By Max Rashbrooke*
Opinion - "I want us to simply be the country we already believe we are." That's how Jacinda Ardern described her ambition for
New Zealand in 2018, and it won't have changed in the light of last night's extraordinary election victory. The ambition
is especially pertinent when it comes to inequality and child poverty, which stand in stark contrast to the lingering
belief in New Zealand as an egalitarian nation.
As Labour commands an absolute majority for the first time in the MMP era, the party could in theory go all out to bring the facts back in line with the belief, slashing poverty rates and
restoring a sense of fairness to the nation. But in practice they cannot, because they have already tied their own
hands.
While it is still possible that Labour will make some kind of arrangement with the Greens to bring them into the
government tent, such a move would at best extend only to the less controversial Green policies in areas such as
conservation.
Nonetheless Labour will undoubtedly take some steps to reduce poverty and inequality. They will significantly increase
the amount of money beneficiaries can earn before having their benefit clawed back, reducing the welfare system's
notorious poverty traps.
They will increase paid sick leave to 10 days, pay the Living Wage to government contractors, and create fair pay
agreements that allow workers who win good terms and conditions at one employer to spread them right across their
industry. They will make trades training free, build 8000 state homes, and continue the roll-out of free school meals
until they are so embedded as to be very hard for a future National-led government to abolish.
None of this, however, will make a major dent in the poverty rates that see around one in five New Zealanders lacking
the income they need for a life of minimal dignity and participation in society.
This is especially true in the light of Covid-19. Pre-coronavirus, Ardern had made modest inroads into child poverty,
according to early statistics and Treasury modelling. But tens of thousands of people are losing their jobs and the
economy is heading back into recession.
Absent further government action, this will push many more families into poverty. If Ardern is to stay on track to meet
her child poverty reduction targets, which involve more than halving it over a decade, she will need some real financial
firepower.
Other ambitions, such as making New Zealand's rivers swimmable again, can be met through regulation - that is, without
major cost (to government, at any rate). But not so inequality, which is quite literally a question of cash. And cash is
precisely what Ardern has denied herself.
Either a wealth tax or a capital gains tax could have raised billions of dollars from the wealthiest New Zealanders in
order to support a better life for the less fortunate. But Ardern has ruled both of them out, not just now but for her
political lifetime.
The prime minister may have had a moment's pause on election night, reflecting that she had forever ruled out a wealth
tax - or indeed any new tax this term except one new top income bracket - in order to hang onto a final 2-3 percent of
swing voters that, as it turns out, she didn't even need (given the wasted vote, even 47 percent would have been enough
for an outright majority).
But that's already in the past. Ardern now has to work out how on earth she will reduce inequality, all the while
holding back the tidal wave of poverty represented by the newly jobless, without the extra revenue she needs for the
task. The prime minister may have unparalleled popularity, but that huge majority may not be much use to her.
* Max Rashbrooke is the 2020 J. D. Stout Fellow at Victoria University of Wellington