Brian Rudman: National steels itself to squirm

Almost since the day they were elected into office, National's leadership has been softening us up to the likelihood they'll renege on their key election promise - a $4 billion, three-year programme of personal tax cuts. Tomorrow, Finance Minister Bill English will stand up in Parliament and, if the pundits are correct, do the dirty deed.

In the commercial world, such an obvious breach of promise would be actionable in the courts. Unsurprisingly, the legislators that draw up the laws to protect us from the business wide-boys carefully exempt themselves from similar sanctions.

The last time political pledges seem to have been tested in the courts, the case failed. Judge Fred McElrea pointed out that if Parliament "intended to allow courts to preside over such matters as the honesty and integrity of politicians and their political promises, then it would have needed very clear words indeed to achieve that end because it would be inconsistent with the traditional separation of powers between the political process and the judicial process".

He was hearing a petition from indefatigible water rights protester Penny Bright and others, in the aftermath of the 2000 local elections in Auckland. The group claimed some successful right-wing councillors misled voters as to their true intention regarding water privatisation.

Judge McElrea rather wryly observed that even if there was the possibility the candidates might have confused voters as to their intentions, "some might say that it is of the very nature of politics that candidates will promote their policies in this way, unrestrained by any political equivalent of the misleading or deceptive conduct provisions of the Fair Trading Act relating to commerce".

The courts, he said, "are not an appropriate guardian of the conscience of political candidates". The time to deal with broken promises is "at the following election, by which time the voters will have been able to see whether the election promise was broken or not".

The aftermath of the Rogernomics years were cynical times. As newly elected Prime Minister Helen Clark then observed, by the time of the 1999 election, voters had good reason to suspect the word of campaigning politicians. "They'd been lied to for about 15 years solid, and they just never seemed to get what they'd voted for."

It seems we're drifting back to those bad old days. Earlier this month, Prime Minister John Key signalled to an audience of his friends at a Business New Zealand meeting the promised tax cuts would be delayed to some unspecified time in the future. He said New Zealand could not afford "a runaway balance sheet".

Yet back on September 30 last year, Mr English was mocking then Finance Minister Michael Cullen for being over-cautious on the issue. He said: "Dr Cullen cannot be trusted to deliver on any future tax promises."

He compared that with National which "will have an ongoing programme of personal tax cuts. It will be a responsible programme and a transparent programme".

He said he would treat Labour's tax cuts, which came into force the next day, "as the first tranche on our tax-cut programme. That will be followed by another tranche of tax reductions on April 1, 2009, and further tranches in 2010 and 2011". He declared: "National has structured its credible economic package to take account of the changing international climate. Our tax cut programme will not require any additional borrowing."

A few days later, Mr Key launched "a tax package for our times" that is "appropriate for the current conditions". He said it would require "no additional borrowing, or cuts to frontline services to fund it. There is, in fact, a small saving to be made, of $282 million".

Somehow, cutting taxes dramatically was going to increase government income. On December 16, Mr English was up in the House confirming "National will not be going back on any of those promises, as we fully costed and funded them".

The Government is now making out some economic thunderbolt has suddenly hit New Zealand and thrown their pre-election calculations out the window.

But even economic ignoramuses like myself knew a global crisis was nigh. The experts had been saying so for long enough.

The International Monetary Fund's October 8, 2008 World Economic Outlook, for example said the world economy is "entering a major downturn" in the face of "the most dangerous shock" to rich-country financial markets since the 1930s. That was about the time Mr Key was unveiling his "responsible" and "appropriate for the current conditions" catalogue of tax-cut bribes.

Of course, last election wasn't the first time National dangled tax cuts in front of voters. In 2005, Mr Key's predecessor, Don Brash, campaigned on large tax cuts and increased spending on education, health and transport, without, as economist Brian Easton later noted in his Listener column, "any indication of how they might be delivered".

Dr Easton suggests National might have lifted its share of the poll by 10 per cent as a result. He also wrote "it was fraud though, to pretend we could have lower taxes without lower public spending".

That time round, the ploy didn't succeed, which meant they didn't have to front up and say how the bribes were going to be funded.

Tomorrow, the albatross comes home to roost on Mr English's shoulder. We can't sue our politicians for breaking their word. But we can at least enjoy seeing them squirm.