Once, Greens co-leader James Shaw's comment when Parliament resumed this week that the current government does not
deserve to be re-elected if it fails to introduce a capital gains tax would have been regarded as yet another reason why
the Greens kept themselves from being invited into government for almost twenty years. But now they are inside the tent,
the comment takes on a more significant perspective. Not because there was ever any doubt the Greens would back a
capital gains tax - after all, they have never yet met a new tax they do not like - but because of the acid it puts on
the government's formal coalition partner to state where it stands.
At the moment, it holds all the cards. With the Greens having now declared their hand, the future of the capital gains
tax rests not on the tax working group's recommendations, nor even the Labour Party, but on the nine New Zealand First
MPs, or, to be more specific, their quixotic leader. To date, they have maintained their typical silence.
With recent polls showing that New Zealand First will struggle to be in the next Parliament, an issue like capital gains
tax is potentially a heaven sent opportunity for the Party to reassert its independence and act as a handbrake on
government to stop the implementation of an unpopular policy. Indeed, James Shaw's statement could almost be seen as
inviting New Zealand First to do just that, perhaps in the hope of restoring itself in Labour's eyes as the preferred
partner it was before the last election. But it is not as simple as that.
For a start, on this occasion, New Zealand First is not just any other party. It is the government's formal coalition
partner, and its leader is the Deputy Prime Minister. And the capital gains tax is not just any other policy. It is a
key plank of Labour's tax policy, and, as such, comes into the category of a confidence and supply issue. Failure to
gain support to introduce such a policy, let alone a formal vote against it in the House, would raise serious questions
of confidence, and could potentially bring down the government. And an election brought about in such circumstances
would almost certainly see the end of New Zealand First. So, there are strong reasons for New Zealand First supporting
the introduction of a capital gains tax, albeit after a few tweaks.
However, a capital gains tax is unlikely to be popular with a chunk of New Zealand First's provincial and rural support
base. Not that many of them are likely to be affected by it, but, as both Labour and National found out during the
superannuation debates of the 1980s and 1990s that spawned New Zealand First, it was not the reality of the impact of
the superannuation surcharge - which never affected more than a quarter of superannuitants - but the perception that
every one of them was hit, and the fear amongst those under 65 at the time that it would hit them too, that did the
political damage. A similar reaction is likely if a capital gains tax is introduced, which is why New Zealand First is
likely to face pressure from its support base to resist the proposal.
So the decision to support or oppose the capital gains tax is likely to be a finely balanced one for New Zealand First,
which is where James Shaw's statement assumes its real significance. It is far less a statement of the Greens' position,
(which no-one would have been at all surprised to hear anyway) and much more an attempt, to flush out where New Zealand
First stands. It also gives more than a passing hint to the tensions within the coalition government on the subject.
In that respect, one has to feel a little sorry for the Greens. They spent most of the last Parliament preening
themselves as Labour’s coalition partner in waiting, only to be gazumped at the altar by New Zealand First, because
Labour was not astute, strong, or brave enough to say to New Zealand First they wanted to form a Labour/Greens coalition
that they were welcome to join, or else they could keep the National Party in office. In the event, the Greens were
jilted and relegated to the position of confidence and supply partner. Ever since, they have been struggling to reinsert
themselves into the major policy loop, and this is but the latest example.
It could yet prove their most effective if they can force New Zealand First’s hand. But a more likely outcome is that
New Zealand First will fudge and delay a decision as long as possible, quite possibly beyond the current Budget cycle,
to make it difficult for Labour to legislate in advance for the post 2020 capital gains tax, as it wishes, while all the
time keeping its own powder dry.
Although James Shaw deserves acknowledgement for doing his best to try to keep New Zealand First honest, he has in
reality shown once more that when it comes to realpolitik New Zealand First will continue to run strategic rings around
the hapless Greens.