The Week in Politics: David Seymour's dragon soon to be unleashed

Analysis: David Seymour's Treaty Principles Bill is a step closer to Parliament as warnings about its divisive potential ramp up, and Labour leader Chris Hipkins hints his party could go into the next election with a radical tax policy.

A cartoon published by the New Zealand Herald this week showed a fierce dragon with a diminutive David Seymour standing in front of it, saying: "Not long now, my precious, and you'll be off the chain."

The timing was spot on. The next day it was confirmed the ACT Party leader's Treaty Principles Bill would be introduced to Parliament in November and after its first reading it would go through a six-month select committee process.

Cabinet discussed it on Monday, but Prime Minister Christopher Luxon wouldn't talk about it, citing Cabinet confidentiality.

At his post-Cabinet press conference, Luxon again set out National's well-known position on the bill - under the coalition agreement with ACT, it would support it on first reading but not beyond that.

That means, as has been known since the government was formed, that the bill won't become law and there will be no referendum on the principles it contains, which was Seymour's original intention.

It was left to Seymour to explain Cabinet's decisions, and he released the revised set of principles which will appear in the bill when it is drafted.

To understand the difference, it is necessary to compare the principles as they were originally set out, which are still on ACT's website, and the revised versions.

The original, based on the first three articles of the Treaty of Waitangi:

• The New Zealand Government has the right to govern all New Zealanders.
• The New Zealand Government will honour all New Zealanders in the chieftainship of their land and all their property
• All New Zealanders are equal under the law with the same rights and duties.

Those were simply stated and difficult to argue with. The problem was whether they accurately reflected the meanings in the first three Treaty articles. The Waitangi Tribunal and numerous Māori activists said they didn't.

The revised principles are:

• Civil government - the government of New Zealand has full power to govern, and Parliament has full power to make laws. They do so in the best interests of everyone, and in accordance with the rule of law and the maintenance of a free and democratic society.
• Rights of hapū and iwi Māori - the Crown recognises the rights that hapū and iwi had when they signed the Treaty/te Tiriti. The Crown will respect and protect those rights. Those rights differ from the rights everyone has a reasonable expectation to enjoy only when they are specified in legislation, Treaty settlements, or other agreements with the Crown.
• Right to Equality - everyone is equal before the law, and is entitled to the equal protection and equal benefit of the law without discrimination. Everyone is entitled to the equal enjoyment of the same fundamental human rights without discrimination.

The re-written principles aren't so simple, and were presumably crafted to make the bill less objectionable to Māori. If that was the intention, it didn't work.

"It's a pig, it's dressed up as a pig, and it's still a pig," said Te Pāti Māori co-leader Debbie Ngarewa-Packer.

Seymour seemed satisfied with the changes.

"It accepts that hapū and iwi - not all Māori, but specific hapu and iwi - had existing property rights on February 6th 1840," he said. "That's a matter of specific fact rather than a categorisation of people."

The announced agreement that the bill would have a six-month select committee process, lasting through to May next year, caused a separate controversy. Six months is the usual time for select committee consideration of a bill, but it is often set at less than that.

"That would take the ACT-led debate right past Rātana celebrations and Waitangi Day next year - when the government will likely be challenged again on the issue," RNZ reported.

Hipkins said Luxon could shut it down earlier.

"You can have a first reading and not send it to a select committee, you can send it to a select committee for a period of 24 hours, report it back and then vote it down," he said.

"The National Party could end this debate if they were of a mind to."

Luxon never wanted the bill and, as Hipkins says, he could shut it down. The prime minister won't do that because, as he has so often explained, he's bound by the coalition agreement.

Seymour holds all the cards on this, as does any minor party leader in coalition with a major party which depends on its votes to hold a majority. If Luxon breached the coalition agreement, Seymour could - and probably would - bring the government down.

Critics of the bill have been numerous and noisy, with Te Pāti Māori threatening a protest hikoi of unprecedented strength.

This week they were joined by 400 church leaders, including the highest-ranked in several denominations, who published an open letter to MPs.

"We call on all Members of Parliament to do everything in their power to not take this bill to select committee and to work towards the ongoing restoration of the Tiriti relationship," they said.

Another damning verdict was delivered this week - former prime minister and constitutional expert Sir Geoffrey Palmer, quoted by Politik. He called the bill "a political stunt".

"It's hardly a serious constitutional proposal," he said. "And it's promoted by a party that has got 11 seats in Parliament, got 8.6 percent of the vote, and 9 percent of the members of the 123 (member) House. So it hardly has a policy mandate for this in the wider general public."

A lot has been said and written about precisely how the government is going to get rid of the bill after the select committee process. A bill would normally come up for a second reading and if that happened National could vote it down, but there's no mention of a second reading in the coalition agreement.

Politik's Richard Harman asked Clerk of the House David Wilson what the options were, and he explained. The government could move a motion to discharge the bill, it could be placed at the bottom of the order paper and left there for the duration of the Parliamentary term, or there could be a motion saying the bill would receive its second reading at a later, unspecified, date.

Along with the revised principles, Seymour released the regulatory impact statement on his bill and the Cabinet paper that accompanied it.

"The advice from Ministry of Justice officials and contributing agencies is that the bill would be damaging to Māori/Crown relations and hasn't met the standard of good faith engagement with Māori that is required under the Treaty," RNZ reported.

Seymour disagreed, saying the six-month consultation during the select committee process and the ongoing national conversation since 2022 provided ample opportunity for all New Zealanders to provide feedback.

It's very likely that a special select committee will be appointed to deal with the bill, probably with Māori MPs heavily represented. It's going to be an intense and almost certainly very divisive process - with wonderful publicity for the ACT Party all the way through.

Tax talk

Running second to the Treaty Principles Bill this week was Labour and the tax policy the party says it is discussing internally.

The big question hanging over Labour since the election has been whether it will go into the next one with a capital gains tax or a wealth tax.

Hipkins vetoed a wealth tax after former ministers David Parker and Grant Robertson had worked one out before the last election, which led to Parker's resignation as revenue minister.

Hipkins lost his nerve in the face of National's "tax and spend" attacks, and there's been speculation about whether he will have the courage to see it through next time.

The Labour leader has been talking about tax policy for the last two weeks without actually saying anything that could be latched onto as a clear policy direction.

Stuff's Tova O'Brien pushed him on her podcast.

"I think we do actually need to have a fairly significant conversation as a country around tax," Hipkins told her.

"All of the major international economists including the World Bank, the IMF, the credit rating agencies, they all come to New Zealand and they say 'you guys place far too much emphasis on taxing salary and wage earners and not taxing other forms of income', and I think they've got a point."

Hipkins said salary and wage earners paid a disproportionate share of tax because other forms of income were not taxed.

O'Brien pushed further: "Will Labour campaign on broadening the tax system?"

Hipkins replied: "I think I can say yes to that question - exactly what that looks like, we've still got a lot of water to go under the bridge."

O'Brien asked whether a wealth tax or a capital gains tax were "squarely on the table" for Labour.

"We've put all tax options on the table because we do need to broaden the government's tax base," Hipkins said.

Stuff columnist Vernon Small, who was at one time Parker's press secretary, thought about that.

"Labour leader Chris Hipkins might be trying to soften up the public, or he might just be whispering sweet nothings in the ears of grumpy and impatient party activists who think he's not doing enough to counter the government's spin or show the public why Labour should be back in the Beehive," he said.

"While he might still argue that his musings… are well short of detailed policy announcements, something has clearly changed."

Hipkins made similar comments in other media interviews, and it was enough to get National going.

Luxon chose to read more into it than was actually there, saying at his post-Cabinet press conference he had seen reporting of Hipkins advocating for a capital gains tax.

"The message is pretty simple. Labour is for more tax, more spending, more borrowing, you saw that really clearly in those public statements and that is what got New Zealand into trouble, big time," he said.

Finance Minister Nicola Willis had previously chipped in with a social media post "Labour loves talking about raising taxes".

It all sounds very familiar. The Herald was sufficiently interested to publish an editorial headed 'A grown-up discussion on tax reform'.

The paper said New Zealand was one of the few countries in the OECD that did not have a wealth or capital gains tax. It went over the IRD study that found the wealthiest families paid an effective tax rate of 9.4 percent, less than half the 20.2 percent the average New Zealander paid, the plan worked out by Parker and Robertson, and Hipkins' veto.

"Now in opposition, Labour is again weighing the idea of a wealth tax, "it said.

"For too long, politicians have refused to properly debate tax reform. It's been in the too-hard basket for anyone in power, particularly as an election approaches.

"We need a proper, grown up discussion on taxes in this country. That should involve all political parties, working out what we want our taxes to pay for and who should pay what."

* Peter Wilson is a life member of Parliament's press gallery, 22 years as NZPA's political editor and seven as Parliamentary bureau chief for NZ Newswire.