Beehive Banter
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New co-leader, landlord boost, unhappy cops, Labour retreat

ANALYSIS: National’s fall-out with police officers is similar to Labour’s with teachers and nurses.

Beehive Banter: the week in politics.

Brent Edwards Fri, 15 Mar 2024

Chlöe Swarbrick was predictably elected Green Party co-leader at the beginning of the week and she immediately attacked the Coalition Government, referring to its 100-day plan as cruel and bizarre.

“The coalition wants you to think better is impossible. They want you to acquiesce to oil, gas, and mining lobbyists’ wishlists to destroy our natural environment. They want you to give in to their bonkers’ agenda that’ll see more people die from smoking to fund landlords’ tax cuts. They want you to believe all politics and politicians are the same. It benefits them and their donors for you to switch off.

“Don’t let this Government’s bully boy behaviour silence you. Let it motivate you,” Swarbrick said.

She has also cast a warning to the Labour Party, suggesting – as others have before her – that the Greens could become the dominant party of the Left. 

New Green Party co-leader Chlöe Swarbrick.

The same day she was announced as Greens co-leader, Regulation Minister and Act leader David Seymour and Revenue Minister Simon Watts announced the Government was proceeding with its plans to bring back interest deductibility for landlords. But there will be no tax break for this current financial year, as originally planned. Instead, from April 1, landlords will be able to claim 80% of their interest costs and then 100% the following year.

The cost of the scheme is now calculated to be $2.9 billion over four years, not $2.1b as National calculated before the election.

Who will benefit?

The Government argues giving landlords tax deductions is as much about helping renters, but there is no likelihood rents will drop once landlords can claim interest deductibility. Questioned on what he might do with his investment properties, Prime Minister Christopher Luxon said it was a personal matter for him and his finances.

Bringing back interest deductibility might mean rents won’t go up as much but, for most renters already struggling to pay the rent, they might not notice much change. 

Coalition faces criticism over interest deductibility for landlords.

Some argue the change will encourage more property investors to buy property and that will increase supply of rental housing, not just easing pressure on rents but also on the rental housing market, making it easier for renters to find a home to rent in the first place.

On the flip side, though, it will also likely mean first-home buyers will face more competition from buyers who have an advantage over them because landlords will be able to claim against their mortgage payments while owner-occupiers will not.

The Government will be hoping the change helps boost the rental housing market, without shutting first-home buyers out of the residential ownership market.

Disappointed police

It is also going to have to deal with repeated criticism of its hard fiscal stance. Whenever it says it cannot afford to spend money on something, its $2.9b spend on interest deductibility will inevitably be raised. It happened this week when the Police Association responded angrily to the Government’s latest pay offer, comparing it with the amount of money put aside for landlords.

Under the current offer, police officers would get a wage increase of $5000 from November 1 last year, then a further 4% increase in September this year and another 4% from July next year. But police officers argue they will still not catch up with inflation, which was 7.2% in 2022 and only dropped to 4.7% at the end of last year.

The fallout with police is reminiscent of the Labour Government’s strained relationships with teachers and nurses, who were outraged and disappointed by the initial wage offers they received. As Labour had to end up doing with teachers and nurses, it seems inevitable the coalition will lift its pay offer to police officers, particularly as it now expects police officers to take a much tougher line with gangs.

Luxon – as Labour leaders did – put himself at arms-length from the dispute, saying it was a matter for the police and the Police Association, which negotiates on behalf of police officers. But it is Luxon and his ministerial colleagues who hold the purse strings and determine just how much money is available for any settlement. 

Police officers are not impressed with their latest pay offer.

It puts Police Minister Mark Mitchell – a former police officer – in a difficult spot as he weaves between the Government’s conservative fiscal policy and its tough-on-crime approach, which would surely also involve making sure the people expected to implement the tougher approach to crime would be paid well for doing it.

RNZ quotes officers as saying the coalition’s offer was “insulting”, “disgusting” and “demoralising”.

Labour leader Chris Hipkins, who was in a similar difficult position over teachers’ pay, can now stand on the sidelines, and criticise the Government, even after the Government he led had made a similarly disappointing offer to police.

“The ball is firmly in National’s court. They gave the police the impression before the election that they thought police should be paid more. Now they’ve actually got to front up and deliver,” Hipkins said.

And police officers will argue that, if the coalition can afford nearly $3b over four years for landlords, it can afford to pay them more than the current offer. Those negotiations are continuing.

Workplace reform

Workplace Relations and Safety Minister Brooke van Velden.

Meanwhile, Workplace Relations and Safety Minister, Act’s Brooke van Velden has announced her priorities for the next couple of years, now that she has got the 100-day plan out of the way by scrapping fair pay agreements, reintroducing 90-day employment trials for all businesses, and announcing a modest 2% increase in the minimum wage.

In a speech this week, van Velden said her first priority was to fix the Holidays Act. Employers and employees alike would welcome someone sorting out the problems around calculating holiday pay. But it has been a long-running problem. Good luck to van Velden in fixing it.

She also intends tidying up health and safety rules, saying it is time to assess whether the health and safety system is fit for purpose, and is seeking advice on how to increase the certainty in contracting relationships. She says the legal status quo has created uncertainty for contractors and businesses.

And, finally, van Velden wants to make changes to personal grievances by setting a high income threshold, above which a personal grievance could not be pursued, and removing the eligibility for remedies if the employee is at fault. This is all in line with Act’s election promises.

Labour retreat

While the Government is considering its next moves after knocking off its 100-day plan, Labour MPs spent the day near Martinborough planning for the year and term ahead.

In some ways, Labour has been galvanised by the coalition’s 100-day plan, given much of it focused on scrapping Labour initiatives. But the party must also wrestle with some big policy issues, particularly around tax, as Hipkins has already conceded. But he repeated tax policy needs to be considered within the party’s wider economic and fiscal policies.

Those will not be resolved this week, but the party will engage in a wide debate about changes to the tax system, including flirting again with the ideas of either a wealth or capital gains tax.

Next week, Parliament is back, and it will push through legislation giving landlords their tax break and imposing road user charges on electric vehicles, as well as passing the bill giving effect to the Free Trade Agreement with the European Union.

Labour leader Chris Hipkins.

Brent Edwards is NBR's political editor. 

NOTE: No video this week as host Grant Walker is away. He returns next week. 

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New co-leader, landlord boost, unhappy cops, Labour retreat
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