When the government broke for the summer, Prime Minister Ardern told her Cabinet to cut its legislative cloth to suit the government’s election-year capacity.
The government was attempting complex reform of the resource management system, council water infrastructure, and the entire health system. It was also setting up an income insurance scheme while shifting the labour market towards an Australian-style wage awards system. And dozens of smaller but still tricky initiatives.
Doing a limited number of things well might just be better than failing at many things simultaneously.
At the first post-Cabinet press conference after the break, Prime Minister Hipkins announced that the government would focus on measures that might help bring down living costs. Sensibly, he would not get into details before working them through with his colleagues.
There are a few things the government could do this year to help sustainably bring down living costs.
Most importantly, housing costs should have a stronger focus in resource management reform. The Natural and Built Environment Act includes eighteen different outcomes that planners must consider. The National Planning Framework, yet to be announced, should set ample supply of land for development, and housing affordability, as the highest priority. And councils must be provided with the incentives and infrastructure funding and financing tools necessary to help them say yes to new housing.
Moreover, it could adopt measures supported by the Initiative and recently recommended by the Council of Trade Unions: opening up the Overseas Investment Act to encourage more competition, simplifying the use of foreign-sourced building materials, and looking at private building certification as an alternative to council monopolies.
For a more immediate boost, the government could announce a carbon dividend instead of extending the petrol excise holiday. Every dollar the government earns when it auctions ETS credits could, and should, be rebated back to households. It could also index income tax thresholds and undo recent bracket creep while reducing New Zealand’s remaining tariffs to zero.
But with the Australian bookmakers putting Labour’s chances at around 30%, populist measures might be more tempting. Supermarkets were a convenient target in 2022; the government might similarly target the banks as mortgage interest rates rise. Subsidies targeted at politically sensitive groups could be preferred to a broader carbon dividend.
A pared-down legislative agenda is welcome. A government choosing the more sustainable of those agendas would be more deserving of re-election.