Election 2026: Why more ‘free’ policies could cost New Zealand dearly

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OPINION: Election giveaway promises risk taxing ambition out of existence.

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National is campaigning on Helen Clark-era superannuation, the Greens want to revamp the tax system and Labour is extravagantly giving away free stuff. Photos / Getty Images, illustration / NZ Listener

As the election campaign gets underway, the promises have started coming thick and fast. This time around, we’re hearing a lot about free stuff.

The all too familiar faces from Labour and the Greens have been joined by newcomers TOP, with each seemingly intent on outdoing the other with pledges of benevolence.

There are promises of free doctors’ visits, despite the fact we are short of doctors, so short it can take a month or so to get an appointment. Cervical screening and prescriptions are set to join the list of freebies, too.

And we can’t overlook the proposed ceiling on public transport costs, meaning that no one will pay more than $20 per week to travel on our trains, buses and ferries. With public transport already subsidised to 86% of its cost, I would have thought that’s enough. If people still aren’t using buses, perhaps it’s because they need their cars.

Down the hallway, another political party is promising free doctors and nurses visits nationwide, free dental care and a guaranteed minimum income of $385 per week for adults who are not in fulltime paid work.

And the promises get better the further left you go. There you will find a proposal for a “Citizen’s Income” of $19,400 per annum tax-free, irrespective of one’s circumstances, for every adult citizen or permanent resident.

In all cases the proposed spending is universal, untargeted and intended to apply whether the recipient needs government support or not. It seems the intent is to turn every New Zealander into a beneficiary.

Of course, the logical question to ask is how we pay for such largesse. As you might expect, these parties of the political left have answered that with their promises of more taxes. Taxes that will come in the form of increases to current rates and the introduction of new ones.

In particular between them, they’re talking about land taxes, capital gains taxes, wealth taxes and a return to death duties, now repackaged as an inheritance tax.

So, if you’re a hard-working Kiwi family, with your own home, maybe a farm or an orchard, and perhaps a business or some investments, and you thought the Labour-led Government of 2017-23 was getting scary in its final years, you’d better brace yourselves. What is largely the same group of politicians are now telling us that, if elected to government this time around, they are going to do it all again, only this time, they intend to be much more present in your lives and your savings accounts.

The timing of their planned assault couldn’t be worse.

With the occasional exception of the sporting field, New Zealand typically has to live in the shadow of Australia on a number of fronts. The good news is that we are finally in a position where we are taking the economic challenge to Australia and winning.

We’re increasingly hearing stories of our best and brightest returning home or at least looking to do so. But we’re also hearing of Aussies wanting to come here. And they’re Aussies we need – people like nurses and police. And then there’s the start-ups; young leaders of Aussie technology businesses are looking at our tax structures and making plans to move across the Ditch, bringing their innovation and ideas, and need for talent and scale, to our business landscape. Those people and their growing businesses will add to Xero, Halter and Rocket Lab in employing people, and paying PAYE and business tax, giving the Government incremental income from new sources.

And yet, we have this line-up of politicians, a group whose policies have already been tried and failed, coming forward at election time with a series of policy proposals that would instantly neutralise that current advantage. But it’s worse than that; they are also failing to understand the impact of the lost Kiwis their proposals will create.

The latest Inland Revenue distribution data available states that 3% of people pay 24% of individual income tax. The 2020 Treasury tables suggest that 22% of individuals pay 76% of income tax. These figures do not include company tax paid by the thousands of small businesses owned and run as private companies.

In other words, a massive majority of the tax burden falls on a small minority of taxpayers. Under the policy suggestions being campaigned listed above, those same people will be paying dramatically more. Sooner or later those policies become unaffordable for those with assets and investments, and many of them will be forced to leave. Others will take offence to the attack on personal property and decide to get out, as has happened in European countries that have pursued similar agendas.

Some wealthy families have already set up structures offshore to move their assets if such policies seem likely.

And let’s not forget what those very same overburdened taxpayers contribute to New Zealand society in addition to tax. They are the same people who keep the charities sector going, who fund that extra school building or university programme for young talent. Just ask the people at Starship or breast cancer charities where they would be without those generous Kiwis.

Of course, the political left want to throw the money they generate through these increased taxes at those people who need help. We should respect the intent. But there are better ways of doing so.

As we saw with the last Labour Government, throwing money at health, welfare, housing and the like doesn’t work unless there is a plan and that plan is accompanied by a desire to get those people requiring support into a position where they no longer need it. There will always be people with long-term physical or mental needs that ensure they can’t support themselves. And we should support them. There will always be retirees, who’ve done their dash for the country, and we should support them.

But beyond those groups, we need to, at the very least, try to set people up for success, success that gets them off government support and supporting themselves.

I’ve seen plenty of examples of the benefits of aspiration over learned helplessness. If you give someone a problem and they solve it, their self-esteem and personal belief grows almost instantly. You can then give them another challenge, this time slightly more difficult, and because they believe they can solve it, they will. Again, the self-confidence grows and that person continues to learn, develop and grow.

Alternatively, you can approach a person with a modest or even relatively simple problem. Often, attitude rather than capability will see them unable to solve the challenge. Such an outcome will reaffirm their belief that they can’t do it. Next time around you give them an easier challenge, but the outcome is the same and their self-worth takes another hit. Sooner or later, government support becomes the only option.

We need to build our people rather than destroy them. If we can support people to take on small challenges and succeed, over time those people become less dependent on that support. It might be as simple as helping a school sports team or culture group. Perhaps, a modest part-time job. Every step, something to build on. Each step, a lift in self-esteem.

But we don’t do enough of that. Instead we seem to make a habit of supporting those who are dependent and keeping them that way. The list of policies above seem to be destined to do more of that than less.

I was recently reminded of the Rotorua motels fiasco that was allowed to escalate under the last Government. That’s what happens when people are incentivised to become dependent on the Government. What we need is people who are prepared to become dependent on themselves.

But instead, we have a group of politicians, who seem hellbent on pursuing those same policies. The only difference this time is that they’re looking for new parts of our wallets to raid to fund their socialist dream, because the debt they racked up last time around means we can’t borrow any more.

It feels like some of the tax policies represent an all-out attack on the personal property rights of every New Zealander who’s grown up in this country and had a crack at making something for his or her family.

At various stages of life, most of us have bought our properties, and in many cases we’ve done them up as we could afford to do so, making them more comfortable and increasing the value in the process. Some of us have done the same with our farms, businesses and investment portfolios. We’ve paid our taxes and our rates, without fuss or question.

But all of a sudden, a politician comes along and wants a bigger slice of the pie we have created. It’s one thing to want a bigger share of our incomes. But our houses, farms and businesses? Those Apple shares you might have purchased for $1000 20 years ago? That’s not on.

Like many fair-minded Kiwis, I wouldn’t mind paying more tax if I saw value in the projects those funds were being targeted at.

But the suggestion that these long-term assets, built over lifetimes, are a tax target because the political left wants another Government-funded free-for-all, just like the last one, is unacceptable. The only reason that they need a new source of funding, is because we haven’t been able to pay off their last spending binge.

The time has come for us to say “no more”. Why would we do otherwise?

Bruce Cotterill is a professional director, speaker and adviser to business leaders. He is the author of the book, The Best Leaders Don’t Shout, and host of the podcast, Leaders Getting Coffee. www.brucecotterill.com

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