INSIGHTS BLOG

MARK LISTER: I SEE RED

Mark Lister, 19 October 2020

The New Zealand Labour Party achieved a phenomenal result at the 2020 election, securing a highly impressive 49.1 per cent of the party vote on the back of Jacinda Ardern’s huge popularity and public profile.

This equates to 64 seats in our 120-seat parliament, which allows Labour to rule for the next three years without requiring the support of any other parties.

Special votes might change the results slightly, and this has historically seen the Greens secure additional votes.

However, this time Ardern’s international profile could see Labour benefit much more than it has in the past.


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ACT was the success story of the night, moving from one seat to ten (much of which will have come at National’s expense) while Chloe Swarbrick’s victory in Auckland Central and the expected return of the Maori Party are also notable.

At the other end of the spectrum, the failure of NZ First to secure any seats represents the end of an era for Winston Peters.

There is unlikely to be any significant market reaction this week. Labour has been polling well ahead of National since the COVID-19 pandemic turned the year on its head several months ago, and virtually all political pundits and bookmakers were expecting another three years with Jacinda Ardern at the helm.

The only surprise is arguably just how strong this victory was, with many people having expected Labour to fall just short of being able to govern alone, meaning the Greens would’ve been required to form a government.

As it turns out, the Greens are not needed, although Labour will probably involve them in some shape or form, if only for optics and to maintain a positive working relationship with future elections in mind.

On balance, many voters will be more comfortable with a Labour majority, as the Greens are viewed by many as more extreme, more disruptive and higher risk. Labour is now is a position where it can choose to ignore any Green initiatives it doesn’t agree with (such as a wealth tax), without any fear of repercussions or decision-making difficulty.

Investors, rating agencies and many businesspeople will be relatively comfortable with this result, firstly because it was expected but also because it represents the status quo. In short, come Monday morning it will be business as usual.

Being able to govern alone, without the difficulties of coalition disagreements or opposing views in either direction, will make this term a much easier one for the Government. Ardern has, in many respects, been given a clear mandate to implement whatever changes she believes are necessary.

That creates extremely high expectations and leaves little room for excuses. We haven’t seen any significant changes in this last three years, which will have disappointed many Labour voters who were hoping for ‘transformation’. It has been easy to point to the lack of consensus across the three coalition parties as a reason for such limited progress.

That won’t be an option this time. Ardern will be expected to deliver, which could leave her in a difficult position. Her left leaning supporters will want to see change, while many of the first time Labour voters (and there are plenty of those) will be much closer to the centre and will be the same people who would’ve voted for John Key a decade ago.

They will be looking for the stability and continuity that Ardern and Grant Robertson offer, rather than transformation and dramatic change. Having won these voters offer with her charisma and communication skills, Ardern will want to keep them onside.

Trying to find the right balance between those two opposing forces could make for an interesting three years.