Labour Leader Calls for Full Government Resignation After GDP Drop

New Zealand’s Labour leader, Chris Hipkins, is demanding the resignation of the entire government following the release of disappointing economic data indicating a significant decline in the country’s gross domestic product (GDP). The latest figures show a 0.9% contraction in GDP for the June quarter, which far exceeded market expectations of a 0.4% decline and the Reserve Bank’s forecast of 0.3%.

Hipkins’ call for a government-wide resignation does not extend to Nicola Willis, the Economic Growth Minister, despite former Labour Finance Minister and Act founder Sir Roger Douglas advocating for her departure. Willis has maintained that both she and Prime Minister Christopher Luxon have confidence in her economic management, although she later clarified that discussions about her position were not as direct as initially suggested.

Political Responses to Economic Challenges

Speaking to reporters, Luxon expressed unwavering support for Willis, proclaiming her to be “the best finance minister New Zealand would ever have.” He attributed the economic downturn to external factors, particularly the United States’ tariff regime, which has disrupted global trade and diminished investor confidence, impacting trade-dependent nations like New Zealand more severely.

The unexpected GDP contraction runs counter to the government’s objective of fostering economic growth by 2025. Douglas, along with Robert MacCulloch, chair of macroeconomics at the University of Auckland, criticized the government’s current financial strategy, specifically highlighting excessive spending on pensions and healthcare as obstacles to achieving a budget surplus.

While Hipkins was absent from Parliament when the GDP figures were released, he did not hesitate to direct his criticism towards the government upon his return. He stated, “The whole government needs to go. Nicola Willis, Christopher Luxon, Chris Bishop, they are all in this together. I think the whole Government should resign.” He emphasized that the current economic strategy is a collective failure, citing the coalition agreements signed by leaders including Winston Peters and David Seymour.

Public Perception and Polls

In light of the economic situation, a new poll conducted by Talbot Mills between September 1 and 10, 2023 revealed that a majority of New Zealanders, at 55%, believe the country is on the “wrong track.” Despite being Labour’s pollster, the poll was conducted for corporate clients, showing that only 30% of respondents felt the current government was doing better than the previous Labour government.

The survey indicated that 45% of respondents viewed the current coalition as worse, while 21% considered both governments to be about the same. In terms of party support, Labour leads with 35%, followed closely by the National Party at 31%. The Greens and New Zealand First each garnered 10%, while Act received 7% and Te Pāti Māori stood at 4%.

As the country approaches the 2026 election, Hipkins faces ongoing scrutiny regarding Labour’s limited election policy announcements. He argues that releasing policy proposals during such economic turmoil would be counterproductive, stating, “It isn’t the right time for the Opposition to be releasing policy because who knows how much worse this is going to get before things can start to get better.”

The political landscape in New Zealand continues to evolve as leaders respond to economic challenges and public sentiment ahead of the upcoming election.