Friday 28 January 2011

Who Doesn't Dare - Loses

Close, but no cigar, Phil: Courage is the only currency that will purchase this election for Labour.

COURAGE is the most valuable political commodity. Without courage, you won’t offer the best policies. Without courage, you can’t attract the best candidates. Without courage, even the best organised political party is rapidly reduced to moral and intellectual bankruptcy.

Last Tuesday afternoon, in the Auckland suburb of New Lynn, the Labour Party leader, Phil Goff, had the opportunity to demonstrate not only the courage of his party, but his own willingness to risk everything for a Labour victory.

He failed on both counts.

What’s really infuriating about Mr Goff’s failure to be brave, is that the policy package he finally decided to offer the electorate was so very nearly enough.

With just a little more courage, the tax reforms Mr Goff announced could have been an electoral game-breaker. With just a little more courage, the moral crusade against greed, inequality and social injustice that waits only for a politician with the guts to lead it, could have been unleashed. With just a little more courage, the stark economic and social alternatives confronting New Zealand could have been thrown into sharp relief. With just a little more courage, Labour could have given us a choice.

Take, for example, Mr Goff’s announcement of a "Tax Free Zone" for low income earners. The policy’s very name – incorporating the language of the Fourth Labour Government’s high-risk anti-nuclear legislation – was clearly designed to raise the hopes and aspirations of the party’s hard-pressed supporters. And, had it encompassed the first $10,000 of income, Labour’s constituency would have stood up and cheered. Here at last would have been irrefutable evidence of Mr Goff’s determination to halt and roll-back the unrelenting transfer of wealth from the poor to the rich.

A Tax Free Zone of $10,000 would have required the wholesale reform of the way the wealth of New Zealanders is taxed. It would have mandated the re-introduction of gift and inheritance taxes; it would have required the increased taxation of repatriated profits; it would have necessitated substantially increased marginal tax rates for the highest income earners; and, most of all, it would have made sure that the gaping revenue hole, opened up by the refusal of successive governments to introduce a capital gains tax, could finally have been sealed.

The $5,000 Tax Free Zone which Mr Goff did announce is worse than nothing at all. The extra dollars it places in the hands of working people are far too few to significantly lift their living standards, and its $1.3 billion cost is simply left dangling in mid-air.

Oh sure, there are sly hints aplenty about New Zealand’s inadequate tax-gathering mechanisms – but absolutely no firm policy. This simply will not do.

In the current economic circumstances it is politically irresponsible to announce tax changes leading to a $1.3 billion decline in revenue without, at the same time, describing how it is to be made up. Labour’s opponents will, quite rightly, point out that, in the absence of corresponding tax increases, Mr Goff’s $5,000 Tax Free Zone can only be paid for by further increasing the deficit, or cutting back on government expenditure.

Mr Goff’s state of the nation speech was also silent about the crucial issue of Free Trade. While Labour clings, like a frightened child, to MFAT’s apron-strings and refuses to engage in the hard-headed analysis that would allow it to recognise the enormous economic damage this country’s fanatical adherence to Free Trade has inflicted upon its people; all the fine talk about "growing an economy that works for you" is just hot air.

For Labour to reject Free Trade and embrace Fair Trade would require enormous courage. But how brave do you have to be to announce that, upon taking office, a future Labour Government will immediately end the New Zealand State’s relationship with the Westpac Bank, and require every government department, crown-controlled entity and state-owned enterprise to source their financial services from Kiwibank?

Yet, even this tiny gesture was too much for Mr Goff.

It’s sad, because the opportunity to inflict an "Orewa" on John Key’s Government was definitely there on Tuesday. By setting the terms of the debate at this early stage, Mr Goff could have wrenched control of the political agenda from the Prime Minister’s inactive hands.

Had you dared more, Mr Goff, you would have failed less.

Courage is its own reward.

This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Star of Friday, 28 January 2011.


Anonymous said...

Almost exactly my thoughts.

Sad irony that labour could very easily lose the election for want of being more like a Labour Party.

Goff's Gotta Go!

Loz said...

Interesting to contrast this with the Australian Labor Party who announced a graduated reconstruction "levy" (a.k.a. tax) to assist with flood reconstruction yesterday. Corporate media immediately publicised the most negative view imaginable (in this case the tale of woe is that taxes make people less likely to donate money for charity). What was fascinating was that everyone straw polled considered it was fair for the well off to pay a bit more in a time of national need.

I have come to expect every initiative that comes from the New Zealand Labour Party to be accompanied to the disappointing drone of dying bagpipes... no exception here.

Draco TB said...

In the current economic circumstances it is politically irresponsible to announce tax changes leading to a $1.3 billion decline in revenue without, at the same time, describing how it is to be made up.

Go listen to the speech again - Goff did say how it was going to be made up. He may not have gone into details but he did say.

Mr Goff’s state of the nation speech was also silent about the crucial issue of Free Trade...all the fine talk about "growing an economy that works for you" is just hot air.
Agree with you on that score and about government using Kiwibank.

Had your dared more, Mr Goff, you would have failed less.
He still has time to be more radical but he has to hit out now at the unsustainability of Nationals "sell everything" policy.

Bruce said...

There has been an interesting programme on The Discovery Channel on Ralph Nader and his role in US politics. Your article reminded me of that. He certainly had the courage to question the status quo and call politicians to account. Of particular relevance to your article was the way in which the Democratic party sold out its ideals to corporate America in its move to the centre. It had strong rings to the way Labour has moved to the centre and away from its traditional support. The election is there to be won. We just need Labour to take the courage of its convictions in its hands.

Anonymous said...

Ultra leftism is the curse of the working class

Trotter is its craziest manifestation

here's this poor bastard giving us another ten bucks and week and mondayising anzac day and what do we here from our intellectual leaders?

not enough. well hereres a message from the trenches, get your arse out of your face and vote labour

so we can get another ten bucks

and don't go on and on about him dying his hair , its his har and at least hes gort some

more than lenin, so fuck you

Anonymous said...

Chris, you read my mind! My first thought when I heard $5,000 tax-free was, "Good start, but not enough to make a real difference, should have made it $10,000". We need to decide as a country what a minimum livable income is, and then try to make it possible for low-income earners to live on their own salary/wages WITHOUT requiring government benefits to top up their miserable after-tax income!

The problem is that Labour is like one of those lousy boyfriends who always sends flowers when they've done something wrong....too little, too late. Without bold, decisive action, I have lost faith in Labour that it remembers its original social values.

I don't consider myself 'Ultra Leftist', but this is such a half-hearted policy that it shows Labour is still scared of losing its conservative middle-class supporters. The working class is where their true power lies.

Anonymous said...

"For Labour to reject Free Trade and embrace Fair Trade would require enormous courage. But how brave do you have to be to announce that, upon taking office, a future Labour Government will immediately end the New Zealand State’s relationship with the Westpac Bank, and require every government department, crown-controlled entity and state-owned enterprise to source their financial services from Kiwibank?"

Why stop at Kiwibank?

Why not return to the Reserve Bank of New Zealand as the government's bank.

And, no, I dont drive a Skoda.

Unknown said...

As someone recently observed, before we create a just society, we must first create a solvent society. There is little point cranking up more wealth transfer initiatives if there is little or no wealth to transfer.

Clearly the number one issue facing us a a nation how we can live within our means, and then begin to repay our debts.

As it stands, the top 10% of tax payers carry 70% of the tax burden. These are our best and brightest, they are also very mobile. Increase their burden and they will simply export themselves and their businesses and their wealth.

Then who will the socialists tax?

There is a very simple rule that works in life. You get more of what you reward, and less of what you punish.

Right now, our taxation system is designed to punish those who risk their capital in business and new ventures with a range of punitive taxes commensurate with their success. Similarly, those who are well educated, and diligent face the same punitive tax system as their skills become appropriately rewarded.

Yet perversely, this is exactly the kind of activity that New Zealand needs more of.

What Governments are good at, is transferring wealth from those who create it, and transferring it to those who consume it, thereby rewarding those behaviours that we want less of. Hence the growth in the DPB, 'sickness' beneficiary numbers, and a long tail of ACC claimants who seem to be there for life.

Yes, there are times when the State does need to provide assistance, and it would be cruel and heartless to simply 'cold turkey' the hundreds of thousands who consume these 'benefits' today. However, the trend has to be away from State dependance, and towards self reliance, and family centric welfare, if we in New Zealand ever hope to regain our wealth status compared to other countries in the OECD.

Simply slicing up an ever diminishing pie until we all starve equally is not an attractive option.

We need to create more pie.

Here is a novel idea. Let's have Phil Goff, along with our best and brightest university academics, plus the 'intelligent' socialists turn their minds to 'pie creation' rather than pie redistribution.

At the very least the exercise would help them confront the realities and very real difficulties surrounding wealth creation. We may then see a new respect for those at the sharp end who start businesses and generate employment opportunities which ultimately provide the core of our tax base.

As much as this may irritate the socialist mind, these are the people upon whom our economic future ultimately depends.

Anonymous said...

Much of Brendan's sentiment I am in sympathy with. However, as a Democratic Socialist myself, I would have different solutions.

Tax- 1% on the first $20,000. Across the board tax of 24% including company tax. All earnings over $20 million taxed at 50%.
Financial transactions tax of 0.5%. Capital gains tax on everything except the family home. Inheritance tax. Death tax.

Land ownership- All land except residential property in public ownership to be leased by farmers and other firms.

Economic growth- Create a new publicly owned oil firm to act in joint venture with Chinese or Brazilian state oil firms to explore off shore oil.

Explore all practically available options which allow maximum profitably for the NZ people on Mining, wherever.

Stop supporting pointless unwinnable money draining western alliance military crusades such as Afghanistan. The third world economies are rising and where we stand on these issues will be vital to our trade relationships.

Brendans comment on growing the pie is correct, unfortunately either orthodox right-wing and left-wing thinking is an impediment to this.

Olwyn said...

Brendan, I cannot tell you how weary I have become of homilies like the one you have delivered here.

I begin by correcting a factual error: Mcflock on the standard has actually looked up the percentage of tax paid by the richest, and the 2009 sheet shows that the top 10.16% of individuals earned 1/3 of all the taxable income and paid 44.5% of the tax. The article is called "Selling Our Assets to Pay for Tax Cuts for the Richest 1%" if you want to check.

Most people will agree that we need a greater productive base to our economy, but if this was likely to be brought about simply by letting the rich keep more of their money we would surely have seen some sign of it happening by now. That we haven't gives lie to the suggestion that that these people "risk their capital in business and new ventures" in a way that serves this purpose to an adequate degree.

Furthermore, I am not sure that these people would flee in droves if they were asked to pay more tax - there is probably a reasonably large number that much prefer being a big frog in a small pond, to laud it over us rather than take their chances in the big bad world. But people who are leaving in droves are working class people, and if they all came home at once, we really would be faced with the mess we are in.

The central question; what to do about the productive economy in New Zealand, is far from being answered simply by reducing the tax on the rich.

Paling Fence said...

What ever happened to the Quarter Acre Pavlova Paradise?.
Have you ever considered the power of the Property Council ("$6 B in assets and 20 Corporate members") They keep a low public profile as their interests are the opposite of most of us.
I see Heatly wants to do something about the housing shortage and favours infill (which gives the developer a fat capital gain) but often leaves a ghetto for residents.
Look into it
Chop! Chop!

Anonymous said...

Nice elongated cliche touching all the right-wing dogma dog-ends, Brendan, but no one's listening any more.

Here's the thing. We gave Douglas (and Maggie, and Regan) and your tired ideas free rein for twenty-five long years, and look around son, it's a stinking mess. You failed. Big time.

Sorry bud, but our country's assets and the millions shovelled into the pockets of those "best and brightest.. well educated, and diligent" since the mid-80s have achieved squat-all. Your "people upon whom our economic future ultimately depends" have enjoyed "best country in the world to do business" status for years - and blown it.

No bigger pie in sight, our forefather's larder pillaged, and our grandchildren up to their eyeballs in debt.

And you want us to do it all again. Sorry, Brendan, new recipe needed. Get used to Chinese.


Olwyn said...

Sorry I left a typo in my comment - I meant "lord" it over us, "not "laud."

Back to the actual question - whether Phil should have gone further in one big hit; I am not sure that I agree with you on this. I feel fairly sure that he is not the man for such a gesture, and I am not sure it is the right time for it either.

If we look at what people like about Phil Goff, or would like if they were not so desperate for some left wing traction, is that he understands politics and he has been resilient enough to withstand some bad political weather - many others would have wilted under the negative conditions he has faced since becoming leader.

If we look at what people don't like about him; they don't think he is charismatic enough to defeat John Key, and they mistrust his left-wing credentials, suspecting him of concealing rogernomic tendencies.

One good thing about his state of the nation speech was that it made unequivocal commitments. He will introduce a tax free $5,000 dollars, and he will not sell assets. But the big one, when he finally announces its detail, will hopefully be changing the reserve bank act. I say hopefully because we have yet to see what it amounts to.

This seems to me to have the potential to divorce Goff from his rogernome history through action rather than words, and to bring members of the productive economy, who have also had a gut full, on board as well. If he manages this he will not need charisma so much since he will have something of substance to offer.

This in turn will help to create the preconditions for moving toward greater equality. To have offered more than he did at this stage may have been to jump the gun.

Anonymous said...

Olwyn said

"Furthermore, I am not sure that these people would flee in droves if they were asked to pay more tax -"



Loz said...

Brendan: The "expand the pie" "cut takes" "trickle-down" war cries have been used for 25 years by successive governments leading us into this mess. At what point must we admit that the free-market experiment has been a disaster for all but a tiny few?

Your statistics really need some clarification as they build a slightly misleading picture.

Readers should understand that they were primarily publicised by a lobby group called the "Taxation Working Group" (who incidentally hold a stated belief that personal and corporate tax are inappropriate in New Zealand). The quoted 70% tax statistic is somewhat subjective as it is derived by deducting available benefits from lower income bands to show that lower income New Zealanders don’t pay tax... many would see the mathematics (although not technically wrong) are politically motivated. Thankfully, the same report shows the actual banded tax take. If we compare the taxation statistics generated by the TWG to the last census statistics it paints a much better picture of what the numbers mean.

Only 20% of New Zealanders have a declared personal income over $50,000 and they pay about 60% of all income tax. The median income in NZ is $27,508 and the national average (RGNDI) income is $29,836 which shows how dreadfully low the incomes of most New Zealanders actually have become.

What needed to be highlighted when you provided statistics from the TWG report is that the wealthiest New Zealanders are not in the "top 10%" group of tax payers at all!

... the penny drops & the stats look more reasonable.

The findings highlighted that those doing the best in New Zealand are avoiding income tax through accounting. A sample of 100 of our wealthiest individuals showed that half were declaring taxable incomes under the top $70,000 p.a. tax threshold. This is a huge flaw with the impression you put forward about who are shouldering the tax burden Brendan... the "best and brightest" who are paying all the tax are middle New Zealand, not the wealthy & certainly not foreign entities harvesting their obtained "investments".

Income tax band adjustment is not enough to bring foreign stakeholders or capital gains benefactors inline with sharing the tax burden. It is however an important step in recognising the weight isn’t being carried fairly.

tony said...

thank you so much for saying what the rest of us (well, some of us anyway) are thinking.
The sad thing here is that John Key is showing courage and conviction, and is, at least, being authentic. What a shame that the Labour Party cannot stand up and be counted.Having a dollar each way is a sure path to failure.

If only Labour could stand up for what it believes in. After touting an intention to return to the party's roots, they are baulking at the last hurdle. For far too long we have watched the process where those at the bottom of the heap are being robbed of what little remains, while the wealthy claw the remainder into their own fat hands.
If the Labour Party wish to be a credible alternative, then they have to manifest the courage of their own convictions (that assumes they have some). The alternative is an increasing descent into slavery for the already-marginalised and exploited.

Unknown said...

In response to Olwyn, I believe statistic of the top 10% of tax payers paying 70% of the tax takes into account the rebates that low and middle income earners accrue in Working For Families.

There are many distortions in our tax system that make meaningful calculations difficult.

It may be however that the article quoted: "Selling Our Assets to Pay for Tax Cuts for the Richest 1%" that you referenced is correct.

My primary point, which Andrew and yourself appear to acknowledge is that we need a larger pie, and in the first instance, we need to repay the money we have borrowed for the pie we are currently consuming.

Neither Labour or National appear grasp this, as it's not reflected in their policy settings or their rhetoric.

My other point is that if all of the dedicated socialists in New Zealand their emotional and intellectual energy into exploring ways to grow the pie, create a business and generate employment, then we would all be better off.

It appears so self defeating to be constantly harping at the rich for being wealthy. Its like cursing mountains for being high. It's both pointless and ineffective.

In the same way, using the power of the State to coerce the wealthy to fund your personal lifestyle feels... well, just a little bit unclean. Why do you feel that wealthy people owe you a living, should pay for your health care, or your children's education?

Why not simply celebrate their good fortune, or their success, and concentrate on what you can do to shape your own personal and economic destiny?

Thankfully, we live in a country where upward mobility is not just a possibility, but it's a reality for hundreds of thousands of people who choose to engage in our market economy.

We need to throw of our 'entitlement' mentality, realize that no one owes us anything, not even the rich, and set about doing the best we can with the resources we have.

I suspect that only then is meaningful change possible.

Anonymous said...

"Why do you feel that wealthy people owe you a living, should pay for your health care, or your children's education?"

Its called a decent society. It is what tax pays for. It is where health and ecuation are public goods that everyone should have, and not just those at the top, while the rest just have to compete with each other for charity.

And another thing, Brendan, if you think that I am going to bow and scrape and doff my cap to someone because they have more money than I, then you can get fucked.

Another Brendon

Anonymous said...

Brendan: Why do you feel that wealthy people owe you a living...?

We don't. We just want our fair share. In return for our input.

The crux of your (and the entire right wing's) deceit is that ultimate, obscene conceit: "I did it all myself".

No you didn't. And until you fully accept that fact, remain alone, and incomplete.


Unknown said...

I'm beginning to enjoy this conversation. :-)

The point that both AK and Brendon appear to be missing, is that we all have to serve someone. It might be a boss, it might be a customer, it might be our colleagues, it might be the person next door, but if we want economic success, we have to first make ourselves useful to someone and then willingly serve them.

Other people place an economic value on how useful they consider our goods and services to be. They also rate how reliable we are, how honest we are, how trustworthy, how dependable etc.

Brendon, no one has to 'bow and scrape' but everyone who is commercially successful has learned how to serve others.

Everyone, without exception.

So AK, what is an individuals 'fair share' of the economic resources being generated in a Nation?

Ideally, customers and employers decide the answer to that question. They reward those who serve the best, most constantly, most honestly and reliably.

If you think your boss has got it wrong concerning your worth to her business, then you are free to look around for another role, or start your own business in competition.

However, we live in a socialist country where Governments have decided that there are votes to be won by transferring wealth from those who have learned how to serve, to those who have not.

Unfortunately, we get more of what we reward.

This behaviour by Governments has fueled an entitlement mentality, and a political movement that primarily exists to facilitate wealth transfer from those who serve, to those who have not yet learned how to do this, or who are unwilling to do this, or who have confused service with servility, and consider it beneath them.

It's a great pity that these basic facts of life and economics are not taught in schools. Well, at least they weren't when I was there! (briefly).

Now, in any society, there will be those who through no fault of their own are unable to care for themselves. The state along with other mediating institutions has a legitimate role there.

However, in a functional society the size of New Zealand, these people don't number in their several hundreds of thousands.

As we are finding out, that is unsustainable.

Anonymous said...

So AK, what is an individuals 'fair share' of the economic resources being generated in a Nation?

Ideally, customers and employers decide the answer to that question.

Fair enough. So slavery was ideal too then.

Thanks anyway Brendan, at least you're trying. (very)


SPC said...

The Reserve Bank Governor has in the past called for there to be a surcharge on mortgages - to provide an alternative to raising the OCR to constrain inflationary demand. This allows lower upward pressure on the dollar value and thus is beneficial to the productive export sector.

We have $170B of mortgages - so a 1% surcharge would raise $1.7B pa.

It could be implemented as an alternative to increasing the OCR from 3 to 4% later (as is forecast) in the year. Thus it costs homeowners no more than they pay now, keeps the dollar below 80 cents with Australia and raises a useful amount of money at the same time.

That and ending Kiwi Saver tax incentives (the employer contribution is there to encourage saving) means $2.7B pa can be found very painlessly.