'Traditional Labour': Hipkins signals party revival, tax policy pivot

Government spending, debt, and tax revenue will all need to increase says Labour's Chris Hipkins, though his party still hasn’t set a specific policy on how that could happen.

Almost a year after his government was voted out of power, Hipkins spoke to Q+A about his party's newfound openness to reviewing the country's tax policy and was questioned about how Labour would govern if it returned to office in 2026.

The Labour leader said a key question for any future government's economic policy to consider will be how much the population grows, and how great a proportion of the total population moves into retirement age.

“The big question mark is what happens with the working-age population. If the working age population stays the same, and the population over the age of 65 grows, then yes we will [have to increase the percentage of tax revenue compared to GDP]”

“We have to be honest about that. Let’s go back 10 years, there are now 200,000 extra people over the age of 65. There’s another 400,000 that’ll be there in the next ten years. That means our population over the age of 65 will have gone from 14% to 21%.”

“You can’t say to people over the age of 65 that we can give them everything that we gave them when they were 14% of the population and not increase government spending – the maths just doesn’t add up.”

Hipkins said paying for that would require broadening the tax base, and that couldn’t just fall on wage earners and GST. He conceded Finance Minister Nicola Willis is currently considering the same issues, with her consideration of “new revenue measures.”

“They’re talking about a form of capital gains tax when it comes to funding their roads, they call it value capture, it’s actually a form of capital gains tax."

Labour is currently engaging in internal discussions and debates over the nature of the tax policy they take into the 2026 election, with a capital gains tax under discussion.

The party leader said: “I didn’t think we had the runway in the leadup to the last election to sell a significant change in our tax system, that’s one of the reasons we’re talking about it now."

He also agreed with the contention that incentives around investment in housing need to change, with a rebalancing towards productive investment in business.

In April, the Labour leader said tax system reform was an "economic necessity", after ruling out wealth and capital gains taxes at last year's election. Speaking to party members, he committed to putting all options "back on the table" for 2026.

Speaking to Q+A this week, Hipkins was also asked about his plans for holding onto the party's leadership and what Labour would have to do to win against the coalition — which would involve making the first one-term government in nearly 50 years.

He said Kiwis wanted to see more of a "traditional Labour flavour" from the party, which was committed to delivering a credible "alternative" to the coalition.

"New Zealanders, I think, overwhelmingly, have told us that they want to see more Labour in the Labour Party," he said.

"They want to see us getting back to what the Labour Party stands for."

Q+A with Jack Tame is made with the support of New Zealand On Air

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