New Zealand Government Cuts Taxes Even as Budget Deficit Widens 
By Lucy Craymer
The conservative government, a coalition between the major centre-right National party and minority parties New Zealand First and ACT, has been in power since the 2023 election.
"Kiwis will have to weigh up who is best placed to provide stable and strong government in a very volatile and uncertain world...a strong economy with responsible spending, lower taxes and more opportunity for you and your family," Luxon told a news conference announcing the election date.
Luxon, 55, has seen his popularity fall over the past year amid a weakening economy and higher unemployment.
The former CEO of Air New Zealand has faced criticism for some of his policies, including the closure of a separate health authority for indigenous people and a lack of funding increases for frontline employees, amid higher unemployment.
Current opinion polls indicate a tight contest with neither the ruling coalition nor the centre-left Labour Party, led by former Prime Minister Chris Hipkins, appearing to command majority support.
"The economy is recovering, and National's plan to fix the basics and build the future is delivering results for you and your family. Now is not the time to put all of that at risk," Luxon said, adding that he was open to working with New Zealand First and ACT after the election, but wanted a strong vote for National.
New Zealand has used a mixed-member proportionalelectoral system since 1996, and this has made coalitions the norm.
The New Zealand government last year passed a law that will prevent people from enrolling to vote on election day and bar prisoners from casting their ballot while in jail, a move critics say could reduce voter participation and impact support for left-wing parties.
ECONOMIC CONCERNS
Luxon swiftly rose through the ranks of the National Party and became leader by end of 2021. He helped the party grab a significant share of votes away from Hipkins' Labour Party in the 2023 polls.
Labour has struggled to win back support after rising living costs alienated voters and the shock departure of former charismatic leader Jacinda Ardern months before the 2023 election did little to reverse its fortunes.
"New Zealanders face a very clear choice at this year's election between a government that's offering more cuts, more division and more negativity, or a change of government to a government with a positive vision for New Zealand's future," Hipkins said.
For many voters, the economy remains their key concern, with growth over the past two years soft, house prices remaining well below their 2021 peak and unemployment sitting above 5%. The government will be banking on the economy continuing to improved this year following on from a 1.1% rise in the third quarter to reassure voters.
The New Zealand dollar rose 2.9% last year largely due to the weakness in the U.S. dollar. Still, it underperformed its peers and on a trade-weighted basis, it fell more than 2% last year.
"The spectre of the economy still hangs over New Zealand politics," said Ben Thomas, a political analyst and former National Party staffer. He added that even though broadly inflation had come down there was still a rise in costs such as local government taxes that were hitting people.
Thomas said the government would have been expecting "a slightly easier run into the election with the economy on the turn" but that geopolitics and U.S. politics will likely have consequences for New Zealand as an isolated trading economy.
(Reporting by Lucy Craymer in WellingtonEditing by Alasdair Pal and Michael Perry)