10 Sep 2020

Timid tax, debating debates and say hello to Kinder Collins

From Caucus, 12:00 pm on 10 September 2020

It was one of the big unanswered questions every political junkie was waiting for. No, not National's Infrastructure Bank. Definitely not a new public holiday. Though we'll come to those. It was Labour's tax policy. How brave would it be? Would Labour dare to promise transformation or would it play it safer?

We got the answer yesterday - a new top tax rate of 39 percent for those earning over $180,000. A promise to try a bit harder on taxing multi-nationals. And that was it. As Guyon Espiner says in today's Caucus podcast, if 'tax is love' then this was a peck on the cheek. An elbow bump at best.

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Labour Party finance spokesperson Grant Robertson in Tauranga on 8 September, 2020.

Labour Party finance spokesperson Grant Robertson in Tauranga on 8 September, 2020. Photo: RNZ / Dom Thomas

Is this the tax policy Jacinda Ardern and Grant Robertson dreamed of unveiling through their long years in Opposition? By no means. They believe in a Capital Gains Tax. They would certainly tax harder if they could. But Robertson's argument is that what has largely been described as a timid approach to tax policy is the "right thing to do right now".

And have no doubt, it is timid. In 2014 David Cunliffe's policy was 36 percent on income over $150,000 and in 2011 Phil Goff's 'tax switch' involved an interest free zone and 39 cents over $150,000. Back when Labour last introduced a new top tax rate - under Helen Clark in 1999 - it was 39 cents on incomes over $60,000 (which is around $90,000 in today's money). 

Even with the move to a 39 percent top tax rate New Zealand will still have the 12th lowest top tax rate of the 36 countries in the OECD; so staying in the bottom third. Australia's is 47 percent, Canada's 53.5 and Britain's 45. And given it cuts in only at $180,000 - as Robertson endlessly repeats, it only taxes the top two percent of earners - it's at the conservative end of the developed world.

In sum: timid.

The Caucus crew though acknowledge it does the job politically, taking tax off the table at the election this year. If the Left are frustrated, the Right are disarmed. Perhaps even more importantly, Robertson's comments that this is the right move for our times suggest that Labour's read is that the electorate is more volatile and jumpy than many believe. Scott Campbell agrees, saying that if they'd gone much further it would have dramatically lengthened the odds on a Labour victory, maybe even putting it at risk. Amidst a global pandemic, voters are anxious and easily frightened. Tax is a policy that Labour knows from bitter experience is one that can change the way people vote. Hence the caution. 

Matariki star cluster from southern hemisphere

Matariki star cluster from southern hemisphere Photo: NASA

At the populist end of the policy debate though, Labour has shamelessly offered voters an extra day's holiday. Lisa Owens describes it as a reflection of our fragility; a reward for our troubled times. The biggest criticism, as Campbell points out, has come from within Māoridom. There's an element of 'beads and blankets' about it, as it signals a commitment to Māori culture while drawing a veil over Labour's failure to move the dial on material hardship and poverty, arguably the biggest and toughest issue facing Māori.

On the other hand, as Espiner points out, no party has played the race card on the suggestion of a Matariki holiday. Such a policy at the 2005 election would have been used to suggest 'race-based' bias. It's remarkable how much the public mood as changed.

That also seems to be reflected in some of the meaty policy National has been rolling out this week. A "baby bonus" scheme, a meth policy that focuses on health not law and order ("we can't arrest our way out of this," said Judith Collins on Morning Report), and an Infrastructure Bank for plenty of government borrowing. This isn't the Crusher Collins some predicted would shake up National. It's a kinder Collins we're seeing instead. 

National Party leader Judith Collins announcing the party's Hawke's Bay Hospital election promise on 8 September, 2020.

National Party leader Judith Collins announcing the party's Hawke's Bay Hospital election promise on 8 September, 2020. Photo: RNZ / Samuel Rillstone

The Infrastructure Bank is an interesting solution to New Zealand's infrastructure deficit that deserves more coverage than it's had and, as Espiner points out, has the benefit of bringing some fiscal discipline to government slush funds such as the Provincial Growth Fund, without walking away from the spending altogether.

Finally in this week's podcast, we debate the debates. TVNZ has taken the embarrassing step of changing the criteria around its 'multi-party' debate, adding the Māori Party and Advance NZ, but still leaving the Opportunities Party and New Conservatives out in the cold. The criteria were a seat in parliament or three percent in a recent poll, drawn up in 2011 when Espiner and I were working at TVNZ. We were both in the meeting where they were settled, as we wrestled with fair treatment of the likes of the Maori Party and United Future. There is no simple or perfect line to draw; you are balancing competing rights and any media organisation should be independent to decide the entry criteria for itself.

Geoff Simmons, leader of The Opportunities Party.

Photo: RNZ

However, times have changed, the major parties are more dominant and several minor parties are well below that three percent threshold. Those criteria now skew in favour of incumbents and shuts out fresh voices and ideas. Caucus has a couple of suggestions, such as a Contenders' Debate for the smaller parties or hosting debates on YouTube, where you can run beyond a commercial hour or hour and a half, meaning more party leaders don't come at the cost of minutes per leader.


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