It would make history if the current government only last one term. (Image: Gabi Lardies).
It would make history if the current government only last one term. (Image: Gabi Lardies).

PoliticsJune 20, 2024

A complete history of New Zealand’s one-term governments

It would make history if the current government only last one term. (Image: Gabi Lardies).
It would make history if the current government only last one term. (Image: Gabi Lardies).

The current coalition not lasting beyond this parliamentary term is an idea that’s been seized on by its opponents. History suggests it’s unlikely – but not impossible. Gabi Lardies explains.

‘We have a very good chance of making this a one-term government,” said Labour leader Chris Hipkins at his party’s recent regional conference. Though he was no doubt bolstered by a room of supporters on Sunday, as well as recent polls that showed the government’s popularity slipping, it wasn’t the first time Hipkins had used the phrase, and he’s far from alone – it’s been repeated by outspoken opponents of the coalition, including the Green Party, for months. Perhaps now enough time has passed since Labour’s dismal election performance for it to gain traction.

But while “one-term government” is becoming a galvanising phrase among opponents of the current coalition – thrown around not only in political speeches and debates but also at rallies and on social media – it is not a common occurrence in Aotearoa. Keeping in mind that the spirit of the phrase excludes coalition changes, such as the Labour-led government dropping NZ First in 2020, here is the complete history of New Zealand’s one-term governments:

  1. The second Labour government led by Walter Nash, 1957-60 
  2. The third Labour government led by Norman Kirk and Wallace (Bill) Rowling, 1972-75

To point out the obvious, there have been just two, and both were Labour. If the current government were to last just one term, it would be the first time in history that a National-led government would so quickly fall from power. Single terms are also rare in Australia – there hasn’t been one there since 1931. In Europe they’re much more common, with most countries seeing a change of government at least every two years.

So what happened for those two 20th-century New Zealand governments to lose popularity just three years after coming into power? Could it happen again in 2026?

A rare sight! Members of the first one-term government at Government House, 1957. (Photo: National Library of New Zealand).

Jim McAloon, a professor of history at Te Herenga Waka, says it’s likely a coincidence that our only two single-term governments were Labour ones. The commonality that isn’t so coincidental is that “what undid them was economic policy or economic events”, he says. That doesn’t necessarily mean the two governments badly managed economic affairs, “but that they were confronted with circumstances that made life difficult for them”. 

The second Labour government came into office in 1957 with just a two-seat majority, so was “​​always going to have a problem holding on”, says McAloon. It also faced a balance of payments crisis, with export earnings down and imports high, which can lead to rapid decline of a currency’s value. In order to get through that without high unemployment or economic damage, the Nash government’s 1958 budget was “a bit tough”, says McAloon. Raising taxes on beer, cigarettes and petrol, it was called the “black budget” by National leader Keith Holyoake (though he probably didn’t coin the phrase), and the label caught on. Holyoake was “a very, very effective and skilled politician”, says McAloon, and was able to run the all-too-familiar National Party line that Labour were bad economic managers and all too happy to raise taxes. “That doesn’t change, does it?” notes McAloon. “Holyoake just said black budget, black budget, black budget every week for three years.”

When the next election rolled around in 1960, Labour was turfed out. It’s wasn’t only that National won over Labour voters, McAloon says, but also that many Labour voters stayed home – something that played a part in Labour’s defeat in the 2023 election too.

The next one-term government came after 12 years of National in charge. The Norman Kirk Labour government was voted in with a huge 23-seat majority amid a national mood that it was time for change. Television had become an important part of politics, and Kirk was good at it. McAloon describes him as “a big, big man and compelling public speaker” who was so popular that a song about him, ‘Big Norm’ by the band Ebony, was fourth on the national charts in January 1974. Unfortunately for Labour, Big Norm died of heart failure in 1975. “That did not help,” says McAloon. His successor, Wallace (Bill) Rowling, was not so good at the theatre of politics, and struggled to assert authority.

Then, the booming economy came to an end. Inflation soared. It was not through Labour’s economic mismanagement, but because the price of oil shot up and pushed the western economic system into a recession, and New Zealand went down with it. Suddenly we were spending much more on imports, and the market for our exports contracted. The UK joined the European Economic Community and we could no longer count on them to lap up our sheep and lamb. A big personality entered the contest for prime minister – Robert Muldoon became leader of the National Party in 1974. He “campaigned on the basis that everything was their fault, you know, which was quite unfair – but politics isn’t fair”, says McAloon, who adds that Muldoon was “pretty good at scapegoating and dog-whistle racism and accusing Labour of being a bunch of out-of-touch, elitist intellectuals”. In the 1975 election, Labour’s majority was reversed.

But economic downturns can’t be wholly blamed for governments lasting only a single term, as they’re not the only ones to have faced them. After the wool market collapsed in 1966, the National Party won a third term. The Muldoon National government also held on through the oil shock of 1979. The National government that delivered the “mother of all budgets” in 1991 did scrape into a second term in 1993, although there was a major swing away from its previous landslide win in 1990. The global financial crisis hit at the end of the three-term Helen Clark Labour-led government, with the 2008 election seeing the beginning of the John Key-led National/Act/United Future/Māori Party three-term government. Three is the most common number of terms for New Zealand governments to last, and there have only been a couple of four-term ones. McAloon says perhaps that’s because “if you’re in power for a long time, inevitably people get bored, disillusioned, annoyed, and just think, ‘Oh, well, time for a change.’”

Something else to consider is that both the second and third Labour governments were elected under a first past the post system – “winner takes all, if you like,” says McAloon. There were no king-makers or parties to form stronger coalitions with. It didn’t take a huge swing of voters to knock seats off a government. Under MMP the whole mechanism is different, with coalitions and blocs that need to be considered. “The likely coalition partners also have to maintain their share of the vote and a reasonable degree of discipline themselves,” says McAloon. To some extent the major parties need their votes too.

The handshake after the coalition agreements were signed, November 24, 2023. (Photo: Marty MELVILLE / AFP).

As for today, McAloon says the current government is gambling that social conservatism will win them more votes than economic austerity will lose them. He’s noticed this government blaming the previous for a bad economy, just like Muldoon did in 1975. “It’s an easy dodge to simply blame the last lot for everything.” Of course, National is not the only party that does that.

There’s some truth, McAloon thinks, in the cliche that oppositions don’t win elections, governments lose them. “I don’t think that’s going to work for Chris Hipkins, though,” he says. “I think he needs to pitch an alternative view, especially if he’s hoping to make Luxon’s a one-term government.” He says getting voters to switch back to Labour, or getting Labour voters to turn up, will take persuasion – not just waiting for the coalition to lose popularity.

Hipkins’ pitch on Sunday to push out the government after one term included being an effective opposition, having new ideas and policies to capture imaginations, and rebuilding and broadening the Labour movement. Greens co-leader Chlöe Swarbrick, who called for a one-term coalition government during her “state of the planet” speech in May, went beyond parliament to organising people to resist and put pressure on the coalition. Either way, if the opposition want to make history by adding a National-led government to our very short list of one-termers, they’ve got about two years and five months of hard work in front of them.

‘Help keep The Spinoff funny, smart, tall and handsome – become a member today.’
Gabi Lardies
— Staff writer
Keep going!
Chris Bishop against a background of lined paper. There are graphs overlaid on the image, trending upward, culminating in a burning house icon.
Image: The Spinoff

OPINIONPoliticsJune 20, 2024

Bishop’s house price comments show the mood is shifting. Will we see actual change?

Chris Bishop against a background of lined paper. There are graphs overlaid on the image, trending upward, culminating in a burning house icon.
Image: The Spinoff

A housing minister willing to publicly discuss house price falls is encouraging, but true affordability is likely to remain a long way off, writes Max Rashbrooke.

House prices must always rise. For as long as I can recall, this has been one of the core assumptions of Kiwi politics. It has seemed like a long-run item of faith, a central tenet in the national religion of property investment.

Metiria Turei learnt this to her cost in 2016, when the then Greens leader told Morning Report prices needed to halve – over a period of time, but halve nonetheless – if homes were to become affordable once more. Labour leader Andrew Little called her “irresponsible”, and the public, according to Greens I spoke to at the time, “freaked out”. More recently, Jacinda Ardern sought nothing more alarming than a “sustained moderation” in prices.

But on Monday, the housing minister, Chris Bishop, dipped his toe into these dangerous waters. Asked by Herald reporter Thomas Coughlan if prices should fall, he simply replied: “Yes.”

“Average house prices to the average household income are too high by any objective measure. They are severely unaffordable by international standards,” he added. “The flipside of house prices falling for people who own homes is that they become more affordable for people who don’t.” 

So far, Bishop’s laudable comments have not brought the proverbial house down upon his head. On the Stuff story carrying his remarks, the responses were mostly – though not universally – positive. 

Possibly this is because Nats can get away with saying things Greens can’t. But it could also represent the slow movement, from the fringes to the mainstream, of the view that house prices are just too high, and therefore must fall. As indeed they’ve done in the past. Relative to incomes, house prices declined sharply from the mid-70s to the mid-80s. And in the last few years they have dropped from their ridiculous pandemic-era peak.

Crucially, though, Bishop hasn’t been explicit about what he wants. When most people hear “house price falls”, they think of a scenario where a house that’s valued at $800,000 one year is worth, say, $790,000 the next. But if house prices increase at a slower rate than inflation, that still counts as an “inflation-adjusted” or “real terms” fall. If, in other words, a house valued at $800,000 sells for $808,000 (that is, 1% higher), but inflation is 2%, the value of the house has “fallen” relative to the costs of other goods. 

When The Spinoff asked on Tuesday which scenario he meant, Bishop’s office said only that he “stands by his comments yesterday and all previous comments around housing affordability”. Which reveals nothing – except that he isn’t taking up the opportunity to say, “Yes, absolutely, I want the actual dollar value of homes to drop.”

Housing minister Chris Bishop and prime minister Christopher Luxon at parliament in March (Photo: Hagen Hopkins/Getty Images)

One might ask: so what? There is no knob marked “house prices” that the government can turn up or down with infinite precision; only the broad aim matters. And that’s a partially fair point. It’s helpful – encouraging, even – to have a housing minister talking about house price falls of any kind. 

But still the distinction does count. First, it’s the difference between really facing down anxious homeowners versus still not wanting to frighten the horses, à la Ardern. The scale of government action needed to achieve the two scenarios is also somewhat different.

The distinction, finally, matters for the path back to affordability, usually defined as prices being only three times incomes. The average house-price-to-income ratio, according to interest.co.nz, has fallen from its 2021 peak of 9.3 to a mere (!) 6.9 today. That’s because the average house is now valued at $790,000, and assuming a prospective house-buying family of two 30-year-olds, 1.5 incomes and one child, the average income available is $115,000. (Other assumptions give higher ratios.)

If one then projects that incomes will rise 2.5% above inflation each year, as they did in the decade pre-Covid, what does that mean for the “real-terms fall” scenario in which house prices increase by 1% but inflation by 2%? It means at least a two-decade wait before we get back to a situation where house prices are three times incomes. Such slow-and-steady progress would nonetheless represent a long wait for those currently locked out.

If house prices freeze (in actual dollar terms), affordability might return a little quicker: in 15 years, say. But to get back to the three-to-one ratio within a decade, prices would have to fall something like 3% a year in actual dollar terms. 

That may not sound like much, but it is. A house that’s worth $790,000 one year is only worth $721,000 (in actual dollar terms) after just three years of 3% falls. By the end of the decade it is worth only $580,000.

Image: Tina Tiller

These are all rough numbers: a spreadsheet not a detailed model. Nonetheless those are the kinds of projected falls to make homeowners, well, freak out. Some would soon owe the banks far more than their houses are worth. Those with their retirement hopes pinned on an investment property would – rightly or wrongly – be in some trouble. And if the “wealth effect”, in which people spend more when their house value rises, is real, the economy would slow. 

Nor is it clear how far public opinion has shifted. It’s true that, for some time now, polls have shown support for house price falls as a concept: in 2022, three-quarters of New Zealanders backed the idea. Last year they were far more likely to be “optimistic” rather than “worried” about price drops.

But that is very different from saying that one’s own house price should fall – and the last time that, as far as I know, the public was asked that specific question, just one-quarter responded favourably. This is probably why, as Hayden Donnell and others have noted, any media mention of falling prices is related in the same tone one might use to announce the death of a beloved relative. 

This may change: the “aspirant homeowner” and “parents of aspirant homeowner” demographics may come to outweigh the “hands off my house price” cohort. Media coverage may shift. But if not, any real assault on prices would require National to face down two-and-a-half years of negative headlines before the next election – and, as above, countenance some startling declines in house values.

This is the problem with having allowed prices to rise to such insane heights, over so many years: the unwinding is liable to be either painful or slow. And it’s worth noting that Bishop has publicly pledged only to achieve house prices of “three to five” times incomes – which provides some wriggle room. Merely freezing prices could get us to the upper bound of Bishop’s target early next decade. 

Of course no one can predict exactly how prices will respond to any given set of government actions or wider economic shocks. And Bishop is a canny politician: if he’s willing to publicly discuss house price falls, something in the debate has clearly shifted. But a gentle stasis is still much more likely to be National’s dream scenario than anything that brings affordable housing more quickly into view.

‘Help keep The Spinoff funny, smart, tall and handsome – become a member today.’
Gabi Lardies
— Staff writer

Politics