How will Nats spend more while taxing less?
In Parliament on Wednesday, National’s shadow treasurer, Andrew Bayly, was already looking tired when Grant Robertson decided to twist the knife. ‘‘Bring back Paul Goldsmith!’’ the finance minister shouted gleefully. The pair had been debating National’s set-piece Covid-19 announcement earlier that day, in which Robertson had spotted a slip-up: Bayly’s team had mistaken the male unemployment rate (3.8 per cent) for the whole-population one (4 per cent).
It was a trivial error, perhaps, except that it suggested a certain gender-blindness – and, more importantly for political purposes, allowed Robertson to recall the multibillion-dollar mistakes that sank Goldsmith’s proposed Budget in the 2020 election campaign.
It was especially unfortunate for National because it had been having – by its recent standards at least – a reasonably good week. The previous day, party leader Judith Collins and housing spokesperson Nicola Willis had shared the stage with the latter’s opposite number, Megan Woods, for a shock announcement: the two major parties, so often at each other’s throats, were collaborating to radically increase housing supply by making three-storey townhouses the new normal in our biggest cities.
The policy’s merits aside, National looked relevant, constructive and on the ball. It was a big coup for Willis, in particular, who had long pushed for planning deregulation. Elsewhere, the party could claim victory as Labour adopted, or appeared poised to take up, several Covid-19 measures National had proposed: freeing up MIQ spots for healthcare workers, for instance. Ministers might have eventually done those things of their own accord, but hadn’t before National suggested them; and at the very least, the party’s Covid-19 spokesperson, Chris Bishop, was raising the right points and keeping pressure on a Government suddenly looking unsure of itself.
Much of that good work, though, may have been undone by Bayly’s Back in Business plan, which tries to set out a roadmap for the economic recovery from the coronavirus. Parts of the plan are sensible, among them a $10 million mental health support package for small businesses. But there is a lack of credibility about the whole document that suggests National hasn’t learnt from recent mistakes. It lists the cost of its individual initiatives but doesn’t add them up, perhaps hoping no-one else will. But it is easily done, and the policies the party has set in stone – like lifting from $14,000 to $17,000 the threshold where the 17.5 per cent tax rate cuts in – will cost perhaps $1.9 billion a year, plus as much as $370 million a week for other, more targeted measures.
So where will it find the cash? You can’t expect us to know that just yet, National might say – except that, when Labour was in opposition, it was pilloried each time it couldn’t account for every cent of its spending pledges. If that’s the standard of accountability, National has to live by it.
Even worse, Back in Business continues the party’s inexplicable obsession with slashing public debt, even though it is just 30 per cent of GDP, compared with roughly 100 per cent in Britain and America. The interest rate government pays is at a historic low, and what it is purchasing with that borrowing – wage subsidies that will keep businesses afloat and health measures that keep people alive – is more than worth the money. Yet National wants debt slashed to 15-25 per cent of GDP, whatever the cost.
Back in Business continues the party’s inexplicable obsession with slashing public debt, even though it is just 30 per cent of GDP.
Compounding the problem, it plans to spend more, cut income taxes and reduce debt simultaneously – an impossible task unless it also raises more in tax elsewhere or, an infinitely more likely prospect, slashes other services. This is bad history repeating: last year one of its MPs anonymously summed up its election platform by saying, ‘‘We’d fallen into some sort of economic Bermuda triangle. We were going to spend everything, but we were also going to be better on debt, and provide tax [cuts].’’
Inconsistencies abound: Bayly says his plan is ‘‘about the here and now’’ but promises tax cuts two years hence for businesses that by then may be doing fine. National also can’t seem to decide whether it is ‘‘ending lockdowns … when we hit
85-90 per cent vaccination’’, as its plan says at one point, or whether ‘‘once vaccination rates reach
85-90 per cent … lockdowns should become a measure of absolute last resort’’, as it states on literally the next page. Casting something off forever, and holding it in reserve, are not the same.
The party’s determination, meanwhile, to open up on December 1, regardless of vaccination rates and the likely consequences for marginalised communities, is downright dangerous. It all suggests rushed policy from a party that, its funding slashed by electoral catastrophe last year, is under-resourced, and has an uneven line-up of front bench talent. Unlike errant statistics, this is not a trivial matter. Events this week have shown what a consistently effective opposition could do. We need ours to be firing on all cylinders.