Zealand can avoid ending up in a position where another round of painful decisions becomes unavoidable.

Regrettably, it is beginning to look as though the political class has failed that test.

Parliament remains a fascinating place, where a mixture of virtuous, venal, earnest and ambitious people gather to make laws and steer the country in the direction they believe is best.

Yet there was very little normality during my time as political editor.

The March 15 terrorist attack occurred six months before I arrived. White Island erupted in December. Covid-19 arrived in March 2020, bringing with it a subsidised economy, unprecedented restrictions on daily life, closed borders and long periods of disruption to education and work.

That was followed by the inflation shock, which despite having eased, remains a central political issue.

In between, Jacinda Ardern won one of the most remarkable election victories in New Zealand history, securing more than 50% of the vote. Then a political neophyte was elected in 2023.

Since the middle of 2021 — five years ago now — New Zealand's real GDP per person has been largely stagnant. If voters are grumpy, and they clearly are, that is one obvious reason why.

There has at least been some good news recently. Over the past year, New Zealand has effectively received a modest pay rise from the rest of the world, with real gross national disposable income rising by nearly 2%, or 1.4% per person.

That measure captures the real purchasing power of New Zealand's disposable income.

While cost-of-living politics often focuses on the price of mince, cheese or petrol, the bigger question is how governments make New Zealand and New Zealanders wealthier, more productive and more prosperous so they can better afford everything from butter to bridges.

The inability of governments across much of the developed world to deliver rising living standards while containing the growth of the administrative state is helping drive the rise of populist parties.

Consider Reform in Britain and Pauline Hanson's One Nation in Australia.

A decade ago, when Brexit occurred, Reform did not even exist, although its predecessor UKIP was polling at about 12%.

Just days later, on July 2, 2016, Pauline Hanson returned to the Australian Parliament after an 18-year absence, this time as a senator. At the time, many regarded it as a bit of a joke.

Today, according to the polls, both parties are among the most popular in their respective countries. with Reform over 25% and One Nation over 30%

Whether one regards that as encouraging or alarming is beside the point.

Political parties do not last forever.

The conservative side of politics in New Zealand and Australia has existed in roughly its current form since the late 1940s, but it may yet return to a more fragmented shape. Likewise, Labour parties emerged in the early 20th century as the dominant force on the political left alongside the trades union movement.

Compared with Australia and Britain, MMP has acted as a release valve in New Zealand. Parties such as NZ First have periodically surged when public frustration has demanded an outlet.

But today's party system is not necessarily permanent.

Unless the political class can find a way to deliver stronger growth, rising living standards and better-performing public services, voters may increasingly look elsewhere.

The dissatisfaction evident in today's polling is not simply a verdict on the Government. It is a warning to the entire political establishment.

People are squeezed in the present and pessimistic about the future. Until that changes, the politics are unlikely to change either.

Thanks for making me part of your Saturday the past seven years.