National’s credibility is on the line

Written By: - Date published: 9:30 am, September 2nd, 2023 - 40 comments
Categories: benefits, capital gains, capitalism, Christopher Luxon, david parker, election 2023, national, nicola willis, same old national, tax - Tags:

When the history of the 2023 New Zealand Aotearoa general election is written and if Labour gets up to win it historians will point to the events of this week as the turning point in what has already been a dramatic year in politics.

Because I cannot believe how bad National’s tax cut policy release has been researched and structured and how bad its release is going.

Its assumption of earnings has been herculean.  And you get the feeling that the the advice behind it is cursory and technical rather than reality based.

And David Parker has clearly set out what the problems are.

From Giles Dexter at Radio New Zealand:

One of the four new ‘targeted revenue measures’ set out to fund National’s Back Pocket Boost tax cuts plan, launched this week, was a partial reversal of the foreign buyers ban, which had been in place since 2018.

It would impose a 15 percent tax on houses worth more than $2m sold to overseas buyers (although Singapore and Australia would be exempt, due to prohibitions within the FTAs). National said the move would raise $740m a year, on average.

However Labour’s overseas investment spokesperson David Parker said New Zealand’s international tax treaties could exempt many other markets from National’s proposed tax.

“It could put us in breach of both our trade agreements, and our agreements in respect of double tax agreements,” he said.

Parker specifically singled out China, saying a non-discrimination article in the double tax agreement between New Zealand and China would exclude China from taxes of every kind and description, making National’s income projections meaningless.

“Chinese buyers were 36.7 percent of non-New Zealand house transfers in the year before overseas speculators were banned. When you add Australia (19 percent) and Singapore (3.5 percent), this means at least 60 percent of non-New Zealand house transfers would be excluded from National’s tax,” Parker said.

According to Parker whether it is described as a tax or a fee there are still problems with it:

“Publicly available Inland Revenue advice provided to a Parliamentary Select Committee clearly states that ‘the non-discrimination Article in the new Double Taxation Agreement [between NZ and China] applies to taxes of every kind and description’.

Current National MPs Paul Goldsmith, Andrew Bayly, Judith Collins and Ian McKelvie were on the Finance and Expenditure Committee when it considered that agreement in 2019.

“This means Chinese nationals must be excluded from National’s proposed tax, in addition to the exclusions for Australia and Singapore that they have already admitted”.

If you take Australian, Singaporean and Chinese buyers out of the high end housing market the potential pool is rather small.

The taxation of online gambling also has been heavily criticised.

From Radio New Zealand:

[Labour Minister Barbara] Edmonds on Thursday told reporters at Parliament offshore online gambling operations were already subject to GST after a change brought in by National in 2016, and far more gamblers would be needed to cover National’s expected costs.

“Based on the estimates I’ve seen we believe that New Zealanders lose $350m offshore due to online gambling, that’s based on the GST count that we’re getting,” she said.

Her colleague Kieran McAnulty said the $350m figure was backed up by figures produces by the TAB and Lotto as part of the review of the Gambling Act.

“The TAB has been producing figures to demonstrate why there needs to be regulation of online gambling, Lotto have done the same. If they believed there was four times the amount of people gambling overseas they’d say so because it would strengthen their case.

National’s response has been to refuse to release its costings.  From Audrey Young at the Herald:

National finance spokeswoman Nicola Willis has declined to supply critics with the assumptions on which the funding was based. Leader Christopher Luxon used the classic National Party defence along the lines of saying “trust us, we know how to run the economy”.

Of course this could be all a pretext.  National may have calculated that some will be sucked in by the promise of a tax cut and not care, and those who do care prefer to get the cold hard cash in their hand.  And if this does come to pass you can bet that any shortfall will be met by a blizzard of cuts to services.

And the potential cuts are already showing.  National’s Louise Upson has said that a National Government will reverse the Government’s policy of indexing benefit increases to average wage increases and instead index them to changes in the CPI.

And Carmel Sepuloni has given this policy both barrels.  From Glenn McConnell at Stuff:

Labour is accusing National of “condemning children to poverty”, after the Opposition’s social development spokesperson said she planned to undo changes that ensured benefits increased with average wage growth.

The Children’s Commission pushed for years to have general benefits indexed to wage growth – which is how pensions have been calculated for decades.

When this change happened in 2020, then children’s commissioner Andrew Becroft called it “the single biggest step to stop children remaining in poverty”.

Labour social development spokesperson Carmel Sepuloni told Stuff National’s proposal would see “thousands” of children sink below the poverty line.

Figures from the Ministry of Social Development estimated that indexing benefits to wage inflation had moved 5000 children out of poverty since the policy came into force.

The proposed changes to interest deductibility make the least sense of all of the tax cuts.  The cost is $2.1 billion over four years.  The benefits are hard to ascertain, especially since house prices have been dropping since the introduction of Labour’s policy.  And Sharon Cullwick who sits on the executive of the New Zealand Property Investors Federation recently gave the game away by conceding that if National’s policy was introduced it would not affect rental levels.

From the Herald:

Cullwick doubted rental prices would come down if the policies were changed.

“It comes back to supply and demand.”

I should declare an interest.  I own a rental property bought for a different purpose but currently rented out.  National’s policy would be worth about $8,000 a year to me using figures off the top of my head.  That is $320 a fortnight.  I neither need nor deserve this extra money.

If you want a view from someone who is on the opposite side of the political spectrum to me then try this from occasional Standard commenter Matthew Hooton:

“National’s tax policy was much worse than expected. It reveals a party undeserving of being taken seriously.”

He is right.  Time will tell if National has seized defeat from the jaws of victory.

40 comments on “National’s credibility is on the line ”

  • Comments are now closed

  1. bwaghorn 1
    2 September 2023 at 9:37 am

    The benefits are hard to ascertain, especially since house prices have been dropping since the introduction of Labour’s policy

    That's what national wants to rectify, the house owners want there tax free capital gains back. So they can borrow to buy their rentals,holidays,boats etc.

    The fact that their main tax grab is based around selling houses to foreigners is the worst part of the whole thing, the fact their numbers are wrong is secondary to me

  2. bwaghorn 2
    2 September 2023 at 9:40 am

    What tax policy would hooton want??

    I'm picking his would be worse

  3. AB 3
    2 September 2023 at 10:02 am

    The common misconception that Labour are not good economic managers forces them to be 'fiscally responsible'. The common misconception that National are good economic managers gives them the freedom not to be 'fiscally responsible'. Perception and reality are thus driven beyond what was initially just a mere disjunction, to the point of becoming opposites. And nobody seems to notice. and while I hope you are right MS, I'm not sure anyone's about to start noticing.

    • ianmac 3.1
      2 September 2023 at 12:13 pm

      AB:"The common misconception that Labour are not good economic managers forces them to be 'fiscally responsible'"

      A bit like women having to perform twice as good to be equal.

  4. Anne 4
    2 September 2023 at 10:39 am

    Well, Shamubeel Eaqub is derisive of National's tax policy describing parts of it as "bullshit". Fran O'Sullivan was not impressed either:

    From this morning's The Nation on TV3:

    https://twitter.com/NewshubNationNZ/status/1697733287580471547?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet

  5. MickeyBoyle 5
    2 September 2023 at 12:04 pm

    You say all that, but from what I am seeing and hearing kiwis love it.

    Sorry Micky, but this is more wishful thinking than reality.

    • Kat 5.2
      2 September 2023 at 12:32 pm

      Perhaps you should visit an optometrist Mr Boyle, and an audiologist……..might help you in feeling not quite so sorry…..

      • MickeyBoyle 5.2.1
        2 September 2023 at 2:35 pm

        Just my view Kat.

        I may be wrong, or you may be wrong. Time will tell.

        • Kat 5.2.1.1
          2 September 2023 at 7:47 pm

          Ha….a bob each way then is it Mr Boyle…………perhaps you should include a visit to gamblers anonymous….

    • PsyclingLeft.Always 5.3
      2 September 2023 at 1:03 pm

      Are these the (several hundred per month) people you apparently see and hear ?

      This could be…or BS ? Maybe you dont like to see the Nat fish hooks?

      https://thestandard.org.nz/four-new-taxes-and-a-climate-funeral/#comment-1966560

      • MickeyBoyle 5.3.1
        2 September 2023 at 2:34 pm

        Same people.

        Unlike some I don't stay in an echo chamber. That's why I know that unless something drastic happens, Labour will be consigned to the opposition benches come mid October.

        The mood for change and anti Labour sentiment is palpable.

        Good to see Chris announce a dental policy today, hopefully there is more of this.

    • Tricledrown 5.4
      2 September 2023 at 3:18 pm

      Willis and Luxon have no charisma Hipkins has plenty.National's tax policy only benefits the well off families only 34% of families earn over $100,000 once people realise the average median family who earn under $80,000 a year that their is only crumbs or barely 1/2 a block of cheese in it for them and it won't be till July next year.When Mathew Hooton criticises Nationals tax cuts as a flop you know its a failure.Then National funding of policy is a sham.Given they have had 6 years to sort it.Then Nationals Wellsford to puhoi 4 Lane Road costings are completely fictitious.Nationals $2.3 billion costing is under half the most recent costing.But after cyclone Gabriel exposed how unstable the land is making it even more expensive then the on going maintenance required to

      Continuously mitigate the moving land.$100's of million for a road that could be closed regularly with more weather events like Gabrielle .National have run out of ideas so bribing the squeezed middle to give the bulk of tax cuts to the Well off at a time when those under real financial pressure get nothing from National.

      • alwyn 5.4.1
        2 September 2023 at 9:19 pm

        You really should stop making up these numbers.

        According to MBIE the median family income for a household in New Zealand in 2023 was $115,200.

        What do you claim to know that they don't?

        http://webrear.mbie.govt.nz/theme/household-income-median/map/timeseries/2023/new-zealand?right-transform=absolute

        • Barfly 5.4.1.1
          3 September 2023 at 9:23 am

          He said average you said median as if this was a direct comparison ROFL – I have no idea if Tc's figures are correct but I have to pull you up for your usual disingenous bullshit. Try arguing honestly for a change

          • alwyn 5.4.1.1.1
            3 September 2023 at 10:03 am

            What he said was "only 34% of families earn over $100,000 once people realise the average median family who earn under $80,000 a year "

            Well the median income is defined as being the middle of the distribution. By definition half the group get more than the median figure and half get less. If MBIE is correct then his claim that only 34% are above $100k is false.

            He also talks about "the average median family". What he means is unclear but once you see the words together I read it as being the average family on the median income. Perhaps he means something else but he never bothers to justify any of his claims so who can possibly know.

            It isn't greatly relevant anyway. In any positively skewed frequency distribution the mean is always greater than the median and the median is greater than the mode. Household incomes in New Zealand are an example of such a distribution so the average, which is what the mean is, will be more than that the median and he is even more out of step with what MBIE is saying. I am not aware of any real case where the distribution of incomes in a country do not show a positively skewed distribution.

            I suggest that if you are going to try and discuss this you get some minor understanding about what the terms mean. Then you might be able to argue honestly.

            • Blazer 5.4.1.1.1.1
              3 September 2023 at 10:10 am

              Should have watched Q&A this morning.Any credibility wannabe finance minister Nicola 'shriek' Willis had….just ..evaporated.

  6. adam 6
    2 September 2023 at 12:16 pm

    How many times do national have to noise dive our economy, before people get they 'ant that good at managing an economy.

    Apart from the current 1.1% inflation we have stripping away any tax cut benefits by the time they implement them.

    We are looking at a crisis like the UK with election of nat/act. Worse though, with no City of London to stop/slow down the mad rush of capital out of the country.

    Tax policy, more like a lolly scramble for those looking to make a quick buck.

  7. Roy Cartland 7
    2 September 2023 at 12:29 pm

    Of course the Nats are betting on ignorance and greed. It's all they've ever done and all they are capable of.

    That's why we need civics education. If people actually knew what they were voting for, the Nat voting base would be in the teens, if that.

    A functioning media would be useful too.

  8. Ffloyd 8
    2 September 2023 at 12:58 pm

    Kat. 100%. Sounds like a Paula Bennet sound bite. Golly gosh! all the kiwis I know just love our policies. Who wouldn’t want an extra $2 a week in their back pocket. It will help pay for public transport and prescription that we will be taking back to the past. See! Fiscally neutral! We are financial wizards sweeties.

  9. Mike the Lefty 9
    2 September 2023 at 1:03 pm

    Overseas buyers that have enough money to pay for a house selling for over $2 million dollars probably will just judge the extra 15% as a inconvenience rather than a hindrance.

    National trying to make it look like they care about our national housing shortage. The policy is so thin you can see through it.

    • Tony Veitch 9.1
      2 September 2023 at 2:10 pm

      And you can bet some greedy bastards (looking at you, Luxon, Mitchell et al) will be inflating the value of their 3rd or 4th property into the $2M bracket in order to make a killing!

      OMG, the Natz (and Act) are appalling!

  10. Incognito 10
    2 September 2023 at 2:04 pm

    Again, National has put up a big FOR SALE sign for rich overseas buyers & immigrants.

    https://www.stuff.co.nz/business/132855849/us-billionaires-eyeing-up-auckland-as-national-party-teases-lift-of-buyer-ban

    But make no mistake, this cynical election ploy goes beyond bribing ‘middle-NZ’, as it harks back to the Panama Papers and John Key’s wet dream of turning NZ into “ an Asia-Pacific “Switzerland” ”.

    https://www.nzherald.co.nz/business/fran-osullivan-keys-vision-switzerland-south/67JEXE73GVNPTQZUAU75KN4T2U/ [coincidentally, by Fran O’Sullivan]

    National has form in looking after the rich & famous, irrespective of where they come from and who they are, at the expense of low- and middle-NZ. They sold off as much of the ‘family silver’ and a stake in SOEs as they could get away with, at the time, and raised GST despite promising not to.

    Nicola Willis is doing a great job conning voters that this about affording ice creams and DVDs for her children and her blatant dishonesty is as much eye opening as it is eye watering. Not for one second should anybody believe that Nicola Willis is in the same boat as they are. No wonder she is Deputy Leader of that gang of cronies.

    https://www.parliament.nz/media/10244/230518-willis-amendment.pdf

    National only has to fool enough people for long enough to get over the line on 14 October.

    Let the Voter Beware, of National.

  11. SPC 11
    3 September 2023 at 4:22 pm

    We are warned.

    He believed the election would be a defining moment in New Zealand’s history that would shape the country for generations.

    There is no way that sort of change is indicated by anything in the pledge card.

    https://www.nzherald.co.nz/nz/election-2023-national-party-leader-chris-luxon-to-unveil-pledge-card-promise-at-campaign-launch-as-freedoms-nz-plan-to-converge-on-it/P3GHNI5ICVGVNN3T6ATUO3UXOY/

    Promising to increase super every year – but not saying how, when ACT want to save money by using the CPI is interesting.

    • weka 11.1
      3 September 2023 at 5:00 pm

      also want to extend the retirement age.

    • Incognito 11.2
      3 September 2023 at 5:32 pm

      There is no way that sort of change is indicated by anything in the pledge card.

      Ah, but did you read what’s on the other side of the pledge card? It’s an old magician’s trick.

  12. SPC 12
    3 September 2023 at 5:38 pm

    Anyone else tired of Nationals fraudulent claim of a $250 a fortnight tax cut to the average-income household with children.

    Luxon on Sunday said National's "fully-funded tax plan" would give $250 a fortnight to the average-income household with children (this includes National's proposed childcare rebate), up to $100 a fortnight for an average household without kids and $50 per fortnight for a median income worker.

    https://www.newshub.co.nz/home/politics/2023/09/election-2023-christopher-luxon-makes-eight-point-personal-pledge-to-new-zealanders-at-national-campaign-launch.html

    Newshub partially corrected the narrative with the information – but should go further. Their Family Boost only applies to early childhood education expenses – under 5's.

    So media reports should say only for parents with children under 5 that have child care costs.

  13. SPC 13
    3 September 2023 at 6:34 pm

    For a party claiming competence

    National plans is to take over $500m a year from the Climate Emergency Response Fund, which is paid for by polluters through the Emissions Trading Scheme.

    Which means whenever there is a (inevitable) weather event there is no contingency made for consequent government spending.

    One wonders what someone like Ruth Richardson thinks of that.

    Then there is the extra detail of taking away the regional fuel tax in Auckland – used by the council there for their transport policy. And at the same time ending the half fare PT for those under 24 and CSC holders and free PT for those under 12.

    Every step taken demonstrates a focus on roads and cars and a lack of resourcing for PT alternatives.

    It’s so 20th C thinking.

    • Mike the Lefty 13.1
      3 September 2023 at 7:26 pm

      With the NACTs wanting to gut expenditure on everything we had better hope that if they win the country will be spared the scale of natural disasters that Labour had to clean up after.

      Can you imagine ACT's response to major floods or earthquakes? What sort of government relief from disasters would you get under them? If it happened in Ponsonby there might be, everyone else would be told to hold a few sausage sizzles and gala days to raise the money to rebuild.

      Can’t do any wasteful spending!

  14. joe90 14
    3 September 2023 at 7:29 pm

    Pretty legal, eh Nic…

    /

    There was one very important word in Jack Tame’s interview with shadow finance minister Nicola Willis on TVNZ’s Q+A this morning about National’s policy to introduce a 15 per cent foreign buyer tax on the sale of houses over $2 million.

    It was evident from what Willis said that National had not sought advice on tax treaties before the party’s taxation policy release on Wednesday by herself as finance spokeswoman.

    Yes, they had sought advice on trade agreements, she said, but when Tame pressed her about tax treaties, this is what she said: “We have subsequently talked to people about tax treaties because the view about tax treaties is that it does depend on whether or not the foreign buyer charge is seen as a tax or not, and also depend on the country you are dealing with.”

    “Subsequently” means after the policy release.

    https://www.nzherald.co.nz/nz/politics/election-2023-dispute-widens-over-legitimacy-of-nationals-foreign-buyer-tax-audrey-young/XIHZTECXHJFKJCN3TORZD76E34/

    • SPC 14.1
      3 September 2023 at 7:39 pm

      Can you imagine China saying to National that it would only object (and make responses like tariffs on our exports) if we went ahead with AUKUS (pillar) 2, sustained support for the international ruling on the South China Sea islands (and thus ASEAN nations on the issue) or departed from the position that Taiwan was part of China in any way?

      Numpties.

  15. Heathrt 15
    3 September 2023 at 9:41 pm

    Yes, he did not hold back, he had nothing good to say about National's policy. I have always respected his views

  16. Chris 16
    4 September 2023 at 12:05 pm

    The clearest explanations showing precisely how ridiculously flawed national's tax policy is will make not a jot of difference if that message doesn't get out to the voting public. It's all well and good talking about it here on TS, but it's voters who need to hear and understand it. Selling a message has always been Labour's weak point.

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