Thursday, July 27, 2023

Point of Order: Parker resigns as Revenue Minister

Stamps himself as a politician of principle

New Zealanders should be standing up and giving a round of applause to a politician who this week set himself apart in the House of Representatives as a person of principle. Such politicians are highly uncommon these days, so Point of Order will be leading the cheering for David Parker who this week resigned as Minister of Revenue because the Prime Minister had over-ruled him and dismissed the plan to introduce a wealth tax “while I am Prime Minister”.

Some political commentators were critical of Parker. Claire Trevett, political editor of the NZ Herald, saw his action as an “Ill-timed bout of personal principle that carries a whiff of petulance and selfishness”.

She believes PM Hipkins was already dealing with enough trouble, as MPs crammed the exit door — the last thing he needed was an arm wrestle with the ones remaining as well.

“That is especially the case when it comes to something Labour is now increasingly hoping will help put its election chances back on course: its coming tax policy,” Trevet wrote.

“Yet there was Parker apparently packing a sad because Hipkins had killed off his hopes and dreams of a wealth tax”.

Trevett did note that taxes such as a capital gains tax and wealth tax are a matter of long-held principle for Parker. He has had to shelve that numerous times in the past, including in 2019 when Jacinda Ardern ruled out a capital gains tax.

“This time round he appears to have decided that he has swallowed enough dead rats for the sake of politics over principle and this was one dead rat too far”.

The Post’s report had a different tone to it than Trevett’s. Its political editor, Luke Malpass, wrote that this is a significant and consequential development for this Government. While there have been a number of ministerial resignations this year caused by various misbehaviour, Parker’s stepping down is over a matter of policy, principle and ideology.

“It’s about what Labour believes,” Malpass wrote.

“Parker left the job because what he wanted to do was at odds with the stated aims of Hipkins.”

He is now transport minister – which was a portfolio given to him after the resignation of another minister, Michael Wood. He is understood to have been working on Labour’s transport policy.

A clue as to why he did what he did was to be found in his statement that, “I’m an agent for change – for progressive change. I’ve been that way all of my political life and I’ve still got lots of energy as shown by the scraps that I’ve got into in the last couple of weeks on transport.”

Parker also continues to shepherd Labour’s massive overhaul of the Resource Management Act through Parliament.

Parker was key in doing the Government’s work on IRD’s high wealth individuals research project. This compelled rich New Zealanders to give over significant tax and earning data to the IRD.

That work showed that the richest New Zealanders pay half the rate of tax as the average New Zealander, although the report was criticised for its use of “economic income” as a useful concept for how much tax people paid.

Nevertheless, Parker was extremely proud of this work and has argued consistently that it put real-life data around the gathering of wealth, and on his version of events, the legal minimisation of tax by the wealthiest Kiwis.

Malpass went on: “From this came the logic of a wealth tax. Informed by the work of French economist Thomas Piketty, Parker has been concerned for a number of years about the relative share of income earned from capital as opposed to that of wage and salary earners and the tax treatment of those forms of income.

“With the wealth tax scotched, the intellectual and political platform for tax changes which Parker had been patiently building up over years was effectively chucked out. Chucked out, it should also be noted because Hipkins didn’t think that there was a good political basis for it.

“It has become clear that Labour’s re-election campaign is going to be focused squarely around the leader”, Malpass says.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton


Ken S said...

David Parker - the Don Quixote of NZ politics. And just as useless?

Anonymous said...

Parker is manipulative. He orchestrated the report on the tax paid by the most wealthy 300, for the very purpose of justifying his personal agenda to introduce a wealth tax, initially at a high threshold with a low tax rate. Without a doubt, the thresholds would be lowered and the rate increased as the financial position of the govt worsened, as projected by Treasury.

That project was nothing more than a convenience for Parker who had no regard whatsoever for the expense that the IRD incurred (taxpayers) and the considerable cost to the 300 people that had to respond to the IRDs questions.

It is highly likely that Parker is now undermining Hipkins so that either he or one of his fellow socialists can take control of the party (after the election) and eventually bring about the radical change to the tax system that he and others within the party want.

Parker is one of the most calculating ministers within the Labour lineup, but the least targeted because his approach is to manipulate behind the scenes without broadcasting his intentions.