Surprising Election Turmoil: New Zealand's Economic Struggles Take Center Stage

New Zealand is heading to the polls on Saturday for a general election that is expected to be a closely contested race between the two major parties. The economy and a cost of living crisis have taken center stage in the campaigning, following the unexpected resignation of former Prime Minister Jacinda Ardern nine months ago.

The latest polls indicate that the main opposition center-right National Party, under the leadership of Christopher Luxon, holds a slight lead over Prime Minister Chris Hipkins, who succeeded Ardern. However, there has been a late surge in support for Hipkins' center-left Labour Party leading up to the election, as reported by CNN affiliate Radio NZ.

The election coincides with Australia's Voice referendum, which aims to acknowledge Indigenous Australians in the constitution and establish a permanent body for direct communication with the government. In New Zealand, neither party is projected to secure a majority, leaving room for the nationalist NZ First party, led by Winston Peters, to potentially play a decisive role as kingmaker in a coalition government.

Coalitions are common in New Zealand's mixed-member proportional system, implemented in 1996.

Labour was the sole party to secure a majority of votes and govern independently in the present political setup. This occurred in 2020 when Ardern's successful management of the country's coronavirus outbreak propelled her to a landslide second term.

In January, Ardern startled the nation by announcing her unexpected resignation, expressing that she no longer possessed the drive to run in an election. As a result, she handed over the leadership of her party to Hipkins.

New Zealand Prime Minister Chris Hipkins at Parliament on July 26, in Wellington, New Zealand.

Hagen Hopkins/Getty Images

Ardern, a renowned global figure, faced various crises during her tenure, such as the Christchurch terrorist attack, a fatal volcanic explosion, and a worldwide pandemic. Notably, she gained international recognition for her fearless display of empathy and compassion, contrasting the rise of populist demagogues in several western democracies.

However, upon returning to her home country, her popularity waned due to increasing living expenses, a shortage of housing, and economic uncertainty. Additionally, she had to deal with violent protests against lockdown measures in Wellington, where she faced personal threats.

Hipkins has been burdened with these existing problems, which have been further aggravated by a sluggish economy, an alarmingly high inflation rate of 6%, and worries from credit rating agencies about the deficit in accounts.

Sophia Ha, a resident of Sydney for the past five years who originally hails from Auckland, used to strongly support Ardern but is currently undecided about her voting choice.

"She was an excellent advocate for young women in politics," Ha expressed to CNN. "I believe she has left a significant gap that would be challenging to fill, but I also think that New Zealand is in need of economic support."

Alex Wareham, a bartender from Auckland, desires to witness concrete efforts from the next government in addressing the climate crisis and alleviating the escalating cost of living. However, she perceives a divide among the political parties regarding these concerns. "While some prioritize tackling the cost of living, crime, and post-Covid economic recovery, others exhibit a greater emphasis on combatting the climate crisis. Nevertheless, I believe that climate change will not be at the forefront during this election. It appears that taxation and financial matters will dominate the discourse," she shared with CNN.

New Zealand National Party leader Christopher Luxon speaks during a National Party campaign rally on October 10 in Wellington, New Zealand.

This is also New Zealand's first election after the relaxation of strict COVID-19 lockdown measures, which have been a subject of debate. The government's proactive approach in dealing with the pandemic, known as "go hard and go early," resulted in the implementation of some of the harshest border restrictions in the world. These measures separated families and barred almost all foreign visitors for nearly two years.

New Zealand experienced significantly lower rates of Covid infections and deaths compared to countries such as the United States or the United Kingdom. However, numerous residents believed that the government implemented excessively strict measures.

"Regardless of their actions, they were criticized," noted Wareham. He further explained that due to the absence of a significant human toll, individuals were more concerned about the negative impact on the economy and the country's closure.

"It was bound to be a lose-lose situation for Labour, regardless of how you analyze it... yet, it appears that a National government would have handled it similarly amidst the Covid crisis," she expressed.

The big issues

All major political parties have committed to enhancing the economy, alleviating the burden of living costs, promoting job growth, and enhancing healthcare, education, and housing facilities.

Centrally crucial to the National Party's 100-day agenda is its commitment to numerous tax reductions, including the elimination of a regional fuel tax. Additionally, they aim to revise the Reserve Bank's mandate to prioritize inflation, reduce excessive regulations for businesses, expand free breast cancer screenings, strengthen law enforcement measures to combat crime and empower police to conduct thorough searches on gang members. Furthermore, the National Party intends to reverse various policies implemented by the Labour Party within the last six years.

Labour's policies consist of broadening access to free dental care for individuals under 30, alleviating the impact of increasing food prices through the elimination of goods and services tax on fruits and vegetables, integrating financial literacy education into schools, expanding free early education, and providing additional financial assistance to working families.

At the age of 44, Hipkins initially entered Parliament in 2008 and took charge of the country's Covid-19 measures in 2020. Before assuming the role of prime minister, he served as the minister of education, minister of police, minister for the public service, and leader of the house.

Content was briefly disrupted during his campaign due to a positive Covid-19 diagnosis. This occurred at a crucial moment, just two weeks before the election, and resulted in a five-day absence from the campaign trail.

His primary competitor, Luxon, is a businessman and former CEO of Air New Zealand. He assumed leadership of the National Party in 2021. Prior to becoming the opposition leader, Luxon, aged 53, held positions as a party spokesperson for multiple government departments and served on various select committees.

Nearly one million people have already cast their ballots since early voting began for overseas voters at the end of last month. In New Zealand, voting started on October 2.

On the ballot, voters have the opportunity to make two choices: one for a candidate in their local constituency and another for the political party they support. For a party to secure a seat in parliament, they must receive either a minimum of 5% of the overall vote or have a constituency candidate emerge victorious.

For a party or coalition to establish a government in New Zealand's single-house parliament, they must secure at least 61 out of the total 120 seats, which roughly translates to around 48% of the popular vote.

Approximately three weeks following the election, the election commission will release the official results.

CNNs Angus Watson contributed reporting.