Talk of a "wealth tax" is not a conversation the Government wanted to have as it seeks to walk back some of its more unpopular policies. By Jane Clifton
With all the Government's handbrake turns and wheelies, the Beehive may soon rival tracts of the Hutt Valley as a hot venue for boy racers of a Friday night.
A fair amount of rubber was burnt halting the Rotorua Māori wards legislation, and the skid marks from reverse laps around the Three Waters reforms are still smoking. It's all pedal to the metal and hang the speed cameras now Labour has decided grocery regulation is urgent after all.
With Labour's re-election chances hairier than ever, more backtracks on controversial policies are likely, with potentially popular ones reaching ear-popping acceleration rates.
But oh, the whiplash when something unexpected shows up in the road. Revenue Minister David Parker's new mission to soak the rich came as a spray of road spikes. Prime Minister Jacinda Ardern was so spooked as to perform the equivalent of that heart-stopping accidental manoeuvre where you throw your gearbox into reverse while belting along a motorway. Her attempts to rule out a wealth tax, given Parker's Wagnerian declaration of vengeance, were less convincing than she might have hoped.
Ardern has previously ruled out a wealth tax both "this term" and "under her watch", but this week has fallen conspicuously short of reiterating that pledge with respect to next term. Her caution was probably because "wealth tax" can mean so many different things, many of which are always under consideration, from imposts on mansions, inheritance, vacant land and financial transactions to incursions into trust fund rules.
This was emphatically not the debate the Government wanted to have now. What Parker announced was a new research programme into the affairs of the super-rich to inform future tax-net fine-tuning. Alas, he made it sound as though Judgment Day was nigh. The message the media took was, "Big, fat, rich bastards' tax coming right up!"
Fear and loathing quickly reached fever pitch, because it's almost impossible to clip the super-rich without also affecting the merely comfortable, and even those trying to keep precarious businesses afloat – let alone in a time of galloping inflation and war.
The crowning stupidity of this furore is that any domestic measure calling itself a "wealth tax" could only ever be merely symbolic, since no country can successfully tax the super-rich without the co-operation of pretty much every other country. Tax avoidance, like Covid, is impervious to borders. Work is well under way on an internationally harmonised tax net, but unless and until we have one, a lone country's efforts will be largely symbolic. Anyone who doubts this can't have noticed the greased-piglet fiasco that is the attempt to economically blockade Russia via its oligarchs.
Ardern's irritation at having to do the pinhead dance on wealth taxes was understandable. No new wealth tax is going to spare the average household from the ravages of inflation just now, nor alleviate the skills shortages, nor budge the greenhouse-gas-emissions dial.
The Government admitted just this week that we need $31 billion more in infrastructure each year for the next 30 years, which we simply can't afford. At a pinch, the Government could seize the assets of every rich-lister and reassign them to fund roads, drains, schools and hospitals – but we still couldn't get the labour or half the building materials.
What was Parker thinking? Colleagues aware of his devotion to economist Thomas Piketty, whose doctrine is direct state intervention to restore equality, might have kept a closer eye on his final drafts.
Piketty's is not a wildly controversial orthodoxy, but its domestic implementation is politically fraught. Although few households would ever be troubled by a wealth tax, and most would cheer to see the likes of Elon Musk and Mark Zuckerberg shaken loose of a few billion, the concept is not as popular as logic would suggest.
Even if a new tax is not within their tax bracket, many people worry that it might be one day – the aspirational mindset Sir John Key so shrewdly dinned into National when he was leader. That's why National and Act are having such a bonanza, hailing a new tax squeeze to threaten "every battling Kiwi".
Some ingenious second-guessing has emerged in the commentariat, including a top-rate tax biff with a GST-reduction softener.
But the odds of there emerging a stonking new kryptonite weapon against the helicopter classes are pretty slim, and of Parker's being the Superman who gets to fire it, skeletal.
Rather, he had better stick a hardback copy of The Spirit Level down the seat of his trousers for the prime ministerial walloping that's coming his way.
As for the Three Waters U-turn, it's more of a C-shaped reversal, in that the changes bring it near as dammit back to the place from which it started. It's a final round of "let's pretend". In a bid to alleviate a minority of councils' horror at having water assets – and their much greater liabilities – removed from their balance sheets, each will now get a share of the water sector, but with no power attached. Many are still whingeing, but at least it's not about an "asset grab". It's actually a liability grab – but they can still pretend they have a share in an asset.
This was done in the name of another pretence: the risk of privatisation. Dream on. Entrepreneurs have made a buck out of bottled spring water. But find a private buyer for sewage, stormwater, tap water or river cleanliness and they'll be that busy fending off Nigerian gentlemen with bridges to sell and fortunes needing bank accounts to "rest" them, water still wouldn't get a look in. More than ever, since the latest data on quake damage and sea-level trajectories, water management is all expense and no profit – the "only" payoff being that of not poisoning people.
Councils have also pretended they're not allergic to Māori co-governance, just romantic about local democracy. That has resulted in a complicated new cat's cradle arrangement: councils and mana whenua get equal dibs on a regional reps' group, which will appoint a selection panel, which will appoint a board. That's an economy-sized new serving of local democracy with diluted co-governance.
Now someone just has to figure out how to explain to future generations why it all had to be so bizarrely complicated.