Labour is back in the game, but does it have the right answers?

Roger Partridge
Insights Newsletter
18 August, 2017

Two proposed taxes - on petrol and water - in her first week could have voters believing the new Leader of the Opposition has something against fluids. Any such fears, though, should have been relieved when Jacinda Ardern sent a tweet last week showing the contents of her liquor cabinet rival Winston Peters’.

It was also a relief to hear one of the opposition parties talking about policies rather than personalities. And about policies that matter. Auckland’s congestion problems rival its housing crisis as a constraint on the welfare of its residents.  And New Zealand’s water free-for-all is not serving the country well. Labour is to be commended for tackling these issues.

Unfortunately, though, there are problems with both Labour’s policy proposals. A regional fuel tax is a blunt instrument for solving peak hour congestion. It will tax motorists who do not drive during rush hour or, for that matter, on congested roads. Compared with GPS or camera-based congestion charging systems operating in many modern cities overseas, it is outdated and outmoded.

The water tax – or “royalty” to use the name given to the policy by Labour – is also ill-suited to solving our water problems. While it will raise revenue for the government, it does nothing to ensure our water is put to its most productive use. Instead we will be left with our first-come, first-served system of water consents that neither encourages conservation, nor ensures water is used where it is most valued. For this we need a system of tradable water rights, like those operating in countries like Australia, Chile and South Africa.

At least, though, Labour has got us talking about ideas. And surely this is what we should be doing in an election year: challenging the political parties outside government to serve up alternative solutions to the country’s most pressing problems, and then evaluating what they have to offer against the status quo.

We might disagree with what Labour has proposed. And when the public accounts have rarely looked in such good health, we might lament that its first two “solutions” involve new taxes.

But what we need is a contest of ideas, with the winner taking the reins of government and the loser drowning their sorrows - in a fluid of their choice.

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