Hard News by Russell Brown


Labour's Fiscal Plan: Explaining without losing?

Labour couldn't really ignore the unravelling of the "$100,000 bottle of wine" story yesterday, but not for the first time, it was a day when a policy set-piece was tipped over by events. Where the party's new Fiscal Plan was picked up, the focus was inevitably on a modest rise in the top tax rate, which according to Twitter was either a corporatist sellout or creeping Marxism.

Hamish Rutherford in the Dominion Post focused on the modesty of the cut, which, he noted, caught Bill English on the hop:

Finance Minister Bill English initially attacked the plan by saying it was the same old Labour "tax and spend".

Questioned on the statement, and Labour's relatively minor increase in either tax or spend, English changed tack, saying that Labour was now proposing to run the country on what it recently said was unsustainable.

"I don't believe a Labour Party can live on that spending."

Eventually English settled on the fact that it didn't matter what he thought, or even what Labour thought.

In this morning's Herald editorial, Kevin Hart (why is he the only one who signs his editorials?) was happy to dish up basically pro-forma scorn in Labour's plan to tax rich unnecessary and flawed, declaring:

Labour says its top personal rate would apply to just 2 per cent of New Zealanders. That hardly makes it right. Even the previous Labour Government, which began by lifting the top rate to 39 per cent, came to see this was not the way to go. It lowered that rate to 38 per cent and endorsed the principle of giving people's tax money back to them to spend as they chose when it extended tax relief through its Working for Families programme. If Labour's reversion to type now is less extreme than at the last election, when it proposed charging top earners 39c in the dollar, that is no recommendation.

Well, there's a debate to be had about Working for Families, but I don't think that's it.

By comparison with the alternative Budget it took intothe last general election, this is Labour edging back towards the centre. You can argue that that's the wrong approach: that Labour should focus on shifting the political centre itself, much as it did last time it was in government. But you only get to do that when you're poular -- and at the moment, labour manifestly isn't that.

But this isn't the "reversion to type" that Hart sneers at in the Herald. The plan does contain new, unfamiliar and to some extent unproven ideas, and that makes it a complicated package to sell to the public. In a remarkable exchange on Morning Report today, Steven Joyce seemed fairly determined not to let that happen. It will be one of Labour's challenges to find good ways to deliver the ideas through the noise in election year. Arguing with Steven Joyce probably won't be one of those ways.

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