The global credit crisis took a firm grip on New Zealand’s election campaign this week. With just 16 days to go before Kiwis head to the polls, the credit crunch has become the political puppet-master, tugging the parties to and fro. Recession, yank! Inflation, jerk!

The two main parties had recognised the political importance of prudence a week earlier, with Labour announcing a bank deposit guarantee scheme and National trimming its long-promised tax cuts. But that was just the beginning.

On Sunday, National urged the Labour-led government to go further, not just guaranteeing bank deposits but all lending between New Zealand banks and their overseas counterparts. Standing up tall and trying to look as prime-ministerial as possible, National leader John Key urged his opponents to put politics aside and offered to work with Labour to hammer out a scheme. Prime Minister Helen Clark graciously responded by saying that it was no time to elect a leader like Key, who still had “his trainer wheels on”. As New Zealand Herald political analyst John Armstrong put it, “Good try, John. But Labour is not going to fall for that old trick”.

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Still, Labour could see where the wind was blowing, and having announced $618m worth of new spending the week before – including a universal student allowance – Clark suddenly found the restraint of a monk. There would be no more significant spending initiatives before the election, she said. A planned extension to paid parental leave and an increase to the minimum wage had been put back in the box. Her government’s focus, if re-elected, would be a financial stimulus package in December. She just refused to give any details.

With no more policy to debate, potential coalition deals have dominated the rest of the week. When the Greens announced they would only go with Labour, voters were left with an unusually clear picture of what potential coalitions they would be choosing between: The Progressives and the Greens will only deal with Labour. Act will only deal with National. National has ruled out dealing with New Zealand First.

That leaves just United Future and the Maori Party unspoken for. Given that on current polling United Future will have just one MP, it’s the Maori Party, with five to seven MPs, that could well hold the balance of power.

Perhaps. If you were kind, you could call the polls volatile. If you were more direct, you’d say they were all over the bloody place. Some have National with a 14-18 point lead, some just a six point lead. The Pundit poll of polls has the gap at 13 percent. But toss in the Green’s 8 MPs and the Progressives’ one, and there’s not much in it. If New Zealand First can climb from three percent to the five percent threshold, it could just about even the numbers up. But with or without them, the polls only need to close a little for the Maori Party to become the decider. Co-leader Tariana Turia has been careful to stress that the party she founded could go either way. But John Key must have felt a bit sick to open the paper this morning to read that the other co-leader, Pita Sharples, had told a Christchurch forum that he would prefer Labour to get more votes, “because that’s what our people want…. Maori are joined at the hip with Labour”.

And just to make matter worse for the National leader, one of his senior MPs told a regional newspaper that Asians are better fruit-pickers because “their hands are smaller” and that employers are having to teach Pacific Island pickers “how to use a toilet or shower”.

It was the sort of casually racist campaign buffoonery the media had been waiting for, and they pounced. Key used his large, pakeha hands to slap Smith down, stressing once again that prudence is the watchword in this campaign.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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