Labour's Tax Plan Doesn’t Add Up

Alex Eastwood-Williams

I don't believe in kicking people when they're down, which I why I feel bad criticising the New Zealand Labour Party - who as we all know are mortally wounded. 

And yet, if you ever needed a reminder that the only difference between Labour and National is the name, look no further than Labour's tax policy:

Andrew Little has promised no new taxes and is even spouting the National Party line about how well the government has done to gain a $1 billion surplus (which, by the way, will barely service the interest on all the new debt we've accrued over the last nine years.)

So far, so good: I personally don't want any new taxes, but if I was a National voter, it wouldn't persuade me to change allegiances to Labour.

Naturally, Labour being Labour, they still want to spend up large. They're promising a massive house-building programme, they've promised large investments in health, education, transport and police, and unless they're planning to drop their 2014 spending promises in 2017, they have $5 billion a year worth of new spending planned, which as even the worst mathematician could point out, is a figure that cannot be paid for out of a $1 billion projected surplus.

Clearly, Labour are either going to have to break their promise on no tax rises, or they're going to have to break their promise on public spending increases. And they're going to have to hope like hell that nothing happens to the economy, such as, for instance, the housing bubble bursting.

Now I don't know about you, but at this point I'm actually suffering from deja vu.

In 2008 the National Party, led by a young charismatic banker, promised a series of tax cuts without spending cuts, in the middle of the worst recession since the 1930s.

Back then it was apparent that he would either have to borrow money, or break one of his promises, because his promise didn't stack up.

In the end he did both - in order to keep public spending stable, he ended up raising, rather than lowering taxes and borrowing more money than any government in New Zealand history.

But with his winning grin and his "aw shucks" persona, he got away with it.

Will Labour get away with this? Probably not. Not only are the people of New Zealand not nearly stupid enough to fall for the same sort of bribery twice in a row, but even if they were Labour does not have a single politician charismatic or inspiring enough to make us look the other way.

Their leader is indistinguishable from the wall behind him, and while their deputy might get a lot of media attention, the reality is that she has no appeal outside of middle class Auckland and Wellington and isn't going to win over anyone in conservative middle New Zealand.

But at the end of the day, the whole argument is moot and Labour's promise not to raise taxes isn't worth the air that passed through Mr. Little's lungs.

You know, I know, and Labour knows that they're completely powerless without the Greens, who have been absolutely candid about the new taxes they want to implement, and in light of Labour's most recent policy announcement still refuse to rule out raising taxes

And let's face it: If the Australian Green Party was able to push through an unpopular carbon tax with only one seat in Parliament, then imagine what kind of concessions the New Zealand Green Party will get with a third of the government benches and a few Cabinet posts.

All this begs an important question: Why bother voting for Labour at all? Either you support their tax plan, in which case you might as well vote for National who can guarantee the exact same plan without having to make concessions to the Greens, or you can accept that Labour will inevitably have to adopt the Green Party's tax plan, in which case you might as well just cut the middle man and vote for the Greens.

About the author

Alex Eastwood-Williams