In his opening speech in Parliament this year Green co-leader James Shaw suggested that ‘we’ – the Green Party at least – may not deserve to be re-elected unless a more comprehensive Capital Gains Taax – “tax income from capital the same way that we tax income from work” – is introduced.

Green Party Economic Policy:

Capital Gains Tax

• In order to treat all income the same, introduce a comprehensive capital gains tax on inflation adjusted capital gains at the time the capital gains are realised.
• Exempt the family home from capital gains tax.

Now Jacinda Ardern has said that not only will the Government not be proceeding with plans to introduce a CGT, but that it will never happen while she leads the Government, Shaw is left looking silly and impotent, again.

And Shaw has made things worse by they do deserve to be re-elected because of other things they are doing on climate change, tackling homelessness, and cleaning up rivers – but progress on those issues is hardly worthy of self praise.

Shaw was interviewed on RNZ Morning Report: Capital gains tax plan dropped – James Shaw responds

The Green Party co-leader James Shaw has been dealt two hefty blows – not only the confirmation the capital gains tax has been ditched but that Jacinda Ardern has also taken it off the table as long as she is Prime Minister.

In February he suggested on this programme that the government didn’t deserved to be re-elected if it didn’t follow through with a capital gains tax. Now he’s changed his mind saying they do deserve to be re-elected for their work on climate change, tackling homelessness, and cleaning up rivers.

Suzie Ferguson: New Zealand First pulled this down, didn’t they.

James Shaw: Well as the prime Minister said they couldn’t form a consensus in Cabinet around that um recommendation on the Capital Gains Tax and so the pulled it.

Suzie Ferguson: And so you are outside Cabinet but clearly were supportive.

James Shaw: Well, you know we were consulted on the indecision, um and so you know we just got to a point where we said well, you know this is clearly not going to go any further so Government has to proceed.

Suzie Ferguson: But the Prime Minister ultimately must have buckled under pressure from Winston Peters, because Labour supported it, and the Greens supported it, so who’s left?

James Shaw: Well, I mean that’s a question for her and the Deputy Prime Minister. I wasn’t privy to those conversations. Um, you know our relationship primarily was through Grant, you know we were talking to him on a regular basis about where we were hoping it might go. Um but it is a coalition government and ultimately in coalition governments not everyone gets everything they want all the time.

Labour and NZ First have a coalition agreement, Greens are outside of this arrangement providing ‘confidence and supply’. It sounds hear like Shaw was not a part of the CGT discussions at all, he was merely being informed by Grant Robertson of the lack of progress. So sitting on the sidelines, impotent.

Suzie Ferguson: Indeed, but what is the quid pro quo?

James Shaw: Ah there isn’t a quid pro quo. I think the, um, you know the thing about this government actually is that you actually look at each issue, um, by issue, and and each thing stands or falls on it’s merits.

This issue fell seemingly without Greens having a say.

Suzie Ferguson: Mmm, but you’re having to swallow quite a dead rat on this one, so are you saying you’re not getting anything in return?

James Shaw: Well like, we’re getting to be in government, ah and along with that ah comes a substantial ah set of policy gains that we wouldn’t have if we weren’t in government.

Greens have achieved or are trying to achieve some policy gains, but these are dwarfed by the policy gains that NZ First have been able to achieve – which must be with Green approval. it looks like Greens give a lot, and get little. Word is that Shaw is struggling to get his Climate Change policy past NZ First. These are big impediments to core Green policies.

Suzie Ferguson: Mmm, but what is the point in being in government if you don’t get some of the major wins?

James Shaw: Well we are getting some of the major wins. So I’ll give you some examples. Um we’ve put fourteen and a half billion dollars into a rapid transit um buses, light rail, aah walking and cycling over the next ten years.

That’s proposed, not done. Greens will struggle to be in Parliament let alone Government for anywhere near that long. Recently the Minister of Transport conceded that light rail is likely top be scaled back. And the Auckland City rail loop cost has just jumped by a billion dollars, this must put pressure on other transport spending.

James Shaw: We’ve had the largest funding in conservation in the last sixteen years.

The funding of most things goes up over time, so it is only a gain if funding increases are significantly above inflation (I don’t know in this case if it is).

James Shaw: Um we’re about to introduce the zero carbon bill into Parliament. So you’ve got you know across the whole range of areas huge progress, more progress than we were able to make in  the last twenty years we were in opposition.

Suzie Ferguson: It’s been reported though this morning on Politik that New Zealand First will be folding their opposition to Labour’s climate change policies, and that is the price. Is that not the case?

James Shaw: I haven’t read Politik this morning, sorry.

Suzie Ferguson: But is that something you know about or not?

James Shaw: Look I’m not aware of that report so I can’t comment on it.

Suzie Ferguson: So there is no quid pro quo as far as you know? That’s what that report would seem to indicate.

James Shaw: Well like I said I haven’t seen it so I couldn’t, it’s hard for me to comment on something I haven’t seen.

Suzie Ferguson: Mmm but it’s not anything you’ve heard from the Prime Minister or indeed as these final negotiations have been taking place?

James Shaw: No it’s not.

This is what was said at Politik:

Jacinda Ardern claimed to her press conference yesterday that the decision to dump the tax was made without any sort of a deal with NZ First.

But nothing comes for nothing in politics.

And NZ First must surely expect there will be a price to pay. Most likely this will be in them folding their opposition to Labour’s climate change policies.

That may just be speculation.

Suzie Ferguson: Can the Government still claim to be transformational?

James Shaw: Yes, I think we can…

Suzie Ferguson: Why?

James Shaw: Well because like I said, on so many areas, and Grant Robertson was talking about that earlier this morning, the work that we’re doing on ending homelessness, on lifting people out of poverty, ending child poverty, on mental health, on climate change, on conservation, on cleaning up our water, those are the areas that really tipped the election in 2017, and those are the areas we are making progress on.

Most of those are being worked on rather than making notable changes. It may take another year (or longer) to judge how successful they have actually been.

James Shaw: Now, I’m not saying that I’m not disappointed about this decision, I am, and Green party policy hasn’t changed on that, but you know as with anything. You’ve got to take it all in the round, and when I said aah that I think that we should you know be questioning ourselves, we should always be questioning ourselves about how transformational our Government is.

And actually I think that we’re doing in fact have done more in the last eighteen months than the previous government did in nine years, and so I would choose it every time.

That’s a tired old comparison that Labour and Greens keep trotting out. It’s rhetoric with no factual basis.

Suzie Ferguson: To achieve targets around lifting children out of poverty and social justice, the only way to achieve those targets now is going to be with borrowing isn’t it.

James Shaw: (deep breath) Ah well that is a question for the Minister of Finance, um and…

Suzie Ferguson: But I’m asking you because it’s Green Party policy as well, so how would you be wanting to achieve those targets. You’re going to need extra money coming from somewhere. Are you going to borrow it?

James Shaw: Yes we are. Um but but I can’t comment on this year’s budget obviously because that’s about to be announced.

This year’s budget has nothing to do with the future plans that will be affected by no longer being able to get on previously relied on tax from a CGT.

Suzie Ferguson: But you’ve been talking about relaxation, or possible relaxation of the fiscal rules you signed up to. Is that how you get these over the table.

James Shaw: I believe so, yes.

Suzie Ferguson: So there is going to be extra borrowing.

James Shaw: I can’t tell you that.

Shaw is Associate Minister of Finance so must be privy to some sort of discussions on how policy promise might be funded without having a CGT.

Suzie Ferguson: But you believe so.

James Shaw: Well well look no ultimately I think that if you look at the long term fiscal strategy ah of ah Government um you know we have said that we think that needs to be reviewed, and we intend to do so.

Um at the moment actually the economy is doing very well, ah and we’ve got revenue coming in, so you know we are able to invest in things we wouldn’t have otherwise been able to invest in otherwise.

Suzie Ferguson: You famously said that the government didn’t deserve to be re-elected if you didn’t follow through with a capital gains tax…

James Shaw: …that’s not strictly true…

Suzie Ferguson: …hang on a minute. Um why did you say that?

James Shaw: What I said was we should be asking ourselves the question of whether or not we deserved to be, and we should be asking ourselves that question al the time, on the basis that at the last election ah you know a majority of New Zealanders voted for change, they voted for bold change.

I don’t see how he can claim that. People vote the way they do for a wide variety of reasons. Some may even have voted for NZ First hoping they would go into Government with National. The party wanting the most radical change, the Greens, got substantially fewer votes than they got in the previous election.

James Shaw: Now you know tax reform was…

Suzie Ferguson: And now you say they’re not getting it as of yesterday.

James Shaw: …well no tax reform is a part of that picture but it’s only a part of that picture. And like I said if you look at everything that we’re doing, whether it’s in the domain of lifting people out of poverty or ending homelessness or cleaning up the environment, ah you know action on climate change.

We have taken some really big calls and we will be taking some really big calls over the course of the coming eighteen months before the next election.

Depending on what Winston allows them to call.

James Shaw: And so in the round yes, I do believe that we deserve to be re-elected, but we should never stop asking ourselves that question.

On the basis of losing the CGT battle, and the big calls to be made over the next 18 months, I think it is premature to claim the Greens deserve to be re-elected.

From Shaw’s big speech to start the year in Parliament in February:

Now, the Green Party has long been calling for that fundamental imbalance to be addressed, and every single expert working group in living memory has agreed with us, but no Government—no Government—has been bold enough to actually do it. But if we are to be the Government of change that New Zealanders wanted and elected, we must be bold.

The crises that we face on multiple fronts—the wealth gap, climate change, the housing crisis—we cannot solve without fundamental reform. These crises have been allowed to metastasise because generations of politicians have timidly tinkered rather than actually cut to the core of the problem.

And the consequences of that timidity—the consequences of that timidity—are being felt by Karen and by hundreds of thousands of New Zealanders just like her, trapped in “Generation Rent”. So when the commentators pontificate about whether this Government can politically afford to do what no other Government before it has done, I ask “Can we afford not to?”

Can we afford not to?

We were elected on the promise of change. If we want to reduce the wealth gap, if we want to fix the housing crisis and to build a productive high-wage economy, we need to tax income from capital the same way that we tax income from work.

The very last question that we should be asking ourselves is: can we be re-elected if we do this? The only question we really ought to be asking ourselves is: do we deserve to be re-elected if we don’t?

That’s a question that voters will answer in 18 months.

See James Shaw slams tax timidity, calls on Labour, NZ First to be bold with CGT