Toby Manhire grabs a seat in Lower Hutt to watch the Labour leader make his biggest pitch yet.
Chris Hipkins is not a religious man, but that didn’t stop him blending apples and church on a Sunday afternoon in the Hutt. The sign outside the big tax speech at St Paul’s Anglican Church advertised someone In It For You on one side, and the details of the fruit and vege co-op opening hours on the other. Inside the hall next door, under the stairs, big white baskets overflowed with plump, elegant Braeburn.
About 250 party members squeezed into the hall yesterday afternoon and did their best to sound surprised and inspired as the prime minister reached to pull a rabbit from the hat and produced a carrot. Not just any carrot, but a delicious, GST-exempt carrot.
Grant Robertson used to be a religious man. “I want to thank St Paul’s for allowing us to use this venue today,” he said yesterday. “I don’t represent myself as any kind of saint but I’ve been on my own road to Damascus when it comes to the announcements we’re making today.”
Robertson, whose church these days is the debating chamber in the House of Representatives, and who probably could have been prime minister if he’d wanted it after all, has found his light. Boondoggles can be really good, actually.
Robertson said his own, particular conversion came after being satisfied that a new grocery commissioner would ensure that supermarkets passed on the savings, and that the tax system would remain “stable and sound and efficient”. He said: “I’ve been convinced that looking around the world, other countries can do this, and actually doing something directly about the price of food matters sufficiently to me that we can make that change.”
When Hipkins was asked to name a single tax expert or economist who backed removing GST from fruit and veg, he answered a different question. “I can name a whole lot of tax experts and economists who think that the tax system should never be changed.” Jane Patterson from RNZ sighed and put the same question again. He said, “other countries do it.”
The truth, of course, is that there is a dossier bulging with numbers and analysis that makes a resounding argument for Labour’s policy to remove GST from fresh and frozen fruit and veg: the findings from polling and focus groups.
When I asked Hipkins last week about his decision to reject a tax switch featuring a wealth tax, overruling Robertson and his then revenue minister David Parker, he said: “It should be incumbent on all political leaders, before you rule something in or out, you actually consider the facts and you consider the evidence and you consider the advice.”
And the same would apply to any policy on GST? “Absolutely. But, having said that, public opinion also matters. Ultimately, you have to bring the public with you.”
The GST exemption was the centrepiece, but it wasn’t the only part of the package announced yesterday, which would also include an increase in the in-work tax credit by $25 a week to $97.50 and a widening of eligibility for Working for Families. The WFF abatement threshold would move to $50,000. That’s a substantial shift, but it doesn’t kick in until 2026 – a delay necessitated by the straitened times in which we live. Coming just a week after the announcement of work beginning on an Auckland harbour tunnel in 2029, it’s asking for a good bit of forbearance.
In what was as much a mini-rally as a policy announcement, Hipkins invoked Kirk and Savage, Nash and even Ardern. “I know our team has not had a perfect year,” he said, to a rumble of bruised laughter. There were repeated references to bread and butter, to “coalition of cuts”, and even Ruth Richardson. Mercifully, there was no mention of sausage rolls. Deviating from his speech notes on the subject of Labour’s state house building record, he beamed: “Great things happen when there’s a Hutt boy in charge.” There was even a gentle swipe at the real people’s commissioner for groceries, Sam Uffindell.
And it went down well. “He’s a really good speaker, you know?” said one of the Labour faithful watching from the mezzanine. “Really good. Ten out of 10. And he doesn’t go on. Get in and get out.”
Robertson played attack dog. In a foretaste of the campaign he took aim at Christopher Luxon, voicing aloud the unwritten second half of Labour’s slogan. New Zealanders faced a choice between “a party led by Chris Hipkins, that’s in it for them, against a guy who’s in it for himself, who wants to give himself and his mates a massive tax cut.” Hipkins said, “If I’m going to target support, I’d rather give it to mums and dads than to millionaires.”
National’s tax policy is still to come, of course. Nicola Willis is yet to leak it, but it will not feature the removal of the $180,000-plus tax bracket – that pledge, which left National wide open to the “millionaire-mates” line from Labour, was necessarily jettisoned last year. Pegging tax brackets to inflation is much less vulnerable to such attacks.
As for Labour’s GST pledge, it needs to survive two challenges in the weeks ahead. First, the weight of expert opinion that says, essentially, if you want to spend a chunk of money helping low- to middle-income New Zealanders, this ain’t it. “We could consider that income tax or welfare transfers are likely to achieve greater distributional benefits, with lower fiscal and efficiency costs, than having a system of multiple GST rates,” was the clear conclusion, for example, from the Michael Cullen-chaired tax working group set up by Labour after the 2017 election.
The second is more immediate and practical. The risk of summoning the ghosts of the campaign of 2011 and the knots that Phil Goff found himself tied up in on how the fruit and vege GST exemption would work. But Hipkins will reckon a more agile political tactician. And his mind is made up, focused unbudgingly on the most quotidian and vivid expression of the cost of living crisis: the price of stuff on supermarket shelves – retail politics in every sense of the word.
