The excitement around the Rugby World Cup pushed campaigning for this month’s election to the very last moment. Almost as soon as the All Blacks lifted the Webb Ellis trophy, political parties hit the campaign trail and the leaders of the two biggest parties have publicly gone head to head at least a couple of times in the week since.
Repeated polls have put National ahead of Labour by many a country mile and the latter’s frustration has been seen in its leader Phil Goff’s aggressive attacks on Prime Minister John Key. Mr Goff has even called Mr Key a liar on a televised debate for not following up his promise not to raise GST during his term in office.
Labour’s frustration also shows in the rather brazen boldness of some of the policies that it has so far announced. They are difficult to justify and their purpose seems to be to grab the attention in a situation where the chance to close the yawning popularity gap with National is fast slipping away as D-day looms.
Suddenly, it has mustered the courage to push New Zealand’s eternal hot potato – a capital gains tax – as one of the main thrusts of its campaign. It did nothing on the matter when it was in power for nine long years. While an informed national debate on a capital gains tax is certainly long overdue, rushing to make it an election plank is clearly aimed at pandering to its obvious power base – no matter that it will in all likelihood hit it most in terms of increased rents. And it is something that will undoubtedly turn off fence sitters among the better off voters.
Just as its other announcement of raising the minimum wage to $15 will. Nothing is more populist than promising more money directly into people’s pockets but Labour hasn’t been able to back up these plans with convincing figures. Without sound economic measures and policies to increase jobs, compulsion on employers to increase wages is more likely to leave them with no option but to shed jobs.
Also, it’s announcement that it will waive GST from fresh produce catches the eye like a bright flash, but the logistics of doing it would be daunting to say the least. And the belief that sales outlets will dutifully pass on the GST portion of the proceeds to consumers is rather naïve.
The recent industrial action across the Tasman, which grounded the entire Qantas fleet inconveniencing some 70,000 passengers and threatening two high profile events – CHOGM and the Melbourne Cup – is warning enough of what can happen with another of Labour’s election planks: to return to industrial-wide awards.
New Zealand has been spared of crippling industrial action for nearly thirty years but this policy could bring back the climate of the militant 1970s when strikes and work stoppages were the order of the day.
The announcement of such policies leaves it open to interpretation as more of an attention-grabbing tactic for a section of its core power base and the media than serious, well considered options actually addressing the real problems confronting the economy at a fundamental level.
In any case, these and the other plans that Labour has announced leaves no option for it but to go on yet another borrowing spree, which according to one estimate leaves a hole several billions of dollars deep. In a scenario where the government borrows close to $400 million a week to keep the country afloat, a plan that necessitates borrowing more has little merit.
Labour’s contention that revenue to meet this can be garnered with increased taxes on higher income earners and a capital gains tax as well as profits from state owned enterprises (SoE) is not only hard to justify but also makes it easier for higher income fence sitters to make up their minds on whom to support in this month’s election.
Speaking of SoEs, Labour has stood its ground firmly in its vehement opposition to National’s long-held plan of the partial sale of the government’s stake in them to get the country out of debt and bring back the books to a surplus by 2015 or even earlier if possible.
SoE ownership – particularly of iconic organisations like Air New Zealand – has always been a sensitive matter to New Zealanders and it remains to be seen if National’s punt on it will bring it dividends or erode at least some of its lead over Labour in the run up to November 26.
Detecting stiff headwinds both from Labour and other parties and gauging the general public mood, National last week tried to sweeten this election plank by saying it would spend a significant amount from the proceeds on education. But whether it will wash with a wary public even among its hardcore supporters remains to be seen. Undoubtedly, Labour will raise this issue repeatedly in the coming weeks.
Last week National showed some courage, so to speak, in tackling the gargantuan welfare monster that Labour created in its nine-year rule. The plethora of benefits it progressively introduced created a welfare dependency unparalleled anywhere in the developed world – one that is open to brazen abuse and makes poor economic sense any which way one looks at it.
In fact it is one of the biggest reasons for New Zealand slipping in many of the OECD indices earning the sobriquet “the third world of the first world”. In the past three years, regrettably, the National government squandered its mandate in taking a number of hard decisions – one of them being to set things right on welfare abuse.
But its latest announcement to deal with this huge issue, however tame it may finally turn out to be on closer scrutiny, will definitely get hard working people – including a large number of entrepreneurial migrants – behind National.
The abuse of the welfare system including what Prime Minister John Key is once reproted to have referred to as “breeding for a business” touches a raw nerve among a large body of hardworking taxpayers of all persuasions.
Unfortunately, however, both the leading parties have left the real problems that confront this remote little country of 4 million almost completely untouched. Questions such as some basic but hard decisions that need to be taken in terms of a long term plan to ensure its viability and financial security at a fundamental level have been left unaddressed.
Neither Labour nor National have demonstrated a convincing vision that goes beyond, well, November 26.