Politics
The Government’s pork barrel is proving slow to spill its contents.
It was either clinical amnesia or utter guile but National’s Paul Goldsmith straight-facedly this week accused the Government of vacuously parading around the countryside in high-vis clobber, handing out cheques. Whichever deity is supposed to smite pots calling kettles black with a hypocrisy lightning bolt obviously couldn’t be bothered. Because this seems to be the new way of all Governments. Grants and funding schemes and the hoopla around them are the fabric of politics. But Goldsmith’s Government elevated the rolling pork barrel to performance art, often giving repeat performances of the same grant announcement if it felt the first few times didn’t get enough press coverage.
Seeing Steven Joyce or Simon Bridges on TV every week in a hard hat with a spade, a chequebook and a new clutch of acronyms obviously hypnotised rival politicians, because this Government has upgraded its pork-barrel kit to the $3 billion Provincial Growth Fund (PGF), and embarked on high-vis with such freneticism, it may as well paint PGR on a jet and simply top-dress the provinces nonstop with cheques and IOUs.
It’s a curiously well-kept secret, though, that the louder the hoopla around a new funding announcement, the less likely it is to actually proceed, let alone bear fruit, within the lifespan of the politician who announces it. If there’s a change of government, the dial can be set back to zero on many or all high-vis projects.
In Regional Economic Development Minister Shane Jones’ recurring nightmares, Rachel Hunter purrs: “It won’t happen overnight, but it will happen.” Pantene shrewdly never advertised an actual time frame, but the latest estimates of progress so far suggest the PGF is more of a long-term legacy deal than one likely to galvanise voters next election.
VAINGLORIOUS HYPE
Of the $26.6 million allocated from the fund, only 3.4% has actually been spent, according to research by the National Party. The net benefit is 54 of Jones’ “ne’er-do-well nephs” off the couch – aka 54 new jobs. At press time, these figures hadn’t been contested, though PGF spending announcements by ministers total hundreds of millions of dollars. What the conflicting figures may reflect is that big projects and investments have a dismayingly long lead time – and so they should. The Serious Fraud Office has already stepped in to help ensure the handouts aren’t scammed – though international experience suggests some misspending is inevitable for a fund of this size. There’s already been one debacle over something as simple as no one remembering to clear scrub from a forestry block before ordering the new seedlings.
Without wishing to be mean, just ask Housing Minister Phil Twyford about big-project lead times. To no one’s great surprise, he has had to eat
In Shane Jones’ nightmares, Rachel Hunter purrs: “It won’t happen overnight, but it will happen.”
every word of his vainglorious hype about KiwiBuild numbers – a banquet not so much of consequences as lack of consequences. All of a sudden … the houses didn’t eventuate. As he was warned, it’s impossible to jawbone quicker builds, even with the state’s heft behind you. Economic development projects are equally lacking in torque upon take-off.
Trouble is, Jones’ New Zealand First Party is pinning its electoral survival on making things happen – delivering measurable benefits, particularly to the provinces. What this glacial rate of progress suggests is the party had better move to Plan B: to become the people’s champions for stopping things happening. There’s plenty to choose from, starting with the capital-gains tax (CGT) – which, just quietly, some in the Government’s
Labour arm would love to be prevented from having to enact. Electorally, a CGT could be as big an upheaval as Britain’s poll tax. Its fairness is not as obvious to the average home-owning voter as it is to the tax experts. And now we’re at risk of catching Price Slump-itis from Australia, the corollary of a capital losses tax credit – little discussed here but still potentially part of the deal – would make any sane administration back off mumbling about challenging global headwinds.
FAIR-PAY FEARS
More politically tricky, though, is the fair-pay report. There seems a growing consensus in favour of extending the living wage, and only an attention-seeking contrarian would argue New Zealand should continue to pursue a low-wage economic model. But this new recommendation to legislate to enable groups of employees to trigger compulsory pay rises not just for themselves but others in their industry might be a step too fair for NZ First.
The reform has obvious downside risk for small provincial firms, who could be forced to pay the same rates as larger Auckland employers. With NZ First having already succeeded in diluting Labour’s first labour-market reforms, this territory is fair game for the party – though it’s not without risk. One person’s political honest broker is another’s political wrecker. Intracoalition argy-bargy over CGT, fair pay and pretty much anything else is apt to be interpreted as instability, tails wagging dogs and all the other old MMP bogeys. Coalitions are eternally damned if they do have vig- orous policy contests, and damned if they don’t.
National, meanwhile, has returned to the tax-cut well, promising to deal severely with fiscal drag and bracket creep – which handily sound like nicknames for the latest # MeToo villains. These particular creeps are what inflation does in pitching people into higher tax brackets over time, so that those on quite modest wages can end up being taxed at a rate never intended when the tax thresholds were last set.
National has promised to reset the knob on bracket creep every three years, which has a distinct ring of fairness about it, as well as that always-regretted-later quality: political courage. It could deplete the state’s coffers at an eye-watering rate.
Still, before getting teary eyed about such nobleness, it’s worth remembering that this would not be a true tax cut, but the state giving us back money it never meant to take from us in the first place. If National’s handclasping professions of fairness are taken to their full extent, taxpayers’ bracket-creep readjustments should really come with compound interest to recognise the benefit to the state of this compulsory windfall money.
Sadly, this is another of those propositions that cues politicians to back out of the room mumbling about “global headwinds”.
This would not be a true tax cut, but the state giving us back money it never meant to take.