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Three economists think National's foreign buyers tax could come up $500 million short each year

Public Policy / news
Three economists think National's foreign buyers tax could come up $500 million short each year
National party leader Christopher Luxon and deputy Nicola Willis announcing a $14 billion tax plan in August 2023
National party leader Christopher Luxon and deputy Nicola Willis announcing a $14 billion tax plan in August 2023

National’s Nicola Willis promised the party’s tax plan would not require “a single dollar of borrowing”, but a report by three economists suggests it might be half a billion dollars short.

The opposition party’s Back Pocket Boost policy would cut annual taxes by about $3.7 billion, funded by roughly $2.1 billion in cost savings and $1.6 billion in new taxes. 

Approximately $740 million of that new tax money was supposed to come from a 15% tax on foreign buyers of New Zealand homes worth over $2 million. 

However, three economists have written a report suggesting it might only raise a third of that number, leaving the plan with a $500 million funding gap each year.

The review was written by Nick Goodall, the head of research at property data firm CoreLogic; Michael Reddell, a former Treasury and Reserve Bank economist who writes a fiscally-conservative blog; and Sam Warburton; an economist who helped debunk a fiscal hole allegation in 2017.

The trio attempted to replicate the methodology used by National to come up with the $740 million estimate. 

When they recalculated the numbers as described in the policy document, they found it would raise just $224.5 million from about 600 sales each year. 

Limited data

However, this methodology missed “obvious features” such as growth in the number and prices of houses being sold, as well as some nationalities being excluded from the tax. 

These additions boosted the estimated annual revenue to $286.8m each year, from a little over 700 transactions. Still well short of National’s numbers. 

However, the authors still felt this could be an overestimate, as the best foreign buyer data was only collected for two years, in 2017 and 2018. 

In 2018, the numbers of buyers appears to have been boosted as overseas investors rushed to get into the market before the Labour-led government's ban was introduced. This means instead of 4000 annual buyers, there would be more like 3100 in a normal year. 

Once this adjustment was made, the authors’ third model suggested the tax would bring in about $212 million each year, or 71% less than National had estimated. 

“Overall, we consider Model 3 to likely be the best, with Model 2 providing estimates of the likely maximum amount of revenue,” they wrote in the report. 

“We estimate that there would be about 520 sales per year, compared to National’s 1,700 sales per year. The 520 is made up of 380 sales of houses above $2 million and 140 sales of buyers over-paying to $2 million for properties that would have sold for less”.

This may not be what happens in the first year that the ban was lifted, because there could be a significant amount of pent-up demand for New Zealand property ready to be released. 

“However, even if one assumes twice the normal level of sales in the first year of the new policy it doesn't change the key conclusion here: there is a big shortfall and it will be there year in, year out”. 

Opinions may differ

National’s Nicola Willis said it wasn’t surprising to have different economists disagreeing about the estimates and she was confident in the numbers reviewed by Castalia Advisors. 

“Our figures are conservative and assume that sales captured by the tax will be significantly less than half the number of sales to foreigners before the ban came into place”.

In a statement, Castalia said Goodall, Reddell, and Warburton’s critique seemed to assume that lifting the ban would lead to “a negligible number” of transactions. 

“In our view, this requires a belief that foreign buyers have been deterred from the New Zealand market by factors other than the ban,” it said in a statement. 

Castalia said it still thought National’s estimate was more likely to be accurate. 

The model used was based on NZ’s experience before the ban, and included estimating some reduction in purchases due to the new tax. 

“We believe the forecast number of sales to foreign buyers in National’s tax plan is reasonable and supports the overall revenue forecast in the plan”. 

Goodall, Reddell, and Warburton’s critique appeared to be based on the view that NZ real estate had permanently lost its position as a destination for investment capital, it said. 

Eric Crampton, an economist at the New Zealand Initiative, said it was hard to adjudicate between the rival estimates without getting to see Castalia’s model, but looked like a “case worth answering”. 

National should’ve relied more on spending cuts to fund its tax plan, rather than getting “embroiled in disputes” about a tax that “never made much sense in the first place”.

He said bringing 2024 spending (as a percentage of GDP) back to what Labour had forecast it to be in Budget 2019 would free up over $12 billion for tax cuts.

Transparent policymaking

The report authors did not think Castalia’s response was sufficient to refute their estimates, but acknowledged there was a high level of uncertainty in all the projections. 

Sam Warburton said the analysis was worthwhile because economists believed in transparency and should give all parties an equal level of scrutiny. 

For example, he said Te Pāti Māori’s wealth tax numbers were completely unreliable, the Green Party’s numbers were highly optimistic, and Labour’s GST policy was very ineffective.

Reddell said this shortfall wasn’t important macro-economically, meaning that it wouldn’t have a material impact on the already significant government deficits.

However, he felt that it was a worthwhile test of the politicians’ approach to policy-making and how transparent they were when responding to criticism. 

As an opposition party National doesn’t have the same resources as the Government to form its policy, but Reddell said it was well-funded by donations which could be spent on analysis.

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126 Comments

My economist is bigger than your economist...or is it the other way around?

Up
7

Of all times with respect to volatility in global economies and markets, the last thing we need is 'fairy dust' revenue forecasting.  National are trying to use a foreign buyer tax for revenue raising, when as a tax mechanism, it is normally used (and successfully I might add) to dampen demand.

Dumb and dumber.

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36

Don't Nat/ACT usually say we can't tax our way to prosperity?

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18

When Labour makes an inflationary increase to fuel tax it is considered a new tax. When National creates a new tax, it is considered a great way to get revenue. 

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20

It's a new tax on non residents. Surely that's a good thing for people who live here.

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7

No, it isn't. They've just been outbid for their own country, portions thereof. 

Been happening to farming, too. In the latter case, we're exporting profit - as we are with banking. 

Time we brought it all home, learned to live within our means, and long-term-maintainably. 

Because the question the Nats need asked, is: What then? And what then? And what then? 

What they don't have, is a plan. 

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35

It is so frustrating.  I begin to think that living within our means, planetary realists are being framed as nutters these days!

https://www.millenniumassessment.org/en/BoardStatement.html

The most thoroughly researched report about the 'real world' I've read.  Highly recommended - but it's huge, detailed and factually accurate - so it comes with a warning for the growth forever-ists.

 

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15

Please o Please Kate come into the real world

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0

Nailed it pdk.

There is no plan after the last river is dammed, the last farm or house sold to foreigners or last boatload of immigrants. 

it can apparently go on forever under a Nat vision. 

 

 

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16

Well there's the moon, maybe India is on to something.

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1

And the weather - sell it off - rent it back genius!

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0

Not if house prices go up by the same amount...foreigner buys 2mill house,pays 2.3mill including tax,all houses in the street now revalued up by 15%...foreigner, having left the house empty or used it as an 'address' to send his child to AKL Grammar, now sells his house 2.5 years later to a local kiwi and obviously the price asked by the foreigner now includes the tax he 'paid' i.e. he will sell for at least 2.3 to recoup his 'tax',more likely,he will sell for 2.5mill,pocket $500k tax free capital gain,repatriate his cash and essentially the kiwi has paid the tax for him...thank you very much

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18

Oh, spare us the optimism.  Where the heck do these mythical kiwis who will pay over-the-top in value on resale come from.

As the Aussie kid in the Mitre 10 commercial says, "You gotta be dreamin', mate".

 

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8

The ones who have just offloaded 3 rentals due to the brightline being reduced, they are not spending their own money..just tax free capital gains.

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5

Said like a person who has no idea about the property market Kate. FYI, prices have been increasing steadily since the 1960's despite market volatility, how exactly do you think places like Ponsonby went from being a run down shite hole in the early 80's to multi-million dollar old villas? You may have heard of FOMO? Real Estate Agents and Economists actually measure it.

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0

prices have been increasing steadily since the 1960's 

Well of course they have - heard of inflation?

The metric you need to compare is the ratio of house price to income over the years. Auckland is presently at 10.7:1.  

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1

When it sells, does the price including the tax get applied to sales stats, or does it exclude the tax?

If it includes the tax, then it is going to put the average sale price in NZ even higher.

When NZers build they so also pay 15% tax on materials and labour when building a house, which also helps push up average house prices. Whereas in the UK, materials on new builds are exempt of sales tax. NZ also already pays far more for materials due to a lack of competition in the market and is probably just as  bad as the supermarket sector..

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0

When it sells, does the price including the tax get applied to sales stats, or does it exclude the tax?

Almost definitely the registered sale price will exclude the tax, like what happens in other jurisdictions.

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0

It does mean we are selling the land beneath us to foreigners. Quite the price to pay in my opinion.

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20

No a good thing would to ban non-residents from being able to buy property. If only there was a party that would enact such a policy 

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6

Its also a tax on people who live here.  Its a tax on people who do not have permanent residency or citizenship.  It includes those living and working here on work and student visas.

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0

I would say Dumb and Dumber is re-electing the same people and expecting different results.

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6

or electing someone that cant count to fix up for dumb and dumber and digging the hole deeper

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4

this is exactly how I thought when Roberson said 'choose another party does not guarantee a change'. How much change will we have if we select the same lot?

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0

There is the truth of the rub. Labour are now recognised as an incompetent lot by their performance in government. They now attempt to offer a government consisting of a coalition, that is fraught with conflict and unknowns, as an improvement. That is simply not credible. On the other hand Labour may well decry the alternative National/Act as being potentially even less credible . But that case has not been proven whereas Labour’s is actually on record and starkly so too.

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3

Totally agree Dumb and Dumber

Forget about the numbers that not the big issue here.

The big issue is National wanting to turn housing market back into a Ponzi that's just what created the mess we see today.

Me too Luxon is just following Me John key who destroyed this country after the GSC with the help of the Chinese laundered money.

Took some houses in the hot areas of Auckland like Forrest hill for a standard 4 Bedroom from $500k 2010 to $2.5m.2016

We just can't go down this track again.

Young Kiwis if want the Kiwi dream of owning your own home your need to vote left. 

National are so bad at reading the room.

This is what will lose them the election.

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7

Why Kate? We have suffered from 5.5 years of fairy dust from Ardern, and nearly 6 years of same from Robertson. Labour have bought us record debt, raging inflation, worse outcomes in health, education and law and order. And all you hear from them is fairy dust. So why then, can't the other side do the same, and you be happy about it? Or is it just straight up hypocrisy from you?

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0

I'm voting TOP.

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4

Oh thats the party thats not doing well in Ilam , Gerrys ex area

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0

Ahhhh here we go again.  National bad does not = Labour good.  

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1

Your version of what Labour has and hasn't done is pretty fact free - debt is much lower than many previous governments (% of GDP), raging inflation is what we had in the 1970s-1980s not now, health - just look at the amazingly good job over covid, law and order - FFS the crime rate has been declining since at least 2012.

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1

Give New  Zealand a break Kate please

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0

God Help Us All, National are as clueless as the current clown show!

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30

Probably 80% of voters agree and yet still they waste their vote on them both.

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11

The sad thing is, know one cares about the lies, they'll all still vote National because they need someone to blame for their own misery.

Unfortunately, Labour has a large sticker on their back that says 'Blame Me'. 

Up
14

Yup,a video could surface  of Luxon sacrificing a goat on the altar of an Upper Room Church whilst wearing a klu klux klan robe and folks would vote him in to oust Labour..it's the price you pay for being in charge through a crisis...the British voted out Churchill,swap out nazi germany for Covid and here we are;

The end of World War II in Europe and the defeat of Hitler and Nazi Germany in early May 1945 turned British Prime Minister Winston Churchill into the world’s most eminent statesman. He was feted and celebrated everywhere he went and had an approval rating of 83%.

Yet he suffered a humiliating election defeat in 1945.

 

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6

Are they being voted out for being in charge through a crisis, or for refusing to adjust the tax brackets after high inflation has made them ridiculous. I am definitely voting for the latter. 

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2

They have had their focus groups and know they are being voted out for dividing the country. That's why Ardern is gone and the Maori caucus are keeping their head down. 

And make no mistake, Labour are being voted out rather than National in.

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14

they'd have to show up first.

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0

"it's the price you pay for being in charge through a crisis". Nope vman, it's the price you pay for being hopeless. Education system is falling apart, law and order is falling apart, health is falling apart. And all with record spending (funded by debt) on each one. Inflation is rampant. Debt is spectacular. Current account is a ticking bomb (and not many understand what that means - if overseas investors walk away, and lenders demand risk premiums, voila, a currency devaluation is probably coming, then it will be, New Zealand, the new Sri Lanka). They are assaulting NZ's democracy and trying to dilute one person, one vote. I mean, what the hell could go wrong? Worst Government, and worst P.M's since forever. You think things are bad or have been bad. Sheesh. We are treading a razor's edge that should we tip the wrong way, will see a whole lot of people in a world of hurt. And it will take a generation to fix.

Lastly, on Churchill, do a bit of reading. There is a reason he lost. You could start with an easy read by Boris Johnson called "The Churchill Factor" which is a dead easy read. "Churchill, A Life" by Martin Gilbert is good, as is Roy Jenkins "Churchill" and Andrew Roberts, a more modern number, "Churchill: Walking with Destiny" is excellent as well.

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0

Which is why you shouldn't vote for them. The NZ public is hilariously about to replace a finance minister that has a Bachelor of Arts by another one that has a English Literature degree.

Why would you think the latter has any more ability than the former?

Vote different, don't vote for the same ideological driven numpties.

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11

English Literature degree with a post grad in Journalism.  Great if you want someone to provide spin.  

What's utterly ridiculous is she's the preferred choice for finance, while their ex-BNZ business banker looks over Transport.  I don't think parliament is the place where people should be cutting their teeth.    

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7

out of curiosity, who do you consider having clues out all of them?

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0

I honestly feel the right mix of Act's and Green parties polices will work best for middle NZ. The Green party is the only party that wants to reform the tax system so assets are taxed this will allow them to lower income taxes (which is a part of their policy). Act want to lower taxes across the board. Both of these would benefit ordinary Kiwis. Labour & National are equally pathetic and out of touch with the issues facing Kiwi's. 

I guess what I am saying is the Green Parties tax reforms combined with Act's lower taxes in general would be of great benefit to working class Kiwi's.

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6

Greens is not the only Party, TOP has a much better tax reform policy.

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9

Yes, TOP.  Sure, Greens and Māori taxing wealth policies purport to tax more/raise more tax, but it is the redistribution of existing taxes - off labour and onto land that is the most orthodox, most efficient and most simple.

   

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4

let's put things into perspective here.

according to treasury website, the "Total Crown revenue for the 2019/20 financial year was $116.0 billion". even the '500Mil short' is real, it's only 0.43% of the total revenue. so a 500Million dollar 'short' is not exactly a short, it's too small a portion in the total revenue.

The real question is how valid and solid the National's fiscal plan is. my opinion is that it has flaws but generally solid. 

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7

"it's too small a portion in the total revenue."

But a rather LARGER portion of their tax plan changes.

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11

Becomes unfortunate jargon. $ millions wasted, a few small percentage points here or there are seemingly justifiable in the grand scheme of things.By way of examples, Minister Robertson, on that criteria, flippantly trivialised the spend on the farcical Auckland cycle bridge and for a lesser wastage, but the same sort of fruitless mission, PM Key’s pointless new flag exercise. It’s simply not justifiable. To put the percentage into perspective, how many New Zealand household budgets could afford to write off aimless and imprudent expenditure just because it’s other people’s money.

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6

The government never spends other peoples money as it spends its own money and that is NZ Dollar currency of which it is the only legal issuer and taxpayers and bondholders cannot create this currency and so we spend the governments money and it doesn't spend ours. https://www.levyinstitute.org/pubs/Wray_Understanding_Modern.pdf

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3

I tend to agree, its basically pocket money for the government. It costs $150 million just to give us free prescriptions, get rid of that for a start. 

The real issue I have with National's tax cuts is how lame they are. $25 bucks a week is nothing. Had Labour matched their overall tax cut but gave it all to PAYE earners instead of property investors, Labour would be in with a shot. 

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6

I don't suppose it matters to you jimbo, I mean spending other peoples money is great.

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0

Free prescriptions avoids 18 times the cost in avoided serious health issues in the future. So more than pays for itself.

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1

You still have to pay the $60 to the doctor to get the prescription.  What's another $5 to fill it?

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0

When we're struggling to deal with inflation, a $500 million/year debt fuelled handout via tax cuts is not something that we should be wanting

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2

Who cares? They're not Labour.

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4

I'm so bored of hearing about this over and over ... might just vote for National out of spite at this point. 

Why does the media suddenly care about how much might things cost now anyway? Would the Greens' wealth tax raise as much revenue as claimed? Would TOP's LVT work as predicted? What if free dentistry and CGT exemptions cost more than anticipated? What about NZ First's policy (oh wait they are only interested in toilets)

Country is stuffed either way, so may as well vote for the party that's going to at least give me a tax cut that might pay for Friday takeaways and a pint or two. Labour offers me absolutely nothing by comparison. 

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13

"might pay for Friday takeaways and a pint or two" - all for $25?

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1

I get ~$50 p/w on the calculator. Dominos special offer + a couple of house pints easily. Man of simple tastes I am.

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4

You and your lady I assume. So one pint each and a pizza. Better than nothing I guess...

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0

Sorry mate, all this extra demand for pizzas means they’ve just put their prices up. Too much money chasing too few goods. You can’t have a large pizza anymore. And only one pint. To share. 

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0

People with pizzas in the freezer at home can leverage the equity in those pizzas to acquire more pizzas.  

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0

Would TOP's LVT work as predicted?

Yep foolproof - witness rates - no one avoids them.  They do need to work it to include a tax on 1000m2 of rural and lifestyle land, but aside from that additional detail - it's entirely able to give totally, and utterly reliable revenue forecasts.

And adjustment of the income brackets as stated, a no brainer.

 

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2

This doubt on deliverability of National's proposed tax relief plan since it was released has been pushed relentlessly by the journalists.  Pity they haven't held Labour's abysmal efforts at financial management over the last six years up for similar scrutiny and justification. 

Anyway, I hardly think a half billion dollars potential shortfall on the 15% foreign buyer's 'tax' is going to alter the overall deliverability of National's tax relief policy.  By the same token, the journalists and economists are not questioning how the cost of Labour's removal of GST on fruit and vegetables will be paid for.  Both of these proposed policies are simply designed to make it easier for Kiwis facing high costs of living.  The difference between the two is that the tax relief benefits will be directed towards working people, who are presumably helping NZ's productivity, whilst the benefits of removing GST on fruit and veg is rather more nebulous in its effect and, to me, falls more into the realm of being election click-bait. It is still a cost to government though. 

Lastly, can anyone explain to me while the vast majority of NZ's journalists seem so determined to have a Labour government re-elected?  Most media outlets seem to step up their role of being the Labour Party's unpaid public relations arm come election time.

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11

Just for clarity: Labour's GST proposal would be funded by removing the tax depreciation rules for commercial property owners. The same line of funding is used in National's tax plan to cover $525m of the annual cuts. 

Almost every economist in the country lined up to have their turn criticising the GST policy, journalists reported on it at length, and Labour did not go up in the polls (possibly as a result of the negative coverage). Perhaps, you are reading the wrong news stories?

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12

If his bias was the Bridge, there would be enough lanes already already. 

But - why economists, Dan? 

Why not address the bigger picture? This is like arguing how much better off the B Deck passengers will be if they muster aft of forward; nobody is addressing the sinking...  though many have been given the opportunity to study it....

:)

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3

I wish people would stop taking any criticism of National/ACT as an endorsement of labour, we need to hold them all to account.

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21

Agree.  Also slightly annoying when there's a discussion solely around National, providing scrutiny over their proposals, and then people chirp in with "What about Labour".  We're not talking about Labour, I don't care about Labour, I'm not going to give National's proposals a free pass because they're of the same caliber as Labour's. 

Fanboys who would rather use Labour's incompetence as a distraction because they cannot accept their precious team cannot live up to their pretentions.  

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6

Michael Reddell was one of the 3 who put together todays analysis, he goes into more detail here:

How much revenue a foreign buyer tax might raise, and how and why it does (and doesn’t) matter | croaking cassandra

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2

Michael admits that there are big uncertainties with his analysis.

“The first is that there is no hard data on what prices those foreign buyers were paying before the ban.”

So the accuracy of his analysis is very questionable.

Even if there was a shortfall of $0.5 billion per year (worst case) it is still small change in the bigger picture of how out of control spending in government departments has got. 

Over the last 6 years, government departments (excluding health & education) are spending $3.5 billion more. This is a 62% increase. Inflation accounts for about 23% so $2.2 billion is over & above inflation.

 

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2

If the accuracy of his analysis is highly questionable, equally so must National's analysis be highly questionable.

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0

My household earns well over the 39% tax bracket, my tax relief will be $74 a fortnight that I dont need. Im not squeezed. It is absolutely wasted on me.

They are the business party right ? I havent heard a single thing they are going to do to help SME's. Its all carrots and Donkeys. Im protest voting Winston, hopefully he handbrakes the whole debacle.

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22

Agree sluggy,similar scenario here...WP is going to garner a lot more protest votes going forward...

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3

I watched an interview where he committed to opposing the sale of foreign housing and farmland to overseas buyers, in fact he was still holding a grudge about Silver Fern Farms being sold to the Chinese.

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9

Same here. 

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3

Who cares if they country can't afford it, I want my $20 a week so I can afford a few more coconut lattes a week or an extra smashed avo on toast!

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10

Most effective voting strategy in this election will be like;

Eeny, meeny, miny, moe,

Catch a poly by his toe.

If he lies, let him go,

Eeny, meeny, miny, moe...

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3

A much better idea is to apply Stamp Duty on all residential sales over $2M.
This would be easy to apply and can be done immediately as the legislation for stamp duty still exits.  
Just find your last cheque book and you will see that Cheque Duty ( viz Stamp Duty) was still being charged. 
It could also apply to commercial property sales, which was the case up until the 1970’s.
 

 

 

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7

that is what they told JK was the only legal way to do it, so do not be surprised if that happens

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1

I support the foreign buyer tax. I don't support spending the revenue before its raised. There is no way there is going to be more than a few dozen foreigners willing to pay more than 300k in tax just to get onto the NZ property market. 

I was happy to hear Act announce they were going to trim their tax cuts yesterday. Fiscal responsibility is something lacking on the right and left. We need it if we are to have any hope of getting inflation back down.

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2

I am not so sure on the tax being a deterrent. What’s 300k on 2 mill when you are worth millions and want NZ as a bolthole?

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4

On the current exchange rate XE.Com has $2.3mill NZD = $1.36mill USD...

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3

Rich people hate paying a single cent of tax more.

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2

They also hate the thought of an authoritarian regime seizing or freezing their assets.

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2

Luckily we have a glut of empty houses to sell them...

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3

Has anyone heard of Castalia before?

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2

Dodgy AF.

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2

A chunk of the votes they lose for their lies and ineptitude will head to Winston. Luxon better break the ice soon or he can end up as a big bald headed muppet…sorry puppet.

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5

The marlboro man?

I do like the look of his horse, any chance we can vote for the horse ?

 

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1

Luxon needs to stop the out right lying around NZF...he was a corporate CEO & he is in the middle of an election campaign,to say he hasn't thought about WP is plainly farcical,as a CEO he and his executive team would constantly be running risk scenarios,what if's etc as no doubt a campaign commitee would be... 

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6

All politicians lie (yes you too jacinda) but the sheer obviousness and volume of Luxon's worries me. After all, this is our next PM.

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5

He is absolved of his sins every night as he kneels in prayer before nunyes.

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3

good to see hosking go hard and  hold luxton to account over this on his morning show, oh wait he didn't, he gets a super soft ride from  hosking cant upset his party.

i am glad for interest.co.nz seems to be the only media digging deep in the figures and asking the hard questions of all parties evenly

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14

yea,it was sickening to hear the Hosk pre-empt the economists announcement today.."you will hear a lot today"..."the 'media' will pick this up..." but in his words,nothing to see here,move along.

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5

Hosking doesn't even pretend to be real media. If you listen to him, you are dumber for it.  RNZ have been balanced, digging into both Labour and National in equal measure.

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8

The wife likes to have it playing so the dog has something to listen to lol...I'll see if he is ok with a change of station.

I agree re him being real media, but given his ratings, it's scary how many hang off every word he spouts as gospel... 

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4

Agree, its absolutely frightening, but explains much about the country if he is the "voice of the people".  I recommend the V for Vendetta movie, if NZ was ever to go authoritarian, Mike Hosking = Lewis Prothero.

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3

Newshub gave it a good rattle last night, and noon on national radio just gave Willis a grilling.

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1

$500 million, small price to pay for a change of Government.

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4

Agreed.

When Labor announces some new hairbrained scheme $500m is chicken feed.If some economists, who are always right on the mark(not) find $500m problem with Nationals figures it is apparently the end of the world.

If National were up front and declare that any shortfall will be made up from cost savings then this would make the problem go away.

They could promise not to make stuff ups like the $530m rat test debarkle and and problem solved.

I am not a National voter but this relentless crusade by the media on this issue is pathetic.

Its a "squirrel" moment to distract voters from the real issues like crime/doctors strikes/ongoing govt debt issues... etc

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5

The fiscal equivalent of the FBB would be the government spending $20b and taxing $2.9b back. Except not $2.9b, it's looking like $1b.

So yes, we should be extremely critical.

Oh and sorry, this is before they look at the budget? This is aside from the budget. There's a $19b hole before we start looking at the actual budget? If you think the last few years have been bad, you ain't seen nothing yet.

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1

Half a billion, what's that the cost of 3 houses in 10 years?

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1

Why is this even in the news? The current mob have racked up 90 billion in debt with SFA to show for it. That should be the headline.

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13

Uhhh, because this is an article about economists claims on National's costings?  Just like you wouldn't see a headline about $90b of wasted borrowings on a news article about The All Blacks vs Namibia.  

Anyway, if National get in they'll just carry on the borrowing spree which started in 2008.  Labour, but Blue.  

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because the party proposing are saying they are head and shoulders better economic managers than labour and they are showing they to can not count or use a calculator.

and the problem with that is WE ending up paying for their sloppy working out.

no one expects a labour or green finance minister to be able to keep the cheque book in the pocket and not splash the cash or balance it, but we do expect it of national and ACT and at the moment BOTH are woeful 

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That's $90 billion more dollars that the government has created and put into our bank accounts through its spending and has added to our savings, this money hasn't just disappeared.  https://theconversation.com/how-government-deficits-fund-private-saving…

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But it will disappear by 2027, and we're all cheering for it too, for whatever reason.

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Public Service payroll in the Wellington region has increased from 19800 in 2017 to 27000 in 2022. Assume each of those additional 7200 people are on 80k each. Thats a 576 million per year salary bill.

Give them all a don't come Monday . No one will even notice. Hole filled. Bonus is that we will also have 7200 people freed up to do something useful in the economy and help fill that skills shortage we keep hearing about.

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$80k per head sounds cheap, based off what I've seen!

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How much of that $576m is recovered in tax revenue?

The FBB is $20b in spend, and $3b recovered in tax.

In both cases the money enters the private sector and exits via tax, so which do we prefer?

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Yeah the problem with that scenario is that all the capital is tied up in 3 bedroom shitboxes, none for business. So there's no work for them to go too. Maybe we should fence off hamilton, those public servants could join the naughty Kainga ora tenants in the tron.

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And National will probably reduce the public service payroll and increase the private sector consultants bill (who will be the old public servants)... swings and roundabouts.

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They won't be able to afford the rest of the 100,000 homes at this rate.

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Yes, the National party is back on track to screw NZ over again.

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I guess the question of the day really has to be "how big is Nicola's hole?"

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Sam Warburton debunks Joyce's fiscal hole. Yeah well, again, hopeless research. Joyce was proven correct. He claimed we'd have to borrow $11.7bn and they ended up borrowing a hell of a lot more than that by June 2020 (in their FIRST term).

"The Government borrowed $6.5 billion creatively through Crown entities NZTA and Housing NZ which did not show up on core government net debt metrics, Minister of Finance Grant Robertson has confirmed". NZ Herald 10 August 2018 (not even a year after they took office). "

The revelation followed comments by independent economist Cameron Bagrie supporting Stephen Joyce's election-campaign claim that Labour has an $11b fiscal hole, and that the figure could climb higher.

"There is a fiscal hole, and a softening economy is making it wider," Bagrie said. Same article. 

And then they went on to borrow $17bn by June 2020 barely 4 months after CoVid arrived. So Sam Warburton's views can safely be ignored if his only claim to fame is "debunking" Joyce.

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Luxon apologists in these comments are breathtaking. 

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Yep , the radicalised ignorance of the NZME and  LinkedIn geniuses is something to behold.

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People in New Zealand can’t afford to by average house in say Auckland and many other areas from scratch so open the door to rest of the world is crazy if inflation continues to raise and with this policy in 7 years 2 million level will be average price putting price’s way out of reach for anyone who does not have a home,so most of young generations will be renting, and anyone who does upgrade will have huge mortgages and at the whim of interest rates decision makers.

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As a property investor, this makes me very, very nervous. The _only_ reason (truly, I think they're out of touch and lack vision on most issues on our minds, climate, health system, crime, etc.) why I plan to vote National is for their 'promise' of rolling back interest deductability rules.

Hearing that their budget is 1/2 bil short makes me wonder whether that promise is just smoke and mirrors and that will be the first thing they'll drop. Oh dear.

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TOP would roll back interest deductibility rules as well - from their website;

A fair housing market

Increasing housing supply via five critical reforms to the housing market.

  1. Removing the current Bright Line Test and allowing tax deductibility of interest for landlords, which is replaced by the Land Value Tax.
  2. Requiring a deposit of 100% of the value of an existing home when purchased for investment purposes. This ensures property investors don’t just use the value of an existing home to purchase another (reducing property speculation).
  3. Returning the GST on new residential builds back to local councils to fund infrastructure development.
  4. Clearing the public housing waiting list via the establishment of a $3 billion development fund for Community Housing Associations.  
  5. Supporting urban densification for central cities and transit nodes. Councils will be required to demonstrate that they have enough land zoned for new residential housing in line with the NPS-UD and MDRS.
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Anyone want to ask the economists for a declaration of interest? How many of them have consulted for political parties, and which ones?

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Interesting how he sends out his female attack dog to deliver and defend the numbers so he can bark “rocksolid rocksolid!” and sneer.

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Mere chump change to some of Labours short comings. Roll on 14th October. should be declared a public holiday 

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Labour blow $100 Billion on nothing, but we're supposed to worry about a $500m shortfall that will be easily covered by simply cancelling the catering contracts?

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