No amount of political acrobatics could save Grant Robertson when he fronted the parliamentary press gallery to explain a thinly disguised U-turn on tax just days before a General Election.
I’ve seen Robertson speak on more than a few occasions; on good form, he’s magnetic — blessed with a pointed intelligence, conviviality and verbal dexterity that recalls some of New Zealand’s best politicians. He’s been called arrogant before, but to invert one of Churchill’s most pointed put-downs, if he is an arrogant man, he has plenty to be arrogant about.
Unfortunately for him, no amount of political acumen could disguise a U-turn of this scale and at this stage of the campaign. On the evidence of one poll (combined with whatever Labour’s internal polls were showing), he had decided that the John Key-style ‘less detail means more votes’ politics he and Jacinda Ardern had been playing on tax was not going to wash with the electorate. We will now get to vote on changes in tax rates, but not until 2020.
The fallout could be greater than Labour anticipates — and I’m not just talking about this election. If Labour is lucky enough to win this time around, Robertson’s mistake will make campaigning on tax increases a tall order in Labour’s second term.
You’ll hear him called a fool for backing down or not stating plainly Labour’s tax increases and let’s be clear (to borrow Labour’s phrase du jour) they were going to be increases. We’re told that plainly campaigning on tax increases before an election is not only possible, it’s been done before — and recently. Why didn’t Labour just bite the bullet and come out with it this time?
Labour’s 1999 victory was a masterclass in campaigning on a left wing, high tax platform.
The example most frequently brought out for campaigning on tax increases is Helen Clark, who publicised her tax policy before the 1999 election (they had actually been labour policy since 1994). Clark even managed to defend her tax hikes in the 2005 election under heavy fire from a resurgent National.
Useful as they are these examples miss a crucial point: 1999 and 2005 were not tax increase or tax cut campaigns. In both campaigns, Labour managed to shift the narrative to services rather than cuts. Tax simply became the means by which the service was paid for. In 1999, tax increases became service increases; in 2005, the reverse was true: tax cuts became service cuts.
Labour’s 1999 victory was a masterclass in campaigning on a left wing, high tax platform. The pledges, made on Helen Clark’s now infamous pledge cards were: to create more jobs, to cut the cost of tertiary education, to cut waiting times for surgery, to reverse cuts in superannuation, to restore income-related rents for state housing tenants, to crack down on burglary and youth crime and, finally, no increases in tax for 95 per cent of the population and a top tax rate increase from 33 per cent to 39 per cent. The implication is obvious: the final pledge pays for the others.
Clark understood the discontent in the electorate at poorly performing state services, particularly in health and education. She also knew that voters know a rat when they see one and increasing funding without increasing taxes frightens the electorate — particularly when it comes from a left-wing party which is so easily and readily besmirched with the charge of well-intentioned profligacy.
Of equal interest is the 2005 campaign, not least because both Robertson and Ardern were involved in it — Robertson in particular worked at the highest level, earning the nickname ‘H3’ (referring to the order of precedence behind Clark, H1 and her Chief of Staff, Heather Simpson, H2).
In 2005, National knew that to beat Labour on tax, it would have to both break voters’ association of tax cuts with service cuts by convincing voters that the country could afford to lower taxes.
First, National had to convince voters that the government was well-funded and wasteful. Helen Clark quickly became the ‘Prime Money Waster’ and Michael Cullen ‘The Wastemaster General’, both fecklessly bestowing buckets of taxpayer money on pointless vanity projects like ill-advised hip-hop tours.
In August 2005, When National’s tax package was finally released, media were fed lines about tax relief instead of tax cuts. The message was clear: Clark and Cullen were wasting people’s money and by trimming that wastefulness, National could pay for handsome tax cuts for all.
The strategy didn’t work, but it took National to within a hair’s breadth of winning, elevating the party to a level of popularity that it has only recently begun to descend below.
There’s only so long a party can harness the mood for change — a lesson Ardern and Robertson are now surely aware of.
Given their experience, one can only guess why Ardern and Robertson haven’t run a campaign based on services. Perhaps they find the political ground so fundamentally shifted by Key’s detail-lite politics that they gambled they might get away with his tax working group game from this government’s first term. This has now been shown to be a colossal error. Tax cuts — or ‘switches’, I should say — that no one voted on are one thing, tax increases are something else.
Ardern and Robertson also overestimated Key’s popularity when he left office, and by extension the style of politics he bequeathed to the country. Research done by UMR, Labour’s own polling firm, in September 2016 showed the words most associated with Key were: Arrogant, smarmy, liar, untrustworthy, and smug. In April 2011, the same survey returned: Charismatic, honest, personable, intelligent, leader.
There is a wellspring of discontent with National’s inaction on housing, water quality, poverty, and services and an equal disbelief that the ‘she’ll be right’ government English inherited from Key is able to deliver the change that is needed. The mood for change is palpable. As in 1999, there is a sense that there are problems in the country and the state that need to be fixed, people just want to know how much it will cost. We’re happy to stump up for well funded services, but no one will sign their name to a blank cheque.
If Labour does win this election, it will need to find a way to campaign on its tax cuts in 2020. Party strategists will face an impossible choice. They can’t campaign on tax increases for their own sake, but nor can they harness the mood for change and discontent at poorly run state services, having by then run them for three years. There’s only so long a party can harness the mood for change — a lesson Ardern and Robertson are now surely aware of.
