Effective opposition and the question of tax - Labour's year of 'listening'

Analysis: Just a year after Labour's crushing election defeat it is meeting in Christchurch this weekend to begin paving its path to the 2026 campaign.

The party's annual conference comes two weeks after the largest protest seen at Parliament, partly in reaction to the Treaty Principles Bill - an event that prompted unprecedented alignment in tactics from Opposition parties.

It saw the first meeting of the three Opposition leadership teams - Labour, the Greens and Te Pāti Māori - a coordination set to become regular.

Reflecting on his defeat, earlier this year party leader Chris Hipkins signalled his time in Opposition would be about listening, reconnecting and developing new policy ideas. He wanted to understand why Labour lost support from those who had voted for them in the past.

His discussions, he told RNZ in an interview ahead of this weekend's conference, were about recognising that the "next election isn't going to be a rerun of the last one".

"They didn't vote for us last time because of issues around the cost of living, because of issues around crime and various social issues that they thought needed more attention."

Hipkins thinks the standout issues next election are likely to change. The cost of living is still a big factor for people he acknowledged, "but the nature of that's different".

He doesn't think this means the current government is getting it right, saying it's the Reserve Bank that got inflation under control, "and that was going to happen anyway".

"If the election had been a year later, the overall vibe and sentiment would have been different in the election. It wasn't, though, it was just a particularly bad part of the economic cycle to be the incumbent government."

Hipkins knows his party has to offer New Zealanders something different in 2026 but is the first to admit "you haven't seen a lot of new ideas from us this year."

So, what exactly has the party been doing?

In a speech in March this year he indicated the party's policy working group, the Labour Policy Council, would release a series of discussion documents, including one on tax. In his speech he said, "After the election I said that all options around changes to the tax system were back on the table and I meant it."

RNZ has seen a copy of this document which offers explanations for taxes such as a capital gains tax, a net wealth tax, a land tax, an inheritance tax, stamp duty, and the risk-free rate of return method.

The party will vote on a range of issues this weekend that will eventually inform their election manifesto. No policy will be decided this weekend, however. The party received hundreds of remits (or proposals) and has whittled them down - only ten will be discussed openly by those present at the conference.

Tax is one of those ten remits and the proposal states the party will continue work on a CGT or a wealth tax but will not take forward work on other taxes. Given the party will consider which tax to apply, rather than whether to tax at all, shows how far the conversation within the party has come.

For some in the party - the type of tax chosen does represent an existential or generational tension. The discussion is inherent to who Labour wants to be, and who they hope to represent. More practically, it is also a question of what problem the tax is trying to address.

Another of the ten remits that will be debated openly is a proposed amendment to the policy platform, that Labour should be focused on the economic conditions of working people. This would indicate a desire to return to Labour's roots. Those debates in conjunction allow for the necessary and important discussion any party faces about balancing a platform of change with what will win an election.

Hipkins is adamant tax isn't what elections are won or lost on, "I don't think people vote on tax in isolation from everything else that you're doing."

He said everyone in politics spends far more time talking about tax than ordinary New Zealanders. For National, that's "tax cuts and tax reductions" and for Labour that's "diversifying the tax system" or "making the tax system fairer".

"Those aren't things that people are talking about at the RSA on a Friday night or … standing at the side of the sports field on a Saturday morning. They're not the topics of day to day conversation for most Kiwis."

But he acknowledges tax is an issue facing the country - and he's the one charged with selling to the public any solution Labour comes up with.

Capital gains tax fraught

While Hipkins said all options are on the table, the CGT and the net wealth tax are the only two likely to be considered seriously as policy. A capital gain happens when an asset increases in value from a particular starting point, and that gain is realised when the asset is sold at a profit. A wealth tax applies to the entire value of someone's assets, at a low annual rate - a tax on unrealised gains.

The history of capital gains tax policy is fraught. Different iterations of government have attempted to address the issue of tax, before taking turns ruling out a CGT. Most notably, Jacinda Ardern, first reopened the debate, then saying it would never happen under her leadership.

A wealth tax also became a touchy subject within the caucus last year after Hipkins, as Prime Minister, ruled out the proposal colleagues David Parker and Grant Robertson had been working on for Budget 2023. Instead, he went with taking GST off fresh and frozen fruit and vegetables. Another u-turn, like so many by Labour in the past, could be just as damaging as going ahead with the policy.

As Hipkins has pointed out on general issues, this year is different to last year. On tax, even the banks are now pointing toward a CGT. Treasury also came out this month saying it's the best way to raise revenue.

Depending on who you ask, a CGT is becoming an easier sell given most OECD countries also have one. However, it does affect more people. A wealth tax brings in more revenue earlier. That revenue, however, would drop off. A CGT, while coming into the government coffers later, would bring in increasing amounts of revenue before plateauing, but at higher levels.

Those with more wealth could find ways to avoid a CGT. A wealth tax could also be avoided - by leaving the country. A CGT also offers a secondary benefit in incentivising people to not just invest in property.

With a CGT, other decisions must also be considered such as when it comes into force, what is in scope (the inclusion or exclusion of the family home, for example), and what rate it is taxed at. Similarly, with a wealth tax there is a need to identify the scope, and a system of valuation. All that needs to be sorted out to sell the idea in a straightforward way to the public.

And before presenting a 'tax' to the public, the party will want to be able to offer an incentive. What will people get in return for that tax?

Health is an area that constantly needs more money and is increasingly one of the biggest issues concerning New Zealanders. Hipkins echoes this, saying peolpe are starting to see the effects of the government's changes in health. Any new tax revenue could go a long way to helping with that.

Weighing up the pros and cons of any policy is a normal process for any party. Labour's tainted by its history with tax and weighing up the right way to address wealth inequality and fairness in the tax system with what will put Labour back into the Beehive, is part of the discussion the party is set to have.

Hīkoi mō Te Tiriti

Last week, tens of thousands of people arrived at Parliament - the culmination of a nine-day hīkoi from around the country. The movement was affiliated with Te Pāti Māori (TPM), but it became much wider than a TPM protest. Labour and Green MPs and staff were on the forecourt alongside TPM and the organisers, and the united front didn't start there.

It started with the first cross-party leadership meeting in early November and led to joint party statements and a joint social media video. It also led to a united stand where MPs from all three opposition parties joined the haka started by Hana-Rawhiti Maipi-Clarke at the end of the first reading of the Treaty Principles Bill. Some MPs from all opposition parties have received Privileges complaints for doing so.

The Bill, along with other coalition polices, has set off a coordinated movement of resistance this year from Māori and non-Māori. Following the hīkoi, Hipkins was asked on Morning Report whether Labour was going to be drowned out by Te Pāti Māori on these issues - it's hard to ignore how TPM has tapped into communities in ways other parties are still struggling to do.

Behind the scenes though there is an acknowledgment it makes sense to work together on the issues they align on and working together in the lead up to the hīkoi had gone rather smoothly. It's understood regular meetings will take place between the parties from now on, allowing them to get to know each other better and know where the red lines are for each party.

Hipkins believes they're working together constructively but points out no one is shying away from the fact they are all competing for votes.

"We can talk to each other, but we'll also undoubtedly find areas where we disagree."

Hipkins pointed to the Greens tax policy in the last election, and Te Pāti Māori's idea for a separate Māori Parliament for example, he said, "that's not something the Labour Party will ever consider."

"We think that you can give effect to the Treaty within a system that still has one government for the country."

That will be their point of difference to what Te Pāti Māori is selling. Labour's Maori caucus co-chair Willie Jackson has a speaking slot this year, which isn't a regular occurrence at the conference. Hipkins said that speech will be around messages of unity, because he thinks New Zealanders want to see the party bring the country together.

This will, however, be an opportunity for Labour to set out their point of difference to TPM. For some Māori, not all Te Pāti Māori's policies will sit right with them and they will want to know how Labour plans to address those issues.

Hipkins knows it's a fine balance though, given the risk of eating into each other's votes, and the collective goal should be to grow the vote of the left bloc.

"If we want to be part of the government, my goal is to take votes off parties like National and New Zealand First. My goal is not to take votes off the Greens or the Māori Party. I want to take votes off the people who are currently in government."

The next election won't be a re-run of the last one, Hipkins insists. Having lost in 2023, he would be hoping not. Labour is still in listening mode and the risk is that it leaves a vacuum for other political parties to fill.

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.