Bill English’s Campaign – It’s A Bit Of A Flutter

Bill English’s Campaign – It’s A Bit Of A Flutter

First published on Spectator.co.nz…

Ironic really.

On Friday morning last week, National learnt that the National Business Review-Compac poll had its support slumping to only 28 percent. The 25-point gap between National and Labour is the widest since the NBR started the poll over ten years ago.

Based on the results of the poll, the Labour would have won 69 seats in the House (an increase of 20 seats). National would have won only 36 seats (a decrease of three seats). National’s three lowest ranked list MPs – Alec Neill, Arthur Anae and Marie Hasler – would be voted out of parliament. The majority for the centre-left over the centre-right would be 40 seats.

The news for National is even more disastrous when it considers where it is losing support. National’s support among voters in the $50,000-70,000 income bracket, once a rock-solid bastion of dependable support for the party, has slumped to only 26 percent.

National’s tax-cut bribe will be targeted at wealthy voters and corporates. The cost will be in excess of $1.6 billion. The net effects of National’s bribe are both significant and permanent.

To his credit Bill English announced that the tax cuts would be funded because “it is not committed to the Cullen fund”.

English is right. The tax cuts for wealthy New Zealanders can be funded. But they can only be funded because National would abolish the Cullen fund, more appropriately known as the superannuation fund.

This means that National will abolish the fund that has been set up to help offset the cost of future superannuation. The government is setting aside money and invested to help ‘pre-fund’ superannuation. The policy is far-sighted and responsible as it guarantees that money will be in the kitty to help pay for the pensions of elderly people and baby-boomers well into the future.

Is that a good idea that will benefit elderly people? Apparently not according to English who has spent the best part of 12 months rallying against the initiative to pre-fund superannuation and the guarantee of a pension for our senior citizens.

Elderly people have had nothing but bad experiences of the National Party. The party’s determination to be stick to the’ tax-cuts and narrow government mantra’ saw the Shipley-English government cut superannuation during the 1990s.

At National’s 64th annual conference in August 2000, delegates voted against a remit to ensure that “the level of payment be enough to enable the elderly to live with dignity”.

English has previously described the superannuation fund as “clapped out” and is reported to have said that guaranteeing superannuation well into the future is “not prudent”. So it should come as no surprise that National is now not prepared to maintain the means of paying for New Zealand superannuation if it wins the next election.

National’s decision to abandon a credible commitment to fund the superannuation fund risks the odium of elderly voters, that’s a vital vote if you want to win provincial seats like Tauranga, Whanganui, Otaki and Whangarei.

But then National’s tax policy effectively draws a line in the sand and says, “go away old people, we don’t want you”.

Instead National wants the $50,000-70,000 income bracket firmly back in it’s camp. A support rating of 26 percent is simply not good enough. National wants to double that number and quickly too. That’s why it is prepared to waft the promise of tax cuts in front of the nostrils of wealthy voters.

It’s a cynical plan that is full of assumptions and risks.

National is assuming that voters will be seduced by tax cuts. This is highly dubious when one considers that Labour campaigned on a promise to increase the top marginal income tax rate and won the last election. Voters appear to favour paying more to fund a greater level of government expenditure on health, education and the police, as opposed to tax cuts for wealthy voters.

National is assuming that it can survive the odium of the elderly. I have some sympathy for National’s strategists on this point. English himself recognises that National’s legacy of broken promises and pension cuts has effectively burnt many bridges between the party and elderly voters. But a sour relationship with one group of voters – arguably a group that needs more attention than most – is not the basis for making informed policy decisions.

National is assuming that operating lower surpluses to help bankroll ongoing tax cuts will be acceptable to the financial markets. Actually the policy will almost certainly spark a new round of interest rate rises as the fiscal policy of a National-led government is adjudged to be loose and scatter-shot.

Low interest rates over the past two years have equated to significant savings for families living in the suburbs of Auckland and Wellington. Their expensive first home purchase costs less because of low interest rates. That’s money in the bank for families who need it most.

National’s scatter-shot approach to fiscal policy would spell the end to low interest rates. As rate increases set in, the cost of owning a home becomes more expensive. That’s a dire prospect for homeowners who would suddenly face higher mortgage repayment costs.

National’s decision to embrace tax cuts for wealthy New Zealand is not an economic policy decision, it is a political decision.

A political party that aspires to be in government cannot go into an election trailing the majority governing party by 25 percent. That is why National is trying to take action to reverse the growing divide between it and the Labour Party.

Bill English ascended to the leadership and talked about investment in health and education as a priority ahead of tax cuts. His caucus has rolled him. The neo-liberal dries are committed to tax cuts first ahead of an investment in social services.

The size and scope of the tax cuts is not significant, but it is symbolic. National’s decision represents a tangible expression of its interest in the wealthy elite rather than the wider community. That is why the tax cuts are small and targeted.

National’s pollsters know that the collapse in support for that party among voters in the $50,000-70,000 income bracket threatens to cost it precious seats at the forthcoming election. This week’s cynical ploy to offer wealthy voters a tax cut (to the detriment of health and education, the police, the elderly, and first home buyers) is a calculated gamble to ‘stop the rot’ and reverse National’s flagging election fortunes.

Bill English will gamble on a promise to give himself an extra $120 a week. How apt that he announced this initiative in a casino complex.

First published on Spectator.co.nz…