NEW PM TIGHT-LIPPED ON POLICY CHANGES AHEAD
Incoming Prime Minister Chris Hipkins carries the weight of expectations that include a much-anticipated mid-course correction in the area of policy.
Policy decisions that drew fire from the opposition are likely to lose priority or even be jettisoned. Though Hipkins has been reticent on what those might be, it’s fair to assume the RNZ-TVNZ merger as well as a proposed $ 3.5 billion income insurance scheme may not go full steam ahead. Changes are likely afoot to Three waters, though it has been passed by the House.
Hipkins has also displayed a certain ambivalence on “ co-governance,” identifying it as a big-ticket issue that needs to be fine-tuned for greater clarity. His statement that New Zealanders are uncertain about “what we mean when we are talking about co-governance,” would indicate the Labour government’s commitment to the Treaty of Waitangi falls short of being an article of faith etched in stone. But the symbolism remains in place, with Hipkins due to visit Waitangi in February.
But to assert his credentials as a harbinger of change, Hipkins will need to address the spectres looming over his upcoming swearing-in as prime minister by the governor-general on Wednesday : inflation and the cost of living crisis gripping New Zealanders.
Inflation is currently pegged at 7.2 per cent, the highest level in three decades.
The Reserve Bank’s monetary response to Covid created a bubble in the housing market when home buyers, lured by cheap borrowing, rushed to take on mortgages. This resulted in spiralling house prices. The Reserve Bank then began hiking up the official cash rate ( OCR) to cool the housing market and stem the inflationary trends let loose in the economy.
Hipkins is not likely to step out of Ardern’s shadow in dramatic fashion while dealing with what he calls the “bread-and-butter” issue of cost of living.
Radical change is not in the offing.
Capital gains tax will not come up for consideration for now, nor will changes in the superannuation age.
Hipkins is on a pruning mission that will see him “ take a ruler” to every minister’s portfolio.
The new PM seems bent on making “the tax system fairer.”
While doling out dollops of working class rhetoric in his media interviews, Hipkins alluded to “some New Zealanders who perhaps aren’t contributing their fair share” of taxes.
This means tax changes are on the horizon, but not for now. Hipkins has made it clear his government will stick to Labour’s pledge of not going beyond the 39 per cent tax rate
The other political parties currently in Parliament have responded in contrasting style.
The Green Party favours introducing a capital gains or wealth tax “ that could cover the net wealth of the top few percent – not including mortgages and other debts.”
The National Party is focused on adjusting tax brackets for inflation and delivering increased Super payments for every super annuitant.
ACT is targeting the government for “wasteful spending.”
The change of leadership in Labour has forced a tactical shift upon National, which has relied on the stratagem of not revealing its policy plans and keeping its political opponents off its scent. Christopher Luxon may need to shed his cloak of reticence and be more forthcoming on the details of how his party plans to combat inflation and rising costs.
But lost in the thrust and parry of Hipkins’ media exchanges is his handling of the retail crime emergency in the country whilst he was the minister of police.
That is the elephant in the room whose presence cannot be wished away.