After Davos, a reality check for Jacinda Ardern

2019-02-02 01:33:24

OPINION: From being feted as the Davos darling by the world's media, Jacinda Ardern's return to New Zealand must have felt like a bucket of cold water in her face.

Ardern arrived back to a KiwiBuild shambles,  an unsettled back office, cancer waiting times, cost of living gripes, state sector strikes, (another) employer backlash over industrial relations reforms, fresh NZ First rumblings, tensions with China, and a bunch of political headaches that are about to land on her desk – chief among them how to sell a capital gains tax, but also a raft of reports and inquiries on problems that Labour kicked down the road after getting into office.

No wonder Ardern looked like she'd rather be anywhere but here when she fronted her first Beehive press conference after Cabinet on Tuesday.

But as a New York Times headline on Friday showed, even domestic issues can follow you around on the international stage.

It noted that, after promising 100,000 houses, Ardern had delivered just 47. Welcome home, prime minister.

It is not fair to suggest – as some have – that Ardern's trip to Europe was all stardust and style over substance. Outside the rarefied world of the economic talkfest, she held meetings with the European Union and British Prime Minister Theresa May, and got firm commitments from both over post-Brexit trade deals.

But still. Her triumph at Davos, and the accolades heaped on her Government's focus on climate change and the upcoming "wellbeing" Budget, must feel like a different world.

The reality on the domestic front is that climate change progress is stalled, while the "wellbeing" Budget is a much harder sell to a domestic audience because nobody is really quite sure what it means, and "wellbeing" in layman's terms means being able to afford to fill up your car, or buy a house.

Fixing KiwiBuild, meanwhile, is going to require more than tweaking. It should have been obvious to all that the policy is too big to fail – yet on the evidence so far, that is the road it is headed down.

There are now serious questions within her Government over whether the policy is still fit for purpose.  There are even more serious questions about whether Housing Minister Phil Twyford is the person who can fix it.

Some immediate tweaks will help.  It seems that only now are the scheme's architects planning on surveying the tens of thousands of people who registered for KiwiBuild to find out what they want. The big question is why that never happened in the first place.

But more fundamental changes, like tossing more sweeteners at developers, are fraught. The Labour grassroots are already antsy that the programme delivers to middle New Zealand, and not the poorest Kiwis.  Lining the pockets of property developers will hardly mollify them.

Twyford, like some of Ardern's other underperforming ministers, is on notice. By delaying her Cabinet reshuffle till after the May Budget, she has signalled that it will be more substantive than if she had moved now, as previously signalled.

Resurrecting KiwiBuild might be the most pressing of the Ardern government's problems. But it is far from the only one.

Her back office is in a state of flux, with a number of key staff leaving and others forced to reapply for their jobs as a result of restructuring.

That probably contributed to the sense of crisis when a bumbling Twyford filled the political vacuum at the start of the political year by admitting the Government wasn't going to meet its first-year targets for KiwiBuild.

That news seemed to take other government ministers and government allies by surprise, almost as much as it did the media.

The Labour machine will need to be a lot slicker when it issues its response to the Tax Working Group, which delivered its report this week. It's no secret that a capital gains tax is front and centre of its recommendations.

Politically, a capital gains tax has even less appeal than the water tax Labour dumped on the campaign trail after voters were bombarded by a very clever social media campaign launched by National.

That will be nothing compared to the likely scare campaign over a CGT, which National has already promised to repeal.

It's not just a sceptical public Ardern has to win over either; in its fight to the death with National over its conservative, elderly base, NZ First could easily veto the move.

Even Labour MPs will need some convincing.  Many of them were there when Labour campaigned on deeply unpopular policies including a CGT (and raising the pension age) at the 2011 election.

The resulting election-night humiliation was the stuff of nightmares.

Labour has made the start to its political year look so hard, in fact, that even the shadow of Jami-Lee Ross couldn't detract from Simon Bridges' "relaunch".

Bridges announced a shift in tax thresholds to ensure middle-income workers weren't pushed into the top tax bracket – a promise that ticks both the "fairness' box and cost-of-living concerns.

Labour barely even bothered to criticise the announcement, because it knew that it would be popular.

Labour will also frame the CGT as argument about fairness. It is an argument that will resonate with millennials and lower-income Kiwis locked out of the housing market by older New Zealanders' leveraging their capital gains to buy up more property.

It also fits with Ardern's narrative on fairness and inequality – that was the argument she  took to Davos, with the warning that failing to counter the growing sense of "them and us" had led to the rise of nationalism and protectionism that has now plunged the global community into so much uncertainty.

But Ardern will have to back herself to sell that message on a CGT and be heard above the cacophony of opposition.

Former National leader John Key showed the way, when he was able to sell a rise in GST at the height of his popularity, and without even burning up too much of his political capital.

No-one thought that could be done either.

But the devil will be in the detail of a CGT – and it will be that detail on which it could founder.

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