By Peter Wilson*
Former Labour MP Gaurav Sharma's resignation from Parliament has caused a major headache for his former party. Photo: RNZ / Samuel Rillstone
Analysis: It's been a grim week for the government, with higher than expected inflation, a by-election that Labour is expected to lose, Winston Peters returning to the political stage with a fierce attack on his former coalition partner and Auckland's new mayor dumping Three Waters.
"If the government started this week with a headache, it's now got a crippling migraine," comment from the Herald stated, a fair description of the last five days.
The bad news began with inflation figures showing the annual rate had eased slightly to 7.2 per cent from the 32-year high of 7.3 per cent - but that 7.2 per cent was well above the Reserve Bank's expected 6.4 per cent.
Economists said the strength of the numbers showed inflation was sticky, broad-based and would be a challenge to get under control, RNZ reported.
The media plunged in with gloomy headlines.
"Pain warning as inflation stays hot," said the Herald while Stuff's take on it was: "Borrowers warned after annual inflation at 7.2 per cent".
The Herald reported predictions that the Official Cash Rate (OCR) could reach 5.25 per cent from the current 3.5 per cent as the RB hiked interest rates harder and faster than had previously been anticipated.
"One Auckland home-buyer is preparing to pay an extra $500 a week when he refinances his home loan next August, while a mortgage broker says the typical Auckland homeowner could be forking out $26,000 in repayments due to rising rates," the report said.
Those figures were scary for any mortgage holder and there was more to come.
"Economists are also warning of increased risk of a 'hard landing' - the RBNZ tightening of monetary conditions bringing the economy to a screeching halt, leaving people unemployed in its wake," the report said.
Stuff quoted Infometrics economist Brad Olsen describing the latest figures as "alarming", while Westpac said price pressures were widespread.
"We're seeing inflation running red hot across the economy," said senior economist Satish Ranchod.
Leader Christopher Luxon went on the attack as financial hardships of New Zealanders intensified with mortgage rate hikes and gloomy economic figures. Photo: RNZ / Adam Burns
National took full advantage, with leader Christopher Luxon launching another question time broadside when Parliament resumed after a two-week recess.
"Does she now accept that, at 7.2 per cent, inflation has a firm grip on our economy and that her government's failure to take the cost of living crisis seriously is crushing everyday Kiwis?" he asked Prime Minister Jacinda Ardern.
She replied by listing the measures the government had taken to support households and businesses, such as cutting fuel excise duty, the winter energy payment and the cost of living payment.
Ardern came back at Luxon with what she called "the live experiment", which had shown the impact of tax-cutting policies such as National's had on economies.
She was referring to former UK Prime Minister Liz Truss' disastrous attempt to cut taxes and borrow vast amount of money at the same time. Truss resigned after 45 days in office - the shortest-serving prime minister in UK history.
National has previously said its policies were nothing like that.
Luxon again accused the government of excessive spending, which he said was fuelling inflation and promised a National government would put an end to wasteful and unproductive expenditure.
On Wednesday's Morning Report Luxon gave the most detailed explanation so far of what National considered to be "wasteful and low productivity" spending.
It's worth listening to for that reason, and because Guyon Espiner managed to get a straight answer on whether National was still committed to scrapping the top tax rate. It wasn't easy but Espiner succeeded: "Yes, Guyon... " Luxon said before going on about the rest of the party's tax policy.
Luxon has said he won't publish National's fully costed tax plan until about a month before the election, after the Treasury has opened the books and released its Pre-election Fiscal Update.
The government has said there won't be any tax changes this term but hasn't ruled out offering them for next term.
Sharma's expulsion claim seems dubious
Former Labour MP Gaurav Sharma this week did what Labour really didn't want him to do, and resigned from Parliament.
Sharma was kicked out of the Labour caucus and the party after going public with his claims about being bullied by his colleagues, and continued to sit as an independent.
Now he's gone, claiming Labour had intended using the waka-jumping legislation to force him out of Parliament closer to the election so there wouldn't be a by-election in Hamilton West.
By-elections don't have to be held if a seat is vacated within six months of a General Election.
Sharma's claim seemed dubious and begged the question: Why would Labour go to the trouble of getting rid of him just before an election, and take all the negative publicity that would create, when he would soon be gone anyway?
He said he had been informed of this by members of Labour's NZ Council but Ardern said no such move had ever been considered and she had no idea where he got it from.
Labour really didn't want a by-election but now it's stuck with one in an electorate that was firmly in National's hands before Sharma was surprisingly elected in 2020.
Since then Labour's fortunes have reversed and National is consistently ahead with polls, showing it could form a government with ACT.
The Herald's Audrey Young said Sharma had set up a blood bath for Labour.
"It will definitely be about inflation, mortgage rates, rents and the cost of petrol, power and fuel," she said.
"By-elections are a chance for voters to give a government a bloody nose at the best of times. We are not in the best of times."
Young said Ardern had won the seat for Labour in 2020, not Gaurav Sharma. "It will be a miracle if she can save it in 2022."
National won't be complacent because, as Young said, losing the by-election would be "an utter failure".
The date has been set for 10 December and nominations close on 8 November.
It's going to be a test of Luxon's leadership on the hustings and the depth of acceptance by voters of his claims about government spending fuelling inflation.
It will give him a really high-profile platform to campaign on, but he won't be alone.
The one advantage Labour could have, perhaps the only one, is that the centre-right could become a crowded field with anti-Labour votes being leeched off by ACT, NZ First if it fields a candidate, and parties such as Matt King's Democracy NZ and Brian Tamaki's Freedom NZ.
Sharma has said he will stand as an independent and is forming his own party.
Ardern is already playing down Labour's chances, saying it has been the underdog in the electorate in the past and the unfortunate circumstances of Sharma's departure won't help.
ACT concerned over Peter' impact
ACT is worried about NZ First since Winston Peters' comeback speech last weekend, with leader David Seymour warning that the centre-right vote could be split and Labour might slip back into power in next year's general election.
Peters and Seymour fish in the same pond. Peters is targeting the same groups of disenchanted Kiwis that ACT courts.
A resurgent NZ First, if it maintains momentum through to next year's election, could have a real impact on the result.
Victoria University political analyst Bryce Edwards said it wasn't out of the question that NZ First could soon be registering 5 percent in the polls and "suddenly become a real force in next year's election".
Edwards said if this happened the drag race between left and right could be overtaken by a centre party once again holding the pivot vote.
"NZ First is now well-positioned to fill the vacuum that has developed in the centre of politics," Edwards said.
"New Zealand First still has a long way to go in returning to Parliament - and there are plenty of reasons for voters to distrust them. But it's probably time to start taking a Winston Peters comeback seriously."
Edwards' article was published on the Herald's website.
NZ First's Winston Peters announced he's back with a vitriolic attack on 'woke' politics. Photo: RNZ / Samuel Rillstone
In his speech to NZ First's annual conference last weekend Peters put Labour in the firing line, RNZ reported.
"Peters said the government's agenda was driven by 'malignant paternalism' and 'inverse racism'," the report said.
He also used his speech to outline several policies, promising to clamp down on immigration, ban gang patches in public places, and spend billions on health and education.
"New Zealanders are getting sick and tired… of soft-in-the-heart, with a head to match, lily-livered liberals espousing policies against New Zealand's interests when it comes to immigration," he said.
The government's plan to levy farmers for methane emissions was "pure unadulterated bull dust".
It was all "woke, virtue-signalling madness, again. All to make our climate activists feel good about themselves."
It was vintage Peters, an old hand at identifying issues that worry voters and pressing their buttons.
Ardern said Peters had been looking for headlines. He certainly got them.
She told Morning Report his comments were "merely politicking", part of a cycle that could be observed in the lead-up to elections, and she wouldn't entertain them.
After having to deal with Peters' vitriolic comments Ardern came up against another difficult customer - Auckland's new Mayor Wayne Brown.
He's turning out to be an assertive leader, and this week called for Watercare and council chief executive Jim Stabback to stop all work on the government's huge Three Waters project.
Three Waters, he said, was doomed.
"The proposal has not been passed by Parliament and after last weekend's local government elections throughout the country has no chance of proceeding this side of next year's general election," he said.
Prime Minister Jacinda Ardern meets Auckland mayor Wayne Brown. Photo: Supplied / Auckland Council / Jay Farnworth
Ardern met Brown on Thursday as part of her get-togethers with new mayors, and stood firm on Three Waters.
She said she had made it clear to Brown that she did not want Aucklanders facing increasing bills over his "speculation about Three Waters", RNZ reported.
"I'm unwilling to stand by and see Aucklanders face increasing bills, and that is what is projected to happen if we don't do something about water infrastructure," she said.
"So I expressed to the mayor that in my view neither of us want to see that scenario, so let's keep working together."
She said she had shared with Brown the timetable for the legislation that is going through Parliament.
"It continues, so I'll be making sure that his team are aware of those timetables."
The Herald's analysis was that by all accounts the meeting was "cordial and constructive".
The Three Waters legislation is currently with a select committee, which can change it.
As it stands, councils can't opt out of Three Waters. Under it, four water entities will take over water infrastructure from councils and run it.
*Peter Wilson is a life member of Parliament's press gallery, 22 years as NZPA's political editor and seven as parliamentary bureau chief for NZ Newswire.