Scoop Election 08: edited by Gordon Campbell

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Gordon Campbell on the government’s tax cuts fixation

November 22nd, 2016

Long before the earthquake hit, the dodginess of the government tax cuts programnme was evident in the language of its packaging. It is being touted as a “tax cuts and family care” package. Yes, this $3 billion election bribe is going to be packaged as family assistance – even though, if it is going to be structured anything like the 2011 tax cuts package, the bulk of its benefits will be delivered disproportionately to the relatively well off, with only a showcase segment devoted to those truly struggling to get by. Hey, if the aim really is to offer ’family care’ to those truly in need, why not commit right now to targeting the entire $3 billion giveaway solely to those earning below the median wage/median household income?

Or better still, why not shelve the whole idea of tax cuts as a hopelessly inefficient way of delivering relief to struggling households… who are also facing rundown and inadequate services in health, education and housing. The track record of tax cuts is that they fuel income inequality, and add – at best – make only a few extra dollars of disposable dollars available for consumption. The better option (as always) would be to spend the money on both social services and programmes likely to generate sustainable wealth – because once the construction activity linked to disaster relief runs its course those jobs that are currently inflating our GDP figures will decline, and all that New Zealand will have done is to rebuild back to something like where we were before the disasters struck.

As others have noted, the likelihood of tax cuts is still being talked up, well before the costs related to the latest earthquake are known. This cost doesn’t simply involve the bill for the repair work on damaged infrastructure. There is nothing like a reliable cost estimate for the new configuration of road, rail and revived coastal shipping required to better serve New Zealand’s transport routes between the South and North Islands in a seismically uncertain future.

It seems utterly irresponsible to be committed to giving away the money needed for such essential work. But then, that’s typical. The Key government seems remarkably blasé about this country’s future needs : faced with an ageing population, an ageing health specialist work force and rising health costs related to expensive new drugs, the government has been starving the health system of funds – as a proportion of GDP – for the past six years. Rather than use the surpluses that Bill English is projecting until 2020 in order to make the necessary investment in the public health system, the money will be frittered away instead on a sparsely sprinkled programme of tax cuts.

It will have the desired political effect, though. Even crumbs will be gratefully received by the poor, and pocketed with only a twinge of guilt by the better off. Next year, Labour can be expected to tie itself in knots trying not to unduly criticise the meagre handout to its core constituency. Already, Labour leader Andrew Little seems to be trying not to advocate for the tax cut funds to be spent on social needs instead. This week for instance, Labour has been arguing that the money should be used to pay down government debt, even though our ratio of government debt to GDP is currently healthier than in many other comparable countries. Presumably, Little is trying to make Labour look like a “ responsible” alternative government. Sigh.

In May, Prime Minister John Key conceded that the driver for tax cuts was mainly ideological:

He said the choice they were faced with in the short term was either a billion dollars worth of tax cuts which would deliver a small amount of money to New Zealanders, or spend the money on other things such as cancer drugs. “Philosophically we believe in lower taxes and smaller government, and government’s definitely getting smaller,” he said. “The point is if we’re going to have a tax programme – we’re not ruling that out in for 2017 or campaigning on it for a fourth term. But having probably a bigger one, to be blunt.” When asked how much was needed for meaningful tax cut, Key responded: “$3 billion I reckon.”

Right. So for starters, we probably need to be asking these kind of questions:

(a) Is a tax cut of $3 billion still seen to be the minimum to deliver worthwhile relief to New Zealand households?

(b) Will this next tax cut round be structured differently to the 2011 round, and if so why, and how?

(c) Will the bulk of the tax cut benefits be delivered to those above or below the median wage and/or average household income, and if so in what proportions?

(d) Will the tax cuts increase or decrease the extent of income inequality in this country?

(e) Given the existing and looming needs in health, education and housing, why are (i) tax cuts and (ii) is a $1 billion spending spree on prisons being prioritised ahead of them?

(f) Is it responsible to prioritise tax cuts before the government has received reliable estimates of (i) the repair costs of the earthquake or (ii) the costs involved in devising the best configuration of road rail and coastal shipping to better serve the South to North freight routes in future or (iii) the cost of the support package needed for local businesses affected by the earthquake to get back on their feet?

This week, Bill English has been talking as if none of this matters because there are allegedly predictable surpluses of 8 or 9 billion dollars rolling in by 2020. If that’s true – and if the government can really afford to throw $3 billion out of its aeroplane in the general direction of taxpayers in what is (co-incidentally) an election year…what was all that language about the need for belt tightening about? Unwittingly, it seems we have all been serving as workers on National’s re-election effort, and have been engaged in building up their campaign treasure chest.

Trump and Obama

Back in 2008, Barack Obama was elected on a tidal wave of expectation by his centre left fans who felt that, at last, things were going to change in Washington, and a President who listened to their needs and understood them would be taking up residence in the White House. The reality set in soon enough. To a disappointing degree, the Obama presidency delivered business as usual. Even so, some 24% of US Republican voters this year still felt that Obama may be the Antichrist.

In 2016, similar forces of convergence are massing on the hopes of the centre right to far right. Donald Trump’s supporters have been set up to experience something of that same sinking feeling. Over the past week for instance, Trump has been pressured by Republican chieftains and foreign leaders (such as Japanese PM Shinzo Abe and by the combined leadership at APEC in Peru) not to follow through on his campaign promise to dump the TPP trade deal. Change it in your image – John Key reportedly joked that the TPP should be renamed the ‘Trump Pacific Partnership” – but don’t dump it, has been the core message. Mayors of major metropolitan centres are also calling on Trump not to deport – as he promised to do – the millions of undocumented migrants.

Obviously, Trump will not ignore his agenda entirely and particular Presidents do make a difference. George W. Bush for instance, invaded Iraq and thereby triggered terrorism consequences whose effects are still apparent, worldwide. Similarly, Trump can be counted on to stack the Supreme Court bench with conservatives, with effects that will last for decades. Moreover, his appointments to key positions so far – in defence, national security, the CIA, as attorney-general etc – have been fringe-dwelling nutcase figures far from the Washington mainstream.

Even so, and over time… while no one knows how Trump will react to the pressures of convergence, the likelihood is something more like Washington’s business as usual will prevail. We know already that Trump is a man who likes to be liked, and that he has a short attention span. He may conclude that simply going along with the boring stuff may be the best way of fitting in time for a round of golf. Like George W. Bush, Trump will delegate. The scary factor may not be Trump, but the quality of his apprentices.

Finally…some good news

One of the unexpected happy outcomes of 2016 has been the return of hip hop’s beloved icons, A Tribe Called Quest with their first new album in 18 years. The death last May of Phife Dawg (a long time sufferer from diabetes) had seemed to be the final blow….After all, Michael Rapaport’s great Beats Rhymes and Life documentary had shown just how crucial the chemistry/rivalry between the scrappy, combative Phife and the charismatic, naturally gifted Q Tip had been to the group’s identity.

Well, surprise. The We Got It From Here album is a showcase of the warmth, inventive wordplay and instantly recognisable beats that we associate with A Tribe Called Quest, but without the results sounding like merely a nostalgia trip. In the year of Trump, the return of ATCQ has been a consolation. Here’s a track from the new album…

And for old times sake, here are a couple of way back whens. “Scenario” is still infectiously great in itself, but is lit up near its conclusion by the sudden appearance of a young and ferocious Busta Rhymes.

Finally…on the rooftop overlooking Linden Boulevard in Queens the young ATCQ have a ball performing “Check The Rhime”. Last week a stretch of this same Linden Boulevard was officially renamed Malik Phife Dawg Taylor Way in tribute to the man, and to the group he inspired.

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