We all hate paying tax, but we know what it’s for, and most of us tolerate it.
Most New Zealanders support this borrow and spend emergency, but it will have to be paid back.
Contrary to the opinion that Labour can’t manage the economy as well as National, we went into the pandemic with a budget surplus, and a cross party agreement to keep debt at around 20% of GDP. This is among the lowest in the OECD, much lower than Australia at 45%, UK at 80% and the US at 107%.
Of course our debt has skyrocketed under Covid, but so has the debt worldwide.
Now, as we hope to eradicate Covid again, we face an economic rebuild, and tax repayment. This is where the difference between Labour and National becomes most marked.
National is bleating that Labour will increase taxes, claiming that they will add none. National are scathingly critical of the Green Party proposal for a Guaranteed Minimum Income plan, paid for by a new wealth tax on millionaires.
But here’s the thing. There are only two options - increase tax, or cut expenditure. In 2008 when a fresh faced young John Key came to power the first thing he did was cut taxes for the rich and increase GST for the poor. He called it fiscally neutral. It may have been neutral for the government, but it exacerbated poverty and inequality overnight.
So, if National continues, as I expect they will, to say they won’t increase taxes, in fact they may reduce them, voters must ask them “what expenditure will you cut?”
Free market neoliberalism, introduced to the US by Ronald Reagan and the UK by Margaret Thatcher, and New Zealand by Roger Douglas and Ruth Richardson, set this dastardly political philosophy loose to wreak havoc on our society. It is now largely discredited, with aspects of it like ‘trickle down’ utterly false, but among right wing politicians there is still sneaking admiration for the way neoliberalism was able to accrue so much wealth at the top, and create huge misery at the bottom. The 1% still loves it.
In the 1970s, top tax rates were in the 60s and 70s percent. Neoliberals forced that down, Douglas even calling for a flat tax, where the richest would pay the same rate as the poorest.
Those who scoff at this analysis would do well to read on the subject. Joseph Stiglitz an American Nobel Prize winner in economics, and former chief economist to the World Bank, is the most authoritative author on the subject. His book “ The Price of Inequality” is a classic.
To read about the social ills that attend neoliberalism read “The Spirit Level”, by Wilkinson and Pickett.
So, to sum up, beware of political parties which pledge to reduce taxes, and ask them how they will balance the books without cutting vital social welfare, health and education spending. There was a huge amount of deferred maintenance on hospital buildings, schools and social spending under National from 2008 to 2017. Labour is having to address that deficit. Hopefully they can get their proposed “wellbeing budget” up and running when Covid has been whacked.
Finally, on the vexed question of what society we want, I heard a speech by retired Chief Judge of the Appeal Court of NZ, The Right Honourable Sir Edmund Thomas a few years ago, where he said this: “New Zealand will never again be a fair and just society until it rids itself of the last vestiges of neoliberalism.”
Only twice in the last one hundred years, have New Zealanders denied a government a second term, and I don’t expect this to be a third. Jacinda Ardern and Labour deserve another term, hopefully with the Greens as their partner. (JOHN ELLIOTT)
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