Duncan Garner: The only question that will matter at the 2026 election

Are you better off under this National-led coalition government? We’re halfway through the three-year election cycle, so it’s the question the government will start to pay more attention to because come the 2026 election, it’s the only question that will matter. Right now, the answer is unlikely to be a resounding “yes” – as shown by recent public opinion polls that make tough reading for National.

Unemployment is up to 5.1%, the highest it has been since 2020. Unemployment among Pacific people is more than double that, at 10.5%, and the Māori unemployment rate of 9.7% is coming close to it. It’s worse if you’re aged 15-19, where the youth unemployment rate in December 2024 was 23.8% - it’s highest in more than a decade.

But the government had something to celebrate this week with news our GDP (Gross Domestic Product) rose 0.7% in the December 2024 quarter, following a 1.1% decrease in the previous quarter. This was stronger than most economists predicted, and Finance Minister Nicola Willis was quick to seize on it as proof the economy has turned a corner.

It might make for a happier headline, but let’s remember our economy is still sluggish and remains 1.1% smaller than it was in 2023.

National will be celebrating that after a slow and unsure start to the year, Prime Minister Christopher Luxon has grabbed the headlines with his investment summit and trade trip to India, where he succeeded in getting a potentially lucrative free trade deal back on the table. New markets matter for exporters and with the prospect the current $1.54 billion in goods sent to India each year could grow 10 times, our exporters could do very well.

But how the economy continues tracking during the next 12 months is critical to this government’s ability to head to the polls next year saying, ‘See, we told you we would get things back on track.’ For now, though, I’m picking the party hierarchies – especially National’s – will remain nervous.

With economic growth comes jobs and pay rises, and that’s what National desperately needs to point to. That will give a boost to business and consumer confidence, too, both of which remain low. Right now, it seems like confidence is shot, with businesses reluctant to spend in case it backfires and consumers still worried about the cost of living and job losses.

If unemployment starts to drop, if confidence grows along with capital and expansionary ideas, then we might see the benefits flow to everyday Kiwis. It will also give us a chance to work out at election time if Luxon and Willis talked a whole pile of nothing or whether it was a carefully laid plan that actually worked.

In the meantime, there’s just eight weeks until Willis’s second budget and that will be crucial in setting us up for those additional jobs and pay rises. It mustn’t just be blather about “supercharging the economy” or “growth, growth, growth”; it needs to lay down concrete plans that will lead to results voters can see and feel in the back pocket. Only then will we feel better, and more hopeful that we’re making progress and there are opportunities ahead.