OPINION:
“Inflation packs a powerful emotional punch,” I thought to myself as I watched the numbers spinning past $150 on the petrol pump last week.
It stirred feelings of physical anxiety.
Thanks to a household Omicron case, it was the first time I’d filled the tank in more than 10 days.
It felt like the world had changed since I’d been locked down.
My next stop at the local Pak’nSave didn’t help with the feelings.
Of course, I’d spent my 10 days at home reading and writing about inflation, analysing how the war in Ukraine was spiking oil and other commodity prices around the world.
But reading about things and experiencing them are very different.
Advertisement Advertise with NZME.The same could be said for anyone who’s followed the business news for the past year.
The inflationary trend has been building steadily.There’s been plenty of pointy economic debate.
Related articles Business Market close: Rocky day for NZ shares caps off troubled week 11 Mar, 2022 04:45 AM Quick Read Read More Liam Dann: Deepening war in Ukraine means more price …Liam Dann: Battered by pandemic, war and new technology, …Liam Dann: RIP housing market boom – you won’t be missed …Liam Dann: Christopher Luxon could be next PM, but …Now big events, including an oil shock, have pushed it off the business pages and to the front of everyone’s mind – or the pit of our stomachs.
It’s causing pain and people are naturally looking to their government for reassurance and help.
Inflation is now Prime Minister Jacinda Ardern’s biggest problem, it looks set to grow as an issue while the pandemic looks set to fade.
Historically, inflation is always a big problem for governments.That’s because all voters feel it directly.
Unemployment is a more devastating economic issue if it is you who loses your job.
But you can run policies that push unemployment to 12 per cent and still hold enough support to win an election the next year – as National did in 1993.
Advertisement Advertise with NZME.
I don’t think all this inflation is actually the current government’s fault, even though some people do.
Kiwis are experiencing pain at the petrol pump.Photo / NZME I still think it’s mostly a global shock that started with pandemic disruption to global supply chains and has been turbo-charged by market fallout from the war in Ukraine.
But the Government needs to stop saying all that and start talking about strategies to mitigate the pain.
“It’s not our fault” is not a sustainable political strategy …even if it is largely true.
National Party leader Christopher Luxon seems to have recognised this in the past few weeks.
He’s shifted his focus away from attacking the Government’s Covid response.
It didn’t work for the previous three National leaders.
No matter how many administrative bungles you highlight, the debate always comes back to our astounding success in minimising the Covid death rate.
Luxon also seems to have shifted his attack line away from debating who is to blame for inflation.
The problem with that debate is that it ends up back on Covid response issues – like how tight borders are restricting labour supply.
Or blaming the Reserve Bank for printing money and the Government for spending it to support business and save jobs.
New Zealand’s fiscal and monetary policy response to the pandemic wasn’t party political.
It was orthodox and in line with moves by conservative governments in the UK and Australia.
National would have done it too.So the only opportunity there is to claim they’d have done it more efficiently.
That hasn’t been credible to this point.
Luxon appears to have realised that his real opportunity is offering up solutions to what he has shrewdly dubbed: “the cost of living crisis”.
National Party leader Christopher Luxon.Photo / George Heard That’s a very corporate outlook.Business only looks forward, bosses only want solutions.
Anyone who’s suffered the misfortune of sitting in a management meeting trying to explain the reason something went wrong will know this all too well.
There’s a point at which the boss stops listening, usually followed by an awkward silence and a question: “So what are you planning to do about it?”
Even though we’re at the peak of a Covid outbreak, we have the end of the pandemic in sight.
Meanwhile, with inflation, we face the kind of uncertainty and concern we did when Covid first hit.
The only evident plan to deal with inflation is the Reserve Bank’s cycle of interest rate rises – which will do nothing to ease the fears of anyone with a mortgage.
Then last Sunday, Luxon offered another solution – tax cuts.
That’s been attacked and pulled apart by Grant Robertson and others for not adding up.
It doesn’t appear to have been worked through in any detail, but that may not matter.
It looks proactive on an issue where the Government does not.
Labour needs to reassess and reset on the inflation issue.
That’s a tough ask given the pandemic demands still upon them.
But politics is not fair.
Even if history judges this government’s pandemic response kindly, it seems voters – distracted by the cost of living – may not.
There is still time for inflation to peak and ease before the election.
But the issue has legs.
There is a risk that it embeds itself in the domestic economy and takes longer to beat than anyone would like.
Labour needs to hedge against that risk.
It’s not a party of tax cuts but it needs to think creatively about what it can do – or be seen to be doing.
That starts with the messaging.
Ardern and Robertson need to make it clearer that they understand what’s happening with prices and the anxiety that’s causing people.
They need to do something they’ve been good at in the past.They need to show more empathy.
NEW HERALD SERIES COMING UP:
• Inflation Nation – Why the cost of living is going up and what we can do about it.
Check it out from 7pm tonight at nzherald.co.nz and in tomorrow’s Herald..
