The political priorities of Jacinda Ardern, the incoming Prime Minister of New Zealand, could not be more proximate to those of three-time Prime Minister Helen Clark. But it is Ms. Clark’s creative abilities of cohabiting with adversaries in a coalition that Ms. Ardern would have to draw upon, as Labour forms a government with the nationalist and anti-immigrant New Zealand First. This could not be more urgent to deliver on her inclusive agenda to narrow inequality, boost tertiary education, and advance women’s empowerment.
A risky deal
Early signs of Ms. Ardern’s political acumen have been evident in her recent elevation as leader of the opposition in Parliament and spectacular role in reviving Labour’s electoral fortunes after the party’s decimation in three successive polls. The significance of this turnaround is underscored by the country’s robust economic health under the rule of the outgoing National Party government. Then there is the decision of Winston Peters, leader of NZF and the kingmaker in the current scenario, to court Labour, which only emerged as the second largest force in the September election. While this is undoubtedly an opportunity for the Prime Minister, the deal is not without risks given the delicate arithmetic in the current Parliament. Ms. Ardern has to tread a fine balance between pushing her pet projects and accommodating those of Mr. Peters. The two may quite easily make common cause on preventing non-residents from buying property in the country. But curbs on net immigration could test the alliance, as Ms. Ardern supports limits only on unskilled manpower, whereas Mr. Peters believes most inflows to be anything but that. This is where a novel political experiment under the previous Labour government could help overcome the relative inexperience of the new dispensation.
New Zealand’s election ends in stalemate
Ms. Clark’s third term was witness to the paradox of parties simultaneously joining the government and staying in the opposition. The NZF and the United Future assumed ministerial positions in return for their support in matters concerning their portfolios as well as in motions of confidence. Such a deal gave the parties a stake in the government’s survival, while also safeguarding their identity and freedom as the opposition to criticise the government’s performance in other areas. The arrangement proved a creative means to manoeuvre around the country’s proportional system of representation, which has prevented a clear majority for any party since its adoption in the 1990s. The effectiveness of this method is perhaps best illustrated by the recent example of Germany following the September general elections. Despite emerging as the second largest party in the Bundestag, the Social Democrats have opted to remain in the opposition so as to rebuild the party’s centre-left credentials.
Also, Wellington is contemplating an expanded role for the central bank beyond the traditional function of setting monetary policy. Will the idea gain currency, as has the widely applied 2% inflation target?