Thursday, April 18, 2019

The cost of cowardice

How big a mistake was Jacinda Ardern's cowardly act of rejecting fairer taxes, not just now but for the rest of her political career? Not only has it poisoned her own base against her and created a strong incentive to end that career, it also fatally undermines the other policies she pretends to care about:

Consider the Prime Minister's pledge to halve child poverty within a decade, possibly the political priority closest to her heart. It is very difficult to see how that can be achieved without the $3.4 billion a year that the capital gains tax was, according to the most recent estimate, going to raise.

Lifting tens of thousands of children out of poverty will take money, and lots of it. And the government can't just rely on the economy delivering solid growth. A decent amount of that growth will go to middle-income earners - but meeting (at least one of) the child poverty targets requires lifting the incomes of poor families relative to those in the middle. In other words, it requires a redistribution, a shifting-around, of the proceeds of growth, not just growth itself.


Many of the government's other priorities - building more state homes, eliminating introduced predators, and repairing mental health services, among others - also require significant funds, again well above what will be generated under existing tax settings. Some of the government's goals can be achieved by regulation and putting costs onto businesses, but not many.

Effective policy costs money, and this government has just robbed itself of that vital tool. Remember this next time they plead "poverty" as an excuse for not doing something: they chose to be poor. They chose to be a government which could not afford things. They chose to not be able to do the things they promised. Or, to put it another way, they chose to be shit. And we should hold them accountable for that choice.