Selling fairness, owning the future: inside Labour’s push for power

Labour’s political big wigs gathered together yesterday to fire the first election salvo and spell out the party’s intention to impose a capital gains tax if it wins power in November. And the campaign, which is being led by Image Centre Group and String Theory, hopes to persuade Kiwis to vote for the reds by playing on the ideas of fairness and ownership of the future

Image Centre Group’s Mike Hutcheson, as per usual, conjures up an analogy to describe the behind-the scenes arrangement: Jeremy Taine is the composer, Dr Jane Cherrington is the conductor, Image Centre’s digital department &Some and its printing arm Image Print are the musicians, and ex-BCG2 Health chief Sarah Norrie, who is working for Image Centre as the major link back to the Labour team, is chief usher and front-of-house.

Anyone who knows Hutcheson, who proudly claims to be right of Atilla the Hun, will know he’s not the first person you’d expect to be helping devise Labour’s strategy and sell the idea of a capital gains tax. But he and the Image Centre team were also behind Len Brown’s successful campaign for the Auckland mayoralty. The masterstroke was putting him on TV after his on-stage head-smacking implosion and somehow making him seem normal and trustworthy again in the eyes of the voters, while Banks was too late getting his mug on the telly, which seemed to make him appear even more arrogant and distant.

In a way, this election battle between Labour and National bears some similarities to the Auckland mayoral race, with the Labour team fairly and squarely in the underdog camp and facing off against a similarly confident foe: the country’s first celebrity prime minister.

There’s no doubt bringing in a capital gains tax is a bold, risky strategy that will be sure to roil many and, as you’d expect, John ‘The Mobile Smile’ Key and others including PwC chairman John Shewan have already rubbished the policy (the surprisingly good economic figures released yesterday didn’t help Labour’s case).

The pundits are, as expected, lining up on both sides of the debate (although Gareth Morgan and many others are fans), but what really matters is the public perception, and it’s been received much more favourably than anticipated, with the polls showing there’s a definite preference for a capital gains tax rather than the sale of assets among the public.

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Of course, for most voters tax is boring. And confusing. So, taking a leaf out of Steven Johnson’s book, the team, with the assistance of Toybox and String Theory producer Nick Barnes, ventured down the animated path and filmed finance minister David Cunliffe explaining the concept and why it makes fiscal sense, the pitfalls of selling state assets and why not having the tax in place makes New Zealand an anomaly (Switzerland and Turkey are the only other developed nations that don’t have it).

There’s no doubt it will be an interesting few months in the persuasive political arts, as it is every three years. And Labour’s got off to a fairly good start.

Here’s the official Labour release:

Labour has today revealed a bold plan to stop our valuable assets being flogged off overseas, give hard-working Kiwis a tax break, pay off the country’s ballooning debt and grow our economy.

“New Zealand is drifting without a plan. Debt is out of control. The economy is not performing. Record numbers of New Zealanders are leaving permanently.

“We are fighting for the future of our country. It’s that simple. It’s time to show courage and take action,” said Phil Goff.

“Labour’s plan charts a course for a stronger, more resilient economy and will allow us to keep our valuable assets for the benefit of future generations. We will make the hard decisions needed to secure a prosperous, long-term future for all New Zealanders.

“Our policies will result in investment shifting from speculation on property to the productive sector. This will lead to more jobs with better pay, give the economy a much-needed boost so that we can pay our way in the world and make it easier for more Kiwis to buy their first homes.

“We need to build an economy that has the capacity to create safety nets to pay for future shocks, like the devastating Canterbury earthquakes.

“These changes won’t be easy and some people won’t like them. But it’s the right thing to do,” said Phil Goff.

Labour’s policy includes the introduction of a Capital Gains Tax, which is already in use in nearly all developed countries, including Australia, the United Kingdom and United States.

“It’s not fair for people to have to pay tax on every dollar they earn from wages or interest on their money in the bank while others are making huge profits buying and selling assets without paying any tax,” said Phil Goff.

“This tax switch is about creating a fairer tax system. In fact, under Labour, the overwhelming majority of Kiwis will end up paying less tax not more.”

The key points of the proposed capital gains tax are that:

  • Most New Zealanders will not pay the tax.
  • It will not apply to the family home.
  • Those who do pay it will still get to keep 85% of any gain they make because the tax rate will be set at a flat 15%.
  • It’s predicted the tax will raise $26 billion over 15 years that can be used to pay off debt, cut taxes for most New Zealanders, save our assets and prepare for the mounting cost of our aging population.
  • Real estate in the Canterbury CERA zone will be exempt for at least five years to give earthquake-affected residents some relief.
  • Labour will also put the top tax rate back up to 39 cents for income earned over $150,000. That’s likely to affect around 2% of the country’s top earners.

“This is about everyone paying their fair share – nothing more, nothing less. We won’t be borrowing billions of dollars to give tax cuts to the wealthy like the National Party is. Instead, we will be asking those earning the most to pay just a little more, to help meet costs like the Canterbury earthquakes.

“We know that many middle and low-income Kiwis are finding it hard to make ends meet. We’ll ease their burden, by making the first $5000 they earn tax free. That’s $500 extra a year in the pocket of every New Zealander.

“We’ll also take all GST off fresh fruit and vegetables so families can afford healthy food.

“Labour has a plan. National doesn’t. Its only idea is to sell our assets off to big corporates and foreign buyers. That is incredibly short-sighted and will see New Zealanders become tenants in their own land. For goodness sake, if you’re in a hole, why would you sell off the ladder?!

“New Zealanders have said loud and clear that our assets should not be put on the block. We need to own our own future, to hold it and safeguard it for future generations. Putting our heritage up for auction is not the solution.

“For nearly three years, National has been content to tinker with the economy when bold action is needed. They’ve had their chance. They’ve failed.

“The time for tinkering is over. Labour has a plan and the courage to make it work so that New Zealand can become a better place to live for all Kiwis.”

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