Ardern weighs spending priorities and Cabinet line-up ahead of election year

A newly prioritised spending plan and fresh ministerial line-up are part of Labour's plan to reset the political landscape for the start of 2023 - election year.

The political headwinds are significant: a cost-of-living crisis only set to worsen; waning support for the governing party and its high profile leader; the murky dynamics of disinformation and social disunity swirling below.

"You're right to characterise it as a challenging year," says Jacinda Ardern, settling into a chair looking out over the sunny backyard at Premier House in a suitably festive red Juliette Hogan trouser suit.

It's a sharp contrast to the year the prime minister is here to reflect on, and the troubling times New Zealanders are warned to expect over the next few years.

"I'm also reminded that politics has always been about solving problems ... either anticipated or unanticipated," she says, acknowledging the "difficult issues" 2022 has thrown up. 

"Our focus, though, has been ... finding the solutions - as complex as they may be - and making sure we demonstrate to New Zealand that that's where our focus is."

Spending priority list - what to keep, what to scrap - to be sharpened over summer break

With the Covid pandemic dragging into a third year, there has also been the global sucker punch of Russia's invasion of Ukraine.

As the world tentatively was trying to find a way past Covid, it was hit with further political and economic shocks, more severe supply chain disruptions, and compounded cost of living pressures.

Labour has been trying to drive home the message those global events are the force behind much of the domestic challenges but they know as well as anyone it's the government voters look to for relief - or to blame. 

The opposition has been gaining ground with relentless attacks about the cost of living, questioning the spending on projects like the health and polytechnic reforms, the proposed merger of RNZ and TVNZ, and - perhaps most controversial of all - the Three Waters infrastructure plan.

To have any chance next year, Labour will have to shut that narrative down and wrest back the title of most-trusted economic manager - those wheels are now in motion.

"So, firstly, we need to support New Zealanders," Ardern says. "You've already seen some of the initiatives that we've undertaken to help ease the cost of living. In the new year we'll continue to assess what other things can we do to support New Zealanders, but we need to do that in a way that doesn't make inflation worse. 

"And that will be top of our mind."

The second thing, she says, will be to make sure the government is "really prioritising our focus and our spending". A third priority is to get some growth momentum into key industries, including exporters and those companies employing large numbers of staff.

The government has already been moving away from direct Covid support, phasing it out as part of a broader plan to return to pre-pandemic spending levels, she says.

"Spending is one part of the ruler that we will be running over our agenda for next year, but it's one part alongside actually just being mindful that there is only so much that you're able to prioritise and in 2023 we know that we need to keep that ongoing focus on the constant balance we'll have to strike."

The government needs to look both at the broader spending track and specific projects - and in the context of the longer-term challenges - but Ardern says "likewise, that has to be the ruler for our focus, our projects and our priorities as well". 

"So we will be spending some time over summer casting our eye over the agenda to make sure that where we are investing our energy and resources, they are on those areas that New Zealanders expect us to be."

However, that's as specific as the prime minister would get about whether any live projects are on the chopping block.

"I do want to just give a bit of time for us to go back and to go through that exercise," she says.

Labour's election year line-up and the PM's plans 

It has been a tough year for ministers and some have come out of 2022 better than others.

Ardern says she will announce a "handful of retirements" next week - a list of ministers who won't contest the next election - leaving the way clear for an executive refresh.

Then, at the start of next year, she will announce a caucus reshuffle to help "demonstrate some of the thinking we're doing to make sure we're making the most of our experience and our team, but also some of the excellent talent we have in our caucus".

There are many dynamics at play: not only is the year wrapping up with controversy hanging over two of her minister - Nanaia Mahuta and Willie Jackson (both of whom have signalled their intent to stand next year) - the need to start plotting a course for succession is also becoming more pressing.

She will be looking to "retain" experience within the ministerial ranks, but also "continuing to show we have succession planning" and that Labour is "making the most of the experience that we have in our wider caucus".

There are ministers, Ardern says, who have "come through and been a huge part of the response" to the pandemic and associated challenges, giving them "good experience, good expertise, good knowledge".

"I'll be wanting to make sure I balance that because when you are going through economic periods like the world is about to embark upon, I want to draw on that experience, but also bring in that new energy."

Senior ministers David Parker and David Clark did not give a clear answer either way when asked about their election-year intentions.

Deputy Prime Minister Grant Robertson says he "loves" his job and "intends on keeping on doing it" - asked if has any leadership ambitions, the response was a brief "nuh".

In 2023, Ardern will be facing her third election as Labour Party leader. When asked if she would commit to serving a whole term if re-elected, she says her plans have not changed and "the expectation, obviously, is that when you run you run, and I've continued to give the same commitment I always have".

"I have no plans to change what I'm doing or my role as leader."

That still leaves a fair amount of wiggle room for Ardern - if indeed Labour can secure a third term - but she said she had been "fairly consistent".

"I'm in this job and will commit myself fully to it and for me it's about making sure that I'm there doing that job as well as I can; any decision about my future or based on whether or not I believe I'm still doing the job I need to be doing."

And she has no illusions about how difficult election year is going to be, but says she "faced every election with the same approach", needing to "give our all and set out clearly our view on why we are best placed as a party and as a team to take the country through the next stage". 

Labour goes into this election without the advantage of the extraordinary popularity Ardern enjoyed in 2020. Polling shows public support for her and the party dragging down throughout the year; a culmination of the social backlash against the pandemic response and reflective of the length of time she's been at the helm.

"Regardless of the polls you have to put your best foot forward, we will be doing that again regardless of whether or not you're polling in front as we did in 2020 or - as in 2017 - when we had a closer race," she says.

Ardern points to the polls in the year before the 2020 election. 

"At this point in the cycle, we were actually eight points behind ... there has already been volatility in our polls," she says.

"Our focus is singular, making sure that we're focused on the things that are really challenging New Zealand and New Zealanders."

But are people still listening to Labour and its leader?

"At this time of year - no", she admits with a laugh. "You know, I'm really realistic - of course, I talk to my family, my friends, I get a sense of where people are at in a cycle. 

"I think people are tired. I think this has been a hard year. There are areas where there are frustrations - I hear that, I see that," she said.

"And I know it's our job in politics to fix the problems we face. There'll be times when people be really tuned into that and there'll be times where actually they just want some time out."

In this week's Focus on Politics, RNZ Political Editor Jane Patterson sits down with Prime Minister Jacinda Ardern to run a ruler over the year that's been and the election to come.

Tune in on RNZ National at 6.30pm on Friday, on Saturday at 5.10pm, or check back here to listen on demand after it's played

Listen free to Focus on Politics on Apple Podcasts, on  Spotify, on iHeart Radio or wherever you get your podcasts.