Labour has been handed a campaign roadmap by Joyce's election year Budget; Alex Tarrant on the political fallout from the Greens and NZF supporting the 'families package'; And is there a gap there for National's coalition buddies?

Labour has been handed a campaign roadmap by Joyce's election year Budget; Alex Tarrant on the political fallout from the Greens and NZF supporting the 'families package'; And is there a gap there for National's coalition buddies?

By Alex Tarrant

How can Labour respond?

That’s the key question being thrown around political circles following Steven Joyce’s first Budget as Finance Minister.

Did Joyce’s move to cut tax bills and raise Working for Families (WFF) and Accommodation Supplement payments take the wind out of Labour’s sails?

Does Green Party and New Zealand First support in Parliament for Joyce’s ‘families package’ indicate a split on the left? What happened to that memorandum of understanding?

Steven Joyce’s first Budget as Finance Minister was largely predictable.

A fiscally conservative Budget letting New Zealanders “keep more of their own money,” as National’s Finance & Expenditure Committee chair Chris Bishop put it during the third reading for the WFF/tax change Bill on Friday.

Of course, National was attacked for not doing enough on health, education and housing. That’s par for the course.

The per capita and inflation adjusted figures showing how much funding will fall for core spending over next four years were staggering. It didn’t make a shot of difference last election though.

The tax bracket increases drew the most vehement response from Labour. Yes, lower income people got something – a family on $24,000 or less gained as little as $5 a week from the families package, but one on $127,000-plus will get $33, with five-sevenths of that stemming from the tax changes.

Joyce, English & co. were shackled from doing much different by their self-defined fiscal conservatism.

If they had only made changes to WFF and not introduced tax changes (something Labour says it would have backed), they could not have argued along the ideological lines that people should be able to spend more of their own money, and that the government should be redistributing less.

And that’s where the door might be slightly ajar for Labour as the general election campaign approaches.

Just as Labour’s response to National’s housing policy is ‘we’ll build more than you’, the clearest response to this Budget’s centre-piece is looking like, ‘we’ve got a bigger families package than you’.

In Parliamentary debate on Friday, deputy leader Jacinda Ardern offered up a hint of where the Party is set to head (or should head).

It won’t come as a surprise.

Labour said they supported Joyce’s changes to Working for Families. But because these were tied up in the same Bill as the tax bracket increases, Labour just couldn’t vote for them, apparently.

They introduced an ‘SOP’ or suggested amendment, that the WFF and tax changes should be separated out into different Bills to be voted on respectively.

The Greens supported that proposal, but with a shot of realism acknowledged the National-led government was not going to budge.

So, the Greens supported the whole families package Bill. Along with New Zealand First.

As Greens co-leader James Shaw put it, the Bill is not perfect, due to the tax changes, “but it does do something just a little for people who need it.”

You should take what you can get, even if it’s not perfect.

Labour was left on its own in Parliament opposing the Bill. That doesn’t happen often.

Were the Greens trying to show they could distance themselves from Labour if they wanted? Were they sidling up to New Zealand First with one eye on Peters’ likely veto over Labour-Green-NZF Cabinet appointments?

My understanding there was no collusion between the Greens and NZF. Shaw and Turei made the first move, on the floor of the House Thursday. New Zealand First then did the same, based on its own take on the Bill. Both are opposed to the rest of the Budget.

Despite the apparent split, speeches in Parliament Friday by Green and NZ First MPs did indicate how they could come to an agreement with Labour post-election on a larger families package.

Both were open to raising the abatement threshold for WFF from $36,000 to $55,000. Although in a first for this correspondent, a New Zealand First MP said the party would first like to see the proposal costed (!) before they gave full support.

So what could this package look like?

We already have the bare bones.

Labour welcomed Joyce’s Working for Families changes, particularly moves on payments for 16 and 17 year olds. Ardern congratulated National for taking on one of three recommendations from the Children’s Commissioner on the issue.

But that left two recommendations not taken on by the Government, she noted, using the opportunity to talk up Labour’s Best Start package.

It seems Best Start will be the backbone for Labour’s response to this part of the Budget.

When it lost the 2014 election, Labour put all policies under review. Only a handful have been re-announced to date (or new policies announced). Best Start isn’t one of them. Yet.

But you can bet that Labour is head-down figuring out how to boost the policy further. A Better Best Start policy. One that will target the lowest income earners and beneficiaries as well as families.

We know Labour isn’t going to move on the income tax side. Its opposition to National’s package includes that raising the tax brackets to the extent they were gives more to the rich than it does the poor, and is poorly targeted.

Those are some meaty surpluses in the Treasury forecasts for coming years. Grant Robertson should be able to argue some of that money should go towards helping the most in need, without changes inadvertently helping the least in need.

James Shaw was also not a fan of the tax changes – regressive rather than progressive, as he put it. While the Greens supported the Bill, there was only one way for proper moves that would target the least-well off in society, he said.

“Change the government.”

And if the Greens have enough power, there will be welfare, income and taxation changes “from day one.”

Of course, the gap that the Budget leaves open for Labour is also there for National to shift into later if its polling shows it needs a boost during the election campaign.

Perhaps more importantly, it leaves space for National to be ‘encouraged’ into that space post-election by a potential coalition partner – the Maori Party and United Future come to mind.

So does New Zealand First.


Watch Alex Tarrant discuss the Budget, and Labour's possible reaction to it, on Three's The Nation on Saturday 27 May here.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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WFF is such bad policy, it is going to become a headache as it becomes more and more costly as all political parties use it as a vote catcher.
for the money gathered in then redistributed once administration costs are extracted what does it achieve and is there a simpler more cost effective method.
I prefer the first X amount of your income tax free,

I would rather see the major method of offering families assistance to be income splitting for taxation purposes. I think we all need to consider and accept that greater society assisting people bringing up their children is a good thing. The one I think is insidious is welfare for landlords in the form of accommodation top ups.

yes so you could have a tax code F for family under 18, first 20 K (example) tax free.
easier on companies especially small ones collecting the paye and making payments to the IRD

Anything that works and is easy and that sounds like it could be, and such as this should not be seen anywhere near election year budgets, as probably shouldn't addressing fiscal drag.

Either alternate (in fact probably any alternative) would be better than WFF and in work tax credits, further supplemented by the Accommodation Supplement!!!

This National government has zilch vision - aside from manufacturing the consent of the electorate to give them another term in power. Point is - it will be patently obvious to them that they have no new ideas; no idea how to turn productivity around; no plan for GDP growth aside from rampant immigration.

That they seek another term with all the same people; no new policy and corrections being the only budget that is keeping pace with inflation/population growth is tantamount to treason to my mind.

When folks like Kerry McDonald speaks with such vehement disdain with this budget and their overall performance as he did on Q+A this morning, their core supporters of the last nine years need to think hard - very hard;

https://www.tvnz.co.nz/shows/q-and-a/clips/extras/steven-joyce-panel

BTW - what does Kerry McDonald think is needed - in a later segment on that same programme he said, 'everything that Winston Peters talks about in his Beachlands speech' - and here it is;

http://www.nzfirst.org.nz/speech_budget_day_deception_day

when you have people of kerrys caliber speaking out about low skilled immigration, and the focus on Auckland away from the productive export sector its time to take notice that we need a change of direction.

Drain the swamp

We need much more than a change in direction
we need an agent of change
a catalyst who has the courage to drain the swamp

Personally I think that is even more messy, and in some cases, do you seriously want your employers to know about your kids or family situation? For women in particular, hiding any fragment of their parental responsibilities is a burden they're already tasked with facing. Although that's not supposed to be the case, it still happens and the frankly, for the most part it's none of their business.

That is a pretty dystopian view of things, don't you think, in that case though, income would not be considered split till the end of the year when you and your partner added your income together so it could then be split equally and quite likely taxed on a lower rate. Particularly helpful if you have a "stay at home" carer for the kids, although like general home ownership, something that has nearly been consigned to history.

I think there is room for Labour / Greens to offer a different tax package , without breaking the Labour pledge to not raise taxes. Doubt they will lessen the WFF increases. They could play with the tax brackets , skewing them more to the lower income taxpayers.
They could offer a $5000 tax free bracket , effectively giving everyone a $ 10 a week increase. then keep Nationals lifting of the next bracket to $ 22000, ( or perhaps increase it to 26K ($ 500 a week). Perhaps reduce the next brackets increase from $ 52000 to $ 50000.
Of course this needs to be paid for , leave the next bracket as it is , and reduce the top bracket from $ 70 k , down to whatever is necessary to cancel out the lower brackets increase. Say to 68k for e.g. So everyone but the top bracket get a tax break. the top get no increase , but get no tax break either.

We actually need to move away from Working For Families and onto a system where you get rebates for each child.

This nonsense of taking the money away and then giving it back through WFF if just an administrative nightmare and its not right on any level .

Far simpler to have tax tables for M , M +1 for one child , M+2 for two and so on .......

This would be simpler and cheaper to administer , and would eliminate the complexity .

It would also avoid this nonsense where the Government takes money you have worked for, and then gives your own money back to you to enable you to feed the kids .

Its communist -style social engineering at its worst .

This makes sense to me.

At the risk of opening the proverbial can, I'd modify this tax table so that the maximum is M+2. Something about finite world and the issues of exponential growth...

My guess is that come election time the results will be about the same as they have been for the last 3 elections. I can't see a way for Labour to form a government. They are trying a National-lite approach and National is trying a Labour-lite approach. In the end the centre vote, which the Labour purists have effectively purged from the party, is key to wining the election (obviously!). Labour just comes across as inauthentic when discussing mums and dads issues.

Laubour just lost any chance of being in power by Little saying latest budget tax cuts could be reversed !
What more information do voters need

When and where did he say that?

News media last 36 hours

Oh dear, I hope we are not getting into fake news. If you mean by saying the would release their own fiscal policy , that is drawing a long straw. But you could say that opens the possibility of reversing the tax cuts. Best to wait and see what they come up with .

It doesn't look like the main contenders will be presenting us with any new or innovative policies to consider this election. That's hardly surprising. And that means I'm about ready to vote for any party that will abolish the working for families benefit and the accommodation supplement benefit, both of which are distortionary folly we cannot afford and do not need.

You obviously don't have kids. My wife and I fell into an income range that meant, with both of us working we had to pay child care for 2 kids, and I calculated it basically meant she was working fulltime for $ 20 - 40 extra a week. It was only by virtue of one child turning 3 , and getting 20 hours free care,( and dropping her hours to suit), that it became viable for us to both work. I think this is the income bracket that Labour and the greens want to extend the WFF for. With Nationals dropping of the threshold , and increasing the retribution rate , anyone in the $50- 100 k combined income bracket will probably find themselves in a similar situation to what we were in. These are the ones they are talking about been $ 3 a week worse off , but they are not taking into account childcare costs.