Mike Hosking: Chris Luxon has made Jacinda Ardern look out of touch


National Party leader Christopher Luxon might have Covid but, before the positive RAT and the isolation, he hit pay dirt with his state of the nation speech.

Tax cuts are a winner, especially in a country with a government that has done the exact opposite.

When you are on the average wage and a chunk of your income is trapped by the top tax rate, and when you add the GST on, and then in excess of half of what you earn goes to the government, there is plenty of rich material for a debate on whether you’re being overtaxed, and whether the government that is overtaxing you is using your money more wisely than you would.

But that wasn’t the big victory for Luxon. The trap he laid for Prime Minister Jacinda Ardern has turned out to be a winner because she walked right into it.

I assume she realises she has walked into it, because watching her in the house this week she is tense, defensive and over it.

The trap was the cost-of-living “crisis”.

The trap is whether the Government admits it’s a crisis. National can’t lose, because if she does, she is the architect of the crisis, and if she doesn’t, she looks removed from all reality.

Whether Luxon was basing all this on past experience I don’t know, but National got caught in the same mad game several years back when housing became a political minefield.

The clever thing to have done was to steer clear given that governments, as I have argued many a time, do not dictate the housing market.

That, by the way, is another trap Labour has walked into.

Famously, at the party retreat in the early part of 2020, Jacinda Adern grandiosely announced that house prices were out of control and she was going to fix them.

She has of course done exactly the opposite.

The numbers out just this week showed affordability is at an all-time low, the Government is reviewing its completely botched lending rules that made getting money – especially for first-home buyers – even more difficult, and the famous Grant Robertson line about “tilting the market towards the first-home buyer” is now in tatters.

But back to the cost of living.

When a Prime Minister on half a million dollars a year tells people on less than 10 per cent of that there isn’t a crisis, the “let them eat cake ” cloak of arrogance is draped ominously on her shoulders.

There is no doubt, we have a cost-of-living crisis, we live it every day.

Everyone is an expert in the cost of living; in the price of petrol, in the cost of the groceries and on the things we’ve already given up getting because the price of everything is rising … and fast.

She also made the critical error of pretending that wages have outstripped inflation since her time in office.

It’s not true.

It’s not true on average over her four years, and it’s especially not true in the past six months, nor will it be true for the remaining time she has in office.

In the latest numbers we have, inflation is 5.9 per cent. Wages have gone up less than half that.

The ANZ this week is forecasting inflation to peak at 7.5 per cent. Are wages going to rise at anywhere close to that level? Of course not.

We are going backwards at a rate of knots, if you hear different from this government they are either fudging figures or straight-up misleading you.

But then, in a way, the figures don’t matter – just look at your shopping trolley and tell me we don’t have a crisis.

They’ll also tell you it’s everyone else’s fault. This cost-of-living issue has been imported, the government says, it’s affecting everyone. Well, that’s only partially true.

Non-tradeable inflation, that’s the stuff we create locally, is the second-highest in the world, they can’t hide from that.

Their spending, their borrowing, their scattergun distribution of cash they never had around the non-productive parts of the economy, is now coming back to haunt them.

Nothing but nothing finishes a government off faster than a bad economy.

National, with tax cuts on offer, will let you decide more of your own economic outlook, while Ardern and Robertson will tell you they know better.

With one speech and one line, in less than a week, Luxon can sit out his self isolation knowing he has turned the tide on his election chances. He has policy alternatives, and he has a government looking removed and out of touch, with a leader pretending what’s in front of every single one of us isn’t real.

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