Desperate and disappointing Labour

Labour and Prime Minister Chris Hipkins have stooped to a disappointing low with the announcement yesterday that GST would be removed from fresh and frozen fruit and vegetables.

In the worst traditions of former prime minister Robert Muldoon and New Zealand First leader Winston Peters what matters is what people say they want — principle be dammed.

It smacks, as Labour slips in the polls, of desperate populism.

Of course, National and Act are capable of similar approaches. Surely, many in National recognise that parts of its crime and punishment policy are there to feed off public fears. The lock-them-up mentality often leads to more crime, not less.

It can be argued democracy is about the will of the majority. If most people support taking GST off fruit and vegetables, then bring it on.

According to a recent Talbot Mills poll, 66% supported or strongly support the move — 80% for Labour supporters, 75% for Greens, 59% National, 45% Act and 80% for swing voters.

Thus, from the point of view of politics, the policy is a winner — at least until sufficient voters realise what a "boondoggle" it is.

While, ultimately, politicians should and must bend to the will of the people, we also expect values. We expect them to do what is right for the country, not just what will win short-term power.

In the end, what does any party stand for if it is driven by polls and focus groups?

Superficially, taking GST off fresh fruit and vegetables is admirable. It should remove costs from what are mostly healthy foods and does so during "a cost-of-living crisis".

Nevertheless, everyone who examines the matter concludes the policy is poor — both economically and as a means to help the disadvantaged.

Tellingly, Mr Hipkins was asked yesterday to name one expert who agreed with the policy. He sidestepped the question and said that other countries had taken similar action.

He immediately displayed a basic logical fallacy. Just because others do it does not make it right.

Sure enough, Australia and others have GST carve-outs, including on types of food. This creates administrative burdens. Perhaps Labour’s policy will cost the economy as much to run as it gives out, at least initially.

An IRD panel is to determine specific criteria and the grocery commissioner would "monitor" supermarkets.

There will be disputes over definitions and complications over food that might be a mixture of fresh fruit and vegetables and other ingredients.

The cost, estimated at $2 billion over four years, comes at the expense of other spending.

The GST cut, due from April 1 next year, mocks Mr Hipkins’ claim he stands for ordinary and working New Zealanders and not millionaires.

It is the well-off and the educated who are more likely to buy fruit and vegetables and to buy expensive produce.

The New Zealand Herald has calculated GST on fruit and vegetables is worth $11.21 a week for the highest-earning households, $5.63 for the average household and only $2.21 for the poorest homes, the price of a basic packet of chewing gum (GST inclusive).

Labour’s estimate is $5 a week in savings for average families.

These figures assume the GST cut is passed on and not subsumed by businesses.

It was only a few months ago that Finance Minister Grant Robertson slated GST carve-outs and called them a "boondoggle". The Michael Cullen-led tax working group also rejected GST exceptions.

In the words of Infometrics chief executive and economist Brad Olsen, the idea is "pure politics over economics".

"Everyone thinks it’s diabolically silly."

The foolishness draws attention from the other parts of the tax policy. Labour also announced the in-work Tax Credit will increase by $25 a week to $97.50 and the Working for Families abatement threshold will be raised in 2026 to $50,000.

Labour, disappointingly, is pumping for pure populism over sensible policy. It will only have itself to blame if it continues to bleed support to the Greens.