O'Sullivan: Not that tax talk again, Jim

By FRAN O'SULLIVAN

No one ever went bust over-estimating the ability of a politician to choose the grand gesture over substance.

Beneath all the media oxygen Alliance leader Jim Anderton is generating to lift his party's languishing profile it is easy to understand why the Deputy Prime Minister has reverted to his anti-capitalist, slogan riven bandwagon.

An opinion poll plummet to the 2 to 5 per cent range - and a raft of hungry players such as Mana Motuhake leader Willie Jackson positioning themselves to ultimately inherit Alliance leadership positions - would concentrate the mind of even the most visionary politician.

The difficulty Mr Anderton faces is he must now marry his Alliance brand-building exercise with the pragmatic image of a friendly-to-business economic developer that he has spent the last 18 months building.

Mr Anderton spent the first half of the Coalition Government's three-year term on good behaviour. But now the "period of consolidation" is over he has reverted to pushing his tax increase barrow to get a quick distinction from Labour for the Alliance.

There has been the odd pirouette and ritual grandstanding for the television cameras during the past 18 months.

But ritual slagging of business people and "the rich" had become almost mute as Mr Anderton relished being in Government and using the levers of power to effect change.

He got his way on the absurd People's Bank, forcing Prime Minister Helen Clark and Finance Minister Michael Cullen to reverse their position on the $80 million-plus initiative to keep the Coalition peace.

When last year's horrendous standoff between the Government and business ended and glasnost returned, grumpy Auckland corporate types would come back from Beehive meetings surprised at finding the Deputy Prime Minister had a pragmatic approach to resolving commercial-related issues.

Mr Anderton has demonstrated an ability to forge a 'whole of Government' solution to pull in major foreign direct investment and has won the confidence of forestry industry players.

But now that the tax bogy has reared its head again, both the business sector and aspiring players who wish to take up the PM's challenge for this nation to become "Innovators to the World" will become nervous that Mr Anderton may add a spoonful of substance to his spin.

The Alliance leader has not fleshed out his tax increase policy prescription. But with the Alliance's own heir apparents playing branding games - Mr Jackson spearheading an attempt to revisit the Treaty of Waitangi settlement process, and, Alliance cabinet minister Laila Harre appearing to side with striking journalists against their so-called media oppressors - the potential for mixed messages is huge.

In some respects this is all part of the colourful and more open nature of the MMP electoral regime. Minor parties - such as the Alliance - frequently take an opportunistic approach to prevent themselves being buried by the major players.

Dr Cullen plays down the Anderton tax initiative by putting it into an MMP context. Says Dr Cullen, it is good that the Deputy Prime Minister speaks out about his party's coalition role and policy beliefs.

Dr Cullen has the good sense to underpin economic confidence by adding the rider that Labour itself is not foreshadowing further increases in income tax rates or GST.

Mr Anderton does not stop at pushing for generic tax increases.

This week he polarised the debate by singling out Canterbury University vice-chancellor Daryl Le Grew, who is in the forefront of protest against the Government's Budget decision to cap tertiary education spending and force a rationalisation of the sector.

Professor Le Grew - with a salary package of $290,000 to $300,000 - was a high-income earner who could pay more tax to fund the education sector. The professor had the good sense to stare down the Deputy PM by saying tertiary education did not need another dollar: "It just needs some political will and the guts to do something about it."

The Alliance's economic and social agenda at the last election was driven by a huge revenue grab.

Wellington forecasters Infometrics estimated the tax schedule would produce about $749 million in revenue - very close to the Alliance's $760 million figure. A tax on commercial land was to help pay for tertiary education initiatives.

The Alliance's programme basically provided for a further step in progressive personal income tax rates to exact a 43 per cent tax on incomes between $60,000 and $75,000, then it rachetted up to a top rate of 47 per cent rate. Labour stalled the tariff reduction programme - but refused to raise tariffs as Alliance wanted.

Other policies which effectively mirrored Labour's, such as income-related state housing rentals and increasing superannuitant payments, have been introduced.

But prime branding policies such as Ms Harre's plan to introduce paid parental leave may yet cool the relationship with Labour, particularly if the Alliance pushes for it to be accompanied by compulsory social insurance scheme levies at 0.24 per cent of payroll, as suggested in its 1999 election policy.

In a 1999 report, Infometrics noted that that any accommodation of Alliance policies in a Labour-Alliance coalition would imply pressures for higher spending than suggested by examining Labour Party policies alone.

Already Dr Cullen has shown that he is not averse to easing spending - this year's Budget is proof positive.

But the political payoff the Alliance will seek as a loyalty bonus will inevitably put fiscal pressure on Labour as the Coalition heads into election year.

Already potential marriage partners are displaying their wares to Labour. New Zealand First's Winston Peters - who has played a cool waiting game - will be rewarded for supporting Dr Cullen's Superannuation Fund initiative. The Greens have strengthened their individual profiles.

But the essential challenge that Mr Anderton faces is to keep his young thrusters together. Last week Mr Jackson rolled Sandra Lee as leader of Mana Motuhake. It will not be long before Ms Harre starts her own play for the Alliance deputy leadership, which Ms Lee still holds.

Both Ms Harre and Mr Jackson are more radical and have much more fire than the Anderton loyalists. Mr Anderton's last big play is about to begin. But like Mr Peters, the Alliance leader needs to change gear. He has made a useful transition to the Deputy Prime Minister's role - it would be a pity to spoil things now.