Labour’s finance spokesperson ‘not convinced’ tax cuts will be fair

Tuesday, 21 May 2024

Labour Party finance spokesperson Barbara Edmonds says she is “not convinced” the Government’s planned tax cuts will be fair or fiscally “stable”.

Edmonds delivered a speech to the Hutt Valley Chamber of Commerce on Tuesday morning, two weeks after Finance Minister Nicola Willis spoke to the chamber about the National-coalition Government’s first Budget, to be delivered on May 30.

Three months into the job as Opposition finance spokesperson, Edmonds spent much of the speech not attacking the Government or justifying the prior Labour Government’s spending, but explaining herself.

“This is not an eat the rich moment. I do not have a juicy sound bite on wealth tax or a capital gains tax,” she said.

.

Edmonds criticised the Government’s promised tax cuts - which Willis earlier this month said would be “modest” and reach 94% of households - by suggesting Willis might head down the “Ruth Richardson route“.

Richardson delivered the “Mother of all Budgets” in 1991 which severely cut Government spending. Willis in her speech was critical of commentators who were “enthusiastic to see the mistakes of history repeated” and promised hers would not be a Budget of “austerity”.

“I am not convinced the present finance minister has yet learned either the lessons of history or the obligations of public finance management,” Edmonds said.

“We can look to history for the warnings and precedents, and we can look to future trends for guidance.

“The history of National finance ministers’ first budgets is instructive. Will the current minister go down the Ruth Richardson route or take the Bill English bypass?”

She said the tax cuts would not meet a test applied by former Labour finance minister Sir Michael Cullen, that cuts must not require borrowing, services cuts, exacerbate inflation, or lead to greater inequality.

The Government’s cuts to government spending were “too deep, too fast”, she said, and she tied the cuts to slowing economic activity in the Wellington region.

“I’ve even heard of retailers in the Wairarapa and Kāpiti Coast laying off staff and cutting hours to keep the lights on, so the impact of the cuts is spreading far wider than just the Wellington CBD.”

In the speech, Edmonds told her story of being one-of-four children of a “typical Pacific migrant” family, of her mother’s death at 35, her father raising the children on a domestic purposes benefit, and raising eight children while studying and becoming a tax lawyer.

Edmonds, who was internal affairs and revenue minister in the past Government, said the departure of former Labour finance minister Grant Robertson left “big shoes to fill”, but she would do it “in heels for an added degree of difficulty”.

She said she shared much with in common with former Labour finance minister Michael Cullen, whose legacy included KiwiSaver and the New Zealand Superannuation fund.

“Like Sir Michael, I agree wealth should not be despised.

“In fact, it is a common aspiration for all New Zealanders to seek to be better off, to be more financially comfortable, to not have to worry when the bills arrive.

“I do not have disdain for wealth creation – I want people to create wealth, but I also want it to be more widely shared, to help tackle poverty, and reduce the inequality gap.”

She said as finance spokesperson she would be focused on costs for households “not just right now in a cost of living crisis”. Also, levelling the “playing field” for small businesses, climate change and adaptation, and infrastructure that was “more than just roads”.

Her experience of “real-world challenges” would be applied through what she called three types of economics: kitchen table economics, boardroom table economics, and Cabinet table economics.

“I will bring a smart-headed and kind-hearted approach to this role. After all, I needed those strengths as we raised eight children.

“In politics, as in economics, I am pragmatic and not ideologically fixated.”

Edmonds said debates about “very narrow aspects” of tax policy were missing the point, and tax bases and revenue were only part of the issue.

In a seeming reference to discussion about whether Labour would pursue a capital gains tax, she said: “One policy change by itself will not resolve our long-term challenges and we must look at all the levers at our disposal“.