What does a Chris Hipkins government look like compared to a Jacinda Ardern government? That’s the question that will be answered this year as Hipkins embarks on trimming the Government’s bulging policy programme. Axing unnecessary policies.
Do we see the ascendancy of a new policy idea, like social investment, which came to the forefront of policy during the Bill English years, after sitting in the background during the John Key leadership?
Or will the change be relatively minor - a seamless transition from one leader to the next.
For all the hackneyed comparisons between the Key-English transfer and the partnership between Helen Clark and Michael Cullen, those currently at the top of the Labour Party have been mostly in the same camp. Cullen was lobbied heavily to roll Clark, and nearly did it, and it’s often rumoured that Key’s switched vote brought down English’s leadership in 2003 - they were not close friends, but became professional allies.
Jacinda Ardern, Chris Hipkins, and Grant Robertson, by contrast, were friends before they were allies - and were on the same side of multiple leadership tilts in opposition (Ardern nominated Robertson when he ran for the leadership).
New Deputy Carmel Sepuloni is a slight exception to this. While she has been friends with Hipkins for some time - the pair were both whips under David Cunliffe - Sepuloni occasionally fell on a different side of the Labour Party to the current regime. She backed Cunliffe in the conflict that was to prove one of Labour’s most divisive, Ardern, Robertson, and Hipkins famously did not.
Ardern had promised to streamline Labour’s policy focus, by axing unpopular policies. Things like the RNZ-TVNZ merger were mooted for the scrap heap. Hipkins confirmed that this is still on the cards, meaning a handful of unpopular policies might be destined for the scrap heap.
Hipkins said this will take place in the coming week, describing it as a reining in of the current work programme. He teased a more economic, business-focused agenda, suggesting a gentle nudge to the centre.
Here are some picks to what might be coming.
Perhaps the biggest change to Labour’s programme under a Hipkins leadership is the likelihood of tax cuts.
Polling shows the economy and cost-of-living issues are top of mind for voters heading into the 2023 election. This means measures to lift incomes will be front and centre of the election campaign.
There were two poles to the income question in the previous Labour leadership. One was offering tax credits, boosting incomes by offering handouts instead of tax cuts. This tended to be favoured by Ardern.
“We tend to have a bit of a view that easing the [cost of living] pressure is solely about some of those blanket moves that you can make.
“We’ve said using things like a tax credit system, which does give support out to families - 60 per cent are reached ... can provide more support, more targeted and less inflationary,” Ardern told the Herald at the end of last year.
Robertson, however, was said to have erred closer towards backing tax cuts - and Hipkins too. With Ardern gone, tax credits may have lost their great champion. Tax cuts, potentially those that offer more for people on lower incomes than what National is currently offering, might be on the way (probably at the election, rather than the Budget).
Sepuloni’s elevation to the top may challenge this. She’s Social Development Minister and may keep this role after the reshuffle (she’s excelled, so far).
This is the portfolio that would likely roll out any tax credit changes (Working for Families is administered by Inland Revenue, but policy is part of the social development portfolio).
One big thing to look for is the impending outcome of the Working for Families review.
This started in 2021 and wrapped up at the end of last year. The Herald understands at least six options have been included in the final recommendations, ranging from fairly low-cost to quite expensive. These changes were slated to be made early this year, and perhaps funded in the Budget.
Does Sepuloni’s promotion make it more likely the costlier tax credit plan be chosen by the Government? If so, it would take a significant chunk of income that would otherwise be used for tax cuts. Perhaps the leadership will opt for a smaller Working for Families package, saving cash for tax cuts at the election.
David Parker’s research into how much tax the uber-wealthy pay in New Zealand (probably not much) returns later this year. The Government might have decided to use that research to think up new ways of taxing the super-wealthy. It’s hard to see that happening now.
When Ardern first announced a plan to axe policies at the end of 2022, the TVNZ-RNZ merger was the favourite for the axe.
It’s hard to see it surviving under Hipkins, who has expressed a desire to narrow the Government’s focus to more bread and butter issues. It seemed destined for the scrap heap.
Social Unemployment Insurance
This is Grant Robertson’s baby. The scheme would offer 80 per cent of most employees’ wages for up to seven months after they lose their jobs. It’s funded by a 1.39 cent levy on the earnings of workers and employers - a levy that looks an awful lot like a tax.
The scheme was initially quite limited, but Ardern personally fought for it to be expanded to cover all sorts of redundancies arising from health conditions - doubling its cost. Business NZ has been supportive of parts of the scheme (which it co-designed) but is critical of this expanded scope.
The scheme is likely to lose this component, particularly without Ardern to defend it. Hipkins might also decide that it’s easier to scrap the scheme wholesale. A “jobs tax”, as National calls it just as electorally damaging it its set at 1.39 cents of 0.7 cents.
Hipkins is meeting business leaders in Auckland on Thursday - if he were to announce the axing of this policy, that would be the time to do it.
The plan to build light rail through Auckland is probably safe. The project is too far gone to U-turn on, and killing it would create as many problems as it solves.
The Government would have to go back to the drawing board on how to resolve the problem of bus congestion in central Auckland and rethink its future transport plan. Best just to stay the course.
A plan to build a new Waitemata Crossing (probably a tunnel) is safe for the same reason.
Transport Minister Michael Wood may also have to come cap-in-hand to Hipkins for money to cover cost blowouts on the Government’s NZ Upgrade roads. This will happen in the first few months of this year. Much of the money will come from the axed Auckland cycle bridge, but more might be necessary. It’s possible the Government may decide to scale back some projects.
The Government is investigating building a massive hydroelectric scheme in the South Island “battery” to help New Zealand move to 100 per cent renewable electricity. Historically, hydroelectric projects in the South Island have tended to be anything but easy. The Lake Manapouri scheme upended New Zealand politics.
This immensely complex scheme could get the axe. It’s hard to see why a Government fighting battles on so many fronts would decide to pick another. However, the scheme is quite important in terms of climate commitments and might be far enough in the future not to worry about.
The Government has said it will introduce legislation to lower the voting age. It doesn’t have the votes to get the 75 per cent majority required to lower the voting age at a general election. It does however, have the votes to lower the voting age at local elections, which it has suggested it would do.
Proposed legislation to lower the voting age was in response to a Supreme Court ruling last year. The Government must, by law, respond to this ruling. However, it is not obliged to actually do anything beyond that. There’s a decent chance this might be kicked for touch (although Hipkins would look a bit silly, having said he supports a lower age).
Justice Minister Kiri Allan is legislating hate speech laws. Already heavily watered down, these appear to displease both proponents and opponents of reform. Allan, in backing Hipkins’ leadership, has possibly earned a policy free pass. U-turning now might be seen as a betrayal of the survivors of March 15, the attack that sparked the reforms.
Similar to the Lake Onslow hydroelectric scheme this project is very important, but complex enough to be a bit of a problem for the Government.
The policy will help communities to retreat from areas likely to be unlivable because of climate change, which is hugely important for local councils desperate to relieve themselves of the immense cost of serving sinking communities.
The scheme is likely to involve charges, however, opening itself up to property tax attacks.
It’s hard to see if this will be scrapped. It’s politically problematic, but deeply important.
Despite the public angst over Three Waters, the programme is mostly legislated by now. Scrapping it would require legislation to repeal what has just been passed. Co-governance in Three Waters has also been legislated, meaning it’s very unlikely the Government would choose to repeal it. Another two bills are before the House, so it’s possible the Government might try and heed the concerns of local government through amending this legislation.
The Government has already paused other co-governance work, leaving Hipkins little scope for any further U-turn.
Parker’s RMA reforms are probably safe.
His two RMA bills are meant to pass through all stages this year. Most parties agree the RMA is broken and needs scrapping. Parker’s proposals are not contentious enough to be given the axe although Hipkins might be looking nervously at his neighbour from the Hutt, National’s new (as of Thursday) RMA spokesman Chris Bishop, who has the political chops to turn RMA reform into a massive problem for Labour if he’s not careful.
However, National might not want Labour to fail in its efforts. Repealing the RMA is incredibly difficult - something that eluded even John Key. It’s probably easier for National to let Labour do the job of repealing and replacing the RMA, and for National to amend anything they end up passing.
National will also know that its likely coalition partner Act might make its own repeal efforts difficult.