Claire Trevett: The enemy PM Chris Hipkins has to avoid - confusion over Labour’s tax plans
Reminder, this is a Premium article and requires a subscription to read. News this week that the pace of inflation had slowed from Usain Bolt to Carl Lewis speeds prompted a collective sigh of relief in the Beehive. A year after the peak had been forecast to happen, had it actually happened? It wont have them breathing easy yet but it will give the Government space to end the fuel tax subsidies in June and hope that it will improve overall confidence and optimism in voters. By then the promised targeted cost-of-living relief will also have landed in the Budget. The question of who that will target will be critical. Nationals leader Christopher Luxon and finance spokeswoman Nicola Willis are already making sure those who have missed out on previous cost-of-living incentives are made aware they have missed out. Both are highlighting the working poor and middle New Zealanders who increasingly feel like the working poor: those who have not benefited from measures such as the inflation adjustment to benefits and Super. They also highlight that Nationals promised tax cuts will benefit those same groups. In that regard, when it comes to avoiding obstacles toward winning a next election, Prime Minister Chris Hipkins is eyeballing an enemy: confusion. On Thursday, Hipkins will deliver the first official pre-Budget speech. That will come one day after Revenue Minister David Parker delivers a report which looks at how much tax the wealthiest New Zealanders are paying. The timing of Hipkins speech is no coincidence. Many politicians have their hobby horses and Parkers is taxing the rich. As a result of Parkers previous utterances on this topic and the report itself, speculation has already begun that Labour is looking again at a broad capital gains tax or some other kind of wealth tax. Parker tries his utmost to suppress his Piketty-an urges but is often overcome by them and so says something that results in confusion, such as expressing a view of how great it would be to tax the rich more. And every time he does it, his leader ends up having to try to quell speculation of a secret plan to slap on a wealth tax. Once bitten, twice shy, so this time Hipkins has prepared for it. Hipkins speech the next day will not be to announce a capital gains or wealth tax. It will be to rule those out, beyond the existing brightline tests. That rule-out will apply for the Budget, at least. Labour is yet to finalise what if any tax changes it will take to the election to campaign on. Hipkins will need to make that clear before long, too. Confusion over tax policy is something that has bedevilled Labour before, sometimes to disastrous effect. National has been merciless in ensuring that. In 2017 National managed to stem new leader Jacinda Arderns rise in the polls partly by putting up questions around Labours tax intentions. It does not help that Labour has treated a capital gains tax as its dance partner in the hokey tokey. Over the years, the policy has been put in, then out, then in and then shaken all about. Ardern eventually got around to putting it out she ruled out a capital gains tax as long as she was PM (with a bit of help from NZ First). That promise left the building with her and so now Hipkins is set to face the same question as to whether it will be back in again. To that end, National is already running a tax calculator a misleading one based on non-existent taxes that Labour may or may not adopt. The primary intention of that is to sow confusion about what Labours plans are. So part of Hipkins job the day after Parkers speech will be to mop up any confusion that Parkers report and speech may sow. The other part of his speech will be to set out how Labour does intend to pay for the cyclone recovery without taxing the rich and without a cyclone levy. Robertson has already signalled a cyclone levy is off the table, and Hipkins is set to confirm that, while also setting out how it will be paid for that is likely to be a combo of debt and tapping into the allowances for new spending. Speculation Hipkins is looking at a wealth tax or broader capital gains tax does not take account of Hipkins political radar or his drive to win an election. Hipkins is in the process of shoring up political capital not squandering it. He has moved from the bonfire part of his strategy to the neutralise part. His announcements over the last week have been aimed at neutralising other potential problem areas in particular those highlighted by National, as it goes about releasing its own new policy. The last week has seen him announce the fast-tracking of renewable energy project consenting - something National has also pushed policy on. In a counter to Nationals attacks on school achievement levels and new policy to focus on the basics of reading, writing and maths, Hipkins set out plans to slow down changes to NCEA to instead focus on those basics of literacy and numeracy dovetailed with policy to reduce class sizes at primary school. His efforts to try to neutralise law and order also continued: more than doubling the funding for the ram-raids fund and measures to make court easier on victims. The one issue on which he has been willing to burn a little political capital was over his reset of Three Waters there was some compromise for councils concerned about their lack of influence and control - but Labour did not back down on the co-governance aspects of it. It is now slightly less unpopular than it was before. After the neutralise phase comes the goodies stage. One of Luxons predecessors, Sir John Key, famously once defined being rich as not having to worry about how to pay the bills. It is that definition people will be using to weigh up the Budgets offerings. Reminder, this is a Premium article and requires a subscription to read. While Hipkins got his teeth checked today, Luxon was tucking into a mince pie.