National MP Hamish Campbell has backed Christopher Luxon to lead the party into the election, rejecting suggestions the Prime Minister is caught in a political decline.

The Ilam MP defended Luxon during a lively debate with Labour list MP Tracey McLellan.

Their discussion covered unemployment, support for small businesses, council reform and Luxon’s unexpected proposal for a referendum on MMP.

Asked whether Luxon was in a political death spiral following poor polling, an internal leadership vote and the surprise MMP announcement, Campbell was unequivocal. “No, absolutely not,” he said.

Campbell said Luxon had successfully managed a government involving National, ACT and New Zealand First while advancing reforms in education, crime and resource management.

He also confirmed he wanted Luxon to lead National into the election. “I think he’s done a very good job of managing a three party coalition,” Campbell said.

McLellan offered a different assessment, describing Luxon as “incredibly unpopular” and accusing him of being led by coalition partners Winston Peters and David Seymour.

However, she was also pressed on why Labour had not established a decisive lead despite Luxon’s difficulties. McLellan said Labour remained competitive but acknowledged there was still considerable work to do before the election. “We’re certainly not taking it for granted,” she said.

Jobs become the dividing line

The sharpest exchange came over unemployment, which has reached 5.6 percent, its highest level in nearly 11 years. There are now 171,000 people out of work. Campbell acknowledged the numbers were not where the Government wanted them to be but pointed to two consecutive quarters of economic growth.

“We need to get the environment right where growth continues to happen, because that’s how we’re going to get people into employment,” he said. McLellan said the figures represented families facing immediate financial pressure and blamed government spending cuts, public sector job losses and cancelled infrastructure projects. “Behind every statistic is an actual job. It’s a person. It’s a family that’s struggling,” she said.

“You cannot cut your way to growth, and we can’t afford three more years of this.”

Competing plans for small businesses

The MPs also debated Labour’s plan to scrap National’s Investment Boost programme and replace it with more targeted support for small businesses. Labour’s package includes an immediate tax deduction for eligible equipment costing up to $10,000, changes to the GST registration threshold and measures intended to help businesses receive payments more quickly.

McLellan said the changes would improve cash flow and reduce paperwork for small business owners. Campbell accepted that lifting the GST threshold had merit but argued the wider package would not support businesses wanting to make larger investments.

He said a $10,000 deduction might cover a laptop but would not help an engineering company purchase an expensive machine and expand production. “That’s not really going to shift the dial of getting another employee in the door,” Campbell said.

McLellan responded that many small businesses were not looking to purchase major industrial equipment and needed immediate help with costs and administration.

Councils and MMP

On local government reform, McLellan said central government should not force Canterbury councils into mergers opposed by their communities.

“We’re not going to force local councils to do anything they don’t want,” she said.

Campbell said the current process allowed councils to identify the arrangements that worked best for their regions, including whether to form unitary authorities combining local and regional council functions.

The pair also disagreed over Luxon’s support for an MMP referendum.

Campbell described the announcement as an honest answer to a live question and said he was open to a public discussion about the electoral system. McLellan called it a distraction and suggested it reflected Luxon’s difficulties managing his coalition partners.

“That’s the nature of coalitions,” she said. “That’s what a good leader can do. You’ve got to be able to work with people.”

The exchange offered an early preview of the election campaign, with National pointing to emerging economic growth and Labour arguing that many households have yet to feel any improvement.