LOWER HUTT, New Zealand, Nov 2 (Reuters) - The campaign for New Zealand's general election on November 7 comes down to the price of everyday life for 70-year-old Liz Hartley, a part-time bus driver.
"You've got to work to pay for the extras and to have a few treats," said Hartley, queuing at a food truck as election volunteers worked the crowd at a riverside market in Lower Hutt, a city northeast of Wellington, the capital.
As a result, Hartley said, she plans a tactical vote in her Hutt South constituency aimed at denying reelection for National Party incumbent Chris Bishop, one of the most senior figures in government.
Three years after urban voters helped the National Party winelection on promises to cut inflation and government debt, New Zealand is struggling to fully shake off a recession, though the party says it has laid the foundations for future growth.
In Hutt South, Bishop faces voters battered by a cost of livingcrisis and expenditure cuts in the capital that eliminated jobs for contractors, and shrivelled spending at shops andbusinesses.
Voters in the constituency, which spans communities east of Wellington, want a plan to "move the country forward and drive prosperity," Bishop told Reuters.
"My sense is that our economic plan is beginning to work, and we need more time to see it through," he added.
As New Zealand emerges from years of sluggish economic growth, its lagging urban sector presents a challenge for the National Party to retain votes in the cities of 30,000 or more that are home to about 65% of a population of 5.5 million.
A shift to National from Labour in traditional left-leaning urban areas in the largest city of Auckland helped propel the party to victory in 2023.
ECONOMIC WOES
If not for the "economic funk"engulfing most voters, the National Party would have a much easier route back to office, said political commentator Grant Duncan.
"National comes in with this reputation for beingthe great economic and fiscal managers ... and it hasn't worked out."
The government was not entirely at fault, but Prime Minister Christopher Luxon also made economic promises ahead of the 2023 election that he could not keep, he added.
New Zealand had endured "shock after shock after shock," said Kiwibank Chief Economist Jarrod Kerr, which meant that the promise of a recovery has been postponed,
"The cost of living crisis is very real for many businesses and households."
But rural and urban areas have fared very differently, with tourism and higher agricultural exports supporting the former, especially on the South Island, where second-quarter retail spending was up 8.6% on the year.
In urban locations such as Auckland and Wellington on the more populous North Island, however, consumer spending has lagged, with a smaller corresponding rise of 5.8%.
Jobs also reflect the divergence, with unemployment over the period falling 0.6 percentage points in the South Island but rising 0.7 percentage points in the North Island.
House prices, another key concern for voters, are down almost 30% from their peak in Wellington and 24.7% in Auckland, eroding middle-class wealth, versus a drop of 17% nationally.
"A third of the economy is doing really well, and two-thirds are still trying to find their feet," Kerr added.
NO CLEAR PATH BACK TO GOVERNMENT
Polls show no clear path back to government after the election for any potential coalition, as voters look back at Labour or smaller parties such as the centrist Opportunity Party that could be the first new party in government since 1996.
"People are really looking for something different," leader Qiulae Wong told Reuters in August, as the party draws urban professionals and voters disillusioned with the left-right divide.
It is getting ever harder to sell National's message that the programme of fiscal restraint and infrastructure investment is laying the groundwork for stronger growth, said political commentator Liam Hehir.
"National is continuing to promise, 'We've done the hard work, we're going to get the benefits now, just hang on for a bit longer,'" he said. "You don't get three years of that."
A left-wing coalition is pitching a bigger government role to help relieve household pressures, support public services and tackle housing affordability.
But voters still remembered weak economic growth under the previous Labour government, leading them to "shop around" more than in the past, Hehir added.
"The old adage of 'It's the economy, stupid' still rings fairly clear," for voters, said Infometrics chief economist Brad Olsen.
In Hutt South, Hartley should be enjoying retirement but finds herself working part-time, as rising prices leave very little by the end of the week.
"You don't have savings anymore, there is no such thing anymore," Hartley said.
(Reporting by Lucy Craymer and Alasdair Pal; Editing by Clarence Fernandez)
