Anyone travelling with the Prime Minister who wasn’t aware
of the Black Caps’ recent Champions Trophy loss to India or New Zealand’s test sweep last year will no doubt have the results now committed to memory.
Almost as if scripted, Luxon didn’t miss a chance to mention his appreciation of India’s leaders not boasting about the Champions Trophy win, before noting he was doing the same concerning the test wins. It never failed to get a laugh.
It might appear tiring to those who hear it on repeat, but it proves Luxon knows his audience. More than 60 million people streamed the Champions Trophy final online. You can bet most of those eyes would have been in India.
Luxon later explained he used it as a conversational “entree”, a tasty start that increases the appetite for a more hearty discussion.
Well, if cricket is the entree, a comprehensive trade deal with India is the main and by the sounds of it, the grill is heating up.
From the moment in 2023 Luxon declared he’d put pen to paper with India in his first term, he faced a barrage of scepticism, even until the day he left the Whenuapai Airbase for New Delhi.
How satisfying it must have felt for Luxon to announce shortly after touching down on Sunday that negotiations that had gone cold in 2016 would soon begin again.
He could barely disguise his feelings of vindication. Instead of letting the resumption of negotiations speak for itself, Luxon couldn’t resist having a few digs at the media, who he seemingly blames for the doubt placed on his trade promise.
The “I told you so” attitude took some of the shine off what was a significant win for a government and Prime Minister that find themselves under pressure to deliver.
Now, two questions remain: can the two countries come to a quality agreement, and by when?
Luxon’s gloating will come back to haunt him if negotiations persist beyond the 2026 election.
Broken promises of any nature can prove politically damaging, especially if your opponents can argue a trend.
A coalition Government that campaigned on turning words into action only opens itself up to more damage if it fails to deliver. A quick glance at the polls shows how Luxon’s inability to address the cost-of-living crisis, something he pledged to do in Opposition, is putting a ceiling on his personal support and that of his party.
What gives Luxon and Trade Minister Todd McClay confidence are the noises coming out of India.
Prime Minister Narendra Modi and Trade Minister Piyush Goyal were singing from New Zealand’s song sheet this week, welcoming the speedy progression of a comprehensive deal, their language signalling their desire for something more than the interim agreement India signed with Australia.
The two countries’ leaders became so excited by the prospect of rapid negotiations, it almost ignited a bidding war to see how quickly each country thought a deal could be done.
Goyal won that war when he joyfully proclaimed a 60-day deal was possible. While said in jest, the comments were made at a public event in front of business representatives, so they can’t be ignored.
Luxon hadn’t helped the situation by sharing his and Modi’s “private expectations” to about 450,000 Newstalk ZB listeners that an agreement could be reached by the end of the year.
That comment was soon walked back to the original first-term timeline, but it would be unusually careless of Luxon to have made such a claim without some level of assurance from Modi.
Deja vu
While setting a deadline is hardly a good negotiation strategy, it’s understood India hasn’t baulked at Luxon’s timeline, probably reflected in Goyal’s bullish claims.
The negotiations, which were first said to start next month but were brought forward to next week, are also structured in a way that any stalling is escalated to McClay and Goyal, who back their ability to resolve any difference of opinion.
One of the biggest caveats to all of this is the same reason followers of New Zealand’s efforts to trade with India are now feeling a sense of deja vu.
Sir John Key in his two visits to India, in 2011 and 2016, was told by his counterpart that strengthening trade was a priority.
During the second visit, Modi in his second year as PM publicly stated his desire for an early conclusion to a comprehensive economic co-operation agreement, but it never eventuated.
However, three key factors apply now that did not under Key.
One is the state of personal relationships between the respective leaders and ministers. Luxon and Modi’s kinship is obvious, the latter almost ending up in a chuckling fit after Luxon delivered another serving of his conversational entree. McClay and Goyal appear to be even closer, helped by McClay’s five in-person visits to India since the election.
Even accounting for some exaggeration on Luxon’s behalf about the perilous state of New Zealand’s relationship with India under Labour-led governments between 2017 and 2023 (which included three years of current Foreign Minister Winston Peters holding the same role), there is a general consensus the Government has pushed hard to forge bonds.
Second is the state of global trade. United States President Donald Trump is plunging the world into uncertainty by starting trade wars through a rapid regime of tariff hikes.
One way to reassure your citizens is to seek deals with new friends.
Third is India’s growing presence as a global superpower. Modi’s middle class is bulging as he eyes up becoming the third-biggest economy in the next decade, set to be worth north of $30 trillion by the 2050s.
Beyond dairy
Dairy persists as the long-standing roadblock. India wants to protect millions of vulnerable small-scale farmers, but its demand for milk is outstripping supply.
Fonterra doesn’t see the point in a deal without the country’s biggest export market. Luxon disagrees, saying there are wins to be had in other areas.
A wealthier India promises expansion for more niche dairy products and technology. New Zealand is also looking to leverage the existing dairy links to prove there are mutual benefits, one example being the Indian outfit producing foot and mouth disease vaccines out of Dargaville that is looking to expand operations.
Kiwi exporters shouldn’t get ahead of themselves just yet. The political cost of threatening millions of voters’ livelihoods is much higher for Goyal than the blowback McClay might receive from a disappointed New Zealand dairy sector.
At least for now, all signs point towards progress.
Gruelling schedule
Though Luxon on the whole conducted himself well, packing many engagements into four and a half days has clearly taken its toll on the PM.
For someone who is normally bouncing off the walls at the corporate-style networking events, something – whether it was illness or fatigue – made him appear noticeably subdued.
It’s hardly surprising. In 11 days, Luxon went from sitting days in the House to his investment summit in Auckland. He spent the next day commemorating the anniversary of the Christchurch terror attack, then participated in a multi-leader call about Russia’s war in Ukraine before jumping on an overnight flight to meet up with his delegation in Singapore.
Even for a man who says he needs only a few hours’ sleep, that’s a lot to handle.
Luxon, however, will have little time to recover. He touches down in Auckland about the same time as Peters who will be seeking an audience to discuss his all-important meetings in the United States, designed to test the temperature on tariffs.
Peters has been careful not to reveal anything of his discussions with American counterpart Marco Rubio, suggesting New Zealand has some choppy waters to navigate.
Comments from Rubio about burden-sharing probably translate into the US calling for countries expecting security assistance to up their defence spending.
The Government is about to launch its 15-year defence spending plan, which has been delayed for months. In this case, it might be a fortunate outcome because it will allow Cabinet to consider the US demands.
With little wriggle room in the next two Budgets, Luxon has been laying the groundwork to potentially argue why deferring a surplus or taking on more debt is necessary to lift defence investment.
Speaking as chief guest at India’s renowned defence-focused Raisina Dialogue in front of Modi and other senior ministers, Luxon declared: “You can’t have prosperity without security.”
That presents as a handy strategy to qualify spending a lot of cash on ships and planes if it leads to Luxon’s much-desired economic growth. Such an argument might be difficult to make, though, given none of the economic benefits will be realised in the short term.
Domestic headwinds continue to blow. While the country has finally pulled itself out of recession, Luxon will again face up to the ongoing free school lunches dramas as he waits for a poll to pull him and National ahead of Labour.
The public is also expecting two big announcements from the Government in the coming weeks in the form of the defence plan and the new Cook Strait ferries, which Peters will lead as Minister for Rail – both requiring deft management.
As he catches up on sleep on the 757 bound for the 09, Luxon will rest assured knowing his India visit exceeded expectations. His rest may be short-lived.
Adam Pearse is a political reporter in the NZ Herald Press Gallery team based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.