Branko Marcetic: How will we pay for the cyclone recovery? Tax the rich

Branko Marcetic: How will we pay for the cyclone recovery? Tax the rich

Cyclone Gabrielle is already being declared a turning point for New Zealand. The devastation it’s left across the country seems to have sparked a wholesale rethinking from our politicians and pundits about a lot of what’s passed for conventional wisdom in our politics. It’s viscerally exposed the grim results of years of infrastructure underinvestment. It’s shown the need to rebuild our manufacturing sector at home and strengthen our flood resilience. Most importantly, we’re told, it’s shown first-hand we need to treat climate change with the urgency it demands, with even the National Party showing signs of moving away from its foot-dragging on the issue.

Rebuilding critical infrastructure, giving a hand up to the thousands left homeless and in need, and speeding up the transition to a green economy: this is going to be an enormous undertaking, and is not going to come cheap. While we won’t have a firm number for a while, Finance Minister Grant Robertson predicts the cost will be in the multi-billions of dollars, likening it to the scale of the $40 billion Canterbury rebuild. Getting all of this done means turning away from the pound-foolish fiscal conservatism that’s now prevailed across first National, and now Labour governments, fostering the chronic underinvestment that even the government itself now acknowledges has made the severity of this disaster much worse.

So why is it that in the wake of this pressing emergency, as we seem to slowly be facing up to the realities of the monumental task ahead, politicians and the media are still stuck in the same conservative mode that prevailed pre-Gabrielle?

National leader Christopher Luxon still wants the tax cuts that will further starve the government of the revenue it will need to meet these challenges, while simultaneously denouncing a “blank cheque” for the response. In his recent interview with Robertson, TVNZ’s Jack Tame repeatedly pressured the finance minister to keep within Labour’s self-imposed fiscal restraints and “tighten your belt.” Robertson himself said the government might have to redirect existing spending to meet these needs, and stressed at one point it “simply has to find that” money to be able to pay for part of the ensuing costs. Auckland Mayor Wayne Brown suggested spending pressures meant there’d be a trade-off between cutting carbon emissions versus building future resilience. National MP Shane Reti now infamously took to publicly asking billionaire Elon Musk to donate hundreds of Starlink terminals to the country.

It seems everything’s changed — and nothing has.

At least based on these statements, the government, and certainly much of our political and media class, is still operating from within the stifling fiscal corner the Labour government has painted itself into over the past six years. That approach has seen Labour refuse to finance desperately needed public investment by taking on too much more debt, while at the same time ruling out a string of obvious revenue-raising measures: no wealth tax,  no inheritance tax, no capital gains tax, no higher tax rate on trusts, no windfall profits tax that other governments, even a conservative British one, have imposed on the businesses that made a killing over the course of the pandemic.

As a result, we’re in the somewhat absurd situation of being a wealthy country facing myriad expensive crises, but having to ration out our response to them because the cupboards are supposedly bare — or, even more embarrassingly, finding our MPs begging foreign billionaires for help.

But New Zealand doesn’t lack the means to pay for these things, nor do we need to explode the deficit to afford them, since that still seems to be the overriding priority for our political establishment. The fact is that New Zealand is a country that provides a home to 14 billionaires, most of whom have been getting richer, who collectively sit on wealth worth nearly $37 billion,  while at last count, there are 347,000 people in the country worth US$1 million or more. A significant number of those will be ordinary homeowners who have seen the values of their houses lately balloon, but many are not.

According to the 2022 Knight Frank Wealth Report, the number of ultra-high net worth individuals in New Zealand — meaning those worth a staggering US$30 million or more — rocketed up 150 per cent from 2016 to 2021, at which point they numbered 3,118. This cohort is predicted to increase another 48 per cent by 2026, with New Zealand leading the field in all of Asia as the continent looks set to overtake Europe as the world’s second-largest regional wealth hub, according to the report. Meanwhile, calls for a windfall tax have been fueled by news of corporate profits surging and looking on track to rise even further, much of it concentrated in sectors like fossil fuels, banking, electricity, and supermarkets, even as other sectors like hospitality have struggled.

In other words, it’s a fairly small segment of the country that would be affected by revenue-raising taxes targeting extreme wealth and pandemic-era profiteering, which would in turn help the government meet the cacophony of crises now facing the country as a whole — a course of action that the ultra-rich, too, would benefit from, given that they depend on the same resilient infrastructure and climate disaster mitigation the rest of us do. It’s simply absurd that at a time like this and given the scale of what’s needed, we would continue on a path where the wealthy and big business keeps contributing less in tax than they have through most of New Zealand’s modern history, or worse, pay less than the lowest earners.

Prime Minister Chris Hipkins should have reversed his predecessor’s rejection of revenue-raising measures when he first took the reins, at the same time that he jettisoned several of the Ardern government’s least popular big-ticket policies. That he didn’t was a missed opportunity. But the destruction wrought by Gabrielle provides a second chance to do so. If the scale of this emergency and the crises that helped cause it doesn’t justify changing course on Labour’s refusal to tax the rich, what on Earth ever will?

 

Branko Marcetic is co-host of the podcast 1 of 200 and a staff writer for Jacobin magazine

This article can be republished under a Creative Commons CC BY-ND 4.0  license. Attributions should include a link to the Democracy Project.  

 

Other items of interest and importance today

OCR HIKE, BUDGET, FINANCING CYCLONE RECOVERY
Luke Malpass (Stuff): Adrian Orr gives the political class a wake-up call on borrow-and-spend
Richard Harman (Politik): Orr: Raise taxes or I will raise interest rates (paywalled)
Luke Malpass (Stuff): Tax more or spend less: Adrian Orr’s inflation advice after Cyclone Gabrielle
Tom Pullar-Strecker (Stuff): Reserve Bank governor Adrian Orr calls for a more ‘just in case’ approach to resilience
Rebecca Howard and Riley Kennedy (BusinessDesk): Weather disaster is fiscal, private sector challenge – RBNZ (paywalled)
Jane Patterson and Russell Palmer (RNZ): Robertson weighing options, fends off ‘cyclone tax’ accusations
Jamie Ensor (Newshub): Cyclone Gabrielle: Grant Robertson says not responsible ‘to take options off table’ amid questions over potential flood tax
Jenée Tibshraeny (Herald): Budget date unveiled: Questions remain over whether higher taxes will be needed to pay for rebuild
Bridie Witton (Stuff): Tax or borrow? Labour and National clash over cyclone recovery
Mark Quinlivan (Newshub): Cyclone Gabrielle: National’s Christopher Luxon, economist Cameron Bagrie not keen for flood tax to pay for damage
Herald: Tax fossil fuel profits to pay for cyclone cleanup, says Green Party’s Julie Anne Genter
No Right Turn: Paying for the rebuild
Bridie Witton (Stuff): Grant Robertson warns ‘unknown territory’ ahead for the economy
1News: 2023 Budget to focus on cyclone recovery, cost of living
Anna Wnyte (Stuff): Budget day ‘in the shadow of Cyclone Gabrielle’ set for May 18
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Liam Dann (Herald): Reserve Bank made the right call to hike OCR despite harsh reality of Cyclone Gabrielle (paywalled)
Jonathan Mitchell (NBR): RBNZ foolish to hike OCR this week: Shamubeel Eaqub(paywalled)
Paul McBeth (BusinessDesk): RBNZ and the Beehive need to be more than fair-weather friends (paywalled)
Jenée Tibshraeny (Herald): The silver lining in Reserve Bank’s latest OCR hike(paywalled)
Bernard Hickey (Interest): Orr jabs at banks on deposit rates and inclusion
Stephen Minto (Daily Blog): The Crusade against inflation
Tom Pullar-Strecker (Stuff): Reserve Bank hikes official cash rate to 4.75%
Gyles Beckford (RNZ): Reserve Bank raises official cash rate by 50 basis points to 4.75 percent
Herald: Reserve Bank bumps OCR up to 4.75pc despite Cyclone Gabrielle’s economic blow
Jonathan MItchell (NBR): RBNZ hikes by 50bp; cyclone impact on monetary policy unclear(paywalled)
Jenna Lynch (Newshub): Newshub-Reid Research poll: Do Kiwis want help with mortgage rates?
Susan Edmunds (Stuff): Official cash rate increase: What does it really mean for home loan rates?
RNZ: Cyclone and Auckland floods: Recovery phase expected to boost economic activity – Infometrics

CYCLONE GABRIELLE, FLOODING
Brent Edwards (NBR): Cyclone Gabrielle recovery poses risks for Govt and Opposition(paywalled)
Katharine Moody (Interest): Top 5 emergency management planning rules needed
Thomas Manch (Stuff): New natural disaster insurance law passes in Parliament
ODT Editorial: Timely law change as disasters strike (paywalled)
Audrey Young (Hearld): Prime Minister Chris Hipkins makes his first mistake, on Cyclone Gabrielle lawlessness
Luke Malpass (Stuff): Christopher Luxon calls on Government to get tough on ‘low-life, scumbag’ looting in cyclone-hit areas
Thomas Coughlan (Herald): Cyclone Gabrielle: National’s Christopher Luxon slams criminals, opposes ‘flood tax’ (paywalled)
Kate Hawkesby (Newstalk ZB): Govt’s denial of any looting in Hawke’s Bay smacks of a Jacinda-type approach
Kerre Woodham (Newstalk ZB): Same level of crime as you’d usually expect? That’s not what the people are feeling
Phil Pennington (RNZ): Cyclone Gabrielle: Transport infrastructure repairs not a clean-cut task
Rob Campbell (Newsroom): Floods have barely receded and already the self-serving calls: Build, baby, build
Gerhard Uys (Stuff): What does cyclone damage mean for our food supplies?
Rob Stock (Stuff): ‘I can absolutely empathise’: Head of revamped disaster insurance claims service lost home in earthquake
Gianina Schwanecke (Stuff): Cyclone Gabrielle: Traumatised couple return to Eskdale home to document losses for insurers
RNZ: Red-stickered Auckland homeowners may need to pay rates
Samantha Gee (RNZ): Cyclone Gabrielle worsens Gisborne’s housing crisis
Denise Piper (Stuff): Government hasn’t forgotten cylone-hit Northland, minister insists
Angela Woods (Herald): Lack of investment blamed for Northland’s roading woes after Cyclone Gabrielle (paywalled)
Lianne Dalziel (Newsroom): Don’t red-zone cyclone regions – disaster offers us the chance to put things right

FORESTRY SLASH
David Norton (The Conversation): We planted pine in response to Cyclone Bola – with devastating consequences. It is now time to invest in natives
Anne Salmond (Newsroom): Cyclone aftermath: Lies, damned lies and statistics
Aaron Smale (Newsroom): Parker’s office says slash not an Environment Ministry issue
Michael Neilson (Herald): Cyclone Gabrielle: PM Chris Hipkins to announce forestry slash inquiry on Thursday during Hawke’s Bay visit
Jo Moir (Newsroom): Govt to announce forestry slash investigation this week

CLIMATE CHANGE
Herald Editorial: Managed retreat our planning blueprint (paywalled)
Newshub: Patrick Gower slams National leader Christopher Luxon’s ‘demeaning’ handling of Maureen Pugh’s climate comments
1News: Luxon gives Pugh homework in wake of climate comments
William Hewett (Newshub): Greens co-leader Marama Davidson slams National MP Maureen Pugh for ‘unbelievable’ comments on man-made climate change
Steven Cowan: Marama Davidson: Labour’s loyal servant
Alex Casey and Anna Rawhiti-Connell (Spinoff): Some handy climate resources for the Maureen Pugh in your life
Rachel Brown (Stuff): The climate does not respond to promises – it responds to action
RNZ: Climate protesters block Fonterra office entrance
Brent Edwards (NBR): National MPs question whether Green investment fund adds value(paywalled)

PARLIAMENT
Johnny Blades (RNZ): Entrenchment use under the grill in Standing Orders review
Hayden Donnell (Spinoff): Efeso Collins on his return to politics, and why he chose the Green Party
Claire Trevett (Herald): Who won the first Question Time of 2023? Not PM Chris Hipkins or National leader Christopher Luxon (paywalled)
Claire Trevett and Michael Neilson (Herald): Prime Minister Chris Hipkins and National’s Christopher Luxon head-to-head in Parliament for first time
Glenn McConnell (Stuff): Chris Hipkins’ tax blunder, crime ‘hysteria’ as Parliament gets back to business
Simon Louisson (The Standard): Is Labour heading for Muriwai-scale landslide win?

LOCAL GOVERNMENT
Kiri Gillespie (Rotorua Daily Post): Rotorua Lakes Council votes to scrap controversial Māori representation bill – ‘democracy is tapu’
Todd Niall (Stuff): Hands up for the toughest chief executive job in local government
Erin Johnson and Todd Niall (Stuff): Auckland Council chief Jim Stabback resigns
Bernard Orsman (Herald): Auckland Council chief executive Jim Stabback resigns halfway through five-year term
Todd Niall (Stuff): Chlöe Swarbrick launches climate petition about Auckland mayor Wayne Brown’s budget
Todd Niall (Stuff): Call to charge $500 for the right to park on Auckland streets
Todd Niall (Stuff): Council-owned Ports of Auckland lifts profit and dividend
Paul Majurey (Herald): Reconnecting public to vacated Ports of Auckland land
Will Mace (NBR): Auckland Airport stock maintains altitude as council weighs sale([aywalled)
Erin Gourley (Stuff): Cyclone Gabrielle: More than 30 councils sign up to adopt a flooded community
Emily Ireland (Local Democracy Reporting): Survey shows only 9 percent happy with South Wairarapa council
Raphael Franks (Herald): Kaipara mayor Craig Jepson takes issue with karakia said by member of public at council meeting
Rachael Kelly (Stuff): Gore has 13,000 residents, and nearly $50 million of debt
Michael Fallow (Stuff): Invercargill City Council appoints new chief executive
Katie Townshend (Nelson Mail): Nelson Seafarers MemorialJetty ownership to shift to council for upkeep

EDUCATION
Graham Adams (The Common Room_: Hipkins’ stealth revolution in education
Don Brash: The new history curriculum? It’s crap
Shanti Mathias (Spinoff): Starting school later could transform teenagers’ learning – so why don’t we do it?
Felix Desmarais (1News): Labour and National spar over school attendance data release
Molly Swift (Newshub): Principal who doubled attendance rate says Government’s new multi-million fund to tackle truancy should go directly to schools
David Farrar: The latest school attendance data is disastrous
Mike Hosking (Newstalk ZB): Not all truancy situations are created equal

HOUSING
Philippa Howden-Chapman, Nevil Pierse and Brodie Fraser (Public Health Communication Centre): Housing and urban regeneration in Aotearoa New Zealand
Stephen Ward (Waikato Times): Big risks exposed in ‘one-sided’ $150m housing cash deal for Hamilton
Geraden Cann (Stuff): Website allowing tenants to see what landlords own records 188,000 searches 
Miriam Bell (Stuff): The towns where house prices have doubled over the last 10 years

BUSINESS
Rob Stock (Stuff): Secret mortgage war: BNZ offers 4.99% one-year rate to new customers
Brianna Mcilraith (Stuff): We produce enough food for 40 million, so why our supermarket shelves bare?
Dita De Boni (NBR): Dogged anti-bullying campaigner again tries his luck in court(paywalled)
Brianna Mcilraith (Stuff): The things we won’t stop buying even when we’re tightening our belts

HEALTH AND DISABILITY
Anneke Smith (RNZ): Health NZ braces for tough winter with plan GPs are unaware of
Laura James (1News): Disability Minister has ‘heard concerns’ about accessibility bill
Richard Davison (ODT): Protesting hospital cuts pointless, Cadogan says (paywalled)
Lyric Waiwiri-Smith (Stuff): Why do Kiwis vape so much compared to the rest of the world?
David Williams (Newsroom): How a university’s Covid stance evolved, then fell apart
Ian McCrae (BusinessDesk): Everyone deserves my brain tumour experience – but most are missing out

FOREIGN AFFAIRS
Thomas Coughlan (Herald): Have Chinese spy balloons flown over New Zealand?(paywalled)
Sam Sachdeva (Newsroom): NZ’s nightmare scenario in Ukraine war
Thomas Manch (Stuff): Prime Minister Chris Hipkins speaks with Nato secretary-general Jens Stoltenberg
Malcolm McKinnon (Stuff): One year on from invasion of Ukraine: victory or peace?
Anna Whyte (Stuff): Pacific Island Forum meeting politically, personally important to deputy PM

501 DEPORTEE RULING
Michael Neilson (Herald): Government to rush through bill to fix law after 501 deportee High Court ruling
No Right Turn: Labour to courts: F*** you

MIGRANT WORKERS
Amelia Wade (Newshub): Cyclone Gabrielle: Immigration Minister Michael Wood urgently reviewing whether tweak needed to RSE scheme
Damien Venuto (Herald): The Front Page: Is Immigration NZ getting a ‘stink reputation’ with migrant workers?

ENVIRONMENT
Jonathan Milne (Newsroom): Cawthron boss told he should have expressed himself better
Bryce Wilkinson (Herald): The question not asked over net benefits from RMA replacement Bills

MEDIA
Karl du Fresne: Why journalists’ credibility is declining (No. 137 in a series)
RNZ: The Detail: Younger audiences slip away from local media

TRANSPORT
Thomas Coughlan (Herald): Auckland Light Rail works begin today – but will the Government axe it? (paywalled)
RNZ: Interislander passengers may wait days for rebooked crossing
1News: People left sleeping on couches after Interislander problems

OTHER
Audrey Young (Herald): Māori hate Conservation Department, ex-DOC minister tells MPs
Liz McDonald (Press): Quake-hit Cantabrians still mired in claims 12 years after disaster
Jonah Franke (Stuff): Explaining citizens’ assemblies – how they could make politics fit for the future
Morgan Godfery (Stuff): ‘The modest reclamation of Māori is an undeniably good thing’
Mike Mather (Stuff): ‘They just told us to get lost’ – Prison officers at Waikeria Prison powerless to stop riot
Giles Dexter (RNZ): National Party to use select committee boost to influence freedom camping law
Nikki Mandow (Newsroom): ‘It sends shivers down my spine what we manage to achieve’
Brigitte Morten (NBR): The ‘enormous’ problem of protection (paywalled)