PM Chris Hipkins

The Hipkins Government revealed its true colours yesterday as it chopped a whole series of “nice to have” policies — many of them promoted by the Greens — and instead diverted the savings to relieve the impact of inflation.

His approach is all about taking action; no more excuses, or blaming others or rhetoric, Hipkins is becoming a political action man.

He’s up against it.

StatsNZ yesterday reported that food prices were 12.0 per cent higher in February 2023 than they were in February 2022, the highest annual increase since February 1989.

Of course, Cyclone Gabrielle has had a lot to do with that but inflation, or as Hipkins prefers to call it, “the cost of living,” has become the number one current political issue.

The Ipsos New Zealand Issues Monitor, released last month, shows that inflation moved ahead of housing as the top issue in February last year.

Ipsos found that 65 per cent of their survey sample believed it was the top issue; that is the highest level of any issue since surveying began in 2018.

By September last year, then-Prime Minister Jacinda Ardern was blaming international events for inflation along with the lack of competition in the supermarket sector.

Labour appears now to have realised that voters want action on this issue, not words.

Thus yesterday, Hipkins’ announcement of $1.7  billion in savings from  previously announced measures and yesterday’s range of measures being deferred or stopped will allow the Government to “focus on the issues that matter most to New Zealanders and provide just a little bit extra in support to households.”

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POLITIK understands the plan is to have Hipkins, and the Government to be seen as taking action to combat the cost of living.

Hence yesterday’s announcement that benefits and superannuation will be indexed to inflation rather than wages.

The decision to maintain the removal of the fuel tax also fits that scenario.

And this approach, which is in marked contrast to the way the Aerdern handled inflation last year, appears to be working.

Traditionally National is seen by voters as being more competent at managing the economy and economic issues but though the Ipsos poll puts National ahead on managing inflation, it has Labour only three per cent behind.

Hipkins’ language yesterday clearly echoed the thoughts of Labour’s political strategists when he couched the reprioritisation moves as the Government making sure it was focused on the things that were most important to New Zealanders at the moment.

And he underlined the need for the Government to actually deliver.

“It’s a focus on making sure that the things that we are doing are deliverable within the timeframes that we’re doing them,” he said.

“It’s a focus on making sure that we can actually meet the immediate needs that we’ve got in front of us in the cyclone, and the recent natural disasters have actually put new, new pressures on us that we have to be able to meet.”

All of this is wrapped up in the kind of traditional Labour values that a Prime Minister from the Hutt would believe in.

“I want to make sure that New Zealand is a country where people who go out there and strive and work hard are able to get ahead and feel like they’re making progress,” he said.

“And I know that for a lot of families, they’re not feeling that way at the moment.

“I want to make sure that we, you know, enshrining the promise of social mobility that basically you can work hard, and you can improve your lot in life, and you can create a better future for yourself and for your children.”

But though Labour was slightly ahead of National in last night’s One News Kantar poll  (36% – 34%), the economic outlook is uncertain.

The New Zealand Institute of Economic Research yesterday published its annual Consensus Forecasts, which are an amalgam of forecasts from the major banks and Treasury, and they show that annual consumers price index inflation is forecast to reach seven per cent for the year to March 2023 and ease to 3.9 per cent for the following year.

That may help bring down Reserve Bank interest rates, but in the run-up to the election, nearly half of all New Zealand mortgages will have to be refixed, and most will have to be refixed at rates near double what homeowners are paying now.

That will matter to most households more than the inflation rate.

POLITIK understands that Labour’s strategy will be to try and keep the gap between itself and National as small as possible and then to hope that Hipkins can be seen through the election campaign as a more credible Prime Minister.

Labour will be pleased with last night’s One News Kantar preferred Prime Minister ratings.

Hipkins was up four per cent to 27, while National Leader Christopher Luxon was down five per cent to 17.

The only person within National capable of challenging Luxon, Nicola Willis, rates just one per cent in the poll behind even Jacinda Ardern, who is on two per cent.

That would indicate that a challenge to Luxon is highly unlikely.

Privately National MPs believe that their best hope is that the economy performs even worse than the forecasts.

Hipkins is taking risks. Scrapping moves favoured by the Greens, like reducing speed limits, imposing a recycling levy on containers and scrapping the low-income EV car subsidies, left Greens co-leader James Shaw saying that had he been in Cabinet, he would have argued against the moves.

But though Climate Change as an issue rates at only 27 per cent in the Ipsos poll, that concern is rising, and it is now the fourth biggest concern, level with health and hospitals and behind inflation, law and order and housing.

So yesterday is the way it looks like being for the rest of the year with the two main parties neck and neck and the Hipkins Government looking to do the kind of things that resonate in the Hutt.