Meet New Zealand’s New Prime Minister As Kiwi Tumbles

Labour leader, Jacinda Ardern, will be New Zealand’s next Prime Minister after winning the support of the New Zealand First Party to form a coalition government. Labour with NZ First and the Greens will have 63 of the 120 parliamentary seats versus the National Party with 56. At 37, Ardern joins a global wave (France, Austria) of young politicians being appointed to key leadership roles, and will be the country’s youngest Prime Minister and the third woman to hold the post. New Zealand’s Labour Party had not been in power for nine years, after three terms in power for the National Party.

Twenty-six days after the election, the leader of New Zealand First, Winston Peters, announced his party was backing Labour live in an eagerly -awaited television announcement.

“We had a choice to make, either with National or with Labour, for a modified status quo or for change, In our negotiations, both National and Labour were presented with an opportunity, work together, cooperate together for New Zealand. That’s why in the end we chose a coalition government of New Zealand First with the New Zealand Labour Party.”

Peters confirmed that he has been offered the role of Deputy Prime Minister with Foreign Affairs and Defence also going to NZ First. He stated that Ardern had shown “extraordinary talent in the campaign” and had taken the Labour Party from a “hopeless position to position where they’re in office and government today.”

Peters stated that "We believe capitalism must regain its human face" as he warned that his party believes an economic slowdown is coming soon. "Some will attempt when the looming changes come to heap the blame on us," he said. He refrained from giving details on the policies agreed with Labour. However, given the scale of the property bubble, housing is a sensitive subject in New Zealand. Peters said he expects to see "fewer people coming here" which will help with the demand side, and "10,000 affordable homes a year" on the supply side (supporting Labour's “Kiwibuild” policy).

Peters had not told Ardern before speaking on national television. From a Stuff.co.nz reporter “I’m up at Labour offices, and jubilant cheers are erupting from the Michael Joseph Savage room in Labour’s third floor parliament offices. They are delirious. There’s have been tears and hugging, seen through the window of the room. Labour is ecstatic.”

Arden’s ascent to Prime Minister has been meteoric. Having become an MP in the 2008 general election, she was elected leader of the Labour Party less than three months ago on 1 August 2017. Beginning her career as a researcher in the office of then NZ Prime Minister, Helen Clark, she also had a stint as a policy advisor to British Prime Minister, Tony Blair. In 2008, she was elected President of the International Union of Socialist Youth. Ardern has opposed to tax cuts for high earners (supported by the National Party), a robust welfare state and same-sex marriage.

The Kiwi fell sharply on news of Ardern’s victory, as Bloomberg noted: The local currency plunged on concern the new government’s policies, such as a potential cut in immigration, may curb economic growth. ‘In terms of political risks, we’ve gone from zero-out-of-10 to four-or-five-out-of-10,’ said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. ‘Given that Peters is on the record for slashing immigration, reducing offshore ownership, changing the RBNZ’s mandate, until we get clarity on all of those policies, we’re going to have a lot of jitters and political and economic risk.’ Peters, who argued on the campaign trail that the New Zealand dollar has been persistently overvalued and is a long-term critic of the Reserve Bank of New Zealand’s inflation-targeting mandate, had proposed a system in which the central bank could directly control, and devalue, the currency. Labour has proposed a Fed-style dual mandate for the central bank of full employment and price stability.

Indeed, the local currency plunged as much as 1.6% amid concerns that policy changes may curb economic growth.

Score one for the tabloids: they were right…