web analytics

The Unbearable Lightness of the Bright-Line Test

Written By: - Date published: 4:20 pm, March 13th, 2021 - 96 comments
Categories: business, capital gains, capitalism, discrimination, Economy, grant robertson, housing, Politics, tax, the praiseworthy and the pitiful - Tags: , , , , ,

There is nothing quite like Establishment praising Establishment and making a few gentle suggestions on how to tackle the mushrooming housing crisis. The IMF released a report on Friday on NZ’s economy and it contained a lot of praise of NZ Government but was critical of the run-away housing market. One of the suggestions was “an expansion of capital gains taxation”.

The response from Government was a vanilla press release that was a textbook example of positive spin, self-praise and self-congratulation, and cherry-picked political propaganda. Of course, there was not a single mention or even a hint of CGT.

Rumour has it that Government is looking at extending the bright-line test from five to ten years or possibly even longer. This is the kind of political pragmatism that will not scare the middle-NZ horses for the simple reason that it generally exempts the family home.

Here is a hypothetical example of how toothless the bright-line test is in practice. Assume you live in Auckland and bought a house two years ago for $1 million, which you put on the market and sell for $1.5 million. That is a tax-free gain of $0.5 million, minus a few minor costs for the middlemen, et cetera.

You decide to move out of Auckland and buy a nice wee lifestyle block somewhere for $1 million. With the remaining $0.5 million, you buy a rental property in Auckland for $1 million and rent it out for $500 per week. The mortgage of $0.5 million is fixed five years at 2.99% p.a., with fortnightly repayments of just under $1,000 ($969), i.e. $500 per week. In the first year, the interest component is just under $15k ($14,808), which is tax-deductible, if you set it up as a business, of course. In other words, the rent will take care of the mortgage but you may have to ‘subsidise’ your rental for other costs, e.g. insurance, repair & maintenance, et cetera. These costs are accounted as business losses and thus tax-deductible. For argument’s sake, let’s assume you are a ‘good landlord’ and you do not increase the rent at all of those five years.

In five years, you put the rental property on the market and it sells for $1.5 million. You pay the bank the balance owing, i.e. $444,451 and pocket the tax-free profit because the sale date falls outside the current 5-year period of the bright-line test.

In this simple example, with quite conservative but fairly realistic numbers, over a period of five (or seven, depending when you start counting) years, you can make about $1 million completely free of tax, but minus a few relatively minor costs incurred, many of which are tax-deductible, and live in a lifestyle block that is likely to have increased in value too.

If this Government thinks that extending the bright-line test is going to make any difference, they will need to get their heads checked. In fact, I believe they know and all property owners know that it will not make a difference at all and the Ponzi scheme will continue unabatedly, with about 25% of sellers not even bothering to pay the tax owed. In fact, because of the bright-line test, some property owners might defer selling and thereby put pressure on housing supply and thus upward pressure on housing prices. Perfect!

This Government, which has no coalition demands to worry about at present, and its PM, who enjoys unprecedented popularity (just for the nitpickers), have ruled out CGT. This does not leave them much wriggle room other than perhaps an extension of the bright-line test, which is a cruel joke to first-home buyers and to those who will never be able to afford their own home and are forever caught in the rental trap.

The ruling out of CGT has elements of the door-in-the-face technique, which is designed to generate consent and compliance. Even worse, a CGT that exempts the family home would be just as bad. I cannot decide between timid or cynical politics on this one. Any good stuff enacted by this Government will be ineffective and largely undone by its inability or averseness to tackle the housing crisis.

Grant Robertson is working on yet another cunning plan, one that undoubtedly will involve many beautiful bigly words:

We will have more to say on this in coming weeks and Budget 2021

96 comments on “The Unbearable Lightness of the Bright-Line Test ”

  1. Adrian 1

    Only 5% of houses sell each year but if 10% of houses were on the market each year there would not any price inflation pressure. Anecdotally it appears that the majority of sales are to people who want to live in them. The 5% figure is pretty consistent over the last few years but a certain cohort have been added in the last year, they are young couples who have either parked their travel plans for the future or those who have returned and have enough money to settle down. An extra 1 or 2 % of buyers dramatically skews a market. Grant Robertson almost certainly has far more info about the market than anyone else.

    It will settle down but when?

    • Incognito 1.1

      Grant Robertson almost certainly has far more info about the market than anyone else.

      I’m sure he does but it is a meaningless statement. What is he doing with all that info other than writing nice press statements and speeches full of nice sounding rhetoric? The problem is hugely complex, too big for one single person to fully comprehend. It takes a concerted effort across the whole of Government and many Ministers/Ministries to change the current situation, which has been going on for years. In addition:

      Power is being increasingly outsourced to that growing number of bureaucrats, by politicians unable or unwilling to make difficult decisions.

      https://www.stuff.co.nz/national/politics/300249267/raising-the-ghost-of-helengrad-big-govt-is-back

      It will settle down but when?

      How? Do we just wait for it to blow over and do nothing? Do we just tinker around the edges to create a perception of doing something knowing full well that we have no idea and/or hope in Hell to fix it?

    • Phil 1.2

      Only 5% of houses sell each year but if 10% of houses were on the market each year there would not any price inflation pressure.

      You appear to be under the impression that all those extra sellers are going to sell their homes and then live… nowhere?

  2. Bazza64 2

    The residential business losses aren’t immediately tax deductible as they are caught in the ring fencing rules. That loss can’t be offset against other taxable income, but has to be carried forward & offset against future residential property rental profits. So those with high debt levels on their rentals don’t get the loss offsets & tax benefit they used to get.

    Still don’t think CGT tax will be a goer any time soon. Most people thought it was a good idea until they found out their small business capital gains on any sale would be taxed.

    • RedLogix 2.1

      Yes – all that ring fencing does is push the tax loss out into the future. In the short term it makes the cash flow tighter and encourages rents to increase.

      Unintended consequences.

      • mikesh 2.1.1

        A land tax, or a property tax along the lines suggested by Gareth Morgan and the current TOP party, would make the cash flow even tighter. This is why the banks favour capital gains taxes: these have no effect on the property owner's cash flow, leaving more cash available to be extracted in the form of interest – I suspect that the IMF's suggestion of CGT is simply a sop to the banking world. It also explains why capital gains taxes, or even brightline taxes, are pretty ineffectual.

        The tax deductibility of interest also helps the banks as well as the property owner, even though interest does nothing to promote the acquisition of taxable income.

        • RedLogix 2.1.1.1

          Fair enough point – but at least TOP's CCT treated all assets equally and didn't distort investment as the current system does.

          I did a quick calculation a while back, if a rental business is making a reasonable return (assuming property prices haven't been inflated all to hell and back) the CCT would have always been less than the normal business tax – assuming no debt. Thus it would have had no impact.

          If there was debt and the business was making a loss, then the CCT would have been paid – but as a LTC (Look Through Company) this would have normally reduced the owners PAYE tax accordingly. But then the govt went and ring-fenced that didn't they?

          • mikesh 2.1.1.1.1

            I think TOP is envisaging that its CCT would apply to family homes as well as to rental properties and other (non property) investments. This would suggest that its overwhelming effect would be on the property market.

            Ring fencing would probably not be necessary if interest was non deductible.

        • Bearded Git 2.1.1.2

          CGT is complicated to implement and it is difficult to predict how much it will raise, which may not be very much as the so-called family home is invariably excluded.

          If the objective is to redistribute wealth so that NZ is a fairer society-surely this is what Standardistas want?-then the obvious choice is for a wealth tax as proposed by the Greens at the last election (or similar).

          NOTE: Anybody commenting on this I would ask to say whether they would personally be affected by such a tax.

          • Andre 2.1.1.2.1

            A capital gains tax is based on actual real numbers of purchase price and selling price and expenses, and comes due once after the sale of an asset.

            A wealth tax is based on imaginary manipulable estimates of asset values, which have to be updated and justified and tax paid every. single. fucking. year. It would be a massive gift to dodgy accountants and lawyers, for sure.

          • Drowsy M. Kram 2.1.1.2.2

            I trust most wealthy individuals pay their fair share of tax. I'd favour the implementation of a straightforward wealth tax in NZ.

            Progressive Tax Reform
            In Aotearoa, there is enough to go around. But the tax system has allowed wealth to accumulate with a small number of us, while most of us have only modest assets. We tax work in Aotearoa, but we don’t tax wealth.

            Every year the IRD could audit a random 10% of individuals filing a wealth tax return, with swingeing financial penalties for deliberate underpayment, e.g. 10 times the underpayment. Such deterrent penalties would, of course, almost never be imposed, because most wealthy individuals understand what tax is for and so accept the requirement to pay their fair share.

            I've never needed the services of an accountant, and I'm not sure if I would be affected by the Green's wealth tax, but any affect would be small and bearable.

          • RedLogix 2.1.1.2.3

            I've consistently promoted TOP's CCT asset tax here for some years. Yes it would affect me significantly – I haven't recently done a calculation but I'm pretty sure I'd wind up paying more tax.

            Just as Morgan would have.

      • Tricledrown 2.1.2

        All tax losses against the property must be paid back to the IRD on the sale of the property when sold if the value of the building has increased.

        [Fixed typo in e-mail address]

    • KJT 2.2

      They were persuaded, that they would be hit on the capital gains from selling their small business.

      A propaganda coup by the opponents of CGT.

      In fact most small businesses sell at too low a price to attract much capital gains tax. Which could be easily accommodated by having a threshold, or making CGT progressive.

      The people who will really get hit, were the ones pretending to be a business while really being involved in CGT free, land speculation. Which apart from tax fairness, is one of the aims of CGT. Slowing land price rises.

  3. Stuart Munro 3

    I wish it were not so – but the self-inflicted incapacity to resolve the housing crisis is the present government's Achilles' heel. Who is going to paint them out of this corner, and what rough beasts are shuffling towards Wellington, if they do not.

    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,
    The blood-dimmed tide is loosed, and everywhere
    The ceremony of innocence is drowned;
    The best lack all conviction, while the worst
    Are frequently convicted in the course of their post-parliamentary careers.

  4. Adrian Thornton 4

    Good piece there Incognito, thanks. I agree completely with your assertion here
    " If this Government thinks that extending the bright-line test is going to make any difference, they will need to get their heads checked. In fact, I believe they know and all property owners know that it will not make a difference at all and the Ponzi scheme will continue unabatedly"..exactly right on the mark.

    Sorry to sound like a broken record here, but this Liberal third way Labour government (and National) both operate under the same economic ideological duopoly, with only minor differences in style and delivery to separate them…what we are witnessing in this domestic housing fiasco has been decades in the making, a slow burn Ponzi Scheme (which you accurately described it as) if you will, that has gone hand in hand with extremely slow wage growth over that same time frame.

    We have also witnessed over this same time frame the degradation of all public assets, a degradation which is still going on as we speak…universities are literally cutting off their own limbs right now to achieve the monetary demands of this government, even while we are going through a pandemic FFS…again, with both parties pushing this ideology, hand in hand.

    So let me remind you that when anyone votes Labour or National they vote for all of the above, as the above has quite clearly and plainly been the path both parties have been pursuing for nearly fourty years.

    So what are we left with? The Greens? (Whom I vote for reluctantly, I am socialist Labour at heart) who in all honestly have proved (lately) to be an incredibly weak foil for Labour even when they have some leverage, or somehow wrestling the Labour Party out of the death grip of these fundamentalist free market Liberals (including Ardern)? , yes I believe this is really the only way to bring about the radical changes needed to alter the doomed path these idiot neoliberals have knowingly led us all down, how to we take back our labour peoples party ? I don’t know sorry; go ask someone smarter than me.

    • Incognito 4.1

      Labour is as vulnerable on housing and climate change, for example, as it is on the Covid-19 pandemic. The efforts to keep the pandemic under control are starting to look obsessive but they may win this round partly thanks to a number of external factors that have little to do with this Government as such and partly because of good crisis management. Meanwhile, other crises keep growing …

      The Green Party may be able to do more to move the Overton window and public opinion. Expressing “disappointment” with Government action/inaction is just about the weakest option they can take. IMO, they are as capable as any other party is to offer a different and alternative narrative and sell this to the public. In fact, it is every party’s duty to do the best they can for Aotearoa-New Zealand, but the Green Party and the Māori Party are the only ones with enough integrity and mana to fulfil their Parliamentary and socio-political duties, IMO.

  5. Sacha 5

    They could opt for a stamp tax on all second homes – which has the advantage of being opposed by the business roundtable's economist Elric Crampon.

  6. georgecom 6

    the Bright Line Test isn't a comprehensive answer for rising house prices. nor for that matter though is a CGT. What they both are is the state getting some income from capital gains. A CGT would be much wider than the BLT. The BLT is fine (albeit perhaps with a 7-8 year extended time frame) if you simply want to apply a CGT to housing investment and speculation, a CGT if you want to include a whole lot more untaxed income. I am in favour of a CGT but I am not silly enough to think it will solve the housing price bubble by itself, especially as the family home will most likely be exempt. I support a CGT for the reason of tax fairness. The BLT does this for investment/speculative property, what is needed is to ensure that the significant minority of tax avoiders – either through ignorance or intention – cough up their share of tax on the capital gain.

    What might have a significant impact on house prices is a land tax. That however won’t touch other forms of un taxed income like a CGT will.

    • mikesh 6.1

      A capital gains tax can hardly be considered "fair" since the person paying for the gain, namely the buyer of the property, receives no compensation, via the tax system, for his "loss".

      • KJT 6.1.1

        Tax on work seems "hardly fair", because the final buyer of the work or services receives no compensation "via the tax system for his loss".

        Fixed it for you.

        • mikesh 6.1.1.1

          The final buyer does not have a loss when he purchases the product of work or services since it is assumed that these are worth the purchase price. Capital gain, by definition, is not backed by work or services, otherwise it would not be capital gain, just ordinary income.

          • KJT 6.1.1.1.1

            Splitting semantic hairs, Again!

            Are you saying that houses “are not worth the purchase price”?

            • mikesh 6.1.1.1.1.1

              Splitting semantic hairs, Again!

              Not at all. Just telling it like it is.

              Are you saying that houses “are not worth the purchase price”?

              Maybe. Maybe not. But if they are then there is no profit to be made in selling them.

      • Andre 6.1.2

        Under capital gains tax regimes, the buyer of the property receives recognition for the "loss" incurred in buying the property when they subsequently sell it, via the cost basis of the property being deducted from the selling price to arrive at the taxable capital gain.

        In exactly the same way as any other trader gets to deduct the purchase price of goods sold from the final selling price to determine the taxable profit.

        • mikesh 6.1.2.1

          The buyer may never sell the property, or property prices may fall before he does. It is better if taxation issues, if there are any, are sorted out at the point of sale.

          • Andre 6.1.2.1.1

            Under a capital gains tax regime, taxation is sorted out at the point of sale. When the seller has the proceeds and profits of the sale in hand.

            • mikesh 6.1.2.1.1.1

              Under a capital gains tax regime, taxation is sorted out at the point of sale. When the seller has the proceeds and profits (sic) of the sale in hand.

              That's true – but we don't actually have a capital gains tax regime, apart from the brightline tax, and nor should we.

              • KJT

                Because you may have to pay it?

                The arguments against CGT apply, in spades, against taxing workers incomes.

                • mikesh

                  Because you may have to pay it?

                  I guess that might be one good reason. Not that that would apply to me since my only property is a "family home". However, it would be preferable to manage the economy so that there were no capital gains, or at least pretty minimal ones.

                  The arguments against CGT apply, in spades, against taxing workers incomes.

                  The logic of taxing incomes relies on the proposition that the government needs to divert a certain percentage of GNP to be used by the state. Since GNP is reflected in incomes, incomes seem an appropriate source of revenue for the government. It should be noted that capital gain is not income. All one gets from selling a property is a bundle of cash and, as any accountant will tell you, cash is an asset, not income. Cash may of course be acquired through an income generating process, but a simple increase in the value of an asset (capital gain) is not such a process.

                  Nevertheless a system in which employees paid no tax, and tax was not deductible in their employers' taxation returns, would probably be viable, though I'm not sure that those employees would be any better off.

                  • Drowsy M. Kram

                    UN chief: World ‘at the breaking point’ with vast inequality
                    UN chief took aim at vast inequality noting the 26 richest people in the world hold as much wealth as half the global population.

                    Time for a wealth tax? Unlikely; as far as most of our parliamentarians are concerned, it would be like turkeys voting for Christmas. Bye bye civilisation – nice knowing ya.

                    Here are some ways to encourage sharing in everyday life

                  • KJT

                    Still pushing the screwed up notion, that a person can increase their wealth by buying and selling land, which at present is costing all of us severly, should not pay tax, whereas someone who increases their wealth by work, which mostly contributes to the rest of us should.

                    ,
                    ,

                    • mikesh

                      Still pushing the screwed up notion, that a person can increase their wealth by buying and selling land,

                      Not at all. I have for years been a strong advocate for the (re)introduction of land taxes.

                    • KJT

                      LOL. So you are for taxes on gains on land? But you want to levy it before the money is realised, and call it "land tax".

                      You must be an accountant?

                    • mikesh

                      I'm in favour of taxing the land itself, not just the gains on land; although a land tax would have the advantage of picking up capital gains, and taxing those, as it went along.

                    • KJT

                      Andre. At 14 has a good answer to that.

                    • mikesh

                      I took a look at Andre at 14. He seems a little confused. What he is talking about is, I think, what accountants refer to as "goodwill" rather than capital gain, with the company being sold, presumably, as a going concern. The point is that goodwill is usually based on some estimate of the company's future earnings and the purchaser will be expected to pay tax on those anticipated earnings when they arise, so whether a second lot of tax should be paid on them by the seller is doubtful. This may be true even if a capital gains tax is place, though of course I cannot be sure.

                      Of course the same considerations may well apply to capital gain as well, this being another reason why we should avoid introducing such a tax.

                  • KJT

                    If someone is in the "business" of buying and selling land, they are taxed on what they make. Many who are now making tax free capital gains are in the "business" of buying and selling land, it is just just that we fudge it with accounting "standards".
                    A well known example is "renovating the "family home". If I'd done that as a builder it would be taxed. If someone does it as a second source of income, with the intention of making a profit on eventual sale, it is not.
                    Similarly a farmer that farms as a going concern, annual profit making business gets taxed on all that he makes. One that deliberately increases tax deductible, "improvements, to reduce their taxable income knowing that they will make it back on sale, is in the "business" of land speculation, not farming.

                    • mikesh

                      Renovating a home is an "income generating" activity and, as such, should attract income tax if the home is subsequently sold at a profit. Failure to declare gains due to renovation as income is probably fraudulent, but the fraud would usually remain undetected. Are you saying that we should tax all capital gains, family homes included, just to make sure we catch these "bad guys" out?

                    • KJT

                      That was just an example. I could have used the ex politician who made 10 million on selling their "family home", untaxed. Most people would agree that should be taxed.

                      And yes. "Family homes" should be included in capital gains. A threshold and progressive rates as part of income tax would exclude those with average "family homes" from paying much.

                      It would cost them, and businesses that borrow and/or own land as a going concern, considerably less than the other options put forward to slow the housing market. Raising interest rates and/or land taxes. Both of which have unintended consequences way beyond the housing market.

                    • RedLogix

                      A CGT on the family home would be an absolute election killer. Don't even think such things, much less type them out in public.

                    • KJT

                      And an annual tax on the family home, which you advocate isn't? Electoral poison! Unlike taxes on large capital gains, it will affect everyone.

                      A progressive CGT, would exclude the gains on all but the most expensive family homes.

                      Opposition to CGT, is not as high as you would think. 80% supported it in a poll, before the right wing bullshit machine and Labours less than lukewarm support took hold. Much bigger support than for TOP's, land tax..

                      I didn't see any opposition to the idea of someone who made 750k on their "home" paying CGT, under the bright line test.

                      The one policy that any Government would get more votes for, is building State rentals.

                    • RedLogix

                      And an annual tax on the family home, which you advocate isn't? Electoral poison!

                      Again it's a mistake to consider one tax reform in isolation. Morgan devised a complete system where most ordinary people would actually finish up paying somewhat less total tax. Also it would only be calculated on the equity in the home, not the total market value.

                      https://www.top.org.nz/property_tax

                      It's worth running your own household through this calculator:

                      https://ubi.top.org.nz/

                      The point I keep coming back to is that the Big Kahuna represented a comprehensive reform and integration of our tax and welfare systems – an no single component of it can be properly understood in isolation.

                    • KJT

                      I don't think anyone here is advocating changes to the tax and welfare system., "in isolation".

                    • mikesh

                      I don't think that that was what RefLogix meant. What he meant was that Morgan's system comprised, from memory, three components, and that no one of those components should be considered in isolation from the others. The three components were the flat tax, the UBI, and the comprehensive capital tax.

  7. RedBaronCV 7

    Shrink the population – move out some more of the !80,000 work permits still running around in NZ and make it that applications have to be filed from out of the country as some other states do. Stops people from staying here for years on various short term visa's.

    Put a withholding tax on bright line sales – at least some of the profits will have left the county never to be seen again.

    • Craig H 7.1

      In places which require that work visas are applied for from overseas, that usually only applies to people on visitor visas (and at least some countries have exemptions for NZ citizens from that rule as well).

      I like the withholding tax on sales idea, although I'm sure solicitors will like it less (as the obvious place in a transaction for any tax to be withheld).

      • RedBaronCV 7.1.1

        Do they only require it for visitor to work visas? I thought the UK for one needed people to exit if reapplying for work visa's . Ditto Australia. Anyway we could do so if we wished. particularly for the youth visa – study visa – essential skills visa's . It might act as a reality check on people who intend to switch from one visa to another.

        Witholding tax is already taken over a range of transactions – lawyers would adapt.

  8. Sanctuary 8

    There is no silver bullet solution (or I suspect any politically feasible solution at all) to the housing problem, which a generational problem. Anyway, the oldest boomers are currently getting into their 70s. They are subject to the ravages of the calendar like anyone else. They'll be looking to sell up in increasing numbers in the next 10-15 years as old age starts to catch up with them and the problem will then most likely solve itself as supply of property increases and we may even experience population decline.

    • RedLogix 8.1

      Or if they're smart they'll start transferring assets to the next generation in a planned fashion long before they become incapable of making important decisions.

      we may even experience population decline.

      NZ is one of the few developed nations with a relatively flat demographic profile so absent mass emigration that's not very likely. Still it is true for many other nations in the wider world. eg Brazil.

      Many assumptions we've been making about growth have been really based on what's called 'the demographic dividend'. Next year fully half the boomers in the developed world will be retired – and suddenly transition from being productive and investors, into low spenders and consumers of capital.

      This factor more than anything else is going to shape the next few decades.

    • Incognito 8.2

      Agreed. Not one single silver bullet solution, at least. The people with the clearest heads, e.g. Labour, the Green Party, and the IMF, are actually saying that the issue needs to be tackled on both the supply and demand sides, unlike National …

      My worry is that we might be like moths drawn to light and be blinded by an extension of the bright-line test as if that will make one dot of difference. Changes to the RMA are likely some time away. That doesn’t leave much else in the tool-box that might be acceptable and marginally effective.

    • Pat 8.3

      That assumes boomers are the problem…I think you'll find its not so simplistic

      • KJT 8.3.1

        Blaming inequity on "generations" lets the real culprits off the hook.

        In 20 years it won't be "boomers" anyway. As always, it will be the children of the rich.

  9. dv 9

    I wonder if the tax has been paid on this?

    An Auckland villa bought last August has just been resold for a $755,000 resale jump – netting its owners more than $100,000 in capital gains per month.

    The three-bedroom Grey Lynn home at 3 Schofield St sold at auction for $2.55 million on Wednesday as house prices continued to skyrocket.

    The owners earlier paid $1.825m for the villa in August, with marketing photos from the time appearing to show little had been done to improve the property leading up to its incredible resale profit.

    When contacted by the Herald, the owners did not wish to talk about the resale.

    https://www.nzherald.co.nz/nz/auckland-grey-lynn-home-sells-for-755000-profit-in-seven-months/VROY6V2IIXIZFR2LNDFEUZW7QY/

    • Andre 9.1

      The tax isn't due yet, since the profit happened late in this financial year which doesn't end until March 31.

      But it would be quite the ballsy move to try to not pay the tax, given the publicity it has received and that the (former) owners reportedly run a home renovation business.

      • dv 9.1.1

        Any way we can find out?
        Is the record public?

        I should have said
        ‘I wonder if they will pay tax on this transaction?’

    • Jimmy 9.2

      "But they appeared to run a home renovation company and may have done work on the home prior to relisting it."

      Surely they would be liable to pay tax on it for the year ending 31 March 2021.

      Did they even live in it?

  10. Foreign waka 10

    The only way to remedy the situation is to build government rentals (flats of three and 2 bedrooms) close to amenities, such as train stations, supermarkets etc. This would help young families and pensioners. Young families get a start and pensioners can move to something smaller, manageable without having to move into a retirement home they cant afford. The older folks housing would be released for the next buyer.

    N.B. I for one would not want to go to a retirement home, even if I could pay for it, as it is another commercial entity that sees old people as an ATM for their shareholders.

    • mikesh 10.1

      We seem to be seeing reports of rising prices in some smaller centres – Tauranga and Levin are two that come to mind. Perhaps the migration of people who don't actually need to live in Auckland or Wellington has already started. And, as you say, it would also help if the elderly were to move into smaller, cheaper units.

    • tc 10.2

      ATM is generous ! We felt reamed after a family member passed as the agreement forced a sale of his unit back to them at a price they thought was ok.

      First time I've seen akl real estate devalue.

      Regional NZ prices have been under pressure from the akl market for years already.

  11. Craig GlenEden 11

    Your assumption that you can borrow 1 million or even .5 of a million buy a property then rent it for $500 and that covers the mortgage and other costs is a total nonsense.

    Paying rates, insurance, maintenance and getting a house to rental standards and maintaining those standards incurs a considerable investment. The deficit that would have to be meet by the Landlord a week would be considerable therefore decreasing any capital gains at the other end.

    I’m sorry but you are just plan wrong with your example. If you were right we wouldn’t have so many mum and dad investors leaving the rental market.

    • Incognito 11.1

      Thank you.

      If I understand your objection based on technicalities, you’re arguing that the rent won’t suffice meeting all costs, which is actually mentioned in the OP. Is that it or is there more that you object to? Regardless of the technical details, it is clear that the principal mechanism of tax-free enrichment is correct. Or do you reject that as well?

      Do you have any data or link to back up your assertion that “so many mum and dad investors leaving the rental market”? Sounds like an explosive brain fart to me when you refer to M & D investors but I’d love to be proven wrong.

  12. Pat 12

    Both main parties (and the OECD central banks) have made it abundantly clear that credit expansion is the growth driver and has been for years…unfortunately their models appear to have been based on equity and in a world of inequality their models dont work….the low and diminishing wages of the working population (the majority) increasingly lack the wherewithal to pay the rentiers so the public purse is subsidising them….and the public purse is due to run out of road.

    • Incognito 12.1

      Heh! My gut feeling tells me the same: easy cheap credit for those who have assets/capital is the fuel that keeps the fire going and the flames shooting up in the air.

      So, we do need and have better models? If yes, that begs the next question …

      As Stuart Munro was eluding to on OM, it is not a local but a global problem. This implies that local solutions might be rather inefficient and ineffective and possibly even counter-productive (AKA unintended consequences). The similarities with the Covid-19 pandemic and climate change might not stop there. None of this argues we should do nothing though.

      • Pat 12.1.1

        It is a global problem (albeit one driven by the club of 'developed' nations) but if we dont wish to wait around for the others to change tack , assuming they do before they crash everything then local action is the only option…and yes it comes with consequences, both intended and unintended (or possibly better described as undesired but anticipated) so the argument is very much not to do nothing, rather to explain what needs to be done and why and garner support….and that is whats lacking.

    • mikesh 12.2

      It seems to me that three things are necessary:

      Stopping the private banking system creating "fiat" money.

      Making interest non deductible for tax purposes.

      Introducing land taxes.

      • Pat 12.2.1

        We could place further restrictions on banks…LVRs and DTIs do that as do capital ratios (there are others), and we could remove the tax advantages from property investment or provide competitive alternatives however I dont see a land tax as a key factor in property speculation…land tax to provide for infrastructure perhaps but then we effectively have that with TA rates, and its not exactly a roaring success (and thats a different issue that needs addressing for different reasons)

        But as stated above we had settings previous to the 80s reforms that addressed those issues and we voted them out….would we vote them back in? (or a version of)…possibly, but Id suggest only after the market has crashed.

        We could do numerous things to unwind what has occurred but the political class dont wish to because it has become basis of our (short term) economic wellbeing and will collapse the financial system should they do so….and they dont have a viable alternative.

        We have painted ourselves into a corner

        • mikesh 12.2.1.1

          I don't see the provision of infrastructure as the purpose of land taxes. Their main purpose, I think, would be to encourage a more more efficient use of land. Also, land tax clearly is a factor in land speculation since it increases an owner's outgoings in respect of the land that he owns.

          The land taxes that were once in place were removed in the early nineties, but I don't recall them ever being "voted out".

          • Pat 12.2.1.1.1

            Encouraging the 'efficient' use of land is what exactly?

            Land taxes suffer from the same problem as any flat tax (they are regressive) and one of the main problems we face is the inequity in distribution.

            The land tax system we 'voted out' (as voted out as any of the policies in the 80s/90s) were effectively non existent at the time they were removed but if you can design a land tax system that does what you claim , remove property speculation then by all means outline how it works because as far as I can see it does nothing other than add to cost for all….it is no way targeted. Adding costs does nothing to make housing more affordable for anyone.

            • mikesh 12.2.1.1.1.1

              Encouraging the 'efficient' use of land is what exactly?

              It would encourage higher density housing where land is scarce: movement out of expensive areas to areas where land is less expensive; discourage large parking areas in shopping malls; etc.

              Land taxes suffer from the same problem as any flat tax (they are regressive) and one of the main problems we face is the inequity in distribution.

              It is not particularly regressive since the richest people tend own the most expensive land.

              The land tax system we 'voted out' (as voted out as any of the policies in the 80s/90s) were effectively non existent at the time they were removed but if you can design a land tax system that does what you claim , remove property speculation then by all means outline how it works because as far as I can see it does nothing other than add to cost for all….it is no way targeted. Adding costs does nothing to make housing more affordable for anyone.

              They were not "non existent at the time they were removed", but there was a fairly high threshold. I'm pretty sure that if such a tax were introduced today there would be some sort of threshold. I also think that there would be downwards pressure on the price of land so that property would not necessarily be less affordable. As for removing speculation, I didn't claim that it would, but merely that it would discourage speculation. In any case, I don't think there is a system that would remove speculation altogether; would we want to make it illegal for persons to hold assets, unprofitably, when nobody else wants them.

              • Pat

                The trope of 'efficient use of land' simply means the most profitable….do you wish housing to be profitable or a human right? the most efficient use of land in Canterbury is dairy farming….hows that worked out?

                "It is not particularly regressive since the richest people tend own the most expensive land."

                Regressive is regressive…the wealthy may own the most expensive land but the less wealthy pay their costs through leases and rents.

                "They were not "non existent at the time they were removed"

                "Although the Land Tax Abolition Act (1990) which took effect from 31 March 1992 abolished New Zealand's land tax, a land tax was the very first direct tax ever imposed on New Zealanders, by the Land Tax Act (1878). A property tax followed the next year (per the Property Tax Act 1879). When first enacted, this charged a rate of one penny in the pound (i.e. 1/240th or 0.4%), but a massive £500 exemption applied, exempting most people from tax liability.

                The land tax initially provided a major proportion of government revenue. In 1895 it made up 76% of the total land and income tax revenue received by the government.[32] In 1960 land tax contributed 6% of direct tax revenues, and by 1967, in a report recommending the abolition of land taxes, a committee chaired by Auckland accountant Lewis Ross noted that a mere 0.5% of total government revenue now came from land taxes. The government did not act on the Ross recommendation to abolish land taxes."

                https://en.wikipedia.org/wiki/Taxation_in_New_Zealand#:~:text=The%20land%20tax%20initially%20provided,revenue%20received%20by%20the%20government.

                • mikesh

                  The trope of 'efficient use of land' simply means the most profitable….do you wish housing to be profitable or a human right? the most efficient use of land in Canterbury is dairy farming….hows that worked out?

                  As Humpty Dumpty said "words mean exactly what I intend them to mean". Your definition of "efficient" ain't mine. Nor was your meaning implied in the examples I gave. And I have no idea whether Cantabrians are making the most efficient use of their land. Red herrings of that sort don't work with me.

                  Regressive is regressive…the wealthy may own the most expensive land but the less wealthy pay their costs through leases and rents.

                  If the wealthy own the most expensive land then they pay more tax. That's regressive. What they do with the land has no bearing on its regressiveness. And if that's not what you mean by "regressive", who cares. They still pay more tax.

                  I recall paying land tax on some commercial property I was looking after, right up to the time of the tax's abolition.

  13. Weasel 13

    Incognito has made an assumption about the Bright Line Test that renders his argument incorrect. The BLT is not the introduction of a tax, such as a capital gains tax, but merely a clarification of existing tax law. It simply clarifies that if you sell within the period specified by the BLT, it is assumed your intent in purchasing the property was for capital gain. There is no particular starting point as there would be by a CGT law, it captures properties already purchased within the specified time frame. Therefore, if the BLT is extended to say, 10 years, or possibly a time line is abolished altogether (which I believe is the correct solution), it is assumed that the sale is for capital gain. The example Incognito provides would in fact be captured.
    By the by, the same applies with shares. The law states that if your intention is to sell for a profit, then you are liable for tax on capital gains. Regular traders are captured by this. However, the wording of the law is loose because it relies on what you say your intent was at the time of purchase. In the 1980s and 90s, the likes of Brierley Investments et al would purchase a company and state with a straight face that their intention was to hold it for the long-term. Nek day, it would be flicked and Brierley would tell the taxman it was never their intent but someone made an offer they couldn’t refuse and therefore they were not liable for tax.
    One of the problems of the BLT has been the laxness of IRD in applying the law. When the rule was introduced, IRD was allocated an extra $29 million for property tax compliance on top of $33 million allocated for the same purpose in 2010. John Key’s media statement in 2015 said IRD expected to generate around $420 million of additional assessed tax in the coming five yearS. The question is: why has IRD been negligent?
    Many property sellers caught by the rule extension who have not paid tax may not only be still liable to pay the tax but may also be liable for penal payments.
    The beauty of the BLT is that when introduced by National, John Key, Bill English and others swore it was not a CGT, as did then Labour Party leader Andrew Little. So not only would Jacinda Ardern be able to say with hand on heart she has not broken her promise on CGT (though that would be a bit like Brierley saying it was always their intent to hold for the long term) but National is painted into a corner because, when they introduced it, they were so adamant it is not a CGT.

    • Pat 13.1

      The problem is proving intent…it was always a 'Claytons"tax…as so many are.

      • Weasel 13.1.1

        That is the beauty of the BLT – it takes the mind-reading out of the equation – you are assumed to be selling for capital gains within the time frame.
        Because house prices are now so high, there is almost no rational explanation for investing in a second+ property other than for capital gain, ergo take the time factor out of the BLT and assume all such investments are primarily for capital gain.

    • RedLogix 13.2

      The issue around 'intent' was always a weakness of all CGT regimes.

      The reason why it exists is that in many cases if you sell a capital asset with the expectation that the funds will allow you to buy another asset better suited to your purposes or productivity – then because you are effectively selling and then buying in the same market a CGT leaves you with a major shortfall. This is most evident in the case of the family home, which is why all CGT regimes exclude it.

      However at the other extreme many people buy and sell assets (shares for example) as traders and the income they generate is obviously subject to tax. The problem is that there is no clearcut dividing line between the two cases; 'intent' and 'bright line tests' are very crude and blunt attempts at creating one.

      By contrast, asset taxes like TOP's CCT regime avoid this problem altogether by taxing all assets at a small rate annually – completely sidestepping the issue above.

      The only problem that arises with CCT's and the like is the case of 'asset rich cash poor' where typically a retired person is living in a large home they've owned for decades. The obvious solution here is to simply allow the owner the option of deferring the tax until the asset is sold or passed on in an estate.

      • mikesh 13.2.1

        However at the other extreme many people buy and sell assets (shares for example) as traders and the income they generate is obviously subject to tax.

        Do sharetraders take into account the problem of their firms' retained earnings? I have often wondered?

        • RedLogix 13.2.1.1

          I've no real idea, but if they use anything like normal online trading methods, it's pretty much taken care of automatically. Like banks collecting tax on interest earned for example.

          But I could be wrong.

          • mikesh 13.2.1.1.1

            I'm in favour of taxing the land itself, not just the gains on land; although a land tax would have the advantage of picking up capital gains, and taxing those as it went along.

      • KJT 13.2.2

        Then it is a Capital Gains/inheritance tax anyway.

        There are major issues with taxes when there is no income to pay them.

        In fact it contradicts one of the tenants of an effective and fair tax system.

        You pluck the goose when they have enough spare feathers to still keep warm.

        I can see taxes before the income is realised, transferring even more of our land to those on very high incomes. The only ones buying houses will be people who can afford both the house and the annual taxes. It may depress house prices, but it will not help more people to own "homes".

        Tempting to finish my accounting quals if that happens. It will be an accountants bonanza.

        Very hard to argue with the actual sale price for CGT, however.

        • RedLogix 13.2.2.1

          Then it is a Capital Gains/inheritance tax anyway.

          Yes. A lack of an inheritance tax is very notable feature of the NZ tax system – I would have imagined the left might be supportive of a measure like this that would go some way toward going to remedying this.

          There are major issues with taxes when there is no income to pay them.

          The proposed TOP CCT was based on the idea that any asset might be reasonably expected to make a return at least better than the current bank deposit rate – typically 3%. (Although the current rates are much lower, there is good reason to expect this to be an anomaly in the long term). This was called a ‘Minimum Rate of Return’.

          Very briefly, a CCT is calculated by taking the 3% of the value of the asset and applying the normal income related tax to that – say 25%. Thus if you had a house worth $1m – the CCT tax on this would be $7,500 pa.

          Here is the important part to understand – this is only the minimum tax to pay. If the asset is earning enough to attract more tax than this in the usual course of business – then this is what is paid and the CCT tax floor is not applicable.

          Crucially Morgan made the had the interesting insight, a decade or so before most other people, that the homeowner was equally benefiting from capital gains, and should not be exempt. It's also providing the residents a very real benefit, effectively if they're not paying mortgage interest or rent, this is an 'income stream' that isn't being captured by taxation. (I accept this is a controversial viewpoint, but technically Morgan is correct in this.)

          And if an asset is earning an income it should be paying tax in the usual manner – if it's not, such as the case of land banking and houses left empty by speculators for example – then the CCT will apply. In which case the owner has the option to defer the tax and as you say – effectively convert it into a CGT. (Of course I'd expect IRD to charge some interest on the deferred payments, so it's not necessarily a painless option.)

          • KJT 13.2.2.1.1

            Technically correct is true. Just like Mikesh.

            Morgan's is just another method of taxing Capital Gains.

            I have real issues with tax on unrealised income.

            While I agree the principle of taxing wealth is fine. Not many will support a tax when they don't have the money from the assett, to pay it. As well as all the issues with deciding on valuations and appreciation amounts.
            I can see an even faster transfer of wealth as an unintended consequence. As assets accumulate in the hands of those who have both the wealth to buy them and the ongoing income to pay the annual taxes.

            Morgan's idea, and, I hate to say it, the Greens tax as well, is an accountants dream.

            • RedLogix 13.2.2.1.1.1

              I have real issues with tax on unrealised income.

              And I'm proposing that in those cases the owner gets the option to defer the tax and pay when the income is realised. Effectively becoming a CGT or Estate Tax – which you do support. So exactly what are you objecting to here?

              But in most cases assets do produce an income and pay tax in the usual manner. A CCT simply puts a minimum floor on how much – and acts as a disincentive to speculators holding onto property purely for capital gain. Which again is precisely what the left has been asking for.

              If you want we could add in the provision that a CCT deferment would be only available on the family home.

      • mikesh 13.2.3

        The issue around 'intent' was always a weakness of all CGT regimes.

        Yes. the IRD always seemed to get themselves twisted up in knots around this issue because, on the one hand, they did not wish to "punish" those who intended to live in their houses until the day of judgment but who had to sell as a result of changed circumstances, and at the same time they wanted to catch out those who appeared to be making a living from buying and selling houses. Personally I would not have worried about it. The capital gains that the latter were making was being paid for by the buyers of those houses, so there was no increase in the community's aggregate purchasing power. The government's interests lay in garnering a share in the "real" goods and services produced by the community and these are reflected in the incomes from work, profit, etc. The government would effectively find itself in much the same position as would be the case if there were no capital gains to be taxed.

  14. Andre 14

    If you're pondering the difference in actual effects of a capital gains tax, a wealth tax, Kitty Man's Comprehensive Capital tax, or any other tax, the founders of TradeMe should provide food for thought.

    TradeMe was founded in 1999, with not much more than a computer and an internet connection. then later that year Sam Morgan sold half the company to others to raise $75,000 to keep it afloat. It probably didn't get any real revenue until September 2000 when it introduced success fees. From then as it grew like a mushroom cloud, it would still have required bugger-all capital, and just a bit of wages and salaries, until it sold to Fairfax in March 2000 for $700 million (actually $750 million, that last 50 mil was conditional on targets that actually were met). That growth was only possible because of the rule of law, infrastructure, and all the other good stuff provided by all taxpayers funding the government.

    https://en.wikipedia.org/wiki/Trade_Me

    Under a capital gains tax regime, it's simple. As it grew, the only taxes payable would be the personal income taxes due on the employee's income, the income taxes on any dividends paid to shareholders, and company tax on profits (actually that doesn't really happen in NZ because of company taxes getting credited to dividend recipient's taxes, but anyhoo). Then on sale of the company, the proceeds of the sale (less cost basis) becomes taxable capital gains for the shareholders. In the UK, they would pay 20%, Australians would pay 22.5%, Americans 23.7% (simplifying a little, these are top rates, which would certainly apply to those reaping millions). So of that $750 million sales price, our peer nations would have collected around $150 million in CGT. Compared to zip, nada, bupkis collected in NZ.

    Under a wealth tax, what would have been paid? It's almost guaranteed the accountants and lawyers would have kept the assessed value of TradeMe to a tiny fraction of what it would actually sell for in the open market. And no tax due on sale.

    Under a CCT, what would have been paid in tax? Same problem as the wealth tax.

    • KJT 14.1

      This is one of the many instances that I think about when I advocate for a CGT.

      People also think it would affect small tradesmen and businesses.

      We all dream of doing a Sam Morgan, but in reality the residual value of most small businesses, after being run as a profit making tax paying enterprise on sale, is small.

      Which is why I reckon Capital gains tax should be both progressive and comprehensive.

      Average home owners and small business owners, wouldn’t be liable for huge amounts. Getting rid of one of the objections.

      Other interventions, such as raising interest rates and LVL ratios actually costs the ordinary home owner and small business owner, much more. 12% interest rates on business loans when your US competitor pays 2% is a killer.

      • Andre 14.1.1

        The US, UK, and Australia all have progressive rates in their capital gains taxes.

        The US rates are 0% for income up to USD40,400, 15% for income between USD40,401 and USD250,800, and 20% for income above USD250,800. There's also a 3.8% surcharge if your investment income is above a threshold (haven't found the threshold yet and not gonna look more).

        The UK appears to have 0% for capital gains up to GBP12,300, if your total income is less than GBP37,000 then capital gains are taxed at 10%, it's the high earners that pay the full 20%.

        Australia has the capital gains tax rate as half the person's regular income tax rate. Those rates are quite progressive, going up to 45%.

      • mikesh 14.1.2

        See my comment made at 4:54pm on the 15th, which refers to Ad at 14. It doesn't seem to have a number or, if it does, that number is so faint I cannot see it.

Recent Comments

Recent Posts

  • New school site for booming West Auckland
    The Government will build on a new school site in West Auckland to cope with rapid population growth in the area, Education Minister Chris Hipkins says. The Ministry is working with existing local schools to determine how the 1.5-hectare site at 279 Hobsonville Point Road will be used to support ...
    BeehiveBy beehive.govt.nz
    2 hours ago
  • Trans-Tasman travel window to close at midnight tomorrow
    A further 500 MIQ rooms released for managed returnees from NSW Further Government actions announced today are balanced to provide more certainty for Kiwis wanting to return from Australia, while continuing to protect New Zealand from COVID-19, acting Minister for COVID-19 Response Ayesha Verrall says. The actions were foreshadowed last ...
    BeehiveBy beehive.govt.nz
    16 hours ago
  • Govt investing millions in Hawke's Bay and Tairāwhiti schools
    Napier Boys’ and Girls’ High Schools are among those set to benefit from a $16.5 million investment in the Hawke's Bay and Tairāwhiti region, Economic and Regional Development Minister Stuart Nash announced today. The Government has set aside money in Budget 2021 to accelerate five projects in Napier, Hastings, Havelock North ...
    BeehiveBy beehive.govt.nz
    20 hours ago
  • Game changing Jobs for Nature investment for Northland
    Conservation Minister Kiri Allan has announced Jobs for Nature funding for a portfolio of projects that will create ‘game changing’ gains for nature and communities across Northland/Te Tai Tokerau as part of the Government’s acceleration of the economic recovery from COVID. “This portfolio of 12 projects will see over $20 ...
    BeehiveBy beehive.govt.nz
    22 hours ago
  • Third COVID-19 vaccine receives provisional approval
    New Zealand’s regulatory authority Medsafe has granted provisional approval of the AstraZeneca COVID-19 vaccine for individuals 18 years of age and older, Acting Minister for COVID-19 Response Dr Ayesha Verrall announced today. New Zealand secured 7.6 million doses (enough for 3.8 million people) of the AstraZeneca COVID-19 vaccine through an ...
    BeehiveBy beehive.govt.nz
    22 hours ago
  • Bowel-cancer screening programme is saving lives
    More than 1000 New Zealanders have had bowel cancer – New Zealand’s second-most-common cause of death from cancer - detected under the Government’s National Bowel Screening Programme, Health Minister Andrew Little said today. More than 1200 New Zealanders died from bowel cancer in 2017. The screening programme aims to save ...
    BeehiveBy beehive.govt.nz
    22 hours ago
  • Govt welcomes draft report on the retail grocery sector
    The Commerce Commission’s draft report into the retail grocery sector is being welcomed by Government as a major milestone. “I asked the Commerce Commission to look at whether this sector is as competitive as it could be and today it has released its draft report for consultation,” Commerce and Consumer ...
    BeehiveBy beehive.govt.nz
    23 hours ago
  • Christchurch’s Youth Hub ‘set to go’ thanks to further Government funding
    Construction of New Zealand’s first, purpose-built centre for youth well-being is ready to get underway thanks to an extra $2.5 million of COVID-19 response funding, Housing Minister and Associate Minister of Finance, Megan Woods announced today.  “The Christchurch Youth Hub is about bringing together all the things young people need ...
    BeehiveBy beehive.govt.nz
    24 hours ago
  • Next step to protect Milford Sound Piopiotahi
    Expert group lays out plan to better protect iconic UNESCO World Heritage site Milford Sound Piopiotahi and its surrounds Funding confirmed for dedicated unit and Establishment Board to assess the recommendations and provide oversight of the process from here Milford Opportunities Project a test case for transformational change in tourism ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Funding for projects to reduce waste from construction and demolition
    The Government has announced funding for projects in Auckland and the lower North Island to help reduce construction and demolition waste. “Construction is the main source of waste sent to landfill, and much of this could be reduced, reused and recovered,” Environment Minister David Parker said. “The Government is funding ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Plan to eliminate hepatitis C as a major health threat by 2030
    A plan to eliminate hepatitis C in New Zealand, reducing liver cancer and the need for liver transplants, has been released today by Associate Minister of Health Dr Ayesha Verrall. “Around 45,000 New Zealanders have hepatitis C, but only around half know they have it,” said Ayesha Verrall. “Symptoms often ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • School upgrades and new classrooms for West Coast, Tasman and Canterbury
    A funding injection from Budget 2021 to complete four shovel ready projects and new classrooms at six schools and kura will provide a real boost to local communities, Minister Dr Megan Woods announced today. “This Government has committed to providing quality fit for purpose learning environments and 100,000 new student ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Warmer Kiwi Homes smashes annual target
    The Government's highly successful insulation and heating programme, Warmer Kiwi Homes, is celebrating a key milestone with the completion of more than 38,000 insulation and efficient heater installs in the year to the end of June, smashing its target of 25,000 installs for the year. “The Warmer Kiwi Homes scheme ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Exemption granted for Wallabies to enter NZ
    Bledisloe Cup rugby will be played in New Zealand after the Australian rugby team received an economic exemption to enter New Zealand. Travel between Australia and New Zealand was suspended on Friday for at least eight weeks following the worsening of the COVID outbreak across the Tasman. New Zealanders have ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Minister of Foreign Affairs makes three diplomatic appointments
    Foreign Affairs Minister Nanaia Mahuta today announced three New Zealand Head of Mission appointments. They are: Mike Walsh as Ambassador to Iran Michael Upton as Ambassador to Ethiopia and the African Union Kevin Burnett as Ambassador to Indonesia Iran “Aotearoa New Zealand has a long-standing and constructive relationship with Iran, despite a ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Enhanced Task Force Green Approved for West Coast and Marlborough
    The Government has activated Enhanced Task Force Green (ETFG) in response to the West Coast and Marlborough floods, Social Development and Employment Minister Carmel Sepuloni announced today. “To assist with the clean-up, up to $500,000 will be made available to support the recovery in Buller and Marlborough which has experienced ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Govt support for upgrade of Eden Park players facilities
    Minister for Sport and Recreation Hon Grant Robertson has announced funding to upgrade the players facilities at Eden Park ahead of upcoming Women’s World Cup events. Eden Park is a confirmed venue for the Rugby World Cup 2021, the ICC Women’s Cricket World Cup 2022, and a proposed venue for matches of ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • More jobs and quicker public transport motoring towards West Auckland
    Work to improve public transport for West Aucklanders and support the region’s economic recovery by creating hundreds of jobs has officially kicked off, Transport Minister Michael Wood announced today. Michael Wood and Auckland Mayor Phil Goff this morning marked the start of construction on the Northwestern Bus Improvements project. It ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government backs critical health research
    Research into some of New Zealanders’ biggest health concerns including cancer, diabetes, and heart disease is getting crucial support in the latest round of health research funding, Health Minister Andrew Little announced today. The funding, awarded through the Health Research Council of New Zealand, covers 31 General Project grants ($36.64 ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • New Bay of Islands hospital facilities to bring services closer to home
    Prime Minister Jacinda Ardern and Health Minister Andrew Little have joined a ceremony to bless the site and workers for Phase Two of the redevelopment of the Bay of Islands Hospital in Kawakawa today. The new building will house outpatients and primary care facilities, as well as expanded renal care ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Raukokore re-imagined with ‘smart’ relocatable rent to own housing
    Iwi, Crown Partnership Relocatable, fully insulated housing, connected to a new solar plant Provides a pathway to home ownership New housing in the remote eastern Bay of Plenty community of Raukokore shows how iwi and Crown agencies can work together effectively to provide warm, dry, energy efficient homes in a ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Cabinet accepts Turkish authorities’ request for the managed return of three NZ citizens
    Cabinet has agreed to the managed return of a New Zealand citizen and her two young children from Turkey, Prime Minister Jacinda Ardern announced today. The three have been in immigration detention in Turkey since crossing the border from Syria earlier this year. Turkey has requested that New Zealand repatriate ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Govt delivers more classrooms so children can focus on learning
    Extra Government investment in classrooms and school building projects will enable students and teachers to focus on education rather than overcrowding as school rolls grow across the country, Prime Minister Jacinda Ardern and Associate Education Minister Kelvin Davis say. The pair visited Ruakākā School in Whangārei today to announce $100 ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • New station a platform for AirportLink to take off
    Every Aucklander with access to the rail network will now have a quick and convenient trip to the airport, Transport Minister Michael Wood and Auckland Mayor Phil Goff said during the official opening of the new Puhinui Interchange today. The new interchange links the rail platform with a new bus ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • 10 days sick leave for employees delivered
    Legislation doubling employees’ minimum sick leave entitlement to 10 days comes into effect today, bringing benefits to both businesses and employees, Workplace Relations and Safety Minister Michael Wood announced today. “Our Government is delivering on a key manifesto commitment to help Kiwis and workplaces stay healthy,” Michael Wood said. “COVID-19 ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Prime Minister congratulates Fiame Naomi Mata’afa on Election Win
    Prime Minister Jacinda Ardern tonight congratulated Prime Minister-elect Fiame Naomi Mata’afa on her victory in the Samoa’s general election. “New Zealand has a special relationship with Samoa, anchored in the Treaty of Friendship. We look forward to working with Samoa’s new government in the spirit of partnership that characterises this ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Quarantine Free Travel with Australia suspended
    Quarantine Free Travel from all Australian states and territories to New Zealand is being suspended as the Covid situation there worsens, Prime Minister Jacinda Ardern and COVID-19 Response Minister Chris Hipkins announced today. From 11.59pm today Australians will no longer be able to enter New Zealand quarantine-free. This will be ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Growing conservation efforts in Gisborne
    A big injection of Jobs for Nature funding will create much-needed jobs and financial security for families in TeTairāwhiti, and has exciting prospects for conservation in the region, Conservation Minister Kiri Allan says. “The projects target local communities most affected by the economic consequences of COVID 19 and are designed ...
    BeehiveBy beehive.govt.nz
    7 days ago
  • Flood recovery given further assistance
    The Government is contributing a further $1 million to help the flood battered Buller community, Acting Emergency Management Minister Kris Faafoi announced today. “Buller is a small community which has found itself suddenly facing significant and ongoing welfare costs. While many emergency welfare costs are reimbursed by Government, this money ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Funding for five projects to reduce food waste
    The Government is funding five projects to help address the growing problem of food waste, Environment Minister David Parker announced today. “New Zealand households throw away nearly 300,000 tonnes of food every year, half of which could still be eaten. By supporting these initiatives, we’re taking steps to reduce this ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Temporary Accommodation Service activated for West Coast flooding event
    The Temporary Accommodation Service (TAS) has been activated today - meaning residents on the West Coast of the South Island and in the Marlborough region hit by flooding over the weekend can now access help finding temporary accommodation, announced Associate Minister of Housing (Public Housing) Poto Williams in Westport today. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Pause to Quarantine Free Travel from South Australia to New Zealand
    Quarantine Free Travel from South Australia to New Zealand will be paused from 11.59am (NZT) tonight, COVID-19 Response Minister Chris Hipkins has announced. However, people currently in the state who ordinarily live in New Zealand will be able to return on “managed return” flights starting with the next available flight, ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New Zealand condemns malicious cyber activity by Chinese state-sponsored actors
    New Zealand has established links between Chinese state-sponsored actors known as Advanced Persistent Threat 40 (APT40) and malicious cyber activity in New Zealand. “The GCSB has worked through a robust technical attribution process in relation to this activity. New Zealand is today joining other countries in strongly condemning this malicious ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Remarks to Diplomatic Corps
    It is a pleasure to be with you all this evening. Some of you may have been surprised when you received an invitation from the Minister of Disarmament and Arms Control, and I would forgive you if you were. New Zealand is unique in having established a Ministerial portfolio ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Early Pfizer shipment boosts vaccine schedule
    The largest shipment of the Pfizer vaccine to date has arrived into New Zealand two days ahead of schedule, and doses are already being delivered to vaccination centres around the country, COVID-19 Response Minister Chris Hipkins says. “The shipment of more than 370,000 doses reached New Zealand yesterday, following a ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Backing for Bay of Islands predator free effort
    The Government is throwing its support behind an ambitious project to restore native biodiversity and build long-term conservation careers, Conservation Minister Kiri Allan says. Predator Free Bay of Islands aims to eradicate predators from the three main peninsulas in the region, and significantly reduce their impact throughout the wider 80,000-plus ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Government commits $600,000 to flood recovery
    The Government is contributing $600,000 to help residents affected by the weekend’s violent weather with recovery efforts. Acting Minister for Emergency Management Kris Faafoi and Agriculture Minister Damien O’Connor have been in the Buller district this afternoon to assess flood damage and support the local response effort. They have announced ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Government assisting local responses to heavy rainfall and high wind
    Acting Minister of Emergency Management Kris Faafoi says Central Government is monitoring the severe weather across the country, and is ready to provide further support to those affected if necessary. “My thoughts are with everyone who has been affected by this latest event, particularly communities on the West Coast and ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • PM Ardern chairs APEC Leaders’ meeting on COVID-19
    New Zealand Prime Minister Jacinda Ardern has chaired a meeting of Leaders representing the 21 APEC economies overnight. “For the first time in APEC’s history Leaders have come together for an extraordinary meeting focused exclusively on COVID-19, and how our region can navigate out of the worst health and economic ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Health Minister welcomes progress on nurses’ pay
    The New Zealand Nurses Organisation’s decision to take the Government’s improved pay offer to members and to lift strike notices is a positive move towards settling district health board nurses’ pay claims, Health Minister Andrew Little said. “It’s encouraging that the discussions between NZNO and DHBs over the nurses’ employment ...
    BeehiveBy beehive.govt.nz
    2 weeks ago