The Greens’ “new paradigm” and Labour’s need

Where did people fit in Thursday’s budget? As a cost. Even Bill English’s vaunted “social investment” is cast as a future cost to be avoided.

That opens space for Labour and the Greens, as they prepare to formalise their cooperation, to reframe the budget process as using people’s taxes to enhance their lives, including by reducing social inequities and building stronger ecosystems.

Grant Robertson, in an article on budget morning, said a successful budget would give everyone the “opportunities and support to achieve their potential and get a share in prosperity”.

He then ruled out tax cuts even though a key factor in realising opportunity is post-tax disposable income and on current projections someone on the average wage will in a few years be paying the top marginal tax rate. “Average” isn’t “rich”.

Actually, Labour still proposes a higher rate for those on six-figure incomes — and on Friday Andrew Little (members of whose old union favoured tax cuts in Labour’s third term after 2005) did concede there may be a need to adjust thresholds.

The Greens took a different line in the 2014 election, promising a tax on greenhouse gas emissions, offset by lower tax rates on low-to-middle-incomes.

This works on the principle of taxing “bads” (like pollution) more and “goods” (like work) less.

Sift through Labour’s evolving tax talk and you can discern faint overtones of this principle in the approach to income from capital gains (open again to taxing that income after Little killed the party’s 2014 version, especially since English did last year for too-quick house re-sales) and in Labour’s openness to a land tax, which is a version of wealth tax.

And Robertson sometimes does use the “bads” versus “goods” terminology. If he gets to be finance minister sometime, the tax taskforce he has promised would likely have a far wider brief than English’s 2009-10 version.

Labour and the Greens are closer also on housing, including building houses with state money — close enough to be able to forge an operating agreement on housing if in a cabinet.

The same goes across a range of other policy areas. Many of each party’s’ press releases on budget detail could almost have been issued by the other. An example: reaction to the byzantine funding of Department of Conservation (DoC), which looks like cuts and was condemned by the Tourism Industry Association (whose minister is John Key) as jeopardising one of the key attractions to foreign visitors.

At leader level Labour/Green rhetoric is different.

Chattering-class liberals looking for a reason to vote for Little grump that he often sounds more “against” than “for” — as he was again in his post-budget speech on Thursday (though there was more “for” than in his post-2015-budget speech).

It was Green co-leader James Shaw who evoked 1930s Labour Prime Minister Michael Joseph Savage’s “heroic” state house building programme. Shaw used that to illustrate his aim for a “transformative” government, not just a transactional one.

Of course, being Green, Shaw focused on climate change — on which there was barely a mention in the budget apart from the long-foreshadowed phase-out of the two-for-one emissions trading units subsidy for big polluters. He extolled DoC’s “heritage” work.

Key has called the Greens “barking mad”, a phrase Speaker David Carter has ruled conforms to Parliament’s exemplary standards of etiquette.

Key doesn’t think central banks are barking mad even though five northern hemisphere ones have plunged into unknown economic territory with negative interest rates.

This and other unusual economic events invite a quest for a “new paradigm” in economic management, as former United States Treasury Secretary Lawrence Summers wrote last week in the Financial Times.

The Greens already have their “new paradigm”, focused not on “flows” of economic activity such as those gross domestic product (GDP) measures but on maintaining “stocks” of human, social and natural (ecosystem services) capital as well as financial and physical (infrastructure) capital.

Robertson has edged down this route, citing GDP’s limitations in his pre-budget speech on May 23. Even the budget under English pays more attention to the government’s “balance sheet” of assets and liabilities — see page 8 of the fiscal strategy report — though that has some way to go and is a long way short of where the Greens are.

But are the Greens a stretch too far for too many voters — and thus a risk to Labour?

Robertson can muse on a “new paradigm”, as in his “future of work commission”. But Little has to win off Key the sorts of voters who want things a bit better but not radically different.

The Labour-Green challenge is to make this work as constructive complementarity in a visible government-in-waiting, which they must be if they are to win power in 2017.

Expect a move soon to formalise a government-in-waiting. And watch to see how much cement the two leaders lay at the Greens conference on Saturday.