Analysis: Grant Robertson decried the tax system in his final speech to Parliament this week – but his party did little about it when it had the chance, writes Q+A presenter Jack Tame.
“New Zealand’s tax system is unfair.”
Former Finance Minister Grant Robertson did not fudge his words in his parliamentary valedictory speech this week.
In a typically funny and well-crafted address, he left the debating chamber with a message that most, if not all, his Labour colleagues surely agree with: New Zealand needs a wealth tax or a broader capital gains tax. As it stands, our tax system exacerbates inequality.
If only they’d been in government for six years.
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An argument forwarded by former Prime Minister Jacinda Ardern and repeated by Robertson in his valedictory speech is that any tax changes needed to be enduring. There would be no point in charging ahead with reforms if they were unlikely to survive a change in government.
However, such concerns did not stop Labour from pursuing Three Waters, RMA reforms, the restructure of Te Pūkenga, the Māori Health Authority, and Auckland Light Rail.
The most galling thing for those who support tax reform is not that Labour didn’t do it, it’s that the party didn’t even really try.
Labour's missed opportunity
Despite her incredible communicative talents, Ardern chose not to use her early honeymoon period in office to make the case for a broader capital gains tax (even though she supported one in Opposition).
Her coalition partner at the time, Winston Peters, arguably defied the Cabinet manual to bray publicly about having killed the policy. Labour did nothing to respond.
And after winning a historic majority in 2020, Labour opted to try and hold on to whatever voters it had won over from National.
Despite then-Revenue Minister David Parker’s well-publicised efforts to introduce a wealth tax policy, new Labour leader and Prime Minister Chris Hipkins nixed it in favour of a few cents off peas and onions, a policy even more clunky and administratively unweildly than it was uninspiring.
Labour was then turfed from office and the moment was gone.
It's easy to be bold in Opposition
All that being said, it would be disingenuous to suggest that in government, Labour did nothing to address the unequal tax system as Robertson sees it.
The removal of interest deductibility and the extension of the brightline test were perhaps more impactful than many appreciated in cooling some of the incentives to invest in residential housing.
Those policies have not survived the change in government, but even as they are undone, the coalition is forced to justify doing so.
It cannot be lost on many voters that at the same time as they are cutting disability services, threatening free school lunches, and low-balling police in a pay dispute, landlords will be getting $2.9 billion through interest deductibility.
Hipkins says all policy options are on the table for Labour for the 2026 election.
The irony of a wealth tax – which many Labour MPs apparently now support – is that Labour might not have felt one was necessary if a broader capital gains tax had been in place, earlier.
It’s easy to be bold now, but the party’s leadership had their chance. And even though they might still lament unfairness in the tax system, ultimately they valued political capital over sticking to their convictions.
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