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New Zealand's COVID comeback overshadows Ardern's reelection bid

As mysterious new outbreak delays vote, popular PM's rivals smell opportunity

New Zealand Prime Minister Jacinda Ardern speaks to the media on Aug. 17, explaining her decision to postpone the general election until Oct. 17.   © Getty Images

SINGAPORE -- Prime Minister Jacinda Ardern has delayed New Zealand's general election for a month in the face of a new wave of coronavirus infections, but she could be forgiven for wishing the vote had already taken place.

Ardern's Labour Party has been riding high in the polls in recent months. A "rally around the flag" effect and 102 days of no COVID-19 community transmission propelled Labour's support numbers to between 50% and 60%. If reflected at the ballot box, this would mean the first single-party majority government in modern Kiwi politics.

Meanwhile, the opposition National Party has changed leaders twice in less than three months as it registers some of its worst support in a decade and loses voters to a small libertarian party.

But this month's outbreak in Auckland, which as of Monday involved 58 cases, prompted Ardern to reinstate a partial lockdown of the country's commercial capital and bow to opposition calls to postpone the polls. While Labour is still the favorite, there is a risk that the party's lead will narrow ahead of the Oct. 17 election date -- a date Ardern says she has "absolutely no intention" of pushing back any further.

"It'll be Labour that gets punished if community transmission occurs," said Janine Hayward, a politics professor at the University of Otago, before the new outbreak. "There's huge expectation politically that we carefully guard the position we are in."

Some of the cross-partisan support seen in previous months has dissipated as political rivals sense an opening. Judith Collins, the latest National leader, has sharply criticized Ardern's recent handling of the disease. And Deputy Prime Minister Winston Peters, whose populist New Zealand First party will not be returned to parliament if polls are accurate, has suggested without offering proof that the Auckland cluster stemmed from a breach at the country's borders.

Ardern has insisted that no connection to the country's entry gateways or quarantine facilities has been established, but has also said the strain found in the city of 1.7 million differs from the virus that circulated earlier this year. "It appears to be new to New Zealand," she said last week.

The source of the outbreak has yet to be determined.

A nurse conducts coronavirus tests at a drive-thru site in Auckland on Aug. 16, as health officials rush to contain a new outbreak in the city.   © Getty Images

Though Ardern has been held up worldwide as a symbol of effective leadership in the pandemic, not everyone is convinced. "The prime minister has done a reasonable job of communicating, but governments tend to do reasonably well handling crises," Christopher Finlayson, a retired National politician who was attorney general during the financial crisis and Christchurch earthquakes, told the Nikkei Asian Review.

"The steps she took were probably 70% to 80% similar to what my government would have done if still in office," he added. "There's no magic in shutting borders and preparing to make people observe lockdown."

Nonetheless, Ardern, who is personally extremely popular with the public, still has several factors working in her favor.

The fresh outbreak appears to be geographically contained and she has a near-monopoly on public attention as New Zealand reenters crisis-fighting mode. And the October election -- which is still earlier than other parties had hoped for -- comes two weeks before potentially devastating quarterly unemployment numbers are slated for release.

The nation's economy has also benefited from heavy government support, including a nearly NZ$14 billion ($9 billion) wage subsidy that was extended after the latest outbreak and an NZ$100 billion quantitative easing program. Business activity outside Auckland has held up and dairy, meat and fruit exports rose by over NZ$1 billion on the year between February and June, driven by North American and Japanese consumers.

"We've lost a significant amount of jobs but after [the first] lockdown, things like retail spending are back to normal," said Shamubeel Eaqub, an economist at Sense Partners. While the collapse of international tourism has translated to a roughly 1.5% hit to gross domestic product, domestic travel has picked up some slack. Heavy vehicle traffic, a bellwether for economic activity, has rebounded.

Much of the economic pain will, instead, be felt by the next government. Unemployment is likely to peak at around 8% next year and will remain persistently high through 2024, said Christina Leung, principal economist at the New Zealand Institute of Economic Research, a centrist think tank. "We're forecasting a V-shaped recovery from June lows, but when the wage subsidy ends we might see a W shape."

The matter of how to pay for the coronavirus fiscal programs has become a major campaign issue. The Treasury forecasts that the public debt-to-GDP ratio will hit 54% by 2023, up from 19% in 2019, leading the National Party to call for a reduction to 30% in about a decade's time. Ardern has jumped on that suggestion and argued that it would only be possible through drastic cuts to public spending -- a point supported by independent economists.

"Talk about reducing it over the next 10 years is just irresponsible. You don't do that in the middle of a recession," said Eaqub, adding that the debt level is sustainable given the low interest rates the country is borrowing at.

Questions persist over Collins' effectiveness as a foil to Ardern. The veteran lawmaker delights in the "Crusher Collins" moniker that was bestowed on her after a stint as police minister and is a favorite of her center-right National Party's base.

National Party leader Judith Collins, known as "Crusher Collins," has sharply criticized Ardern's recent handling of the pandemic.   © Getty Images

"Judith is very polarizing as a politician," said Sue Moroney, a former Labour frontbencher. "Her abrasive style will be off-putting to some who occupy the center, which is where our elections are fought."

Moroney argued that "Ardern is the opposite of that, and even people who may not have agreed with Labour policy in the past find themselves warming up to her. You couldn't get two more different female politicians."

Though Collins has voted in support of same-sex marriage and decriminalizing abortion, she is seen as more socially conservative than her predecessors. "Young National supporters now look at the party as something that doesn't represent them," said Hayward, the Otago politics professor. "While it may economically be in line with what they think, it no longer has an urban progressive face."

Finlayson, who served in cabinet with Collins and is associated with the Nationals' more liberal wing, thinks Collins is misunderstood.

"It's a shame that Judith has been stereotyped into this law-and-order stuff," he said. "She's a very compassionate person ... and is capable of making tough decisions. She will understand our economic challenges far more than the current PM."

Those looming challenges have prompted Ardern to pledge NZ$300 million for job creation if reelected, but also to try to keep post-election hopes in check. She has told her supporters not to expect groundbreaking new policies.

Yet, if she returns to power with a majority or the support of left-leaning Greens, she will be under pressure to run a more progressive government.

"If Labour gets a very strong mandate, that will be a mandate for progressive politics in this country," Moroney said. "We will have an amazing opportunity to implement some policies that would really improve people's lives substantially."

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