Jacinda Ardern aims to bet both ways on our future – transforming Aotearoa to rid us of inequality and poverty, and building consensus.
She has won a mandate with her historic, landslide victory but can she do both?
“I have been a consensus builder, but I also need to work with the mandate that Labour has been given,” she said in the aftermath of her electoral win.
I doubt that the two goals are compatible and my bet is that building consensus will win.
A big factor in the election landslide was Labour’s ability to spike National’s primary gun – tax. Ardern went to huge and costly lengths not to scare middle Aotearoa on tax.
While Labour announced a new, higher marginal tax rate on very high incomes (kicking in at incomes over $180k), Ardern unequivocally ruled out the Green Party’s wealth tax. And last year, she ruled out a capital gains tax despite it being the her own Tax Working Group’s main recommendation to address an “unfair and unbalanced” tax system that has produced inequality.
Her staunchness on CGT and wealth tax was Ardern’s way of taking tax off the table as central to the upcoming election. Labour knew from bitter experience that National would scare-monger on tax. Remember that before Covid, National was polling well over 40 percent, despite having a deeply unpopular leader in Simon Bridges.
Third iteration National leader Judith Collins still tried to bet the tax drum, despite Ardern’s many statements to the contrary, that Labour would kowtow to the Greens and bring in a wealth tax.
While Ardern succeeded in dousing the tax issue, it may be a pyrrhic victory as National’s scare-mongering in on tax over generations has again protected the assets of wealthy – no capital gains tax, no wealth tax, only a minor change to the progressivity of income tax.
Ardern is left almost no options to redress the unfair and unbalanced tax system that lies at the heart of inequality and poverty.
When she ruled CGT last year, Ardern said: “We can find, and will find greater ways to achieve fairness in our system. There’s a range of options but I need to go and develop that plan for 2020.”
The 39 percent tax bracket on earnings above $180k will not cut it, in terms of addressing the tax imbalance. It will raise an extra $550m, less half a percent of government revenue. Nothing else has been offered.
Even without having hobbled herself on the tax issue, the economic slump resulting from the Covid response has made social transformation a Himalayan task.
With $58 billion planned to be spent on Covid responses, Treasury forecasts the unemployment rate to double to nearly 8 percent in 2022, net government debt is forecast to hit 55 percent of GDP by 2024 and discretionary spending allowances are cut to almost nothing.
Even before Covid there was insufficient operating allowance to enact the main recommendations of the Welfare Expert Advisory Group report recommendations. The big ticket items to lift benefits by between 12 and 47 percent would have cost an extra $5 billion a year, well out of reach of the pre-Covid operating allowance.
Despite this gloomy financial scenario and the own goals Labour has scored on taxing assets, we shouldn’t lose sight of the multitude of opportunities for Labour given their outright majority.
For example, I look forward to Labour following through on Heather Simpson’s work on reforming the Healthcare system, particularly reducing the absurd number of DHB’s to a realistic number.
Similarly, it will be great to see enactment of the proposals in the Turiki Turiki report initiated by Andrew Little into decolonising the justice system and addressing the appalling Maori incarceration rate. Let’s hope they resist tinkering at the edges and move from a system of fear, punishment and control to one based on prevention and restoration.
It would be great if we developed a roadmap for an alternative aspiration of continuous economic growth – that we built on Grant Robertson’s wellbeing budget so we all work less, consume less and pollute less. Let’s see if Ardern can expend some of her considerable political capital to promote the idea of sufficient income for all, scale back material expectations in favour of more leisure, less stress and more community-activity.
We are still waiting after three years of Labour-led government for a big picture plan for science and innovation. A science-based, rather than an emotion-based, GE policy would also be nice.
Let’s have a proper immigration policy based on what is sustainable and best for Aotearoa. Policy at the moment seems to be based on which lobby group makes the most noise.
Now that the NZ First handbrake has been removed, let’s move on those initiatives they stopped – cameras on fishing boats, feebates for cars, ending three strikes in justice, promoting solar energy, putting in a tax on sugar.
And while we are at it, let’s get a whole lot more serious about waste and pollution. Instead of the Covid recovery fund being blown on shovel-ready roads, what about spending big on such things as a national energy waste plant that turns waste into energy, not just for Aotearoa but for our smaller Pacific neighbours.
Judith Collins foolishly claimed late in the election campaign that obesity was a personal responsibility, exemplifying the difference between National’s philosophy and the progressive side, which sees it as societal problem. But it would be good to develop a policy on obesity reduction so we can address the problem.
The winding back of the backbones of neoliberalism would be welcome – for example, not making our hospitals, universities, public broadcasters and the like operate as for-profit entities; ditching the Fiscal Responsibility Act that hog-ties government spending options and dismantling the market-driven model of our electricity system.
While John Key with his silly flag referendum has made this path a sticky wicket, it would be great to develop Aotearoa’s roadmap to true independence. One day we won’t have a head of state, who not only is born-to-rule but lives on the other side of the world and we can vote for him or her; we won’t have honours system based on class, we will have a country name that reflects our unique culture and yes, we may even have a flag that is unique and properly represents who we are.
Undoubtedly, there are a plethora of other laws and sectors Labour can and should turn upside down. The party has been given a powerful mandate. My question is whether Labour, and Ardern in particular, is willing to do that because of her desire to maintain consensus and not rock the waka.