The government has wrecked the economy, but don’t worry, we’re not going to go hog wild changing things.
Chris Hipkins delivered an emphatic denunciation of National’s fiscal recklessness when challenged over his spending promises on RNZ’s Morning Report in June. We’re not bad with money – they are, he told presenter John Campbell. “What was profligate was giving well over $3 billion in tax cuts to landlords.”
It was a familiar refrain. In May, Hipkins criticised the government for its “tax cuts for landlords” in a video he shared on Facebook. In his state of the nation speech earlier in the year, he said the government had sharpened our recession by prioritising tax cuts for landlords. His MPs have regularly delivered the same argument. “Instead of investing in good jobs so people can work and support their families, reliable healthcare and warm, dry homes, this government has chosen tax cuts for landlords,” said his finance spokesperson Barbara Edmonds last year.
It’s a strong message, and one only slightly undercut by Hipkins announcing on Monday that any government he leads will deliver those same tax cuts to landlords. He told reporters Labour had recently finalised its position on interest deductibility and decided not to make any changes.
There are some arguments for the move. Hipkins has justified the choice by saying Labour has replaced interest deductibility for property investors with a, say it with me, simple, targeted capital gains tax. Landlords will still have to pay, just in a different way. Some economists had voiced concern over Labour’s prior interest deductibility rules, arguing they lowered the number of rental properties on the market and that landlords were passing the extra costs on in rents.
But the announcement is emblematic of a wider issue with Labour’s two-speed campaign. For all the criticism of his forcefulness as a leader, Hipkins can be blistering in prosecuting our coalition government’s failures. He’s relentlessly hammered National for promising to get the country back on track then delivering a recession and a pernicious cost of living crisis instead. “People are working harder than ever and falling further behind. Groceries cost more. Power costs more. Insurance costs more,” he thundered in his state of the nation speech in February. “New Zealanders were promised the cost of living would be fixed. Two years later, it’s worse.”
But when it comes to the question of what Labour would do differently, Hipkins gets more coy. He’s spent much of his time during this campaign talking about what his party won’t do. Those people working harder than ever and falling further behind? They shouldn’t expect an income tax break. Hipkins has repeatedly ruled out making any tax changes beyond the aforementioned simple, targeted CGT. Wealth taxes? No. Inheritance taxes? No. Land taxes and a UBI? No way. Meanwhile, Hipkins has insisted in interviews that Labour has a financial plan; that it will make different choices to the current government. But he’s refusing to go into detail on what those choices will be until after the pre-election economic and fiscal update (Prefu) next week.
As commentators have argued, this is all in keeping with a small-target strategy. Hipkins wants to carry his political Ming vase across the electoral finish line without breaking it. But it can seem like the party is delivering a contradictory message. On the one hand, things are absolutely terrible. The government has wrecked the economy. Westgold costs more than actual gold. On the other, don’t worry, we aren’t going to change things all that much. Yes, the country’s economic settings are broken. The rich are getting richer. The poor, poorer. But no, we’re not going to overturn the legislative applecart. Can’t afford the rent? Sure, but have you considered our $20 fare cap on public transport? Better starts soon – subject to favourable political and economic conditions.
Perhaps it’s no surprise Labour has been losing votes to parties promising a more comprehensive programme of change. Opportunity is the obvious example, but the Greens and New Zealand First have also seen polling bumps in recent months. Hipkins is promising to deliver a major policy announcement at Labour’s campaign launch at the weekend. He’s promised those attending his public meetings he’s just getting warmed up. There’s still time to change the topic and start talking more about what Labour is going to do rather than what it’s not. But as things stand, the small target is shrinking. Soon it may look to voters like nothing at all.
