Colin James has a look at this in his column today in the NZ Herald. We don't actually think this downturn is going to be that long lasting and certainly won't dominate the next Government's term - something James sees as possible. That said we are in for less buoyant times 2009-2011 than Labour has enjoyed throughout the three terms that it has served. 2008 is going to be the test and the recession will be biting pretty hard in November (it is a pity Labour is so far behind in the polls as right now (or just after the Budget) would probably be the last chance to have the election without the recession....
Any way back to Colin James
The interpretation Labour likes is that if times get tough, people will look for a security blanket, that Labour's core competence is helping people through hard times and that Labour has an advantage in that John Key has yet to prove himself and Helen Clark and Michael Cullen are a proven pair.
The interpretation National likes is that squeezed households need relief and National is the major party people believe will cut taxes more and ease their paths out of their personal credit crunches - and that it all went wrong on Clark's and Cullen's watch.
The worry for National is that the downturn might bite hardest on its watch if it leads the next government, that it gets thereby a reputation for austerity and that voters tip back next election (as happened to Labour in 1957-60).
Of course, a re-elected Labour-led Government would face the same music but a fifth term is a huge ask anyway. (Hence already some in Labour are envisaging the "sixth" Labour government, implying the current fifth one is near the end of its life.)
There are some side issues, like the role of foreign banks and foreign investors. The decision by David Parker and Clayton Cosgrove on Friday to block the bid for Auckland airport by the Canadian Pension Plan hooks into the inward-turning instinct harder times activates in some people.
Winston Peters remains fully attuned to that, as he showed last week in his positioning on the China free trade agreement. "Foreigners last" is a good line when there is hurt at home. The Greens and the Maori party can also rouse their core constituencies, who range from suspicious to hostile in their attitudes to foreign economic influences. The parties' manoeuvrings make great spectator sport. Trouble is, the spectators are also players.
