The potent Covid Delta variant has left the Government not quite in intensive care but certainly in need of some political nursing.
POLITIK has obtained polling by Talbot Mills, the Labour party’s polling company which shows that Labour and National are now rapidly converging.
Their December poll has Labour on 40 per cent and the Greens on nine with National on 31 and ACT on 12. That gives the centre-left a six per cent margin over the centre-right; that margin was 24 per cent in March.
But dig into the polling, and what becomes clear is that the story of this political year has not been the recovery of the National Party under its new leader.
Instead, it is the story of Labour’s continuing decline since March. It has fallen from 50 per cent to 40; that means that one in every five of its supporters has deserted it in the space of nine months.
There is a revealing hint as to why this might have happened buried deeper within the polling. Talbot Mills also poll on whether the country is going in the right or wrong direction.
This is the poll that party strategists watch the most closely. It tends to foreshadow movements in the party support poll.
And the current poll shows that those who believed the country was going in the right direction began to slide in March and has continued to do since.
So what was the tipping point? Why did the mood change then?
It would seem logical first to point the finger at Covid.
But March was a quiet month; only 13 new cases, mainly at the border, and things were looking so optimistic that preparations were being discussed to open up the trans-Tasman travel bubble.
Announcing that in April, the Prime Minister said “our team’s success” in managing Covid and keeping it out over the past 12 months had opened up the opportunity to establish the bubble.
“The bubble will give our economic recovery a boost and represents a world-leading arrangement of safely opening up international travel while continuing to pursue a strategy of elimination and keeping the virus out,” she said.
It sounded like Ardern was declaring a victory of sorts over Covid.
The next phase would be vaccinations.
We now know there was much wrong with the vaccination programme. It started late, and because of an initial vaccine shortage, it took nearly six months for it to reach under 35-year-old Maori.
Te Kaha GP, Dr Rachel Thomson, told Parliament’s Health Committee in October that one reason Maori vaccination rates were low was that there had been no plan involving Maori to deliver the vaccine.
“The problem has been that there was no plan, particularly for Maori communities like mine, and that we had plenty of time to do that,” she said.
“So it’s frustrating that there wasn’t a plan that involved the vaccine rollout for Maori, and if we’d started looking at the evidence and targeted right at the beginning with the people who most needed and were mostly going to be affected, it would have been helpful, and we would not now be on the back foot.”
Then on August 17, the Ministry of Health confirmed that a Devonport man had the Covid Delta variant. The entire country went to Alert Level Four.
Auckland has been locked down at a lower level since.
Treasury has costed those lockdowns.
In their Half Yearly Economic and Fiscal Update, published on Wednesday, they say that a week at the red traffic light setting is estimated to cost the economy $190 million and amber, $140 million. Closing the international border through to June 2022 could cut two per cent off GDP.
There are other costs. The Chief of the Defence Force, Air Marshall Kevin Short, told a media briefing last week that a combination of a lack of the ability to exercise internationally along with frustration on the part of personnel having to work in Managed Isolation and Quarantine facilities had led to a very high attrition rate which could take several years to recover from.
It is not in the Prime Minister’s nature to admit defeat, but the reality is that Delta destroyed the elimination strategy and, with it, some of her and her Government’s credibility. The sacrifices last year and early this that were supposed to keep the virus out would have seemed to many to have been for naught. They were no match for Delta.
Her own personal poll ratings are now back from the stratospheric heights of last year to where they were before Covid.
So Delta could be partly responsible for the decline in those believing the country was headed in the right direction.
But there is another suspect; housing.
Coming into March, CoreLogic’s Housing Price Index for February 2021 showed nationwide property values increased by 2.6%. This took growth in the previous 12 months to 14.5% – a rate not bettered since the 12 months to October 2016.
But more was to come.
Treasury reported this week that by June the annual rise had jumped to 29 per cent.
The popular view among political party strategists is that house price rises favour National because their voters can see their house values and therefore their wealth increasing.
But there comes a tipping point when the inability of young first home buyers to get into the housing market creates a political backlash.
National’s housing spokesperson blamed the price increases on a shortage of houses, but there was another force that was pushing the prices up.
The Reserve Bank, however, had since the start of Covid last year allocated $60 billion for large scale asset purchases – the so-called money printing programme — which effectively pumped money into the banks. Meanwhile, it also lowered its Official Cash rate to an almost negligible 0.25 per cent.
The money was pouring out of the banks at ultra-low interest rates, and it was going into housing and pumping up the prices.
Treasury says this led to the household debt servicing-to-income ratio reaching its lowest level on record in the June 2021 quarter.
There was little the Government could do. A bipartisan move with National to liberalise planning regulations to allow three dwellings of three storeys to be built anywhere in the bigger cities without planning permission smacked of political cynicism.
It shackled National to Labour on housing policy, but local governments have a year before they must introduce the new planning standard, so it is unlikely to have any effect on house prices any time soon.
More probably, the steady rise of interest rates next year and a growing supply of housing might take care of the issue.
But at present, it is working against the Government.
There are other issues that could have helped diminish the belief that the country is headed in the right direction; the trend to centralisation evident in the health and three waters reforms and a lack of certainty about where the Government is going on Treaty matters, particularly what the concept of Tinorangatiratanga really means.
There may not even be agreement within the Government, and particularly within the Cabinet, on that which may explain why the Prime Minister has had so little to say about it.
This may explain why New Zealand First, whose two former Northland MPs, Winston Peters and Shane Jones, have been vocal about this issue, is now scoring 4.2 per cent in the Talbot Mills poll.
The overall impression then is of a Government that has spent much of this year being subject to events like Covid and house prices that it cannot control.
The Prime Minister has paid a personal price. The stardust is fading. Her preferred Prime Minister rating has fallen this year from the high 50s down to 43%. In effect, her Covid boost, which at one stage took her as high as 65 per cent, has now been wiped out, and she is back to where she was in 2019 when she got as low as 41 per cent.
National’s new leader, Christopher Luxon, is now on 26 per cent, higher than any National leader over the past two years.
But he is relatively untested.
Given the way the polls are going, the Government can be expected next year to start pulling out all the stops.
The indications are that it will stop trying to reform everything that moves and maybe trim back some of its existing reform proposals, particularly the Three Waters one.
It seems to have new energy in the House with Finance Minister Grant Robertson clearly pumped up for his daily duel with National’s new finance spokesperson, Simon Bridges.
This year has seen the optimistic hope that somehow New Zealand could be exceptional and defy all odds dashed.
Delta did that.
Covid is going to define this Government, as it will almost every Government in the world.
The unpredictable factor is what it might next have in store.