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2020: The History That Was – Part 3

20 February 2021 Leave a comment

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2020 to 2021

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As the rest of the world  was perceived to be “going to hell in a handbasket with an out-of-control pandemic; ructions in Europe as Britain copes with “Brexit” chaos; Trumpism in the United States climaxing with the 6 January mob-led coup attempt in Washington’s Capitol; a deadly resurgent covid19 outbreak in Victoria, Australia (at time of writing); Russia continuing to harass and murder political dissidents with impunity; China  cracking down brutally on Hong Kong and it’s Uighur minority; and global temperatures continuing to rise as Humans blithely pump CO2 into the atmosphere – New Zealanders were spectators to our own issues, dramas, and problems…

ACT

The not-so-surpising winner from last year’s general election, ACT increased it’s Party Vote from 13,075 in 2017 to 219,030 and adding nine more MPs to David Seymour’s up-to-now-One-Man-Band operation.

But before ACT supporters and other sundry right-wingers and free-marketeers rejoice with little Happy Dances, it bears remembering that their resurgence came – for the most part – from a dysfunctional National Party.

ACT’s success came from cannibalising it’s larger counterpart, much like the Green Party’s support (11.06% Party Vote) in the 2014 general election came at ther expense of their Labour cousin (27.48% Party Vote).

Oh, and gun-nuts who – like children throwing a temper tantrum at having to surrender their lethal toys – went looking for a sympathetic, slightly-bonkers, “uncle” who would pander to their sense of spoiled entitlement.

The combined right wing vote for National and ACT collapsed from 44.9% in 2017 and 47.15% in 2014,  to 33.2% last year. Hardly cause for celebration for ACT Party strategists.

There was no resurgent right. Only a sloshing-around of disaffected National supporters, gun nuts, and assorted climate change denying numpties.

Unless Mr Seymour is blinded by his (temporary) electoral gains, he and his colleagues must be nervously aware that his fortunes are possible only while National is a lame-duck party in turmoil, with an unelectable Leader.

Election 2020

MMP was designed primarily for two purposes:

  1. To make representation fairer (“coat-tailing” notwithstanding), especially for smaller parties that, until 1996, had been locked-out of Parliament (Social Credit being an aberation for FPP),
  2. To deny either of the two main parties unbridled power without checks and balances to deter wild policy swings (eg; 1984 neo-liberal “reforms”).

Last year, voters in Aotearoa New Zealand had other ideas as covid19 changed the rules by which our economy; tourist industry; international travel, and even social patterns operated.

As will be explored under the heading “National”, approximately two thirds of voters not only supported the current goverrnment’s action to protect Fortress Aotearoa – but seemed determined to keep Judith Collins and the National Party well away from anything resembling power.

Housing

  • RMA

Aotearoa New Zealand has had housing problems since colonisation became a ‘thing’ in this country. Reading an account of housing shortages in the late 1930s/40s could be taken almost word-for-word for our current housing situation;

Meanwhile, full employment with higher wages and overtime meant increased demand for existing houses. In 1942 the shortage was officially estimated as 20 000. Workers came to the cities for war jobs, wives came to be near their husbands in camps. With prices rising and expected to rise still further, house buying was both a sound investment and a tempting speculation, though rent controls curbed quick fortune-making to some extent. At Wellington, where sites were limited, building costs high and where government employees had multiplied rapidly during the past few years, the demand was particularly strong. As early as February 1941, a Wellington land agent stated that flats had come to stay, that but for the Fair Rents Act land agents could sell 70 per cent more houses than they were selling and that low deposits of £200 or £300 were becoming scarce. In November 1941, an agent declared, ‘We are not facing a first-class housing crisis. We are past that stage’; another spoke of an avalanche of buyers and of house dealers buying for cash, renovating cheaply and making £400 to £500 on each deal.

In July 1942, another agent said that if he had them, he could let 30 houses or flats in two or three hours, a state of affairs which he feared was going to be chronic. Already, those concerned with the rehabilitation of servicemen were troubled by the gap of several hundred pounds between the value of a house and its inflated ‘scarcity value’.

At Auckland in May 1942 there was talk of a boom; land agents for several weeks had been exceptionally busy and house values were rising. A suburban home, which 12 months earlier would have changed hands at £1,300, sold for £1,525 within 24 hours of being placed on the market; a house sold by the builder for £1,750 was sold again six weeks later for £2,500. There were many cash sales and otherwise the minimum deposit was often one-third of the purchase price. In Dunedin sales were brisk, with houses long regarded as unsaleable changing hands. At New Plymouth, prices which 12 months earlier would have been far too high were paid without hesitation; 60 persons had applied to rent one house; 46 wanted a small house at £1 5s a week, 16 applied for another at £2 2s a week.

It can  reasonably be argued that the housing crisis in the late 30s/40s was due in large part to a post-Depression economic lag, and shortage of raw materials and labour as we faced the onslaught of Nazi German and Imperial Japanese war machines.

But it then follows that there is little reason why – in an age of plenty and 21st century automation – we are eighty years later faced with a similar crisis.

Whatever the reasons – and we are well versed with most of them – housing remains one of the top three priorities for the Labour government.

One of the alleged reasons for our housing shortage has been the RMA which has been blamed for slowing down or stifling permitting and construction of new housing. 

We should be wary of throwing out, wholesale,  the Act. It has protections that deter inappropriate urban “development” that we may come to regret, as instanced by one particular block of flats on Mt Victoria, Wellington

Urban sprawl is also an unintended consequence to uncontained development. By 2019, around 200 horticulture growers in Auckland had ceased to operate as their fertile land was re-zoned “Residential”. This included some of the best volcanic arable land in and around Pukekohe.

As grower David Clark pointed out in June 2019;

“I used to farm that block. That was a very highly productive bit of soil, that.

The previous National government passed it all off as a special housing area and we lost all of that [land]. That’s a shame. That should never have happened.

It was good productive elite soil, but it’s not now. You can never get it back once all that infrastructure and housing’s gone on there. It’s gone forever.”

Horticulture New Zealand CEO, Mike Chapman, warned;

“It makes sense to protect growing hubs close to our main population centres. They not only provide food that contributes to the physical health of New Zealanders, but also jobs, and vibrant businesses and communities. 

Food and housing are competing for land and water. We need both, so now is a good time to be smart about long-term planning for food security and domestic supply.

We will not always be able to source food from other countries. Look at the extremely hot summer the northern part of the world is having and the impact it is having on food production because of drought.” 

The result of losing arable land to urban sprawl would inevitably result in rising food prices, advised Deloitte New Zealand in a report commissioned by HortNZ.

Environment Minister David Parker took note of a problem that could rapidly spiral into a potential food-crisis;

“I was particularly troubled by how much of our urban growth is occurring in our irreplaceable highly productive land. Even in a country as lucky as New Zealand we only have limited quantities of these high-class soils.

We have to ensure we have enough land to build the houses people need, but we must protect our most productive areas too.”

As with all human activities, we should cautiously wary of unintended consequences.

  • Interest Rates

Ballooning housing prices are forcing first home owners to pay ever-increasing amounts to get a roof over their heads.

Whereas the median house price in Aotearoa New Zealand for a property was $495,000 in 2017, by 2020 the median price had risen to $725,000.

In Auckland, media houses prices surged from 800,000 in 2017 to $1,000,000 last year.

For first home owners these stratospheric prices are barely manageable because of historically low interest rates.

This constitutes a silent time-bomb that will detonate when/if interest rates start to rise again. It will result in forced mortgagee sales the likes of which we have not seen since the housing market collapse in the USA in the 2007/08 Global Financial Crisis;

Simultaneously, the US government of the day under President Bill Clinton elected to begin running budget surpluses. This had the effect of reducing the stock of US government-issued “safe assets” as the state began to pay down its debt. This created an incentive — though not the obligation — for the private sector to meet this demand for “safe assets” by creating some of its own. Thus we come back to mortgage securities.

The authors’ of the latest paper write that “the boom in securitisation contributed to channel into mortgages a large pool of savings that had previously been directed towards other safe assets, such as government bonds”. As Frances Coppola points out, this misstates what was actually going on. The inflow of capital was not “channelled” into the US mortgage market but, rather, it created the demand that gave banks a reason to continue extending mortgage loans into the system.

And here’s where the story gets really interesting. The more credit the banks provided through the mortgage market, the more money consumers had available to pay for goods and services (including, for example, clothes and toys produced in China). This spending then fed the current account surpluses in emerging markets, which flooded back into the US in search of safe assets that would provide a steady stream of income.

So the credit market created what looked like a self-fulfilling cycle where banks issued mortgages, that money was spent on goods and services in the US, which provided the cash for emerging economies to buy the mortgage-backed securities that were then created. Glad that’s clear.

And this is what happened — real home prices increasing by roughly 40% to 70% between 2000 and 2006…

[…]

…the scale of the housing boom had already increased the system’s vulnerabilities, and had been exacerbated by the Clinton administration’s decision to run budget surplus. In the end as borrowers were maxing themselves out, a hit to future incomes was almost inevitable and with it a correction in the housing market.

The full article above by Tomas Hirst is worth reading because there are ominous similarities between the late 2000s and what is happening now in our own housing market: too much money sloshing around, looking for safe investments, and a bubble that must ultimately burst.

Fast forward to last year;

Housing unaffordability is on the rise again, with implications for wealth inequality and deprivation. This is compounded further by the cascading economic effects of the global pandemic and unconventional manoeuvres in monetary policy that are pushing house prices higher.

If/when interest rates begin to rise, the time bomb will detonate and the housing “market correction” will be harsh. 

The government-of-the-day will be forced to intervene directly, taking over debt. Otherwise the alternative will be too terrible to contemplate: images of families forced out of their homes to live in – ?

Greens

The Green Party increased its share of the Party Vote from 2017 to 2020, from 6.3 to 7.9%, increasing its Parliamentary seats from eight to ten. Unlike ACT’s cannibalising the centre-right vote from National, the Greens actually grew the centre-left vote overall.

It could be said that this was achieved by riding on the “coat tails” of a popular Prime Minister.

This blogger rejects that.

The Greens are the conscience of Parliament, if not the whole country. They are deadly serious on the critical challenges that confront us as a nation, whether it be global – apocalyptic changes caused by rising CO2 and methane levels and all its dire consequences – or social problems of a spiralling-out-of-control housing crisis and social inequality.

As our climate warms; weather patterns become more energetic; ocean acidification worsens; and ice continues to melt, more and more people are understanding that this crisis can no longer be ignored or put off to another day.

With Labour’s commanding majority in the House, it is a curious contradiction that the government needs the Green Party more than ever to maintain a solid, unwavering focus on reducing our greenhouse gas emissions.

Without the Greens, Labour risks relaxing into a cruising “business-as-usual” mode.

And we are well past anything resembling “business-as-usual”.

Labour

There is a reason for Labour’s stunning election victory last year…

It would be fair to say that the Labour-led coalition govt was tested in more ways than most governments have been in the past. The  Whakaari/White Island eruption; the 15 March terrorist atrocity in Christchurch; and then covid19 hit the world.

For most people, the lockdown on 25 March was the only possible response. With no vaccine, the virus required a sledgehammer to fight it and – except for essential workers – we were told to stay home.

This blogger has documented his own personal experiences through the “Life in Lockdown” daily diary.

Not since the 1918 influenza epidemic has Aotearoa New Zealand been confronted with such an event. There was no Instruction Manual; we were learning as we went along.

Essential services stayed open; supermarkets (food); service stations (fuel); and chemists (medication). Some, like hardware stores operated a restricted service for tradespeople only, for emergencies (burst water pipes, electrical problems, etc).

Some were obviously taking the mick;

Weight-loss company Jenny Craig is defending its decision to continue operating during the lockdown, following public criticism from one of its own regional managers.

Several of the company’s employees have been touch with E Tu Union to express their frustration at the company for continuing to operate and claiming it is an essential service.

The company has since sent a statement to RNZ, saying it strongly believes it is an essential service.

Others were treating it casually, like an extended holiday. And for a tiny minority,  their sense of bloated entitlement seemed to outweigh the potentially lethal nature of the crisis;

Police have become involved in a stand-off between irate residents on Great Barrier Island / Aotea and boaties anchored up in their waters for the lockdown.

The chair of the Great Barrier / Aotea Local Board, Izzy Fordham, said an estimated 50 boats were anchored in one harbour alone.

She said they were a burden on limited resources and police were investigating.

“Us locals were all trying to do the right thing, stay home, live within our bubble because if we get to the stage where we have community transmission of this disease and this sickness, goodness knows what it will do to our island.”

Fordham said the boaties were being “totally irresponsible” because they could spread coronavirus.

Even a Minister of the Crown was caught out in a class act of entitlement and plain stupidity.

But for the most part, we did as the Prime Minister cajoled us: stay home (unless an essential worker or buying essential needs); exercise locally; stay in our own bubbles.

There were “hic-cups” of course. 

New Zealanders were astounded to learn that, for a long time, flight crews were exempted from quarantine after returning from international destinations

The airline’s crews who fly internationally continue to be exempt from the strict 14-day quarantine rules for people returning to New Zealand from overseas – with the exception of Los Angeles flights.

On Monday the airline confirmed crew members had been forced to self-isolate after some staff allegedly disregarded physical distancing rules during a layover in Vancouver. 

Documents obtained by Checkpoint show increasing unease and fear among flight crew staff about the exemption from isolation or quarantine, and the risk it poses to colleagues and the public.

Air New Zealand is currently operating 16 return international services a week. At the end of May it plans to add three return services a week to Shanghai to that schedule. 

Then we gobsmacked to learn that MIQ front-line workers were not being tested regularly (or at all!) for covid transmission from Returnees, despite being on the pandemic battlefield frontline, and despite assurances from Ministry officials that this was a priority;

So, did the Ministry of Health ever attempt to implement a plan to test all asymptomatic border-facing workers? That remains unclear – ministry officials on Thursday refused to answer Newsroom’s detailed questions on the subject.

And MIQ staff in critical – and dangerous positions – were left without the most basic of protective equipment for their wellbeing;

Nurses at managed isolation and quarantine facilities are threatening to stop work if the government does not ensure they have access to appropriate safety equipment.

New Zealand Nurses Organisation industrial services manager Glenda Alexander said some but not all MIQ sites had a good supply and distribution of the high-quality N95 masks, and used the test fit process to ensure the masks were properly fitted.

“In other facilities they are still using the surgical masks and we are saying ‘no, that is not appropriate given the growing body of evidence that says that the virus can be transmitted through airborne contact’.”

But we muddled through. 

With an equal mix of dedication from heroic front-line workers; good science from epidemiologists and other scientists; a strong collective effort by most Kiwis to “do the right thing”; and a truckload of good luck, we dodged the viral bullet on numerous occassions.

Though, as Dr Siouxsie Wiles has pointed out recently, some of our behaviour could be more cautionary. Sadly, as is the New Zealand way of doing things, something has to go wrong before we will act to remedy a critical gap in our defences.

On the non-pandemic battlefront Labour has had its wins and losses.

  • Capital Gains Tax (CGT)

Touted as making the tax system fairer, the CGT proposal by the Tax Working Group (TWG) was dumped when coalition partner, NZ First, pulled the hand brake on the suggested reforms (see “NZ First” below), skidding 180 degrees to a full stop. As the TWG stated in it’s Final Report;

Group Chair Sir Michael Cullen says our system has many strengths but there is a clear weakness caused by our inconsistent treatment of capital gains.

“New Zealanders earning just salary and wages are taxed on their full income but we have several situations where you can earn income from gains on assets and not be taxed at all.

“All members of the Group agree that more income from capital gains should be taxed from the sale of residential rental properties. The majority of us on the Group, by a margin of 8-3, support going further and broadening that approach to include all land and buildings, business assets, intangible property and shares.

“We have judged that the increase in compliance and efficiency costs is worth it if we can reduce the biases towards certain types of investments and improve the fairness, integrity and fiscal sustainability of the tax system.”

A CGT would also have been one further “bullet in the arsenal” to contain skyrocketing housing prices.

But with NZ First actively opposing meaningful tax reforms, PM Ardern was forced to dump the proposal. 

Curiously, the Prime Minister not only rejected CGT during the term of the coalition government – but for the entire duration of her leadership;

“Under my leadership, we will no longer campaign for, or implement a capital gains tax – not because I don’t believe in it, but because I don’t believe New Zealand does.”

Not only has she locked her party, and any future Labour-led government while she is PM, but she has played well and truly into the hands of National and their property-owning base, as journalist Henry Cooke pointed out with grim, relentless logic;

Yet Ardern wanted the issue off the table for upcoming elections and staked her career on the promise – much like Key when he said he would resign before raising the super eligibility age.

But National are never going to stop attacking Labour on tax. Ruling out CGT just opens the door for National to ask Ardern to rule out every possible other tax in existence, and when the Prime Minister is smart enough not to handcuff herself forever, National will tell voters that the party is keen to fish into your pockets.

Labour’s second greatest achievement (after successfully leading us through the Covid Crisis) has been to out-do National as a sound steward of the economy. Three successive polls last year (here, here, and here) snatched the crown for economic management from National and placed it firmly on Labour.

However, in dumping the CGT, it has allowed itself to be out-manouvered by the Tories and their whining, asset-bloated, propertied-class backers. It has also shown that it is willing to allow unfairness in the tax system that, as the TWG estimated, could have raised roughly $8 billion over the first five years. 

A missed opportunity Labour will regret for a long time.

  • 2 Tier Welfare System

Part of Labour’s plan to assist the economy through all stages of the covid lock-down was to implement a special COVID-19 Income Relief Payment. As this blogger reported on  3 September last year (re-published here from a previous blogpost);

On the 26 of May, Welfare Minister Carmel Sepuloni introduced the Social Security (COVID-19 Income Relief Payment to be Income) Amendment Bill. As RNZ reported;

The government is introducing a new relief payment for those who have lost their jobs due to Covid-19, while they find new employment or retrain.

The payment would be available for 12 weeks from 8 June for New Zealand citizens or residents who had lost their job as a impact of the virus since 1 March.

Those who apply would be required to actively seek suitable work, and take steps towards employment, including making use of redeployment or training.

It will pay $490 a week for those who lost full-time work and $250 for part time workers – including students.

The payments will be untaxed.

People with working partners may also be eligible, as long as their partner is earning under $2000 per week.

The new “income relief payment” was essentially a beefed-up unemployed benefit for workers losing their jobs due to the covid19 epidemic. It would be administered by the Ministry for Social Development.

It was passed in the House, through all three readings, in one day.  Six days later, it was given Royal Assent.

The “income relief payment” differs from the usual unemployment benefit in two major areas:

  1. The amount of the “income relief payment” is $490 per week (tax free) – almost twice that of the regular, maximum  unemployment benefit of $250.74
  2. Partners of post-covid unemployed receiving the “income relief payment” can still be in paid work (up to $2,000 per week!) and this does not affect the IRP. Partners of pre-covid beneficiaries earning the original, lesser unemployment benefit (net, $250.74 p/w) cannot be in paid work, or else it will affect their payments. It also attracts unwanted attention from MSD/WINZ who constantly pry into beneficiaries private lives.

The Covid Unemployed are apparently an elite, special group of beneficiaries for whom the regular payment of $250.74 – without the hassle of employed partners – was beneath their dignity.

This blatant discrimination did not go un-noticed by beneficiaries support groups and other former Green Party MPs.

[…]

As an RNZ story reported, pointing out the blinding obvious;

[University of Auckland sociologist Louise] Humpage said the early findings suggested that benefit levels need to rise.

“I think there is general consensus that benefits are too low at present and I think this Covid-19 payment is a reflection that it’s actually too low for most people.”

What an eye-rolling, unsurprising conclusion.

The two-tier benefit system – primarily benefitting middle-New Zealand – was something we might have expected from the previous National-led government. It would have been a “cunning plan” that former Social Welfare minister, Paula Bennett, might have concocted to protect  middle class workers who lost their jobs and who had little inkling what surviving on welfare was really like.

The last thing National would have wanted is the middle class developing an empathetic understanding of the misery of surviving on unemployment welfare,

For Labour to promote such a scheme can only be described – at best – as misguided. At worst, it was a betrayal.

  • State Houses

According to Kāinga Ora (formerly Housing NZ) 2016/17 Annual Report, the organisation owned (or “managed”) approximately 63,000 properties.

By 2020, that number had increased to 66,253, according to Kāinga Ora’s 2019/20 Annual Report

The number is still far short of the  69,173 properties owned or managed by that organisation, according to their 2008/09 Annual Report.

But it is moving in the right direction, albeit at a unacceptably slow pace. The new build of state houses is certainly not keeping pace with the high numbers on the waiting list, as many families are forced out of the housing market with astronomical house prices leading to equally astronomical rents.

Labour is gradually undoing the mass sell-off of state houses wrought by the previous National government. (National, meanwhile, admitted it was wrong to sell off state housing, has promised no further sale of properties should it regain power – “except to state house tenants“.)

In this area, Labour can and must do better. State housing is their “bread and butter” for existence, as National’s is to support their mates in the business community.

If Labour cannot build the state houses we need, the inevitable question then arises: what good are they?

  • Unemployment & the wages subsidy

Alongside closing our borders and the lockdowns, the other weapon in our arsenal to fight the pandemic was the Covid-19 Wage Subsidy. Basically it paid up to 80% of employee’s wages during the lockdowns (the subsidy is no longer being offered).

It meant that while most of the economy was frozen, businesses could still pay their staff. It relied heavily on borrowed money by the government, but one way or another, there would be a cost as the pandemic impacted on our country.

It seemed to have worked.

Prior to covid19, our unemployment stood at 4.2%. for the March 2020 Quarter.

By the September Quarter, that figure had reached 5.3%.

(Note: the June 2020 Quarter reported a fall in unemployment to 4.0%. These results are misleading, caused by the way Statistics NZ calculates unemployment. During lockdown, the data was badly skewed.)

Many businesses have since re-paid the subsidy as their accounts are better than expected following the lockdowns. One, in particular, The Warehouse, suffered bad publicity when it took the wage subsidy and then made hundreds of staff redundant whilst posting a $44.5 million profit. After considerable public and political pressure, The Warehouse announced it would repay the subsidy.

The most high-profile recipient of the wage subsidy was the so-called “Taxpayers Union“. Ostensibly a group opposed to government subsidies and “profligacy”, the TU applied for, and recieved, $60,000 in taxpayer-funded subsidy;

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Source acknowledgement: The Paepae.

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Predictably, the “Union” became the subject of considerable on-line derision and merciless mocking on various social media platforms. It was one of the few funny moments in the tragedy that is covid19.

Aside from saving jobs and businesses, the Wages Subsidy reminded us that far from keeping the State “out of our lives” as neo-liberals have been calling for since the 1980s – the State was our united defence against the forces of nature – in this case a deadly viral pandemic. Only the State could marshal the expertise; the financial resources; the human power; and co-ordination necessary to save lives. Only the State, through our elected representatives, could motivate and encourage people to act together and do the right thing for the greater good.

Collectivism suddenly became desirable; the neo-liberal vision of small government, not so much.

Contrast our success with that of the United States which has glorified small government and the cult of the individual. Or Sweden, which adopted a hands-off approach. Their death rates are currently 496,033 and 12,428 respectively.

New Zealands death rate still stands at 25.

Now we begin to understand the deep, under-lying reason for Labour’s stunning election results last year. For all our criticisms (of which there are plenty and well-justified), they damn well earned it.

  • What comes next?

As Senior Researcher in Politics at Auckland University of Technology, David Hall, wrote for “The Conversationin October last year;

“In times of upset, people yearn for normality — and Ardern’s Labour Party was awarded a landslide for achieving something close to this.

[…]

This leaves us with the longstanding conundrum of what the Labour Party is and what it really stands for these days. Ardern and her colleagues are not ideologues, but no politics is without ideology — a system of ideas, values and beliefs that orients its efforts.”

If the primary priority of the current Labour-only government is to be “responsible managers” of the economy then they will be jostling for that position with their Tory counterparts. It will be a precarious position to occupy, as National’s fall-from-grace after Steven Joyce’s and Paul Goldsmith’s stuff-ups during the 2017 and 2020 election campaigns proved with dramatic effect.

Whilst being “responsible managers” is a good reputation to hold, in itself that is not Labour’s raison d’etre. Their existence, like the Green Party and ACT, is to effect change.

Labour is the party that initiated State housing; implemented unemployment and domestic purposes benefits; removed homosexuality and sex work from the Crimes Act; cut diplomatic ties with apartheid South Africa; moved Aotearoa New Zealand to be nuclear free; brought in equal pay for women legislation; and many other progressive social and economic reforms.

For the current Labour government to squander their majority in Parliament is to turn their backs on their 105 years of proud history and waste the mandate they have been given.

If Labour is too timid to act on climate change; unaffordable housing and homelessness; rampant inequality and discrimination against minorities; child poverty and low income for welfare beneficiaries; as well as guard the country against covid and act as sound stewards of the economy, then the legitimate question must arise in voter’s mind; why vote for them?

Re-election for the sole purpose of re-election is not reason enough.

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References

The Wall Street Journal: The Covid-19 Death Toll Is Even Worse Than It Looks

Al Jazeera: In post-Brexit UK, quiet ports hide mounting transport chaos

The Atlantic: This is a coup

The Guardian: Victoria hotel quarantine failures ‘responsible’ for Covid second wave and 768 deaths, inquiry told

CNN: Russian opposition leader Alexey Navalny dupes spy into revealing how he was poisoned

CNBC: Hundreds arrested in Hong Kong protests, as analysts weigh in on national security law’s impact

BBC: The Uighurs and the Chinese state – A long history of discord

Reuters: Global temperatures reached record highs in 2020, say EU scientists

Electoral Commission: New Zealand 2020 General Election – Official Results

Electoral Commission: New Zealand 2017 General Election – Official Results

Wikipedia: 2014 New Zealand General Election

The Spinoff: Future Act MP held ‘climate hysteria skeptics’ meetings at high school

Victoria University: The Home Front Volume  II Chapter 17 — More Shortages

RNZ: New Zealand’s most fertile land dug up for housing

Stuff media: $5.50 lettuces if fertile Pukekohe land turned into houses

Canstar: NZ property trends emerging in 2017

Scoop media: Auckland Median House Price Hits $1m Mark In October; 9 Other Regions & 28 Districts Hit Record Median Prices

Business Insider: How A US Housing Boom Became A Global Financial Crisis

The Conversation: With a mandate to govern New Zealand alone, Labour must now decide what it really stands for

Electoral Commission: New Zealand 2017 General Election – Official Results

The Guardian: Climate crisis – 2020 was joint hottest year ever recorded

Stanford News: Stanford researcher reveals influence of global warming on extreme weather events has been frequently underestimated

NIWA: Ocean acidification—what is it?

Carbon Brief: New climate models suggest faster melting of the Greenland Ice Sheet

Geonet: Whakaari/White Island

Wikipedia: Christchurch mosque shootings

RNZ: Jenny Craig defends stance as essential service

RNZ: What it means to break Covid-19 lockdown rules

RNZ: New Zealand lockdown – Great Barrier-Aotea residents irritated by boaties on shores

NZ Herald: Covid 19 coronavirus lockdown – Health Minister David Clark demoted after driving 20km to beach, breaking lockdown rules

RNZ: Air NZ silent about Covid-19 cases as staff fears grow over quarantine exemption

Stuff media: Coronavirus – How the Government botched border testing for Covid-19

RNZ: Covid-19 – MIQ nurses threaten to stop work if N95 masks not supplied

RNZ: ‘Dumb good luck’ no outbreak after Covid-19 community case – health expert

Newshub: Siouxsie Wiles slams Air NZ for still serving food

Tax Working Group: Tax Working Group delivers Final Report

NZ Herald: PM Jacinda Ardern has ruled out implementing a Capital Gains Tax while she is at the helm of Labour

Stuff media: Capital gains tax – Jacinda Ardern took a lifeboat off a ship she could have saved

Newshub: Newshub-Reid Research poll shows Kiwis trust Labour over National to run economy as Paul Goldsmith dodges blame over fiscal hole

Newshub: Newshub-Reid Research Poll: Kiwis trust Labour more than National to run the economy

TVNZ: Kiwis now trust Labour more than National to repair the economy, poll suggests

Parliament:  Social Security (COVID-19 Income Relief Payment to be Income) Amendment Bill

RNZ: Relief payments for people who lost jobs due to Covid-19 announced

MSD: Jobseeker Support cut-out points (current)

RNZ: Covid income relief payment recipients fare better than those on the dole, survey finds

Kāinga Ora: 2016/17 Annual Report

Kāinga Ora: 2019/20 Annual Report

Housing NZ: Annual Report 2008/09

Stuff media: Public housing waitlist cracks 20,000 with over 2000 new households in a single month

Stuff media: National Party admits it sold too many state houses

Stuff media: Election 2020 – National promises to sell state houses, but this time only to tenants

Work and Income: Covid-19 Wage Subsidy

Statistics NZ: Unemployment rate at 4.2 percent in March quarter

Stuff media: Record jump in jobless rate to 5.3%, but NZ set to avoid unemployment disaster

The Spin-off: Why the hell has New Zealand’s unemployment rate just gone down?

RNZ: Ryman to repay $14.2m for wage subsidy

RNZ: The Warehouse Group wage subsidy repayment – Taxpayers pleased

Newshub: Coronavirus – Taxpayers’ Union gives up ‘ideological purity’, accepts $60,000 in taxpayer wage subsidies

Worldometer: Covid 19 – USA

Worldometer: Covid 19 – Sweden

National party: Restoring New Zealand’s Prosperity – Responsible Economic Management

ODT: Opinion – Joyce’s ‘fake news’ fiscal hole backfires

Stuff media: Election 2020 – National’s fiscal hole appears to double to $8 billion as Paul Goldsmith denies double count mistake

NZ History: State housing – The first state house

Te Ara: Family welfare

Stuff media: Homosexual Law Reform 30 years on – what was life like for the gay community pre-1986?

Parliament: Prostitution law reform in New Zealand

Te Ara: Political leaders – David Lange’s tour of Africa

MFAT: Taking a nuclear-free policy to the world

MSD: New Zealand Conference on Pay and Employment Equity for Women

Additional

Greenpeace:  Five ways NZ will be much better if Jacinda makes good on her promise to Build Back Better

Other blogspots

The Paepae: The juxtaposition in this screen shot of the ‘NZ Taxpayers Union Inc’ astroturf lobby group receiving a government-funded subsidy makes me chortle

The Daily Blog: When will Michael Barnett stop whinging, whining and bleating? – John Minto

Previous related blogposts

Observations on the 2017 Election campaign thus far… (rima)

Life in Level 2: Two Tier Welfare; A Green School; Right Rage, Wrong Reason

2020: Post-mortem or Prologue?

2020: The History That Was – Part 1

2020: The History That Was – Part 2

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sharon murdoch

Acknowledgement: Sharon Murdoch

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This blogpost was first published on The Daily Blog on 15 February 2021.
 

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Simon Bridges: “No ifs, no buts, no caveats, I will repeal this CGT”

13 March 2019 2 comments

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A recent bold statement from current National Party leader, Simon Bridges, declared his intentions should a capital gains tax (CGT) be enacted;

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…No ifs, no buts, no caveats, I will repeal this CGT as Prime Minister of New Zealand ” – a statement so categorical that it made John Key’s 2008 commitment never to raise GST, look timid;

“National is not going to be raising GST.

National wants to cut taxes not raise taxes.”

Except, he did.  In October 2010, Key’s National government increased GST from 12.5% to 15%.

Nine years later, Simon Bridges has made a similar, solemn, hand-on-heart, promise: “No ifs, no buts, no caveats, I will repeal this CGT as Prime Minister of New Zealand“.

Except, he can’t.

On at least several levels, his commitment to repeal a capital gains tax will fail.

Labour’s  Grant Robertson, made it crystal clear that any proposed CGT will not be implemented until after the 2020 general election;

“We know it is important to get this right, so we will balance the need for certainty and urgency by ensuring that any potential changes will not come into effect until the 2021 tax year. This gives multiple opportunities for public input, and a general election before any new tax would come into effect.”

The process would be straight-forward: whatever the Coalition government decides would be put into legislation that would not ‘activate’ until after the next election. It would take a repeal of that legislation to stop CGT from ‘kicking in’.

The difficulty with this is two-fold.

Firstly, Simon Bridges and the National Party would have to achieve a simple little thing: win the next election.

The chances of that happening – with current polling – is marginal, to say the least.

For starters, National has been trailing Labour in the last two political polls.

Secondly, National has no ‘mates’. ACT is consistently in the zero-to-1% band and the faux-Bluegreen Party is nowhere to be seen.

That leaves two parties: the Greens and NZ First.

The Green Party membership would rather machine gun the last remaining Hector’s Dolphins than entertain a “teal” coalition with the Nats. Bridges’ promise to reinstate offshore exploratory drilling for oil and gas would make any potential National-Green coalition toxic and as likely as a flying saucer landing on the White House lawn.

Which leaves NZ First. It is unclear as to what benefit – if any – a coalition deal with the Nats would offer to NZ First. As well as having been the “kiss of death” to other small parties, National has tried to destroy Winston Peters in the past. Peters is unlikely to have forgotten the leaking of his superannuation over-payment and the strong probability that it was engineered by a senior National government minister who shall remain nameless.

Moreover, if this current Coalition Government passes legislation for a capital gains tax to take effect in 2021, that would mean all three parties – Labour, Greens, and NZ First – voting to pass said necessary legislation.

For a National-NZ First Coalition to repeal that legislation would mean NZ First voting against a law that they themselves helped enact.

The fallout with the public would be massive, echoing NZ First’s disastrous decision to form a coalition with National back in 1996. Public support for NZ First would rapidly evaporate.

There would be simply no possible political gain for NZ First to travel down that road.

So unless Simon Bridges can find a new political party to ally with; or, unless National can win 50% outright of the Party Vote in 2020 – both unlikely scenarios – his promise to “repeal this CGT as Prime Minister of New Zealand” cannot be taken seriously.

Indeed, the comments following Bridges’ ‘tweet’ on 6 March reflected the disbelief of such an unlikely event happening.

And more than one social media commentor asked some pertinent questions;

“Does that include the Brightline Test your government introduced?”

And;

“Will you get rid of tax on wages and if not, why not?”

Considering that National introduced a limited capital gains tax – the  two year ‘brightline’ test – in 2015, Bridges would have to make some hard decisions and explanations to the public.

Would the ‘Brightline’ test remain in place if he had an opportunity the scrap the Coalition’s more comprehensive CGT?

Would he return the ‘Brightline’ test to two years or keep it  at five?

How would he justify retaining a ‘Brightline’ test – whether at two or five years – when scrapping a more comprehensive, and justifiably fairer, capital gains tax? Why is one form of CGT acceptable to National, but not the other?

And as more than one person demanded to know, why is National promising to get rid of one tax (Capital gains) which would benefit property speculators – but not income tax, which would benefit every wage and salary earner in the country  (and put a permanent smile on David Seymour’s face that would never be erased)?

Bridges would be facing these questions and more in 2020 if he decided to make capital gains taxation an election issue next year.

All of which is unsurprising: at around 5% in the polls, Bridges faced the ignominy of approaching the margin of error – depressing symbolism to be viewed as an ‘error’ – and over-taken by one of his National MPs, Judith Collins. This has made him that most desperate of beasts; a politician at risk of becoming irrelevant.

No party can hope to win the governing benches with a Leader who is seen as uninspiring and lacking support from even National Party voters.

If Bridges cannot succeed in campaigning to defeat capital gains, his tenure as National’s leader will come to an abrupt end. To be followed in rapid succession by his political career.

A further point has probably not escaped the attention of the National Party: if the Coalition government wins the next election and remains intact, that would signify not just the implementation of the capital gains tax – but it’s bedding-in for three years. That would make it much harder to repeal.

Especially if all the fear-mongering, gloomy predictions failed to materialise and the world (or at least the bit at the bottom where New Zealand sat) failed to end in Mayan Calendar 2012-style. Like GST, National would have to ‘bite the bullet’ and accept the new tax. They simply could not find any justification to repeal it without perpetuating their ‘other’ reputation as being a party of, and for, “rich pricks”.

If Labour, the Greens, and NZ First hold their nerve and don’t blink in the face of right-wing hysteria and bluster, the political gain from implementing CGT could be greater than they anticipate.

In fact, everything to gain, and National to lose.

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Postscript

Response to National MP, Scott Simpson, engaging in fear-mongering over CGT:

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References

Twitter: Simon Bridges – no ifs no buts no caveats – 6 March 2019

Otago Daily Times: Key ruled out GST increase in 2008

NZ Herald: GST rise – The hole in your pocket

Interest.co.nz: Labour releases document setting out tax plan, says no Working Group taxes would come into effect until after 2020 election

Mediaworks/Newshub: National plunges to worst result in over a decade – Newshub poll

NZ Herald: National will reverse Govt’s offshore oil exploration ban if in power in 2020 – Bridges

Radio NZ: Peters’ legal action against National party continuing – lawyer

Beehive: Bright-line test targets gains on property sales

Interest.co.nz: The Bill that will see the bright line test extended from two-years to five has passed its third reading and now awaits the Royal Assent to become law

Mediaworks/Newshub: NZ prefers Judith Collins to Simon Bridges as Prime Minister – Newshub poll

Twitter: Frank Macskasy – Scott Simpson – capital gains tax

Other Blogs

The Standard: Why New Zealand needs a capital gains tax

Previous related blogposts

A Capital Gains Tax?  (14 July 2011)

ACT intending a “serious assault”?  (17 July 2011)

National spins BS to undermine Labour’s Capital Gains Tax (31 May 2014)

A Claytons Capital Gains Tax? (13 September 2014)

Simon Bridges – out of touch with Kiwi Battlers (2 March 2019)

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This blogpost was first published on The Daily Blog on 8 March 2019.

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Simon Bridges – out of touch with Kiwi Battlers

2 March 2019 3 comments

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As property investors/speculators; assorted financiers; and their  political-wing, the National Party,  ramp up their opposition to a capital gains tax to a stridency approaching hysteria, current party leader, Simon Bridges, has used the mainstream media to push his highly propagandised (and highly emotive and misleading) messages;

“What the Kiwi way of life is is a recognition that New Zealanders aspire, they understand that people who work hard, who save, who invest, who take risks deserve the fruits of their labour and there is nothing fair about a capital gains tax that fundamentally gets in the way of that.”

He makes it sound as if property investment in New Zealand is akin to carving out and building a railway through the Himalayas.

On social media, Mr Bridges has used blitzed Twitter and Facebook with isolated examples of supposedly “contradictory cases” where CGT might or might not apply and has even taken to mis-representing aspects of how such a tax might apply (though he was quickly called out by other social media users).

Anyone would think that the Four Harleyriders Of The Apocalypse are bearing down upon us.

But Bridges miscalculated badly when one particular message posted on Twitter caught the eye of several users;

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New Zealanders aspire & want to get ahead for themselves & their families. How is it right that an $8m home in Auckland won’t face a CGT but a couple scrimping and saving for a bach or crib for their family will get slammed with the top tax rate? That’s not the Kiwi way.

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The kiwi way“?!

Homeless people living in garages and vans; families crammed into over-crowded houses; and even the home-seeking kids of the middle-class who cannot afford their own first homes would hardly be “The Kiwi Way“.

They would hardly be sympathetic to property owners lamenting having to “scrimp and save for a bach or crib“. Not many tears would be shed over “a bach or crib“.

Especially when many, if not most, if these “baches” and “cribs” are now substantial constructions and no longer the rustic cottages we once knew as kids.

As several Twitter-users pointed out;

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“Because a primary home is a necessity; a beach house is a luxuary.”

Babes if you don’t understand how CGT works maybe don’t get into it. And your mate’s kids might be “scrimping and saving” for a Bach but most of nz are just struggling to get a house deposit together thanks to the mess which is the property market xox

If you are scrimping perhaps a holiday home should not be a priority?

I don’t know anyone scrimping and saving for a batch. Just to get by each week yes. You are so out of touch bro.”

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There were other criticisms made, with many pointing out to Mr Bridges that a capital gains tax would apply only to any profit made at the end of selling a bach/crib – not saving for it;

“It’s not profit unless you realise it by selling the asset, you mean”

But it speaks loudly that Mr Bridges is openly appealing to the propertied middle class – those who already hold assets.

He does not appear to be even remotely concerned at the homeless nor frustrated young home-seekers who have been forced out of the property market, and destined to forever rent. National could not even admit that a home ownership problem existed.

To do so would have been a tacit admission of failure.

The term “Generation Renters” exists for good reason, as economist Shamubeel Eaqub explained in 2015 (when National was strenuously  rejecting any suggestion of a housing crisis);

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Economist Shamubeel Eaqub calls the Auckland housing story “madness” – and his upcoming book Generation Rent captures the rising sense of hopelessness among young New Zealanders locked out of the home ownership dream.

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The number of households who own or part own their home has decreased by 75,000 since 2007, despite the total number of households increasing by 155,000 in the same period. The number of households renting has increased by 117,000 during that time.

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The facts, however, speak more clearly and truthfully than any rhetoric from the current leader of the National Party, desperate to shore up his waning support and struggling to remain relevent.  If Mr Bridges loses the CGT debate it will be another nail in his political coffin.

The data, however, is hard to dismiss:

In 1991 Home ownership had reached a peak of 73.8%.

By 2013, home ownership had fallen to 64.8%.

Last year’s census results are not yet available according to Statistics NZ, but they are hardly likely to show any improvement.

The numbers show the dire state of our plummetting home ownership rates. If Mr Bridges was truly concerned for the “ordinary Kiwi battler”, he would be focused on those locked out of owning their own home instead of those already owning property and ‘aspiring’ to buy holiday homes on top of their bricks-and-mortar assets.

Instead, Mr Bridges’ comments about “a couple scrimping and saving for a bach or crib” indicates how utterly divorced he and his National Party fellow MPs are from mainstream, non-propertied New Zealand. The fact that most of them own investment properties should not be lost on us. They epitomise privilege.

National was certainly not reluctant to raise GST, prescription charges, family court fees, and a whole raft of other charges in 2010. Where was Mr Bridges then, championing those who “scrimp and save”, only to be hit by increased GST, medicine costs, and government charges?!

Mr Bridges and his privileged colleagues appear clearly wedded to protecting the interests of those for whom property investments has created mostly tax-free wealth. If ever there was a party for entrenched privilege, it is National.

It is also clear that those wanting to “get onto the first rung of the property ladder” need look elsewhere than the National Party. “Aspirational” for  the homeless and first home-owners means something completely different to National.

When a party leader unashamedly declares that he backs existing owners of property; wanting more property; without paying their fair share of tax on unearned gain on property – then those without property should look elsewhere.

The real question is not whether Mr Bridges and National are on the side of the property-owners or home-seekers. That question has well and truly been answered by Mr Bridges’ revealing ‘tweet’ above.

No, the real question now is, which side does NZ First want to be on?

What will be Winston Peters’ legacy? Aspirational home seekers or paper-wealthy property owners looking to increase their assets?

I know which one I’d want to be remembered for.

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Note: This blog author is currently away from his main computer, so reference-links may not be as comprehensive as they normally are.

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References

Radio NZ: Capital gains proposal – ‘What we’ve got here is a tax on a tax’ – Simon Bridges

Twitter: Simon Bridges – oriental bay, ohariu, gorse – 25.2.2019

Twitter: Simon Bridges – auckland home, auckland home office, exempt – 25.2.2019

Twitter: Simon Bridges – couples, scrimping, saving, baches, CGT – 22.2.2019

Radio NZ: Housing ‘challenge’ still not a ‘crisis’

Fairfax/Stuff media: House price rises creating a generation of renters

Statistics NZ: Owner-Occupied Households

Statistics NZ: 2013 Census QuickStats about national highlight

Other Blogs

The Daily Blog: ’The laughable myth of the ‘Kiwi way of life’

The Standard: Spare a thought for our poor impoverished landlords

Previous related blogposts

A Capital Gains Tax?  (14 July 2011)

ACT intending a “serious assault”?  (17 July 2011)

National spins BS to undermine Labour’s Capital Gains Tax (31 May 2014)

A Claytons Capital Gains Tax? (13 September 2014)

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Capital gains tax labour NZ Politics Daily - Bryce Edwards Otago University liberation blog - www.liberation.org.nz

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This blogpost was first published on The Daily Blog on 25 February 2019.

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What I want for Christmas…

29 December 2017 Leave a comment

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Now is the time of the year when we send in  requests to that mysterious red-garbed being at the north pole for ‘goodies’ of one sort or another.

This is my belated wish-list of gifts. But not gifts for myself. These are gifts for the whole of New Zealand…

Housing for all

As the Coalition’s Associate Finance Minister, David Parker recently stated;

“I have a pretty simple view of this. I don’t think that it should be an international market for houses. I think local homes are to live in.

They shouldn’t be commodities that we trade internationally. I think just about everyone who’s a foreign person buying into New Zealand – they’re a very, very wealthy one-percenter if you like. And I think that’s one of the excesses of global capital when you allow those sorts of interests to influence your local housing market.”

The majority of New Zealanders would agree with him.

Even our former pony-tail-pulling Dear Leader, John Key, was moved to lament seven years ago;

“Now, that’s a challenging issue given the state of the current law and quite clearly it’s evidentially possible and has been achieved that individual farms can be sold. Looking four, five, ten years into the future I’d hate to see New Zealanders as tenants in their own country and that is a risk I think if we sell out our entire productive base, so that’s something the Government will have to consider.”

Granted that he was referring to selling farms to foreign investors, but the same holds equally true for residential property. We literally could become “tenants in our own country” if housing is allowed to be a commodity traded by investor-speculators. Especially without hindrances such as Stamp Duty or Capital Gains Tax. In effect, our housing becomes the plaything of the wealthy, with our children becoming increasingly locked out of ever owning their own home.

Even domestic investor-speculators are having a deleterious effect on home ownership. As recently as March this year (2017) the Property Investors Club revealed that “Auckland investors account for a 43% share of all sales [and] first home buyers have dropped back to a low of 19%“.

When I open up the Christmas gift labelled “Housing”, I find;

  • A capital gains tax, excluding the family home, set at the corporate tax rate of 28%. Rentals are a business; we should tax them as such.
  • An increase of State Housing of at least ten thousand units.
  • Labour’s “Kiwibuild” policy taking off  like a rocket and providing affordable homes for all first-home buyers.
  • Entrenching Housing NZ  in legislation as a public service rather than an SOE; banning dividends or any other transfers from HNZ to central government; reinvest any gst paid by HNZ back into HNZ; banning sales of existing housing; guaranteeing tenancy for all families where children and/or young adults under 21 reside in the home.

Free education for all

One of the greatest scams sold to New Zealanders is that education is a “private benefit” and therefore should be paid for (at least in part) by young people.

This was never the case for Tories such as John Key, Steven Joyce, Paula Bennett, Judith Collins, Bill English, et al. Their university tuition was mostly free, courtesy of the State.

An educated population presented solely as a “private benefit” ignores the counter-factual; an un-educated population would be severely handicapped economically, socially, technologically and marked with deprivation on every level.

As a mind-experiment, imagine if every doctor, nurse,  and dentist remained in New Zealand after graduation, and in doing so, their debt was wiped. Who would benefit? Answer:

(a) doctors, nurses, and dentists,who would have no massive debts hanging over them

(b) the public, who would  enjoy their services

(c) central government, which would receive  doctors, nurses, and dentists’ taxation.

Now imagine if those same doctors, nurses, and dentists, all emigrated. Imagine if we were left with not one doctor, nurse,  and dentist in the country. Who would benefit? Who would lose out? Answer:

(a)  Losing out: the public, which would be deprived of their services

(b)  Losing out: central government, deprived of their taxation

(c)  Losing out: the entire country, as the economy, life-expectancies, child mortality, etc, all took a giant leap backwards

(d) Doctors, nurses, and dentists, who would still have massive debts hanging over them.

It’s abundantly clear that an educated population is not primarily a private benefit. It is a collective benefit that allows an entire society and nation to progress.

We used to have (near-)free tertiary education for those who wanted it – with a student allowance thrown in.

Then we had Rogernomics; seven tax cuts; and ended up with over $15 billion in student debt. High student debt has forced many graduates to go overseas. The previous National regime even implemented a policy arresting so-called “loan defaulters” at the border;

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This is the craziness  we have arrived at: making criminals of young people for not paying for a service that John Key, Steven Joyce, Paula Bennett, Judith Collins, Bill English, et al, enjoyed for free.

And like a frog in a steadily heating pan of water, this craziness has grown incrementally until New Zealanders have have accepted this state of craziness as “the norm”.

It is not normal. It is as far removed from normal as one can get without permanent residency in the local psych unit.

I open the second Christmas gift. This one is labelled “Education”. In it, I find;

  • Fully funded Early Childhood Education; Primary Schools, and Secondary Schools. All school “donations” are dropped.
  • Increases to Vote Education funding is tagged to inflation/cost-of-living increases.
  • The mandate for  salary increases for teachers is handed to the Remuneration Authority, and is automatically double that of MP salary increases.
  • All university and polytech education is free-to-user.
  • All current student debt is wiped.
  • All criminal convictions for loan defaulters are wiped and their legal fees reimbursed.
  • All student debt amounts paid by graduates become a tax credit. Eg; a graduate having paid $30,000  in debt (including interest) will have a tax credit of the same amount. (An exception being those graduates who voted National and/or ACT. Their debt will be doubled. After all, they support user-pays. Let’s not disappoint them.)

Free breakfasts and lunches in schools

Europe does it. Sweden, Finland, Estonia, UK, Scotland,  and even India does it. They provide varying levels of free meals  for children at school.

The benefits are obvious; healthy meals are provide to all children regardless of social status or class origins. There is no stigmatisation as “coming from a poor family” when everyone is provided with the same service.

Child Poverty Action Group (CPAG) wrote in their 2011 report, “Hunger for Learning“;

Yet despite the ubiquity of food insecurity among students at Auckland’s decile 1 and 2 schools, children’s hunger is often portrayed as one of individual moral failure and stigmatised accordingly. (p17)

In all cases breakfasts were provided on a universal basis to all children who wanted one. Principals were very conscious of the stigma attached to targeted provision of meals, even in younger children. For schools working to build trust between themselves and the community principals felt that universal provision sent a message that children and parents would not be judged. (p24)

Anscombe (2009) notes that in the New Zealand context some schools  do not want to be seen as needing to feed children because of the stigma attached to low-decile schools. (p28)

The key argument against free provision is that it takes away parents’ responsibility to provide basics for children. Yet, as this report makes clear,  many families cannot afford to provide adequate nutrition for their children, and also, targeting risks stigmatisation, and it is clear from the interviews conducted for this report that this becomes evident in children well before they leave primary school. Stigmatisation risks missing children that need help (Sheridan, 2001). (p29)

In its estimate of the cost of food in schools in Scotland, the Scottish parliament made a number of observations pertinent to New Zealand. Among them were that a deregulated system led to poorer quality food, something the Scottish legislation sought to address; a universal system removes the stigma attached to targeted provision, improves take up and is cheaper to administer; universal provision helps build a healthy nation, and this was viewed as contributing to the economic, social and healthy wellbeing of Scotland as a whole; and nutritious school meals were recognised as lowering Scotland’s high rates of coronary heart disease, some cancers, and diabetes, and were seen as being of key importance for development and growth in childhood and adolescence (Sheridan, 2001, pp. 2-3). Other, more direct, savings included teacher time (teachers spend time teaching rather than trying to deal with disruptive behaviour) and savings associated with improved attendance. (p36)

One fact we are all fully cognisant of is that the moralising Right are only too willing and quick to jump on a soapbox and judge poor families for not feeding their children. The constantly parroted rhetoric is “can’t afford to feed them, don’t have them” – a subtle code  advocating class eugenics, and attempting to deflect from the real social problems we face.

Make school meals – like superannuation and hospitals – universally free, and that stigma vanishes because everyone’s children is treated equally.

After all, if it was good enough for former Social Welfare Minister, Paula Bennett,  to refuse to  measure poverty

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…then it should be good enough not to measure which children should or should not qualify for free breakfasts and lunches in our Primary and Secondary schools.

I open my third gift, and it contains;

  • Free healthy, nutritious breakfast and lunch for every child in New Zealand.

Orphan medicines for all who need them

In the last few years I have reported on a small number of New Zealanders who have been denied life-saving medication because PHARMAC has insifficient funding to pay for these expensive drugs. Medication for diseases such as Acid Maltase deficiency, or Pompe Disease, are not funded and sufferers either have to pay huge sums – or slowly perish.

NZORD, the New Zealand Organisation for Rare Disorders, has repeatedly called for PHARMAC to fully-funded orphan drugs for rare conditions.

In August 2013, this blogger reported;

At a seminar in Wellington, Labour’s Health spokesperson, Annette King, announced her Party’s new policy to create a new fund for purchasing so-called “orphan drugs” – medicines – for rare diseases.

Labour’s new policy marks a turning point in the critical problem of “orphan drugs” which are not funded by PHARMAC, but which are a matter of life and death for people suffering rare diseases.

Ms King announced Labour Party policy on the issue of orphan drugs and the problem of lack of funding;

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Annette King orphan drugs NZORD seminar

Health Spokesperson, Annette King, Wellington, 1 August 2013 – NZORD seminar

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“So one of the things that would need to happen soon after an election would be the establishment of on implementation working group, which could be made up of clinicians; of patients; of community representations, and others,  to put in place the details and work on the criteria for access. I do believe that in separating the funding and operation of the orphan drugs policy from PHARMAC. It will let them get on with doing what they do really well, and I think in some ways it will free them to get the best they can for the most of us who don’t need special medicines. But it will mean that for those who have rare disorders, that there will be a fund around that.”

Ms King was advocating a separately-funded body that would over-see orphan drugs for rare diseases.

However, it has become apparent that budgetary constraints and fiscal time-bombs left by the previous, incompetant National government have put Labour’s policy in doubt.

Instead, the new Coalition government is faced with unfunded budget-blow-outs such as new frigates for the NZ Navy;

The cost of upgrading two of the navy’s frigates has blown out again – this time by $148 million. The project – originally estimated to cost $374-million – will now cost $639 million.

This, on top of an eye-watering, jaw-dropping $20 billion “investment plan”  for New Zealand’s military. The Fairfax article appeared to parrot the previous government’s spin with these opening paragraphs;

The Government for the first time has confirmed New Zealand is capable of launching its own cyber attacks as a deterrent to cyber terrorism.

It’s unveiled a $20 billion investment plan in defence force capability, which will see the military establish a new cyber support capability, bolster intelligence units and digitise the army on the battlefield, giving it network enabled navigation and communications systems.

Only further down the story was it revealed that the $20 billion would be spent on new warships, aircraft, and other military paraphernalia.

Meanwhile, health budgets are stretched with PHARMAC unable to afford life-saving medicines.

The next gift to be opened;

  • “orphan drugs” funded for all who desperately need them

There are many other gifts to be opened, but one particular one caught my eye. This one had no cost to it. It was totally, utterly free-of-charge…

Kiwi fairness

Wrapped up in plain brown paper,  and put away in a dusty attic somewhere for the past thirty years, is a little box. It appears unassuming and unremarkable.

Except…

It contains the most precious gift of all; our notion of Kiwi fairness; our identity of caring for others. We had it once, in abundance. We even used to march for it in our streets, for fairness, justice, and peace in far away countries.

In South Africa;

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In South East Asia;

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Even in our own backyard;

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Wouldn’t it be refreshing if those 1,152,075 New Zealanders who voted for National in September this year, thought more of homelessness; child poverty; polluted rivers and lakes; under-funded hospitals, medicines, and mental health services; mounting student debt on our children, etc  – than for their bloated property values?

Wouldn’t it be better for us as a society if our distorted sense of hyper-Individualism – that bratty spoiled ‘child’ of  neo-liberalism and globalisation,  was pared back, and the needs of our communities put first and foremost?

The last gift I open;

  • The Kiwi identity of a fair go for all.

Without it, nothing else can be achieved. Perhaps that one is the most important of all.

A very Merry Christmas, festive season, happy new year, and family time for all,

irrespective of how you may choose to celebrate it.

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References

NBR: Foreign Buyer Ban – it’s the enforcement, stupid

NZ Herald:  PM warns against Kiwis becoming ‘tenants’

Property Investors Club:  First buyers still missing out in Auckland’s most affordable properties

Labour Party:  Our plan to start fixing the housing crisis

NZ Herald:  Student loan debt – 728,000 people owe nearly $15 billion

Fairfax media:  Kiwi lawyer comes home from UK to find $16,000 student loan grown to $85,000

NZ Herald:  Woman arrested at airport over student loan debt

NZ Herald:  Third person arrested at the border over student loan debt, as Govt ramps up crackdown on borrowers

NZ Herald:  Student loan debtor arrested at border, more warrants sought

Radio NZ: Two dozen prosecuted for defaulting on student loans

Child Poverty Action Group: Hunger for Learning

NZ Herald:  Bennett slammed over child poverty claim

National Party:  29 fiscal time-bombs waiting to blow

Radio NZ:  Navy budget blowout – ‘Our sailors aren’t safe’ – Ron Mark (audio)

Fairfax media:  Defence White Paper – Government unveils $20b defence plan for new planes, boats and cyber security

Electoral Commission:  2017 General Election – Official Result

Additional

Bay of Plenty Times:  Inside Story – The student loan effect

Previous related blogposts

Terminal disease sufferer appeals to John Key (12 Nov 2012)

Terminal disease sufferer appeals to John Key – Update & more questions (28 Nov 2012)

Health Minister circumvents law to fulfill 2008 election bribe? (18 Dec 2012)

Johnny’s Report Card – National Standards Assessment – Compassion (9 Jan 2013)

“There’s always an issue of money but we can find money for the right projects” – John Key (20 Jan 2013)

“One should judge a society by how it looks after the sick and vulnerable” – part tahi (4 March 2013)

“One should judge a society by how it looks after the sick and vulnerable” – part rua (4 March 2013)

“One should judge a society by how it looks after the sick and vulnerable” – part toru (4 March 2013)

Opposition parties work together on “orphan drugs” (part wha) (10 Aug 2013)

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homeless families living in a car cartoon

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This blogpost was first published on The Daily Blog on 24 December 2017.

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Observations on the 2017 Election campaign thus far… (ono)

20 September 2017 11 comments

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You show me yours, I’ll show you mine…

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Perhaps the most ill-considered public statement from NZ First leader, Winston Peters, was his recent (11 September) demand that Labour disclose it’s full tax plan as a pre-condition for coalition;

“You are not asking the questions. You can’t possibly mean to go into an election saying, ‘My tax policy will be decided by a committee, and I am very sincere about that’. One needs to know what we are talking about … that should be fatal to a party’s chances. And we need to know.”

The jaw-dropping, gob-smacking, forehead-slapping gall of Winston Peters! For him to demand clarity and full disclosure from others – when he himself has made a fetish of not disclosing to voters who he will coalesce with, post-election  – takes the Hypocrisy-of-the-Year Award from National and plants it firmly on his own Italian suited jacket-lapel.

On top of which, none of Peters multi-billion dollar policies have yet to be costed.

So here’s the deal, Winston. You want to see Labour’s tax plans? We want to see your coalition intentions.

We’ll show you ours if you show us yours.  After all, “One needs to know what we are talking about“.

As Jacinda said, “Let’s do this“.

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Richard Prebble should keep vewy, vewy quiet

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On the matter of Labour referring taxation reform to a Working Group post-election, former-ACT Party leader Richard Prebble was scathing in his condemnation that Jacinda Ardern would not disclose her intentions toward implementation of a possible Capital Gains Tax.

In his regular NZ Herald propaganda slot, he wrote on 7 September;

“…Jacinda thinks the answer to every problem is a new tax. Asking for a mandate for capital gains taxes without giving any details is outrageous. All new taxes start small and then grow. GST was never going to be more than 10 per cent.

Who believes it is fair that the Dotcom mansion will be an exempt “family home” but a family’s holiday caravan plot will be taxed? The details are important…”

A week later, he followed up with;

“In a “captain’s call” Jacinda changed the tax policy to say that a Labour victory was a mandate for Labour to introduce any new tax and at any rate that a nameless committee of “tax experts” recommended, just the family home is off limits.

Any tax? What about land tax? Yes. Tax on the family bach and boat? Yes. Water? Petrol? Nothing is off the table. Will the capital gains tax be 33 per cent? Maybe. The petrol tax 10 cents a litre? Probably. Water tax. Guess a figure. “Trust us” says Jacinda.

No party has ever asked for so much power.

This, from the man who was a former Minister in the Lange Government which – in 1986 – introduced various neo-liberal “reforms” that the Labour Government had never campaigned on; had not included in their manifesto; and introduced the regressive  Goods and Services Tax in 1986. The Goods and Services Tax was never disclosed to the public in 1984.

Prebble and his cronies deceived  the New Zealand public in the 1984 election campaign. They withheld their true agenda. They lied to us.

For Prebble to now rear up on his hind legs, braying in indignation, pointing a  stained finger at Jacinda Ardern, is hypocrisy beyond words.

As former producer of TV’s The Nation, Tim Watkin, wrote on Prebble’s sanctimonious clap-trap;

“To read and hear a member of the fourth Labour government like Richard Prebble howling about transparency is like an Australian cricketer railing against under-arm bowling. Labour’s manifesto in 1984 was as artful a collection of vagaries as has ever been put to the public and after winning a second term in 1987, Prebble and his fellow Rogernomes embarked on a series of reforms – arguably the most radical tax reform ever considered by a New Zealand government, including a flat tax – without campaigning on them.”

Richard Prebble should think carefully before raising his voice on this issue – lest his own track record is held up for New Zealanders to scrutinise.

Does he really want that particular scab picked?

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Latest Colmar Brunton Poll…

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The latest TV1/Colmar Brunton Poll (14 September) has Labour and the Greens climbing – a direct antithesis to the TV3/Reid Research Poll which had Labour and the Greens sliding (12 September).

12 September:  Reid Research-TV3

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14 September: Colmar Brunton-TV1

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Which raises two questions;

  1. Are polling polling companies operating in the same country?  Or Parallel Universes?
  2. Is it about time that all public polling was banned once early voting begins?

The chasm in poll-results for National, Labour, and the Greens confirms critics of polls who dismiss results as wildly unpredictable. “Bugger the pollsters“, said Jim Bolger in 1993 – and with considerable justification.

Though Winston Peters and his supporters may be nervous at the fact that both polls have NZ First at 6% – perilously close to the 5% threshold. Any lower and Peters’ Northland electorate becomes a crucial deciding factor whether NZ First returns to Parliament.

Several commentators – notably from the Right – have been making mischief with the poll results, suggesting that a vote for the Green Party would be a wasted vote. Without the parachute of an electorate base, if the Greens fall below 5% in the Party Vote, their  votes are discounted and Parliamentary seats re-allocated to Labour and National.

John Armstrong and Matthew Hooton are two such commentators making this fallacious point. Fallacious because even at Reid Research’s disastrous 4.9%, the polling ignores the Expat Factor. Expats – predominantly overseas young voters –  are not polled, but still cast their Special Votes, and often for the Green Party.

In 2014, the Green vote went from 210,764 on election night to 257,359 once Special Votes were counted and factored in. The extra 47,000 votes was sufficient to send a fourteenth Green Party List candidate to Parliament;

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It seems contradictory that there is a total black-out of polls on Election Day itself – when voting stations are open. But polling is allowed to proceed two weeks out from Election Day when voting stations are also open.

It may be time for this country to consider banning all polling whilst voting stations are open. If poll results are so open to wild fluctuations, and certain commentators make mischief from questionable data, then the possible risk of undue influence on voters cannot be discounted.

Once voting begins, polling should cease.

The only poll that should count after voting begins is Election Day.

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Losing the plot, Winston-style

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On Radio NZ’s Morning Report (14 September), NZ First Leader, Winston Peters lost the plot. His haranguing of Guyon Espiner did him no credit.

More incredible  was Peters’ assertion that he has not made any “bottom lines” this election;

“I have never gone out talking about bottom lines.”

Peters’ blatant Trumpian-style  lie flew in the face of  his bottom-lines during this election campaign.

On a referendum on the Maori seats;

“My strategy is to tell everybody out there that you won’t be talking to NZ First unless you want a referendum on both those issues at the mid-term mark of this election.”

On re-entering Pike River mine;

“I’m making no bones about it, we’ll give these people a fair-go, and yes this is a bottom line, and it shouldn’t have to be.”

On a rail link to Northport;

“I can say for the people of Northland and Whangarei, this is going to happen. We’ve got the corridor; it’s been designated. The only thing it lacks is the commitment from central government and we are going to give this promise, as I did in the Northland by-election – we are 69 days away from winning Whangarei as well – and that’s one of the first things we’re going to be doing straight after the election.”

Peters has issued  several other bottom lines, including changing the Reserve Bank Act, banning foreign purchase of land, setting up a foreign ownership register, reducing net migration to 10,000 per year, and not raising the age of eligibility for New Zealand Superannuation (from 65).

Peters also attacked Espiner for personally supporting the neo-liberal “revolution” in the 1980s. As  Espiner pointed out, when Roger Douglas tore New Zealand’s social fabric apart, he was 13 years old at the time.

Plot lost.

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Labour’s tax & spend – what ails the Nats?

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National has launched a full-scale attack on Labour’s taxation policies and plans to set up a Tax Working Group to investigate the possibility of a Capital Gains Tax.

The Crosby-Textor line is childishly simple: the Right have identified a ‘chink’ in Jacinda Ardern’s teflon armour – kindly on loan from previous Dear Leader;

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But there’s more to it than simply attacking Labour through a perceived weakness in their taxation policy.

Labour is attempting to shift New Zealand away from a low-taxation/minimalist government, and return the country to the fully-funded social services we all once enjoyed.

Remember free prescriptions? Yes indeed. Prior to 1986, prescribed medicine was free.

National’s growing concern is not that Labour will introduce new (or higher) taxes.

Their worry is that New Zealanders will like what their taxes can buy; free tertiary education. Lower medical costs. Cheaper housing. New, re-vitalised social services such as nurses in schools.

Up until now, the Cult of Individualism had it’s allure. But it also has it’s nastier down-side.

If New Zealanders get a taste for a Scandinavian-style of taxation and social services, that would be the death-knell for neo-liberalism. When Jacinda Ardern recently agreed with Jim Bolger that neo-liberalism had failed – the Right noticed.

And when she said this;

“New Zealand has been served well by interventionist governments. That actually it’s about making sure that your market serves your people – it’s a poor master but a good servant.

Any expectation that we just simply allow that the market to dictate our outcomes for people is where I would want to make sure that we were more interventionist.”

For me the neoliberal agenda is what does it mean for people? What did it mean for people’s outcomes around employment, around poverty, around their ability to get a house? And on that front I stand by all our commitments to say that none of that should exist in a wealthy society. And there are mechanisms we can use that are beyond just our economic instruments and acts, to turn that around.”

– the Right became alarmed.

This election is not simply between the National-led block vs the Labour-led bloc – this is the battle for the future of our country; the soul of our people.

This moment is New Zealand’s cross-road.

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WINZ and Metiria Turei – A story of Two Withheld Entitlements

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Recent revelations that WINZ has withheld $200 million of lawful entitlements to some of the poorest, most desperate individuals and families in this neo-liberal Utopia (note sarc), has shocked some;

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$200 million withheld from welfare recipients who could have used that cash to pay for doctor’s visits. Shoes for children. Even lunch meals – which so many National/ACT supporters continually berate the poor for not providing for their kids – as Donna Miles reported on 13 September;

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Did the country rise up in a clamour of righteous anger? Was there a vocal outcry on social media? Were the Letters-to-the-editor columns filled were disgust and demands for a fair go for beneficiaries?

Like hell there was. If New Zealanders noticed, they showed little interest.

Yet, even the Minister for Social Welfare, Anne Tolley, had to concede that WINZ had fallen woefully short in helping those who need it most in our country;

“I agree at times it’s too bureaucratic and we’re doing our very best.”

$200 million in lawful entitlements withheld – and there is barely a whimper.

Contrast that with former Green Party co-leader, Metiria Turei, who did some “withholding” of her own;

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A young solo-mum withholds information from social welfare in the mid-1990s, after then-Finance Minister Ruth Richard has cut welfare payments – and every conservative moralist; middle-class National/ACT supporter; media elite; and right-wing fruitcake, has a collective hysterical spasm of judgementalism that would put a Christian Fundamentalist to shame.

Perhaps if social welfare had not been cut in 1991…

Perhaps if WINZ had not withheld $200 million in rightful welfare entitlements…

Perhaps then Metiria Turei would not have had to withhold information, merely to survive…

Perhaps if half this country were not so drenched in…

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Perhaps then, our sheep and pigs might finally learn to fly.

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References

NZ Herald:  Winston Peters to Labour – Front up on your tax plans

Fairfax media:  Gareth Morgan positions himself as alternative to Winston Peters

NZ Herald:  Richard Prebble – The Jacinda tidal wave can be stopped

NZ Herald:  Richard Prebble – The Jacinda tidal wave has gone out

Radio NZ:  Time to come clean on coalition compromises

TVNZ:  Colmar Brunton poll – Labour maintains four point lead over National, could govern with Greens

Mediaworks:  National could govern alone in latest Newshub poll

Colin James: Of polls, statistics and a Labour deficit

NZ Herald:  John Armstrong – This election is a two-party dogfight now

NZ Herald:  Remaining Green Party voters ‘mainly hippies and drug addicts’ – Matthew Hooton

Parliament:   The 2014 New Zealand General Election – Final Results and Voting Statistics

Radio NZ: Morning Report –  The Leader Interview – Winston Peters

Fairfax media:  Winston Peters delivers bottom-line binding referendum on abolishing Maori seats

Fairfax media:  Winston Peters says Pike River re-entry is bottom line to election deals

NBR: TV3 – The Nation – Peters promises rail to Northport

Newsroom:  What a National-NZ First Govt might actually do

Fairfax media:  Jacinda Ardern says neoliberalism has failed

Radio NZ:  WINZ staff accused of withholding entitlements

Fairfax media:  Turei rallies Palmerston North troops in fight against poverty

Other blogposts

Donna Miles: Child Poverty – Facebook Post Shows The Nats Don’t Care

Previous related blogposts

Election ’17 Countdown: The Promise of Nirvana to come

Observations on the 2017 Election campaign thus far… (tahi)

Observations on the 2017 Election campaign thus far… (rua)

Observations on the 2017 Election campaign thus far… (toru)

Observations on the 2017 Election campaign thus far… (wha)

Observations on the 2017 Election campaign thus far… (rima)

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jacinda will tax you (b)

 

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This blogpost was first published on The Daily Blog on 15 September 2017.

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National Tinkers while Auckland Property Prices Burn

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snail politics - national government tinkers

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When it comes to tax cuts for the rich;  state asset sales; slashing public services; and corporate welfare – National can move at relativistic velocities that Einstein concluded were beyond the realms of physical  laws in our Universe.

When it comes to social problems like child poverty; increasing greenhouse emissions from agriculture; and a housing crisis in Auckland (denied again, recently, by our esteemed Prime Minister)  – the National government can tinker and prevaricate in ways that would do a two year old, at an early childhood centre, proud.

It has opposed, resisted, condemned, criticised, and generally done everything within it’s power not to implement any form of capital gains tax in this country. Suggesting to National that a CGT could be one tool (of many) to quell housing speculation in Auckland has been like inviting a Vegan to a spit-roast barbecue.

Belatedly, as is usual for this  government, after considerable pressure from multiple political, community, business, and state sectors, Key has decided to move – albeit at a glacial pace, and with a tentative single step – to introduce a limited Capital Gains Tax.

The limited CGT will apply;

Introducing a new bright line test to tax gains from residential property sold within two years of purchase, unless it’s the sellers main home, inherited or transferred in a relationship property settlement.

As Key explained;

“It’s not unreasonable to expect that if you buy an investment property and sell it for a gain within two years, then you should be taxed on that gain.”

Fair enough to. It is not unreasonable, especially when the rest of us have no choice but to pay tax on all our other earnings, whether it be as a wage-slave; self-employed; retailer; contractor, etc, etc, etc, etc, etc…

Even property investors admit it is fair, as NZ Property Investors’ Federation CEO, Andrew King, pointed out;

“As we have been saying for years, people trading property have always had to pay tax on their profits and this move will help to clarify this. This should finally put to rest all the unfounded comments from people who say that property has a tax advantage.”

But – two years is the “bright line”?!

So, property speculators/investors who sell their assets in, oh, say, two years and one day are safe?

I’m sure this has escaped the attention of every property speculator/investor in the country. Plus their accountants. Plus tax specialists. Plus the chap who mows the lawns.

Shhhh! Be vewy, vewy quiet! Don’t tell anyone.

As long as no one knows of the two year “bright line”,  the law is “perfectly workable”…

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flying money pig

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Tinkering – best left to a National government. They are expert at it.

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References

Fairfax media:  No housing crisis in Auckland – John Key

NZCity: Capital gains tax on property announced

NZCity: Capital gains tax – what’s been said

Other blogs

Bowalley Road: The Least They Could Do

Gordon Campbell on the government’s belated moves on property speculation

No Right Turn: Winning the argument on taxing capital gains

Polity: At the end of the day what most New Zealanders ackshully accept is… (Housing edition)

Polity: More-tax-on-capital-gains-but-not-at-all-a-capital-gains-tax

The Dim Post:  Progress

The Standard: CGT – the focus groups made Key do it

The Standard: Capital gains tax to be introduced

The Standard: Herald praises Cunliffe for CGT policy

Previous related blogposts

A Capital Gains Tax?

Our growing housing problem

National spins BS to undermine Labour’s Capital Gains Tax

Why should tradies be prosecuted for doing “cashies” and not paying tax?

Letter to the Editor – A Claytons Capital Gains Tax?

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capital-gains-tax-first-world-problem

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This blogpost was first published on The Daily Blog on 21 May 2015.

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Why should tradies be prosecuted for doing “cashies” and not paying tax?

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“My name is Mr Smith. I am from Inland Revenue and Bill English sent me to help.”

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Before we go any further, just to remove all doubt from certain quarters, as the IRD points out with crystal clarity;

“New Zealand does not have a capital gains tax.”

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IRD - capital gains tax - investor - speculator

Source

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IRD - new zealand does not have a capital gains tax

Source

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Meanwhile, the IRD today (5 May) announced a crack-down on ‘tradies’ and other businesses who  do “cashie” (cash) jobs whilst not declaring that income with Inland Revenue and subsequently not paying their full measure of tax.

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IRD - crackdown on cashies jobs

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First of all, let me state that  everyone should pay their taxes. Without a comprehensive taxation system, our infra-structure would never have been built and our social services would be non-existent.

We need taxes for our education system; our public healthcare; judiciary; housing; police; DoC; border controls; public transportation, et al. As Inland Revenue’s marketing and communications group manager, Andrew Stott, stated in a NZ Herald report;

“Tax in New Zealand pays for many of the things that we enjoy about this country and so it’s important to encourage everyone to do that.”

But it’s a bit “rich” (excuse the pun) for the IRD to be clamping down on an underground “cash” economy  when we have – in broad view of the entire nation – a massive tax loop-hole costing society billions in lost tax-revenue.

I refer to a lack of Capital Gains Tax (CGT).

A tradesman is expected to pay tax on thousands or tens of thousands of dollars received for sub-contracting jobs.

An investor/speculator can pocket hundreds of thousands (perhaps millions)  of dollars in Auckland’s over-heated property market – and not pay one dollar in tax on profit;

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People making more on their homes than they earn at work - nz herald - auckland property market - daily blog - capital gains tax

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In effect, the current taxation system rewards doing very little work. For “Jonathan”, a property investor/speculator, he will just sit back in his Italian-leather recliner-rocker; and watch property inflation increase values. Then cash-up and make a tax-free windfall.

Meanwhile, “Gazza”, a tradesman living across town  to the property investor/speculator, gets up at 6am; goes to work in cold or shine; rain or fine; puts up with the risk of workplace injuries (or worse); goes home; and repeats the next day. For his efforts, he is taxed. And if he dares pocket a dollar without paying a percentage to the Taxman – he can be fined 150% plus interest; taken to Court; perhaps even bankrupted.

The latter is called “a mug’s game”.

Let me demonstrate this  with a highly complex, detailed,  financial diagramme;

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Taxpayer and Speculator

(L-R) “Gazza; works six days a week; earns $150,000 p.a.; pays income tax on earnings plus GST on any new home he builds – “Jonathan”; works in his garden tending to his geraniums; made $1 million selling three houses in Auckland he bought a few years ago; paid nil tax.

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“Gazza” then gets a letter from IRD saying he’s being audited because he  may have done a few “cashies” sometime in the last few years when things were a bit lean after the GFC. Seems he forgot to pay tax on a few thousand dollars.

Meanwhile, “Jonathan” thinks he and his wife will enjoy a round-the-world cruise with their tax-free gain.

“Gazza”, who built the houses, paid tax on every cent he earned (except for the “cashies” he  may or may not have done elsewhere).

“Jonathan”, who has lifted a hammer only to put a picture up on the wall, who built nothing, and simply bought and sold existing houses – paid nothing in tax.

Only in New Zealand do we have a law going after the battlers like “Gazza” – who actually get up each morning to build new houses. National and ACT think this is a perfectly sane state of affairs.

“Mr Smith” from the IRD is knocking on “Gazza’s” door.

“Gazza” wonders why he bothers getting up in the mornings.

“Jonathan’s” geraniums are  doing very well.

Addendum

Stuart Duncan sold his 1982 fibre-cement home at 116 Oaktree Ave in Browns Bay in November 2013 for $751,000.

Now the new owners have on-sold for $1,205,000 – despite doing little work on the property – giving them a 16-month profit of $454,000 – about $940 a day.

“I’m still in shock,” Mr Duncan said after learning how much his old property fetched. “It’s just disbelief.

“It was an 80s house, three-bedroom do-up. Where is the market going? God help New Zealand.”

NZ Herald

I doubt if we’ll be receiving much assistance from an invisible supernatural deity. Not when New Zealanders seem unwilling to help themselves sort out this crazy mess. And not when we, as a nation, keep re-electing a government hell-bent on doing nothing about a crisis that has spiralled out of control.

We have only ourselves to blame.


 

References

IRD: International

IRD: Residential Property

Fairfax media: Cash jobs crackdown by IRD

TV3 News: IRD launches campaign to crack down on cash jobs

NZ Herald: IRD chases down tradies’ cashies

NZ Herald: People making more on their homes than they earn at work

This blogpost was first published on The Daily Blog on 6 May 2015.

 

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Letter to the Editor – A Claytons Capital Gains Tax?

13 September 2014 3 comments

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Frank Macskasy - letters to the editor - Frankly Speaking

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letter to the editor, Rob Fagan, Dominion Post

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from: Frank Macskasy <fmacskasy@gmail.com>
to: Dominion Post <letters@dompost.co.nz>
date: Sat, Sep 13, 2014
subject: Letter to the editor 

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The Editor
Dominion Post
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In referring to a capital gains tax, Rob Fagan claims “that we already have one” (letters, 11 Sept).

This would be news to the IRD which states, in fairly plain english that, “New Zealand does not have a capital gains tax” on it’s page ” Moving to New Zealand permanently – Holding or disposing of shares”.

Mr Fagan might advise if there are any other taxes Inland Revenue isn’t aware of.

-Frank Macskasy

[address and phone number supplied]

 

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References

Dominion Post: Editorial –  Capital gains tax still a smart idea

IRD:  Moving to New Zealand permanently – Holding or disposing of shares


 

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Skipping voting is not rebellion its surrender

Above image acknowledgment: Francis Owen/Lurch Left Memes

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Radio NZ Debate: Bill English vs David Parker

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20-september

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Check out this excellent debate between National’s Bill English and Labour’s David Parker. Well worth listening to;

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Election Issues debate - Economy - bill english - david parker - radio nz - housing - 2014 election - debate

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Alternative link: Listen to Bill English and David Parker debate the economy on Nine to Noon

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john key is scared of your vote

Above image acknowledgment: Francis Owen/Lurch Left Memes

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National spins BS to undermine Labour’s Capital Gains Tax

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bull shit

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The Nats have been at it again; spinning their misleading bullshit to discredit Labour policy.

This time, Revenue Minister Todd McClay, has been busy issuing media statements that there is no need for Labour’s proposed Capital Gains Tax because, well, evidently, we already have one.

On Sunday 25 May, McClay was quoted as stating,

“Where somebody buys a property or buys shares with an intention of the capital gains being accrued … if their intention is to make a gain from the capital, their normal income tax rules apply, and therefore there is a capital gain.”

Earlier in the month, McClay had made the same assertion,

“When people say New Zealand doesn’t have a capital gains tax on property it’s not true – we do have a capital gains tax, and it applies to speculators.”

Which is strange, because when Labour first released it’s CGT (capital gains tax) policy in  2011,  the following were in favour;

The Dominion Post
NBR
Herald on Sunday
Gisborne Herald
Waikato Times
The Greens
The IMF
The OECD
and columnists and commentators,

Paul Little
Mike Hosking
Gordon Campbell
Anthony Hubbard
Patrick Smellie
Vernon Small
Corin Dann
Andrea Vance
John Hartvell
Matthew Hooten
John Roughan
Duncan Garner
John Armstrong
Bernard Hickey
Gareth Morgan

plus 
Academics,  tax experts, economists, and Treasury.

Those opposed to a CGT were National, ACT, and Landlords.  Unsurprisingly, really, when you think about it. National, ACT, and Landlords represent the capitalists and speculators in our society and they would welcome a tax on capital gains like turkeys look forward to Christmas.

So if we already have a Capital Gains Tax – why were so many in favour of introducing a law specifically for it?

This blogger would  hazard a guess that National and ACT oppose a CGT because it would make up for the seven tax cuts since 1986. These seven tax cuts have seriously reduced government revenue and constrained center-left governments from implementing social policies that would return this country to being a decent social democracy.

Imagine if a CGT in five or ten years would deliver sufficient revenue to fully fund a free tertiary education system in this country. It would drive another nail into the coffin of the neo-liberal policy of user-pays.

Hence why National and ACT absolutely loathe Labour’s policy.

If a CGT was introduced, the catch-cry of right wingers – “but where will the money come from!?!?” – will be muted – if not silenced forever.

But is McClay correct? Do we currently have a Capital Gains Tax?

The answer is, ‘Yes’. And ‘No’.

The current taxation policy on capital gains is haphazard; ill-defined; and open to interpretation. This IRD web-page  illustrates how vague the law is on this issue,

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Residential property Whare nohoanga

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Mistaking property dealing for property investment

Property investor is a collective term for property speculators, dealers and investors. However, they are each treated very differently under tax law.

  • Factors to consider when determining your status
  • What is an investor, a speculator and a dealer?
  • If you are not clear on your intentions for buying a property
  • How long do I need to hold the property to make it a capital gain?
  • How many properties can I sell before it is considered taxable?

Factors to consider when determining your status

Three main factors can determine your status as a property buyer for tax purposes:

  • your intention when you buy a property
  • the patterns of your previous property transactions
  • your association to a builder, property dealer or developer.

The category you fall into isn’t determined by what the property is called or how the activity is described. For example, it may be marketed as a “rental investment” with strong “capital gain” potential, but your firm intention or prior pattern is the factor that determines its tax treatment or if you’re involved in or associated with someone in the business of building, dealing, developing or dealing with land.

If you’re an investor you buy a property to use it to generate ongoing rental income and not with any firm intent of resale. The property is a capital asset and any later profit or loss from selling the property is capital and isn’t taxable (apart from clawing back any depreciation, which is now recoverable).

The rules may be different if you’ve been associated with a person or entity involved in the business of building, dealing, developing or sub-dividing land.  

If you buy a property intending to:

  • resell it, or
  • you intend to sell it after making improvements to it

you’re likely to be a speculator or a dealer. Renting your property temporarily doesn’t change your tax treatment either – you’re still a speculator or a dealer.

What is an investor, a speculator and a dealer?

Investor

If you’re an investor you buy a property to use it to generate ongoing rental income and not with any firm intent of resale. The property is a capital asset and any later profit or loss from selling the property is capital and isn’t taxable (apart from clawing back any depreciation, which is now recoverable).

Property investors sometimes refer to a “buy and hold” strategy. This approach is most likely to mean you are a property investor for tax purposes.

Investors will investigate and analyse future revenue streams, and any gain made on the sale of the property is incidental. Their investment is soundly based on a return from the rental income.

Investors pay income tax on their net rental income but generally not on the eventual sale proceeds of the property.

Note

The rules may be different if you’ve been associated with a person or entity involved in the business of building, dealing, developing or sub-dividing land.

Find out about special tax rules for associated persons.

Speculator

You might think profits from selling property are always capital gains so you don’t have to pay tax on them.  But, this isn’t always true. If one of your reasons for buying a property is to resell it, whether you live in it or rent it out, you’re speculating in property and your profit is likely to be taxable. And, if you sell that property at a loss, the loss may be tax-deductible.

If you’re a speculator you buy a property always intending to sell it. The property is treated like “trading stock” and your profit or loss from selling the property is taxable. Speculating can be a one-off purchase and sale of a property.  Speculators may also receive rental income from the property before they sell it.  

Property dealers or speculators will try to determine and analyse the property’s future price movements because that’s what the deal rests on. Any rental income is secondary.

To be a speculator, you need buy only one property with the firm intent of resale.
Dealers and speculators must pay income tax on any gain they make from reselling their property. If they declare a loss, it may be tax-deductible. They must also pay tax on rental income they may earn from the properties.

Dealer

If you’re a dealer you are similar to a speculator buying properties for resale, but you have established a regular pattern of buying and selling. This includes rental properties.

Some property buyers refer to a “buy and flick” strategy. This approach is most likely to mean you are a property speculator or dealer for tax purposes.

Dealers and speculators must pay income tax on any gain they make from reselling their property. If they declare a loss, it may be tax-deductible. They must also pay tax on rental income they may earn from the properties.

If you are not clear on your intentions for buying a property

Read our guide Buying and selling residential property (IR313)

If you’re buying and selling property other than a private family home, we recommend you get advice from a tax advisor with expertise in this area.

How long do I need to hold the property to make it a capital gain?

There is no time limit. If you buy a property with the firm intention of resale, it doesn’t matter how long you hold it – the gain on resale will be taxable (and any loss may be tax-deductible).

Example

You buy a property with a firm plan to resell it for a profit. The property market falls and you decide to hold onto it instead. You rent it out for 15 years and then sell it when the prices are again rising rapidly. Any gain on that sale 15 years later is likely to be taxable.

How many properties can I sell before it is considered taxable?

There is no set number of properties you can have before they become taxable. In some cases the first property bought and sold may be taxable if you bought it for resale. In other cases there could be a number of factors to take into consideration, such as having a regular pattern of buying and selling property, before a property is taxable.

The factors that may be looked at will vary because each taxpayer’s circumstances are different. For example, buying one property every two years may be considered a regular pattern for one individual and not another.

Find out more about what tax you should be paying

 

Date published: 30 Jul 2010

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Note the difference between Investor, Speculator, and Dealer;

  • Speculators and Dealers  are liable to pay tax on gains made from selling property.
  • But an Investor is not liable to pay tax on realised gains.

The difference is open to interpretation, behaviour, and intent. Though how an IRD official can know the intent of someone purchasing a  property remains a mystery. Telepathy? Time travel? A hot-line to one of our gods?

The issue is not made any clearer on another IRD web page;

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Selling property

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The things you need to consider when selling your investment property, selling your rental property or selling the family home.

What happens when you sell your family home

Selling a family/private home usually has no tax consequence. However there are some circumstances where you may have to pay tax.

What happens when you sell your investment property

Generally, you don’t need to pay tax when you sell your investment property except for any depreciation recovered. However, each time you sell a property it is important to consider if you are still a residential investor or are now a dealer.

What happens when you sell your rental property

Generally, you don’t need to pay tax when you sell your rental property except for any depreciation recovered. However, each time you sell a rental property it is important to consider if you are still a residential rental investor or are now a dealer.

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Obviously, there is no one-law-for-all.  (Something which the ACT Party might like to consider, in it’s “one-law-for-all” policy, as it insists on dumping  Treaty of Waitangi  settlement claims.)

When John Key gave justification to amend statutes governing the GCSB, and extended the spy agency’s powers so it could spy on all New Zealanders and Permanent residents, he claimed that the original  Government Communications Security Bureau Act 2003 was “not fit for purpose“.

When a tax law is so ill-defined that it is open to interpretation of “behaviour” and “intent”, then I submit that the current law on capital gains is “not fit for purpose”.

The National government can squeal all it likes, but the time has come for a capital gains tax and to close the Homer Tunnel-sized loop-holes that bedevil  the current law.

After all, if we already have a Capital Gains Tax as Revenue Minister Todd McClay insists – then he won’t mind terribly much if the law is tightened up. We’d be formalising what McClay says already exists.

Right?

That’s making it “fit for purpose”.

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References

Radio NZ:  Parties at odds over capital gains tax

MSN News: IRD targets `high end’ tax dodgers

Tumeke: John Key’s dagger and his 4 Horsemen of the Capital Gains Tax

IRD: Residential Property – Mistaking property dealing for property investment

IRD: Residential Property – Selling property

National Party: Draft intelligence community legislation released

 

Previous related blogpost

A Capital Gains Tax?  (14 July 2011)

ACT intending a “serious assault”?  (17 July 2011)

 


 

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Skipping voting is not rebellion its surrender

Above image acknowledgment: Francis Owen/Lurch Left Memes

This blogpost was first published on The Daily Blog on 26 May 2014.

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Radio NZ: Focus on Politics for 23 May 2014

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– Focus on Politics –

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– Friday 23 May 2014  –

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– Brent Edwards –

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A weekly analysis of significant political issues.

Friday after 6:30pm and Saturday at 5:10pm

Youth unemployment has decreased since the last election but that still leaves 75 thousand young people in New Zealand who are not doing any kind of work, training or education.

 

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Radio NZ logo - Focus on Politics

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Click to listen: Focus on Politics for 23 May 2014 ( 17′  5″ )

  • Budget 2014, Paid Parental Leave, Free medical care for Under 13s
  • Income inequality & child poverty
  • Youth unemployment (NEETs)
  • wage growth, jobs
  • external deficit, exports, China, dairy industry, tourism
  • housing, capital gains tax
  • government surplus, research and science, innovation
  • health spending, education spending, superannuation spending
  • superannuation age of eligibility, Bill English
  • tax cuts

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Acknowledgement: Radio NZ

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Journalists encouraging irresponsible government policy?

6 January 2014 3 comments

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John Armstrong - Cutting tax tempting for National

Source

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Sorry, John, but precisely WHO is talking about tax cuts?

Because so far, all I’m hearing is a couple of journos putting the question to Dear Leader and his faithful little side-kick, Lassie Bill English. No one else is seriously contemplating cutting taxes – not when New Zealand’s sovereign debt is now $60 billion as at 9 November this year – and  increasing by $27 million every day since Key’s hopelessly  incompetent government came to power in 2008.

According to Hamish Rutherford, writing for Fairfax Media, this equates to $13,000 for every man, woman, and child in New Zealand – and expected to increase by another $10 billion by 2017.

We need to address this problem – not fuel it by increasing consumption of imported goods, thereby worsening our balance of payments.

For god sakes, stop encouraging National to engage in any further irresponsible slashing of revenue.  National’s two previous tax cuts in 2009 and 2010 did nothing to  help stem the growth in our sovereign debt. Not when revenue fell by up to $4 billion after those tax cuts.

We have other priorities.

For example, why is the Wellington City Mission short of $2 million to carry out it’s valuable work to assist the poorest in our society? It is obscene that the Mission will have to consider reducing some services, as Chief executive Michelle Branney recently suggested.

Why are New Zealand’s poorest families unable to afford basic  medicines since this government-for-the-rich increased prescription charges in January 2013? When National cut taxes, it attempted to make up for the revenue shortfall by raising GST (despite promising in 2008 not to) and increasing government charges such as for prescriptions, Court fees, etc.

Why are New Zealanders needlessly suffering from rare diseases because PHARMAC cannot afford life-giving medication?

Why are poverty-related diseases making a come-back with such a vengeance?

Children’s Commissioner Dr Russell Wills…

… report is expected to reveal a 12 per cent rise from 2007 to 2011 in hospital admissions for poverty-related illnesses such as acute bronchiolitis, gastroenteritis, asthma, acute upper respiratory infections and skin infections.

“Most New Zealanders will find the numbers of children affected by disease shocking,” Wills told the Herald on Sunday, “but for those of us working clinically with families in poverty it is not surprising.”

Wills also works as a paediatrician in Hawke’s Bay. He said hospital wards were now full of poor, sick children every month of the year – not just in winter. There was no longer a “summer lull” in diseases.

English found himself so cash-strapped after their tax cut profligacy that, by 2012, he was even reaching into the meagre pay-packets of newspaper delivery boys and girls to grab extra tax revenue.

Instead of frittering away taxes, we need to be looking at the real problems confronting us;

  • Address child poverty problems

When children go to school hungry because families cannot afford sufficient food after paying high rents, electricity bills, etc. then there is something seriously wrong with our country.

Especially when we are now seeing children eating out of rubbish bins because there is no food at home for them. I refuse to believe that most New Zealanders want this kind of society for their children.

This is not the New Zealand I grew up in.

The next Prime Minister must make this a #1 priority, and begin with taking on the role of Minister for Children and implementing a comprehensive Food In Schools programme (not the shonkey half-measures undertaken by National earlier this year).

Next on the agenda; returning welfare payments to pre-1991-slash levels (inflation indexed); reduce prescription prices for medicine;  and implement a massive job creation programme.

  • Pay down debt

From 2000 to 2008, Clark’s administration not only paid down debt, but also posted Budget surpluses,

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Government Debt

New Zealand Government Debt To GDP

Source

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Government Budgets

New Zealand Government Budget

Source

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To be fair, Labour’s Finance Minister, Michael Cullen did not have the Global Financial Crisis to contend with. But by exercising fiscal prudence –  instead of  tax-cut lolly-scrambles demanded by the then-National opposition – he left the country in a fit state to weather the on-coming financial storm that was about to envelope the planet.

By the time National came to power in 2008, the global financial crisis was well and truly upon us, with the collapse of Lehman Bros on 15 September 2008. The GFC had started earlier, and signs were apparent to all but the most intransigent optimist that dark storm clouds were on the horizon.

As unemployment rose and economic activity slowed, National persevered stubbornly with it’s tax-cut programme – a move that would further indebt this country and put our government’s books back into the red again. At one stage, National was  borrowing $380 million  a week to make up for the shortfall.

This despite the fact that it was common knowledge that we were facing a dire crisis, as Tracy Watkin and Vernon Small reported on 23 April 2009,

The recession was expected to blow a $50b hole in the economy during the next three years, plunging the Government further into the red as costs climb and tax revenues fall.

“That’s $50 billion we will not recover as a nation, and $50 billion that cannot be taxed by the Government,” Mr English told a business audience in Auckland.

And yet, despite his own candid admission, English went ahead with tax cuts that we could ill afford, and had to make up with massive borrowings; cuts to government services; increased user-pays; mass sackings of state sector worker, and eventual partial asset sales. Even welfare was targetted for “reforms” (read; cost cutting) to claw back government spending.

Little wonder that by September 2011, credit rating agencies Fitch and Standard & Poors had downgraded us.

  • Invest in upskilling the unemployed

Why are we importing tradespeople from overseas when we have 7.1% (153,210) unemployment in this country?

National’s response to the skills shortage was this ideological fob-off from Bill English, in June 2011,

In the first place, it is the responsibility of the companies that expect to rebuild Christchurch to ensure that they have the skills.

And to ensure that everyone understood that National was maintaining it’s long-held tradition of shirking responsibility, he added,

Of course it will be tight, because they are competing with very, very large salaries, particularly those in Western Australia where something like $250 billion worth of capital projects are in the pipeline.”

IBID

That’s the problem with a government that places it’s faith in a free market solution to everything (except corporate welfare) – nothing happens.

Wouldn’t it have made more sense to offer free skills training to every unemployed person in New Zealand, along with subsidised accomodation in Christchurch for workers moving from other towns and cities to take up work offers?

There would have been a cost, to be certain. But that would have been off-set by (a) reduced welfare payments; (b) upskilled workers who would continue to use their new training for subsequent building projects; (c) more taxes paid by more employed workers;  and (d) a flow-on effect to other businesses as income-earning workers spent their wages.

The $4 billion frittered away in tax cuts would have made a considerable dent in our unemployment and given a much needed boost to our economy. And by providing work to the unemployed, the government would have saved millions in welfare.

But by sitting on it’s hands and doing nothing, National has maintained the status quo; 160,000 unemployed wasting their time, and requiring more of our taxes to be paid for the dole.

Is this crazy or what?

Hopefully an incoming Labour-Green-Mana(-NZ First?)  will have more sensible policies than what we’ve seen thus far from National. (Which won’t be hard to achieve.)

And other areas which desperately require State intervention,

  • A fairer taxation system, including reducing (or even eliminating) GST; introducing a comprehensive Capital Gains Tax;  looking at a Financial Transactions Tax (or “Robin Hood” tax, as Mana refers to it); making the first $20,000 tax free; and increasing tax for the top 1%.
  • A sensible pricing system for electricity especially for low/fixed-income earners.
  • Increase funding for early childhood education.
  • More state housing, so our fellow New Zealanders have a decent roof  over their heads.
  • Invest in public transport, especially in Auckland, before the city grinds to a stop.

Those are the things we need to look at. Not cutting taxes for the well off (which is usually what the Nats end up doing).

These should be the priorities of a sensible government. Anything, everything,  else is grossly irresponsible.

Otherwise, what the hell are we leaving our children?

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debt-mountain-cartoon.

May I have some food, a home, parents

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Postscript

Armstrong’s article on tax cuts features a large image of a smiling David Cunliffe. Note; Cunliffe. Not English, nor John Key.

Is there a subtle sub-text being conveyed here that I’m missing? Perhaps I’m getting the wrong ‘message’ from Armstrong’s piece, especially when he finishes with this intriguing comment,

Overall, English will not want to tie himself to future tax cuts without more solid evidence they can be sustained.”

My… that almost sounds like a veiled warning, doesn’t it?

This blogpost was first published on The Daily Blog on 30 December 2013.

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References

Bill English: Dr Cullen maintains tradition of tax-cut denial

Wikipedia: Bankruptcy of Lehman Brothers

NZ Herald: Govt borrowing $380m a week

Fairfax media: $50b hole in economy

TV3 News: Double credit downgrade a double blow for NZ economy

Fairfax media: Key ‘no GST rise’ video emerges

NZ Herald: Food parcel families made poor choices, says Key

The Press: Irish rush for quake jobs

NBR: Chch rebuild companies will have to find skilled workers – English

TV1 News: Rise in prescription charges ‘not fair’ – Labour

NZ Herald: Tax cuts: High earners set to benefit most

NZ Herald: Budget 2012: ‘Paper boy tax’ on small earnings stuns Labour

Fairfax media: $4b in tax cuts coming

Dominion Post: Bennett expects welfare reform to save $1.6b

Fairfax media: Public debt climbs by $27m a day

Radio NZ: Pharmacies ‘carry cost’ of increases

NZ Herald: Child poverty ills rising

Fairfax media: Hungry kids scavenge pig slops

Fairfax media: Mum Not Prepared To Wait And Die

Radio NZ: PM defends record of helping poor families

Radio NZ: 5th year in deficit at City Mission

Radio NZ: Funding declined for housing project

NZ Herald: John Armstrong: Cutting tax tempting for National

The Atlantic: Tax Cuts Don’t Lead to Economic Growth, a New 65-Year Study Finds

Sources

Trading Economics:  New Zealand Government Debt To GDP

Trading Economics: New Zealand Government Budget

Statistics NZ: Household Labour Force Survey: September 2013 quarter (6 Nov 2013)

Roy Morgan: New Zealand real unemployment down 0.3% to 8.5% and a further 8.6% (down 1%) of workforce are under-employed (5 Dec 2013)

Statistics NZ: 2006 Census

Statistics NZ: 2013 Census

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Shafting our own children’s future? Hell yeah, why not!

15 June 2013 6 comments

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student debt

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We’ve all seen the headlines; heard and seen the media stories; house prices in New Zealand are going through the roof and becoming more expensive with each passing day. A recent Herald story stated,

Experts say there is no sign of the market slowing soon, and one commentator forecasts the average price in Auckland could hit $1 million within three to four years.

Acknowledgement: NZ Herald – House prices soar as average forecast to hit $1m

Aside from being a total failure of the so-called “free” market, what else is causing prices to skyrocket?

National says that local bodies are holding up consents.

Some blame it on immigration and/or overseas investors buying up houses and pushing up prices.

Others blame it on investors and speculators exploiting the lack of a Capital Gains Tax to buy up properties, which reduces availability, and pushes up prices.

Others blame central government for not investing enough in tradespeople, to build new houses.

This blogger will add one more component into the ‘mix’; easy availability of capital.

Prior to 1984, housing prices were contained by limited, local availability of funds which banks could on-lend to house buyers. New Zealanders’ savings were poor pre-1984, and Muldoon’s scrapping of Labour’s compulsory super fund in 1975 did not help matters.

As the graph below shows, housing prices up till 1972 were steady. People usually had 10% deposit; borrowed perhaps 60% to 70% as a first mortage from a friendly bank manager; and the balance was financed by what was known then as “Vendor’s Finance” – the seller agreed to 20% to 30% as a Second Mortgage for the buyer. The latter incurred much higher interest rates.

Overall house prices were therefore ‘capped’ by the limited availability of  money, from banks and vendors. Banks acquired their funding from local depositors.

In  1972 and 1980, two international oil shocks resulted in massive inflaton inflation in the country, sending house prices surging.

Post 1984, Roger Douglas de-regulated the country’s financial laws and banks were able to borrow vast amounts from overseas lenders. There was no longer a shortage of funds for mortgages. The concept of  “Vendor’s Finance” and second mortgages disappeared almost over-night.

Purchasers could now borrow 80%, 90%, even 100% to buy a house.

As money became easily available, peoples’ expectations for bigger and bigger returns also rose. If Buyer X could borrow $200,000 to buy a house that Vendor Y had purchased last year for only $150,000, then there was nothing stopping the vendor from demanding the top dollar; $200,000. Maybe more, if Buyer Z could afford to service a $300,000 price.

The sky was literally the limit.

And as the graph shows, that is where house prices were going; skyward.

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Acknowledgement: Interest.co.nz

This has created big problems for us.

Firstly, housing prices are no longer affordable for young New Zealanders. As more and more properties are locked up by their parents’ generation (often referred to as  “Baby Boomers”), the availability of new and existing houses becomes less and less.

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Acknowledgement: Interest.co.nz

Secondly, as we borrow more and more money from overseas to invest in ever-increasing priced housing – our private debt is now approaching Greece-like proportions.

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nz-overseas-debt-1993-to-2010

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So we have fewer houses, being sought by more buyers, for higher prices, creating more overseas debt…

Anything wrong with that picture?!

Yes, plenty.

For the past fourty years, this country has borrowed vast sums – billions – to finance our property speculation. Every time a vendor made a tax-free profit, it was financed by borrowing money from other countries. We were – and still are borrowing our way to “wealth”.

It is neither sustainable nor common sense. And very soon, the bubble will burst; politicians will blame but themselves; and the public -as usual – will be left wondering what the hell went wrong.

Labour has proposed a Capital Gains Tax on housing (except for the family home) as part of  the solution. National – in a display of unmitigated stupidity – opposes any such tax.

The Reserve Bank has come up with their own “solution”,

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Mortgage rule move will force buyers out

Acknowledgement: Dominion Post –  Mortgage rule move will force buyers out

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The Reserve Bank’s suggestion of limiting lending to 80% of a property’s value is wrong for two reasons;

1. House buyer’s will simply return to the days of second mortgages from lenders other than banks (usually through lawyers or secondary finance companies). The second mortgage will have a highrer interest rate. Home buyers will simply end up paying more in outgoings to service not one, but two, mortages.

This will not help first home buyers.

2. Unless they are part of the privileged few – the One Percenters – first home buyers will find it next to impossible to pay rent and save for a deposit on a house. Factor in other financial burdens such as student loan repayments, and life just got immeasureably harder for young New Zealanders.

The upshot of the Reserve Banks “solution” is that it does not address the problem of rising house prices.

It merely penalises young New zealanders.

Meanwhile, the Baby Boomer generation buys and sells properties, tax free, pocketing big gains, financed by offshore borrowings.

This is madness, and make no mistake – we will end up paying for this insanity in a big way.

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Is this really the solution to our housing problem?

28 February 2013 4 comments

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Illustration by Tim Denee – www.timdenee.com

Illustration by Tim Denee – http://www.timdenee.com

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Our housing problem is getting worse with each passing year and each successive government.

In 1991, 73.8% of  households in New Zealand lived in their own home. By 1996, this figure had dropped to 70.7%.

By 2001 home-ownership rate was 67.8%, and by 2006, this had dropped below the half-way mark to 44%

(see: Stats NZ – Owner-Occupied Households, Home-ownership falls dramatically)

As with so many other indicators, the “free market” reforms of the late 1980s and 1990s were creating a flow-on effect that very few had foreseen.

The drop in home ownership was perhaps worsened after the 1987 share-market crash when  investors – many of them ordinary folk – were burned and lost theire lidfe savings, and often their homes.

Part of the problem is that the housing stock is insufficient to meet demand of New Zealanders wanting to buy their own home. Far from being a Local body council or RMA problem, this blogger sheets home responsibility on successive governments who have failed to,

  1. Introduce a comprehensive capital gains tax to stifle speculation,
  2. Speculation drove up property prices as investors played an out-bidding war against each other,
  3. Uncontrolled capital flowing into the country allowed prices to rise as vendor’s expectations grew for higher and higher sale prices (much like in the 1970s and ’80s when wage spirals led to price-rise spirals)

During the  2011 Election, Labour campaigned to introduce a Capital Gains Tax (CGT).  A CGT, Labour (and others) maintained, would put a dampener on housing speculation by removing it’s near total  tax-free status. As well as driving up house prices, speculation of this sort took investment away from more productive industry.

Speculation also relies on using overseas borrowings, pushing up the amount we owe to offshore lenders,

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Treasury

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Predictably, the “genuises” at National – and especially John Key – trashed the idea immediatly,

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New property tax would send NZ 'screaming backwards' - Key

Source

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Key’s criticism ranged from “complexity” (it is not more complex than other tax laws) to “when you put more taxes on the economy you slow things down” (the economy can’t be any slower than it is now).

A few days later, Key went one step further,

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Labour's capital gains tax aims misguided - Key

Source

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According to Dear Dear, in one of his LSD-inspired moments of alternate-reality,

Labour are trying to put up, as a stalking horse if you like, a problem that existed when they were in government but doesn’t exist now.”

Source: IBID

That was Key being his usual mendacious self, of course. Despite his assertion that National had “solved the problem”, our housing crisis was worsening.

In fact, less than  two years later,  the headlines were screaming the problem from Bluff to Kaitaia,

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NZ housing 'seriously unaffordable'

Source

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As per usual, National Ministers were pointing the finger at everyone except themselves (see:  Dear Leader Key blames everyone else for Solid Energy’s financial crisis) and English was quick to point the finger at the RMA ands local body councils.

Of course, the last time National interfered with home-building processes, they de-regulated the building industry; loosened the Building Act 1991; and gave New Zealand a legacy of thousands of rotting houses.

National’s most recent pronouncements are vapid and will do nothing except put  superficial band-aids over a deep cancer in our society and economy,

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House buyers may need bigger deposit

Source

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Restrict high-loan-to-value ration lending in the housing sector”  translates to requiring first home owners – usually young couples – to have to save tens of thousands of dollars, whilst at the same time paying high rents and other out-goings.

Let’s be crystal clear what National is advocating here;

1. Without a capital gains tax, National is allowing the older generation (sometimes referred to as “Baby Boomers”) to;

  • keep their rental investments,
  • use the equity in their currents investments to buy more properties,
  • eventually ‘flick off’ their investmental properties for a tax-free profit

2. New home owners will have to;

  • build up a large savings deposit (returning us to a 1970s-style era),
  • create a demand for more expensive, second mortgages,
  • push up rents as more and more young people are forced to rent for longer,
  • compete with property investors who will continue to drive up prices,  to buy a home

In effect, young New Zealanders will find it harder and harder to get into their own home whilst Baby Boomers will continue  to make the most from increasing rents and a tax-free regime for property  (house) investments.

It will be young New Zealanders being penalised for high house prices – a situation not of their making.

And worse still – and this is truly salt in the wound for young New Zealanders – the money they will be forced, by National’s decree, to save, will be used by Banks to on-lend to housing speculators to buy more investment properties.

The sheer obscene unfairness of this scenario cannot be under-stated.

By what logic, or concept of justice, is it fair to make it harder for young New Zealanders to buy a home whilst older generations continue to enjoy their tax-free investments – which contributed to driving up house prices and our overseas borrowings in the first place???

If this country wants to send another 500,000 New Zealanders to Australia, I can think of no better policy with which  to achieve this enforced emigration. National is practically screaming at our kids to “bugger off !”.

Good on you, John Key, Bill English, Steven Joyce, et al. Another dumb idea.

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Previous related blogposts

A Capital Gains Tax?  (3 Aug 2011)

Blood from a stone? (27 Jan 2012)

Regret at dumping compulsory super – only 37 years too late (21 Jan 2013)

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Blood from a stone?

27 January 2012 4 comments

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Full Story

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Why do I get the impression that this story just screams desperation, from this government?

Aside from the fact that many sceptics voiced doubts last year about National’s optimism to “balance the books”, and considered it nothing more than election propaganda for gullible voters, Dunne’s comments on this issue beggar belief,

“‘We just had public consultation on the use of mixed assets such as holiday homes and launches, and we’ve been doing other work looking at the tax treatment of various forms of activity.”

”That programme needs to be ongoing… what we should be doing is making sure we are collecting all the existing taxes which are due and if there anomalies and loopholes we need to be closing those to make sure the system is fair to everyone.’

It was estimated the Government was missing out on hundreds of millions of dollars of revenue a year.” – Ibid

Whut?!?!

We just had public consultation on the use of mixed assets such as holiday homes and launches

“…what we should be doing is making sure we are collecting all the existing taxes which are due and if there anomalies and loopholes…”

Isn’t this precisely what Labour was suggesting last year with it’s Capital Gains Tax?

The Green Party certainly made that connection,

“Bill English has failed to close the single largest remaining loophole in our income tax system. A comprehensive tax on capital gains (excluding the family home) is hugely progressive and would help close the growing gap between rich and poor,” said Green Party Co-leader Dr Russel Norman.

“Treasury advice to Bill English in 2009 made it clear to him that capital assets are owned disproportionately by higher income families. The advice said not taxing this income is regressive. That’s Treasury’s way of saying that a capital gains tax is incredibly fair.

“Both John Key and Bill English have consistently defended the tax loophole, however, preferring to ignore growing inequality in our society…”

…“The largest proportion of capital gains is earned by those at the upper end of the income spectrum. This income currently remains untaxed,” said Dr Norman.

“This tax loop-hole for those that can afford to own multiple properties needs to be closed.” ” – Source

So much for John Key stating last year,

Scrapping the top income tax bracket reduced the value of highly leveraged investment properties as a tax shelter, while tougher rules on depreciation and LAQCs also reduced their relative attractiveness as investments.

Labour, Prime Minister John Key declared on Monday, is “fighting a problem they had when they were in office, not a problem we have today”. ” – Source

Yeah right, Prime Minister. Unfortunately, simply saying that didn’t make the problem go away, did it?

Gareth Morgan pointed all this out to us, last November,

It’s difficult to detect any sort of principle – liberal or otherwise – in the economic policies we could reasonably expect to address the widening income gap. Gaping loopholes in our tax system permit those with wealth to earn tax-free gains – putting them further ahead than ever.

While the Government sees fit to give a handout to working families earning $100,000 per year (nearly twice the average wage), those who can’t meet bureaucratic hoops miss out on support altogether and we have abandoned targeting in toto for the politically powerful (the elderly).

Equally worrying, current tax policy incentivises investment for capital gains, causing excessive investment in property at the expense of business – something which has hindered the long-term outlook for incomes and jobs.” – Source

So for United Future leader Peter Dunne to try to excuse their inertia by saying  “that the Prime Minister could not have foreseen a dramatic slide in global economic conditions“, is disingenuous.

No. Not disingenuous. Let’s call it for what it really is: bullshit.

National’s tinkering with the tax system is not going to address the shortfall in government revenue. We will simply see more of the above headlines in future media, as the core-problems in our taxation system go unaddressed.

National simply does not have the intestinal fortitude to address taxation problems in any meaningful way. If they did, they would,

  • Implement Labour’s capital gains tax
  • Stop Trusts from being tax havens
  • Reverse the 2009 and 2010 tax cuts for those earning above $70,000
  • Implement a Financial Transactions Tax
  • Review Working for Families payments for families earning over $100,000

Unfortunately, none of the above will happen. Generally, only reformist Labour governments have the inclination to make radical changes when they become blindingly obvious as necessary.

It also takes a collective frustration from Voterland to “connect the dots” and realise that voting for National will not achieve longterm reforms.

In the meantime, Dunne will tinker; National will continue cutting services; government workers will continue to be sacked; and we’ll see more of the following, as our economy stumbles along like a diabetic with low blood sugar,

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Full Story

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Additional

NZ Herald: The case for a tax revolution

Gareth Morgan: Capital gains tax best way to tackle rot

Gareth Morgan: Reviving the values of an egalitarian society

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Bread & Circuses, Penguins & Rugby.

28 September 2011 4 comments

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Our entire mass media seems to be fixated on RWC, or Rugby, or any other sport, social event, or person(s) vaguely related to balls.  If “Happy Feet” had played rugby on Peka Peka beach, our media moguls would have died happy in their beds…
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Case in point how the RWC has supplanted normal, every-day, news events.  On 25 September,  TVNZ7 News-at-8 consisted of the following:

8.00 – 8.07: The Warriors’ win

8.08 – 815: Rugby. RWC. People with a rugby ball. Sick Jonah Lomu (ex rugby player). More rugby.

8.15: Christchurch earthquake. Meningitis case in Wellington.

8.16: Crime story in Dunedin.

8.18: Plane crash in Nepal/Mt Everest

8.19: Libyan civil war

8.21: Civil unrest in Yemen. Fire and fatalities in London.

8.23: Politics in Russia. Putin standing for President again. (Aside; will he campaign bare-chested?)

8.25: Campaign against bull fighting in Spain. (True! No bull!) Crazy US stuntman in China. Followed by Weather today. Followed by International Weather. (Raining in Botswana, I see – fishing trip cancelled tomorrow.) Then TVNZ7 station break.

8.28: Global financial crisis

8.33: UBS Bank Fraud – CEO quits. I shed at tear. (No, not really.) ASB computer glitch. (Some IT geek too busy watching internet porn?) ACT announces policy to decriminalises cannabis. (Good policy – except pot heads will have forgotten by tomorrow morning.)

8.38: Kiwi chick #1,000 born. (Lack of suitable penguin story?)

8.39: “Coming Up Soon” announcement.

8.40: TVNZ7 station break.

8.41: Sport. Rugby. (At this point I switch off. Consider phoning ASB IT geek to obtain his favourite porn website.)

There we have it, folks: fifteen minutes of rugby leading a supposedly “serious” TVNZ7 news hours – with another 15 to 20 minutes of same,  at 8.40.

By comparison, the global financial crisis – which threatens the entire planet with another Depression and collapse of entire governments – lasted five minutes.

Though this information was collated from TVNZ7, the other two television news serices, TV1 and TV3, have been likewise guilty of trivialising news reporting. Theresult is that we, as a society, are less well informed as to what is happening in our own country, and indeed the world.

This is perhaps a matter made even more critical as we have a general election looming and the global economic crisis seems to be gathering an evil head of steam. We also have a piece of legislation called the Police Surveillance Bill currently before the House – a proposed law that could make New Zealand one of the most surveilled country in the Western world.

Big Brother has taken a step nearer.

All this is practically “invisible”. The news media has practicalled muzzled itself, as it chases the Rugby World Cup, and cute animal stories.

Now I’m as happy as the next bloke or blokette to have TV news cover the RWC. No, honestly, I am! But not at the expense of general news; politics; the economy; community; and international affairs. There is a time and place for everything and the News media have a responsibility to inform New Zealanders what is happening in their own country. There is more to our lives than  a 15 minute story on the All Blacks thrashing [insert other rugby team here], and then a human-angle story on one of the All Blacks’ mum and dad.

Otherwise, this isn’t just “dumbing down”, this is a pre-frontal lobotomy of the electronic media with an ECG charge of 5,000 volts to the temples, for good measure.

Welcome to Bread and Circuses, 21st Century style – instead of  Christians and Lions, we have penguins and rugby.

Question – without using Google, do you know the answers to the following:

  1. What date will the coming General Election will be held on?
  2. Which party proposed a Capital Gains Tax?
  3. There are NZ military staff in which country: Iraq, Libya, Fiji?

If you don’t know the answers, but do know who will be playing the next match, then ask yourself why?

And who knew that this was going on:

Occupy wall street movement begins to gain critical mass

Keith Olbermann calls out Media Blackout on ‘Occupy Wall Street’ Protest

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The Great NZ Sell-Off Continues…

7 September 2011 4 comments

Despite recent assurances from the Prime Minister, John Key, to restrict foreign purchases of NZ farmland, his assurances that,  “I think we’re making progress in this area” seems to be based on empty words and little more.

As the Dominion Post  reported last year, “an average of 82 hectares of agricultural land per day has been approved for sale to offshore investors”.

Some recent headlines bear out that report,

It seems quite clear that John Key’s optimistic view that ” I think we’re making progress in this area” is wildly misplace. As usual, his soothing, reassuring words bear little relationship to reality.

But voters have yet to figure that out, collectively.

What the New Zealand public does understand, with crystal clarity, is that selling our farmland to overseas investors is counter-productive; counter-intuitive; and short-sighted economically.

It also cheats our children of their birthright.

New Zealand farmland is over-priced and farmers have gotten into trouble with massive bankloans and reducing equity. In part, this is due to the weasy credit that has been available to NZ society since 1985, when our banking system was de-regulated by you-know-who.

De-regulation meant that vast amounts of money flowed into NZ, for banks to lend out as mortgages, investments, loans, etc.

It also meant that, as money-supply increased, so did property prices. Quite simply, we could expect to sell our properties because there was an endless supply of money available from banks. Purchasers could borrow 80%, 90%, and sometimes 100% for mortgages.

So property prices went up. Our borrowings went up. Demand went up, as speculation was tax-free (remember that there is no Capital Gains Tax in NZ). It was an uncontrolled spending spree, without any consideration that eventually, the bubble would burst.

Well, in 2008, the bubble burst. In early 2008, there were signs that there was a crisis looming in the US banking industry. On 3 March 2008, the Federal Deposit Insurance Corp, the US federal agency that backs bank deposits,  identified 76 banks as in trouble , a 52% increase from a year ago.

By July 2008, Freddie Mac and Fannie Mae, were in severe financial  trouble.

On 15 September 2008, Lehmann Bros, in Wall St, New York, filed for bankruptcy. The subsequent chain reaction of banking failures sparked a global financial crisis and the world fell headlong into a recession.

Here in NZ, credit dried up, and suddenly our farms were no longer worth the high prices that people had been paying for them. The property boom came grinding to a halt, and the “bubble” well and truly burst.

We  could no longer afford to buy over-priced properties to make speculative profits that had been financed using money borrowed from overseas. It was time to pay the Piper.

For many owners of farmland, the obvious solution seems to be to sell properties to overseas interests. Foreigners have the necessary capital – which local New Zealanders do not.

Unfortunately, in doing so, we are effectively locking-out our next generation from the opportunities that our generation – the massive-borrowing, heavily-indebted, Baby Boomers – had enjoyed. We have played “monopoly” with our farms; making ever-increasing profits; as we sold land to each other in a kingd of mad, money-go-round.

Now, we can only save our indebted ‘skins’ by selling out to foreign interests.

This is simply another chapter of the story I told here; “Greed is Good?“.

Is it fare, I ask myself, that we have priced farm land out of reach of our children?

Is it fare, I ask myself, that instead of our children enjoying the same opportunities that we did – that instead it will be Germans , Americans, Swiss, Chinese, etc, who will now reap the benefits?

The greed and naked self-interest of Bany Boomers is well known. It is no secret that we have looted the wealth of this country, and have left our children with fewer prospects than we enjoyed. No wonder so many of them have left New Zealand, and plan never to return,

“A Victorian-based Kiwi with a student loan debt, who did not want to be named because he did not want to be found by the Government, said he did not intend to pay back any of his student loan.

The 37-year-old’s loan was about $18,000 when he left New Zealand in 1997. He expected it was now in the order of $50,000. The man was not worried about being caught as the Government did not have his details and he did not want to return to New Zealand.

“I would never live there anyway, I feel just like my whole generation were basically sold down the river by the government. I don’t feel connected at all, I don’t even care if the All Blacks win.

“I just realised it was futile living [in New Zealand] trying to pay student loans and not having any life, so I left. My missus had a student loan and she had quite a good degree and she had paid 99c off the principal of her loan after working three years.” – Source

As we lose more and more farmland to overseas ownership, we should also expect some fairly noticeable consequences to follow;

1. Profits will flow back overseas, to offshore investors’ banks. This will impact on our Balance of Payments (negatively, I might add). This, in turn, will affect our sovereign credit rating; the interest rates we pay for money we borrow… and finally, our mortgages.

2. As farm produce fetches higher prices overseas, expect to see this reflected in the price of dairy products and meat that we purchase in our supermarkets. We have already experienced the high cos of milk and cheese, due to high prices overseas. Expect this to worsen.

Property and farm owners may object. They will squeal like stuck pigs, in fact. But the sale of our land to foreigners, whether American or Chinese; Australian or German; will eventually impact impact negatively on our economy and on the prospects of our children.

Enough is enough.  No more pandering to the self-interest of Baby Boomers.

It is time that common sense kicked in. The sell-off of our country has to stop. Otherwise, as John Key warned, we will become tenants in our own land.

To hell with that.

 

 

ACT intending a “serious assault”?

17 July 2011 4 comments

Don Brash seems to have changed his mind on Labour’s proposed Capital Gains Tax,

“A Capital Gains Tax means you are clobbered twice: once when you create or earn wealth, the second time when you dispose of it. The fact that we already have it in some form is no excuse for extending it.” Source & More.

Brash further states,

“ACT proposes in the short term to reduce it to Michael Cullen’s level. Long term, we advocate a serious assault on both spending and taxes, with the former capped and the latter low and flat.”

“Serious assault” is about right. What Brash is intending is the total dismantling of the State; selling every state asset available; privatising education and healthcare; huge tax cuts that will benefit corporations and the wealthy; and god knows what else. It would mean the Hong Kongisation of New Zealand – and believe me, folks, you wouldn’t want to live in Hong Kong.

So, there we have it.

Which is the real Don Brash? And do we really care?

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A Capital Gains Tax?

Ok – hands up all those who think it’s a really, really neat idea;

The Dominion Post
NBR

Herald on Sunday

Gisborne Herald

Waikato Times

The Greens

The IMF

The OECD


and columnists,


Paul Little

Mike Hosking

Gordon Campbell

Anthony Hubbard

Patrick Smellie

Vernon Small

Corin Dann

Andrea Vance

John Hartvell

Matthew Hooten

John Roughan

Duncan Garner

John Armstrong

Bernard Hickey


Gareth Morgan

plus 
Academics,  tax experts, economists, and Treasury
 (Source:  Tumeke)

Hmmmm, not bad.

Ok, who is against it?

The National Party  – which is hardly surprising, considering the vested interests that National MPs currently have, in property investments.

Landlords – fair enough, I guess. Turkeys are hardly likely to vote for an early Christmas, I guess. Not that I’m calling landlords “turkeys”. Most of them are quite nice folk. Although landlords might pause to consider; do they really want to be seen by the rest of society – who pay their fair share of taxes (some more than one form of tax) – as bludging of  taxpayers, and expecting some sort of special, divine-inspired, tax exemption?

Believe me, folks; you don’t want to rark-up the Angry Mob. Just ask Ian Wishart.

Considering it?

ACT – Although in a speech which Brash gave in 1998 (as Reserve Bank Governor) he spoke about the tax advantages of property investment:

It is not at all clear to me why, given an already-strong tendency for New Zealanders to invest in property, we should give special tax advantages to that form of investment.” – Source

Although what he sez/thinks now is anyone’s guess. We know he doesn’t like Maori. Which ain’t that helpful in this debate.

Basically, what the whole CGT issue boils down to is two points:

Point One: Fairness

We all pay taxes. Whether you’re the bloke/blokette running your local fish & chip takeaway – or Fletcher Construction; whether you are a sex worker or the Prime Minister; whether you have $1 or $1 million in a bank account – we all pay taxes.

So why a specific sector of the economy should be exempt from paying tax… well, there is no real clear reason. None that makes any sense. (Well, there is the matter of greed. That kinda makes sense.)

Point Two: Market Distortion

As sure as Evolution made Little Green Apples, if we allow one part of the economy an advantage over the rest, then the money will flood to where that advantage provides best return. As Ganesh Nana (BERL) said today on National Radio this morning (15 July), it’s like having holes on a sporting field. (Mixing of metaphors a bit.)

Hence why New Zealand has suffered housing booms; money moves to where investors can get the best, tax-free return, and that is property. So with Supply & Demand being what it is, prices rise, and we have a “bubble/boom”.

This means that effectively we are pricing homes out of the reach of our children. (Home ownership has dropped remarkably in the last twenty years, as affordability worsens.)

On top of that, the Reserve Bank – faced with rising house prices and creating inflationary pressures – is forced to raise interest rates, to dampen demand.

This makes like for our farming, industrial, and business sector hellish, as they cost of borrowings rises. The most productive sector of our economy pays the price because of a glaring anomaly in our economy.

Not good.

So a capital gains tax makes sense. National opposes it, of course, because they don’t want Labour to gain benefit from a sound. sensible policy. So for the benefit of beingf re-elected on 26 November, National is prepared to play politics with this very-real fiscal problem.

Definitely not good.

Will voters support Labour and an introductionfor a CGT?

Considering how voters supported Muldoon in 1975, which saw the canning of Labour’s superannuation fund (bribed with our own money), I’m not terribly reassured. The public have a track record for making the wrong collective decisions, and then wondering why we are up Sh*t Creek with no paddle, as a consequence.

Go on, New Zealand. Prove me wrong.

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