COMMENT:

The first anniversary of last year's election – tomorrow - has delivered some less than frank reflections on that incredible campaign and result.

Unsurprisingly perhaps, tax did not feature heavily in Jacinda Ardern's chapter on the election in the just-published book Stardust and Substance.

Leaders prefer to dwell on their triumphs, and the tax issue represented a major failure in the nascent days of her leadership.

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It undoubtedly suppressed Labour's final vote and affected the shape of Parliament.

One thing is clear after this week's tax report – tax could make or break the Government at the next election, and a capital gains tax (CGT) will be a defining issue for the relationship between Labour and New Zealand First.

The tax blunder last time taught Jacinda Ardern and then finance spokesman Grant Robertson that the "how" of progressing a policy is as important as the "what".

Capital gains tax has been an integral part of the post-Clark Labour story. In a sense, Robertson owes his job as Finance Minister to it.

When Andrew Little won the leadership in 2014 it was on a platform of repudiating the CGT (and raising the super age) policy that David Parker had finessed and owned as finance spokesman.

Little asked Parker to stay on in finance, but he turned him down and Robertson got it.

Tax got a tiny mention from Ardern in the 2017 election book – a flick at National for its suggestion Labour could raise income tax and for the much-derided claim that its fiscal plan contained an $11 billion hole.

But nowhere does Ardern own up to her error on assuming the Labour leadership from Andrew Little.

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She changed the name of the slogan, she changed the billboards, and she overturned Little's carefully calibrated tax policy that required any changes to tax policy from a tax working group to be tested at the 2020 election.

If it sounds familiar, it is because Ardern was forced to revert back to it.

National did not immediately exploit the obvious vulnerability of the Ardern-Robertson position in the campaign.

But Ardern had given Labour an open-cheque book on any changes to the tax system in this term of Government without having to spell it out in the campaign, and that presented National with an equally open opportunity to fill in the blank with whatever it wanted.

After Labour's meteoric rise in the polls on the back of her elevation, by almost 20 points, Labour started diving in the polls and a backdown was required. Even Jacindamania could not withstand the forces of uncertainty over tax policy.

The back down was damaging because it allowed National to talk up the issue of trust in Labour, but not as damaging had the any-tax policy remained.

The same issue of trust and uncertainty will not be present at the 2020 election, because by then voters will know whether or not the Government has passed a CGT to take effect after the election.

Robertson has given a clear indication in his letter to the Tax Working Group of where he wants it to go in its final report in February: he wants a capital gains tax to be integrated into the income tax system (ie applied at an earner's top rate) but with some measures to soften the blow for those with the greatest to lose, small and medium businesses, including farmers, and other investors in the productive sector.

National will almost certainly campaign against it on the more visceral aspects of a CGT – penalising the aspirations of the battling small business owner or person who wants a second home for retirement security.

It will be an argument of aspiration versus ideology.

New Zealand First holds the power in the decision on whether to proceed although leader Winston Peters went strangely septic this week at my suggestion that he and his party could stop a CGT proceeding.

Perhaps this is the one time he would prefer to be part of a "Labour-led Government" than be held responsible for a policy that could damage his party's campaign for the countryside, given the effect a GCT could have on farms.

In the Queenstown ASB debate last election, moderated by Newshub's Patrick Gower, Peters claimed a capital gains tax would not work in New Zealand and had never worked anywhere in the world.

But the fact Peters thinks a CGT has never worked is not necessarily a good guide to future behaviour.

When Peters gets himself into tangles over controversial policy, he simply abuses the journalist as a drongo, moron or idiot and leaves all his options open.

Pressed hard by Gower on whether Peters would stop Grant Robertson's plans for a CGT, Peters refused to say. The people deserved to know whether he would stop it or not, Gower said.

Peters changed the subject and said people should know what Labour policy on water charges would be, and it should not let undemocratic working groups set tax rates.

Again Gower pressed Peters hard on whether he would stop Labour's capital gains tax and make it the price of New Zealand First's support for Labour.

Peters again avoided answering and said he was campaigning to get his party into the most powerful position to stop and start all sorts of things "and I'm not going to have a Yes or No idiotic discussion like that tonight".

It may be that New Zealand First sees CGT as such a defining issue for Labour that it is obliged to support it as an article of good faith.

Both parties will also be mindful of the integrating effect of the policy on the Coalition.

Because the capital gains tax would not take effect until after the election, it would bind the Coalition partners, Labour and New Zealand First, closer together and require Peters and Ardern to campaign jointly under their tax policy.

That will fundamentally change the dynamics of the next election, whatever the merits and disadvantages of a capital gains tax itself.