Joe Pagani is Communications Advisor at left-leaning think tank Progressive Centre UK, and is a former New Zealand Labour Party activist.

Week in Review

What is the Labour Party for?

More about policies that look good than do good, our Government doesn’t know why it’s in politics, writes Joe Pagani

When we look back at this Government, what will we remember it for?

If you ask the same about the Clark government, the answers are plenty; Working for Families, Kiwisaver, Kiwibank, Paid Parental Leave, four weeks' annual leave and interest-free student loans. All on a backdrop of paying down debt, leaving us in good shape when the global financial crisis stalled other countries’ economies.

The current Government has so far been less ambitious. We have a hundred workings groups, the recommendations of which are optional. An oil and gas ban that the Government has stopped mentioning. A free year of tertiary education which, though having some merit, delivers more benefits to wealthier families than to poorer ones.

Only a handful of policies are making a difference to working class families: raising the minimum wage faster, an extension of paid parental leave, and crucial investments by the provincial growth fund are bright spots. They are also all initiatives that could credibly have been introduced by a Bill English-led National party with a centrist partner (say, the Māori Party with a few more seats).

Vague platitudes around “fairness” and “children” are not a plan. They come from an opposition that had more detailed policies on sugar than on taxation.

The capital gains tax provided a clear chance for this Government to shift New Zealand’s economy to favour the people who need Labour governments to defend their interests. The working group’s recommendations could have been bolder - a CGT should apply to the family home, to encourage investment in more productive areas of our economy. But at its core, a CGT, traded off with income tax cuts, would have meant a fairer tax system for every working New Zealander.

Labour governments aren’t elected to ban plastic bags. They are elected to shift the balance from capital to labour. From those who own, to those who earn.

By raising taxes on those who own for a living and lowering them on those who earn for a living, the Government would shift the balance between labour and capital.

There are two sides to a Capital Gains Tax. For ever dollar paid by a land banker who flips a home, or fund which invests in non-productive assets, a dollar less needs to be paid by the nurse, the teacher, and the freezing worker. Tax avoidance doesn’t happen in a vacuum. If one person pays less capital gains tax, someone else has to pay more income tax or GST.

After years of opposition, Labour found itself in Government through the brilliant political performance of Jacinda Ardern, and the quirks of MMP. Labour never did the hard work in opposition of asking why it was less popular than National, and making hard policy choices to earn its right to govern. It waited for a leader to cast a spell and for National to falter, instead. That strategy worked to get into government but it does not provide a roadmap of how to govern.

Any good government knows how to compromise. You cannot be successful without some pragmatism. But the governments who make real change know what they are compromising for. Barack Obama compromised to get the Affordable Care Act passed, and get healthcare to 16 million people. Tony Blair compromised to introduce a minimum wage to Britain, and pull millions out of poverty with working tax credits. Both knew what they stood for.

Vague platitudes around “fairness” and “children” are not a plan. They come from an opposition that had more detailed policies on sugar than on taxation.

The Government should now come up with a better means of switching tax. A tax on the unimproved value of land - traded off with income tax cuts (say, an income tax-free band that would extend some benefit to every taxpayer) - would be efficient, and effective. By definition, it would redistribute from those who own, to those who earn.

But its unlikely we will see anything - tax is too toxic. Instead, New Zealand can look forward to another year of minor tweaks, and policies more about looking good, than doing good.

National, on the other hand, are too incompetent to overcome Ardern’s popularity this election. But do they need to be? We already have one government dedicated to bland managerialism. Do we really need another?