Chris Trotter doubts Jacinda Ardern and Grant Robertson will be losing much sleep over their left-wing critics' anger that no Capital Gains Tax will be implemented

Chris Trotter doubts Jacinda Ardern and Grant Robertson will be losing much sleep over their left-wing critics' anger that no Capital Gains Tax will be implemented
Jacinda Ardern by Jacky Carpenter.

By Chris Trotter*

Has there been an “explosion of rage” in response to the Coalition Government’s decision to abandon the proposed Capital Gains Tax (CGT)? It depends on how you define “explosion”, I suppose. And “rage” for that matter.

Certainly, there have been a lot of angry tweets. On the left-wing blogs you will find a great many disappointed, even cynical, postings. Young Labour are not happy. But, “explosion of rage”? Nah. Not really.

Explosive rage is what the world has been watching unfold on the streets of Paris and other French cities since the end of 2018. “Yellow Vests” smashing up the face of “Marianne” on the Arc De Triomphe. Running battles with the riot police. Setting fire to the high-end stores along the Champs-Elysee. That, I think, qualifies as an “explosion of rage”. Tweeting and blogging – not so much.

Historically-speaking, mass protests are much more commonly associated with the imposition of a new tax, than with a government’s decision to spare its citizens from additional fiscal burdens. Margaret Thatcher’s “Poll Tax” drove the British working-class onto the streets in much the same way as Richard II’s Poll Tax had driven the English peasantry into open revolt in 1381. If Richard’s privy councillors had advised the common folk that after much thought they had decided against implementing the new taxes recommended by the nobles’ working-group, then I suspect the Peasants Revolt would never have happened!

The response of New Zealanders to new taxes offers even less hope to those with revolutionary aspirations. As a young trade unionist and Labour Party activist, I fought the good fight within the labour movement against the introduction of Roger Douglas’s Goods & Services Tax in 1985. To no avail. The Fourth Labour Government’s advertising campaign for GST – featuring, as I recall, bouncing babies and vacuum-cleaners – had the voters convinced that this new tax would be a very good thing indeed. Even in the Labour Party (a considerably more left-wing beast in the 1980s than it is today) only a third of the delegates to the 1985 annual conference were prepared to raise their voting cards in opposition.

It is possible that the Prime Minister, Jacinda Ardern, and her Finance Minister, Grant Robertson, could have generated a similar degree of enthusiasm for the CGT in 2019, had the decision about whether it should – or should not – be introduced rested with Labour, and Labour alone. Any half-way competent ad agency would have had a field day with the brief. Imagine what the creatives could have done with the idea of making the fat cats pay their fair share. The campaign would, almost certainly, have been an award-winner.

Except, of course, the decision on CGT was not Labour’s, and Labour’s alone, to make. Ardern leads a coalition government in which a party representing small business owners and farmers holds the casting vote.

Indeed, as an aside, it is interesting to reflect upon the near impossibility of anything like Roger Douglas’s revolution ever happening again in New Zealand. Turning this country’s fiscal regime on its head was possible only because the old First Past the Post voting system generally provided the winning party with sufficient parliamentary numbers to implement its policies without serious impediment. As no less a commentator than the former National Party finance minister, Ruth Richardson, warned the electorate in the run-up to the MMP referendum in 1992: the radical reforms of the 1980s and early-1990s would have been impossible under a system of proportional representation.

The absence of any commitment to implementing a CGT from the Labour-NZ First coalition agreement should have warned New Zealanders that the chances of such a tax making its way onto the statute books were negligible. Winston Peters had clearly warned Ardern and Robertson that his electoral base would not stand for such a radical restructuring of the way New Zealanders built their businesses – nor with the way they reaped their reward after years of unstinting effort.

That neither the PM, nor her finance minister, had the wit to straightforwardly acknowledge this impediment and remove the CGT from the table during the coalition negotiations –  thereby disappointing Labour and Green supporters at the earliest opportunity and in the least disruptive way – says much about their political inexperience and overall feel for the realities of government. Certainly, more accomplished politicians would not have pressed on with the CGT exercise in hopes that a right-wing populist party like NZ First could somehow be persuaded to commit electoral suicide.

It is, similarly, disconcerting to review the successive failures of Labour’s political leadership to quit when they were behind. The Tax Working Group Chair, Michael Cullen, warned his protege that the prospects for unanimity on the CGT were dim to non-existent: Robertson asked him to press on. The final (majority) report presented a CGT of such breadth and bite that it could not possibly survive politically without the most aggressive and creative campaign being waged in its favour. And yet, from the Labour and Green leadership there came hardly a word. Week after week went by during which the opponent’s of the CGT waged a vicious, unrelenting, and ultimately successful, war against its introduction.

Voters who might have been willing to accept a CGT that targeted property speculators and land-bankers were astonished to discover that their KiwiSaver nest-egg might fall within the Taxman’s reach. People working from home faced the prospect of accounting for CGT on the bedroom they had converted into an office. I would not be the first to speculate that Cullen may have deliberately concocted a tax of such punishing scope in order to save Ardern and Robertson from themselves. If so, then he succeeded admirably!

The contrast between the Labour leadership’s handling of the CGT and their handling of the TPPA could hardly be sharper. In the “explosion of rage” stakes, the 30,000-strong Auckland demonstration against the Trans-Pacific Partnership Agreement in February 2016 ranks highly. So angry was that protest that Labour contrived to position itself proudly alongside the agreement’s opponents. Within weeks of becoming the government, however, Labour and NZ First had deftly executed a u-turn on the free-trade deal. Did the angry opponent’s of the TPPA explode in rage? Did they heck-as-like! The Left generally acquiesced in the new government’s 180-degree policy shift like lambs. Why Ardern and Robertson did not do the same re: the CGT remains a mystery.

Still, if the “explosion of rage” against the Governments decision to be guided by the bleeding-bloody-obvious fact that the proposed CGT was never going to make it out of the House of Representatives, is confined to the ethereal realms of Twitter and the blogosphere, then I doubt if the PM and her finance minister will be losing too much sleep over their left-wing critics’ immaterial detonations.


*Chris Trotter has been writing and commenting professionally about New Zealand politics for more than 30 years. His work may be found at http://bowalleyroad.blogspot.com. He writes a fortnightly column for interest.co.nz.

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The weekend media revisionist campaign to pitch Ardern’s politically amateurish handling of the CGT process as somehow an honourable Dunkirk style retreat, has probably dissipated some of the leftie heat. A Herald article breathlessly republishing a 5 year old social media post by Ardern that had supposedly gone ‘viral’ and a soft focus story about Pink meeting Neve , from September last year, got peoples attention back onto the real news stories.

I think that is as good an article that I have read for quite some time. It is a quandary though when you consider FPP as opposed to MMP. For my part I voted for the latter because I remembered the excesses, power craze if you like,of Muldoon in the last half of his Prime Ministership. Now I am not so sure if the NZ electorate is of sufficient political size, shape and maturity to accommodate and produce effective proportional type governments. For a start adding unnecessarily, and completely contrary to the Royal Commission recommendations, another 30 or so MPs into the soup, did not improve either the calibre or performance in parliament. Quite the opposite I would suggest.

Totally agree. The conventional wisdom
Is that this was masterful political management from Ardern. Like you, I totally disagree with that narrative.
Ardern should have been able to garner support from both NZ First and the general public on a narrow CGT focussed on investment property. Winnie was not concerned with cgt on investment property, and neither would most of the general public, especially as it wouldn't apply to property bought before 2021.
Really poorly managed.
Without CGT revenue it will now be fascinating to see how the financially naive coalition deliver on their promises.

Do I detect, in several of CT's recent articles, the scales falling from the eyes, the wind dying and leaving the Red Sails slack and flapping, the hint that this sorry crew are in fact an Albatross around a Neck? Surely not, Chris! Whatever happened to Vive la révolution?

To answer, some way, your last question. I think it began some weeks ago in an article more or less criticising the current Labour lot for not being independent enough, and worse, too reliant on the old Labour lot that were voted out in 2009. In contrast the latter were virtually severed from the 1984’s which would have suited Mr Trotter quite well, one would think.

Well he is getting into his dotage, so no surprises there. We probably are all in line to lose a few marbles along the way.

Speak for yourself. I know exactly where my taws are (both of them.) Well, at least I think I do.

only those of us who have some in the fist place ..

Is that you, Donald?

Why would they lose any sleep?
They are politicians,the longer they stay in power the more arrogant they get.
However,lets not forget that she mentioned ''cornerstone policy'' on numerous occassions when refering to CGT,so maybe there is a hint of tossing and turning.

I know what you mean, they are still just as arrogant in opposition

Generally a despicable bunch. There's the odd exception. Very odd.

We had a referendum for a flag change, why not CGT. Give us 4 options (including no CGT) and let the public decide. Such a sham!

There were polls, the majority of people hated it so thats why it got dumped. Jacinda just stayed quiet through the whole process, saw it was a dog and binned it. It was an electron promise so they just went through the motions to keep the Labour voters happy. Reality is politicians don't care how they get elected they just want the power. Looks to me like the Labour voters have been suckered in from the start, we are now years into the Labour term and nothing has changed.

I think there needs to be some honest self acceptance from both parties. Labour needs to change its name to the Capital party and of course New Zealand First should change its name to The Property Speculators First party.

Another potential name for Labour could be 'National Lite'.

... Taxcinda had no choice but to dump the CGT proposal after Sir Mickeys cack-handed mess of a tax report ... he should have had the good sense to offer up a more acceptable plan ... but his version of a CGT was utterly repugnent ... no off-set against inflation ... pitched at 30 % of profits ... blame him , not Labour for this shambles ... $ 2 million wasted on the tax reform group !

There were some good things in there , an idea to levy water usage , and pollution ... but it all got smothered by the outcry over the insane CGT design ...

... Sir Michael ... were you serious , or just taking the mickey ?

Perhaps there was some smarts in Sir MC's over the top TWG report - saving Labour from themselves seems a reasonable point. But the way it was quickly passed over in the end suggests another agenda???
I think planning for 2020 has officially begun with the positioning of Labour as a centrist government probably one of their better options, especially with the Nats in Knots. Clarke did so & reigned supreme for 3 terms, as good as any Labour government that I can remember. The lefties have got their knickers in a twist as usual so nothing new there, but you know (& I'd never thought I'd say this) the mostly steady as you go CoL is showing signs of starting to take their leadership responsibilities seriously, albeit after some knee-jerk true-left politics in their first semester. Who knows from here? Anyone?

Yes the last Labour government were cunning and very politically savvey. However apart from the odd positive legacy (like Kiwisaver) they didn't do much at all for the overall good of the country. They started the property bubble with their immigration policy, lack of meaningful action on the RMA and insufficient social housing programme.

This excellent piece is a reminder that although 90%+ of it is dross, there's the occasional good journalist at The Herald:

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12224810

So what are you going to do Labour?

The Democrats in the USA ignored their grass roots members also. They lost most of them to Trump. Given Labours total failure on just about everything that they promised, NZ is ripe for the rise of a radical reactionary party. People are getting pretty sick of the endless political spin that changes nothing and the system that continues to line the pockets of the uber-wealthy. Who can blame them if we see some radical political lurch in future.