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Home / New Zealand

Heather du Plessis-Allan on Labour's cost of living stuff-ups

Heather du Plessis-Allan
By Heather du Plessis-Allan
NZ Herald·
6 Aug, 2022 05:00 PM4 mins to read

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Labour needed something in a rush to save Grant Roberton's Budget in May. Photo / Marty Melville

Labour needed something in a rush to save Grant Roberton's Budget in May. Photo / Marty Melville

Heather du Plessis-Allan
Opinion by Heather du Plessis-Allan
Heather du Plessis-Allan is the drive host for Newstalk ZB and a columnist for the Herald on Sunday
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OPINION

Labour MPs must regret ever dreaming up their troublesome cost of living payment.

The $350 payment should've bought them a week of praise from 2.1 million grateful Kiwis. It bought them a week of ridicule instead.

The Government's stuff-ups got more and more ridiculous as the week went on.

First, Labour sent the money to people who shouldn't have got it: Kiwis now living offshore. In London. Dubai. The Netherlands.

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Then we realised Labour had also sent money to people who really shouldn't have got it: Indians and Australians living back in India and Australia who once lived in New Zealand. Some of them only ever lived here temporarily. Some of them left New Zealand as long ago as 2014.

Next we found out they'd lost 800,000 Kiwis somewhere along the way and the money had only reached 1.3m, not the expected 2.1m. Then - as if it couldn't get more silly - the Government had paid it into the bank accounts of dead people.

And finally, Labour had given with one hand and asked for donations with the other: sending out an email crowing about their generosity with taxpayer money, then asking for Kiwis to give some of it back to the party.

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Once again, Labour couldn't deliver on policy promises. This time it wasn't even as complicated as 100,000 Kiwibuild houses or light rail. It just required spending money. Turns out even something as simple as shovelling $814m out the door got the better of Labour.

And once again they were caught spending taxpayers' money without enough care. Wastage is a problem that's dogged Labour since the day they announced they would pay for nice kids to go to university rather than letting them pay for it themselves.

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What probably went wrong for Labour was that they got too cute with the payment from the start.

They needed something in a rush to save Grant Robertson's Budget in May. The payment was an afterthought, added at the last minute. If he hadn't tacked on this payment (and extended the transport cost cuts) his Budget would've ignored the country's cost of living crisis altogether.

But the Finance Minister got too political. He wanted to exclude too many Kiwis. He didn't want to give it to beneficiaries and pensioners. Too likely to upset working Kiwis. He didn't want to give it anyone earning over $70,000. Too rich already.

Which meant he couldn't just tweak the tax rates, because that would be too universal. Instead, he took the more complicated option of taking tax off all of us and then handing it back to a few of us. Trouble is, because of the complicated process he used to try to avoid giving money to our richest and poorest, he ended up giving money to foreigners living in their home countries.

Of course, Labour should've just changed the tax thresholds. After all, it's not as if prices are going to come back down. That's not how inflation works. Once the prices are up, they're up. But the cost of living payment will only provide relief for three months. And once that $350 is all used up, the price of everything will stay up. So adjusting tax was always the solution.

But Labour couldn't do that, because that was someone else's idea: Act and National.

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Luckily for Labour, National failed to capitalise completely on the cost of living payment snafu. The party was too busy shooting itself in the foot for two days in a row by changing policies then changing them back again. First the promise to increase health spending with inflation. Then the promise to index the tax brackets.

So the damage Labour could've suffered was somewhat muted. But it was likely still significant. Because if you can't even manage to spend money, what can you manage?

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