Prime Minister Chris Hipkins has been scrambling to take Labour back to the centre, writes Bruce Cotterill. Photo / Mark Mitchell
OPINION
It’s amazing how, after years of inaction, this Government is passing legislation like there’s no tomorrow. Workers in health and education have finally had pay offers they can agree to. Both Three (or 10) Waters and the first phase of David Parker’s replacement for the Resource Management Act have been pushed through this last week, despite promises by the likely new government that they will be immediately repealed.
This week they’ve even snuck in a last-minute bill that would change the voting age in local body elections from 18 to 16, a policy warranting debate yet totally drowned out by the pre-election noise.
And they wonder why people don’t trust politicians.
New Zealand has traditionally had two main political parties, which are either slightly left or slightly right of centre. As a result, government and policy have been extremely stable for a long time. Sure, there has been the odd occasion when a leader or finance minister has pushed the boundaries. Roger Douglas did it. So did Ruth Richardson. But by and large, we have tended to tread a safe and centrist line.
The arrival of MMP threatened to change that. While the two main parties have continued to occupy the centre, others have introduced points of view that have often been more radical.
On the left, the Jeanette Fitzsimons and Rod Donald-led Greens were a case in point, although possibly too far ahead of their time to get to the government benches and thus make a major impact on policy. Jim Anderton and his Alliance party pushed the Labour governments with which they shared the Treasury benches further to the left than they would have gone alone.
Then there were Tariana Turia and Pita Sharples, who led a Māori Party that pushed the boundaries, sitting alongside a National government despite not being natural bedfellows. Their constructive aspirations for their people, although modest by today’s standards, enabled them and the country to make progress in race relations that wouldn’t have been made by a single-party majority government.
And the Act party under Richard Prebble, Rodney Hide and finally David Seymour has pushed National governments further to the political right of the centrist line than the Nats would have dared go alone.
New Zealand First has also been consistently sitting on the fringes, although it has not consistently favoured either party, moving left or right in a manner that best suited its own agendas, whatever they may have been at the time.
During the past three years we have had a majority government for the first time under MMP. The result has been a Labour Government that has ventured uncharacteristically beyond its traditional centrist position. It has become more radical in its attitudes to crime, health, education, debt and race relations in particular. All are currently in various stages of crisis. But for the Government’s inability to execute policy, we may well have had yet more radical outcomes.
However, as we line up for the election, we seem poised to return to the past, where one of the two major parties will present a relatively centrist line, while its likely partners in government take up the role of “radicals”.
As a result, we have seen Chris Hipkins scrambling to take Labour back to the centre line. He’s pushed the party radicals and poor performers, including Nanaia Mahuta, Andrew Little and Willie Jackson, into the background and put several controversial policies on his so-called bonfire. In doing so, he has promoted those MPs without baggage to make the lineup look more user-friendly. Unfortunately for him, most were promoted too early and he has problems right across his front bench as a result.
This week, in a move long overdue, the Government continued the cleansing of its record by abandoning the Covid-19 policy framework. Hipkins is distancing himself from the recent past as quickly as possible.
Meanwhile, many voters are frustrated that the National Party under Christopher Luxon is not doing more to agitate and criticise the various “woke” policies of the incumbent Government. But he’s toeing the centrist line and leaving that to Act, which is playing that role effectively.
Desperate to get the Government’s performance off the election agenda and replace it with his cost-of-living concerns, the PM has now forced his finance minister to swallow the dead rat that is eliminating GST on fresh fruit and vegetables.
What the PM doesn’t seem to understand is that, despite our concerns about price rises, dropping GST on fresh fruit and vegetables is counterproductive. Apparently, the change will save families between $4 and $5 a week. That assumes the full impact of the change passes through to the end customer, which of course it won’t. He’s overlooking the cost of making the change. Computer systems alone, at the IRD, the growers, the wholesalers and of course the retail grocery businesses, will chew up the savings.
Most seasoned observers have picked this up quickly. Never before have I seen a policy from any political party so roundly and so quickly criticised by the experts. Within a day of the GST announcement, Radio NZ had assembled 12 economists and tax specialists to give their opinion on the policy. Every one of them was heavy in their criticism. Even the finance minister, having previously dismissed the idea, struggled to defend it when quizzed by media during the week.
And hard on the heels of his concern about the cost of living came Hipkins’ announcement of further tax increases, supposedly to finance another grand infrastructure dream. The $20 billion announcement for road maintenance, busways and cycleways included a declaration that it would be paid for by an additional 12c per litre in petrol tax. That will make the total tax take on unleaded 91 to $1 per litre for Aucklanders and 90c for everyone else. In other words, when you put 60 litres of gas in your car, you’ll be paying $60 in tax. Of that, $7.20 will be the new tax. This from the same prime minister who just a few days earlier was heralding the $4 to $5 saved each week by the new and complicated GST policy.
There is a serious lack of credibility when a government that has failed to implement a single substantial infrastructure project, and furthermore presided over the rapid deterioration of existing infrastructure such as our roading network, now expects us to believe they can deliver some $65b of new projects. And they want us to start paying the new tax before we see the new roads.
Just ask Aucklanders how they feel about the improvements delivered to the transport network as a result of the additional regional fuel tax that was levied back in 2018. The money was intended for transport projects that would “otherwise be delayed”. And yet, we ain’t seen nothing yet!
You don’t fix roads, or for that matter schools and crime and hospitals, by continuing to tax those who can’t or won’t pay. In fact, you don’t fix anything unless you create an economy that can pay the bills. Hence the old quote from that Bill Clinton aide who said: “It’s the economy, stupid”.
A government will deserve the money it raises when its policies ensure the country is successful. That will be when the people, their businesses and corporate New Zealand are all making money and paying tax. Increased success means increased tax.
But the problem with the New Zealand economy is that our core areas of income all come from sources we don’t control. We sell agricultural products that are priced by others, compete for tourism dollars against countries that are similarly stunning but closer and cheaper to visit, and compete for international students against universities that are better resourced. Simply put, our markets set the price for what we sell because, with a few small exceptions, we haven’t been innovative, creative or productive enough to generate large-scale businesses that offer something unique to the world.
And yet, as we sit on the edge of an economic precipice and the verge of a critical election, I’m yet to hear a major policy idea from any party that is going to play a part in transforming New Zealand.
Instead, we hear about tinkering around the edges, with GST being the latest in a line of relatively minor headline-grabbing bribes, aimed at a small number of voters who may swing from one side to the other.
In other words, the incumbent Labour Government does not look like a group of people who desperately want to make a major difference to the country’s outlook. Rather, they appear to be an unqualified, shoddy and desperate group, grasping for power with nothing but their own interests in mind.
We have eight weeks to see something different. I’m not holding my breath.
- Bruce Cotterill is a company director and adviser to business leaders. He is the author of the book, The Best Leaders Don’t Shout, and host of the Herald’s new podcast, Leaders Getting Coffee. www.brucecotterill.com
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