The Guardian wants to tell us all how Jacinda Ardern is just great, gosh, absolutely fab. In doing so they tell us that New Zealand has always had a rather leading edge to its government. Which is, of course, true:
New Zealand has long been the social laboratory for progressive policy reform; it led the world into the 20th century with the introduction of female voting and the old-age pension. In more recent times it seems that for every policy success achieved by New Zealand, Australia has suffered an equal and opposite failure. The last major contested policy reform that has been maintained in Australia is the introduction of the GST in 2000, almost 20 years ago. New Zealand, on the other hand, has lifted the GST twice as part of a major “tax switch” that slashed income tax rates, lifted superannuation and welfare payments, increased property tax but cut the company tax rate. In 2008, NZ introduced a carbon price and emissions trading scheme. Like most schemes it has been subject to revision, but the critical architecture of the ETS remains in place. Meanwhile, Australia does not have a national energy policy.
All of that tax policy is indeed good tax policy. Start out by taxing bads, only taxing goods when we need more revenue than we can get from the former. Then, after we’ve put a price on carbon, tax property – they’re not making any land anymore, nicely inelastic therefore – and we should indeed have low to no tax on corporate profits. Income taxes are a middling thing, we want them low, sure, but we’re not going to reach that nirvana of none. And the heavy weight should indeed be carried by a consumption tax, given the lower deadweight costs.
So, all good. Of course, The Guardian would go entirely apeshit if we suggested the same in the UK, lower profits and income tax, higher VAT. But at least they are acknowledging that this is good tax policy in those efficiency terms, even if perhaps inequitable by The G’s standards.
But it’s the wider historical point that is so fun. Muldoon’s NZ tried to do all the import substitution possible. Erected a vast tariff barrier around the islands. Taxed everyone heavily to subsidise every interest group going. Higher incomes were taxed unmercifully. Basically, well along the way to a Bennite economy. As so many in Labour today are interested in having.
Then they realised this was all a bit shit. Then with Farmer and Douglas and all that they had a more than Thatcherite free market revolution. Simply stopped subsidising farmers at all for example. At which point everything was better. Much, much, better.
And, yes, this was progressive. It improved the living standards of the average peeps which is indeed a useful definition of progressive.
So, yes, New Zealand as a model of policy for us. Slaughter all economic controls, sell the bureaucracy into bondage and spice, not salt, the economy with free trade, free markets and free people.
It’s just that while The G is praising that elsewhere they’d never allow it here, would they?