It’s 50 years ago today that “Big Norm” Kirk died of a heart attack in Wellington’s Home of Compassion. Home of Compassion.
Although he was Prime Minister for only 623 days, he has an iconic place in New Zealand history, particularly Labour history.
When Labour leaders like Jacinda Ardern recite the party’s former Prime Ministers, they tend to stop at Kirk.
Bill Rowling was only a fill-in; David Lange’s legacy is far too debatable for him to be held up as a model. Geoffrey Palmer and Mike Moore were also fill-ins, and Helen Clark was respected, but she, too, has a debatable legacy.
There is only Jacinda, really.
The problem with all this is that, too often, the party seems not to have moved on from Kirk.
But now, Labour’s leader, Chris Hipkins believes the time has come to move on, to recapture the Kirk legacy and that will start with a radical restructuring of the tax system.
Of course, it did move on during the 1980s but moved into Rogernomics, which was not where most of its members wanted to go.
Under Clark and Michael Cullen and then Grant Robertson, it didn’t so much reverse the key pillars of Rogernomics; rather, it trimmed the ugly bits off the edges.
And Ardern’s governments were diverted by the Mosque and Covid crises.
So, to vote in the next election in 2026, a voter would have to be 52 to have been alive when Kirk was Prime Minister.
Now, ironically, across the corridor from where Kirk’s Prime Ministerial office was, Hipkins, is trying to address the challenge of engaging with an electorate that mostly knows nothing about Labour’s glory days.
He spent his summer break in part reading political journalist Dennis Welch’s recently published “We Need to Talk about Norman” biography of Kirk.
Welch, who once stood for the Alliance, pits Kirk against the Lange Government as a contrast between humanism and neoliberalism.
This is the argument that rests on Kirk’s famous aphorism that people need “someone to love, somewhere to live, somewhere to work, something to hope for.”
Perhaps inspired by that, Hipkins defines Labour’s purpose today as getting back to the core philosophy of why Labour exists, and he says that it is to make hard work pay.
“That is the idea that by working hard, you can get ahead, and you can create a better life for yourself and for your family,” he told POLITIK.
“That’s what the Labor Party has been all about.
“But the challenges in the 21st century look different to what they looked like in the 20th century.”
He said that was the age of mass industrialisation, unionisation and collective bargaining.
“Unions still have a very important role to play, but the workplaces look different; they’re not the big industrial workplaces that they were.
“More and more people are employed outside of those bigger workplaces and in more casualised employment and more flexible employment.
And many of the people who are in those work environments want to be in them.
“So, the question for Labour is how do you make work pay for them?”
Labour is starting to grapple with these questions and has begun to ask itself some big questions.
They are having work done of Kiwisaver and Hipkins talks of Kiwisaver Two. That might embrace higher contribution rates or even compulsion, like Australia.
“I think KiwiSaver has been such a huge leap forward for New Zealand. there’s still untapped potential with it,” he said.
The big issue, though, is tax. And he is ready to for a radical break with Labour’s past tax policies.
He starts from the position that the present tax-spending fiscal situation does not add up.
“The government is on fantasy island, with its economic management at the moment,” he said.
“You can’t cut taxes and increase borrowing, claim that you’re going to get back into surplus and claim that you’re going to increase spending on things like health and education.
“You don’t need an abacus to work out that. That just doesn’t add up.”
He is deeply conscious of the Treasury’s long-term fiscal projections, which show the deficit widening after 2030 because of the ageing population.
As a former Minister of Education and Health, he is well aware of the gaps in both those areas.
Only yesterday, RNZ reported on the persistent deficits being run up by Massey and Victoria Universities; earlier this week, a Select Committee heard that only two polytechs are financially viable, while Health NZ is projected to run a deficit of $1.3 billion.
“Ultimately, we have to get realistic about the fact that we’ve got an ageing population,” he said.
“We’ve got rundown infrastructure that is going to have to be replaced.
“We’ve got public services that we’re pressing to breaking point by not funding them properly.”
Fixing this is one of the ways Hipkins would make hard work pay.
But fixing it will require money.
“Whoever the Government is, is going to have to tackle that
“They’re going to have to have a credible plan for how to pay for that.
“So tax broadening has to be a part of that answer. There’s no way around it.”
And tax broadening is shorthand for a capital gains or wealth tax.
Labour has traditionally been very wary of a capital gains tax.
David Lange said, “A capital gains tax policy is one likely to lose you not merely the next election but the next three.”
Andrew Little argued that David Cunliffe’s advocacy of a capital gains tax in 2014 cost Labour the election.
Jacinda Ardern ruled one out as long as she was Prime Minister.
But the case for a capital gains tax is strong. The IMF and the OECD have both recommended one in separate reports on the New Zealand economy this year.
In 2021, in a background paper prepared with the Long Term Fiscal Statement, Treasury officials said: “Fiscal changes in response to population ageing will have economic effects as well. If there is no fiscal response, public debt will reach unsustainably high levels, implying that at some stage policy changes will simply have to be made.”
The IMF said tax policy reforms were needed to promote investment and productivity growth, increase income tax progressivity, and mobilise additional revenue in response to long-term fiscal challenges.
And in his valedictory speech in Parliament in March, the former Labour Finance Minister Grant Robertson finally endorsed a capital gains tax.
Hipkins believes the time has now come to bring one in.
He defends Labour’s opposition in the past by quoting Mike Moore; “it’s wrong to be right too soon.”
“When we announced a capital gains tax (CGT) back in 2011, I think we were in that category. We were wrong to be right too soon, but actually, now everybody is talking about some form of capital taxation in a way that they weren’t when we first mooted CGT back in 2011,” he said.
“So I do think things have shifted there.
“You’ve got the bank economists all saying we need something in that space. You’ve got the IMF, the World Bank, and the credit ratings agencies all saying New Zealand has a structural weakness in its tax system.
“They move various different options for that. So, you know, you’ve got CGT and land taxes.
“But the underlying issue is New Zealand’s tax system is too narrow.
“And I agree with that; so yeah, the tax policy we take into the next campaign will certainly have a significant aspect of base broadening to it.”
Ultimately, though, whatever any Opposition leader says has to be measured against the likelihood that they might win the next election.
In the latest One News Verian poll, Labour was eight per cent behind National, but at the same point after the 2020 election, Labour was 23 per cent ahead of National. It is statistical quirks like that keep hope alive in an opposition.
What might matter more is how much Hipkins and his colleagues want to return to Government. How hungry are they?
Hipkins thought about that over the summer holidays. The hurt of the loss was still burning sharply, and the fact that he was no longer Prime Minister was a daily reminder of that pain. He decided he wanted to return to the Beehive. He wanted it deeply.
“I do, I really do,” he said.
“And so I have made the determination that I’ll use the three years as leader of the opposition to make sure that we go into Government really, really well-prepared next time.
“I wouldn’t be able to do that if I hadn’t had those nine months as Prime Minister because you don’t know what you don’t know until you’re right in the thick of it.
“So I’ve had that experience now, and so we’re going to use this time, and that’s why we’re not bursting force with a whole lot of the same things that oppositions have always done in the first year in opposition.
“That is because we’re focused on one thing, which is winning the next election and then being a very good government beyond that.”
Yet the decision to go into the next election with a capital gains tax is going to make the task even more challenging than it already is.
That does not phase Hipkins.
“I think we have to go into that campaign with an honest debate with New Zealanders about the consequences of not funding health, education, infrastructure,” he said.
“You know, the National Party is currently lying to New Zealanders.
“They’re saying you can have all of this stuff, and it’s not going to cost us any extra, or you can actually do it cheaper. You can’t. So they’re lying to people, basically.
“And I think that’s the debate we have to have: if you want to have world-class health education and housing for everybody, if you want to have the infrastructure that is so badly run down and fixed up, it costs money.
“You can’t get past the fact that it costs money, and someone has to pay for it.
‘Even things like, you know, private equity and PPP for infrastructure projects, that’s just a financing mechanism. It’s not a payment mechanism. Someone still has to pay. “
That is Kirk’s Labour, a party that believes in the role of the state in underpinning people’s lives with the basics like housing, health, and hope.
