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Ardern’s biggest call is coming

Jacinda Ardern must decide early next year whether to rescue Winston Peters or go for a full Labour-Green victory in 2020, Bernard Hickey argues.

The political and policy winds are blowing Prime Minister Jacinda Ardern towards a decision over the summer that will define her career and could change New Zealand for a decade.

Her decision will tell us just how transformational, ambitious and ruthless she really is, or whether, as some suspect, she is more conservative and risk averse than her stardust suggests.

Her decision is over whether to gift the Northland electorate to Winston Peters to ensure New Zealand First votes are not wasted in the event the party is about to receive less than five percent of the vote in next year's election.

This would not be an issue if New Zealand First were polling above five percent, but the last two public opinion polls put Peters' party at 2.9 percent (Newshub-Reid Research in early February) and 4.0 percent (TVNZ-Colmar Brunton in early April). New Zealand First's base of support is around 3.0 percent, according to the New Zealand Electoral Study's survey of voters after the 2017 election, where it received 7.2 percent of the vote.

Peters has also never led his party back into Parliament through the five percent threshold after a term in Government. The closest comparison is the last term of the previous Labour Government over 2005-08, when Peters was Foreign Minister the last time around. His last year in that Government was dogged by controversy over the donations to the party by Owen Glenn and the party's vote slumped to near that support level. New Zealand First's 4.07 percent vote was wasted in the 2008 election.

Peters is this time sailing much more steadily at the right hand of Ardern, but faces the same problem all small coalition partner partners have in Government. Staying loyal to the major party and not rocking the boat deprives them of the oxygen of opposition, and the smaller party gets little of the credit if the Government is doing well. Labour's poll rating of 48 percent to National's 40 percent in the Colmar Brunton survey drives that point home.

No smaller party has returned to Government under its own steam of the five percent threshold after a term in Government under MMP. Each time, the smaller party has only survived in Parliament with a 'dirty deal' to gift an electorate to ensure their vote coasts into Parliament on the coat tails of the electorate MP.

CGT, methane and marijuana slap Labour and Greens in the face

The political winds and the policy setbacks for Labour and the Greens over the last month have made this Northland call even clearer as both an opportunity and a threat for Ardern.

Her personal popularity is sky high, thanks to her authentically compassionate and determined actions and words in the wake of the Christchurch attacks. The National opposition is sliding towards the danger mark of 40 percent under Simon Bridges, who also now faces the very real prospect of a challenge from Judith Collins. He lacks personal popularity (his rating is the same as Collins in the Colmar Brunton poll) and, ironically, the removal of the Capital Gains Tax from Labour's platform under Ardern has evaporated a major source of National's oxygen.

Ardern now knows the 2020 election is there for her taking. It's just a question of who she wants to win with, and how confident she is in her own ability to convert her popularity into a high party vote.

Transformational or just another do-little populist?

Assuming the polls don't change between now and February, Ardern will face pressure from activists on the left of Labour and from the Greens to dump Peters and go for broke.

The Greens have a higher base of electoral support at 4.0 percent and the party has been doing better in the polls. It received 6.0 percent support in the Reid Research and Colmar Brunton polls.

The prospect of a Labour-Green Government able to swing for the fences without the restraint of New Zealand First will tempt many on the left.

If Ardern wants her legacy to be mentioned in the same breath as that of Michael Joseph Savage, David Lange and Helen Clark then she needs a stronger hand in Cabinet and in Parliament.

Ardern and her long-time friend James Shaw have felt those restraints bite into their wrists hard in the last month.

New Zealand First blocked Ardern's passionate hopes for a Capital Gains Tax, the passing of which was seen by Shaw as a test of whether a Government was worth keeping. Being forced to abandon it for the rest of her time in politics was a bitter blow.

Then New Zealand First blocked Green hopes for a more binding referendum on legalising marijuana. That followed New Zealand First's watering down of Labour's plans to completely repeal 90 day trial legislation and get rid of the three strikes sanction.

The latest big slap-down for Labour and the Greens came this week with New Zealand First's insistence that farmers be treated more leniently in the greenhouse gas emissions regime.

The splitting of the treatment of carbon emissions and methane emissions reduces the hit for farmers and the regions, but flies in the face of hopes for much stronger legislation. New Zealand First is also blocking talk of measures to increase the cost of older, heavier cars and utes that are a staple in the provinces.

The easier option

Ardern's big call will be driven as much by her own ambition and confidence as it is by the polling in early 2020.

If she wants to tax wealth properly, improve housing affordability properly, address climate change properly, reform justice policy and significantly reduce child poverty, then Labour needs to take much more dramatic action. A Labour-Green Government that campaigned to tax land wealth, reform the benefit system, massively increase debt-funded infrastructure spending, bring in tougher climate change policy and change the bail and sentencing rules would be a properly transformational one.

If Ardern wants her legacy to be mentioned in the same breath as that of Michael Joseph Savage, David Lange and Helen Clark then she needs a stronger hand in Cabinet and in Parliament. But going for a pure Labour-Green combination is the riskier option, given the chance that both New Zealand First and the Greens fall below the threshold and their votes are wasted. That could allow National to sneak into power on its own with a marginally higher share of the vote than Labour.

It's been done before

The lower risk option would be to offer electorate seats to either or both of New Zealand First and the Greens, by promising not to contest in Northland so Peters could win as an electorate MP, and potentially standing aside in Nelson so the Greens could knock off Nick Smith. That would ensure their votes were not wasted.

There's certainly precedent for Labour to do either one or two 'dirty deals' to ensure National has absolutely no chance of winning.

The 2020 election could be something different in the MMP era. If only the most popular politician of her generation believes in herself and her agenda.

Helen Clark encouraged Labour voters to back Jeanette Fitzsimons in Coromandel in 2002 and then leader Andrew Little gave a nod and a wink to Labour voters to back Peters in Northland in a by-election in 2015 to embarrass National.

Even the Greens have played the game to curry favour when it made sense, including withdrawing a candidate from the Ohariu electorate to put pressure on National's surrogate there, Peter Dunne.

Conflict avoidance technique?

Peters may well not want the help of Ardern, particularly if he wants to effectively launch himself into opposition to his own Government next year to win some oxygen and nudge his vote above five percent in the heat of a campaign.

But that also challenges the ability of Ardern to portray her Government as orderly and reasonably disciplined and civil.

If Peters wants the help in Northland and she rejects it, then that would lead to a very uncomfortable few months around the Cabinet table. It would throw an ugly spanner into what has seemed a seamless and harmonious relationship between the Prime Minister and her deputy. We'll find out if she can handle conflict like that around the Cabinet table and on the public stage. A few hints of the tensions emerged in recent days when someone in New Zealand First (although Ardern said it was not a Cabinet minister) leaked the marijuana referendum cabinet paper to National.

We will know after the summer recess if Ardern really wants to be transformational and take some risks, or whether she and her main partner, Grant Robertson, are more interested in governing in the incrementalist way usually mandated in MMP elections.

The 2020 election could be something different in the MMP era. If only the most popular politician of her generation believes in herself and her agenda.