If Labour's Claytons tax policy gave the finger to those who want progressive taxation, National's Infrastructure Bank seems designed as a deep betrayal of those who value genuine fiscal responsibility.
Labour strategists are thrilled by the far left's negative reaction to Jacinda Ardern and Grant Robertson's promise to leave the tax system basically as it is.
The Government's big two confirmed there will be no shift away from taxing good things like wages, salaries and profits, to taxing allegedly bad things such as capital gains, inherited wealth, carbon and consumption.
Through a social democrat or environmental lens, John Key and Bill English's 2010 tax switch, which paid for tax cuts on low incomes by increasing taxes on consumption, was to the left of what Labour unveiled on Wednesday.
In fact, Labour unveiled almost nothing at all. Its so-called tax "policy" consisted of just a single measure — the restoration of Helen Clark and Michael Cullen's 39 per cent marginal income tax rate, but only on earnings above $180,000 a year.
Whereas Clark and Cullen risked whacking the top 5 per cent of income earners — those earning the equivalent of $113,366 in today's money — Ardern and Robertson have targeted just the top 2 per cent.
Even Don Brash was more progressive, proposing in 2005 that the 39 per cent rate kick in at $157,468 in today's money.
This is not what Labour activists signed up for.
Ardern claims the policy will keep a lid on debt and avoid cuts to health and education, but she can't be that innumerate.
At an estimated $550 million annually, revenue would be a rounding error in the context of total government spending, equivalent to just four days of Covid-19 borrowing. Pro-cannabis activists can legitimately claim a yes vote would bring in about twice as much.
The real motivation is entirely political. First, Labour can claim it is hitting those who Cullen called "rich pricks" while relying on National to leap to their defence. Meanwhile, the outrage from left-wing activists communicates to voters that Ardern and Robertson plan no tax changes for 98 per cent of taxpayers.
If Labour's move was deeply cynical, National trumped it with its so-called "Infrastructure Bank" — in practice, yet another Wellington bureaucracy around which to shuffle money and personnel.
National faces a dilemma. On one horn, Finance spokesman Paul Goldsmith is committed to net core Crown debt reaching 30 per cent of GDP in a decade or so. On the other, the likes of Infrastructure spokesman Chris Bishop recognise that tens of billions of dollars are needed to prevent Auckland in particular from becoming entirely dysfunctional.
The Infrastructure Bank was a cute way of trying to reconcile the irreconcilable, by separating the billions Bishop wants to borrow from the debt measure.
Net core Crown debt excludes assets held by the New Zealand Superannuation Fund and also liabilities held by Crown entities such as SOEs and the proposed Infrastructure Bank.
In the past, SOEs have sometimes felt political pressure to increase their borrowing to maintain dividends. Governments then claim the revenue from the dividend without having to acknowledge the higher debt.
This is frowned on but — like Robertson's new tax — is hardly material.
Goldsmith's first strategy to get the numbers right has been to target failed programmes like fees-free tertiary education and KiwiBuild, and the universal Baby Bonus — but even these are small change in the context of his ambitious target.
His second strategy is not so robust — stopping contributions to the Super Fund.
Like fees-free, there are valid ideological reasons to oppose contributions to the fund at times of deficit, or even its very existence. Robert Muldoon's 1975 Dancing Cossacks are still derided but made a serious point about the risks of a large government fund buying up all the assets in an economy.
The Super Fund largely avoids that problem by being offshore-focused, even though Key promised in 2008 to force it to invest 40 per cent of its assets in New Zealand — a pledge he thankfully broke in government.
But Goldsmith does not make the Dancing Cossacks argument, instead claiming that stopping contributions to the fund will lower net debt.
This is because, in practice, the measure of net debt he uses immediately expenses contributions to the fund and ignores the corresponding financial asset.
This is self-evidently preposterous. Even if the Super Fund's Amazon shares risk falling, it scandalises the memory of Luca Pacioli, the inventor of double-entry bookkeeping, not to include them when Goldsmith — or Robertson — calculate net debt.
However, it benefits Goldsmith by allowing him to apparently lower immediate operating expenses without lowering future assets when calculating net debt.
The difference is material. According to the Budget Economic and Fiscal Update, net core Crown debt is forecast to reach 54 per cent in 2023/24 but a much lower 37 per cent if the Super Fund is included. If National is ideologically opposed to the fund, it should promise to divest it rather than play accounting tricks.
The proposed Infrastructure Bank risks being worse. According to National, the Government would put a "nominal amount of equity capital" into the bank. The bank would then borrow on the debt markets, including 30- to 50-year bond issues.
The question is whether these would be included as liabilities for the purpose of calculating net core Crown debt. They would not normally be for a Crown Financial Institution, although after media criticism yesterday Goldsmith said it would be his policy to include any Crown borrowing by the Infrastructure Bank in net core Crown debt calculations.
In one sense, this may be academic in that it makes little difference how National plans to fund essential projects like its promised expressways linking Whangārei, Auckland, Hamilton and Tauranga, as long as it does get on and build them.
But if cute accounting is to be used to manipulate the measures of Crown debt, it would mean the end of the spirit of the financial disclosure regime first legislated for in Ruth Richardson's Fiscal Responsibility Act — which, in the long run, was perhaps the most important economic reform of the 1990s.
We'd risk heading back to Muldoonery. And the tragedy is that it would be National, more recently the party of sound fiscal management, who would be taking us there.
- Matthew Hooton is an Auckland-based PR consultant, whose clients have included the National and Act parties. These views are his own.