Prime Minister Chris Hipkins with colleagues at the launch of the Labour Party Election 2023 campaign slogan "In It For You" on Sunday. Photo / Alex Burton
OPINION
How did this happen? Everyone agrees the cost of living is the number-one issue this election, but both major political parties have turned their backs on a profoundly valuable tool for dealing with it.
Yes, tax reform. Prime Minister Chris Hipkins says addressing people’s financial hardship right now means it’s too important to think about reforms that would help do exactly that. He says a wealth tax, or apparently any new kind of asset tax, would be a “distraction”. Opposition leader Christopher Luxon agrees.
Treasury says the wealth tax rejected by Hipkins could raise $10.6 billion over four years from the wealthiest 0.5 per cent among us. The money could fund a tax cut of $1050 per year for everyone and would also operate as a brake on inflation.
There’s more. This year, we have been battered by some of the worst storms in our history and the weather is spreading death and disaster all over the planet. Yet climate change barely even rates as an election issue.
Neither major party has said anything coherent about how we might strengthen our disaster resilience. Neither has a plan to rapidly reduce emissions.
We’re meant to accept these are things for another day, when the cost of living or housing or health or all of them and more are not such pressing issues. That mythical day.
Failures of nerve over tax reform and the climate are not the only appalling news. From mental health to dawn raids, rehab for youth offenders to road safety policing, and in many other areas, a deep gap has opened between policy and action. The Government’s plans are simply not being carried out.
Do we blame ministers for not making sure things get done, or officials for refusing to do them?
Or perhaps it’s deeper than that. Is there a malaise in the nation’s administration – among politicians and public servants – that runs so deep, it stops opportunities from being grasped and change for the better from happening?
Probably, it’s yes to all the above. But why?
Hipkins is exhibiting the symptoms of Stockholm Syndrome. It’s as if he’s been captured by a small but powerful group – the super-wealthy 0.5 per cent – and has adopted their values as his own.
It’s been suggested the wealth tax he rejected would have penalised farmers. But Treasury allowed for exemptions for family homes on farms, and for farms worth less than $10 million. There’s no penalty for ordinary farmers there.
There’s no penalty for the great mass of other small business owners, either. They’re very unlikely to be hurt by a wealth tax on the tiny number at the top end of wealth.
It’s said the super-wealthy will flee the country. And go where? Asset taxes of one kind or another are common throughout the OECD.
Treasury says its proposal would improve the lives of four million taxpayers, at the expense of a mere 25,000, but Hipkins can’t see the political value of it.
Nor can he see merit in the Greens’ wealth tax proposal, which would put money in the pockets of everyone earning less than $125,000 a year and provide a minimum income guarantee for all, in line with superannuation and with added family benefits.
A decent Labour leader should not find it hard to inspire a great electoral victory with numbers like these.
And why does National oppose such a tax? They constantly proclaim themselves the champion of small and medium enterprises (SMEs). But very few owners of small businesses are super-wealthy, and both the Treasury and Greens proposals would benefit most of them.
In National’s case, it’s not Stockholm Syndrome. National and Act between them have received $6m in large donations since the start of 2022. That’s eight times more in large donations than the Greens and Labour have received in the same period.
None of the large donors on the right have denied they are trying to buy a government that says no to a wealth tax.
As for the failure to focus on climate action, this is an opportunity being badly squandered. It’s well-known in America, that homeland of climate disaster, that the best time to get public support for difficult but necessary change is directly in the wake of the storm. That’s when people get it.
In New Zealand, we need to step up our “mitigation” and our “adaptation”. That is, we need to reduce emissions and we need to build greater capacity to withstand the wild weather.
Emissions reduction includes agriculture, transport, industry, buildings, energy and more. It will be complex, difficult and sometimes costly, but we have to do it.
Resilient defences will require learning how to live with flooding, better planning and building regulations, rethinking our infrastructure, managed retreat, strengthening community responses, better emergency responses and more. Again, it’s complex, difficult, and some of it is very costly.
Climate action should inform all other policy. All of it.
The idea that environmental action and economic prosperity go hand-in-hand used to be dismissed as merely a greenie slogan, but there’s no excuse for not knowing it now. There’s no fruit bowl in the Esk Valley, exporting to the world, unless it is climate resilient.
And Auckland cannot function as an economic powerhouse unless we learn how to manage the flooding, reduce our reliance on cars and build more densely, with plentiful parkland amid the density.
Marrying the cost of living with climate action has powerful potential to win voter respect. If the major parties want to win the “middle ground”, what more fertile ground could they find?
It’s not just that climate action is urgent. It’s also, I would have thought, that this is precisely what jaded voters want to see.
National, meanwhile, says it will instruct Waka Kotahi New Zealand Transport Agency to spend another $500 million a year fixing potholes.
I’m not against that: it’s obvious more money should be spent on road repairs.
But more money is already being spent. Last year, says Transport Minister David Parker, 54,000 potholes were filled, up from 39,000 in 2018. His Government inherited a road maintenance budget National had frozen. Now, it’s 65 per cent higher.
Freezing maintenance budgets, if you remember, was what National did to hospitals and schools too.
And the extra $500m isn’t new money, but will come from other transport spending. National’s Simeon Brown initially talked about road safety advertising campaigns, but stopping them all would save only $37m.
He also says speed bumps are a waste of money, but Waka Kotahi does not put them on state highways and/or pay for the suburban traffic calming measures he may be thinking of.
National is right to say even more money is needed for road maintenance, but wrong to think the cash is already sitting in the transport budget, just waiting to be used.
But this new policy raises a much larger question: How is it credible to fix potholes, but not address the reasons they’re there in the first place?
There are three big causes. One, the fast-growing number of large trucks. Two, the even-faster-growing number of heavier cars, especially SUVs and double-cab utes. That problem has been super-charged by the arrival of electric vehicles, whose batteries make them heavier than fossil-fuel cars of the same size.
These exact same things also contribute mightily to congestion and our unfortunate road safety record.
And three? Yep, it’s the climate crisis. Waterlogged ground breaks up roads. Every bit of rain brings more damage. For many reasons, including that damage, the country needs an emergency plan to manage the number of vehicles on the roads.
To put it plainly, driving causes those potholes, directly through wear and tear and indirectly through emissions. National wants to fix the potholes, but it also advocates more driving.
Ignoring the benefits of asset taxes evokes the old metaphor of the Titanic deckchairs. But ignoring the climate while pretending the problem is potholes, that really says it all.
Simon Wilson is a senior writer covering politics, the climate crisis, transport, housing, urban design and social issues, with a focus on Auckland. He joined the Herald in 2018.
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