Wednesday 11 May 2022


Words matter, especially when uttered by politicians. History is littered with examples of careless or injudicious words uttered by politicians coming back to haunt them, often at the most awkward of times. 

During the 1987 election campaign, when electoral reform was a hot issue, Prime Minister David Lange promised to have a referendum on the electoral system if his government was re-elected. The pledge certainly delighted electoral reformers, but stunned his colleagues, because Labour’s election policy promised no such thing. Because of internal divisions on this, like so many other issues at the time, Labour MPs were to spend the next three years fudging and avoiding the Prime Minister’s commitment, with the referendum eventually being held during the term of the National Government which followed. 

National’s Jim Bolger caused a similar problem over superannuation in 1990 with his categorical “no ifs, no buts, Labour’s surcharge will go” promise. While Labour’s unpopular superannuation surcharge was repealed in 1991, National’s replacement was even harsher. And who will ever forget American Presidential candidate George Bush senior’s 1988 promise “read my lips, no new taxes” which was quickly overturned once he became President. Words matter, and voters not only remember what was said, but take unkindly to later attempts to redefine both the words and the context in which they were uttered. 

When she rejected the Tax Working Group’s recommendation for a capital gains tax in 2019 Prime Minister Jacinda Ardern was honest and unambiguous. “We have been unable to build a mandate for a capital gains tax. While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.” To her credit, she has stuck to that position subsequently meaning that, given National’s historic opposition to capital gains taxes, the issue is off the political agenda until at least the next Labour-led government after Ardern. 

While the Prime Minister’s honesty on the capital gains issue was refreshing and did not attempt to quibble with words the way some of her predecessors did to justify policy u-turns, the same does not necessarily go for her position on wealth taxes. At first glance, her initial response was similar to her stance on capital gains taxes. 

When asked about a wealth tax in a television debate during the 2020 election campaign, the Prime Minister said unequivocally "I have made my position and the Labour Party position absolutely clear. We have ruled it out. This is not up for discussion. It's not in play. There is no need for the hypothetical. It won't happen" and "I won't allow it to happen while I am Prime Minister." 

As with capital gains, that should have been the end of the matter. The Prime Minister had made her call, and like their predecessors in 1987, her colleagues had to live with that decision.

Indeed, the issue only reared its head again because of an awkward response from the Prime Minister to media questions about whether Labour would introduce a wealth tax in the light of work being done by the Minister of Revenue to ensure wealthy New Zealanders pay their fair share of taxes. Rather than bat the question away by referring back to her absolute 2020 comments, the Prime Minister curiously and clumsily answered by saying that the question was hypothetical because Labour had yet to develop its tax policy for the next election.

After nearly every commentator concluded this less than clear response meant Labour was clearly looking at a wealth tax if re-elected in 2023, the Prime Minister sought some days later to clarify her remarks, saying “I have no intention of introducing a wealth tax here in this term and we are doing no further work on it. Of course, we have always said our policy is not to introduce that and that is our position, nothing has changed.”

Rather than resolve the issue, the Prime Minister’s ruling out of a wealth tax for this term of Parliament only fuelled speculation. Whereas previously Ardern had ruled out a wealth while she was Prime Minister, now she was doing so only up until the next election, strongly implying that plans are afoot for something along these lines if Labour is re-elected.

Media commentary earlier this week suggesting that because the Prime Minister’s 2020 comments were a “blunder” she should not be held to account for them was not only utterly patronising but also evoked eerie memories of Lange’s 1987 comments. Worse, it suggested a new low standard of accountability is being set where it is not what a Prime Minister says that matters, but rather what they meant to say, or worse, what the media thinks they should have said, that counts.

It is unlikely this is what the Prime Minister intended. Having fluffed her initial response a couple of weeks ago, she was more than likely just trying to recover the situation. But if she really wanted to kill the wealth tax issue she should have taken a leaf out of her capital gains and 2020 wealth tax debate books and said simply “there will not be a wealth tax while I am Prime Minister.”

After all, words still matter, and as Churchill famously said, “the short words are the best and the old words best of all.” The Prime Minister should remember that, and that in the absence of simple and clear words people will often draw all manner of unwelcome conclusions.

There is still time for the Prime Minister to uphold her 2020 promise. However, the more she fudges doing so, the more people will become convinced there is a covert post-election agenda. For a government now swaying dangerously close to the ropes, that is amongst the last things it would want. But short, still unuttered, words could yet resolve that.

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