David Parker, seen giving his valedictory speech before leaving Parliament, reflects on 23 years as a Labour MP. Photo / Marty Melville
David Parker, seen giving his valedictory speech before leaving Parliament, reflects on 23 years as a Labour MP. Photo / Marty Melville
David Parker left politics last week after 23 years as an MP.
Parker was the driving force behind 2021 changes to the tax system that meant landlords paid more tax.
Those changes are being phased out.
It’s quite difficult to call someone a “tosser” in Parliament and probably for good reason. If it were easy, there’s a good chance MPs would say little else.
In 2006, however, Labour’s David Parker found his way around these rules.
He was Transport Minister at the time and wasbeing quizzed about an alleged hole in the Government’s transport budget. The then National leader Don Brash and later the party’s transport spokesman Maurice Williamson were so dismissive of the transport budget they held it up in the House and tossed it into the chamber.
Asked a question by Williamson, Parker responded: “I would say to the tosser …”
He paused.
“... of documents.”
Then Prime Minister Jacinda Ardern, with her Finance Minister Grant Robertson (left), Housing Minister Megan Woods and Revenue Minister David Parker announcing tax changes including the banning of interest deductions. Photo / Mark Mitchell
By referring to Williamson as the “tosser ... of documents”, which he literally was, Parker had got around the rule. The chamber (or at least the Labour side) loved it.
The anecdote, which Parker referenced in his valedictory speech to Parliament last week, tells you a lot about the man. He’s very clever – and knows his way around the Standing Orders – but very political too.
Most parties have a few big brains on their benches, but not all of them are as excited by the cut and thrust as Parker.
The tax that Parker pushed too far
Speaking to the Herald to mark his retirement from politics, Parker was quick to say his greatest achievement was shifting the national discussion on tax, from one that focused on taxing people’s wages and salaries to one about wealth and the extent to which it is, or isn’t, taxed.
This is quite the statement.
Parker has a significant legislative legacy, including the Emissions Trading Scheme to reduce emissions, and a law that provides a mechanism to respond to areas where the courts declare laws are inconsistent with the Bill of Rights – a semi-constitutional change.
One of the most far-reaching tax changes Parker managed to legislate in Government was a proposal that barred residential landlords from deducting their interest costs from their tax bills.
By barring these deductions (interest being the largest cost many landlords will face) the Government significantly increased the tax bill for most landlords.
Looking back, Parker said the Government might have gone “a bit far” with the idea, which was being phased in when the coalition took over and is currently being phased out.
Parker is still strongly supportive of the principle behind the policy, but reckons it might have been better had the Government stopped when it had allowed 50% of interest costs to still be deducted, rather than progressing to a full ban, or reverting to 100% of deductions, which is the current policy.
Parker said the key unfairness is that a central component of interest costs is the rate of inflation, but inflation is not a real cost because how much it reduces a landlord’s debt is smaller in real terms.
But because landlords can deduct interest costs from their borrowing, they have an advantage over owner-occupiers who cannot claim an equivalent deduction (although landlords do have higher loan-to-value borrowing restrictions).
Parker believed landlords should not be able to deduct inflation, which erodes the real value of their debt, but they possibly should be able to deduct the margin between the inflation rate and their interest rate, which is a real cost faced by landlords.
He said a “pretty good proxy” for this might simply be allowing landlords to claim a 50% interest deduction.
“We probably should have stopped at 50%,” Parker said.
Tax policy led to tension between the then-Prime Minister Chris Hipkins and David Parker. Photo / Dean Purcell
The changeover
In 23 years as an MP, Parker’s most testing time with his own party occurred only recently – in 2023, after the then-Prime Minister Chris Hipkins killed a wealth tax proposal Parker and then-Finance Minister Grant Robertson had been working on under the previous Prime Minister, Dame Jacinda Ardern.
Parker came close to legislating one of the boldest redistributive tax policies in the world with the wealth tax plan.
Does he regret not forcing Hipkins to sign up to the plan as a precondition of his support for his leadership? Had the wealth tax plan been more widely known, it might have influenced Labour’s leadership deliberations.
“Shoulda, woulda, coulda,” Parker said to that.
He said people could “speculate” on whether he regrets not having the wealth tax bolted down prior to the leadership change but he would not comment on it.
Parker paid tribute to the legislative achievements of the Clark and Ardern-Hipkins Governments, of which he was a part.
While Parker refused to choose a favourite, he said the Clark Government, which ran from 1999 to 2008, had some advantages when it came to pushing forward its policy agenda, much of which survives to this day.
He said in the days when “MMP was younger” there was “more co-operation” between parties. Politics was easier before widespread social media use and what Parker calls the “erosion of civility”.
He also believed the advent of identity politics means small issues suck up more time and political attention than they perhaps deserve.
At a recent reunion of veterans from the Clark Government to mark the 25th anniversary of it being elected, Clark told a story about the then-Speaker Jonathan Hunt.
Hunt “used to advise caucus members about how to deal with difficult conscience issues: if you’re in a marginal seat, try to stay out of the debate, they might not even need your vote. If they need your vote, vote the right way, but don’t thump your chest about it, don’t make it bigger than Ben Hur because it will hurt you with the voters that you need to elect you”.
“The incentives are the opposite to that in MMP,” Parker said.
Were Clark to be Prime Minister today “she would still be fantastic, but she would have more limits placed on her ability”.
Thomas Coughlan is Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
