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.

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    Buzz from the Beehive Two days after hundreds of people rallied outside the New Zealand parliament and the US embassy in Wellington to protest against what they maintain is genocide in Gaza,  Prime Minister Chris Luxon joined with the Prime Ministers of Australia and Canada to express their  concerns that ...
    Point of OrderBy Bob Edlin
    4 days ago
  • All jellied up with possum grease
    1. Shane Jones, addressing the energy industry, called climate concern what?a. The only sane responseb. Undeniably valid c. Our last best hope d. A "religion" 2. Shane Jones’ demeanour in mocking and deriding climate activists can be observed in what other realm of human behaviour?a. Gleeful little boys pulling wings off fliesb. Gleeful ...
    More Than A FeildingBy David Slack
    4 days ago
  • Equality comes to Greece
    The Greek Parliament has voted for marriage equality: Greece has become the first Christian Orthodox-majority country to legalise same-sex marriage. Same-sex couples will now also be legally allowed to adopt children after Thursday's 176-76 vote in parliament. Prime Minister Kyriakos Mitsotakis said the new law would "boldly abolish a ...
    No Right TurnBy Idiot/Savant
    4 days ago
  • CHRIS TROTTER:  Iron in her soul.
      “Battle not with monsters, lest ye become a monster, and if you gaze into the abyss, the abyss gazes also into you.” – Friedrich Nietzsche   Chris Trotter writes – TELEVISION NEW ZEALAND is to be congratulated for inviting Chloe Swarbrick onto its Q+A current affairs show. The Green MP ...
    Point of OrderBy poonzteam5443
    4 days ago
  • The Hoon around the week to Feb 16
    Net emigration of New Zealanders overseas hit a record-high 47,000 in the 2023 year, which only partly offset net immigration of 173,000, which was dominated by arrivals from India, the Philippines and China with temporary work visas. Photo: Lynn Grieveson / The KākāTL;DR: The five things that mattered in Aotearoa’s ...
    The KakaBy Bernard Hickey
    4 days ago
  • Stop Whispering.
    There's nothing to sayAnd there's nothing to doStop whispering, start shoutingStop whispering, start shoutingYesterday our government surprised a few of us by standing up for something. It wasn’t for the benefit of people who own holiday homes and multiple investment properties. Neither were there any tobacco companies or fishing cartels ...
    Nick’s KōreroBy Nick Rockel
    4 days ago
  • “I'm Not Keen on Whataboutism, But What About…”
    Hi,Not sure how your week is going, but I’ve had a pretty frustrating one. I’ve been trying to put my finger on it, and I think it’s perhaps distilled in this message I got on Twitter:What got me a bit riled up is that it was a response to the ...
    David FarrierBy David Farrier
    4 days ago
  • Gordon Campbell on National passing bad policies under urgency
    If National really had faith in its welfare policies, it wouldn’t be ramming them through Parliament under urgency – a step that means the policies can’t be exposed to select committee debate, public submissions, expert commentary, media scrutiny and all the normal democratic processes that this coalition appears to hold ...
    4 days ago
  • Weekly Roundup 16-February-2024
    It’s Friday so once again here”s our roundup of some of the articles that caught our attention this week. This Week in Greater Auckland On Monday Matt looked at the Government’s war on Auckland. On Tuesday Matt covered the ongoing issues with the rail network. On Thursday Matt ...
    Greater AucklandBy Greater Auckland
    4 days ago
  • The Dawn Chorus for Friday, February 16
    The six things to note in my view at 6.30 am on Friday, February 16 in Aotearoa-NZ’s political economy are: Read more ...
    The KakaBy Bernard Hickey
    4 days ago
  • Iron In Her Soul.
    “Battle not with monsters, lest ye become a monster, and if you gaze into the abyss, the abyss gazes also into you.” – Friedrich NietzscheTELEVISION NEW ZEALAND is to be congratulated for inviting Chloe Swarbrick onto its Q+A current affairs show. The Green MP for Auckland Central is the odds-on ...
    4 days ago
  • Dig this
    Resources Minister Shane Jones yesterday told a breakfast hosted by Energy Resources Aotearoa precisely what they wanted to hear. “We campaigned to rehabilitate relegitimise and stand up for working families who derive their income,  derive their hope and derive purpose in regional New Zealand through a flourishing, growing, forward-leaning energy ...
    PolitikBy Richard Harman
    5 days ago
  • Skeptical Science New Research for Week #7 2024
    Open access notables Physics-based early warning signal shows that AMOC is on tipping course, van Westen et al., Science Advances: Here, we show results of the first tipping event in the Community Earth System Model, including the large climate impacts of the collapse. Using these results, we develop a physics-based and ...
    5 days ago
  • A rejection of the rule of law
    No Right TurnBy Idiot/Savant
    5 days ago
  • Shrugging-Off The Atlas Network.
    Upholding The Status-Quo: The Left’s election defeat is not the work of the Atlas Network. It is not even the work of David Seymour and Act. It is the work of ordinary citizens who liked the Right’s stories better than they liked the Left’s. If the Right’s stories were made ...
    5 days ago
  • BARRIE SAUNDERS: Treaty Principles – all rather problematic
    Barrie Saunders writes – When ACT’s leader said they wanted legislation to state what the Treaty principles mean, my first thought was this will be controversial and divisive.  Clearly it is. The first reference to the principles of the Treaty were contained in the 1975 Act establishing the Treaty of ...
    Point of OrderBy poonzteam5443
    5 days ago
  • Luxon Rejects The “Rejection Election” At His Peril.
    Fitting Right In: National retailed a reactionary manifesto of right-wing, racially-charged policies to the electorate throughout 2023. No talk back then of ignoring the overwhelming political preferences of the voting public and making a strong stand on principle. If Luxon’s pollsters and focus-groups were telling him that the public was ...
    5 days ago
  • Valentine’s Day went unnoticed on the Beehive website – but it is not “baa, humbug” to celeb...
    Buzz from the Beehive None of our ministers – a quick check with the Beehive website suggests – found cause to mention, let along celebrate, Valentine’s Day. But two ministers – Agriculture Minister Todd McClay and Rural Communities Minister Mark Patterson – ensured that National Lamb Day did not pass ...
    Point of OrderBy Bob Edlin
    5 days ago
  • Are You A Leftist?
    Nothing To Lose But Our Chains: The emancipatory movement which the Left, understood correctly, has always been, cannot accommodate those who are only able to celebrate one group’s freedom by taking it from another. The expectation, always, among leftists, is that liberty enlarges us. That striking-off a person’s shackles not ...
    5 days ago
  • An unlawful directive
    An interesting question in the Parliamentary written questions feed today, from Jan Tinetti to the Minister of Education: Has she or her Office directed the Ministry of Education to not release Official Information Act material prior to the full twenty working days, if so, why? Given that ...
    No Right TurnBy Idiot/Savant
    5 days ago
  • I’ve been doing this all wrong
    Here are six words that are not easy to say but god it can feel good when you finally say them:I’ve been doing this all wrongFive years ago today I said to myself:What if I'm doing this all wrong?Five years ago today I said to Karren: I think I’m going to ...
    More Than A FeildingBy David Slack
    5 days ago
  • New study suggests the Atlantic overturning circulation AMOC “is on tipping course”
    This is a re-post from RealClimate by Stefan Rahmstorf A new paper was published in Science Advances today. Its title says what it is about: “Physics-based early warning signal shows that AMOC is on tipping course.” The study follows one by Danish colleagues which made headlines last July, likewise looking for early warning signals ...
    5 days ago
  • Valentines from ACT.
    Some of us make a big deal out of Valentine’s Day. We’ll buy the flowers, eye watering though the price spike might be. Say the things we should be saying anyway, although diminished by being scheduled for delivery. Some of us will even write long free-form newsletters with declarations of ...
    Nick’s KōreroBy Nick Rockel
    5 days ago
  • Tax cuts paid for by 13k more kids in poverty
    MSD advised the government that the indexation change it passed under urgency last night is likely to put around 7,000 extra children (and potentially up to 13,000) into poverty. Photo: Lynn Grieveson / The KākāTL;DR: The Government has reverted indexation for main beneficiaries to price inflation from wage inflation under ...
    The KakaBy Bernard Hickey
    5 days ago
  • Fuel Tax Fight and Rail Fail update
    The two stories we covered at the start of the week continue to be in the headlines so it’s worth looking at the latest for each of them. Regional Fuel Tax Mayor Wayne Brown promised some ‘argy-bargy’ over the government’s decision to cancel the Regional Fuel Tax and he’s ...
    5 days ago
  • Climate Change: Arsonists
    Today, a major fire broke out on the Port Hills in Ōtutahi. Like its 2017 predecessors, it is almost certainly exacerbated by climate change. And it is still burning. The present government did not start the fire. But they piled the tinder high last time they were in power, gutting ...
    No Right TurnBy Idiot/Savant
    6 days ago
  • I don’t know!
    http://en.kremlin.ru/events/president/news/73411 7 examples And who actually makes the decisions? Vladimir Putin: I don’t know. America is a complex country, conservative on the one hand, rapidly changing on the other. It’s not easy for us to sort it all out.   Tucker Carlson: Do you think Zelensky has the freedom to negotiate the settlement to this conflict? Vladimir Putin: I don’t know the details, of course it’s difficult for me to judge, but ...
    6 days ago
  • Fresh thinkers
    Fresh thinking will always give you hope.It might be the kind that makes you smite your brow, exclaiming: Why didn't we think of that! It's obvious!It might be the kind that makes you go: Dude you’re a genius.Sometimes it will simply be Wayne Brown handing Simeon Brown his weasel ass ...
    More than a fieldingBy David Slack
    6 days ago
  • It is not about age, it is about team.
    Much attention has been directed at Joe Biden’s mental lapses and physical frailty. Less attention has been spent on Donald Trump’s cognitive difficulties and physical limitations, with most focus being devoted to his insults and exaggerated claims (as if they … Continue reading ...
    KiwipoliticoBy Pablo
    6 days ago
  • ROBERT MacCULLOCH: Fletcher Building – it is time to break up NZ’s most useless company.
    Robert MacCulloch writes –  Gosh, the CEO of Fletcher Building, Ross Taylor, says today’s announcement of a half-year loss of $120 million for the company is “disappointing” and was “heavily impacted” by the Convention Centre losses. He must be crying all the way to the bank (to quote Las ...
    Point of OrderBy poonzteam5443
    6 days ago
  • Mortgage rates seen high for even longer
    Government and borrower hopes for early mortgage cost relief look likely to be thwarted. Photo: Lynn Grieveson / The KākāTL;DR: Stronger-than-expected US inflation data out overnight is expected to delay the first US Federal Reserve rate cut into the second half of 2024, which in turn would hold mortgage rates ...
    The KakaBy Bernard Hickey
    6 days ago
  • Member’s Day
    Today is a Member's Day, the first of the new Parliament. And to start the Parliament off, there's a bunch of first readings. A bunch of other bills have been postponed, so first up is Duncan Webb's District Court (Protecting Judgment Debtors on Main Benefit) Amendment Bill, followed by Katie ...
    No Right TurnBy Idiot/Savant
    6 days ago
  • Three Waters go down the legislative gurgler – but what should we make of Local Water Done Well?
    Buzz from the Beehive Local Government Minister Simeon Brown – it seems fair to suppose – was flushed with success after the repeal of Labour’s divisive and unpopular Three Waters legislation. As he explained, repealing this legislation is a necessary first step in implementing his government’s Local Water Done Well ...
    Point of OrderBy Bob Edlin
    6 days ago
  • Gordon Campbell on five of Luxon’s Gaza absurdities
    Earlier this week, PM Christopher Luxon met with 48 public service CEOs to make sure they were on board with his plans to cut spending on public services so that National can proceed to give the revenue away to those New Zealanders least in need. This wasn’t the only absurdity ...
    6 days ago
  • Love and the Fairer Sex.
    This morning I woke early with many thoughts in my head of things said, events of the week, things that matter. I’m afraid none of them involved Seymour, Willis, or Luxon so if you’re looking for something political maybe take the day off and come back tomorrow. You won’t find ...
    Nick’s KōreroBy Nick Rockel
    6 days ago
  • He stood up to Muldoon and Lange and the Fji army
    Gerald Hensley, who died aged 88 on Saturday, was the key official who presided over the tumultuous events that followed the election of the Lange Labour Government in 1984. He was also instrumental in helping a key Fijian official escape the country during one of the 1987 coups. A diplomat ...
    PolitikBy Richard Harman
    7 days ago
  • At a glance – Has Arctic sea ice returned to normal?
    On February 14, 2023 we announced our Rebuttal Update Project. This included an ask for feedback about the added "At a glance" section in the updated basic rebuttal versions. This weekly blog post series highlights this new section of one of the updated basic rebuttal versions and serves as a ...
    7 days ago
  • Halo dunia!
    Selamt datang di WordPress. Ini adalah pos pertama Anda. Sunting atau hapus, kemudian mulai menulis! ...
    1 week ago
  • The PM wants a turnaround
    As a treat today I have lined up a favourite in the music slot. I love Turnaround, I cannot hear it too often, and I feel in need of a treat when I make myself listen to the Prime Minister the way I did this morning.He too, has favourites that ...
    More Than A FeildingBy David Slack
    1 week ago
  • The PM wants a turnaround
    As a treat today I have lined up a favourite in the music slot. I love Turnaround, I cannot hear it too often, and I feel in need of a treat when I make myself listen to the Prime Minister the way I did this morning.He too, has favourites that ...
    More than a fieldingBy David Slack
    1 week ago
  • ELE LUDEMANN: Trusting locals
    Ele Ludemann writes- A government-knows-best and predilection for central control was another unfortunate feature of the 2017-2023 Labour governments. One of the worst polices as a result of that was what started as Three Waters and became several more. The National-led government is much more trusting of locals ...
    Point of OrderBy poonzteam5443
    1 week ago
  • Legislation to flush away Three Waters has become a certainty – but we must wait for details on th...
    Buzz from the Beehive A  three-day information drought was broken, just after Point of Order published yesterday’s Buzz from the Beehive, and two significant ministerial announcements were made. First, the Budget will be delivered on 30 May, telling us which genuine savings have been made by eliminating waste and which ...
    Point of OrderBy Bob Edlin
    1 week ago
  • Rise of the Lobbyists.
    An unpopular opinion, I love Auckland.Not so much the transport or the house prices - those are pretty dire. But there’s a lot to like. We’ve a vibrant, multicultural city in a beautiful location with, mostly, friendly locals. From the native bush of the Waitakeres to the Gulf islands, it’s ...
    Nick’s KōreroBy Nick Rockel
    1 week ago
  • The holes in National’s water reform pipes
    Young renters just have to watch on as pipes keep failing and the Government and councils point fingers at each other, because all the incentives are for ratepayers to block rates increases, water meters, water charges and the creation of new entities. File Photo: Lynn GrievesonTL;DR: The National-ACT-NZ First coalition ...
    The KakaBy Bernard Hickey
    1 week ago
  • After years of stability, Antarctica is losing ice
    This is a re-post from Yale Climate Connections by SueEllen Campbell Until recently, Antarctica’s ice has seemed surprisingly stable. In contrast to the far north, the southern continent’s massive ice sheets, glaciers, ice shelves (ice that floats on the ocean), and seasonal ice appeared to be reliably frozen: Enough snow fell ...
    1 week ago
  • Auckland’s Persistent Rail Issues
    Over the last few weeks in our weekly roundup we’ve commented on the frequent delays and cancellations that have occurred on the rail network this year since the rail network went back into full operation on the 22-Jan – with Kiwirail proclaiming they had ‘successfully delivered summer holiday infrastructure upgrades ...
    1 week ago

  • Greater support for social workers
    The Coalition Government is enhancing the professionalism of the social work sector and supporting the vulnerable people who rely on them, Social Development and Employment Minister Louise Upston says.  The Social Workers Registration Legislation Amendment Bill passed its third reading in Parliament today. It amends the Social Workers Registration Legislation ...
    BeehiveBy beehive.govt.nz
    44 mins ago
  • Government delivers greater freedom and choice for sick New Zealanders
    The coalition government is delivering on its commitment to making principled decisions by getting rid of red tape that doesn’t make sense and allowing sick New Zealanders greater freedom and choice to purchase effective cold and flu medicines. A bill amending the Misuse of Drugs Act 1975 is being introduced, and changes to the Medicines ...
    BeehiveBy beehive.govt.nz
    8 hours ago
  • Government begins reset of welfare system
    The Coalition Government is taking early action to curb the surge in welfare dependency that occurred under the previous government by setting out its expectations around employment and the use of benefit sanctions, Social Development and Employment Minister Louise Upston says. In 2017, 60,588 sanctions were applied to beneficiaries who ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • State of the Nation
    Ka nui te mihi kia koutou. Kia ora, good morning, talofa, malo e lelei, bula vinaka, da jia hao, namaste, sat sri akal, assalamu alaikum. Thank you for coming to my first State of the Nation as Prime Minister. Thank you for coming to a speech where I don’t just ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • West Coast tourism attractions officially open
    Regional Development Minister Shane Jones will attend the official opening of two highly anticipated tourism projects on the West Coast today – Pike29 Memorial Track, dedicated to the memory of the Pike River miners, and Pounamu Pathway. “The Pike29 Memorial Track is a way to remember and honour the men ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Independent ferry service advisory group in place
    Appointments to the Ministerial Advisory Group tasked with providing independent advice and assurance on the future of KiwiRail’s inter-island ferry service have been made, State Owned Enterprises Minister Paul Goldsmith says. “It’s important for New Zealand that KiwiRail is focused on ensuring safe, resilient, and reliable ferry services over the ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Joint statement from the Prime Ministers of Australia, Canada, and New Zealand
    The Prime Ministers of Australia, Canada and New Zealand today issued the following statement on reports of Israel’s planned military operation in Rafah. We are gravely concerned by indications that Israel is planning a ground offensive into Rafah.   A military operation into Rafah would be catastrophic. About 1.5 million Palestinians ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Govt will deliver on expanded breast screening
    The coalition Government has made the first steps in delivering on its promise to  extend free breast screening to women aged 70-74, Health Minister Shane Reti says. “As part of the 100 day plan, the Government has now met with officials and discussed what is needed in order for the ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government announces woolshed roadshows in support of sheep farmers
    The Government celebrates National Lamb Day (15 February 24) and congratulates sheep farmers on the high-quality products they continue to produce. Agriculture Minister McClay hosted bipartisan celebrations of National Lamb Day with industry representatives at Parliament this week to mark the anniversary of the first frozen lamb exports that left ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Speech: Address to the NZ Economics Forum
    It’s great to be back at the New Zealand Economics Forum. I would like to acknowledge everyone here today for your expertise and contribution, especially the Pro Vice-Chancellor, Head of the Waikato Management School, economists, students and experts alike. A year has passed since I was last before you, and ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government tackling high construction costs
    The Government is focused on reducing sky-high construction costs to make it more affordable to build a home, Building and Construction Minister Chris Penk says.  Stats NZ data shows the cost of building a house has increased by 41 per cent since 2019, making housing even more unaffordable for Kiwi ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Labour’s Three Waters legislation repealed
    The Coalition Government’s legislative plan to address longstanding issues with local water infrastructure and service delivery took an important step today, with the repeal of Labour’s divisive and unpopular Three Waters legislation, Local Government Minister Simeon Brown says. “Repealing this legislation is a necessary first step in implementing our Local ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Cost of living support for beneficiary households
    The Coalition Government is delivering on its commitment to ease the cost-of-living by increasing main benefit rates in line with inflation and ensuring the Minimum Family Tax Credit threshold remains aligned with this change, Social Development and Employment Minister Louise Upston says. The Social Security (Benefits Adjustment) and Income Tax ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Government announces agriculture delegations to better support Primary sector
    The coalition Government has announced ministerial delegations to support key areas across the Primary sector to deliver for New Zealand’s food and fibre sector, Agriculture Minister Todd McClay announced today. “I will be supported in my roles as Minister of Agriculture, Trade, Forestry and Hunting and Fishing, by three Associate ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Waikato MoU reinforces Govt’s commitment to increase NZ doctors
    The Government has taken an important step forward in addressing a critical shortage of New Zealand-trained doctors, with today’s signing of a Memorandum of Understanding for a third medical school, Minister of Health Dr Shane Reti has announced.  “Today’s signing by the Ministry of Health and the University of Waikato ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech – Lunar New Year 2024
    Annyeonghaseyo, greetings and welcome all. It is my pleasure as the Minister for Ethnic Communities to welcome you to the first Lunar New Year Event in Parliament. Thank you to our emcees for greeting us in the different languages that represent the many cultures that celebrate the Lunar New Year. ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • More funding to Hawke’s Bay and Tairāwhiti
    Urgent work to clean-up cyclone-affected regions will continue, thanks to a $63 million boost from the Government for sediment and debris removal in Hawke’s Bay and Tairāwhiti.                                                                                                   The funding will help local councils continue urgent work removing and disposing of sediment and debris left from Cyclone Gabrielle.   “This additional ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Budget will be delivered on 30 May
    Plans to deliver tax relief to hard-working New Zealanders, rebuild business confidence and restore the Crown’s finances to order will be unveiled on 30 May, Finance Minister Nicola Willis says. The plans will be announced in the Budget which is currently being developed by Ministers.  “The last government’s mismanagement of ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government advances Local Water Done Well
    The Coalition Government is continuing work to restore council ownership and control of water assets by repealing Three Waters and appointing a Technical Advisory Group to provide expert advice on the implementation of Local Water Done Well, Local Government Minister Simeon Brown says. “The Government will pass a bill to ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • New diplomatic appointments
    Foreign Minister Winston Peters has today announced five new diplomatic appointments.  "Strong and effective diplomacy to protect and advance our interests in the world is needed now more than ever," Mr Peters says.  “We are delighted to appoint senior diplomats from the Ministry of Foreign Affairs and Trade to these ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Speech to the Committee for Auckland
    It is great to be here today at this event as Minister for Auckland and Minister ofTransport. Let me start by acknowledging each one of you and thanking the Committee forAuckland for hosting this event and inviting me to speak here today. The Committee for Auckland has been a symbol ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Getting Transport Back on Track in Auckland
    Transport Minister Simeon Brown has today confirmed his high-level transport priorities for Auckland, in the lead up to releasing the draft Government Policy Statement on Land Transport. “Our economic growth and productivity are underpinned by a transport network that enables people and freight to move around safely and efficiently. At ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Government to axe Auckland Regional Fuel Tax
    Transport Minister Simeon Brown has confirmed that the Auckland Regional Fuel Tax will end on 30 June 2024. “Today, I can confirm that the Government has agreed to remove the Auckland Regional Fuel Tax in line with our coalition commitments, and legislation will be introduced to parliament to repeal the ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Minister Calls for Work to Tackle Kina Barrens
    Changes to fishing rules and a significant science programme are being undertaken to address kina barrens, says Minister for Oceans and Fisheries Shane Jones. “There has been tremendous interest from iwi, communities and recreational fishers who had raised concerns about such kina infestations being a major threat to Northland’s marine ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Government law and order crackdown begins
    The coalition Government is making good on its promise to restore law and order by removing government funding for Section 27 reports and abolishing the previous Labour Government’s prison reduction target, Justice Minister Paul Goldsmith and Corrections Minister Mark Mitchell say.  “In recent years, the development of Section 27 reports ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Greater focus on getting people into work
    The coalition government will refocus employment efforts and the welfare system so that supporting people who can work into jobs is the number one priority, Social Development and Employment Minister Louise Upston says. “Of concern in the labour market statistics released by Stats NZ today was the number of youth not ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • One year on, NZ appeals for release of Phillip Mehrtens
    Foreign Minister Winston Peters has appealed to those holding New Zealand pilot Phillip Mehrtens in remote Papua, Indonesia, to release him immediately.  Phillip Mehrtens was taken hostage a year ago on 7 February in Paro, Papua, while providing vital air links and supplies to remote communities. “We strongly urge those holding ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Ministers reaffirm Pacific connections this week
    Foreign Minister Winston Peters and Health Minister and Minister for Pacific Peoples Dr Shane Reti are reaffirming the importance of New Zealand’s connections to the Pacific by visiting Tonga, Cook Islands and Samoa this week.  “New Zealand enjoys strong and long-standing relationships with our Pacific partners - especially in Polynesia, where we ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Rt Hon Christopher Luxon – Waitangi speech
    E ngā mana, e ngā reo, e ngā iwi, rau rangatira ma. Tēnā koutou katoa. He tino mihi ki te mana whenua o tēnei rohe.  Mihi mai, mihi mai, mihi mai. Te whare e tū nei, tēnā koe.                               He-wāhi whakahirahira tēnei mō Aotearoa. Ka huri nga whakaaro, ki nga mate. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Government awards primary sector scholarships to students
    Six university students studying agriculture and science have been awarded scholarships as part of the coalition Government’s efforts to boost on-the-ground support for farmers and growers. “The coalition Government is committed to improving support and operating conditions for farmers and growers,” Agriculture Minister Todd McClay says. “We’re backing a range ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • High Court Judge appointed
    Attorney-General Judith Collins today announced the appointment of Wellington Barrister Jason Scott McHerron as a High Court Judge. Justice McHerron graduated from the University of Otago with a BA in English literature in 1994 and an LLB in 1996. From 1996 to 1999 he worked as a solicitor in the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • New Zealand provides further humanitarian support to Gaza and the West Bank
    Foreign Minister Winston Peters has announced that New Zealand is providing a further $5 million to respond to the extreme humanitarian need in Gaza and the West Bank.  “The impact of the Israel-Hamas conflict on civilians is absolutely appalling,” Mr Peters says.  “That is why New Zealand has contributed $15 ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Government consults on expanding COVID-19 Inquiry terms of reference
    The Government is delivering on its commitment to enable public input into expanding the scope of the Royal Commission of Inquiry into COVID-19 Lessons, says Internal Affairs Minister Brooke van Velden. “As committed to in both the ACT-National and NZ First-National coalition agreements, the public will be given the opportunity ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Tai Tokerau Water Boost
    A further $5 million loan has been advanced to the Tai Tokerau Water Trust for Te Waihekeora Reservoir, Regional Development Minister Shane Jones says.  “Water is a precious resource, Kānoa – Regional Development and Investment Unit at the Ministry of Business, Innovation, and Employment have done amazing work in the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Fast track consenting in the fast lane
    The Government is progressing changes to resource management laws as part of its 100 Day Action Plan, with the first steps taken to establish a new fast-track consenting one-stop shop regime. “This new regime, which forms part of National’s coalition agreement with New Zealand First, will improve the speed and ...
    BeehiveBy beehive.govt.nz
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  • JOINT STATEMENT ON AUSTRALIA-NEW ZEALAND MINISTERIAL CONSULTATIONS (ANZMIN) 2024
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