By Jenée Tibshraeny
The Opportunities Party (TOP) isn’t missing an opportunity to up its profile ahead of this year’s general election.
It is shaking things up in the Mt Albert by-election, last week announcing its chief of staff, Geoff Simmons, is running for the seat.
TOP leader, Gareth Morgan, has described Simmons as the “thorn between two roses”, making reference to Simmons’ main rivals - Labour’s Jacinda Ardern and the Green Party’s Julie Anne Genter.
The question is, to what extent will Simmons also be the spanner in the works for the Opposition, capturing votes from National supporters, if not for their genuine support, then in their efforts to prevent ‘Team Labour/Greens’ from securing the seat?
And what will the debate sparked by the Mt Albert by-election reveal about New Zealanders’ appetites for fresh thinking in the political sphere?
THE POLITICS
‘Radical centrism’
In a Double Shot Interview Simmons acknowledges TOP is using the by-election to promote its policies (see interview with Ardern and Genter here).
“Well of course, we’re a new party. But we really weren’t expecting to stand - we haven’t even got all our policies out yet. So it was National’s absence that really pushed us across the line.”
He says Labour and the Greens don’t give voters much choice, “so we thought we may be able to broaden that palette somewhat”.
He describes TOP as being radically centrist.
“We’re absolutely centralist in terms of what we’re trying to achieve. We think that very much appeals to middle New Zealand.
“But what we’re talking about is much more radical… So instead of the same sort of business as a usual establishment party - ‘We make great promises, but we don’t actually deliver anything. We just tinker at the edges, so that we don’t upset anyone’ - we’re proposing some bold changes.”
Simmons maintains politics is entering a new era.
“Left and right are disappearing. Politics all around the world is changing. It’s time for something fresh.”
THE TRACK RECORD
Mt Albert’s issues are national issues
While Simmons was born in Mt Albert, went to Avondale College and studied economics at Auckland University, he hasn’t lived in the Super City since 1999.
Rather, he’s worked as a senior analyst at Treasury, a manager in the UK Civil Service, and most recently, the general manager for the Morgan Foundation.
Yet he maintains Mt Albert is facing the same issues as the rest of the country - high rents and house prices and lack of infrastructure.
THE POLICIES
Central and local government should split light rail costs
TOP hasn’t released its transport policy yet, but Simmons says public transport needs to be improved if Auckland wants to do “density well”.
“Otherwise we’re getting these new dense developments put up without carparks, which is great (it will encourage people to use public transport) but if the public transport’s not there, then they are going to buy the cars and they’ll end up clogging the roads.”
As for the light rail proposed to eventually run from the North Shore, along Dominion Road to Auckland Airport, Simmons sides with Labour in suggesting the cost be shared between local and central government.
The New Zealand Transport Agency is still deciding who is to pay for the project, with the Green Party suggesting central government should go the full hog and fund the whole lot.
Auckland Council needs more freedom
“We think the crucial thing here is that local government needs be given more ability to raise revenue. That applies on the environmental front - being able to charge polluters - but it also applies on the transport front,” Simmons says.
“Things like congestion charging; giving local government more tools to be able to manage the issues in their local area; collect revenue and invest.”
Ardern and Genter also support congestion charging.
Simmons says local government is constrained by a number of “silly rules”, like limits on debt and rules around the infrastructure funding.
He also agrees with Ardern and Genter in saying the New Zealand Transport Agency should have the remit to invest in all modes transport infrastructure - rail, cycle, etc, not just roads.
Government must lead by example on the environment front
Simmons says: “If we are going to increase the population, we’re going to have to make more use of what we’ve got. That’s transport, that’s sewage infrastructure. It boggles me that we are still pumping raw sewage into the Waitemata Harbour.
“We’re sending a message to farmers and corporate polluters out there that if you are polluting, we expect you to pay to clean up that damage. By the same token, if you are actually farming in a very environmentally friendly way, we’ll pay you…
“We can’t lecture farmers, if we’re dumping raw sewage into the Waitemata Harbour. It just totally lacks integrity.”
All home and land owners should be taxed on their equity
TOP wants to stop house prices increasing with an equity tax.
It wants to expand the definition of annual taxable income to include a minimum rate of return an equity owner gets from their productive assets - houses, farms, equipment, cars and even intellectual property in a business.
Those that already declare at least that level of income will be unaffected and those that don't will pay more.
The only exemption would be financial assets such as shares, deposits and bonds which already have tax paid on them.
TOP would use these funds to deliver income tax cuts. It promises 80% of the population would be better off, with the wealthiest 20% taking the biggest hit.
NZ’s tax system ‘rigged’ in favour of property
Asked how palatable National Party supporters in Mt Albert might find this policy, Simmons says National is supposed to be about growing the economy, yet our distorted tax system that favours housing, is holding us back.
“The game is most rigged in New Zealand towards housing. And then we stand back surprised when all of our money goes into investment in housing. I mean, it’s absolutely crazy.
“If we want a productive economy, we have to steer money away from housing. That means stopping the rise in housing prices - which the equity tax would achieve - and push all our investment money, our saving into much more productive uses…
“I would say to anyone who is actually really concerned about the economy… it may make sense for you individually to invest in a house, but if we all do it, it’s collective madness. We can’t all get rich off buying houses off each other folks. It’s madness.”
It will take time for houses to become affordable
Simmons acknowledges it will be a while before people feel the benefits of the policy.
“Eventually incomes will grow and housing affordability will be restored through that route.”
While the Greens straight up want house prices to fall, Labour wants an increase in affordable housing supply to stint house price growth and eventually see the house price to income ratio fall below where it is now in Auckland at 10:1.
“The thing with the Labour policy is that they assume the housing market is broken and that’s why no one is building houses. But the housing market is doing exactly what we’re incentivising them to do, which is land bank… if land prices are going up, why would you build? It’s better to just sit on the land,” Simmons says.
“We actually need to stop that rise, and that would encourage more houses to be built.”
Equity tax to potentially hit foreign investors the hardest
Simmons also says the equity tax would be another way of taxing foreign investors.
“The only reason that they’re investing here is because they want the same tax breaks that we invest in housing for. So absolutely, the tax would hit them potentially hardest, particularly if they’re absentee.”
Simmons recognises the policy may concern retirees who don’t have a lot of cash flow, so says TOP would allow them to defer their payments to the Inland Revenue until when they sell their houses.
“The elderly have seen the biggest capital appreciation. They’ve got plenty of money stored in that asset. I don’t have too much concern for them in that respect.”
Equity tax about closing the loopholes, not stopping property sales
He says TOP has steered clear of advocating for an easier to digest capital gains tax, as it doesn’t work.
“If you make exemptions on any tax, it increases complexity, rich people can afford accountants to be able to use the loopholes to their advantage, it’s a disaster right…
“A capital gains tax taxes transactions. We don’t want to discourage people to buy and sell houses. That’s the market working. We just want to close the loopholes around the effective income that comes from that.”
The Green Party supports a capital gains tax, while Labour wants the current bright line test to be extended from two to five years.
The Mt Albert by-election will be held on February 25.
*This article was first published in our email for paying subscribers early on Thursday morning. See here for more details and how to subscribe.
56 Comments
Yadda yadda. Leftist Rightist Centrist. None of that continuum usefully describes much any more.
As for me I believe in very small government, and individual responsibility. So rightish ? And I don't agree with the capitalist's war on the working and middle classes, which they are mostly winning. So leftish ? I think we are turning the country into a low wage enterprise to suit the needs of outside business. So nationalist ? I believe I believe in one person one vote and democratic rights. (apparently that's racist to the treaty bleaters). I believe in market forces, with destruction of big business who definitely don't want free markets. So communist-rightist ? lol. And every drunken tourist who punches somebody in Queenstown should be on a plane in 12 hours - no exceptions. (Trumpish?)
What rate are TOP proposing for the equity tax? I seem to remember it being 6% PA? That's 60k per year tax on a the average Auckland house!
And considering under this model Aucklander's will be paying considerably more tax than the rest of the country, will TOP pledge to spend considerably more money in Auckland?
The rate will be roughly 30% of roughly 6%. But now solid numbers have been agreed upon. The closest hint is roughly a tax of 1.5%. So 4 times lower than the 6% you quote. Also as to your shock or dismay at how much tax would be paid for an average house that just goes to show how ludicrously over valued property in Auckland is
'We all can't get rich'
Tax on top of tax, sounds like the political party wants get in on the housing situation, No Tax on capital gain - investors keep on investing but we want to tax on equity? come on
This is only going to hurt the average kiwis while the investors keep filling their pockets
The tax on equity will have to be paid by investors as well. Given that investors are required to have greater equity to get a bank loan it will hit them hardest. It will hit speculative investors the hardest as they derive no income from their investments until sale. For average kiwis they will be more than compensated by the reduction in income taxes which are part of the tax reform.
NZ used Land Tax in the past to break up land banks and give mum and dad Kiwis a chance to own. It looks like it's about time we consider the same thing again. If this hadn't been done, today's property investors would never have had the chance they did to get in on low rungs on the ladder at a reasonable price.
Perhaps not the TOP's model, but some level of tax to help address the unsustainable house pricing.
I had been impressed with TOP until their ill-conceived "Democracy Re-set" policy. Hopefully, the next 3 major polices will make up for it. Housing will be the big issue for the upcoming general election. However, it's all over; National will form the next government. The question will be whether TOP can get about the 5% - it's a hard task but at the moment I would vote for them.
Ok so he would only pay paying an extra $1250 dollars a month in new taxes plus the $750 a month in rates, insurance and upkeep. Maybe he will split his vote one for Mt Albert and National qets the party vote. I did read the figure more around 4% so can someone link me to the 1.5% value please?
If someone has $4 million and is living week to week they're doing something wrong.
And she's probably getting a handout from the government in form of the universal basic income we give people just for reaching 65, regardless of whether they've got $4 million dollars in their hands.
Yes your right, after she has spent 45 years paying taxes and my education she gets $300 a week from the government as part of a universal pension and TOP wish to wipe that out with $1200 additional taxes... classic poor mans party...luckily most kiwis have aspirations...the funny thing is she pays $30k in taxes already so her pension just acts as rebate on her tax bill... at least next year with TOP in charge she will be negatively geared!
Paying taxes doesn't automatically mean you "deserve" a universal basic income at a certain age, regardless of need. What a stunningly socialist idea!
Welfare was supposed to be for those in need, not a gift to the rich just for passing an arbitrary age or fulfilling some other equally arbitrary criteria.
If she's somehow entitled to a pension she doesn't need, then surely the young today are entitled to affordable homes through polices the like of which enabled your mother to have a home - e.g. land tax, government build activity, housing corp loans, government leasehold land - all just as arbitrary socialist policies that enabled boomers and those older to get into homes.
There's no reason she should be entitled to a pension she doesn't need, but young upcoming Kiwis aren't entitled to affordable homes like she had.
Very glad you did the interview it was an eye opener, or maybe jaw dropper.
TOP isnt radical, in fact its ultra-broken-conservative economics. ie yet another grow for ever on a finite planet model party. I mean "we need more infrastructure for more people"....that isnt really green or sound economics, what we need is radically less people in NZ.
Here is someone, who got it 15+ years ago....
https://www.youtube.com/watch?v=eOykY2SMbZ0
Pity I had hopes for TOP but it seems its just another party.
well said ... totally agree ...though i didn't have high hopes for TOP.
Theres a few clangers in their broken down thinking ...
1) falling demand (read affordability of more debt) is now at heart of the problem causing weak global growth ... their "solutions" effectively further weaken demand (ie tax polluters / raise local govt revenues, tax...)
2) the invest in alternative "productive" stuff away from houses holds no water ... because resources are stuffed... ie there are no OPPORTUNITIES ... yes ironic. Unless of course we are referring to that old favourite population ponzinomics ...Simply maths says energy per capita is falling whichever way you slice this
3) the key resource (Oil) is buckling to hold things together...
Mr Simmons. “Left and right are disappearing. Politics all around the world is changing. It’s time for something fresh.”
Are you sure about this statement ? Politics is changing ? You are stating you will change things "something fresh"
Question : Will you be stopping economic booms and crashes? That is the boom and crash cycles the world has had since day one.
You do understand to really get an economy running hot you reduce taxes dont you ?
You want another level of government to watch over the government. Band aid over the plaster cast so to speak. More taxes ought to cover it yes ?
“I would say to anyone who is actually really concerned about the economy… it may make sense for you individually to invest in a house, but if we all do it, it’s collective madness
As far as I know.... We do all have to live in a house/aprtment..??? Last I heard living in an illegal dwelling is ..well..illegal... AND wouldn't surprise me if living on the street becomes illegal.
Now.... If I was a foreign investor.... i would set up a NZ entity ( eg.company)...lend all my money to that entity and have that entity buy and own my properties... ( foreign owners of NZ companies are doing this anyway/already, to minimize tax )
Therefore.... the owner of the properties (company....trust...etc ) would have no equity in the properties that might be taxed...???
As my properties gained in value the company would simply remortgage them and send the money my way...
AND.... still no equity tax to pay.
AND... because it taxes equity and not total value.... it will get complex.... people will game it with .. versions of the above... (The people that won't will be the ordinary mum and dad home owners who live in their home )
Point I'm making.... the more removed an idea/tax is from fundamental first principles... the bigger the unintended consequences/ higher order effect.... etc.
eg...their rationale for an equity tax is ,so called, imputed earnings ...and yet there is no actual cashflow income....
My view.... is that The TOP party are not based on what I call first principles..... and have just come up with some ideas that they have taken a fancy to.
Saying that an equity tax will lead to growth and productive investment and higher incomes.... is in the same realm as me saying that if I smiled right I'd be able to date a movie star..... daydreaming.
TOP is not getting my vote.....
AND...Giving Auck council more freedom to tax and burn and borrow....ekkk... thats a thought !
Says the guy who only owns a house because of previous governments' policies of land tax to break up land banks, house builds to increase supply etc.
Some people think they did it all on "their own two feet", and don't appreciate how much they benefited from policies that have since been cast aside in favour of feather-bedding the nest-eggs of those born at the right time.
Rick... I'm not sure there has been an intention of " feather bedding"..??
My own research has proven to me that asset price inflation is largely a function of Monetary inflation.
Monetary inflation is part of the nature of our Monetary system..
ie.. In 1985 M3 money was $85 billion.... today it is $300 billion.
Incomes have not kept up with this level of monetary inflation.
Throw on top of that the problems with the inelasticity of supply of housing, which I sum up as :
minimum govt/council regulation = an elastic supply curve
eg.. A mate of mine was charged a $1800 consent fee to build a stone retaining wall within his property... thats just the fee, so he can be allowed to build the wall.
I think the Mafia might be envious of our Local Bodies ability to extract..."Fees"..
My beef is that Gareths TOP party addresses none of, what I think are, the fundamental issues....
eg.... why are new homes so expensive..???
http://aglayman.typepad.com/aaron_laymans_katy_texas_/2011/09/houston-a…
If u have an interest.... Brendon posts here...and is very knowledgeable about housing
https://medium.com/@brendon_harre/housing-affordability-learning-from-e…
http://www.interest.co.nz/opinion/83082/brendon-harre-and-david-lupton-…
It wants to expand the definition of annual taxable income to include a minimum rate of return an equity owner gets from their productive assets - houses, farms, equipment, cars and even intellectual property in a business.
Alice in wonderland bullshit... tax of "imaginary" income..
In the next breath they say how this will encourage productive investment...???? yeah right
How on earth is a Start up business with very little cashflow going to manage to pay tax on a non-existent income.??
How is that an incentive to be entrepreneurial..??
To me.... its kinda like kicking someone when they are weak and vulnerable...???
Rather than being an incentive towards productive investment.... this equity tax might simply incentivize us all to be total consumers and save nothing..
Taxing intellectual property...??? JEEEEEZZ..... I can just see the gravy train industry of "valuers" that will be created in determining this...."imputed , imaginary income"...
geoff even mentions taxing the equity in the family boat.... Man... this is without end.... this taxing imputed earnings caper is without end.....
It truly is a Politicians/bureaucrats idea of heaven...
Will we give thanks to Geoff and Gareth .... if it ever happens...???
The only exemption would be financial assets such as shares, deposits and bonds which already have tax paid on them.
Ahh... an exemption... BUT... In my world, an asset is an asset....
I spend $30,000 on a boat that earns no income and deprciates in value....and I'm taxed on that.
I spend $30,000 on shares that double in value..... and I pay NO tax on those gains..??
Seems fair to me..!!!.... NOT
AND... The irony is that in buying and running the boat , my money is flowing thru the local economy.
In buying the Shares, my money in simply in the Sharemarket "casino"..... where we will all buy and sell shares amongst each other, in madness, all the while thinking we are all getting rich.!!
Oh..hang on...isn't that what Geoff says we are doing with our family home...and which he wants to squash..????
You pay tax on any dividends paid by the shares, and pay tax on any capital gains in the same way house investors do (i.e. it's a grey area depending on intention). If I invest significantly in overseas shares, there's already a tax regime very much like what you're complaining about here (FiF, where I believe you are taxed on 5% of the value of your foreign holdings as if they had generated 5% income).
A successful share market with high liquidity makes it easier for a company to raise money to fund growth, which will benefit the country as a whole (creating jobs, generating exports, raising productivity). High share prices don't have any adverse impact on the average person, while an expensive house market has huge negative impacts.
Thats right mfd... Share market is a Capital formation tool just as the family home is..well.. the family home..
At the same time the share mkt is a "casino" ( metaphor) just as housing has a speculative element..
( Do you deny this..??? )...... (even worse,.. management have a vested interest in increasing shareprices... at the expense of long term growth )
The DISTINCTION is that dividends that are taxed...are REAL...
Imputed earnings on the family home are IMAGINARY..
ALSO.... I actually have the view that speculators play a role.... they provide liquidity and transfer risk.
My diatribe is all within the context of TOPS' imputed earning tax... on anything....and everything ( It becomes an openended mandate )
Also...just because Cullen brought in the FIF imputed tax regime, surely does not validate anything..??
MFD "Given that we need to raise the tax somehow,"
And we need to do that why ?
Have no problem with income tax. Do have a problem with how it gets wasted. e.g, another level of goverment to watch over the other level that TOP are proposing... but thats ok in your eyes. Why ? Its NOT YOUR MONEY !
How much tax we need to raise and what the government should be spending is a different question. For any given tax level, the money has to come from somewhere. Taxing wealth has a lot going for it compared to taxing income - we're supposed to be encouraging hard work and enterprise, not leveraging up to hoard the most tax efficient asset we can lay our hands on. We have a housing shortage and taxing it will help more efficiently allocate the resource.
Since you asked the second question though, yes I'm happy to pay tax to provide the infrastructure of a civilised society and ensure the less fortunate are looked after.
UUUmmm Gee its where people live ... ?? "People" being the operative word. People pay tax on their income and they buy a house with already taxed money. Hey lets screw them again !!! Can you not see the problem with it ?
In good political politician fashion .... unable to answer the other question. divert .... ....
Well, we tax food and drink which are even more vital for life. That GST is paid out of already taxed income too. You may have also noticed rates, which already tax your house if you own it. You seem to have plenty of arguments against the current tax system, it's strange that you won't engage with this attempt to reform it.
The fact is we have to choose where the tax comes from, and whatever we tax gets discouraged. Now, do you prefer to discourage people from working hard and earning money, from buying stuff, or from owning stuff? Which do you think will lead to a more equal and fair society?
I've read a little about Henry George... but not enuf to have a view..
The idea of a "land tax" makes sense to me....
Land being a metaphor for all God given natural resources which ,essentially, belong to all of and also to future generations. ( this includes the land component of real Estate ) ( I use the term god to simply make the point )
"Land" only ends up in Private ownership thru Govt granted licence .
You might say that I'm splitting hairs (re: Gareths imputed earnings equity tax )... And I'd say that coming from first principle point of views is far less distortionary than band aid style solutions to symptoms...
A key question,for me , is ...how big do you want govt to be..??
He says he is not concerned about asset rich retirees and that they can defer when they die, my goodness so that knocks out at least 25% of your vote not to mention the other 70% expecting a reduced inheritance! The best part is his leader made his fortune tax free out the back of a house garage yet he says houses are unproductive...unbelievable hypocritical policy at its finest...do productive people sleep under bridges?
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