Red and Green promises
advisory body of tax experts means nothing and is presumably cover to allow a Left-of-centre government the chance to float tax reform in time for the following election.
If this meant that Labour would then return to its support for a capital gains tax, the advisory committee would have served a useful purpose. Governments appoint experts they know will give them the kinds of recommendations they want.
The National Government appointed Michael Cullen to review the intelligence agencies because it knew that Cullen, as a security conservative, wouldn’t recommend anything troublesome. And so it proved.
Labour and the Greens promise yearly surpluses ‘‘unless there is a significant natural event or a major economic shock or crisis’’. That leaves quite a bit of room to manoeuvre.
They promise to reduce the level of core debt to 20 per cent of gross domestic product within five years. This means hitting the target two years later than National, and National will no doubt make much of this. But in fact there are big demands on the budget that are completely justifiable, such as the promise to build a lot of houses.
Similarly, the promise to begin contributions again to the Cullen Fund is sensible, careful and necessary. New Zealand superannuation is a fiscal time bomb waiting to go off, and a beefed-up fund would help defuse it. The promise to maintain core crown spending to somewhere around 30 per cent of GDP is a much more ideological commitment. This really is designed to appeal to conservative voters.
When Cullen was Labour’s finance minister he bragged about being a fiscal conservative, and certainly during the first term of the Helen Clark government spending control was very tight. It was much less tight by the third term.
These rules are where Labour leader Andrew Little’s hard-faced conservatism meshes with the Greens’ long-running campaign to look business-friendly and fiscally reliable. The five promises will help push the message, but there are real tensions beneath the surface.
The Greens’ tax policy is much more Left-wing, and the policy details will have to be worked out in any post-election negotiations. Left-of-centre voters will decide which has the stronger hand in that case.
Finally, the promise to set up an independent body to enforce the rules and also cost party political promises is an excellent one. It must not be part of Treasury, whose ideological adventures in the 1980s and 1990s have left a permanent shadow on its reputation.
This policy-costings body will have great power and must be seen to be independent and strictly nonideological.
- Fairfax NZ