Election 2023: Chris Hipkins explains why Labour GST policy limited to fruit, veges

GST on fruit and veggies will be a goner if Labour is re-elected. 

Leader Chris Hipkins has officially unveiled his not-so-secret weapon, which he says will cut $5 off the average weekly shop.

The cost of living carrot comes with changes to Working for Families and the in-work tax credit, which Labour says will see 175,000 families $47 a week better off by 2026. 

He's the hometown hero, Hipkins was happy to be in the Hutt on Sunday.

"It is fantastic to be with you here in the mighty Hutt Valley today with just 62 days to go," he said.

It's not long to butter up the public in this winter of discontent.

"I can't control the weather but I can do something about food prices," Hipkins told the crowd. 

He has selected another staple to add to his bread-and-butter agenda

"If re-elected, Labour will remove GST from fresh and frozen fruit and veges from 1 April next year," he said. 

Hipkins has reached down the back of the old deep freeze, reheating Labour's 2011 pledge of tax-free fruit and veg.

He denied he was out of fresh ideas. 

Cue the shopping list of questions about what products will receive exemptions. Fresh and frozen, yes. Canned and dried, no.

"The distinction we've made is the difference between unprocessed and processed," Hipkins said.

What about coleslaw?

"That has value added to it so it has extra ingredients added to it so it won't be covered… If it has mayonnaise added into it then it won't be covered."

And why not meat?

"This is what's affordable." 

The policy was previously described as a "boondoggle" by his Finance Minister Grant Robertson, but he's come round. 

One of his previous concerns was whether the benefits would be passed on.

"You would have seen in the announcement today that we are talking about the Grocery Commissioner having that role. We did not have that person previously," Robertson said.

He's not the only one that hated it.

"The big winners and the big recipients of this policy are going to be the supermarket owners, not New Zealand families," said National leader Christopher Luxon. 

"We think the better approach is to cut out the middle man, to give people genuine tax relief straight into their bank account."

Awkwardly, Labour's own Tax Working Group kind of agreed, saying in 2019: "GST exceptions are complex, poorly targeted for achieving distributional goals and generate significant compliance costs". 

"Furthermore, it is not clear whether the benefit of specific GST exceptions are passed on to consumers."

And here's the kicker: the group backed income tax cuts to "have a greater impact on low- and middle-income earners".

Hipkins said: "Tax purists will say we should not do this."

"They will always be able to find a reason not to do something but they are not the ones struggling to pay their grocery bills."

The ones struggling love the policy. 

"Wow, wow," said one person. 

"That's fantastic news like when you go to the supermarket I think the pumpkins are like $4."

"I think it's already too expensive for fruit and veggies so yeah sounds mean," said another. 

"It's a good idea," added a third. 

"I don't buy them, my mum does, but she's always complaining that she wasted money on cucumbers," a child said. 

"I'm all for it man, I've got two kids to feed so any savings anywhere," another person said. 

But wait there's more, Labour's promising to boost the in-work tax credit giving low to middle-income working families an extra $25 a week. It would also change the earning eligibility for Working for Families payments in 2026 to catch up with rising wages.

Hipkins has morphed from Prime Minister to trying to become Prime Minister once more.

"If I'm going to target support I'd rather give it to mums and dads than to millionaires," said Hipkins. 

"Millionaires do not need a tax cut right now."

Asked if millionaires buy fresh fruit and vegetables, Hipkins said: "Most New Zealanders buy fresh fruit and vegetables."

So is he giving millionaires a tax cut?

"This policy will benefit all New Zealanders."

Labour, in it for you, mums, dads - and millionaires.