It was a wonkish, nervy, tepid debate, but the political earthquake had come earlier and it changes the way we look at Election 17

Timid, vague and exposed on tax, she still did enough. The morning after the first prime time TV leaders debate, Jacinda Ardern will be the happiest of the two party bosses, not because she won the debate in any signifcant sense, but simply because she didn't lose. And because of more important things that happened earlier in the evening.

The first TVNZ debate was a tepid affair, in which neither leader shone. Whereas The Nation's multi-party debate on Saturday was a zinger-full affair, driven by parties desperate for a headline, the Mike Hosking-moderated TVNZ debate was wonkish and lacking in energy. Oh, Bill English smiled gamely and looked engaged, while Ardern complemented National on the economy, consulting her on Afghanistan and even fair pay. But both spent the night explaining, not debating, and failed to explain succinctly and well. 

It was like a cup final, with the players too nervous and risk-adverse to really stretch out and play their real game. But parity will suit Ardern better; crucially she didn't look or sound of out place up there on the main stage for the first time. She wasn't completely out of her depth or any worse than English. They were both meh.

If I had come to the debate as an average voter after a hard day's work, I would have felt they were both talking at me, past me, but not to me. They were strong on vague values, policy jargon and what Grant Robertson annoyingly keeps calling 'direction of travel', but both struggled to answer the "how" questions. Sure, they want things to be better, stronger, faster, but failed to deliver to New Zealanders exactly how they would do that.

When they did delve into detail, they waffled their way into generalities. Both policy wonks, they seemed to have all the pieces swirling around in their heads, but couldn't quite get them out. English wanted to say 'trust me, I know what I'm doing'. Ardern wanted to say 'we can do better, so let's change'. Instead they waffled.

It was a series of struggles. First, Ardern struggled on tax, then English struggled on housing. English went onto struggle on wages and water, while Ardern struggled on labour reform and, oddly, even on the environment.

Perhaps most of all, English struggled to not look like a party that had been around a long time and is now drifting.

But neither convinced. When Ardern was faffing around trying to explain how she was really being "transparent" on tax because she was clear about what values she brought to the debate, English got in a line that  New Zealanders can't pay for their shopping with her values. When a viewer asked for their stance on medical cannabis, English started wombling on about proper testing for "cannabananoids" or something, while Ardern simply said yes, we'll do it.

Apart from that, the most memorable moment of the night was the first moment, when Hosking simply asked English, off the back of the One New-Colmar Brunton poll last night, "why are you losing?".

It was the first time in 12 years a National Party leader had had to answer that question and it was as devastating as the poll, released an hour earlier, had been shocking.

Because by far the most important event of the night turned out to be the poll, not the debate. Labour 43, National 41, New Zealand First 8, Greens 5, TOP and Maori Party one percent each.

Now that's a game-changer. It looks like Ardern and Labour don't need a youthquake to get ahead, enough normal, old, boring voters are getting on board. 

It gives Labour that magic elixir called momentum. It gives New Zealanders permission to get on a bandwagon. 

Polls are usually all about trends. Making too much of a single poll is usually a mug's game. But this one is different. A lead change and such a dramatic swing is something voters notice and it allows them to say in polite company that they're voting for someone new.

What few of us appreciated was just how many voters were waiting for permission to switch. And how quickly some voters would forgive Labour their flailing years. 

On a parliamentary basis, there's another key point: It gives New Zealand First the incentive to sign a deal with Ardern, not English.

Because under MMP, it's not just being ahead that helps Labour. Don't get me wrong. In a country where the party that came second has never led a government, that helps. But the key detail is how the parties can get to 61 seats, or 50 percent of the House.

On this poll, Labour and New Zealand First could govern alone. And we all know Winston Peters prefers small coalitions. National would need ACT and/or the Maori Party, and we also know Peters won't join with either. So - and it seems bizarre to say this given the 'direction of traval' just a month ago - Labour is now in the box seat. Its biggest threat now seems to be its own fumbling around on tax. An 'elegant solution' is needed.

But there's another twist in that result. New Zealand First has slipped so much that it may be losing its grip on its claim to be the 'decider'. Peters is now fighting for his life. On these numbers, New Zealand is only one seat away from a potential Labour/Greens/Maori Party government.

As a student of Helen Clark, Ardern is unlikely to want to risk the perception of such a swing to the left. But who knows? Remember, with more power comes more say. We've long thought Peters will have the most chips when it comes to coalition wheeling and dealing, but perhaps Labour will be able to insist on bringing the Greens into government alongside New Zealand First, just as Key dragged in ACT, United Future and the Maori Party. It helps to be inclusive and give yourself political cover.

First debate nerves were on display for all to see last night, and the poll made it clear why. There is so much at stake with three weeks to go. But it's now Labour with the upper hand for the first time this side of the Global Financial Crisis... and, to put it in perspective, since before Katy Perry became a star.

Comments (22)

by Raymond A Francis on September 01, 2017
Raymond A Francis

Yes I think you have summed the debate well

But Miss Ardern really has to do better on tax, maybe name the people who will be on the Working Group would be a start. 

Its worth noting that on this poll the Greens only just make it into Parliment, in the past on  rising poll numbers they have not got the vote that the pollsters indicated. So it will be interesting to see just what the real Green rump is. If voters start to think  Green it will be a wasted vote because of that.

Winston back into the box seat. Bugger!

 

by Tim Watkin on September 01, 2017
Tim Watkin

Good points Raymond. Naming the working group is an interesting idea. they need to do something to change that narrative.

Winston's been in the box seat for a while. But now that's looking a bit shakey.

by Anne on September 01, 2017
Anne

Thanks Raymond. Naming a working group or at least supplying a list of the professions and type of experiences required for this tax review is essential if Labour want to quell the nervousness of some voters.

Last night's debate can be summed up in one word - boring. So boring in fact that if a political junkie like me feels the need to 'switch off' and spend 10 minutes attending to domestic chores half way through then there is something wrong. 

Jacinda is a nice person, but I hope that within her breast there lurks a little bit of mongrel because as prime minister she is going to need it.

by Katharine Moody on September 01, 2017
Katharine Moody

I think the best answer to the tax working group question is to simply point out that Labour will review the findings of the 2010 TWG report and implement those recommendations that have not yet been implemented if the reconstituted group agree that is what is appropriate;

https://www.victoria.ac.nz/sacl/centres-and-institutes/cagtr/pdf/tax-rep...

 

by Andrew Geddis on September 01, 2017
Andrew Geddis

Naming the working group is an interesting idea. they need to do something to change that narrative..

I'm guessing the problem with naming such a group in advance of an election is that the individuals concerned will be worried that they will be seen to implicitly support Labour ... it's one thing to agree to come on board a NZ Government body tasked to give policy advice on a subject, quite another to agree to lend your name to something that Labour will be touting throughout the campaign as their policy to deal with the issue of tax.

Or, to put it another way, the only people who may be happy to say "yes" now are likely to be happy to be seen as Labour-friendly, which then undermines the non-partisan credibility it needs to work properly.

Jacinda is a nice person, but I hope that within her breast there lurks a little bit of mongrel because as prime minister she is going to need it.

Haven't we seen that already? The ditching of Turei was some pretty cold hearted realpolitik (and let's be honest ... even if Ardern didn't pull the rug out from under Turei, she certainly polished the lino to a pretty slippery degree). And her put down of Mark Richardson was both heartfelt and intended to demonstrate just the "little bit of mongrel" you seek.

by Alan Johnstone on September 01, 2017
Alan Johnstone

Do people still think she lacks steel?

Jacinda has seemingly cruised to the leadership of the labour party and now leads in preferred PM polling at 37 years old without getting her hands dirty.

Turei, King & Little had their careers ended by her whilst looking innocent. Mongrel is overrated, like Key she's a ruthless smiling assassin.

Much more effective.

by Warren Doney on September 02, 2017
Warren Doney

Nobody thinks Jacinda will seriously rock the boat, but Labour is getting what they deserve for sitting on the fence. It seems unlikely that Grant hasn't got a fair idea of what he wants to do, and already told her.

I would be framing things as doing whatever it takes to fix National's failures. Perhaps that hasn't looked good in focus groups/polling. Perhaps equivocation just a habit inherited from her predecessors.

by william blake on September 02, 2017
william blake

Warren with what is happening in Bangladesh and Texas I can see why getting your boat up on the fence could be a good thing.

by Henry Barnard on September 02, 2017
Henry Barnard

With you, Katherine.  Why not commit themselves to reconstituting the Tax Working Group set up in 2009 - one which Bill English and Peter Dunne supported?  Needless to say, not everyone might be available (Gareth Morgan?).  Also point out that it would be different because it would have to work within the parameters already set down (no CGT on the family home, no introduction of another - higher - tax rate in the coming term) but commit themselves to going with most of the recommendations, unlike National who ran scared of those that would affect their voter base but instead chose to thump the vulnerable with an increase in GST (which has now shifted to 25% of total tax revenue as opposed to 20% at the start of their term).  Also add two more parameters: No increase in GST and, for the first term of their government, no increase in tax revenue as % of GDP other than that already forecast on current fiscal settings.  In other words, the goal would simply - at this point - to broaden the tax base and introduce the idea of a tax on wealth.  

Fact is that the 2009 Tax Working Group agreed that our tax system needed reform: if it needed it then, it must be even more urgent now.

by Katharine Moody on September 02, 2017
Katharine Moody

Couldn't agree more, Henry, and the new parameters you suggest, as per their existing committments to the electorate are ideal.      

by Charlie on September 02, 2017
Charlie

I agree completely Tim: I've seen better debating at high school.

The players were average and the format was rubbish. They just about fried the leaders with the lighting.

 

by Chris Morris on September 02, 2017
Chris Morris

After reading some of the comments above, I wonder how many people have actually read the Tax Working Group report - particularly Recommendation 6? They (as in most) did not support a CGT because of the problems it would cause. It is interesting to not that the WG supported raising GST, not allowing exemptions and lowering income tax. That sounds like What National actually did.  

by Katharine Moody on September 02, 2017
Katharine Moody

@Chris, yes read it. Rec 6. related to a comprehensive capital gains tax (not favoured by a majority - and a partial CGT seen as distortionary), whereas Rec. 7 was: " The majority of the TWG support detailed consideration of taxing returns from capital invested in residential rental properties on the basis of a deemed notional return calculated using a risk-free rate." which was not implemented. And Rec 8. was "Most members of the TWG support the introduction of a low-rate land tax as a means of funding other tax rate reductions." - again not implemented (but the other tax rate reductions recommended were). And Rec 12. "There should be a comprehensive review of welfare policy and how it interacts with the tax system, with an objective being to reduce high effective marginal tax rates." - again not implemented to my knowledge.

Most importantly the changes made by National did nothing to broaden the tax base, as the recommendations explain, "Base-broadening is required to address some of the existing biases in the tax system and to improve its efficiency and sustainability." 

 

by Chris Morris on September 03, 2017
Chris Morris

Actually Katherine, raising GST and changing the personal tax threshholds (effectively lowering  tax rates) were specifically identified in the report to broaden the tax base. They also wanted the tax rate lowered to 27% so implementation of the report is unlikely to happen under a Labour government.

by Ian MacKay on September 03, 2017
Ian MacKay

Thank you Katherine. You cut right to the chase on our behalf. Puts context on what Jacinda has been saying for ages.

by Ross on September 03, 2017
Ross

On a related note, Tim, a working group has been set up to look into water allocation and, presumably, the possible taxing of it. Its chairman is former Labour Cabinet Minister David Caygill.

http://www.mfe.govt.nz/fresh-water/reform-programme/water-allocation-wor...

In November 2017 it is due to make its recommendations to the government of the day. If National remains in government, there could well be changes to the allocation of water and the imposition of some sort of water tax. I must confess I haven't seen or heard the media devote any space to this issue. They've been somewhat pre-occupied with a possible CGT. 

So, setting up a working group to look into how water is allocated and the possible imposition of a water tax is hunky dory. The setting up of a working group to look into a capital gains tax = a terrible idea. 

 

by Ross on September 03, 2017
Ross

setting up a working group to look into how water is allocated and the possible imposition of a water tax is hunky dory. The setting up of a working group to look into a capital gains tax = a terrible idea

Of course, it follows that National is being somewhat hypocritical (not to mention, disingenuous) when it criticises Labour over the latter's decision to set up a working group to look at a CGT. If the working group that National set up to look at water allocation recommends that a water tax should be imposed on those who use large quantities of fresh water for commercial use, will National implement such advice? 

by Katharine Moody on September 03, 2017
Katharine Moody

@Chris. My understanding is that the alignment of the top tax rate to that of the trust rate had nothing to do with "broadening" the tax base, but rather was a means of closing the loophole/clarifying the law on tax avoidance via use of trusts - like this case:

The Supreme Court has sided with the tax department in its judgment on a landmark tax avoidance case involving two Christchurch surgeons who used company structures and family trusts to artificially lower their salaries to avoid the top personal income tax rate.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10747155

And regarding the 'tax switch', this is the sumary of the recommendation (emphasis mine):

The top personal tax rates of 38% and 33% should be reduced as part of an alignment strategy and to better position the tax system for growth. Where possible, the Group would like to see a reduction in personal tax rates across-the-board to ensure lower rates of tax on labour more generally. This could be achieved as part of a package to compensate for any increase in GST.

Tax rates were significantly lowered in the two top income tax brackets, and much lesser to the lower brackets, and thus the compensation for the GST increase to those lower income families was by way of additonal tax transfers;

The main feature of the 2010 Budget was a tax package that lowered income taxes, reduced the company tax rate to 28%, and raised GST to 15%. There were increases to Superannuation, Working for Families and Benefits to compensate for the GST increase. 

https://en.wikipedia.org/wiki/2010_New_Zealand_budget

None of that broadened the tax base - as no capital or wealth taxes were introduced at that time. National has since, put in the 2 year 'bright line' capital gains test and have again increased the level of transfers, but (to my mind) again just patches which avoid the real need for a more broad based system of taxation.

by Chris Morris on September 03, 2017
Chris Morris

They put GST up to 15% to broaden the tax base as the working group recommended.

by Ross on September 04, 2017
Ross

Chris

I dont think increasing a tax can be described as broadening the base. If the govt were to raise your rate of personal tax would you applaud it for broadening the base? Probably not because it would simply be raising revenue from an existing source.

by Tim Watkin on September 06, 2017
Tim Watkin

Kat et al, I was really interested in your idea of reconstituting the 2009 TWG and thought it would be a clever move by Labour... until I checked the membership. It was 13 rich, middle-aged men.

Labour won't go for that sort of line-up. 

Several have well-known political alignments more suitable to a National government and, as Andrew has said, it would be difficult to get any to commit on the eve of an election, risking their reputations and, in some cases, giving political solace to a party they don't support.

So nice idea, can't see it working.

by Katharine Moody on September 07, 2017
Katharine Moody

Thanks, Tim.  Oh heck. Never checked the membership. Having read it it seemed reasonable expert opinion. Never really considered the potential political alignment of the experts. Sad that the work of many of these expert commissioned reports gets 'stacked' in that sort of way, given I assume it was taxpayer funded. That sort of obvious tactic does make the general population very wary of 'experts'. Does no one any good in the long run.

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