Tuesday, December 14, 2004

Points of difference

The government is announcing yet another upward revision of the budget surplus, and National and ACT are taking the opportunity to establish a point of difference by agitating for tax-cuts. I think the government should help them in this, by making it clear that this "windfall" will be reinvested in core social services such as health. This will establish a very clear point of difference going into the next election, with National and ACT standing for tax cuts for the rich, and Labour standing for decent services which benefit all New Zealanders.

The argument for tax cuts is that the government has money at the moment. The chief argument against is that it won't necessarily have it in the future. While the government is flush with cash as a result of the present economic climate, the good times won't last forever, and it must consider its revenue base in bad times as well as in good. If we want to avoid serious cuts to public services in the event of a recession, then we are better off preserving our revenue base and instead investing it in our public services. Otherwise, we are going to (once again) learn that today's tax-cut is tomorrow's run-down hospital.

There's a powerful argument for reinvestment in any case. For most of the 80's and 90's, public services were starved of funds, forced to do more with less as ideologically-driven governments slashed the tax base in an attempt to shrink public spending as a proportion of GDP. Unfortunately, such sustained reductions in funding didn't just trim away the fat - they cut deep into the flesh and bone of our health system, our schools, our universities, our roads. The current state of our hospitals, the length of our waiting lists, the deferred maintenance at our schools and Auckland's transport woes are all directly attributable to this period of deliberate starvation. It's a testament to the extent of the damage that the present government is still cleaning it up five years later.

The right's call for tax cuts allows Labour to present a clear choice between giving the rich more money, and giving everyone better health care. I know which one I'd choose.