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Home / Business

Matthew Hooton: Fewer tweets, more bold ideas from The Opportunities Party

Matthew Hooton
By Matthew Hooton
NZ Herald·
23 Aug, 2018 05:00 PM4 mins to read

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New leader Geoff Simmons needs to speak up on TOP's tax and welfare policies. Photo / File

New leader Geoff Simmons needs to speak up on TOP's tax and welfare policies. Photo / File

COMMENT: By the last election, The Opportunities Party (TOP) was known primarily for berating people on Twitter.

Not only did this drive away many of the sensitive, liberal, policy-analyst types who could have formed a permanent activist base for Gareth Morgan's invention, the fixation on a few dozen Twitter addicts wasted time and money.

This was a shame because TOP had, and continues to have, something interesting to say.

First, TOP is undoubtedly the genuine environmental and conservationist party many have been waiting for.

Those who want to fight climate change, save endangered birds from predators, and turtles and other sea life from plastic bags, have a new political home free of the Greens' radical anti-capitalist agenda.

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Second, it has "evidence-based policy". Most often this is just a slogan used by left-wing activists who have found a journal article that backs up their existing prejudices.

Even when sincere, the "evidence-based" crowd promises too much in a world where not all the secrets of public policy can be unlocked through a JSTOR search.

Still, even with those provisos, promoting "evidence-based policy" is surely better than the "poll-based policy" driving Jacinda Ardern and the previous two governments.

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We all celebrated when Ardern announced on Monday a pay freeze for MPs, but let's recognise that it was a poll-driven gesture to distract from the Government's failures on everything from business confidence and education, to housing, mental health and homelessness.

Most important is TOP's willingness to speak boldly on tax and welfare.

TOP has no truck with Labour's proposed Capital Gains Tax (CGT) on everything but the family home, which would send the strongest possible signal to put in a swimming pool rather than invest in new plant.

Instead, TOP states the obvious — that to avoid such distortions, any CGT must be on all assets and all gains, realised and unrealised. TOP's proposed Asset Tax therefore makes more administrative sense than a CGT.

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Bolder still is TOP's leadership on a Universal Basic Income (UBI).

This is today's cause celebre of the political left, and Finance Minister Grant Robertson has mused privately that his Future of Work project may end up recommending something like it.

With technology destroying unskilled jobs and no political will to address the school-funding, school-management and teacher-union issues, it's inevitable there will be more people for whom a fulltime job is unrealistic. Many more will need to leave work temporarily to retrain, no questions asked.

In fact, a UBI should appeal strongly to the right.

The most damaging aspect of the current tax and welfare system is what John Key called "communism by stealth": the massive effective marginal tax rates (EMTRs) faced by people transitioning from welfare to work, and then as they move higher up the pay scale.

High EMTRs have always been a problem but Helen Clark's Working for Families made them exponentially worse.

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Broadly, a UBI would merge the tax and welfare systems, with tax in dollar terms being a flat percentage of income, less the UBI.

In practice, the unemployed and low-income earners would pay negative tax, but the whole population would face a single (hopefully low) marginal rate on every dollar earned.

This isn't new. Richard Nixon proposed a negative income-tax rate. In New Zealand, a UBI is similar to the Guaranteed Minimum Family Income and flat-tax policy announced by David Lange and Roger Douglas in December 1987.

More recently, National's Lockwood Smith reported in his valedictory speech that his concerns about EMTRs prompted him to spend seven years in opposition working on a model that completely integrated income tax, benefits and family tax credits.

Smith claims it provides for tax-free zones for low-income earners and low EMTRs until a flat top tax rate is reached. He says it worked for all family configurations.

Smith's work would have allowed the Key Government to have done something important in office, including reversing "communism by stealth".

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The proposal was meant to be published by the right-wing Centre for Independent Studies in Australia before the 2008 election but was pulled at the last minute by National Party strategists, fearful it could be controversial. It may yet be published by London's Institute of Economic Affairs.

There is of course one big problem with the UBI.

To avoid deterring people from work and also for fiscal reasons, a UBI needs to be set at or just below subsistence level, with top-ups for those who absolutely cannot work because of age, disability or mental health.

If new leader Geoff Simmons has the courage to make that part of the policy clear, TOP might be close to deserving a few votes.

- Matthew Hooton is managing director of PR and corporate affairs firm Exceltium.

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