The week of the tax cuts

Those were the days, 20 years back. The choice was Labour or National or protest: Sir Robert Muldoon obsessive-aggressive micro-manager, expansive-defensive rhetorician David Lange or victim-prophet Bruce Beetham.

They’ve all now gone. Lange’s death symbolically administers the last rites to that age.

Of the trio Lange was biggest. He MC-ed the revolution from hermetic kingdom to open republic, from monocultural colony to bicultural independence, from alliance to internationalism.

But his memorialisation this week will not be of an actor who moved events. He was the facilitator for those who did move events, the explainer of the need for radical reform, the soother of wrenching pain, the wit who could brighten us while the revolutionaries jack-hammered the social fabric.

Now we have doers: disciplined brainbox Helen Clark versus obsessive over-achiever Don Brash — showbiz pygmies.

Nevertheless, they will do their best on Sunday to put on a show at their official campaign kickoffs.

They will each demand a mandate to govern, just as Muldoon and Lange did. They have brought back the two-horse race and the nags are close to evenly matched: Labour in front at the start of the year, National in front in June when Labour lost its footing, Labour back in front with Iraq, anti-nuclear policy and student loans.

Next up is National’s tax offer. Expect that to move the polls National’s way. Households who have borrowed up to their eyebrows need lolly and National is promising lolly.

Labour is promising in-kind services instead. But you use them only when you need them. For most the right-now need is cash. Petrol prices are up. House prices are stalling so there is less scope to borrow. Pay rises are helping some but not all.

So this is the week of the tax cuts.

It may also be a pivotal week in this forever campaign. If enough voters strike gold when they consult National’s website calculator on how specifically they benefit, straightaway and long-term, National might well nose Labour out.

Michael Cullen’s task is to kill the cuts. He has busied himself posting large numbers on the cuts, hoping voters will then be disappointed with what National produces: $30 has been alleged to have been the minimum Labour’s focus groups have set as a price for switching their votes.

Public quantitative polls, including the Herald’s DigiPoll, have reported much lower expectations. This can be read two ways: that voters would favour National even if the cuts are lower than $30 — good news for National; or that they think National will come up with an unconvincing figure — good news for Labour.

Cullen’s second argument is that they are unaffordable. He has hammered this hard in the past few months and Winston Peters has bought into the line, which is not good news for National.

Are they right? Until we see the actual promise — which is complex, involving family tax credits and other wrinkles besides rate cuts — we can’t know whether it is more unaffordable than Cullen’s own combination of big spending plans and small, distant tax cuts.

But John Key has put a lot of work into the “fiscal impulse” dimension of the cuts. He has to ensure that Cullen can’t credibly to say his cuts would inflate the economy more than Cullen’s spending. He has tested his numbers with financial market economists who have told him they stack up.

That brings into play Cullen’s third counter-attack, that tax cuts will not be possible on top of his extra spending and that beyond a certain point they start cutting into real health and education services — which between them gobble up $1 billion a year in “new” spending, just to keep pace with demographics and services for which there is high, and politically sensitive, demand, such as elective surgery. Expect a lot of argy-bargy around that over the next four weeks.

But Cullen may have a problem there, too: the pre-election fiscal and economic update on Thursday will probably post better numbers than the May Budget — giving Key more credibility.

What does the Cullen-Key battle amount to? A classic spending versus tax cuts election, just what you might expect from a modern two-horse National-Labour contest.

Except for a fourth ghost from 20 years ago: Sir Robert Jones. His maverick New Zealand party in 1984 was a forerunner of MMP politics: neither big-party nor exactly protest. It was a demand that National get back to its roots. It was a party founded in ideology.

MMP makes more room for ideological parties. One such, the Greens, launched on Sunday, down in the polls but up in political maturity.

The Greens give Labour the look of a grouping ready to be a government (plus Jim Anderton and Peter Dunne) — and voters still mostly vote for or against a government. National cannot yet produce a matching look. Key’s tax cuts would be partly at Peters’ mercy.

So, yes, the two-horse race is back, just like 1984. But, unlike 1984, they now carry extra jockeys. Lange would not have approved.