Ardern's NZ Labour set for 2023 refresh

Shaking off poll pressure, a defiant Jacinda Ardern is refusing to concede next year's election and says her Labour party won't need to go negative to win.

However, the New Zealand prime minister will spend her summer choosing a new ministerial line-up and the right policy mix - on a tight budget - in order to win a third term.

Like many, Ms Ardern has reason to be fatigued after a busy and difficult 2022.

Her government has landed reforms - in health, climate changes, workplace relations and, this week, water management - and scored trade deals with the European Union and the United Kingdom.

However, lingering pandemic frustrations, a soaring cost of living, crime concerns and now, recent predictions of a recession in 2023 have taken a toll on her government.

Ms Ardern's Labour party started the year with a commanding lead over centre-right opposition National but ends 2022 staring at polls that, if replicated on election day, would see her booted from office.

In an end-of-year interview this week, the 42-year-old recalled the situation three years prior.

"In 2019 about this time, we were eight points behind," she said, a deficit that was erased by her government's world-best COVID-19 response.

"Politics is all about fixing problems. We've had a few more problems than most that we've needed to fix.

"We've demonstrated that we have the experience and the focus to continue to take on those challenges and that's what we'll be focusing on in 2023."

Another challenge arrives in 2023 in the form of a formidable opposition leader, Chris Luxon.

The former Air New Zealand chief executive took the reins at the end of 2021, ending ill-discipline in the National ranks and steadily chipping away at Labour's poll dominance through the year.

An eight-point Labour lead in the year-starting TVNZ-Kantar poll is now a five-point deficit.

Concerningly for Labour strategists, an 18-point lead for Ms Ardern as preferred prime minister over Mr Luxon is now just six.

The poll slump has many wondering how to arrest the slide, but Ms Ardern said she wouldn't break from her "relentlessly positive" campaign mantra to win.

"I've come up against a number of leaders ... and all the way through maintained the same approach to politics," she said.

"It's about what do we want politics to look like for our kids, for the next generation."

After next week's final parliamentary sitting block, Ms Ardern will head north from the capital to spend part of her holidays considering her best line-up for the year ahead.

At least one cabinet minister, David Clark, will retire, and Ms Ardern has pledged a deeper shake-up to make use of fresh talent in her ranks.

Several may make way, with many tipping Foreign Minister Nanaia Mahuta to lose her local government portfolio after bungling contentious water reforms.

In 2023, one answer to her ailing electoral fortunes may also lie across the ditch.

Ms Ardern is hopeful trans-Tasman talks with Australian Prime Minister Anthony Albanese could help ease crime in New Zealand and score her a much-needed political win.

Last July, the pair agreed a working group on citizenship rights and deportations, with Ms Ardern seeking an end to Australia's much-loathed practice of deporting Kiwis who have lived in Australia for most of their lives.

"We have had that signalling from the prime minister ... it wouldn't necessarily take a change in rule to apply judgment differently and use discretion differently," Ms Ardern said.

"What I'm intending to do, and am doing is watching what we have over time to see if we see that shift."

Any change could bring a demonstrable difference on crime in New Zealand given the high numbers of deportees who offend.

It could also give Ms Ardern a political lift for soothing a problem thought intractable.

While crime is important, Ms Ardern is under no illusion as to where the election will be won or lost.

"There will be - and rightfully so - a significant focus on the economy," she said.

Last week, the Reserve Bank of New Zealand revised its forecast, predicting 18 months of economic stagnation - including a shallow recession - to begin in the middle of 2023.

Amid inflation of 7.2 per cent, Ms Ardern appears set to cut government spending, relenting to an opposition demand, but retaining a safety net for the worst-off.

The alternative, which has fallen flat to date, is to argue that inflation might be bad, but not as bad as elsewhere.

"We can already see through global predictions that internationally, we're seeing economies slow and many forecasting recession in different parts of the world," she said.

"That's why we will be focused on making sure that we trim back. That we have our priorities and our eyes clear on supporting people through."

Ms Ardern will announce a poll date when she returns for duty, with expectations of a spring election campaign.