Copyright thespinoff
Labour’s flagship policy exposes Chris Hipkins’ cautious streak. In politics, the Ming vase strategy refers to a politician playing it safe, taking no chances, as if they were carrying a priceless Ming vase across a marble floor. The phrase originated in the Tony Blair era, but in recent years it is most associated with UK prime minister Keir Starmer, who ran one of the safest campaigns of all time, capitalising on frustration at the ruling Conservative Party but offering no controversial policies and therefore, little for his opponents to attack. It won his Labour Party the 2024 election, but the downsides have become apparent since. With an electorate demanding change, Starmer had nothing to offer. Less than a year after Labour’s landslide victory, Nigel Farage’s Reform Party took the top spot in opinion polling and has continued to rise. In 2023, the leader of the New Zealand Labour Party, Chris Hipkins, utilised the same strategy for a different reason. The Labour government was falling apart at the seams; ministers were self-destructing in interviews or being arrested for crashing ministerial cars, and they had failed to deliver on many of their core policies. Taking on yet another ambitious, reformative platform without a track record of delivery would make them look naive and irresponsible. So Hipkins took a match to the policy bonfire, and instead went into the election promising to take GST off fruit and veges. It didn’t win him the election, but nor was it meant to. It was just supposed to stem the bleeding. Play it safe, don’t alienate moderate voters, and try to save the jobs of as many MPs as possible. Whether that worked is debatable; 2023 was the party’s second-worst election result since 1969, and data suggests that was more due to the base staying home than moderates switching allegiances. In the two years since the election, Labour has enjoyed the fruits of a policy-free approach. The party has gradually risen in the polls, often topping National, simply by riding the waves of dissatisfaction with the government. But that could only last so long. National, frustrated at going up against a blank slate, has been goading their opponents into releasing policy. And Labour always intended to release its 2026 policy well ahead of the election, to give it time to settle in voters’ minds. Hipkins has spent two years cradling his delicate Ming vase, but there is a giant banana peel on the floor that he was always going to have to navigate: a capital gains tax. The Labour membership has demanded that the party adopt either a CGT or a wealth tax (the latter of which was preferred by the party’s left-wing faction). The risk here is obvious to any follower of recent New Zealand political history. Voters generally don’t like new taxes, and they especially don’t like it when politicians can’t make the case for them effectively. Phil Goff flubbed the details of his CGT at the 2011 Press debate, where John Key landed his iconic “show me the money” line. Similarly, David Cunliffe got caught out when asked whether the tax applied to family trusts and deceased estates. Jacinda Ardern refused to touch it. So, as Labour leader, Hipkins is navigating a tightrope. He needs a policy that satisfies his party’s base and tells supporters that he is offering real change, not mere tweaks around the edges. But it also needs something simple enough that Hipkins won’t get caught out by gotcha questions about detail, and targeted enough that voters (most of whom own their own homes) won’t be scared of it. And, he needs to design the policy in a way that makes it difficult – or at least unpopular – for the next National-led government to remove. The policy released on Tuesday (and leaked to RNZ ahead of time, which may indicate some dissatisfaction within the caucus or membership) does a decent job of satisfying the latter two, but may be too cute to have the impact Labour hopes. The proposed tax is extremely targeted: it only applies to commercial and residential investment properties; no family homes, no farms, no inheritances, no stocks or Kiwisaver. According to analysis released by Labour, only 10% of New Zealanders would end up paying it, which leaves a small target for criticism. The Taxpayers’ Union labelled it a “bach tax” and Chris Bishop jumped on Twitter to complain that it would “slug the factory owners with a big new tax”. Labour, presumably, is quite content to lose the votes of people who own factories and holiday homes. The simplest way to implement a capital gains tax would be as a pure tax switch, using the new revenue to reduce income tax for working people. But that exposes the dirty little secret of Labour’s policy: it wouldn’t bring in anywhere near enough revenue to make a noticeable dent in income taxes, because it will only apply to gains made after 2027. Instead, Labour has dressed the policy up by claiming it will pay for a new Medicard, which will entitle every New Zealander to three free GP visits per year. As a health policy, this is really smart: early-stage interventions are one of the best policy decisions to reduce later burden on the health system. It’s also likely to be popular with voters. Once people are used to going to the doctor for free, they’re unlikely to support any moves to bring back fees. However, reducing the political risk has also reduced the policy’s impact. Taking such a targeted approach limits the ability for the CGT to be a truly significant revenue generator, or for it to be a true behaviour-changer that shifts investment from housing to more productive sectors. For Labour supporters who hoped this would mark a real shift in how wealth is shared, it’s underwhelming. Then again, maybe the idea is to start small and see it grow over time, the way the bright-line test quietly did. Whatever the outcome, it’s telling that the version of capital gains tax Labour settled on was more about reducing the downside risk than increasing its potential upside. Even with what may be the most consequential policy of his leadership, Hipkins has once again opted for the Ming vase strategy.
