Political Roundup: TOP offering the transformation lacking in other parties
The Opportunities Party (TOP) is putting other political parties to shame with its bold and innovative policies. Yesterday TOP announced their latest tax, housing, and income policies, and they were the sort of bold and transformative innovations that supporters of parties like Labour and the Greens have been desperately wanting to see from their own parties.
TOP’s new leader, Raf Manji, held a press conference in Wellington to announce radical policies that the party will take to next year’s election in a third bid to make it into Parliament. He also announced another possible route into Parliament, with his intention to stand in the Christchurch seat of Ilam, where he came second in 2017.
Land and income tax policies
The game changer policy that could reset debates on capital gains tax and income tax is the proposal to levy an annual tax of 0.75 per cent of the value of residential land properties. The party pitches this as a superior alternative to a capital gains tax, and says it would raise $6.75b-$7.5b annually.
The tax would be fairly straightforward, and difficult to avoid. For example, a residential property with a land value of $1m would pay an annual levy of $7,500. There would be only limited exemptions – for rural, conservation and Māori land, and people over 65 years could defer their payments. The tax wouldn’t apply to the buildings on the land.
TOP says that the current “Brightline tax” on property would be axed. In addition, property owners would once again be able to deduct interest costs from their tax bills for rentals and new house builds.
TOP would also make a huge change to income tax by creating a $15,000 tax-free threshold, which means all income up to that point would be untaxed. According to Treasury research, this would cost about $5.2b. Hence TOP is selling this as a “Tax switch” – shifting the burden of taxation from income, and especially the poor, to those who own properties. Overall, TOP says the policies would be “fiscally neutral”.
The current income tax thresholds would also be adjusted. And Labour’s 39 per cent tax for top incomes would be maintained.
The overall philosophy of these tax changes, according to Manji is to “rebalance the economy” and correct unhealthy trends, particularly in terms of the housing market and inequality.
Income support policies
Poverty campaigners will be enthusiastic about TOP’s policy of extending the current “In Work tax credit” of Working for Families to those on benefits – costing about $900m. This will have a big impact on inequality, and is a policy that Labour has studiously avoided in recent years.
Perhaps more controversially, TOP is advocating for a one-off cancellation of all beneficiary debts with the Ministry of Social Development – amounting to about $2b.
In terms of inequality, Manji says: “People are caught in a vortex of unaffordable living and are unable to progress with this huge burden of debt around their necks. Meanwhile, the Government has overseen a huge upwards transfer of wealth due to their Covid-19 policies.”
Much of TOP’s focus is on the housing crisis – with the land tax being their prime weapon against imbalances in the market. They have also proposed spending much more on social housing for the poor, identifying that thousands of additional houses need to be built on top of what the Labour Government has planned.
To do this they are advocating a $3bn package of spending for community housing associations, to build 6-10,000 new homes. By bypassing the Government’s Kāinga Ora state housing agency, this might appeal to some on the political right that want to see more social housing but less government bureaucracy.
They also propose that all GST collected by central government from the building of new houses should be reallocated to local authorities to help pay for and incentivise the building of necessary infrastructure.
TOP’s route to power: Ilam
TOP’s policies appeal to the Zeitgeist – the need to shake up the status quo in politics, especially the lack of effective policies to deal with the big problems of housing and inequality.
And at the moment there seems to be large segment of the population who voted for Labour or the Greens in 2020 and have become disillusioned with the current government, but not convinced that a National-Act administration would be any better. There are also former voters from New Zealand First looking for an anti-Establishment option.
And so far, the current policies are getting some interesting endorsements from individuals across the political spectrum – for example, leftwing blogger Martyn Bradbury and rightwing blogger David Farrar have both expressed support for the announcements. In terms of the latter, Farrar says such a tax switch – from taxing incomes to land property instead – will make the tax system more efficient and fair: “TOP’s policy will see people rewarded more for working more, and discourage people from land banking. I support it.”
Maybe we are therefore seeing the start of a minor party rising to fulfill the need that the old parties aren’t delivering. And by positioning itself as a pivot party, TOP could hold the balance of power in 2023 and decide the next government. However, it’s worth pointing out that breaking into Parliament is astonishingly difficult, and TOP is a good example of how hard it is for new political parties.
The party was established in 2016 by wealthy economist Gareth Morgan, and despite his millions of dollars of funding the party only received 2.4 per cent of the party vote at that election. In 2020, under new management, and leader Geoff Simmons, the party managed 1.5 per cent.
The party is currently fluctuating between about 1 per cent and 3 per cent in the polls. To hit the 5 per cent MMP threshold they need to win about 140,000 votes. Getting to that has so far proved impossible for all new political parties under MMP unless they already have MPs and have split from an established party.
Manji has announced that TOP might be able to avoid the dreaded need to get to 5 per cent by winning Ilam, where he once got 23 per cent of the vote as an Independent, coming second to National. He has a strong name recognition and support base in the area, having been a Christchurch City councillor for six years.
If Manji was able to look competitive in the Ilam race, more voters might consider giving their party vote to TOP, with the idea that this vote would be less likely to be wasted. This motivation can give minor parties a real boost.
TOP’s basic electoral problems still exist
The biggest problem for TOP – one that has existed right from its origins – is a lack of clarity about why the party exists and who it exists for. It has never been able to convincingly pitch to voters a simple narrative of what it stands for or is trying to fix. Too often its ideological and voter base has been contradictory and self-defeating. This is often the plight of centre parties – they might have lots of good policies and ideas and quality candidates, but without any organic and genuine political identity and reason to exist they fail to take off.
For example, Manji’s decision to stand in the Ilam electorate is smart – he already has a strong track record there, Gerry Brownlee is not going to contest the seat, and the Labour Party incumbent, Sarah Pallett, is unlikely to hold the seat with the tide going out on the Government’s support.
But this is a true-blue seat of middle class home owners. Will they really be receptive to Manji’s new flagship policy of taxing their properties? Surely, it’s going to be extremely unpopular with many of the voters that ticked the Manji box in 2017 when he was an independent.
Will Fendalton voters really be attracted by policies to give a tax cut that disproportionately benefits those at the bottom? Will they agree with wiping the debts of beneficiaries?
So, TOP continues to be a party of middle class policy wonks with policies that perhaps should be highly attractive to those on the left of politics or the working class or dispossessed. But the party is unlikely to appeal to those on the political right or left, nor to constituencies of the rich or poor.
The party can push the idea that it is a “blue-green” party. But it’s not clear what that means anymore. Manji himself says he voted Green at the last election, and at times has been very supportive of John Key. So perhaps he does personify that ideological mashup very well.
But as the party’s fourth leader he is going to have to do much better than the first three leaders to get across that the party stands for more than just “evidence-based policy”. It needs a much stronger identity than just having bold policies.
However, bold policies are a good start. We desperately need policy innovators and disrupters in New Zealand politics. If nothing else they will hopefully give other parties a jolt, perhaps reigniting debates about progressive tax policies and ways to fix the housing crisis. As TOP correctly said yesterday, the “Status quo must go”.
Further reading on TOP’s policy launch
Thomas Coughlan (Herald): TOP eyes Parliament with $6.35 billion tax cut, property tax
Luke Malpass (Stuff): The Opportunities Party releases $6.5b tax cut plan to get back on political map
Martyn Bradbury (Daily Blog): Boom – TOP release incredible policy
No Right Turn: Shifting the window
David Farrar: A good tax policy from TOP
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