Labour's Responsible Fiscal and Economic Manager? Or, will Grant Robertson's unwavering adherence to his own "Budget Responsibility Rules" strap New Zealand into a fiscal and economic straightjacket, the primary effect of which will be to render the Labour-NZ First-Green Government’s “transformational” promises incapable of fulfillment?
TO ACCUSE POLITICIANS of being part of a “tax and spend” government is just another way of calling them social-democrats. By the same token, politicians who explicitly renounce the policies of tax and spend are signalling that they are anything but social-democrats. What, then, should we make of Grant Robertson’s speech to the ANZ Business Breakfast of Friday, 1 December 2017? The short answer is: if Finance Minister Robertson is a social-democrat, then he’s not a very good one.
Let’s begin with the most positive paragraph of his address to the assembled business leaders. Unfortunately, it’s not his. Robertson is merely quoting the core objectives of the Labour-NZ First- Green Government’s “common mission statement”:
“Together, we will work to provide New Zealand with a transformational government, committed to resolving the greatest long-term challenges for the country, including sustainable economic development, increased exports and decent jobs paying higher wages, a healthy environment, a fair society and good government. We will reduce inequality and poverty and improve the well-being of all New Zealanders and the environment we live in.”
There is no avoiding the radicalism of this declaration. “Transformational government” is what happens when the old ways of doing things are jettisoned in favour of news ways of managing a nation’s economy and society. The 1984-1990 Labour government of David Lange and Roger Douglas was unequivocally transformational. It cast aside the political, economic and social assumptions of the previous fifty years of New Zealand history in favour of a market-led society in which taxing and spending would be relentlessly “downsized”.
Significantly, the current Labour-NZ First-Green Government has, in large measure, come into being because just over half the New Zealand electorate was determined to bring an end to and, if possible, reverse, that downsizing.
Unfortunately, it just isn’t possible – on the basis of Robertson’s address to the ANZ Business Breakfast – to see how that can happen. The Finance Minister makes it very clear that the Ardern Government (its promises to bring about “transformational” change notwithstanding) is absolutely determined to offer “responsible fiscal and economic management”.
In case his audience was in any doubt as to what this entailed, Robertson spelled out Labour’s “Budget Responsibility Rules”:
“To recap, this means that we will deliver a sustainable operating surplus each year unless there is a significant disaster or major economic shock or crisis. We will ensure that government spending as a proportion of the economy won’t rise above the recent historical average of 30% of GDP. We will reduce net core Crown debt to 20% of GDP within five years of taking office.”
It’s important to identify these commitments for what they truly are: a fiscal and economic straightjacket, the primary effect of which will be to render the Labour-NZ First-Green Government’s “transformational” promises incapable of fulfilment.
Robertson’s Budget Responsibility Rules will achieve this result all on their own. Throw in Labour’s election campaign commitment to leave income and company taxes unchanged for three years, and what New Zealanders are faced with is thirty-six months of “Austerity-Lite”. Which isn’t quite the “transformation” New Zealanders had in mind when they accepted Jacinda’s invitation to “Let’s Do This”.
Somehow, Robertson’s rigid adherence to “responsible fiscal and economic management” will have to be overcome. Failure to reclaim the ability to tax and spend, or, to put it in less tendentious language: the ability to redistribute wealth from the rich to the poor while accelerating the nation’s infrastructural development in ways that both reduce social inequality and expand individual opportunity; can only result in the Labour-NZ First-Green Government being thrown out on its ear in 2020.
Most of all, the Labour caucus needs to be weaned-off the self-denying-ordinances of neoliberalism. The whole history of our democracy has been about the determination of ordinary people to claim the same rights and privileges that King John’s barons acquired in Magna Carta. Namely, that before the King can tax them, he must first obtain their consent. In other words, determining the quantum and purpose of revenue gathering is the people’s prerogative. Winning control of the Treasury Benches becomes meaningless if the winners then refuse to exercise their right to raise revenue and spend it as they see fit.
If this is, in truth, to be a radical, transformational government, then perhaps its parliamentary majority should consider delivering a small demonstration of radical, transformational politics. All the Labour, NZ First and Green MPs outside Cabinet could agree to meet as a single entity and demand that the “Red October” appendix to the Coalition Agreement be made available for discussion and debate. This revolutionary “Common Mission Committee” could then communicate to Finance Minister Robertson which of the many promises agreed to by Labour were to be financed and implemented. If he refused, a new Finance Minister could be suggested.
Fanciful? Of course, it is! Not least because the Executive could easily thwart such a rebellion by entering into a grand coalition with the National Party. Would that cause the Labour Party to self-destruct? Probably. But wouldn’t that be a more honest outcome than forever putting up with governments run by unelected neoliberal civil servants?
A Labour Party that refuses to tax and spend really should call itself something else.
This essay was originally posted on The Daily Blog of Saturday, 2 December 2017.