Politics

The Greens’ cunning plan

The Greens' welfare and tax plan challenges current political boundaries - and offers a return to taxing capital without a capital gains tax, Tim Murphy writes

It's a shame the Greens' big plan to simultaneously change the welfare, tax and ACC systems was shaded by a dispute between its launch event's putative MC and one of its MPs over a personal slight.

It's a shame the Labour Party leader, Greens' governing partner and Prime Minister Jacinda Ardern damned the plan with the faint, back-handed praise that it relied on 'heroic' revenue assumptions.

It's a shame the leader of the other coalition partner, New Zealand First, Winston Peters, dumped on the Greens' Poverty Action Plan with some convoluted quote from Sir Winston Churchill about standing in a bucket and trying to pull yourself up with the handle.

It's a shame National's finance spokesperson Paul Goldsmith didn't read the not-so-fine print in the policy and had to correct himself for condemning the plan for supposedly slapping taxes on anyone with a $1m house.

But there was no shame for the Greens in being the first party to offer a big, detailed and transformative policy in response to the economic tornado that is Covid-19. This is what political parties should be doing, 80 or so days out from a general election in the context of a major economic downturn.

A Guaranteed Minimum Income, big increases in benefits, raiding the ACC piggy bank? Tax madness (according to National) or the most coherent income support package seen from any political party (according to the Child Poverty Action Group)? 

The Greens have shown us a medium to longer-term response to the economic crisis that challenges current political limits. The details are in this Newsroom report.

How to fund a big increase in benefits for those not in full time work? How to lift funding for families and children and put right a longtime flaw in the complex Working for Families system? How to come up with money to support the ill, not just those injured by accidents, under our ACC scheme?

Faced with Ardern's pledge that there will be no Capital Gains Tax in her time as Prime Minister, following the collapse of Labour's proposal at the hand of Peters in this, first, term, the Greens have cunningly returned with a 'net asset tax' that would slap an impost on capital without being a CGT.  It would even include the value of equity in a family home valued at more than $1m for a single person or $2m for a couple. And, never ones to hold back, the Greens threw in a reference to taxing the value of assets like expensive art.

"A capital gains tax is still Green Party policy," co-leader Marama Davidson says, but, noting Ardern's personal stance on CGT, "we've come up with a new way to share the wealth, so everyone can live with dignity."

Faced with the coalition's limited progress in alleviating child poverty, the party would use the proceeds of that net asset tax ($7.9 billion in year one) to increase all base benefits to $325 a week, $435 for single parents, and force up child support payments to $190 for the first child and $120 for each child after that. The Greens would also change the abatement rate that Working for Family credits are abated when a household income rises.

And faced with an ACC system that pays income support for injuries but not time off work due to serious illness such as cancer and chemotherapy treatments, the Greens plan to create a new ACC, not an accident compensation corporation but an Agency for Comprehensive Care and, crucially, raid its multi-billion fund built up to cover future obligations.

These positions should all be interrogated hard in the lead-up to the election. Many will find an asset tax hard to swallow, struggle ideologically with the anathema of straight-out, no questions-asked welfare payments for the poor and raiding the rainy-day billions of ACC a high risk when we have just entered an economic deluge with no foreseeable end.

But the value in the Greens going early and going hard with such a sweeping policy is that the party has offered a response to the biggest crisis since the Great Depression that offers change beyond an orthodox, vast Government stimulus and infrastructure build.

The party will be betting New Zealanders shaken by the rapid and comprehensive threat to jobs, incomes and futures will be open to a new, collectivist and non-judgmental platform where Kiwis accept they need to pay more from any wealth they have above million and two million dollar limits to help their sisters and brothers. Is there a new normal in compassion and sharing the burden?

It will hope to get past Ardern's 'things we'll never see' doubts, show Kiwis the detail that Goldsmith missed that the asset tax would apply only above those dollar values (and exclude any mortgage debt in the million dollar calculation) and be rid of Peters and his handbrake and bucket so a red-green coalition might think boldly on these issues.

The Poverty Action Plan sets goals that Labour will find too far, too fast and too risky. But in building towards a coalition, the Greens will surely have factored that in. Leaders Davidson and James Shaw say it is too early for the plan to be seen as a bottom line for coalition talks. Instead they want sufficient party votes from this political declaration to give them room to prod Labour towards a welfare-tax-income support policy that might emulate the circuit-breaking First Labour Government of the 1930s.

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