Inflation is the torpedo than could sink Labour
Last week Christopher Luxon took a significant step to being prime minister. Ordering National MP Simon O’connor to take down his Facebook post supporting the US Supreme Court decision to reverse Roe v Wade was politically the exact right decision.
Luxon made a “captain’s call”. Former National MP Alfred Ngaro is correct. National MPS are allowed a free vote. Luxon had no power to order O’connor to remove the post. Luxon has no power to say that the abortion issue is settled.
Luxon is helped that politically he is correct.
O’connor’s Facebook post has given him the opportunity to prove the government he leads will not have an agenda of conservative lifestyle issues. It now seems it is Labour that has the radical identity politics.
This column has previously criticised Luxon for having no policy. In government this lack of an agenda will make it difficult to tackle serious economic issues. However, as a way to win elections, manifestos are handicaps.
What Labour wants is for National to issue some policy and then to put National on trial and find them guilty in the court of public opinion regardless of the quality of the ideas.
Labour is already running ads saying National has no policy. It is a theme of their speeches.
I recall some years ago visiting Australia and having a private dinner with some senior Labor ministers in the Keating government. In private we talked politics. The Liberals had elected John Hewson as leader. He was a very thoughtful politician. He publicly argued Australia’s tax system was a mess and what was needed was a goods and services tax.
The Australian Labor ministers all agreed at the dinner that Hewson was correct. They then said: “We are going to get reelected by running a GST scare campaign”. That is what they did. Labor won.
One tax idea Luxon is proposing is a policy from Act that the income tax thresholds should be adjusted for inflation.
It is a sensible proposal. If the thresholds are not adjusted, eventually everyone who works will be in the top tax bracket.
Already people like school teachers and tradesmen are paying the top tax bracket. I am sure the Treasury has already advised that the income tax brackets need revising. The only reason Labour has revised the tax thresholds is so Jacinda Ardern can run her attack line that she uses every day in Parliament. She keeps saying that National’s tax proposals will give more money to MPS than to beneficiaries.
This is a criticism one can make of virtually every tax reform. It is hard to give tax relief to people who in effect pay no tax.
The New Zealand tax system is already very progressive. Around 65 per cent of all income tax is paid by those earning over $70,000, according to the Treasury. The “net tax” proportion is closer to 90 per cent, according to a University of Wellington 2013 analysis.
Luxon is right to be cautious of issuing too much policy. It will just be used against him. Better to say what you will do, reform tax, than to say how you will do it.
In a previous federal Australian election the Labor leader, Bill Shorten, issued a detailed manifesto. Scott Morrison put the Labor manifesto on trial, found it guilty and won the election despite the Liberals having deposed of a string of leaders.
This election the Labor leader, Anthony Albanese, issued little policy. All Morrison could do is to say Labor has no answers, not nearly as effective.
If National can resist changing leaders, issuing too much policy and keeping well away from divisive social issues, inflation will win them the next election.
Inflation is a government killer. Every time voters go to the supermarket, fill their cars' fuel tank or pay their mortgages, Labour's support slips away.
Last week with his captain's call to rule out abortion as an issue, Christopher Luxon took a major step towards the ninth floor of the Beehive.