By Jenée Tibshraeny
Those of us holding our breaths for the most important pre-election “contest of ideas” of our lives are starting to go blue in the face.
The Greens and ACT are putting some new ideas on the table, but are struggling to get air time as National is, um… distracted at least, imploding at worst.
Labour is keeping a low profile, as National shoots itself in the foot on a daily basis. It’s taking the higher road, saying it’s too busy governing to worry about campaigning, and will only start releasing policy after its conference on August 8.
New Zealand First has dug up its 2017 campaign strategy, but added the ‘Bad Boys of Brexit’ to the mix.
The key point is, New Zealand First and the two major parties in particular are too afraid of alienating voters by tackling the issues facing the country in this new Covid era.
They’d rather not conjure up fear that naturally accompanies discussion around whether we want to be tracked by the Government, have our borders closed for years, or change our tax system to prepare for asset bubbles created by quantitative easing.
Politicians would rather keep their campaigns positive, pretend we’re in a “post-Covid” era, and retreat to their tried and tested policies and styles of politicking.
Creating policy in response to a pandemic and recession is of course a mammoth task - especially for broad-base parties like National and Labour. What’s more, the situation with the virus is evolving, making it difficult to look too far ahead. Parties would be foolish to set too much in stone, when they need to be agile.
Venturing into new territory where political lines are blurry
Whether to charge returning New Zealanders for staying in managed isolation encapsulates these challenges. Political parties are venturing into new territory by creating policy in this area, which could backfire.
Labour saying it supports National’s call to charge returnees has ended up alienating voters from both camps.
The concept of paying your way fits in more with right-wing than left-wing ideology. But from a moral perspective, disincentivising people from hindering the collective effort to keep people safe, is a more left-wing concept.
Contrary to this, ensuring there are no obstructions for people to exercise their human rights to return home fits in with the humanitarian left. But wait a minute, honouring individual liberties is inherently right…
You see where this is going. There are no natural homes on the political spectrum for some of the policies that need to be created in the Covid era.
Nonetheless, the work needs to be done by political parties. The discussion needs to be had. The public deserves to know what it’s voting for.
The actual issues
The election is only two months away and bar the Greens’ James Shaw, there is still no acknowledgement of the fact that lobbing upward of $60 billion into the economy via the Reserve Bank’s quantitative easing programme will have consequences. This stimulus, which is filtering through the banking system, will benefit the owners of (already inflated) assets, more than it will the rest of society. Just look at the way property and equity markets rebounded after the 2008 Global Financial Crisis; all the while CPI inflation remained stubbornly low.
Politicians need to stop saying this is a matter for the Reserve Bank to deal with and consider whether they can mitigate the side-effects of the monetary policy response.
What’s more, no one’s talking about the real prospect of there being community transmission of Covid-19 in the world for the foreseeable future, if not indefinitely.
Will we only open our borders to a country that is free of community transmission and has good health and contact tracing capabilities?
What about international students and critical workers? Should we not be scaling up managed isolation capacity to accommodate for more of these people? As Covid-19 gets worse globally, New Zealand’s Covid-free status will become more valuable. How can we both maintain this status and capitalise on it? We surely can’t keep foreigners out forever.
As for contact tracing, do people need to get their heads around the fact the Government may need to access the same information the big four tech companies do? Or do we keep closed off to the world for several years and enjoy our liberties domestically?
What’s more, no one’s talking about how the prospect of having more social distancing in the future will affect urban design, commercial property, public transport, productivity and mental health.
Tried and tested vs. new and risky
New Zealand First’s “new” policy of restricting annual net migration to 15,000 is looking rather ridiculous against this backdrop.
Meanwhile, the “tough on crime” and the, “the left is bad with money and will drown you in tax” attack lines are tired, even though they remain highly effective.
ACT should be credited for evolving its thinking, with a policy to introduce an employment insurance scheme whereby someone who loses their job can claim up to 55% of their average weekly earnings over the previous 52 (or fewer) weeks, up to $60,000 a year.
The Greens too want the country’s richest 7% to pay more tax to ensure beneficiaries, students, and some part-time workers have a more dignified income.
Whether one agrees with these policies or not, ACT and the Greens at least acknowledge people face a period of heightened job insecurity.
Collins has put the personality into politics
Coming back to the major parties, having Judith Collins as Opposition leader, who like Prime Minister Jacinda Ardern is an intriguing personality, risks seeing policy discussion further diluted.
Sure, the proliferation of social media has been elevating personality politics for years.
But the interest in these two women is huge. As Josh Van Veen from the Democracy Project put it, they are “as much cultural icons as they are political leaders”.
“Each represents a different side of the New Zealand character, embodying certain values and traits that we see in ourselves,” Van Veen said in a comment piece.
“Understood another way, the perennial conflict between Labour and National is a permanent struggle to define the experiences of the “ordinary New Zealander”. Both parties claim to stand for fairness and decency. What this means will depend entirely on who you are. For Labour, fairness is free tertiary education and comprehensive welfare. For National, the ideal is self-reliance.”
Collins has cleverly avoided personally attacking Ardern, stressing the strength of the “team” that is the National Party.
But being someone to so colourfully encapsulate the ideals that resonate with a large portion of society, the spotlight will remain on her. Her handling of the Andrew Falloon sex text saga will be front page news for some days.
The challenge for National will be seeing if it can pull itself together (following six MPs announcing their resignations in a matter of weeks) and challenge Labour to detail what it stands for and how it will execute this.
In the absence of this, Labour will continue keeping its successful health response to Covid-19 centre stage, treating the election as an inconvenience to its God-given right to govern.
As members of the public, the onus is on us to ensure we don’t bury our heads in the sand, ignoring the existence of Covid-19 as we attend gigs and sports matches again. We need to demand a realistic contest of ideas from our leaders.
62 Comments
NZ's economic structure is independent of political parties, therefore, independent of polices from any political parties.
The three-year election should be called a three-year competition on who's making the must believable and beautiful (but undeliverable) promises.
What are you on about? Have a look at the history of NZ's economy, politics has been fundamental to its economic structure. Politics is by no means the only feature of the economy but it will always be a hugely significant one.
You really do say some weird stuff sometimes.
Yes, neither or the main parties have a plan to get NZ though this and are still stuck on short term details (arrival quarantine charges and travel bubbles) which the decisions made now wont really matter too much by the end of year as circumstances change. I think the issue is there's still a chance this short term thinking could work: If we get a >90% effective longish lasting vaccine that works on all the COVID strains by the end of the year and then there is a small chance some more stimulus could get us though the end of the next and its back to BAU.
No one wants to be the bearer of bad news and policy for worse case would sound depressing next to this. Our MSM also appear to not want to challenge this scenario because I guess it would do bad things to house prices and none of them with influence are brave enough to stick their head out and challenge the narrative. So untill someone or some event breaks the narrative the policy is extend and pretend because anything else would require leadership not present in either main party.
Interesting too that politicians of all parties uniformly discount to zero the chance of no vaccine. Which remains a diminished but very real prospect. They also speak of a vaccine appearing early 2021 as if that means by some magic it can be distributed and administered immediately. Nor does the media robustly question either, thereby amplifying both fictions. And experts who gave nuanced context to both, suggesting 2022+, were simply replaced with narrative-compliant experts extolling the rosy bits without pesky other facts clouding the simple message for the masses. Meanwhile, politicians, experts, and media wring their hands in frustration why trust in them diminishes. Social media, conspiracy theories, and deep fakes fill the vacuum, driving more bizarre behaviours, and actions and reactions to all of it, truth and fake indistinguishable, irrelevant or tribally polarised...
Sigh. Tax and spend. A boring trope from a lazy right that is scared to admit that the economic ideals it supports are bankrupt and failed us all apart from the wealthy.
As for capital destructive, what does that even mean? Destroying capital? Come on. We've been stuck in this neoliberal narrative for so long anything that is remotely out of line with far right economics is slammed as being communist, when those using the term really have no idea what it means.
"This stimulus...will benefit the owners of (already inflated) assets, more than it will the rest of society." Trump considers 'the economy' as the stock market where the ultra rich have become immensely richer, with workers losing out (blue collar job losses, white collar pay cuts). In other countries, asset holders generally (houses, shares) are disproportionately favoured by policymakers. Interestingly, not just right- but also left-wing governments. Rather than creating a 'team', the Covid response seems to be widening existing societal rifts.
Agreed, Though there is a way to reverse some of that damage that was created by 9 years of National false economy and claw back a good chunk of much need revenue. We know we have a huge amount of Empty Homes in large cities such as Auckland, that are popular with overseas Speculative Property Investors using NZ and a bolt hole and tax haven. Make them pay tax on those empty homes!
Even if we just targeted Empty Homes in a city like Auckland our current government could generate huge amounts of revenue that could be used to build new homes for FTB's at affordable prices. Potentially an Empty Homes Tax in Auckland city could generate revenue of $405,747,900.
This tax on empty homes has worked very successful in other major cities that were also had they property prices massively increased by Foreign Buyers, Speculative Investors and Money Launders. Take Vancouver for example they managed to rake in $30 million from empty homes tax in first year and their number of empty homes has reduced by 14.6% since 2018, making them available for rent/sale. Auckland 39,393 unoccupied dwellings, that's fifteen times more vacant homes then Vancouver had before they introduced their Empty Homes Tax.
So knowing that most of these empty homes are in the multi million bracket even if you taxed them at 1% year based on their 2017 CV (Council Value), they could generate an average yearly revenue of $405,747,900
This calculation based on Auckland City December 2019 median house price of $1,030,000. Evidence here: https://www.interest.co.nz/sites/default/files/hla/2019/december/Auckla…
Auckland median house price $1,030,000 - 1% yearly tax = $10,300 per empty home. x 39,393 Auckland officially unoccupied dwellings (Based off recent census results) = $405,747,900 potential in revenue fist year of Auckland's empty homes tax!! A Win! Win! for NZ residents since this can help to build new homes.
Sure there will be some money grubbing Aucklander's out there who will object to this tax, But that's probably because they're living overseas and leaving their property empty for over six months a year. What I say is, if they can afford to leave a property empty in a major city for long periods of time then they can afford to pay tax on it!
Canada, Global News: Vancouver empty homes tax nets another $39M as number of vacant properties drop, city says. https://globalnews.ca/news/6197311/vancouver-empty-homes-tax-revenue-20…
well said -- its appalling that we are talking about borrowing up to 200 billion dollars -- but not one original idea from the major players! I think any party who can put a bold and dynamic vision on the table would walk this election - If we have to borrow big then lets think big - for starters
scrap all income tax on earnings under 50K -- after all thats still around living wage mark -- and if people kept what they earned up to this point - no need to tax and then refund the same money in WFF and Acc supplements -- Just for starters
"New Zealand First’s “new” policy of restricting annual net migration to 15,000 is looking rather ridiculous against this backdrop."
Winston first and immigration. Reviving his usual election mantra again without ever having done anything about it when in a coalition. Both WP and Labour campaigned in the previous election for a lot lower immigration but have done very little about it in the first two years until forced to by Covid.
If and when there is a vaccine Act, Nats, Labour, NZ first and the Greens, i dare to venture, will open the flood gates. Oh wait the flood gates were open for at at least the last 11 years . Perhaps they'll blow up the dam wall after covids as the flood gates won't let enough in.
While I don't think the Coalition govt have made sufficient progress in this area, they have been the first govt in a while to significantly reduce PR approvals which is the long term driver of population growth. Much of the net migration in recent years has been as a result of increased work visas in response to govt buckling to pressure from lazy and unproductive industries who have too long relied on cheap labour.
Good piece. And correct, too.
The old paradigm is gone. The new is coming into focus through a glass, darkly (maybe Peters will get there first?). But none of them have a coherent plan yet, and the two majors can't. Their problem is that even if they had the cranial grunt, the populace are still swallowing the story - the one that goes 'you put a shilling in the bank and.....' Until the populace are informed, 'pollies have to pander to the current narrative.
Interesting times
Yes, it seems to me that the current narrative is globalization - all of them prefer to ignore its impending demise. Centre left is market globalism; centre right is imperial globalism.
http://socialsciences.people.hawaii.edu/publications_lib/JPI%20Ideologi…
Yes, very much an ethical question. My personal view is this;
[we should ensure] there are no obstructions for people to exercise their human rights to return home
But I would have said, we must ensure there are no obstructions for New Zealanders to exercise their rights of citizenship. I think it's a NZ Bill of Rights matter. And that's one of very few pieces of NZ legislation that requires a 75% majority to amend. Let's hope we don't get to that stage.
And yes, from a moral perspective I feel very strongly about this.
The government should be building housing en masse for FHBs. Build and sell at cost. In Auckland this would mean 3 bedroom townhouses for circa 500-600k, rather than 650-800k.
This would stimulate the economy in several ways. Directly through house building activity, and then indirectly by giving people more disposable income to spend in the economy.
Interesting idea. Govt manipulations of markets (tax or borrow to provide subsidised housing) creates an incentive to meet whatever the "let me buy one of these cheap govt houses" requirements are (eg. lower your income) and then sell it at market value. So govt would have to back it up with more regulations to isolate the scheme and constrain the beneficiaries.
The Nats are doing a clean-out of the dead wood which has gathered over the past decade, at a rather unfortunate time (for them). Once upon a time right of centre MP's had real jobs & real backgrounds of real life experiences. These days both sides of the house are full of professional politicians who have no idea of what's really needed down on main street. This is a system well past its use by date. So-called democracies world-wide are all showing similar symptoms - full of overpaid weak people running beautiful countries into the ground. I don't believe we've got the balls to address the real issues, so we will probably continue to decline into the chaos of left versus right, rich versus poor & black versus white. Which is a shame really, because we had everything we needed, & still have, but we just don't seem to be able to appreciate it like before. Perhaps when it's all gone we will?
LJM - "Which is a shame really, because we had everything we needed, & still have",
Not quite. We have been descending inexorably into debt. And it's increasingly unrepayable. And more and more realise the game is up. There used to be a middle class - now there's a middle echelon in debt up their ears,
Time to vote.
Lets end the tax free asset speculation called housing in NZ, and its negative effects on young working Kiwis. Namely enslavement to bank debt thru very high rent or mortgage payments. Would also stop the endless "I'm so greats" by the Debt Gathering Middlemen.
Add to that a relocation of tax away from working productive work (lower paye) and transfered to assets. In one step you boost motivation to actually work, force land to actually make a return, and promote "elimination of" vs "endless" debt. This will put an end to historical speculative based loss strategies, and lower prices as that becomes the focus of new tax minimisation.
Thanks TOP...real innovation for the new working generations.
Ah yes, the way to get people to stop thinking of houses as an investment is to assign deemed returns to them and tax them as if they were investments. Makes total sense. Tell me, what's the market rate of return on a twenty year old Corolla? At some point that will be considered a classic car, so what is it going to sting me having that on my front lawn? What's the deemed rate of return?
maybe you should look up the definition of assets, a car is not an asset unless it is already a collectable and those are rare examples,
a house is not classed as an asset, its the land, that is why you could claim depreciation on it, it has a life span and can lower in value over time
so its the land that needs to be taxed not the house and we already do that with rates
What Is an Asset?
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit. Assets are reported on a company's balance sheet and are bought or created to increase a firm's value or benefit the firm's operations. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it's manufacturing equipment or a patent.
There is a logical/sensible/prudent way to look at taxation of assets, and then there is the illogical/Marxist/destructive way.
The logical approach is to tax the income generated by the asset. In the case of land, this takes the form of taxing rental income and capital gains tax when the property is sold (a debate can be had as to whether CGT should apply to the family home as you'll be buying into the same market after you sell - doesn't seem right to take a 30% hit when you move from one $500k house in Auckland to another $500K house in Auckland). Noting also that the purchaser paid tax on the income used to purchase the property in the first place.
The illogical approach is to tax the asset itself on an annual basis, regardless of whether it is earning any income. The list of problems with this is very long. Suffice it to say that if the government wants to charge me rent for my own land, they need to purchase it from me first at the market rate and then lease it back to me.
"What's the deemed rate of return?" - Well, for foreign investments (the FIF regime), it's currently 5.05%. But the greater issue is the tax basis - the asset valuation....for that, one needs Valuers, Quantity Surveyors, Lawyers, Accountants, and other Essential Services. Nice tickets to clip......it would be an Annual Trot through much the same process in terms of aggravation and cost, as getting a Consent.....
As a aside, with FIF the deemed rate is a proxy for the actual income being earned. The investments are earning actual income. Instead of having to figure this out the regime just “estimates” it with the deemed rate. But when you apply a deemed rate to an asset like the family home, you aren’t using the deemed rate as a proxy for income, because the asset earns no income. Very different fundamentally, even though the concept of imputed income is shared. FIF is taxing actual income based on an assumption, but a deemed rate on assets like the family home is a tax where there is no actual income.
Good attempt a balanced analysis Jenee.
I think most Kiwis will think that some, at least of the returning Kiwis need to be contributing to their isolation, as they return knowing that is a requirement of that. But it needs to balanced against the reason and time they were overseas.
While I see the need for the Winston Peters mavericks in our political system, I am somewhat concerned that Winnie is starting to believe and revel in his 'bad boy' image a little too much. Hiring the 'bad boys of BREXIT' could easily backfire on him as it could undermine the trust that people have in the party and any information they may be sending out.
Our parties need to reassess what they stand for; "For Labour, fairness is free tertiary education and comprehensive welfare. For National, the ideal is self-reliance.” Labour needs to understand that tertiary education is pointless if there are no jobs at the end of it, although I am not against free education as it does have many benefits. I do not like the idea of 'comprehensive welfare' as we already know that given an opportunity, people will rip the system off. Going back to principles here would be useful so that welfare is only available to those who genuinely need it and remove areas like just having babies as being an opportunity and career choice. But National needs to understand the "self-reliance' requires there to be the jobs and opportunities and multiple part-time, minimum wage jobs are not opportunities but a modern form of slavery.
There is still work to be done.
The election is only two months away and bar the Greens’ James Shaw, there is still no acknowledgement of the fact that lobbing upward of $60 billion into the economy via the Reserve Bank’s quantitative easing programme will have consequences.
How come most of what has been enacted so far is still languishing on the RBNZ's liability ledgers as asset claims for the government and banks?
All QE does is inflate the reserves of the commercial banks and as economist Prof Bill Mitchell tells us in his latest blog, "Banks cannot loan out reserves (except within the interbank market). They cannot ‘spend’ these reserves to buy shares or other assets"
Banks create new money when they lend and so QE has no economic effect apart from driving down interest rates.
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The solution is a mix of Land Value Tax, and Capital Gains Tax. We should simply stop separating income earned through capital gains and income gained through productive endeavours. If the tax burden is too high for capital gains income then it's too high for earned income. Use the proceeds of the LVT and CGT to lower the progressive income tax brackets and create a tax free income bracket to approx $15k, and decrease GST to 10%.
Here's Milton Friedman speaking on land taxes: https://www.youtube.com/watch?v=yS7Jb58hcsc
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