Election 2020: Labour’s in – so who gets a pay rise, and who pays more tax?

Now that New Zealanders have voted overwhelmingly for a Labour-led government, they can start looking ahead to what that might mean for them.

Labour’s priorities will be contingent on any coalition or confidence and supply talks.

But if some of its top election promises are followed through, there will be higher taxes for the wealthiest New Zealanders, higher wages for the lowest income earners, and thousands more jobs created by large-scale infrastructure projects.

Labour’s focus has shifted from its 2017 campaign, which focused on reducing child poverty, making housing more affordable, and tackling the existential threat of climate change.

This time around, it is more focused on rebuilding New Zealand from the economic toll of the Covid-19 pandemic. Labour has pitched its approach as continuity and stability rather than transformation.

In a bid to create more jobs, it has promised to spend $42 billion on infrastructure, including $7b on road and rail projects and $700m on “shovel ready” projects. The first $3b on big projects is expected to create 20,000 jobs.

It is also wanting to support people who might have lost their jobs or reduced their hours because of the pandemic.

The minimum wage will rise from $18.90 to $20 an hour next year and, at some stage, sick leave entitlements will be doubled to 10 days a year.

Tertiary courses in building, construction, agriculture and manufacturing will remain free for the next two years. One year of fees-free, post-school study will remain in place.

On the tax front, a new top tax rate of 39 per cent is proposed on income over $180,000. A capital gains tax is completely off the table – Jacinda Ardern has ruled it out as long as she is Prime Minister. There will be no fuel tax increases this term.

Ardern has also ruled out adopting the Green Party’s wealth tax – a 1 per cent tax on net wealth of more than $1m. Greens will still lobby for it at the negotiating table, but Ardern has insisted it will go nowhere.

There are pay rises in store for early childhood teachers, whose wages have lagged behind kindergarten teachers. The scale of the increase is not yet known, but Labour has committed $600m over four years towards pay parity.

It has also promised $320m to the poorest schools and the expansion of free lunches to the most disadvantaged 25 per cent of schools. And all primary and intermediate school students will get access to mental health support.

Pharmac will get a $200m boost, and Ardern also promised a review of how it funds life-saving drugs when she was put on the spot during one the leaders’ debates – though no further details have been given.

Among its other health promises are more funding to reduce waiting lists, more grants for dental care for people on low incomes, and the establishment of an Aged Care Commissioner.

In the environment space, Labour has vowed higher health standards at swimming spots, cleaner city rivers, farm plans, and new controls around winter grazing, nitrogen pollution and fertiliser use. It also wants to repeal and replace the Resource Management Act and replace it with two acts.

There are few new initiatives for housing, except for a proposal to reform planning laws to speed up consent processes. Kiwibuild and the expanded state house building programme will continue.

Most of Labour law and order proposals are broad and long-term, but its shorter-term plans include more alcohol and other drugs treatment courts and more support for meth addicts.

Labour also wants to progress initiatives which stalled during the last term, mainly because of wrangling with coalition partner NZ First.

They include fair pay agreements, which are sector-specific minimum standards for wages, redundancy, overtime and other workplace matters which were above existing legal minimums. One of the party’s key promises to unions, the agreements are meant to prevent a “race to the bottom” in which employers compete for business by driving wages down.

Ardern has warned not to expect a quick resolution on the Ihumatao situation, though there could at least be some progress on the contested site near Auckland Airport now that NZ First are out of the picture. She has downplayed the likelihood of the Government gifting the land to iwi.

Labour has promised to keep overhauling the welfare system, though it has made few specific promises in this area.

Next year, beneficiaries will be able to earn more before they are penalised. Someone on a jobless benefit will be able to earn $160 a week before their benefit payments are reduced (up from $90 a week).

These are, of course, promises made in the heat of an election campaign. As Kiwibuild showed, some policies can crumble when confronted with reality.

It is too early to know what the Greens will get out of any potential coalition talks. The party did not have any “bottom lines” in its policy manifesto, instead deciding to focus on broad areas like the environment and energy.

But the Greens have said they want to keep Labour government honest on its climate change goals. That could mean revisiting plans to delay agriculture’s inclusion in the Emissions Trading Scheme, emissions standards for vehicles and expanding renewable energy.

Source: Read Full Article