31 Aug 2023

Money or the bag: Major parties crashing into the centre

From Caucus, 5:00 pm on 31 August 2023

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Analysis - National's tax plan released this week was one of the big set pieces left in the Election 2023 campaign, even though the campaign hasn't officially started yet. In the past tax plans have spurred and stalled political momentum, sparked debates about fiscal holes, lost voters and maybe even elections. So though we still have six weeks to go to the election, there was a lot riding on Christopher Luxon and Nicola Willis when they talked tax this week. It's the focus of this week's Caucus podcast.

National produced a clever and careful political document. As Julian Wilcox says, they made sure they didn't know the ball on five metres from the try line. That was their first job and they got it done. The narrative crafted was about support for "the squeezed middle", seeking to underline both the caring face of National and its steady hand at the fiscal tiller.

It was a tax plan very much in the modern style of economic managers. This was the National Party of Keith Holyoake and Harry Lake, not the party of Ruth Richardson and Don Brash. National is underlining its softer, centrist credentials, with hardly a hint of reforming zeal. In a week where National leader Christopher Luxon told Morning Report he believes in "better government" rather than smaller government, it was a largely ideological-free document. No trickle-down, no market solutions.

Keith Jacka Holyoake. Ref: 1/4-020010-F. Alexander Turnbull Library, Wellington, New Zealand. /records/23232141

Keith Jacka Holyoake. Ref: 1/4-020010-F. Alexander Turnbull Library, Wellington, New Zealand. /records/23232141 Photo: Alexander Turnbull Library

Instead, it was a tax plan for swing voters. As Lisa Owen puts it, National and Labour are crashing into the centre. National won't touch Labour's winter energy payments or fees-free tertiary policy, for example. It will boost the Working For Families in-work tax credit by exactly the same amount as Labour. It carefully designed tax relief so that those on $80,000 a year would get the same dollar amount in their "back pocket: as someone earning 10 times that or more". You could see the delight on Luxon's face when he was able to point that out, nixing Prime Minister Chris Hipkins' favourite line of the past few weeks, that National was a party giving tax cuts to millionaires. That attack line has been silenced.

And where National's tax plans often spark squeals of outrage at who is expected to pay for this "back pocket boost", there were crickets on the front this time. National isn't blatantly cutting benefits or rolling back public services, instead it's introducing new levies and "revenue measures". Heresy for some National parties of the past. So who does pay? Foreigners wanting to buy houses or move here, casinos, commercial property owners, backroom bureaucrats... no-one who will win any popularity contests or upset a voting bloc.

Instead - and this is a bit different - the debate over this tax plan is whether the numbers stack up. It's the sort of scrutiny the Greens have often had in the past, with opponents giving a nudge and a wink and saying they're making up numbers. National's revenue estimates on the number of houses that will be sold to foreigners, the number of casinos they can regulate and their suggestion re-introducing depreciation on rental properties will create "downward pressure" on rents have all been mocked. The revenue estimates were as "heroic" so often, we wondered if Super Luxon and Wonder Willis would suddenly whip off their blue suits to reveal capes underneath.

ACT party leader David Seymour speaks at the censure of National MP Tim van de Molen

Photo: RNZ / Angus Dreaver

It means the action this campaign will be on the fringes. Perhaps the most important question after this tax announcement - as we discuss in the podcast - is whether National can ring-fence the policy and deliver it in coalition with ACT or whether it will need to concede ground, undermining Luxon's promise that this is the tax policy National will "implement on the other side". 

It leaves major party voters with a narrow choice: The money or the bag. Do you want Labour's complicated bag of childcare subsidies, free bus rides, money off fruit and veg et al or National's $10-$50 per week in your pocket to spend as you wish?

The underlying choice is laid out. And the campaign hasn't even officially begun yet.

In the countdown to Election 2023, the Caucus podcast is out every Thursday afternoon and plays on RNZ National at 6pm each Sunday.