Editorial: Ardern's backdown carries a cost

This has not been a good week for Labour but the penultimate week of election campaigns is often turbulent. Photo / Nick Reed

Editorial

Labour did not wait for another poll to be published last night before announcing its backdown on Jacinda Ardern's decision to put as yet unknown tax reform into effect before the next election.

Clearly, the party's own soundings were confirming the damage the policy was doing, already evident in National's resurgence in TV3's Reid Research poll on Tuesday.

The impact of the reversal will not be known until next week's polls but it may not have done Labour much good.

A similar mid-campaign retreat was made by British Prime Minister Theresa May in the election this year.

Confident of winning, she went into the election with a policy to make affluent senior citizens pay more towards their subsidised rest home costs.

It was brave and it presented the Labour Party with an easy target, which it exploited with the same relish National has used Ardern's courage here.

And it was courageous, her first "captain's call" after being handed the leadership. Her party wants to set up a working group to advise it on a better balance between taxation of income and assets and she wanted to act on its advice before the next election.

She and finance spokesman Grant Robertson have given no sign that they are approaching the exercise with any particular taxes in mind but National believes - or has pretended to believe - they must have taxes in mind that they are not telling.

Its politics, it's an election campaign.

So now, if Labour is elected, its hand will be tied on tax reform for the next three years. The most it will have a mandate to do is to extend National's two-year bright line test for taxable capital gains on investment homes to five years, and stop losses on highly geared rental homes being used to reduce tax on other sources of income.

No matter how sensible the working group's proposals might be - and they might even be popular if incomes would be more lightly taxed - Labour has now undertaken not to enact them before the next election.

All of that assumes Labour wins this election, which is harder to predict now than it was a week ago. The backdown in Britain did not do the Tories much good and it will have damaged Labour's new leader here.

To reverse now makes the original call look more naive than courageous. Ardern's youth has been a large part of her appeal and while younger voters might not hold naivete against her, older ones might wonder at her judgment generally.

Elections are important tests of those asking to be entrusted with the country's economy and national welfare.

Ardern says it was also her "captains call" to abandon her earlier one, but the back-down was announced by Robertson yesterday, not her.

This has not been a good week for Labour but the penultimate week of election campaigns is often turbulent. Polls perhaps reflect last-minute wavering of voters who had been fairly definite.

Labour's task now is to put this unedifying backdown behind it, bury the tax issue and be relentlessly positive again.

National's task is to bank this tactical gain and become more positive in its own campaign. It's looking like a close finish.

- New Zealand Herald