December 8, 2023

Election 2023: Act questions National’s tax commitment as negotiations drag on

National leader Christopher Luxon (from left), Act leader David Seymour and New Zealand First leader Winston Peters. Photos / NZME

Negotiations to form the next Government continue in Auckland, with National shuttling between the Act and New Zealand First parties to build relationships and hash out a deal.

National appears to be quite happy to run down the clock to November 3, when the final vote tally including 570,000 special votes will be published. National will then know whether it needs a deal with NZ First as well as Act, its preferred partner.

Special votes tend to favour the left-wing parties, particularly Labour and the Greens. This could mean National and Act losing the one-seat majority they currently have, which would force them to go with NZ First to have the numbers to form a government.

There is a theory going around the National Party that this year may be different and that the swing against Labour was so severe that very few special votes were cast for Labour and the Greens.

If this were the case, and National and Act kept or extended their one-seat majority, the parties would have to decide whether to bring NZ First on board anyway as insurance against a rogue MP blowing up the Government, or whether to chance it and hope the National and Act caucuses deliver stability. However, the theory is likely wishful thinking.

Act leader David Seymour appeared on The Working Group podcast this week and tackled the possibility of governing in coalition with just National, noting the last National Government had tight majorities too – although Seymour said it was “more likely” that the special votes favoured a three-way coalition.

He also raised the spectre of National loosening its tax policy, noting the party’s pledge card did not specify when it would deliver income tax cuts. National could, in theory, introduce tax relief in the final year of the next Parliament and meet that pledge.

“You’ve got to read very carefully what National have said on their pledge card, that the average earner will receive $100 per household per household per fortnight without specifying the time – so that could be in the 2026/27 financial year,” Seymour said.

National’s full tax policy promises income tax cuts in the party’s first post-election Budget.

National leader Christopher Luxon was quiet on Wednesday, doing a round of broadcast media in which he promised Parliament would run right up to Christmas and meet earlier in the new year.

“New Zealanders voted for change, we’ve got a lot to get through, if we start earlier and have to finish later, so be it,” Luxon said.

The last sitting day of the current sitting calendar is Thursday, December 21, although in practice the House will adjourn on Wednesday the day before. Parliament doesn’t sit on Fridays or over the weekend. Unless Luxon wants to change that, it is hard to see how he could squeeze additional sitting time out of Parliament this year, beyond forcing the House to adjourn on Thursday, rather than Wednesday.

Parliament tends to return after Waitangi Day in the new year. Luxon could bring MPs back in January to fulfil his promise.

Incoming NZ First MP Shane Jones told Radio Watea that while the party had campaigned on a regional infrastructure fund and other policies, the new Government would be constrained by how much money was available for new spending.

He said the next Government would need to “make sure there’s enough tin in the bin”.

Issues like keeping the age of superannuation eligibility at 65, scotching the Kermadec ocean sanctuary, and National’s foreign buyers tax are all on the table for NZ First.

While Luxon has made contact with Peters, the main vector of communication between National and NZ First appears to be via MPs Gerry Brownlee and Todd McClay, who Peters gets on with.

There are looming questions regarding the potentially-combustible relationship between Act and NZ First, and particularly Seymour and Peters, who do not get on.

Peters has been eager to remind National that it will probably need his votes in any deal.

National appears to be doing more talking with Act than NZ First around putting together a two-party Government with a possible third partner as insurance. This risks provoking NZ First’s ire if the party’s votes are needed next week.

Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.

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