Steven Joyce: It's a backdown

The Labour Party has reversed one of new leader Jacinda Ardern's first 'captain's calls', saying it will implement no tax reforms recommended by a working group before the 2020 election.

Announced by the party's finance spokesman, Grant Robertson, the move returns Labour to its position under the previous leader, Andrew Little.

The tax working group policy was always intended as a way to neutralise the political attacks that cost Labour votes in both the 2011 and 2014 elections when it campaigned explicitly on implementing a capital gains tax. Despite excluding the family home, the CGT issue played poorly with the electorate.

Labour scrapped the policy under Little, replacing it with the tax working group policy and a promise to take its recommendations to the electorate.

Ardern announced a change to that policy in an interview on August 22 with the New Zealand Herald, saying: "It is different leadership, different decisions. Andrew [Little] made a call that he would go back to the electorate. I made a call that if I was in government and presented with a tax working group paper that suggested these are the things you need to do to be able to tackle the housing crisis and inequality in your tax system, to then sit on that for one, maybe two years without doing anything didn't feel right to me."

The combination of attacks on Labour's tax agenda and over-reaching claims by the National Party of a large fiscal "hole" in Labour's budget plans are judged to have blunted the momentum that has seen Labour recover from a low point of 24% in the most-watched public opinion poll, by Colmar Brunton for One News, to a high point of 43% in a poll taken between Sept. 2 and 6.

Another Colmar Brunton poll is due tonight, but a poll taken last week for rival TV3's Newshub service by Reid Research, showed a reversal, with Labour trailing National by 9.5%age points on 37.8% support. While private polling undertaken by both the major parties is said not to show anything like as dramatic a shift as the Newshub poll, Labour insiders have been acknowledging the party's upward momentum stalled around a week ago.

Since then, Labour has ramped up its accusations of "lies" and "scaremongering" by the National Party, which released a new attack ad this week playing on Labour's campaign slogan, "let's do this", saying "let's tax this".

Joyce: It’s a backdown

Mr Robertson insists his party is still focusing on New Zealand’s housing crisis, despite its decision to push back further tax measures.

Responding to questions from media he reiterated several times Labour’s desire to get the right balance between certainty, and urgency.

“We cannot sit around and let the housing crisis get worse and worse as National has done over the past nine years.”

But Finance Minister Steven Joyce says Labour’s move “undermines its whole housing policy” as well as the party’s tax policy.

“Apparently this was an urgent tax change that needed to be done and they weren’t going to wait around. Now suddenly they can wait around for it, which I think puts a bit of a lie to their whole tax and housing policy.”

Mr Robertson denied Labour’s move was a backdown but Mr Joyce rejects his denial.

“If it looks like a backdown, it walks like a backdown and there is that backdown beating noise, then I think we can safely assume it is a backdown,” Mr Joyce told NBR.

Labour has proposed a 10c a litre regional fuel tax in Auckland to help fund transport infrastructure, an international tourist levy, a royalty on bottled water and a levy on commercial water use aimed mainly at irrigators, and to include 10% of agricultural greenhouse gas emissions in the emissions trading scheme by 2020 as a first step in gradually bringing agriculture into the ETS.

It will also shift the so-called 'bright-line' test that requires capital gains tax to be paid on the sale of residential properties sold by non-owner occupiers within two years of purchase to a five-year threshold and "will end negative gearing" allowing property investors to offset mortgage repayments on an investment property against other income.

Mr Robertson and Mr Wood reiterated that "Labour will not make any changes to personal income tax, corporate tax rates or GST" other than reversing the income tax cuts legislated to come into effect next April.

‘Urgency and certainty’

Speaking to party faithful today in Greymouth, Ms Ardern echoed Mr Joyce’s comments regarding urgency but conceded that she “accepts that New Zealanders want certainty.”  

“We will not have any law enacted until the people of New Zealand in 2020 have a chance to vote. That is me balancing the need for urgency with that certainty that I know New Zealanders want too.”

She says she “absolutely stands by the fact that this election we have an urgent set of issues to tackle.”

ACT leader David Seymour lashed out saying such a big policy back down nine days out from an election is “astounding.”

“Today’s performance isn’t just incompetent, it’s dishonest. The backdown is a smokescreen – Mr Robertson wants the headlines to read ‘no new taxes’ when Labour’s policy is still to bleed New Zealanders dry with a water tax, higher income tax, regional fuel tax, and more.”

RELATED VIDEO: Finance Minister Steven Joyce and Labour's finance spokesman Grant Robertson go head to head on money matters (Sep 8)