Uncertain models of funding will plague whomever makes it into government – but the Greens say they have the answer
Party representatives agreed more than they may have expected to on Tuesday as they fronted to an Infrastructure New Zealand audience in downtown Auckland.
Neglected funding tools like congestion charging and value capture were largely agreed upon by a panel including Minister of Infrastructure David Parker, National’s Chris Bishop, Act’s Simon Court, New Zealand First’s Shane Jones and Greens co-leader James Shaw.
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The politicians all agreed chronic underinvestment in infrastructure had lead New Zealand into a tricky spot.
But while Parker and Bishop – who may well soon be Minister of Infrastructure if the polls bear out – argued over how to fund big projects with a small pool of money, Shaw argued the issue went back further.
“In the infrastructure category at the surface level you do actually get quite a lot of agreement,” he said. “Part of the issue though is we basically don’t spend enough money so we end up scrapping over a very small bucket and that’s why we have this perennial debate over how we want this project funded rather than that project funded – actually we need both.”
Shaw said the Fourth Labour government – which he called the first Act government – “spiked” the country’s ability to invest and created today’s problems.
“As politicians we all just end up scrapping over scraps if there isn't enough actual cash in the system,” he said. “We just don’t build at the rate that we need to.”
Shaw said whether projects were paid for on the public ticket or by user-funded private capital investment, the public would end up paying for it one way or another.
“So it sort of doesn’t matter [which you choose] except the Crown tends to finance a bit cheaper and have lower cost of borrowing,” he said.
Across town, Shaw’s co-leader Marama Davidson was revealing the Greens' newest policy – an expansion to the students receiving free school lunches by 58 percent, with a plan to eventually make the programme universal.
She said the policy would cost $191.1 million per year and reach 135,000 extra students.
Labour has promised funding from the programme through to the end of next year, but has not committed to anything beyond that.
It’s the kind of thing a party could do if that pot of money was expanded and politicians were given leave to do more than “tinker around the margins”, as the Greens have said in the past.
But how do you pay for it?
Davidson said she would be paying for it with a wealth tax – in fact part of a suite of changes to the tax system including 2.5 percent tax on assets over $2m for individuals and $4m for couples, a 1.5 percent trust tax, a new income tax rate of 45 percent on income over $180,000 and a new corporate tax rate of 33 percent.
But Labour has turned its back on any kind of big tax reform this election, with Prime Minister Chris Hipkins saying now was not the time for systemic shake-ups.
It’s a position directly responded to by the slogan of their potential coalition partners: “The time is now,” say the Greens.
Davidson shot down the idea that Hipkins' squeamishness about tax reform should get in the way of her party’s big ideas.
“No one gets to rule out any policies ... I’m really clear about that, that power remains with the voters,” she said. “If people like the solutions that we’re offering ... people can vote for it, the more votes we have the more chance we have to get this over the line.”
The school lunches expansion is another Green policy, like income guarantees and free universal dental care, that’s ambitious in scope and also potentially very expensive.
That’s meant tax reform has become the keystone policy of the Green platform this time around.
In many debates over the past few weeks, all roads have lead to tax reform for Green candidates.
Health spokesperson and Mt Albert candidate Ricardo Menéndez March brought diabetes strategies back to tax earlier this month at a panel for Diabetes Matters, where he said a lack of revenue tools to fund the health system created conundrums for Pharmac leading to important treatments not being funded.
Meanwhile, at a debate on climate resilience in housing last week, Auckland Central candidate Chlöe Swarbrick said a fairer tax system was needed to fund crucial climate adaption and mitigation.
To the Greens, the unstable revenue model of the public sector seems to be the first domino in a long line.
But in the infrastructure debate – held in front of a room of the country’s top infrastructure decision-makers – there was a tacit acceptance that without another good look at how public works are funded, potholes await on the road ahead. Literally.
As the election day nears and scrutiny is levelled at National’s figures and Labour’s lack of appetite for sweeping tax reform, exactly how the government fills its coffers is a question the major parties will need to answer over and over again.
