National's proposed tax changes suggest they're out of ideas - Shane Te Pou

Opinion

OPINION:

Even its harshest critics would concede that the National Party has had a good couple of months under new leader Chris Luxon.

To his credit, there's little sign under his leadership of the infighting and backstabbing that marred the tenures of Judith Collins, Todd Muller and Simon Bridges before him.

What's more, the media have granted Luxon a generous honeymoon that's allowed him to introduce himself to the electorate on his own terms without much in the way of scrutiny. The reshuffle he announced yesterday, in the wake of Simon Bridges' shock resignation, was carried off with minimum fuss. To the extent Luxon remains unable to produce anything like a formidable front bench, it is the fault of the party's poor recruitment over many years, and cannot fairly be laid at his feet.

Aside from running an airline, however, few voters have much sense of what Luxon stands for in policy terms. Will his business acumen help shape an ambitious new agenda that speaks both to the challenges of the moment while equipping New Zealand for an uncertain future? Or does he represent more of the same old middling conservatism we've come to expect?

Based on his first major policy announcement, people hoping for the former better get used to the latter.

Luxon's proposed tax changes suggest National is out of ideas and out of touch with the problems facing the New Zealand economy.

Take the pressing issue of rising costs for Kiwi households, and its policy prescription would likely make things worse.

Not only do tax cuts add to inflationary pressure across the economy, but they also deliver the least to the people under the most financial stress. People most impacted by inflation like lower-income workers, superannuitants and beneficiaries get nothing out of National's plan whereas people like Luxon and me gain thousands.

The real impact of the proposed tax cuts will be on health and education. Health services alone need $2 billion in additional funding a year just to keep the lights on. Education needs $650 million.

National leader Christopher Luxon and new finance spokeswoman Nicola Wills. Photo / Mark Mitchell

This raises questions that demand clear and specific answers from National.

Will they force schools and hospitals to get by on less in order to fund tax cuts? Or if they do commit to adequate health and education funding as well as tax cuts, what other parts of the budget will be slashed?

Luxon said in the speech of his desire to repair the bottom rungs of the ladder of social mobility. Nice line.

But, sadly, the opposite will be achieved with his tax plan.

The bracket change and removal of the 39 per cent rate gives Luxon $8000 a year. It gives a minimum wage worker $2 a week. He is not fixing the rungs at the bottom of the ladder, he is just adding some new ones at the top.

If he were sincere about addressing inequality, it's not like throwing money around the Koru Lounge was the only option.

For around the same money that National plans to spend on major tax changes, they could give everyone a $7000 tax-free zone that would put a flat $735 a year in every worker's pocket.

Or a one-off cost-of-living payment of $500 to anyone earning less than $100,000 (including beneficiaries and superannuitants) would cost less than National's proposed bracket changes alone- and yet would deliver 450 per cent of the benefit to a minimum-wage worker.

If Luxon and National were serious about inflation as a policy matter, and not just as a political football, there are many things they could be proposing, but notably aren't.

They could invest to make sure homes are properly insulated to reduce heating bills. They could embrace an ambitious agenda to build enough housing so that rents don't continue to demolish incomes. They could enact policies to build resilience into our supply chains so that future crises don't cause massive price spikes. They could make sure to have proper competition in essential services (supermarkets, petrol stations, building materials, energy) so that monopoly pricing doesn't continue unabated.

Instead, the complete absence from Luxon's speech of serious and substantive policy ideas like these suggest that, while Luxon may well be a shiny new face, he has very little in the way of bright new ideas.

It's as if National is betting that voter frustration with cost-of-living increases and exhaustion with the pandemic means they need not worry about doing anything differently or taking any policy risks.

When he had a chance to spell out his plans for New Zealand, what we got instead was the latest National Party scheme to manipulate the tax system to the disproportionate benefit of the people most likely to vote for them. If only the challenges we faced as a country were small enough to justify politics like that.

I end this column as a born and bred Bay of Plenty Māori lad sending my aroha to a guy who spent many years in the Bay. I sincerely wish Simon and his whānau well.

• Shane Te Pou (Ngāi Tūhoe) is a company director at Mega Ltd, a commentator and blogger and a former Labour Party activist.