So far, Labour’s tax plans have been treated like an incoming hurricane in the Caribbean – how big will it be, what path it take through the economy, how much damage will it do? Are these going to be gi-normous Category Five taxes that flatten everything in sight, or something that may require only some extra rationing beforehand, and a bit of judicious sandbagging…
Given that every other economy in every other developed country copes with a far more extensive capital gains tax than the one we’ve got already, the amount of fear and trepidation being lavished on what Labour might have in mind seems excessive. Chances are the levees will hold, no matter what recommendations emerge from the tax working group that Labour plans to entrust with exploring the likely options. These will be options. No one has said the findings of the tax working group will be mandatory, and binding on all first responders.
Instead, it would be more helpful if the questions were being turned around the other way. Namely, what are the problems that Labour is seeking to address – and do we think we can solve such problems without sending some kind of price signal? If we regard income inequality, housing affordability, climate change and the declining quality of our rivers as being serious problems, do we truly expect the solutions to be pain free for everyone involved – including the property speculators, and the polluters?
Do we really think for instance, that we can address climate change without including farmers – the country’s main source of emissions – in the emissions trading scheme which, for all its imperfections, is the main way we currently have of addressing man-made changes to the climate. Even if right now, there is no absolute surefire solution for farm-generated emissions, a price signal would – arguably – motivate farmers to reduce them further in the meantime. After all, a tax on cigarettes isn’t expected to cure nicotine addiction overnight either, but it helps reduce the incidence of it. And yes, the price signal will cause some pain. It won’t work otherwise.
In an ideal situation – or in some Scandinavian social democracy – the campaign debate would be framed around arriving at a consensus on the problems the country faces, thus enabling a rational comparison between the solutions on offer. Reportedly, the country is in a mood for change. Presumably, this involves more than changing the faces on the captain’s bridge, without having any change of course. Back in 2008, the Australian media likened our election to an argument over whose turn it was to take out the garbage. (To outsiders, there wasn’t a lot of discernible difference on how to run the economy.) Thankfully, Jacinda Ardern is not campaigning as being merely a fresh face for business as usual.
Do we need a more meaningful capital gains tax? Is the Pope a Catholic? Presumably, there would be widespread agreement among voters that wealth earned from investment should be taxed fairly, and at much the same rate as the income earned from wages and salaries. Currently, it isn’t. If there’s agreement on that principle – and most other countries recognize the principle more comprehensively than we do – then the rest is merely in the detail. Detail can fairly be left to the tax working group to come up with options, rather than being commitments concocted by politicians on the fly.
Given the need to shift investment out of property and into more sustainable and productive ways of generating wealth, it isn’t hard to see what Labour has in mind. To repeat: a status quo that continues to reward speculation in housing is neither sustainable or sensible. Current house prices in Auckland are the product of a bubble. They will, and need to, decline. Investment has to be shifted into more productive areas of the economy. Most of the risk lies in perpetuating the price bubble that this government’s inaction has served to inflate.
As National’s share of the vote has declined into the low 40s and Labour has eaten into the Greens and New Zealand First support, the certainties of only six weeks ago are now in question. While Winston Peters may yet prove to be the kingmaker, this is less certain now that’s he’s at only six or eight in the polls than when he was riding high in double figures, and heading upwards – if you could believe him – for somewhere around the 20 mark.
Ditto for Labour, which could yet find itself with options other than a reliance on Peters: that’s if Labour can get to 44 or 45 without sending the Greens below five and out of contention entirely. A Labour/Greens/Maori Party combination might just be enough. On current polling, the Maori Party appears likely to win at least two seats: Waiariki (Te Ururoa Flavell) and Te Tai Hauauru (Howie Tamati). In Ikaroa Rawhiti, co-leader and number one ranked Marama Fox is well behind Labour’s Meka Whaitiri. Thus, the Maori Party would need to generate sufficient extra votes to bring her back on the list, even if Tamati wins his seat. (If Hone Harawira succeeds in what looks like a tight contest in Te Tai Tokerau, he would be more comfortable with Labour, but would probably go along with his re-united colleagues in the Maori Party.) Even at three seats though, the Maori Party could be a possible kingmaker for either major party in a tight overall outcome.
Winston Peters has recently treated a continued lack of detail by Labour (post election) about its tax plans, as being a deal breaker in the coalition negotiations to form a new government. The irony of Peters, of all people, demanding clarity as a democratic right about one’s prior intentions is obvious. On tax, just how NZF plans to generate the revenue for its spending promises is also entirely opaque.
As for deal breakers… abolishing the Maori seats is supposedly another bottom line for NZF. The reality is that since 1996, Peters has known all along which way he would prefer to jump, and the fog of uncertainty he generates is almost entirely about the process of him leveraging policy gains in the negotiations. The nation’s wider mood for change counts for very little. Back in 1996, there was a mood for change too, and Peters chose to frustrate it.
At present, the policy areas Peters has focused upon (seniors, regional development, immigration cuts, student debt) are entirely compatible with Labour, if Peters, at 72, did choose to end his political career in that kind of company. Ending up as the eventual rescuer of the National Party in its time of need would also offer him some obvious personal satisfactions, but the potential for Peters being taken for granted within a fourth term National government would be high. It depends on whether Peters wants genuine gains or just a victory lap, from this last throw of the dice.
However the numbers are compiled if the Greens make it back, and Labour can hold up around 44, then life without Winston becomes a possiblility. For National, Peters looks more and more like a necessity.
From Montreal: Marie Davidson
Last year, the bludgeoning repetition of Marie Davidson’s “Naïve to the Bone” underwrote one of the best EDM singles of 2016 for the 30 year old French Canadian musician, hitherto known for her role in the Essaie Pas duo. Now, she’s collaborated with the London based, Italian born producer Not Waving on another great, laconic single “Where Are We…”
And for old times sake, here’s the “Naïve To The Bone” cut …