That old time Labour (and Presbyterian) religion
By Richard Harman (author)
Last October the Fabian Society put together a half day seminar in Auckland looking back at the Clark Government.
The Fabians have a long and honourable tradition of upholding the “democratic” part of the democratic socialism that the Labour Party stands for.
Their meetings tend to be populated by the retired and are usually well mannered, if somewhat intellectual dissections of current major policy issues.
In a way, they are old time Labour --- in their values anyway.
The Auckland seminar drew in some big names from the Clark era --- Michael Cullen, Margaret Wilson, Mike Wiliams and Clark’s long time administrative assistant Dot Kettle.
And also David Parker.
While the other speakers reminisced, it was Parker who set out the unfinished business that he believed Clark had left behind.
At the top of the list was inequality. Or what he describes as the age old political argument, who should get the surplus created by our economy.
Anyone who knows Parker would not be surprised by this. Privately he becomes passionate, angry even, when he talks about how a combination of globalisation and permissive tax policies have allowed the rich in New Zealand to get much richer over the past few years while the middle class has fallen behind.
Parker is something of an enigma within Labour; with his boyish looks it’s easy to forget that he is a 56-year-old former managing partner from a large South Island law firm who worked closely with the swashbuckling Dunedin entrepreneur, Howard Patterson, a man Parker says he admires to this day.
"He was a fantastic guy, so I'm not criticising him, but he did what all those people do, he actually followed the money,” he says.
“That’s what entrepreneurs do; they follow the money into the things that they can make the most money from and if that’s driven by economic settings including tax they follow those tracks.
“Those people pay very little income tax. They pay a bit of GST, but they don't pay as much income tax as middle income New Zealanders on a percentage basis.”
While the party has been in Opposition during which time Parker made a failed bid for the leadership and then impulsively declared that he would not return to his finance spokesmanship he ahs remained a generator of policy ideas.
He is one of the few MPs in Parliament --- Bill English might be another --- who genuinely think deeply about policy.
That hasn’t always made him popular; one of the first things Andrew Little did on assuming the leadership was to scrap Parker’s capital gains tax proposal.
Yet the idea of somehow taxing capital is central to everything Parker has to say about inequality.
A question about how Labour should address it gets interrupted --- the top quintile, the rich, “have run away with all the cash” --- the rest of society lives in “strugglers’ gully”.
“Post GFC (great financial crisis) it’s been trickle up, not trickle down,” he says.
“So much of the wealth that has been generated in society has been flowing to the top few percent effectively at the cost of the middle because it’s the middle who in relative terms have been stagnating around the world.”
That feeling has been moderated here, though; he argues by Labour's "Working for Families" tax package which was aimed at the working middle class.
And the Clark Government, in particular, Cullen, can also take credit for creating the surpluses which the incoming National Government was able to use to stabilise the economy when the GFC struck.
“As a result of those moves we haven; 't had a middle class which has felt it in the neck the same way they have in Brexitland or Trumpland, but nevertheless it is true that the middle clas sis getting left behind because so much is going to the top few percent.”
So what does Labour need to do?We’ve got to serve their interests, we’ve always been the party of working people, we haven’t been the party of beneficiaries.
“We have been the party who when he have a strong middle know that that middle and us (a Labour Government) will look after the people who through no fault of their own are in desperate circumstance.”
Parker is not the sort of politician to chose his words carefully, and he's treading into potentially troubled waters with these comments.
Yet what he says is not that out of step.
Michael Cullen, speaking at a closed session during the party's annual conference last year, also warned of the dangers of becoming a party of beneficiaries.
But whereas Labour party members find Cullen’s pragmatic socialism much more easy to accept because it stems from his family’s London working class roots, Parker's is more difficult.
His does not rely on his own personal experience but is an intellectual socialism grounded in his Presbyterian roots.
"I come from the most egalitarian city in New Zealand where people are thrifty. They work hard; they value education and they don't like too much flashy wealth, and they don't like huge gaps between the haves and the have-nots.
“I’m not a cloth cap Labour party person.
“My view of the Labour party is that we have always been the party that thought through political process we could improve the lot of working New Zealanders and we believe that politics is the way to get a more prosperous and fairer society.
“I like prosperity, I like people being rewarded for effort, I love my own business background, I love the creativity of new ventures, I like making money --- I’ve made a lot of money but I’ve lost more money than I would want to --- so I really get the productive economy stuff.
“But I’ve seen in my own life experience that the people who make the most money are incentivised not to invest in the most productive assets but in speculative assets.
“I’m all in favour of growing the cake. I'm not happy with the size of the cake I want to make it bigger, but I also want to distribute the fruits fairly.”
To business audiences, he makes his pitch slightly differently.
Speaking at a telecom conference last year he said New Zealand could do much better as a country if we fixed New Zealand's capital allocation problem "which most people in this room know needs to be fixed.
“We should remove the advantage we give to speculation,” he said.
He quoted statistics showing that $60 billion had been lent to property assets since the GFC but
less than $10 billion to the business sector.
“Some of those billions sloshing into the Auckland housing market should and would have been investing in growth companies if our tax system was better and fairer.”
“This would drive billions towards the productive sectors including yours.”
Parker’s position within the party means he can’t really offer a precise policy agenda to bring about the goals he wants to achieve.
The nearest he gets to economic policy these days is that he is the spokesperson on entrepreneurship.
But through is speeches and this interview he makes it clear that he believes the tax system needs adjusting to reward wage earners.
And it is clear that he believes that would mean disincentivising the kind of asset accumulation that has exploded as after the GFC world interest rates plummeted.
He frequently refers to the French economist, Thomas Piketty to support his arguments; again the theme is that those who can buy and sell assets have profited disproportionately compared to those who earn wages.
Of course where this ends is probably with a capital gains tax or a form of capital gains tax.
But for the meantime Little has ruled that out.
Parker is senior enough within the party and caucus to be able to quietly poke away at that conclusion.
Yet by embracing both efficiency and fairness within the same argument, he makes a powerful case that is entirely within Labour's tradition.
It's that acknowledgement of the party's fundamental mission --- to ensure that a fair share of the nation's wealth goes to those who do the work --- that is why he is invited to Fabian conferences.
You can't get more Labour than that.