Phil Goff has announced that Labour will bring agriculture into the Emissions Trading Scheme earlier and use the extra revenue to fund R&D, much of which will be into clean tech and low-carbon farming. That’s part a swath of announcements showing Goff’s Labour has the vision Key’s National lacks. Labour is making positive choices while being fiscally responsible.
The cost of the $800 million R&D tax credits will be funded by making agriculture pay for its emissions from 2013, rather than 2015 under National. This is good commonsense stuff. It doesn’t make sense to be subsidising pollution from out-dated technology when we could be subsidising research and development of the next generation of technology that will boost incomes and protect our environment.
Incredibly, this $400 million a year subsidy only makes farmers pay for 10% of their 2005 emissions plus any growth since then. Not to mention the two for one subsidy that other polluters get. So plenty of room for further subsidy eliminations in the future.
Labour cannot be accused of a tax grab here. It has announced how it will save on a tax subsidy in one area and replace it will better subsidy in another. Contrast that to Key’s sneaky tax hike on Kiwisaver by taking away half our tax credits and taxing our employer contributions.
Goff also announced that Labour will raise the minimum wage to $15 an hour in its first year. That would take away from burgeoning profits, which end up as dividends for the wealthy and foreign owners, instead putting another $70 a week into the pocket of a full-time minimum wage worker.
I think this is actually the most effective cost of living policy. About quarter of a million workers (15%) would get a pay rise as a result. Half a billion a year into the poorest communities in the country. Think how many jobs that will create, rather than having that money go offshore in dividends, in luxury imports, and foreign holidays for the wealthy.
Wasteful projects like the navy missile system and the holiday highway will go and the money will be channeled into areas that need it.
We’ll have to wait to know exactly how much of National’s Kiwisaver cuts Labour can afford to reverse or what else it will do to incentivise savings. That’s responsible. National has created a hell of a mess. It only just opened it books and revealed its Kiwisaver cuts. Labour can’t simply pledge to reverse them until its done its calculations.
We also don’t know the guts of Labour’s tax policy, although Goff has confirmed there will be a new top tax rate in somewhere above $120,000 a year. Before anyone yells ‘tax grab’, consider that government revenue as a % of GDP has plunged thanks to National’s irresponsible tax cuts at the same time as spending as a % of GDP has soared. Getting back to balance should not be simply about spending cuts.
But, if today’s announcements are anything to go by, we can expect that Labour’s tax and savings policies will be a combination of responsibility and vision that puts National in the shade.
Goff’s full speech – Owning our future – is here.