As we head towards the election three interconnected difficulties shape voter sentiment, writes Dr Muriel Newman, from the NZCPR. Original comment abridged.
A deepening cost‑of‑living crisis, a perception of political instability, and unresolved attacks on our constitutional integrity through co‑governance. These pressures have been intensified by global events, particularly the conflict in the Middle East which Treasury warns could worsen inflation, slow growth, and push unemployment higher than previously forecast.
The cost-of-living squeeze remains the most immediate concern for households as fuel prices escalate and the increases flow through to food, power and all other goods and services.
These projections underline how vulnerable we have become to external shocks, and they help to explain why consumer confidence has fallen sharply with households bracing for further price rises.
Public services are also under strain, particularly the health system, which continues to grapple with workforce shortages and extended waiting times. With infrastructure backlogs persisting in regions still recovering from severe weather events and years of underinvestment, these challenges compound household anxiety.
All of this needs to be understood in the context of the Coalition agreements. Those pledges were set out in two formal arrangements – one between National and ACT, and the other between National and NZ First – supported by National’s own commitments to rebuild the economy through three primary frameworks: the 100-Day Action Plan, the 100-Point Economic Plan, and a detailed Fiscal and Tax Plan. Together, these documents formed the basis of the Coalition Government’s work programme for the three‑year term.
The Coalition’s fiscal plan rests on three pillars: returning the Crown’s operating balance to surplus, reducing core Crown expenses as a share of GDP towards 30 percent, and placing net core Crown debt on a clear downward trajectory towards a prudent range below 40 percent of GDP. However, weaker‑than‑expected economic growth, lower tax revenues, and persistent spending pressures have seriously delayed progress.
The problem was that instead of confronting those targets head-on when first elected, by aggressively reducing government spending through line-by-line reviews to eliminate poor quality expenditure, and by reversing Labour’s escalation of public service staff numbers from 47,000 when they took office in 2017, to 63,000 by the time of the election, National opted instead for a ‘softly, softly’ approach.
This was the strategy successfully used by former Finance Minister Bill English during the Global Financial Crisis: hold expenditure steady, grow the economy, and allow the size of government to fall naturally towards the long‑standing benchmark of 25 percent of GDP, which many economists regard as the optimal size of government.
Unfortunately for the Coalition, that strategy has not worked for Finance Minister Nicola Willis, largely because the economy has failed to fire. And just as the early signs of recovery were finally starting to emerge at the start of the New Year, the Middle East crisis erupted, rendering all growth forecasts obsolete.
In fact, Treasury’s December 2025 Half‑Year Economic and Fiscal Update showed just how difficult it has been to revive the economy: instead of the country being on track for the $166 million surplus the Coalition originally forecast in their first Budget, a $10.4 billion deficit is expected. This would be followed by deficits of $5.1 billion next year and $0.9 billion the year after, with a modest $2.3 billion surplus not emerging until the 2029 financial year – if, and only if, spending discipline is maintained.
With global shocks such as the conflict in Iran and ongoing fuel‑price volatility having emerged since those updates, we are likely to see a return to surplus delayed.
Meanwhile Core Crown expenses are still projected to fall gradually towards 30 percent of GDP over the forecast period, as they have been driven by tight operating allowances and ongoing fiscal reprioritisation.
And while net core Crown debt had been expected to peak last year at 43.5 percent of GDP, it is now forecast to rise to 46.9 percent in the 2028 and 2029 financial years before slowly declining towards the 40‑percent target.
In response to this global disruption, rating agencies have grown more cautious. These agencies have affirmed the underlying strength of our institutions but have effectively put the Government “on notice”: if progress toward a surplus and debt stabilisation continues to slide, a formal downgrade in the coming years becomes a real possibility.
With economic headwinds delaying the Coalition’s fiscal consolidation, the ongoing deficits are resulting in continued high borrowing, rising interest costs, and very limited room for new spending or further tax relief. For households, the result is a sense that despite the Government’s best intentions, little is improving in their day‑to‑day lives.
Compounding this situation is the fact that several key policy reforms that should have been helping to lift economic performance — most notably the long-awaited replacement of the Resource Management Act — have yet to be delivered. That means the promised benefits of cutting red tape, increasing housing supply, speeding up infrastructure delivery, and improving productivity have not materialised. Housing and infrastructure bottlenecks remain entrenched, and the long‑awaited step‑change in development speed and affordability has yet to occur.
The same pattern is evident in health, where the improvements voters were promised are slow to materialise.
A further challenge for the Coalition has been the public‑sector workforce itself. Many officials hired to advance Labour’s policy agenda are actively resisting efforts to unwind it. In several areas, the bureaucracy is dominant, with laws undermined in practice and ministerial directives only partially executed. The result is a system where the machinery of government is not consistently aligned with the elected Government’s objectives. In this environment, advice to ministers cannot be trusted, with bills drafted by the bureaucracy – such as the RMA replacement – containing so many Labour-aligned provisions that should have been rejected, that the new laws promise to be worse than the old.
Layered on top of the country’s economic anxiety is a period of political instability. Public disagreements between Coalition partners have reinforced the perception that the Government is preoccupied with its own internal struggles rather than the country’s priorities.
The mainstream media has played a major role in amplifying the perception of instability through relentlessly hostile coverage and by hounding Coalition MPs. This stands in stark contrast to the favourable treatment Labour received, not only in government, but also when Jacinda Ardern first became leader and their manic enthusiasm – which reached such a fever pitch that it became known as “Jacindamania” – helped to propel the Party into a position where it could form a government in 2017.
All of this reinforces the view that the media should be providing fair and balanced journalism, not attempting to shape the political landscape nor influence the outcome of the election.
Beneath these immediate pressures lies a deeper constitutional unease. The debate over co‑governance, democratic accountability, and the future interpretation of the Treaty continues to simmer. While these issues may not dominate daily headlines, they shape long‑term public confidence in the integrity of New Zealand’s democratic institutions and remain a potent undercurrent in the election environment.
With hundreds of thousands of voters still undecided, the 2026 election remains fluid. In an environment of ongoing global uncertainty, questions over economic security, political stability, and the future of our constitutional arrangements are likely to dominate voter decisions. How the Coalition responds to these intertwined pressures and delivers for those who backed it in 2023 – before Parliament dissolves on 1 October – will be pivotal in shaping voter sentiment and, ultimately, the election outcome.