Workers Must Be Prepared to Fight an Unpopular Luxon Government

By Elliot Crossan


When John Key became Leader of the Opposition in November 2006, National and Labour were neck-and-neck in the polls. But after the first few months of 2007, Key and National surged in popularity and never looked back, defeating the Clark Government in the 2008 election and governing for nearly a decade. From April 2007 until Key’s resignation as Prime Minister, the National Party led Labour in every single opinion poll for nearly ten years.

Key’s popularity was remarkable. But that level of popularity is very difficult for the National Party to replicate.

In the last seven weeks, National and ACT have edged ahead of the three left-wing parties, and though Aotearoa is still eight weeks out from the 2023 general election, and a few weeks out from the start of the official campaigning period, the right-wing parties are now the slight favourites to form the next government. However, the left should not make the mistake of thinking that another decade of Tory hegemony is inevitable.

If National and ACT win — and that is still a very big if — this will not be the second coming of Key. Poll after poll shows that Christopher Luxon is not popular — he never surpassed Jacinda Ardern and has thus far failed to top Chris Hipkins in the preferred Prime Minister ratings despite Labour’s support plummeting since Luxon became Leader of the Opposition in late 2021. Additionally, even the polls taken in July and the first few weeks of August, all of which predicted a National victory, gave it between 33.3% and 36.6% of the vote — an unusually low share for a winning party. This is because the ACT Party, polling 11% to 14%, is stronger than it has ever been before.

The country is facing an economic crisis, with an incoming recession and rising unemployment following hot on the heels of the highest levels of inflation since the early 1990s. In these conditions, a National-led coalition with a strong ACT presence will be the most right-wing government since the neoliberal revolution of 1984-1993. It will be an unpopular government implementing unpopular policies under an unpopular Prime Minister.

Workers must be ready to fight back against the austerity offered by the prospective Government of the Rich. This is a fight the left can win.

The Battles To Come

National and ACT’s agenda will be brutal for working people. ACT is making this explicit, openly campaigning for harsh austerity measures and widespread repeal of workers’ rights. National, meanwhile, is running what is known in Australian politics as a “small target” campaign, in which a party makes very few concrete commitments in order not to give its opponents much to attack. Luxon’s team are dangling tax cuts in front of voters whilst refusing to reveal any major plans for what else they will do if they win. Why? Because their real agenda will not be a popular one.

Craig Rennie, economist for the Council of Trade Unions, has conducted an analysis which points to National’s real plans. Rennie has costed the National Party’s spending commitments and found a fiscal hole of between 3.3 and 5.2 billion dollars. This is largely because National’s promised tax cuts are entirely unfunded.

Neither Luxon nor finance spokesperson Nicola Willis have explained where the money for these tax cuts is going to come from. National has long criticised Labour for taxing too much — the clear implication being that a National Government would be unwilling to raise taxes elsewhere to finance its cuts to income tax.

The Opposition has also criticised Labour for borrowing too much. This coupled with the Reserve Bank’s stern warnings against the Government running deficits during an inflationary period ensures that National will be unable to borrow to make up the shortfall without breaking radically from economic orthodoxy, which the traditional party of big business is highly unlikely to do.

It is therefore clear that Luxon and Willis intend to opt for austerity, cutting spending and selling off state assets to pay for tax cuts. They have been hinting at this for a while by railing against Labour’s “overspending,” and now there is evidence. National Party Cabinet Ministers will no doubt be encouraged and emboldened in this regard by their ACT counterparts, who will be impatiently eager to use this once-in-a-generation opportunity to radically reduce the size and social provision of the state.

The only way the next government will be able to cut income tax rates without implementing austerity, increasing borrowing or increasing taxes elsewhere is if economic growth is much stronger than is currently anticipated, resulting in increased tax receipts. It is very unlikely that this will happen in the next term. Central banks around the world are engineering a recession in order to reduce demand and therefore bring down inflation. This recession will get worse before it gets better. Not only is it unlikely that the next government will enjoy higher-than-predicted levels of growth — on the contrary, whichever party wins the election is likely to have lower revenue than currently expected.

It is therefore highly probable if they are part of the next government that David Seymour and ACT will get their wish. Austerity will be the watchword — austerity the likes of which Aotearoa has not seen since 1993, but which Europe and the United States suffered as recently as the 2010s with devastating results.

This contrasts with the previous National Government. Aotearoa did not suffer as much as most OECD countries from the effects of the Global Financial Crisis — the immediate aftermath was bad, but afterwards we experienced stronger growth and lower unemployment than average. As a result, National could claim to preside over a “rockstar economy.” Key and English may have reduced spending in some areas and partially privatised multiple state assets, but it was a mild agenda compared with the severity of the cuts and asset sales seen elsewhere. In fact, in the wake of the Christchurch earthquake, the Key Government actually went into stimulus mode, borrowing money to finance a swift recovery.

Key’s enduring popularity can be explained by this confluence of strong growth, low unemployment and limited austerity, bolstered by high immigration and rising house prices. The latter resulted in the housing crisis, which became the biggest challenge to the Key Government’s popularity in its later years; but housing affordability wasn’t as much of a problem for the home-owning majority until interest rates started to rise in 2021, which caused mortgage costs to soar.

Luxon is already unpopular. His personal approval ratings are low; people don’t trust him. Add on top of that the inevitable unpopularity of an austerity government, and the hatred that will be felt towards ACT Ministers whose extremist ideology aims to permanently rob the working class to make the rich immensely richer, and you have the recipe for a Prime Minister and Cabinet who will repulse ordinary people. It will be widely seen as an out-of-touch Government of the Rich.

It is already clear what the National leadership’s attempt at a solution to this problem is. They are following a strategy so often pursued by right-wing parties around the world. Don’t fight the election on your unpopular austerity agenda. Don’t reveal to people (until it’s too late) that you intend to make the rich richer and everyone else poorer. Instead, fight a culture war.

That is why, instead of campaigning openly and honestly for austerity, National has decided to dog-whistle about Three Waters; to bait voters hard with law-and-order populism about gangs and ram-raids; and to try to make working- and middle-class Pākehā worry, not about the privilege of the rich, but about the supposed privilege of Māori.

Once National is in power pursuing an unpopular agenda, the party will have no choice but to double down and continue stoking the flames in order to stay in office.

Unfortunately, this divide-and-rule strategy works — under the right circumstances. It is why Trump was elected President in 2016; why Italy now has a far-right Prime Minister, and why France and Spain too have come worryingly close to electing fascists into government — just to name a few examples. National has not fully committed to this road yet, but the early warning signs are there.

Such signs were present in the Conservative Government that inflicted brutal austerity measures upon the UK in the early 2010s. The result for the British Tory Party was the Brexit vote, and a continuous shift towards racism and right-wing populism ever since.

Meanwhile, unlike National, the ACT Party is campaigning openly and honestly for austerity. For ACT, right-wing populism is simply the cherry on top.

Yet the politics of division do not always succeed. In times of economic crisis, when many people are struggling and anger is rightly felt among the population, the ground opens up for a contest of ideas. Right-wing populism succeeds when the only alternative being offered is the failing status quo.

There is always a genuine alternative: one which improves lives for the vast majority of society, and does not require pitting workers against each other. That alternative comes when the left successfully organises and fights for a transformation of society in favour of the working class, pointing out clearly that the real cause of the crisis is not migrants, indigenous people, or any other minority; but that the real enemy is the top 1%.

Transformational Change: Labour’s Broken Promise

Left-wing writers and activists have a difficult needle to thread this election. I notice it in my own writing — I have begun to lace my usual criticisms of the Labour Government with a few more sentences praising some of their achievements, and emphasising that, of course, National and ACT are worse…

The left is now in the familiar position of being furiously frustrated at the Labour Party’s failure to deliver the transformational change it promised, whilst at the same time being deeply concerned at the increasingly likely prospect of the right-wing “coalition of cuts” winning this election. The left is both furious when Chris Hipkins rules out any wealth tax or capital gains tax under his leadership, and anxious to defend the reforms that were won whilst Jacinda Ardern was Prime Minister, entirely inadequate though they may be.

For the union left, Fair Pay Agreements are the most significant reform won under this Government. Overhauling employment relations in favour of sectoral bargaining represents the biggest step forward for workers’ rights in decades, and even radicals are applauding Labour for passing this legislation — so much so that Unite Union, the most radical left-wing union in the country, happily co-organised a rally with the Labour Party and four other unions to stand up for FPAs.

FPAs aren’t the only victory workers have won under this Government. Five new sick days per year, a Matariki public holiday, and significant increases to the minimum wage have also made a difference. When it comes to poverty, a key issue which Ardern personally championed as Prime Minister, some progress has also been made — Labour reduced child poverty by almost a third, from 22.4% in 2017 to 15.4% in 2022, largely by increasing core benefit rates for the first time since the infamous 1991 Mother of All Budgets.

The left understandably wants to defend these gains from National and ACT, whose austerity agenda could not only undo the progress that has been made under Labour, but go further, making the situation for workers much worse than when Bill English left office.

Yet at the same time, people are crying out for more from Labour. Working class voters clearly believed in the transformational change Ardern campaigned for in 2017; the vision of a more kind and fair Aotearoa that she painted was compelling. It’s clear that, six years later, disillusion has firmly set in. Many of those who voted the Ardern Government into office have given up hope of seeing that change come to pass.

Whilst the middle class voters who supported Labour for the first time in the 2020 Covid landslide have “gone home” to National, progressive voters are more divided. Many will stick with Labour, but without the enthusiasm they felt in the Ardern era. Some are now intending to vote for either the Greens or Te Pāti Māori in the hope of more left-wing minor parties forcing Labour to deliver. But most significantly, many progressives will simply not vote this time around. The statistics show time and time again that when turnout is low, left-wing parties are hurt the most, because lower income workers are less likely to vote unless they feel truly represented. When struggling workers see no hope of improvements in their lives, why should they bother to show up at polling stations in the first place?

Labour may have delivered modest reforms for the working class, but in an overall context of multiple social, economic and environmental crises, these reforms have been a drop in the bucket.

Inequality researcher Max Rashbrooke argued in a recent article that Labour has reduced income inequality. But wealth inequality is by some metrics just as bad, and by other metrics worse, than it was six years ago. Journalist Bernard Hickey claims that the pandemic saw the fastest increase in wealth inequality in the history of the country, due in large part to house prices surging in 2020-2021.

The housing crisis is worse today than it was when National left office. House prices are higher than they were in 2017; rents keep going up and up; and now mortgage holders are alarmed at the rate at which their interest payments are increasing.

Even if income inequality has fallen a bit under Labour, low incomes and low wages are still an endemic feature of Aotearoa’s economy. Fair Pay Agreements aim to address this structural problem to an extent, but the first effects of FPAs will not be seen in the ten weeks remaining before the election — and under National and ACT, FPAs will be “gone by lunchtime.” Hence the importance unions are placing on defending this Government.

Public services are underfunded — nurses and teachers have had to strike multiple times to demand better pay, safer staffing in hospitals and smaller class sizes in schools. Their concerns have not been fully listened to.

Far too many Kiwis still live in poverty despite the progress that has been made, and far too many people are still homeless. Ethnic inequalities remain — 10.3% of Aotearoa’s children live in households experiencing material hardship, a rate which itself is far too high; but it’s much higher for tamariki Māori — 18.8% — and higher still for Pasifika children — 25.6%.

On top of all sits the climate crisis, the urgency of which becomes more clear with every passing month, every extreme weather event, and every terrifying scientific report detailing just how little time humanity has left to take the radical action necessary to save our species. Environmental groups were already condemning the incrementalist approach of the Government even before Hipkins’ “policy bonfire” saw hundreds of millions of dollars worth of green initiatives go up in smoke. The fact that this policy bonfire occurred mere weeks after Cyclone Gabrielle only added insult to injury.

The reality is that the Government has not delivered the change that the working class desperately needs. It has failed to address the crises Aotearoa faces, and instead has tinkered around the edges with an improvement here, an improvement there, but nothing transformational. Social and economic transformation is what is truly required.

Instead of turning towards transformation, Hipkins has moved Labour to the right since taking over from Ardern. His decision to rule out a wealth tax or a capital gains tax as Prime Minister has left the Government in the same conundrum as National — but instead of simply making promises and staying quiet about the austerity which will inevitably result, Labour has opted to simply offer next to nothing. Grant Robertson is now claiming that it is “not possible to make big promises” this election, whilst Hipkins recently told striking teachers and nurses that “there is no money tree,” echoing the rhetoric of UK Tory Prime Minister Theresa May. Her 2017 campaign went down in flames, and a Labour campaign which offers nothing will suffer similar results.

Labour’s inability to offer any substantial policies is a direct result of Hipkins ruling out taxing the rich, and the disillusionment this has caused can be seen in recent polling. A Newshub-Reid Research poll conducted just prior to the Budget in May showed that 60.5% of eligible voters support a wealth tax, whilst 39.5% are opposed, excluding the 12.3% who answered don’t know. A more recent 1 News-Verian poll taken in early July just prior to Hipkins’ decision showed that 58.4% support a capital gains tax on rental properties, with 41.6% opposed, excluding 11% who don’t know. The majority of Kiwis support taxing the rich, and know that taxes on wealth and capital gains are necessary to address the multiple crises society faces.

It should be no surprise then that in the two opinion polls taken since Hipkins’ tax announcement, support for Labour has dropped by 4.5% and 3.6% respectively.

Workers Can Fight Back — and Win

If National and ACT win, it will be a moment for the left to reflect on what went wrong, and prepare to fight — and beat — an unpopular Luxon Government.

The first and most obvious lesson will be that the Labour Party has once again failed to deliver transformational change to the benefit of the working class of Aotearoa. The Government has once again failed, just like every Labour Government for decades, to adequately fund services; to end poverty; and to radically restructure this economy built on low wages, unaffordable housing and low taxes on the rich. Most importantly for the future of the entire species, Labour has failed to take urgent and radical action to prevent catastrophic climate change.

The moment will be ripe for a political movement to take shape fighting for a genuine transformation of society; a movement fighting to tax the rich; to end poverty; to fund services, lift wages, end the housing crisis; to rebuild the union movement; and to transition rapidly towards a decarbonised economy.

The immediate task of such a movement will be to take up the fight against Luxon, Seymour and their Government of the Rich — not in order to simply demonstrate dissatisfaction, but to beat them. This will not be the Key era; the radical left will no longer be a small, marginalised force on the sidelines, hopelessly frustrated at the hegemony of the National Party. This will be a fight against a vicious assault on working people from an unlikeable Prime Minister and his unpopular Government.

Huge anti-austerity movements sprung into life in Europe in the 2010s. The working class will need to build such a movement here, and fast, as the assault will be rapid. In a three-year term, National and ACT will have no time to waste; they will seek to dismantle the welfare state and cut taxes for their rich mates at an alarming rate. Wayne Brown has already started this process in his first budget as Auckland Mayor; it’s precisely what Roger Douglas did in 1984 and what Ruth Richardson did in 1990; it is the Shock Doctrine in practice. The right never let a good crisis go to waste.

Out of that movement must come something concrete: a socialist political party ready and willing to lead the resistance to the Government of the Rich; to rebuild the trade unions to their former strength; and to conquer political power in order to implement a transformational programme. The ultimate goal must be a fundamental and irreversible shift in the balance of power and wealth in favour of working people.

The question shall arise as to whether that political party should be the Labour Party, the Green Party, or a new party. A debate will be had — can Labour return to its roots and be reclaimed as the workers’ party it was originally meant to be? Can the Green Party move past its middle class niche and become a party by workers, for workers? Or must socialists start again from scratch, and build a new party from the ground up? Efforts to achieve all three outcomes will be welcome until it becomes clear which path will succeed in advancing the interests of the working class.

Labour could still win the election, and form a coalition with the Greens and Te Pāti Māori. In that eventuality, other debates will arise in the immediate term. The struggle will then be on to force Labour to renege on Hipkins’ pledge not to tax the rich. A National-ACT coalition looks more likely at this stage, but nothing is set in stone.

It is ten weeks too soon to predict the outcome of what could be the closest election in a very long time. The result may even be so close that nobody knows the outcome on election night, leaving all parties furiously biting their nails until the special votes roll in a fortnight later.

But if National and ACT win, the left cannot and must not despair. Workers have to be prepared to fight an unpopular Luxon Government. Because when it is organised and ready, the working class has the power to fight back, win, and transform Aotearoa once and for all.


Elliot Crossan is a socialist writer and activist from Auckland.