Tax debate opportunity for Labour members to be ‘very explicit’ to leadership - former president

Former Labour Party President Nigel Haworth told the Herald members could effectively bind the party. Photo / Greg Bowker

Former Labour Party president Nigel Haworth said members have the opportunity to draft a “prescriptive” and “explicit” tax policy for the party in the next 15 months, which would be “binding” on its MPs, leaving no room for their caucus or governing council to wriggle out of.

Haworth’s intervention, published in a post to the Standard, a popular leftwing blog site, comes as Labour members debate not just the issue of tax, but also the extent to which the party’s leadership has the ability to make “captain’s calls”, overruling the wishes of members.

Many members look at leader Chris Hipkins’ decision to rule-out a capital gains tax and a wealth tax and campaign on an unpopular GST exemption for fruit and vegetables last election as the embodiment of this problem, although the party maintains that the correct process was followed in campaigning on those policies.

Labour, as a large party, but with a strong tradition of democratic decision-making, is in the throes of debating how much policy power should rest with members, and how much should rest with the Labour’s caucus of MPs and governing council.

Leaving power with members is arguably more democratic, but supporters of vesting more power with politicians argue the professionals move quicker and have a better grasp of what the public wants than rank and file members.

In his post, Haworth, who was Labour’s president between 2015 and 2019, said that the next two party conferences will determine future policy around tax, and that if members choose to do so “a mandate on the parliamentary party may be imposed”.

He said that if the membership “does not lay down an unequivocal mandate on taxation” in the next 15 months, the party’s policy development would “drift into the campaign process, notorious for its contingent thinking”.

Haworth said there was another current of thinking at play in the party, which vested more power with caucus in the interests of pragmatism.

“It [the current of thinking] owes more to elite theory than participatory democracy, positing the existence of a parliamentary elite which, based on its experience and knowledge, should be entrusted with policy decisions.

“The Labour tradition has always shaded pragmatically into this way of thinking, especially when in power, but the constitutional framework of the party, and members’ thinking, reject its principles,” the post said.

Labour lLeader Chris Hipkins announcing his GST policy in 2023. Photo / Mark Mitchell

Labour’s policy council is currently discussing tax policy with members. That process will ultimately result in the party’s conference voting to amend the Labour “policy platform” with whatever emerges from those discussions.

The Herald reported this week that former revenue minister David Parker had reportedly discussed something called a “capital income tax” with members. Based on one account this looked similar to the wealth tax proposal of 2023, but targeted at even wealthier individuals.

The policy platform is the party’s policy bible, however it is different from the manifesto that Labour runs on at each election. The party constitution describes the platform as a “high-level statement” of Labour’s policy, rather than an explicit manifesto of policies.

However that does not mean it is without power. The platform is binding on all parts of the party. The party’s election manifesto must be “based on and consistent” with the platform.

Labour can only break from it if it is required to during coalition negotiations with other parties, and even then, explanation for why those breaks occurred must be given to the party council.

The Herald has previously reported some members’ concerns that the amendment that will result from these tax decisions will be vague. An amendment might say, for example, that Labour would look to treat more equally the taxation of income from labour and capital, or work towards a fairer tax system. Vague wording like that could, critics argue, give the parliamentary wing of the party the ability to run on something like 2023′s GST policy.

Haworth told the Herald he appreciated that in the heat of a campaign, parties needed to move fast, and noted that as president he had made changes that allowed the party to move quicker when in government in order to respond to shocks.

“I don’t know how widely felt the captain’s call thing is. One of the things that happens in the Labour Party is as you get closer to an election, by the nature of politics, the parliamentary party, the campaign team, become more important ... there is a pragmatic dimension to this,” he said.

However, he said that in opposition, there was an opportunity for party members to be quite explicit through its policy development process.

“The constitution of the party is very clear that conference can make decisions that are binding,” Haworth said.

He said members had the opportunity to “instruct” or “say very clearly” to the party the kind of policy they wanted.

“They can do that - they can make a very explicit detailed mandate,” Haworth said.

He said the membership was more engaged with the tax discussion than previously.

“What’s happened is the issue of taxation has become a proxy for a much broader discussion about where Labour is going. The taxation issue itself is very important but it is also about the way we operate as a party but also where we might suggest New Zealand might go,” he said.

Haworth said he got the sense from members that the tax decision was a proxy for a debate about what kind of economy and society Labour wanted and whether members wanted to move further away from the 1980s neoliberal consensus.

He said the modern economy had placed pressure on working and middle-class New Zealanders, leading to a sense of instability and insecurity.

He said many in Labour felt one way of addressing this was to “reconstitute an arrangement whereby everyone felt there was something coming for them in the economy”.

“There is a place for everybody in the sun,” he said.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.