Sunday 16 July 2023

Captain’s Call.

Not Now, Not Ever, Never! That Labour has meekly accepted Chris Hipkins’ “Captain’s Call”, nixing both a Wealth Tax and a Capital Gains Tax while he’s in charge, is deplorable. Given the centrality of tax policy to everything a political party seeks to accomplish when in office, his decision to rule out key instruments of revenue gathering without consultation, debate, or vote indicates that tangible accomplishments are no longer on the party’s agenda.

IT WAS THE AUSSIES who came up with the “Captain’s Call” tag, and we Kiwis have followed along behind. In the context of sport, the term has a rough and ready legitimacy. After all, our national teams are not democracies, so the idea of allowing the team captain (instead of the team coach) to make the occasional decision on strategy, tactics, and/or personnel, seems entirely reasonable. Otherwise, why bother having a captain at all?

But political parties are not sports teams. No matter how often politicians and journalists talk about “the team”, politics is not a sporting fixture. Indeed, the more a nation’s politics comes to resemble a sporting fixture, the more certain you can be that nothing important is riding on the outcome of the “game”.

In the past, people joined political parties to change the world. It is a moot point as to whether this is still the case. What is certain, however, is that a political party whose only objective is to beat the other team/s has long since degenerated into something else. The members of such a party might well accept a “Captain’s Call” as the end of the story, but only because they’ve forgotten how to make decisions for themselves.

That the New Zealand Labour Party has meekly accepted the Captain’s Call of its Leader, Chris Hipkins, that his government will not introduce either a Wealth Tax or a Capital Gains Tax (CGT) while he’s the one in charge is deplorable. Given the centrality of tax policy to everything a political party seeks to accomplish when in office, the decision to rule out key instruments of revenue gathering without consultation, debate, or a vote – not even around the cabinet-table – indicates that tangible accomplishments are no longer on the party’s agenda.

When political leaders issue a Captain’s Call, they are effectively inviting their parliamentary colleagues to either back them or sack them. They are signalling that key policies, key decisions, are no longer to be decided democratically by Cabinet, Caucus and/or the wider party; but from above, by the Leader and his/her closest advisors. Where democratic leaders are content to let the party determine policy, seeing themselves as simply the chief salesperson of its policies to the electorate; autocratic leaders have no interest in discussion or debate. It is their judgement, their will, which alone determines whether a policy lives or dies. This sort of leader, once they have made their “call”, can no longer be persuaded, or outvoted. They can only be deposed.

What has led Chris Hipkins to this crucial Captain’s Call on Labour’s taxation policy? That he was the unanimous choice of his colleagues to lead Labour into the 2023 General Election suggests that Hipkins and, at least, the parliamentary party were on the same political wavelength. His bonfire of Labour’s unpopular policies also seemed to have the blessings of the caucus, and was well received by the voters. Hipkins appeared to be on track to win his party a third term.

But, somewhere amid the havoc unleashed by storm and cyclone, the bonfire went out. The Māori caucus refused to countenance the jettisoning of co-governance, and so fiercely were a clutch of expensive pet projects defended by their originating ministers, that it seemed prudent to leave them in place. Even more troubling, from the new Prime Minister’s perspective, was the news that policy development on radical tax reform targeting the super-wealthy was well advanced. Hipkins, who had introduced himself to the country as Mr Bread-and-Butter (with positive results in the preferred prime minister stakes) was not at all keen on being re-branded as Mr Fire-and-Brimstone.

Hipkins’ colleagues, Finance Minister Grant Robertson and Revenue Minister David Parker, found it impossible to persuade the Prime Minister that their tax reform plans were a plus, not a minus, for the Labour Party. Nor could they convince him of the wisdom of their time-line. Robertson and Parker wanted to introduce their tax package in the May 2023 Budget, but delay its coming into force until 2024. By explicitly seeking a popular mandate for the reforms, Labour could set the tone of the forthcoming election campaign: pitching hope and fairness against fear and greed.

Hipkins wasn’t convinced. His advisers had warned him that focus-group reports indicated that a radical tax policy would be a very hard sell. More to the point, all of Hipkins personal political experience told him that most of the privately-owned news media, and all of the interest-groups representing the big end of town, would wage an unrelenting campaign against Labour’s tax package. A campaign loud enough to drown out the Government’s message of hope.

It is also likely that Hipkins feared the consequences of unleashing such a left-populist campaign. Temperamentally, Hipkins is ill-at-ease with the sort of politics that mobilises too many ordinary people. Ever since the political divisions unleashed in the 1980s, the strongest factions in the Labour Party (which Hipkins has been careful to cultivate) have thought it wiser to keep control of the losing side in the class war, than lose control of the winning side.

Hence Hipkins’ Captain’s Call from Vilnius.

That there were public servants in Treasury and IRD willing to tell National’s Nicola Willis exactly what questions to ask and which documents to seek in relation to Robertson’s and Parker’s tax plans, had already put the government on the back foot. If the tax package had been released in the Budget, as planned, Labour might have avoided looking shifty and secretive on tax. But, Hipkins had put a stop to that. And, now, he would put a stop to this.

The upshot of all this political caution is that Labour will go into the election with very few achievements to boast of, and with next to no policies bold enough to persuade the electorate to overlook its many failures. Hipkins’ refusal to risk his own and his party’s future on a policy platform that would’ve helped to make New Zealand a fairer and more hopeful country, coupled with his refusal to let the Greens and Te Pāti Māori make the same promises with any credibility, have made the victory of fear and greed a near certainty.

It was a chance for Captain Hipkins to show his quality, and sadly, he has.

This essay was originally posted on The Daily Blog of Friday, 14 July 2023.


larry said...

Chris you said (excellent observation) ...Quote"

" Given the centrality of tax policy to everything a political party seeks to accomplish when in office, the decision to rule out key instruments of revenue gathering without consultation, debate, or a vote – not even around the cabinet-table – indicates that tangible accomplishments are no longer on the party’s agenda".

That! ... in a nutshell tells it all. when "all" is the inevitable demise of leader Hipkins. It is a cry born of his personal desperation and hopelessness.

To have gone with this Captain's Call tactic, fly's in the face of/ignores Robbo and Parker the chief Labour custodians of economic policy making and is tantamount to his "losing the room".

Watch this space now for the wheels really! falling off the Labour Party's clapped out Jalopy.

sumsuch said...

How much of it is the failure of democracy and how much the failure of Labour? The short-termary of democracy comes direct from we voters. Labour surely must be about persuasion to keep its claim to idealism. Except they've been bending a long while to the freemarket wind. Where would such idealists come from? Crises produce the appropriate response. But with climate change when the fires and rain are in your face it's too late.

David George said...

Here's a truly great interview Chris: The right lacks the vision to win the culture war.

On the culture wars:

“The right lacks vision. They play a rearguard game. They don't have a compelling story to tell young people. And because they're conscientious, conservatives are conscientious, it's easy to hoist them on the petard of guilt. And the psychopathic narcissists of the radical left are unbelievably good at that.”

On the personal versus the political:

“I think you have to get your psychological house in order before you can be even remotely effective politically in the fundamental sense. Otherwise, you're just a tool of ideology or your own ego.”

On Britain:

“English common law is a complete bloody miracle … what a phenomenal accomplishment. And so, yes, I think that makes Britain singular and worthy of tremendous admiration … It's a country that's suffering from far too much guilt at the moment.”

DS said...

Obvious point: David Lange pulled just such a Captain's Call in 1988 with his cup of tea. I don't recall you complaining about that one.

Odysseus said...

I suspect Chippy may be rolled in the coming week or two. His Party's pollster has already signaled his own and Labour's stars are waning. Desperation is setting in. It's always a risky thing to leave home to swan about on the international stage at a critical point for your Party's future. A Ugandan coup may await your return.

Anonymous said...

Hippie has hardly had a chance to introduce restoration of true working class values both to the labour party and government.
If this next election is a landslide failure for Labour, many working class gains since Micky Savage will be at great risk. What chance if ACT is part of an incoming government for restoration of loyal conscientious service values in the Public Service to how they were before the 1988 Act brought in "marketisation" ? And lookout! Employment legislation will be at risk and holidays act, and union workplace access gains lost yet again.
As for ACT and their deregulation thrust, do you want a repeat of "leaky housing" equivalent horror stories yet again? We need Labour's best communicator to navigate the country intelligently while protecting our people and working class gains won with great sacrifice over many decades. Hippie is Labour's best communicator by far.
Labour needs their best communicator and his her best judgement to avoid an impending defeat in 4 months time, and so I for one accept his "Captain's Call" in this context.
Gerard McIndoe

Chris Trotter said...

To: DS @ 00.08

No, I didn't. But that was because Lange's intervention reflected both the policy of the party and the wishes of New Zealanders.

Not sure that applies to Chippy's call.

The Barron said...

Lange voted against Labour's nuclear free policy but respected that the party makes policy. He took party policy to the electorate then into legislation.

His cup of tea was exhaustion after economic policy without party mandate.

sumsuch said...

The Douglasites mounted a manifesto-less coup. A baseless coup. Loyalty doesn't come into it. To be shocked by what Lange did, as his 'Labour' fellows were, is to be shocked by your face in the mirror. Come from a foundation and you can complain.

Yep, still angry.

Brendan McNeill said...

“Labour could set the tone of the forthcoming election campaign: pitching hope and fairness against fear and greed.”

I’m presuming by that statement you think that the wealthy are by default greedy, and fearful, or is it that you think Labour voters are greedy to get their hands on the wealth earned by others, and fearful of missing out? I’d like to hope it’s the latter.

New Zealand is not Britain or Europe. We don’t have the kind of intergenerational wealth that is the experience of those nations. Most wealthy Kiwi’s have earned it by their own enterprise, ability, risk and aspiration. This is 100% true for those I know personally, and I know a few.

There are only five countries in the OECD that have a wealth tax, Colombia, France, Norway Spain and Switzerland. The reason so few take this road is that the wealthy and their assets are mobile, and Australia would be a desirable destination with a much larger economy and greater opportunity. Taxing these people out of the country would be a fools errand, and don’t think a great number of them wouldn’t leave. They most certainly would. They would take their wealth, their businesses, their tax revenues, their GST payments, their ACC payments, their PAYE payments, and their employment opportunities with them.

Every remanning Kiwi would be finanically and socially poorer for their loss.

The weakness of democracy is that when politicians are happy to rob Peter to pay Paul you quickly end up with more Paul’s in your economy than Peters. This is exactly where we have landed and the blind rage of the Left over Hipkins ‘captain’s call’ is the overwhelming evidence.

But yes, roll Chippie and make wealth and capital gains tax the election issue, and enjoy your success at the polls. After the party there is always the mess left behind.

wilfandnora said...

Whilst like you I abhor the cowardice of Hipkins, both you and Martyn Bradbury need to understand that TAXATION DOES NOT FUND GOVERNMENT SPENDING. When will everyone catch up with the true reality of a sovereign nation's fiscal capability. Get up to date with MMT. Of course the idiot Labour Party brags about achieving a fiscal surplus (thankfully small), which means that the private sector (including households) must be in deficit - all just straightforward accounting.

Taxation certainly has its uses: taking from the rich, helping/hindering specific business sectors or even businesses, taking pressure off an overheating economy (hardly the case currently), and just making the currency the only game in town by forcing it's use for payment of taxes.

Of course, like a sovereign government, banks can also create money out of thin air every time they make a loan. Actually they create credit and not fresh money, which only the central bank (a government's private bank) can do. Bank loan have to be repaid. Also the bank loan creates an equal asset for the bank. So they sum to zero - no real new money. A central bank 'loan' to the government operates similarly for the sake of normal accounting practice, but the loan need never be repaid, and the asset side eventually gets written off. Look at hundreds of years of the UK fiscal position and you will see consistent large indebtedness - very brief and very small surpluses can occasionally be seen.

Government's are the producers of money, and do not operate like private households, businesses, and even local government. The things that government's need to be careful about is not so much the creation of funds, but how they are spent. Our government created plenty of money to help us through COVID - good stuff. They also, by sloshing billions into special Reserve Bank accounts, enabled the banks lend massively more than usual (bank lending is constrained by a central bank). What did the banks do. They did not lend for productive business, they lent for existing asset purchase, mostly domestic housing. Hence we got the massive house price inflation, which, after their huge cock-up, the government has been trying to reverse.

I am one of probably many natural Labour supporters who is not giving them my vote this election. They have done very little to deserve it. Equally The Greens, National, and ACT will not get my vote. The Maori Party policies all seem to be about only Maori - nothing inclusive there. Who have we go left: NZ First ( no thank you), TOP with some very interesting policies. So, as Social Credit don't seem to figure, Either TOP will get my vote or I'll stay at home.

John Hurley said...

I think we have developed two distinct and antagonistic cultures.

1. Worships the center.
Has a positive view of history: "yes we came to blows, but there was also valor on both sides" [Norman Kirk Waitangi Day speech].
"I just can't stomach RNZ"
"NZ is full"

2. Worships the periphery
"NZrs don't know their history". "She said just because those events weren't on the scale of those overseas doesn't mean they weren't as significant" JA
"Morena" "The sewer" (Giles Beckford discussing "Hidden in plain site")
"My parents migrated here so I can't turn around and stop others"

etc, etc
You can see how it divides us into class because ethnic conflicts are fueled by competition (eg housing and employment) and the wealthier you are the less competition is an issue, it might even make you rich (Bob Jones).

It started with the move away from (I can't say it) "white NZ" - a people with a common history and heritage. "We used to exclude (I can't say it) "Asians". We had a poll tax - it was racist".

The net result is a society split in two parts. One lot dominates the other (Paul Spoonley - export education; salary; status; Jack Tame; Mike Hosking (advertising); Michael Barnet (domestic economy) and needs to keep the other part down (prevent it form talking).
"And we just keep get better [despite evidence to the contrary], whatever happens we will find a way" (Oscar Islander on Q&A).

Notice how certain people like Tina Ngata and Kate Hannah are - it is just religion. Push the button and out they spew. Jordan Peterson made a video on ideological position (What's your name!? "Hugh Mungus" "What did you say!?" "Hugh Mungus" "He sexually assaulted meeee!"

Guerilla Surgeon said...

"I’m presuming by that statement you think that the wealthy are by default greedy, and fearful"

It's pretty much a given Brendan. I suspect the people that you know I well off rather than wealthy. I don't know anyone who I'd class as even "merely" rich. Under a hundred million apparently. And you only have to look at the actual behaviour of the wealthy to realise that they are both greedy and fearful. Greedy because they keep on making money beyond what anyone could ever spend, (well – unless you're Elon musk who's an eejit.) And fearful of poor people getting a share of it. Which is why they spend huge amounts of money all over the world, sponsoring legislation to make themselves richer, and to keep the poorer sort down.
And of course of supreme importance to you,/S denying people their free speech.

Given that these wealthy people and companies don't really pay much in the way of tax,( I doubt if we would be financially worse off if they left. Not that any of the the really large companies are more than peripherally present in New Zealand anyway.

The weakness of democracy – well one of the weaknesses, is that modern states are at the mercy of large companies which earn huge amounts of money and can spend insane amounts trying to influence politicians. And judges.

So the whole Brendan I think most rational people would be just a little suspicious of the rich.

David George said...

The brilliant Mary Harrington reviews Chris Rufo's America’s Cultural Revolution:

"Members of the Old Left, meanwhile, can mourn the theft of their movement by bourgeois nihilists, who commandeered the institutions of power in their name and are now retooling them into a shamelessly partisan bureaucracy of weaponised prejudice. As for those nihilists, should any take the time to read it, America’s Cultural Revolution is a shot across the bows. It declares, first and centrally, that the politics of negation will devour itself through negation. Troy may be sacked, but Clytemnestra waits at home, with a smile on her face and a dagger in her belt.

And it declares, further, that conservatives (or some of them, anyway) have belatedly grasped the new rules of engagement and are mobilising in turn. The citadel may have fallen, the temples looted. But in America’s Cultural Revolution, Rufo declares to the victorious New Left: we are the besiegers now. It’s your turn to try to hold the walls."

Guerilla Surgeon said...

Ah, Christopher Rufo. The guy who started the moral panic about Critical Race Theory, without knowing anything about it, and managed to parlay it into a living on the wingnut welfare circuit. And if you read enough of his stuff you will know that he did it deliberately and with malice.
I had to visit his website a number of times for an assignment, always felt as if I needed a shower afterwards. Not as bad as Stormfront, but they tend towards the crude. He's a little more sophisticated.
Here is someone who is helping governor DeSantis in his "Gesetz zur Wiederherstellung des Berufsbeamtentums" – Florida was number 1 in higher education in the US – watch for its gradual decline.

And someone who defines – as most conservatives do – CRT as pretty much anything they don't like about race. In the process of doing my assignment I never came across any conservative writer who had actually read anything much about CRT and/or new anything at all about it. And I did my level best, in the interests of fairness.

“It should go without saying that what they are calling critical race theory is a whole range of things, most of which no one would sign on to, and many of the things in it are simply about racism,” Kimberlé Crenshaw.

sumsuch said...

I now bounce over Brendan since he has nothing relevant except subjectivism as objectivity. Our oncoming death, from our 80 years of comfort.

Enjoy brill GS. Grey Warbler is too much detail, I'm too much synopsis sans footnotes, GS fights in both trenches. Oh, the Hell in the next 10 years.

Comfort has killed us.

sumsuch said...

It turns out, compared to Hipkins, and out of the blue to the rest of us, Robertson and Parker were all about change.

Realpolitik and then their unsoiled hearts were going to deliver, finally. Secret Santa, just like the 30s.

Anonymous said...

Aren't you ignoring the multiplier effect. That loan is spent at the butcher, the baker and the candle stick makers, thus raising demand and therefore productivity. This cycle repeats around three times. What you say may be true from an accountants viewpoint, but so much from an economic one. The cycle does break down when it's spent on already existing assets, such as pre-existing housing (speculation), but not if you build new ones.