Herald praises Cunliffe for CGT policy

Written By: - Date published: 9:30 am, May 19th, 2015 - 29 comments
Categories: Andrew Little, david cunliffe, Economy, john key, labour, national, national/act government, newspapers, same old national - Tags:

David Cunliffe vote positive

There is an old saying that in politics it is wrong to be right too soon. Brand new ideas may be too terrifying or unsettling for the electorate to be popular. They are also easy targets for a calculating opponent wanting to exploit ordinary voter’s general cynicism about politics for political gain.

This week provides a perfect example of this phenomenon.  After repeatedly railing against Labour’s CGT policy National is now introducing one of its own.  It may be an insipid capital gains tax designed only to create the impression that the Government is doing something but a CGT it is.  At the same time the Government is crossing its fingers that Auckland’s housing bubble does not burst.  The deeply cynical political games played by John Key are becoming increasingly clear.

Today’s Herald editorial has praise for Labour’s policy for the past two election campaigns but also contains a barb, attempting to suggest that Andrew Little is anti CGT.  It starts off promisingly enough:

At long last New Zealand is going to have an effective capital gains tax. The Prime Minister does not want to call it a capital gains tax but that is what it is. Houses bought as investment property will have their capital gain taxed if they are sold within two years. A two-year liability is very low but it can easily be increased if it does not slow the rate Auckland house prices are rising. The significance of the Government’s adoption of this tax should not be under-estimated.

The effectiveness of the proposal could be questioned.  As noted by Deborah Russell all the change may do is slow down turnover in the market.  Investors seeking to hold long term will not be deterred.  And there could be an unfortunate repercussion should the housing bubble burst and investors seek tax benefits from their losses.

The editorial then describes how until recently the country’s political climate has been deeply adverse to a CGT.  But it then praises David Cunliffe for the change in opinion.

If there is any politician who deserves history’s credit for changing this climate it is the former Labour leader David Cunliffe. As Labour’s finance spokesman he was instrumental in putting capital gains tax into the party’s policies for the 2011 election and kept it there as party leader at the election last year. The fact that National did not make a major issue of it in 2011, and did no more than trip Mr Cunliffe on details of the policy last year, suggests some within the Government were coming around to it.

If National ministers were coming around to it they should not have played politics with the issue.  And the repeated denials that change was in the winds should not have been made.

Then the editorial attempts to wedge Andrew Little on the issue.

Now that the Prime Minister has performed a pirouette, Labour’s leader needs to do likewise. Andrew Little was too quick to disown capital gains tax when he became the party’s leader. It was not the reason Labour had lost the election. Now he is reduced to quibbling that the Government’s move will not stop foreign investment in houses here. Perhaps not, but its decision also to require house purchasers to have an IRD number will be a check on the scale of foreign interest in our houses.

The requirement for an IRD number is a start to allow us to understand the amount of foreign investment in housing that is occurring.  But Labour’s policy preventing the purchase of residential homes by overseas entities would address the problem, rather than just measure it.

And the suggestion that Little has disowned a CGT is a misrepresentation.  Shortly after he became Labour leader he said this:

I’ve made a judgement that the superannuation policy and the capital gains tax policy have been problems for us and are two reasons why people haven’t voted for us, and therefore we need to review them.

We will have a review process, we will go through that. I will argue my case in the forums of the party, but my firm view is that we should not be going to the 2017 election with those policies on our slate.

The party is now discussing its policy platform and there is a proposal to change a specific commitment to a CGT to a commitment to use a diversity of financial tools to address housing affordability and to dampen speculation.

Local politics has become rather predictable.  National does not have complex policy.  It has a series of postcard quality snippets of policy with some bland pleasant sounding slogans and a specific budget line item for things as diverse as hercepton or saving Kauri.  This is risk free politics.  There is nothing that can be picked apart.

By way of contrast Labour has fully costed policies that go into all sorts of detail.  Our alternative budgets are things of beauty and require immense amounts of work.  And National then attacks by attacking a slightly obscure sentence or by asking a question of the Labour leader which he does not quite get right.  Because National’s policies are so vague Labour cannot do this.  Little’s proposal will reduce National’s ability to attack and will still allow a future Labour Government the flexibility to change the tax system in a way that will address problems.

Labour and the Greens own the CGT policy and National’s backdown has made discussion about housing very simple.  Instead of should there be a policy the discussion can now be is two years an adequate purpose and should there be a restriction on overseas ownership of dwelling homes.

All credit to the Herald for praising Cunliffe.  Perhaps they could now apologise to him for the Donghua Liu smears.

29 comments on “Herald praises Cunliffe for CGT policy ”

  1. Colonial Rawshark 1

    Recognition for some of the good things DC did is long over due. However, the utter cynicism of the NZ Herald for praising Cunliffe AFTER the election when he is no longer the Labour leader and not in a role of any threat to John Key’s position.

    • Sabine 1.1

      Yep, recognition was long overdue, however there is no Mea Culpa from the NZ Heralds stenographer that they have got it wrong, so spectacularly wrong in their cheerleading for the Ponytail Puller from Parnell.

      In saying that, i wish Cunliffe a lot of fun during question time. 🙂

  2. Adrian 2

    I think you’ve got a problem here. You state “the suggestion that Little has disowned a CGT is a misrepresentation” and then immediately quote him saying his ‘ firm view is that we should not be going to the 2017 election with those policies (CGT) on our slate. To use a currently popular phrase; if it looks like a disowning and walks like a disowning, its a disowning.

    I always thought it was a mistake to ditch the policy so soon after the election. He’s since been cut off at the knees first by the Reserve Bank and now by Key.

    • mickysavage 2.1

      I am suggesting the policy has not been ditched rather that Little thinks we should not be so precise. Besides the discussion will now be if National’s proposal is adequate or not and if it should be strengthened.

      He was not saying the policy is wrong. He was suggesting that it may have been to precise.

      • Sacha 2.1.1

        Little sounded an awful lot like he was blaming the CGT policy for Labour’s defeat when campaigning to be its leader. Not in a measured way either.

        • mickysavage

          He mentioned it at the same time he mentioned increasing the age of eligibility for superannuation. He was not saying that they were necessarily wrong just that they needed to be reviewed because they appeared to be unpopular. Politics is all about working out what policies are desirable and what are achievable.

          • Sacha

            Needed some comms help at the time, possibly. That’s not what came across to me via media. Not that they distort the message at all, naturally.

          • sirpat

            is there much surprise then that after mentioning those two things that Labour got pissed on in the election???

        • rhinocrates

          I hope that was for public consumption and not just him believing the easiest thing to believe. Sidelining a single unpopular policy is easy, disciplining a lazy backstabbing rabble widely perceived as being unable to find their arses in a brewery and turning it into a viable government in waiting is hard… and saying that’s the real problem in public would be disastrous. Time to consult the tea leaves…

          It’s not all about “coms”. That’s based on the belief that one can control perceptions purely and simply through explicit communication while in fact people are very adept overall at assessing character intuitively. The “rational consumer” is a myth of the neoliberals and the “rational voter” should be dismissed too, and you shouldn’t underestimate “irrational” perception and thinking.

          IIRC, polling showed that people favoured individual Labour policies when presented in isolation, but the election showed that they had no confidence in the party and I believe that was based on it being perceived an unsafe bet.

          • Colonial Rawshark


            IIRC, polling showed that people favoured individual Labour policies when presented in isolation, but the election showed that they had no confidence in the party

            And within 12 hours of election night being over, the NZ public was vindicated in their judgement as Labour fell apart faster than an Antarctic ice shelf in summer.

      • Adrian 2.1.2

        Your interpretation of what he said and what he actually said are two very different things.

  3. Halfcrown 3

    There’s a saying somewhere, can’t remember exact saying but it is about Greeks and gifts, I think it is Beware of Greeks that come bearing gifts. In this case Beware of right wing excuses for shithouse paper praising left wing politicians

    I do not trust that pathetic excuse for shithouse paper, and although I have not read it and have no intention of reading it, I suspect it is more about an attack on Little than praise for Cunliffe.

    • Colonial Rawshark 3.1

      Ahh quite right. I hadn’t thought of it like that. This piece will strengthen the hand of those in caucus who like measures like CGT and raising the retirement age.

  4. Sans Cle 4

    Too little, too late for David Cunliffe. Leader of a party more sinned against than sinning. Shame on the perpetrators in the MSM, who orchestrated the witch-hunt.

  5. Sacha 5

    As you note (and the Herald studiously ignores), the Greens were all over CGT long before Labour adopted the policy. Not that they mind I’m sure. Success comes in many forms.

    • AmaKiwi 5.1

      They should mind.

      Standardnistas are part of a tiny percent follow the details. The average voter goes by broad generalities, which is why slippery John gets away with so much evil.

  6. Old Mickey 6

    Does Bill Rowling deserve a hat-tip ? His 1973 (?) speculation tax was targeting the same issues – Auckland house prices. This version is far simpler, however, unlikely to do more than suppress supply for 2-3 years.

    • Colonial Rawshark 6.1

      What are you talking about “suppress supply”? Please explain how this taxation “suppresses supply.”

    • AmaKiwi 6.2

      This bill will do bugger all nothing. Nothing short of Draconian measures would have any impact on our local property market.

      The property boom is worldwide. You can’t stop a global financial mania anymore than you can stop a herd of stampeding buffalo short of dropping a bombs in their path.

      When the bubble bursts, every commentator will have an explanation. But the simple truth is it burst because the social mood changed. People go from euphoria to fear. That’s when the party is over.

  7. Sable 7

    So property investors can blame Labour not National who introduced the tax? Sure MSM we all believe you.

    • AmaKiwi 7.1

      @ Sable

      Spin and hype are everything. The truth is rarely heard by the public.

      Spin it right and you win.

      • North 7.1.1

        Yeah, Maggie Smith, the Downton Abbey dowager – “The truth is neither here nor there my dear……it’s the look of the thing…..”. Sad, but true. How else is His Gaucheness still skanking around as our PM ?

  8. Ad 8

    Not entirely fair to relegate Cunliffe’s career to shunting the supertanker of state tax policy a few degrees more progressive. But it’s major moment.

    I hope we hear from Cunliffe again. I was surprised he was not heard from during the regional economic development debate a week ago, since it was precise his portfolio. I suspect we may not hear from him again this term, rolled up inside caucus daily proving himself no threat.

    By 2017 election, he needs to think where he will make his mark in the world. Life is just too short. I would like to see him reinvented.

  9. emergency mike 9

    “The fact that National did not make a major issue of it in 2011…”

    Wait, what? I recall it being a core issue and one of National’s stock attack points during the election.

    • AmaKiwi 9.1

      Key to Cunliffe in a TV debate: (Key holding up five fingers) – Labour will impose FIVE new taxes.

      My heart sank at that moment.

  10. Peter Bradley 10

    It appears that Labours economic policies at the last election had some merit. The next step by the National government will be some sort of house building program. It won’t be called a government sponsored house building scheme but it will look like one and walk like one and probably smell like one.

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