Sir Michael Cullen steps back into politics with debatable claims about CGT

2019-03-06 00:33:45

OPINION: Sir Michael Cullen's performance when he released the Tax Working Group's final report bore the hallmarks of a swansong.

As well as warning about the political difficulty of introducing a capital gains tax, Cullen cracked jokes about Huawei, talked about how hard it is to quit smoking and took shots at various media organisations.

He informed us that by and large New Zealanders do not own baches.

The Tax Working Group has now disbanded, its final meeting held and the group's report passed to the Government, which is sitting, like a possum in headlights, working out what it will do.

Finance Minister Grant Robertson, Revenue Minister Stuart Nash and Prime Minister Jacinda Ardern have assiduously battled to say nothing of consequence about tax policy as debate on the topic rages.

This has raised questions of whether the Government is willing, or even able, to debate the proposals.

But Cullen, who is not quite a decade out of politics, remains in the game.

His role as working group chairman continues, delivering presentations to interest groups and now, attacking claims made by the Government's opponents.

On Monday evening, at 8.11pm, Cullen, who served nine terms as a Labour MP, issued a statement knocking back a claim by the National Party four days earlier.

Opposition leader Simon Bridges claimed on Friday that: "A capital gains tax would reduce retirement savings for an average earner's KiwiSaver by $64,000 over the course of their working life".

Cullen responded by insisting that the National Party had "failed to take into account the important TWG recommendations which would actually reduce (his emphasis) tax on most KiwiSaver accounts".

According to the analysis by my colleague Tom Pullar-Strecker, while both Bridges and Cullen were strictly speaking correct, both were ignoring the wider context.

In simple terms, Bridges appears to have conveniently ignored the fact that the TWG recommended a range of other types of tax cuts and relief which would offset some of the impact, including directly on KiwiSaver. Certain savers would take a hit, but more would benefit.

Cullen, meanwhile, over-egged the benefits, taking options suggested in the TWG's report and reinventing them as  "recommendations" to lessen the impact of a CGT on KiwiSaver.

These too are presented quite out of context. One of Cullen's "recommendations" would be so expensive to the Treasury's coffers (around $5 billion over five years) that the chances that they would be adopted by the Government are almost certainly zero.

Between politicians, this would simply be the fog of war. Either side is entitled to choose the details which back their case.

But, in this context at least, Cullen is not a politician. He is the chairman of a report which the Government now holds and can take it or leave it.

Was he right to intervene in the debate in this way?

Since the TWG's final report was delivered in late February, the debate has been massive.

Hundreds of stories and opinion pieces have been written, both for and against.

The National Party has not issued a press release on anything other than the TWG's report since the day Cullen made his presentation.

Some of the debate has been factual and balanced, while some has been hysterical and downright wrong.

On Tuesday, the former Finance Minister claimed the reason he responded to Bridges' was that the Opposition leaders' claims were "inaccurate and potentially misleading" and that unlike other commentators, Bridges' statements were likely to be more widely reported.

He then suggested a claim made by National's primary industries spokesman Nathan Guy about the impact on farmers was "particularly egregious" and that he may also issue a response to that too.

Cullen bristled at what he claimed was the suggestion that because a statement was made by National that he could not refute it.

"One is not castrated at the point of leaving Parliament."

But the fact is, Cullen is only commenting on the statements made by National. Although he was happy to name examples of stories on the impact of CGT as "silly", Cullen's only official response to any commentary on the report has been to attack a claim made by the Opposition leader, with a response which is also questionable.

The Government is doing its best to hose down the debate.

At Monday's post-Cabinet press conference, Ardern devoted extensive time to a discussion document on ticket scalpers, then on almost all of the rest on the plight of 'Kiwi Jihadi' Mark Taylor.

After around a minute of general questions, Ardern almost raced from the stage.

The Government is free to adopt the strategy of sitting on the sidelines of the CGT debate until the coalition is ready to make its response.

But the sidelines are exactly that. Cullen's intervention looks highly political.

If the Government is not ready to make the case for change, Labour's grandees - especially those who hold official positions - should not be doing the political work for them.

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