Whatever deal is struck between Labour and the Greens, we can be pretty sure that New Zealand will have a wealth tax for at least the next three years.
There is no sign, that is, that Labour plans to abolish local body rates — a tax on housing, whichcomprises about a half of households' net wealth, as well as on farms and business premises.
Status quo is very much the hallmark of the tax policy Labour took to the electorate, promising no new taxes and no further increases to income tax — beyond a new 39 per cent rate for incomes above $180,000 — over the next parliamentary term.
More broadly, we can expect the Labour Government to pursue a centrist approach to policy, content with making incremental progress towards the more inclusive, sustainable and productive economy they like to talk about.
An approach which, as Jacinda Ardern put it in her election-night speech, "brings New Zealanders with us to deliver long-lasting change". The tone of that speech was remarkable for a lack of triumphalism, given the magnitude of the electoral victory.
Instead, the emphasis was on inclusion.
Clearly, Labour has a strong incentive to hang on to as many as possible of the former National Party voters who flipped to it.
Addressing them, Ardern said: "We will not take your support for granted. I can promise we will be a party that governs for every New Zealander."
More than partisan calculation is involved here. No doubt with the gruesome example of the United States in mind, she spoke of the need to eschew polarisation and to be an antidote to the uncertainty and anxiety of these times.
Times of serious recession, not only here but globally.
And that inevitably limits the Government's options.
The pre-election economic and fiscal update's central forecast is for a slow and jobs-poor recovery.
The Treasury expects it to be the year to June 2022 before real gross domestic product is back at the level it was in the year to June 2019. If growth had continued for those three years at its trend rate over the preceding seven years, it would be nearly 10 per cent higher by then.
And as for employment, it will get worse as the fiscal morphine of the May Budget wears off.
The Ministry of Social Development forecasts the number of people on Job Seeker support — which has already risen by 70,000 from pre-Covid levels to 228,000 — will keep rising to a peak of 274,000 by May next year and remain about that level for a year, before declining slowly to a still elevated 235,000 by mid-2024.
That might be pessimistic. The most timely hard data we have on employment levels, derived from payday filings to IRD, has the number of paid jobs so far holding steady at 2.2 million, even though the number of workers supported by wage subsidy has been declining for a while now, to 76,000 by October 9 from 1.66 million at its peak in late May.
Meanwhile, NZIER's quarterly survey of business opinion released this week found a net 10 per cent of firms reporting they had shed labour over the past three months. But that is not too far south of that indicator's long-run average of a net 4 per cent negative. And it is a less grim outcome than suggested by the net 28 per cent of businesses saying three months ago that they expected to reduce headcount.
We can be pretty sure that New Zealand will have a wealth tax for at least the next three years. Photo / File
Hiring intentions in the latest survey rebounded to a net 16 per cent positive, which is above its long-term average of 1 per cent.
We shall see. In these times the signal-to-noise ratio in economic indicators is low and the labour market is famously a cyclical laggard.
What we can expect, given Labour's outright majority and the removal of the New Zealand First handbrake, is a bunch of changes which tend to cause employers' eyes to narrow and lips to curl: a further increase in the minimum wage; a second week's sick leave entitlement; an extra statutory holiday; and progress on fair pay agreements.
Business lobby groups will no doubt object. But let's face it — businesses which cannot afford to pay a living wage are reliant on someone, somehow, subsidising their workforce.
Otherwise they would not have one. And one firm's employees are other firms' customers.
Beyond those labour market measures and the infrastructure projects it is already committed to, how will Labour respond to the cry, already to be heard, "No more excuses. Let's see the transformation you used to talk about!"
After all, while recession will crimp its tax revenue and swell welfare spending, locking in deficits, the Government these days is able to borrow at negative real interest rates.
The borrowed money should be spent on things which strengthen the economy's capital base, and not just physical capital like infrastructure — though there is plenty to do there — but human capital, aka the young.
Transformation is a process, not an event. It is not as if there is some lever the Government only needs to pull that will catapult us immediately up to the broad sunlit uplands of a fair, green and productive economy.
The challenges it faces have been years in the making: child poverty at levels which disgrace a developed country with some vestiges left of an egalitarian self-image; a housing crisis which has housing costs consuming unconscionable shares of household incomes; productivity levels and growth rates that keep those incomes low; while per capita greenhouse gas emissions are high and rivers are little more than sewers.
These problems are complex and intertangled. None of them admits of quick or easy solutions at the best of times, still less in these times.
And there is a sense that one term does not constitute a fair go at addressing them; 1975 was the last time we threw out a Government after just three years.
Six years is a different matter. Labour in its first term could fairly be accused of having over-promised and under-delivered. The onus on it now is to reverse that.
