Comment: Jacinda Ardern has huge majority but that may not be much use to her

1:30 pm on 18 October 2020

By Max Rashbrooke*

Opinion - "I want us to simply be the country we already believe we are." That's how Jacinda Ardern described her ambition for New Zealand in 2018, and it won't have changed in the light of last night's extraordinary election victory. The ambition is especially pertinent when it comes to inequality and child poverty, which stand in stark contrast to the lingering belief in New Zealand as an egalitarian nation.

Labour has claimed a landslide victory in the 2020 election and has the numbers to govern alone.

Labour has claimed a landslide victory in the 2020 election and has the numbers to govern alone. Photo: Getty Images

As Labour commands an absolute majority for the first time in the MMP era, the party could in theory go all out to bring the facts back in line with the belief, slashing poverty rates and restoring a sense of fairness to the nation. But in practice they cannot, because they have already tied their own hands.

While it is still possible that Labour will make some kind of arrangement with the Greens to bring them into the government tent, such a move would at best extend only to the less controversial Green policies in areas such as conservation.

Nonetheless Labour will undoubtedly take some steps to reduce poverty and inequality. They will significantly increase the amount of money beneficiaries can earn before having their benefit clawed back, reducing the welfare system's notorious poverty traps.

They will increase paid sick leave to 10 days, pay the Living Wage to government contractors, and create fair pay agreements that allow workers who win good terms and conditions at one employer to spread them right across their industry. They will make trades training free, build 8000 state homes, and continue the roll-out of free school meals until they are so embedded as to be very hard for a future National-led government to abolish.

None of this, however, will make a major dent in the poverty rates that see around one in five New Zealanders lacking the income they need for a life of minimal dignity and participation in society.

This is especially true in the light of Covid-19. Pre-coronavirus, Ardern had made modest inroads into child poverty, according to early statistics and Treasury modelling. But tens of thousands of people are losing their jobs and the economy is heading back into recession.

Absent further government action, this will push many more families into poverty. If Ardern is to stay on track to meet her child poverty reduction targets, which involve more than halving it over a decade, she will need some real financial firepower.

Other ambitions, such as making New Zealand's rivers swimmable again, can be met through regulation - that is, without major cost (to government, at any rate). But not so inequality, which is quite literally a question of cash. And cash is precisely what Ardern has denied herself.

Either a wealth tax or a capital gains tax could have raised billions of dollars from the wealthiest New Zealanders in order to support a better life for the less fortunate. But Ardern has ruled both of them out, not just now but for her political lifetime.

The prime minister may have had a moment's pause on election night, reflecting that she had forever ruled out a wealth tax - or indeed any new tax this term except one new top income bracket - in order to hang onto a final 2-3 percent of swing voters that, as it turns out, she didn't even need (given the wasted vote, even 47 percent would have been enough for an outright majority).

But that's already in the past. Ardern now has to work out how on earth she will reduce inequality, all the while holding back the tidal wave of poverty represented by the newly jobless, without the extra revenue she needs for the task. The prime minister may have unparalleled popularity, but that huge majority may not be much use to her.

* Max Rashbrooke is the 2020 J. D. Stout Fellow at Victoria University of Wellington

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