Tranquillum

Written By: - Date published: 7:28 pm, December 6th, 2020 - 134 comments
Categories: capital gains, class war, Economy, equality, Ethics, housing, labour, leadership, Politics, Social issues, vision - Tags: ,

Aotearoa has weathered several storms in recent times. After the Election and with the promise of a vaccine for Covid early next year, we seem to have sailed into relatively calm waters and the safe-harbour protection of a Government that is obviously not going to rock the boat.

The disillusionment is strong with many (?), who think that more must be done, that more can be done. They feel that to achieve this is to relentlessly criticise the Government into action, particularly transformational or progressive action.

Being the Apologist of Establishment that I am, I think this criticism is often misplaced, misguided & misdirected, and thus rather pointless. The people in charge, our so-called leaders are everything but leaders in the true sense of the word; they do not lead us, they manage our affairs for us. Collectively, we chose them and asked to do so for us on our behalf. We got what we asked for.

On the one hand, we should not be surprised with the incrementalism of this Government. On the other hand, we want them to go faster, be bolder (more radical), and go further. In other words, we want our leaders to be people who they are not and act, literally and figuratively; we want them to change fundamentally.

Unless faced with an existential crisis, people, mostly, do not change their ways. In fact, they will defend them as if their existence depends on it. People resist these kinds of criticisms, particularly when these people are content with the way things are and have built successful careers out of and based on it. Asking them to change is not only a mission impossible but also an exercise in futility, in my opinion; we cannot ask for more than they are able to deliver.

But criticise we must and hold them to account. We must challenge them to do the best they can do and be the best they can be just as we do with and to ourselves.

Part of effective leadership is developing a narrative that becomes a collective one. This requires vision and strategy, and boldness. Frame it in a certain way and it will be dead before it hits the water. A case in point is Capital Gains Tax (CGT). Frame it as a way or a tool to solve the perennial housing affordability problem and it hits the skids from the get-go. Other countries have various forms of CGT and this has not prevented huge rises in house prices. Thus, the economic argument for CGT is less compelling, in my view.

However, considering that house sellers raked in $4.4 billion in profit for the September quarter, it is clear why so many are keen to jump on the bandwagon and have a slice of the action too. In addition, it is also clear why housing is considered the best investment option around and has been for a long time. I do not have the figures but I assume that much of that $4.4 billion goes untaxed. That will buy a few a lot of nice Christmas presents, I reckon – good for them.

A different narrative would frame this situation, which has clear negative consequences for our economy and society, in terms of fairness and equality, with equality referring to different income streams treated equally from a tax perspective. One would like to think that these values would align well with the New Zealand Labour Party, its ideology, and its proud history.

A graph from 2011

 

Unfortunately, the current Labour Party seems keen to avoid any reference to ideology and class war in case it would scare middle-New Zealanders. Stability and continuity are the soothing words that the business community and middle-New Zealand want to hear so that is what we hear apart from some inconvenient dissonant noises here and there, which we can easily block out and ignore, can’t we?

The gaping chasm between ethical principles and action is a more compelling reason for CGT than anything else and I would go as far as to call it a mandate. A CGT would also hugely simplify the enormously complex tax system around property values, sales, and profits (and losses!). If not a CGT, what else? Yet, this all seems to be falling on deaf’s ears because the current leadership team lacks that ideological backbone to make any real and meaningful changes.

I do not expect economic or techno-/bureaucratic arguments to have any sway but I do expect that ethical arguments would. Over time, others will step up who are more receptive to these kinds of arguments and ways of thinking and who are able to co-develop a different narrative, one of fairness, equality, and a more resilient economy in which houses are not built on (or near) water with the increasing risk that they go underwater, literally and figuratively. Such narrative will go hand-in-hand with action, one that is long overdue, by at least a century.

Meanwhile, enjoy the relative peace and calm before the next crisis hits. Even if or when you lose your job, your house will still be earning much more than you ever will in a real job, without tax!

134 comments on “Tranquillum ”

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  1. greywarshark 1
    6 December 2020 at 8:11 pm

    Perhaps one of the things that we could do that would prevent us from being completely ineffectual as a polity is to set a maximum time for MPs and Ministers to be in Parliament of Two Terms, of four years per term. Ministers to be in place for two terms max and then drop out on a quota basis in another term at most two. The idea would be to have some experienced Ministers in place to guide the younger ones. And they would be the ones who had succeeded best in getting practical far-seeing policies implemented.

    Then we might not see so much complacency. No wearing out the feather cushions over many decades. It would be – show your worth, be fit for the job, don't show off your white teeth just keep your mouth closed till you have something worthwhile to say.

    • Incognito 1.1
      6 December 2020 at 11:58 pm

      None of what you propose would ensure younger candidate politicians.

      It takes about a minimum of 8 years to train a specialist.

      How long does it take to become a Court Judge?

    • WeTheBleeple 1.2
      7 December 2020 at 8:43 am

      I think that is daft. We'll lose valuable experience and mentoring opportunities. The voting system is supposed to cut out the dead wood. But who I think is dead wood is likely someone else's favorite.

      The system should be changed so the dead wood is glaringly obvious, not covered by a swarm of emotional junior staffers.

      • Incognito 1.2.1
        7 December 2020 at 9:12 am

        Dead wood does not get removed and burnt because party politics adds another layer that is not accountable and transparent to the voters. Parties decide their candidate lists in nefarious ways as National has shown so clearly.

  2. Grafton Gully 2
    6 December 2020 at 8:27 pm

    While enjoying the relative peace and calm before the next crisis hits, my neighbours are concreting and decking over fertile backyard land they might one day need to grow food. They trust the supermarket cargo cult to survive any conceivable crisis. Bless the optimism and "grand plans" of the young !

    • Incognito 2.1
      6 December 2020 at 11:55 pm

      Nah, they’re investing and adding value to their property so that they can go up to next rung. It’s the next owner-occupants or tenants who may miss out growing food.

      • Grafton Gully 2.1.1
        7 December 2020 at 9:52 am

        You are probably right, most houses around here have new occupants every five years or so and no one is growing food. I just can't understand it. In the 1950s when I was growing up no one I knew did this. Your house and backyard garden was your home where the kids played and dad grew veges and mum put the washing out and you knew the whole neighbourhood and the kids had gangs that played together after school. All that seems to have changed beyond my ability to understand why. It must be because people now see their house as a way of "getting ahead" more than a secure base to raise a family and safely grow old in a familiar neighbourhood. It must be hard for young parents to juggle the two priorities, family home and building a nest egg by selling and buying up the ladder. I blame the plague of commercialising everything – even birdwatching and trout fishing FFS !!! and the loss of support for the so-called Nanny State, which I benefited from and hope will return. No sign of a political party to bring it back though, probably because voters now believe there is "no alternative" to the status quo so anyone campaigning on a roll back of commercialisation and a return to a Welfare State would be regarded as a lunatic.

        • greywarshark 2.1.1.1
          7 December 2020 at 10:59 am

          That's the sort of lunacy that should prevail. Everything we do can be regarded as a sort of lunacy anyway, if one could step off the moving belt for a minute. When the gummint stepped away from being for people and enabling us to have lives and opened up to business enabling them to be open when they wanted 24/7, a lot of the time we could spend together was removed, or fractured.

          We have been abandoned by the Treasury finance-machine, its fellow travellers and the personal wealth creators who are driving the country still, even if they are in the back-seat! Shut up back there, we have a better map and route marked out! If you don't like it, we will pause and you can get out, take your e-scooter, or personal gyrocopter and go.

  3. Duncan 3
    6 December 2020 at 8:27 pm

    I think you need to get a few facts right before you jump to conclusions.

    The median house price in Auckland is over NZD 1 million, in Sydney, where it is predicted house prices will surge after Covid-19, just like here, it is less than NZD 950,000.

    Sydney is a major international city with greater land constraints than Auckland. It is bound on the North, West and South by National Parks, and to the East by the Tasman. The population of Sydney is 5.2 million, more than total NZ. Incomes are 30% higher there than in Auckland.

    Auckland is a hick town in comparison.

    So how do you conclude CGT makes no difference.

    And yes I agree about your commentary about our leaders, but why can we not pressure government to change the system, to give us a better selection of leaders.
    Do it by incrementalism. Get rid of the vested interests, lobby groups and party fund raising. Then get rid of the wealthy investment bankers and property landlords, or restrict their numbers, who "represent" us. Give youth a representation, at least 20% of all seats held by under 30s. Set a maximum term of public service, say 3 terms. One to learn, 2 to serve.
    But to achieve all of that, we need an electable party or voter majority to force change.
    To me the biggest issue is the government has us where they want us, divided, and we need unity to drive change for the greater good.

    I don't see unity happening for many reasons. Ethical arguments are all to easily blown away. Look at our homeless, we could solve their problem in 2 years by halting immigration. Yet property owners argue it is a supply issue, which is BS. And the Greens argue for more immigration.
    Let it all collapse into a stinking pile of shit and then see what happens.

    • greywarshark 3.1
      6 December 2020 at 8:36 pm

      The Greens argue for more immigration? Could you give the link to the statement you are referring to, or more details.

      • Duncan 3.1.1
        6 December 2020 at 8:48 pm

        Sure, I will check it out. Never easy as no party will put numbers on it, but I will get you proof if I can.

        • greywarshark 3.1.1.1
          6 December 2020 at 9:01 pm

          Yes I don't want Greens getting labelled for something that was misheard, or actually applied to practical needs such as seasonal workers to some level. I wouldn't expect them to be supporting the milking of overseas hopefuls and the pandering to the rich which we have been doing. It's time to stop the Uriah Heep* approach to immigration.

          We act to support our smaller neighbours in the Pacific and they have made themselves available for seasonal work for many years and earned extra that has helped them. It is a co-operative arrangement that we should continue. But of course should be making places for NZs regularly too, as an obligation to our people. It may have been some mention of immigration along those lines.

          *Uriah Heep is a fictional character created by Charles Dickens in his 1850 novel David Copperfield. Heep is one of the main antagonists of the novel. His character is notable for his cloying humility, unctuousness, obsequiousness, and insincerity…

        • Duncan 3.1.1.2
          6 December 2020 at 9:19 pm

          Be as clever as you feel.

          Before the 2017 election, the Greens set a target of 1% immigration, which is 50,000 pa

          Pretty high.

          They were pilloried for that and dropped the numbers,

          https://www.stuff.co.nz/national/politics/94303173/green-party-apologise-for-antiimmigration-pandering#comments

          They apologised for setting a limit of 50,000.

          I like the fact that they tried to pander to their base by saying it was not a numbers game, but a values game. and good on them, but the implication to me is quite clear, they would be happy with numbers above 50,000.
          So I have no proof yet, but as I said, they will not state numbers.

          But the intention is clear.

          • Incognito 3.1.1.2.1
            7 December 2020 at 12:05 am

            I spot a wee contradiction in your argument.

            But the intention is clear.

            Well, don’t be shy and tell us. For your convenience:

            https://www.greens.org.nz/immigration_policy

            • greywarshark 3.1.1.2.1.1
              7 December 2020 at 3:02 pm

              If you look at something one-eyed then you get a different perspective from someone using both eyes Duncan. Do you understand what politics is about, or do you just sit watching it on tv and say what a bunch of w…s?

              The Greens might have been trying to find what would be regarded as a reasonable ceiling for immigration. No higher than 50,000 for instance. I know they have to find a way to persuade the public to accept policies that will bring some rationality in this country on climate change while there is still time for agency that will make a difference.

              There are so many problems, picking on one thing to hit someone or a Party with is to miss so many more. Now and then someone makes a list of problems and tries to prioritise them. If you could find a list you could work your way down adding your valuable criticisms at each point.

    • Andre 3.2
      6 December 2020 at 9:13 pm

      Whether CGT makes a difference to housing prices or not depends on whether it is also applied to other forms of investment.

      If you want CGT to be specifically a tool to dampen house prices and drive investment to other areas, then apply it to houses only. Then other investments, such as shares, become relatively more attractive because of tax-free income they produce when the gains are realised.

      If the CGT is introduced because of the fairness and equity argument, then all forms of investment should be subject to CGT. Property, shares, family businesses, art, classic cars, what have you.

      Personally I favour the fairness argument for applying CGT to all investments. Seems to me other tools should be brought to bear on the housing crisis. Including government building programmes and regulatory changes. Other tools should also be applied to make other forms of investment more attractive. More personal accountability at the top end of the income scale, regulation of the high fees on investments, deposit guarantee schemes are just the first to come to mind.

      • Duncan 3.2.1
        6 December 2020 at 9:26 pm

        Yeah I don't have any issue with what you say.

        Tax is a tool to manipulate behaviour.

        Thinks alcohol and ciggies.

        And yes there is a plethora of tools to deal with property speculation, of which tax is only one.

        I was just responding specifically to the authors comments.

      • Jester 3.2.2
        6 December 2020 at 10:35 pm

        I cant see a CGT reducing house prices. There is a CGT in Australia and houses in Sydney are not cheap.

        • Duncan 3.2.2.1
          6 December 2020 at 10:56 pm

          Cheaper than Auckland, explain that.

          • Andre 3.2.2.1.1
            7 December 2020 at 5:58 am

            Given personal homes in Australia (and the US) are in fact tax-advantaged compared to other investments, the answer is somewhere other than taxes.

            Cost of construction is likely one factor leading to lower housing prices in Oz and the US.

            When it comes to other investments, I dunno about Australia, but personally I'm a lot more comfortable with my investments in the US stock market than in NZ.

            I have a sense that in the US, big players such as mutual fund and pension fund managers exercise a bit of accountability to ensure company management is oriented a little bit more towards putting at least some of the returns towards all shareholders.

            In NZ, it appears that fund management sector is too small and fragmented, and those fund managers just don't see it as their job to exercise accountability. That fragmentation also contributes to the extremely high fees getting chrged here on the likes of people's Kiwisaver funds.

            Here it also appears our financial watchdogs are relatively toothless and sleepy. It appears the level of misconduct has to rise to awesome outrageousness before they will stir to do anything.

          • Jester 3.2.2.1.2
            9 December 2020 at 10:25 pm

            Simple….Supply. Larger area and more available.

        • Andre 3.2.2.2
          7 December 2020 at 5:11 am

          Main personal residences in Australia are exempt from CGT. In Australia, other investments are subject to CGT. So from an investment point of view, homes actually get a favourable tax treatment compared to other investments.

          https://en.wikipedia.org/wiki/Capital_gains_tax_in_Australia#Exemptions

          Similarly in the US, there are now some quite large deductions from CGT liability for main personal homes, giving them a tax-advantaged status compared to other forms of investments.

          https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States#Primary_residence

      • Incognito 3.2.3
        7 December 2020 at 12:06 am

        yes

    • Incognito 3.3
      6 December 2020 at 11:43 pm

      I think you need to get a few facts right before you jump to conclusions.

      Oh dear, which facts did I get wrong and what conclusions did I jump to erroneously?

      So how do you conclude CGT makes no difference.

      Simple! I did not conclude that. I wrote in the OP:

      “Other countries have various forms of CGT and this has not prevented huge rises in house prices. Thus, the economic argument for CGT is less compelling, in my view.”

      And yes I agree about your commentary about our leaders, but why can we not pressure government to change the system, to give us a better selection of leaders.

      What you ask and suggest refers to what comes after this Government while the OP was about criticism of the present Government. In addition:

      "Après nous, le déluge"

      Ethical arguments are all to easily blown away.

      Indeed, in politics, core values can be traded away for political gains and sacrificed for political expediency. The implicit point of the OP is that ethics and values should take centre stage of politics, not economic or technocratic ‘reasoning’. In our efforts to eliminate Covid, scientific arguments had a lot of sway yet the decisions were not made by [the] scientists and/or health professionals but by our elected representatives who had to and did consider other aspects. This is where values and ethics play a vital role but they generally seem to be ignored as major drivers of policies and political decisions.

      Look at our homeless, we could solve their problem in 2 years by halting immigration. Yet property owners argue it is a supply issue, which is BS. And the Greens argue for more immigration.

      I call BS on those assertions.

      Let it all collapse into a stinking pile of shit and then see what happens.

      Let’s not. Nobody wants things to get worse, not even National.

  4. Stuart Munro 4
    6 December 2020 at 8:31 pm

    I am wary of rationalizations that excuse governments from acting in the best interests of the country as a whole, which allowing the housing bubble to proceed unchecked would be.

    It's a serious business, being a minister, and fiddling while the planet burns, or while housing inflates beyond the reach of working people is at best unprofessional.

    I fear they will do nothing, as they have done nothing about forty years of slave fishermen. But I will not forgive them, if they trouser their handsome salaries and fail to deliver.

  5. lprent 5
    6 December 2020 at 8:32 pm

    I haven't thought this through, but I suspect that just applying GST to all property transactions would probably do a lot to dampen speculation and increase the tax take to the point where property isn't as attractive as other more productive investments.

    You'd have to be able to carry losses over time and people would – when you do a house improvement like a kitchen you expect that to get reflected in the eventual profit. And you'd want to claw back the paid GST from it.

    But above all it removes any taint of 'purpose' which is what causes issues with our existing capital gains tax. But you also make it that the many things with GST on a house then become GST recoverable. Roofing. Lawn mowing. Whiteware. etc. Houses would start winding up with some decent accounting (using online programs) and get exactly the same painful benefit that businesses got from GST back in 1986 – counting where the money goes.

    • greywarshark 5.1
      6 December 2020 at 8:49 pm

      I think I'd be for putting GST on house sales if I could recover GST on R&M. As I need to do a fair bit I will be paying a goodly tax out of real income, not on some basis of landlord pay-back from income on leveraged properties of which taxation is probably the last thing that has to be confronted.

      The accommodation allowance, the immigration encouragements, and the favourable credit available to overseas banks playing their financial symphonies on our financial instruments – all could be called a treasonable device introduced by Labour with National just turning up the volume. Treason includes the act of undermining sovereignty, which has happened with the signing away our rights and resources to large overseas corporations and wannabes.

      A pox on both their houses. Labour had better clean up their playbill or they will lose their venue and seating.

      • lprent 5.1.1
        6 December 2020 at 9:50 pm

        edit: opps – this was mean to be a reply to Graeme on 5.2. Reminds me that on my to do eventually list is a comment mover..

        That is how it works right now. But I'd take the GST off on every sale and put the onus on the owner to claim the GST paid in the (n) years leading up to the sale – carried forward as a GST loss.

        Back in 1986 I was post MBA and stuck in Dunedin (the town with few jobs if you didn't want to work for the government) while my partner at the time finished off her degrees. So I took a eighteen month job following a passion of mine and did computer support across Otago. Much of it was installing computer systems to handle GST. It was amazing how much owners and managers were learning about their own businesses. That happened across the whole country.

        One of the problems with owning housing in NZ is that it really doesn't seem to be treated as a business. More savings in bonus bonds with a speculative element in prizes. In Auckland especially the houses aren't being traded for their rental income or even to live in. A lot of them are just standing empty because the total return in rental over years is way less than the increase in value – and renting them actually costs money.

        There is absolutely no transparency on this part of our economy. Bugger 'privacy' from the IRD – we don't have that in any other part of the economy. Home owners – especially investors – should be required to file quarterly or monthly returns and have the systems to do that. It is absolutely no different from any other type of investment. I do PIR's for investments and Kiwisaver, and PAYE. If I was still running a personal business GST and provisional tax. In all of them I'd be required to account for my dealings to the IRD many times in a year.

        We all do this. I can't see why property shouldn't do the same. GST seems like a good way to make that happen – with an audit trail.

    • Graeme 5.2
      6 December 2020 at 9:25 pm

      GST would only be payable if the vendor was leaving the market or trading down, an it could be looked at like a business sale where no GST is paid or recovered.

      Most of the rorts with GST around private homes, like bed and breakfast and lifestyle 'farms', generally come unstuck when the property is sold and the ex-owner sees how much GST they have to pay, unless they carry on the charade and do it all again.

  6. Duncan 6
    6 December 2020 at 8:39 pm

    And, house sellers may have raked in 4.4 billion for the September quarter, but what is the relevance of house sellers, when we don't have a CGT.

    People who owned properties raked in gains of 200 billion for the year end Sep 2020.

    That is what matters.

    • greywarshark 6.1
      6 December 2020 at 9:04 pm

      Is that rises in book value through housing price inflation, whether unrealised or not?

      • Duncan 6.1.1
        6 December 2020 at 9:13 pm

        Yes, it is, and as I said that is what matters, not realised gains.

        Because that gives investors more equity to raise loans against, and the supply of M3 money increases exponentially as do property prices.

        • greywarshark 6.1.1.1
          6 December 2020 at 9:23 pm

          Yes, it may be pie in the sky but you can bet on it, with housing. The whole damn thing is like risk-free gambling. Who'd go to a casino and play roulette? We should have a level playing field though, the young people must be entitled to get government help with the bidding so they can get onto the escalator.

          The government must be getting back handers for keeping things as they are. Why would they be so keen to not do anything when the situation is obviously egregious and disastrous for our economy as well as the citizens and others, who can't afford a home or even find one to rent?

    • Incognito 6.2
      7 December 2020 at 12:13 am

      That is what matters.

      Obviously, they both matter. The OP used the example of CGT, which applies to realised gains (or losses).

  7. McFlock 7
    6 December 2020 at 9:16 pm

    It's funny. Labour did so damned well in the election largely because of how they responded to covid: strong, decisive action, well communicated and with the consensus of the vast majority of experts.

    Their initial response seem to be to hoard that political capital, terrified of moving in case they lose a few coins.

    Strategically, I think this is the term where they have political money to spend, and if they go boldly the worst that will happen is a three-term government. Which is likely what will happen if they do nothing.

    At an individual level, a third of their MPs likely have less than three years left in parliament. If they acted like they had a limited time to do things, they might be in the group that beat the odds.

    • Duncan 7.1
      6 December 2020 at 9:55 pm

      How do we get them to spend their political capital without revolution.

      I think the only way is to get those who are going to euthanase anyway, to do it on the steps of parliament as a recognition of the hell they have created, and an ode to Seymour.

      Self immolation is the most effective form of protest.

    • weka 7.2
      6 December 2020 at 9:59 pm

      "terrified of moving in case they lose a few coins."

      That's the popular theory. I think we shouldn't discount that the inaction is also ideological. Maybe they really don't want to raise benefits because they think that it will disincentivise work. Maybe they don't want to do what is needed on the housing crisis because they believe that middle class NZ has to pay for its own retirement, and part of the covid recovery is getting people to buy and sell houses. Maybe they're not going to move on climate action because they don't think it's as serious as it is.

      • Incognito 7.2.1
        6 December 2020 at 10:48 pm

        I think it is lack of an ideological underpinning or a lack of commitment to an ideological underpinning of their actions, at least in a publically articulated way that goes beyond rhetoric and aspirational and inspiring speeches. Their vision is the short-term and short-range vision of political pragmatists, as was John Key’s, not the long-term and long-range vision and strategy of adherents of a socio-economic ideology.

        What we see here in Aotearoa is a beige and texture-poor mix of socialism and neo-liberalism, anything goes, as long as it is BAU. The fear of the abyss of the unknown will always turn pragmatists back to the light at the end of the tunnel, the Devil they know: status quo. Ideological firmness and resilience can act like a guiding light, almost like [a] faith. Of course, there are downsides to blindly follow an ideology.

        In contrast, the Green Party and especially the Maori Party stand for something and they embody their respective values; Labour less so. Governing for all New Zealanders is so broad, it is meaningless and catch cry for BAU, which definitely not serves all New Zealanders equally or serves them well, for that matter.

        The result is ad hoc policies that lack a coherent ideological framework and thus no real cohesion between them. These policies address certain issues, no doubt about that, but in an isolated manner; nothing moves forward or changes as a whole.

        • weka 7.2.1.1
          7 December 2020 at 9:33 am

          that nails it, thanks yes

          • Chris 7.2.1.1.1
            7 December 2020 at 2:47 pm

            I see little difference between what Incognito's saying and what you've described as "the popular theory", that they're "terrified of moving in case they lose a few coins." I don't disagree. Labour's put political survival before the wellbeing of citizens since the early 1990s. It's just that Labour and many of its supporters would of course say that "remaining pragmatic" / "steering a middle ground" / "doing nothing" – however one puts it – is in fact 'protecting the wellbeing of citizens' given the alternative to their losing power. But then Ardern seems to be saying 'do nothing unless you've got the support of the population'. Whether this is wholly the case or if there's a bit or even a lot of being "terrified of moving in case they lose a few coins" is hard to know. One thing's for sure, though, which is that right now, the result is the same.

        • gsays 7.2.1.2
          7 December 2020 at 3:34 pm

          With respect to Labour lacking ideology and behaving more like managers than leaders, this is reflected by the workforce. Generally non-unionised, casualised and non boat rocking.

          Getting the government we deserve perhaps?

          • Incognito 7.2.1.2.1
            7 December 2020 at 11:03 pm

            Getting the government we deserve perhaps?

            No, it’s more than that; as I said in the OP:

            “We got what we asked for.”

      • McFlock 7.2.2
        6 December 2020 at 11:45 pm

        I don't believe those views are widespread amongst the Labour caucus.

        If they were, I believe that one or two caucus members I know of would be in another party.

        • weka 7.2.2.1
          7 December 2020 at 9:30 am

          In that case they need way better PR.

          • McFlock 7.2.2.1.1
            7 December 2020 at 10:09 am

            Depends on whom they want to talk to, I suspect. Which would be related to the voting block they see themselves as most at risk of losing, not the blocks they're least likely to gain.

            • weka 7.2.2.1.1.1
              7 December 2020 at 10:39 am

              so they have core values they just don't want to talk about them for fear of losing votes?

              • McFlock …
                7 December 2020 at 12:10 pm

                Oh, they'll talk about them. Child poverty is bad, m'kay? Climate change is bad.

                The question is whether they have come to the realisation that now is the best opportunity they'll have in thirty years to actually address those problems in a manner that they think will work (but other parties believe the manner is either too much or too little).

                I would have expected a 'christmas present' announcement by now. The negative stuff – taxes, regulations, restrictions – will wait until next year. But a pre-xmas boost to benefits, or some industry grants would give some signal of where things are going.

                • weka …
                  7 December 2020 at 3:17 pm

                  Saying child poverty is bad mkay isn't what I meant though, that's rhetoric.

                  I would say that a core value of Labour's is that work is paramount in societal wellbeing. So the solution to poverty is to create jobs. Value –> policy. This makes sense given where Labour came from, but it's really weird trying to make it work in a neolib context.

                  Likewise 'nuclear-free moment' is rhetoric. Values would be 'humans are part of nature, so we need to protect nature as a paramount priority', or 'nature has rights so we need to stop destroying it'. Climate action policy would then reflect that.

                  • weka …
                    7 December 2020 at 3:20 pm

                    I just found this,

                    We’ve put the environment at the centre of our thinking; it’s an asset that underpins our wellbeing, identity, lifestyle and livelihoods. As we continue our COVID recovery, we’re investing in nature to support thousands of people into jobs now, and protect our environment for generations to come.

                    https://www.labour.org.nz/environment

                    Which in startk contrast to the GP and Mp, is essentially saying that nature is a subset of human activity. This is why they've got inadequate policy. They don't get it. The rest is rhetoric ('at the centre of our thinking' and so on).

                  • McFlock …
                    7 December 2020 at 3:40 pm

                    FWIW, I'd expect the Greens, Māori Party (well, when it doesn't go with the nats), and Labour to all have similar values, but to view those values from different perspectives. Labour, for example, should be people-focused and work focused. It's "labour", after all.

                    • weka …
                      7 December 2020 at 3:54 pm

                      well yes but that just takes us back to my original comment. Labour's policy reflects values that don't match the rhetoric. You can't for instance take appropriate action on climate change if you believe that nature is a resource for us to protect and use. Likewise, if you specifically exclude welfare from your values then it's going to be hard to have policy that is people focused despite the all NZers PR.

                    • McFlock …
                      7 December 2020 at 4:38 pm

                      Their policy platform says more about how they see those core values and principles working together. The link is on the core values page for that reason.

                      So for the supposed conflict between addressing climate change and resource allocation:

                      1.15 Sustainability/Kaitiakitanga is the value that will ensure resources are shared fairly across society and in doing so protect the resource base for future generations. We are not just selfishly concerned about ourselves and what we have, but whether our actions
                      are going to leave our children’s and grandchildren’s generations with the same or increased opportunities. Sustainability is about ensuring economic prosperity within environmental, ecological, social, and cultural bottom lines. It is about development that will deliver good education and health outcomes, secure housing and jobs, access to safe food, clean water, clean air, and secure energy resources.

                      The most critical sustainability issue is climate change. It poses a severe threat to the planet and to the future of humans and other species. Labour says that climate change must be tackled urgently and effectively, by way of a low-carbon economy in New Zealand and a comprehensive international climate change treaty.

                    • weka …
                      7 December 2020 at 4:56 pm

                      that actually supports what I am saying (Labour's values on the environment produce inadequate policy). Contradictory statements and the last sentence is meaningless unless one believes that we can do BAU and climate action.

                    • McFlock …
                      7 December 2020 at 4:59 pm

                      I don't see "low carbon economy" as business as usual.

                    • weka …
                      7 December 2020 at 5:26 pm

                      low carbon economy is meaningless without timeframes and plans that drop GHGs fast. NZ patently isn't moving fast enough, and it's clear from Labour's values why. Labour's whole schtick is to work on climate and keep BAU (moving as fast as the economy allows*) eg green tech will save us, we can keep on with the neoliberal growth economy. A great number of people are pointing out this simply isn't possible.

                      *instead of moving as fast as the environment demands. Imagine if they'd taken that position on covid. This is why I wonder if they just don't believe it's as serious as it is.

                    • Incognito []
                      7 December 2020 at 11:23 pm

                      Good discussion between the two of you, thanks.

                      Concerning the decisive action on Covid vs. the apparent lack of urgency on CC, I think one major difference is the control/influence sphere. It’s relatively easy to close the borders and eliminate the virus from our soil, but it is impossible to keep CC out, no matter what we do.

                    • McFlock …
                      7 December 2020 at 5:46 pm

                      The goals and timeframes for their covid response changed quite a bit even in their short durations – but the principle of "keeping people alive" was pretty clear.

                      But at the risk of being accused of pedantry, something meaningless can't actually contradict anything else (unless the other thing is "everything we say will have meaning").

                      It seems to me that if one wants to read all of Labour's publications looking for signs of neoliberalism, sure, one can make that interpretation. But at the same time, one can also interpret a lack of specifics as a combination of "kiwibuild bit us in the arse and the credit card got us re-elected" and the fact the 2017 election could easily have been a National Party 4th term.

                      My interpretation is the Labour caucus is mostly good people trying to figure out what will fly in the current political and economic overton window, while not necessarily being constrained within that window themselves. Policy options have been ruled out to maintain a vote share and avoid opposition fearmongering.

                      Another interpretation is that the bulk of Labour caucus are firmly within a perspective of not wanting (e.g.) poverty but always avoiding any ideas that can actually address it in a substantive manner (and so on with every other problem). As I said, people whose characters I have a reasonable handle on would not be in Labour (let alone the caucus) if they felt that is the case. So that's part of the reason I sit where I sit.

    • lprent 7.3
      6 December 2020 at 10:01 pm

      Their initial response seem to be to hoard that political capital, terrified of moving in case they lose a few coins.

      You mean in the 20 odd working days after getting final results and just prior to breaking parliament for Xmas?

      While they're still mostly dealing with a whole lot of things from the Covid pandemic? I think that the last of the majority of the subsidies and support measures have just been removed.

      Yep – heaps of time to make sensible policy. To be frank we won't know the actual impact on the economy and the tax receipts from Covid until the results are in for the end of the March quarter. And when we're going to start seeing vaccines actually start to become available and some planning to try to reactivate the large areas of moribund economy and jobs.

      It seems to me that not firing ahead at a world economy that will probably fire back before you've checked that your powder is dry and hasn't fallen out would be wise idea..

      • Duncan 7.3.1
        6 December 2020 at 10:12 pm

        Ok, but you ignore the fact that both Jacinda and the RBNZ said recently they don't want to see house prices fall, and the RBNZ could have dropped LVRs immediately but chose to signal investors have 4 months to drive up property prices.

        This is the same as a company underwriting a renounceable rights issue, property investors know they cannot lose.

        These messages are as important as any legislation.

        Stupid.

        • Incognito 7.3.1.1
          7 December 2020 at 12:19 am

          In order to become affordable to many who now can only dream of owning a home, they’d have to drop a lot! This is not going to happen and I don’t think that is the way to go anyway.

          You seem to be missing the main gist of the OP!?

        • lprent 7.3.1.2
          7 December 2020 at 8:46 am

          …both Jacinda and the RBNZ said recently they don't want to see house prices fall, and the RBNZ could have dropped LVRs immediately but chose to signal investors have 4 months to drive up property prices.

          I don't think that anyone wants them to drop abruptly. The consequences of that would be catastrophic for everyone economically. For a starter it gets almost impossible to get mortgages because the risk level for the banks get higher.

          ..property investors know they cannot lose.

          They know that they can't lose anyway. In the areas of highest demand like the urban centres there has been a consistent shortage of building of the right kinds of residential property for decades. House prices have risen in response to that, rent prices have followed to pay for the mortgages, and the banks have assessed the risk and have been willing to lend on what they perceive as the risk-free asset values.

          The responses by the RBNZ have been about controlling the extent of overreach. Both through the LVR and through the level of actual funds that the banks must hold. Both are rationing schemes to minimize risk to the banking system (ie the basic role of the RBNZ). They provide no more housing and arguably diminish the ability to increase supply closer to demand because the LVR in particular limits new housing builds.

          These messages are as important as any legislation.

          Legislation does nothing – it can't magic up housing of the right types in the right places. Messages do nothing – they can't magic up housing…

          • mikesh 7.3.1.2.1
            7 December 2020 at 12:29 pm

            House prices have risen in response to that, rent prices have followed to pay for the mortgages,

            Mortgages shouldn't really be influencing rent prices. A tenant will never own the house that he is renting, so why should he contribute to the landlord's mortgage. The latter will be building depreciation on the house into his rent and that is how the tenant pays for his use of the house

            • greywarshark 7.3.1.2.1.1
              7 December 2020 at 12:37 pm

              As well, the landlord may be working on the increasing value of the house when setting the required rent, which might be arbitrarily set at a certain percentage, say 8%. As the values rise and the 8% is applied to the new valuation of the property to which no improvements have been made, the rent could be put up and justified as only what the market has set, not unreasonable. The inflation of building value is a finagle of the financial market.

              • mikesh …
                7 December 2020 at 1:19 pm

                Rents should be based on running costs: rates, insurance, maintenance and depreciation – but not mortgage payments, not even the interest component – with perhaps some increment to provide the landlord with a profit. Despite rising property prices running costs should probably remain constant which means that, over time, renting would become more and more attractive relative to ownership, which would probably be a good thing.

              • mikesh …
                7 December 2020 at 1:40 pm

                PS: If running costs remain constant then the profit component in rent needs to increase if investment in rentals is to remain attractive. This means that it is the banks, who supply the mortgages, who are the main beneficiaries from rising property values. The landlord's extra profit is offset by a larger mortgage.

                • greywarshark …
                  7 December 2020 at 2:23 pm

                  edit
                  I don’t get you mikesh. Of course the rents should cover the mortgage payments. The landlord is buying a property to run as a money earner, that will increase in value over time. The tenant gets the advantage of living in a very expensive asset, and pays the costs of that. Not to cover the mortgage is providing charity to the tenant out of the landlord’s pocket. The fact that it is an enduring asset is acknowledged, and the costs of maintenance etc need to be covered, but the mortgage and interest payments also are costs which the property rental must cover. Otherwise why invest in it?

                  The landlord is likely to work out the percentage of return on the property on the purchase price which will not be the same as the mortgage. And in that way may push the rental up beyond what is fair. He/'she will want to say that I get …percent on my investment, which will be the purchase price. Then that will be regularly revalued to ensure that the purchaser gets maximum advantage from the rising market price.

                  (I recall a very high building in London CBD in the 70's, very upmarket and very empty. The inflationary market at that time made it very valuable as collateral for further borrowings. It was revalued regularly upwards, which as you say then gives room to borrow more for further investment. It was of more value to the owner empty than rented, as the demand for business rentals was very high at that time.)

                  I consider that government, central and local, should have a good number of accommodation buildings for needy people, some of whom could afford to pay for them. (Older people may not be able to pay and have to rent.) Some would be sold to the individual or family, who then are the owners with the council guaranteeing the loan, and retaining an interest in the upkeep and insurance payments being made, as banks do on their mortgages. But there would be one proviso, that the building when no longer wanted is sold back to the council or government, which pays for it to an agreed system that would be based on the historical price, added repayment for acceptable alterations, major maintenance, and an agreed small percentage of inflation for each year.

                  This would keep the building out of the housing inflationary cycle, and would return the paid-off capital investment to the seller. It would relieve much of the burden of cost to authorities of providing housing to the lower-paid, and enable them to have a security and permanency of site – it should be near amenities and schools – and would mean they could make savings which would stay with the family instead of lining landlords pockets.

                  • mikesh …
                    7 December 2020 at 4:13 pm

                    I don’t get you mikesh. Of course the rents should cover the mortgage payments. The landlord is buying a property to run as a money earner, that will increase in value over time.

                    What I am saying is that profit = revenue (rent) minus expenses. However, mortgage payments are not expenses, they are payments for the property itself. Therefore if the property investment is large and highly leveraged he will need a very large profit margin to accommodate the mortgage. (The mortgage is his own concern so should be met from his own resources.)

                    If we assume that the rent should be running costs plus a normal sort of business mark-up of around 5% or so then a very large mortgage probably makes the business unsound. If he is not prepared to subsidize such a business from his own resources then he should not be in business in the first place. However he gets away with it because he is investing in an "out of control" property market, and he is speculating on making capital gains eventually.

                  • mikesh …
                    8 December 2020 at 5:35 pm

                    One idea pertinent to this situation has been advanced by one Clint Smith:

                    thespinoff.co.nz/society/30-11-2020/one-simple-idea-to-fix-new-zealands-dysfunctional-housing-market/

                    He suggests that tax deductions in respect of mortgage interest be limited to $3000.00, but given to every owner, including owners of family homes, with a mortgage. Such a provision would benefit family homeowners who are not eligible for a deduction at all; but it would hit highly leveraged big time investors pretty hard.

      • sumsuch 7.3.2
        6 December 2020 at 10:43 pm

        The chap talks like a … Labourite and you fire back like an 84ist freemarketeer. Or, Trump, in the end.

        • Incognito 7.3.2.1
          6 December 2020 at 10:52 pm

          Got anything useful to add but ad homs? If yes, be my guest. If no, please go to OM.

        • lprent 7.3.2.2
          7 December 2020 at 10:13 am

          If you're addicted to shoving labels on things outside of your experience – then I'd have to label you as "Too lazy to think". Seems like a nice accurate label.

          Perhaps you'd like to explain your work experience back in the 1970s and 1980s? What the prospects were and where you saw the country heading at that time. This will give us some perspective to see if you are more than a mindless fool.

          Right now you look like you substitute simpleton labels rather than trying to understand where others are coming from.

      • McFlock 7.3.3
        6 December 2020 at 11:31 pm

        It's not like they just got a surprise win. They don't need anyone else, so we should be expecting some strong movement based on their party policies.

        But besides all that, there's no feeling of movement. They've poured cold water on some ideas, but without the "100 days" verve of last time.

        There's more to governance than covid. We've had all the working groups and commissions. Sure, the final tally is just in, but they've known for a while that they won the "king for a day" lottery that most MMP parties will not ever see – governing alone with a reasonable majority.

        Now is the time for backbenchers to throw up the flagpole absolutely wild ideas to see who salutes. And if nobody salutes, less wild ideas can be pursued as a "compromise".

        Maybe they just need a holiday (and I probably do – had a couple of big projects complete in the last week or so). And one never spends the lotto win immediately, pause and have a think first. So, maybe.

        But if we get to 2023 and they haven't made a major pivot in something – house prices, poverty, benefit rates, state homes, anything – it'll be a wasted opportunity.

        • Incognito 7.3.3.1
          7 December 2020 at 12:20 am

          yes

        • lprent 7.3.3.2
          7 December 2020 at 10:07 am

          But if we get to 2023 and they haven’t made a major pivot in something – house prices, poverty, benefit rates, state homes, anything – it’ll be a wasted opportunity.

          Agreed. But I’d prefer that they thought first.

          There was an interview (stuff?) with Jacinda this morning where she was saying how surprised whe was about how long it took to get child poverty estimates back – lag of about 18-24 months from memory.

          That makes it bloody hard to chart a course and then measure effects. It is a problem not only of trying things out – but also looking at how to test if it is having any effect.

          You can’t go into measurement paralysis. But you also want to know if you’re throwing resources down the wrong sinkhole.

          What I’d prefer to avoid is things like the kiwibuild program that relied on private builders producing a particular type of housing. Then persisted when there wasn’t that much chance that private builders would be enticed into that unless there was a severe construction downturn. That was the case back in 2012 when the policy was formulated, and possibly even in 2014. Certainly wasn’t from 2015 onwards.

          It shouldn’t have been part of the 2017 manifest of policies. State housing should have been because that can be much more tightly targeted to what we need now. It also gets away from small scale builders and more to affecting the type of demand in what construction is on order. Smaller dwellings targeted towards different demographics in need.

          • McFlock 7.3.3.2.1
            7 December 2020 at 4:23 pm

            They've had three years in government to think about what they would do if it weren't for those meddling coalition partners.

      • Phillip ure 7.3.4
        7 December 2020 at 10:12 am

        @lprent..
        well..we do have the speech from the throne to look to..laying out the legislative program of this government..

        and that was seriously underwhelming..

        we should just wait…y'reckon..?

        • lprent 7.3.4.1
          7 December 2020 at 10:23 am

          Off hand I can't think of a speech from the throne that has ever had anything meaningful in it. After all you don't usually get numbers involved in it. At best you usually just get legislative intent. And seldom much of that.

          I usually look at the budgets because that is where you see actual resource allocation.

          I'd point out that I do exactly the same thing in the corporate environment.

      • greywarshark 7.3.5
        7 December 2020 at 10:30 am

        You mean in the 20 odd working days after getting final results and just prior to breaking parliament for Xmas?

        Put so clearly that sets the situation before us. Many of us so anxious to finally get some practical things moving, and totally disbelieving that business will provide worthwhile results, that we want immediate visual signs of new beginnings. So time to take a Christmas break?

        Perhaps instead provide food vouchers for the holidays, so that money is freed up to buy or pay back whatever. If money is given there is likely to be a frenzy of toy and technology buying with it, to have something to give to the family, and that would be just giving for temporary wants, not need. Better for government to respond to the food bank news, provide food vouchers that can be downloaded and printed out, to each beneficiary, or accessed through recognised welfare groups on the request of a person or family.

    • sumsuch 7.4
      6 December 2020 at 10:39 pm

      Labour leaders are burnt by reality, Labour followers are forged by it.

  8. Duncan 8
    6 December 2020 at 9:47 pm

    Roulette is probably the best gamble at the casino (94% payout), as long as you don't bet over multiple winning options, then you bet against yourself to lose. And it always follows patterns. That why casinos have maximum bets so you cannot keep doubling up, other wise you would never lose.

    With the housing market, there are no house limits because they want everyone to win, on paper at least.

    Because for the banks the money is free.
    Hallelulah.
    The bank is the house, the players are the buyer and seller mugs. The real estate agents the Chinese of the old gold fields.

    • greywarshark 8.1
      7 December 2020 at 10:35 am

      Duncan reel yourself in a bit. The real estate agents are not like the poor hardworking Chinese men raking over the spoil from other goldfield hopefuls. Better not bring other cultures into your comments please; there is complexity and history to be understood and considered before referring to them.

  9. sumsuch 9
    6 December 2020 at 10:35 pm

    Enjoyed your verisimiltudious talk, Incognito.

  10. KJT 10
    7 December 2020 at 6:40 am

    We don't have a CGT, and we have almost the highest house prices to median income ratio in the OECD.

  11. KJT 11
    7 December 2020 at 6:44 am

    The arguments against a CGT, always boil down to. "I am making lots of money on my house/s, and I don't want to pay tax on it".

    So. "I'll spout all sorts of BS, misuse statistics and make inaccurate comparisons to justify my stance".

    And. If all else fails, "It was the boomers fault".

  12. RedLogix 12
    7 December 2020 at 6:49 am

    Unfortunately, the current Labour Party seems keen to avoid any reference to ideology and class war in case it would scare middle-New Zealanders.

    Has it not occurred to anyone that the fact of 'middle New Zealand' being the dominant voting group is a measure of our success, not failure?

    • Incognito 12.1
      7 December 2020 at 9:08 am

      Yes, this has been touched upon in the OP, if you read carefully.

      The word “success” means different things to different people though.

  13. Ad 13
    7 December 2020 at 9:35 am

    Enjoying the "relative peace and calm before the next crisis hits" by having a housing asset or two is a perfectly rational response to the violence of the economic and social order that we are in since the GFC.

    It's so rational that public tax policy responses should not stop it. And this government more than the fools on the hard left understand that premise very clearly.

    Housing will continue as New Zealand's most attractive asset class irrespective of taxes until there are other superior asset classes with a greater reward for the risks taken.

    For example at the moment you can withdraw your Kiwisaver as a deposit on your first house – but not for any other asset class.

    Also we have so few sharemarket listings that are not utilities or property of one kind or another.

    If we paid 0% tax on Kiwisaver ever, people would find local enterprises would get invested in faster, and of course returns on Kiwisaver on the more adventurous classes would increase.

    So until there are even better alternatives to invest in, there's no point trying to alter their attractiveness with mere tax instruments.

    • greywarshark 13.1
      7 December 2020 at 10:40 am

      I can't resist putting my hand in the water though, as someone else paddles the punt or waka along. I would like us all to have a chance to be a paddler rather than just unwilling passengers amongst those prepared to just sit back and enjoy the ride.

      • Ad 13.1.1
        7 December 2020 at 12:16 pm

        Yes that has been the democratising principle of Kiwisaver.

        NZSuper could itself propose to be a Kiwisaver provider if it wanted.

        Or Crown Infrastructure Partners could propose a large scale home equity scheme.

        It's not like this government are short of equity-growing instruments to reconsider or re-tool.

    • Grafton Gully 13.2
      7 December 2020 at 7:06 pm

      Transferring wealth from the rich to the poor to the long term benefit of everyone would be a better alternative.

  14. mikesh 14
    7 December 2020 at 10:37 am

    The gaping chasm between ethical principles and action is a more compelling reason for CGT than anything else and I would go as far as to call it a mandate.

    Ethical principles, as applied to housing issues, would require a clear headed analysis of why capital gains occur in the first place:

    First, capital gains are mainly associated with land values. A land tax on all occupied land would therefor seem appropriate. The land (Maori land excluded) belongs to all of us and anyone claiming private ownership should be be paying for that privilege. Purchasers of property should be doing so on the understanding that its land component would be taxed.

    Secondly, home owners who own their own homes are living rent free. The rent that they save in doing so is a quasi income which is not being taxed, and should be. (It should be noted that mortgage payments are for the house itself and not for the quasi income that it provides.)

    Capital gains may not exist if these land taxes and/or RFRR taxes were introduced but, even if they did they would no doubt be be greatly reduced. It would seem unfair if sellers of properties were asked to carry the can for the rest of us who are not being taxed appropriately.

    • greywarshark 14.1
      7 December 2020 at 3:23 pm

      Mikesh – …home owners who own their own homes are living rent free. The rent that they save in doing so is a quasi income which is not being taxed, and should be. (It should be noted that mortgage payments are for the house itself and not for the quasi income that it provides.)

      Why should everything be monetised, and we be charged tax on everything that a person needs to live. It is vulture economics and I spit on it and people who suggest it. Our lives are being fractured by this Mafia-like bunch of academics who have managed to take over a discipline that was useful, but is now run by idealogues.

      If people manage to get into a home, which is mortgaged, they are paying it off to a bank what the hell is this idea of treating their living as foregone rent. It should be that everyone has a right to save and get a house of some sort. You are talking like Don Brash and his ideas have been brought in somehow even though ordinary people thought they were shite.

      • mikesh 14.1.1
        7 December 2020 at 7:59 pm

        It is vulture economics and I spit on it and people who suggest it.

        But you cannot deny that our housing market is dysfunctional. Better you spit on that

        Our lives are being fractured by this Mafia-like bunch of academics who have managed to take over a discipline that was useful, but is now run by idealogues.

        Now you are shooting the messenger

        If people manage to get into a home, which is mortgaged, they are paying it off to a bank what the hell is this idea of treating their living as foregone rent. It should be that everyone has a right to save and get a house of some sort.

        Purchasing a house, whether or not it is financed by taking out a mortgage, is an investment. The free rent is the return on that investment. Why should that return not be taxed like the return on any investment.

        • KJT 14.1.1.1
          7 December 2020 at 8:54 pm

          Not correct. A big stretch.

          You are paying to buy the house. If you are living in it the repayments ARE the rent.

          It is not, "Free rent".

          When I buy a car should I pay tax on the rental cost I would have paid if renting it? I am "getting free car rental" according to you.

          • mikesh 14.1.1.1.1
            7 December 2020 at 10:08 pm

            It depends on where you draw the line between those expenditures which are considered investments, and those which are considered consumption. Houses seem to lie on one side of that line, and automobiles on the other. That may seem arbitrary, but economists, and statisticians, consider houses to be investments; I suppose because of the size of the outlays involved, and also because houses are frequently rented, while automobiles, though rentable, are not normally rented.

          • mikesh 14.1.1.1.2
            7 December 2020 at 10:14 pm

            PS: If you think that automobiles should be considered investments, and their benefits taxed, perhaps you should put up a case in support of that.

            • KJT 14.1.1.1.2.1
              8 December 2020 at 9:13 am

              No. I do not think an imputed rental on cars should be taxed. Neither should the idea that if you buy a house, spending money on buying it, you are somehow getting "Free rental" and should be taxed on it.

              That is the sort of half baked idea, that only a theoretical economist can love.

              What should be taxed, is the profit on buying and selling a house/land, Capital gains tax. And the gain on inheritance.

              A lower limit for charging capital gains on a house can be say, any gains below the current median house price in Auckland. Which will exclude most houses bought as dwellings, not, "investments".

              • mikesh …
                8 December 2020 at 2:03 pm

                That is the sort of half baked idea, that only a theoretical economist can love.

                I suspect that an economist, theoretical or otherwise, would have greater insight into this sort of issue than you.

                I don't think you can deny that something that saves you from having to pay rent is conferring a benefit. Or that that benefit has a monetary value. So why should it not be taxable.

                Mortgage payments are payments for the house itself, the house being the entity that confers the benefit, and when all the mortgage payments have been made you will own the house outright; but you still would not have paid for the benefits that the house conferred in terms of accommodation. If you had purchased those benefits from someone else, as would be the case if you were renting the property, then that person would pay the tax and everything would be fine. However that is not the case – you are effectively your own landlord – so you should have to pay the tax yourself.

                Incidentally, capital gain is not profit. When you sell an asset you are merely transferring your capital from one asset class to another. i.e from property to cash. (Cash is an asset – ask any accountant.)

                • KJT …
                  8 December 2020 at 3:50 pm

                  " paid for the benefits that the house conferred in terms of accommodation".

                  Of course we have paid for the benefits the house confers in terms of accomadation. We bloody well bought it! And most of us have paid huge amounts in interest as well, for the privilege.

                  That is the problem with too many economists.

                  Divorced from reality.

                  You, and others can claim until you are blue in the face that Capital gains is not income".

                  The rest of us know that anything which has increases the amount of money you have to spend. Is Income.

                  • mikesh …
                    8 December 2020 at 9:29 pm

                    By your definition capital gain cannot possibly be income.. You can't spend capital gain because it is embedded in the property, and, presumably remains in the property after it changes hands. All you have have received from the transaction is cash. Cash is not income; cash is an asset. Cash sometimes comes from the earning of income, but not in this case.

                    • KJT …
                      9 December 2020 at 3:51 pm

                      Tell that to the IRD and accountants, when we write off decreases in capital value against income for tax purposes.

                      Depreciation is one example.

                      Another is if your oil well loses market value. You can write it down.

                      There is a difference between theory and practical reality.

                      It still doesn't change the fact, that Capital gains escaping tax, is a big loophole in our tax system.

                    • mikesh …
                      9 December 2020 at 4:31 pm

                      Depreciation is one example.

                      Capital is not depreciated. Physical assets depreciate and such depreciation is a legitimate expense tax deductible against income. Capital may well be invested in physical assets, but capital does not in itself depreciate, though capital losses can occur when an entity loses value for some reason. However such capital losses cannot be written off for tax purposes.

                      Tell that to the IRD

                      Incidentally, the IRD does not consider capital gain income. If it did it would be taxing it already. the department regards capital gain taxable only if a property has been purchased for resale. If a property has been purchased for other purposes e.g. as a family home, or for the purpose of acquiring rental income, then any capital gained on eventual resale is not taxable

                      I expect the IRD can be expected to know about these things – more than you at any rate.

                      There is a difference between theory and practical reality.

                      You need to be sure you understand practical reality before making statements like that.

                    • KJT …
                      9 December 2020 at 8:36 pm

                      In my job we call a "rope" a "line", unless it is in a new coil.

                      However it doesn't make the people who call it a "rope", wrong!

                    • mikesh …
                      9 December 2020 at 11:42 pm

                      How very broadminded of you.

  15. WeTheBleeple 15
    7 December 2020 at 11:16 am

    We only need to change how we grow, manufacture, travel, build, make power and consume.

    To continue trying to build on the failed global experiment is suicidal.

    Our planet is geared to feed the insatiable greed of the rich who'd like to drain the entire planet at once, not just their local economies. We can no longer afford the rich. And we really should stop worshiping them. They're (mostly) contemptible shits.

    It's about designing properly. Aquaculture feeds horticulture that feeds agriculture that feeds aquaculture. Nature laughs at our imbecilic fumbling. Everything is connected why are we still failing to make such connections.

    Poverty creates crime that creates social unrest that creates demand for policing that creates expense that justifies penny pinching that creates poverty… CONNECTED. All of it.

    Propping up the rich will damn us all. I may attempt a more positive post later but those are my thoughts as to what's wrong. Material wealth costs far more than we can afford.

    • weka 15.1
      7 December 2020 at 12:54 pm

      If there was one thing I could change right now it would be shifting from the fragmented thinking to the systems, interconnected thinking that is needed for the planning and design to get us out this mess. I don't yet know how to explain well the difference, it's like speaking two languages to people who are only aware of one. This is not new of course, Māori experience this, feminists, disabled people, everyone that's had to find ways of thinking outside of the dominant, til death do us part thinking that is core to the west.

      I still believe that Labour will follow when there are enough people demanding change, and am hoping that as the social justice stuff ramps up the regen people can get their voices heard when change starts to happen. I agree with Incog about the importance of narrative and I wonder if the regenerative communities are ready for having influence in that when the time comes politically.

  16. R.P Mcmurphy 16
    7 December 2020 at 11:17 am

    NZ is a cargo cult. We are at the mercy of the housewives of the USA who generate global economic booms. The problem here is like the rest of the world; overpopulation. However our overpopulation was artificially generated by the Nationals party to appease the real estate and retailer factions who only know how to go forward and dont create anything by themselves. The relentless drive by the media to consume has worked a very nasty trick on kiwis which will come back to bite us in the end.

    ps. I didn't go to a private school so excuse the semi colon

    • greywarshark 16.1
      7 December 2020 at 2:48 pm

      I register 'housewives' and overpopulation. Seems female based critique. I think by overpopulation you are referring to excessive immigration. And the housewives of the USA are accompanied by their husbands and partners in doing the consumption, think of cars and all sorts of machinery that the husbands are devoted to, sometimes more than to their wives. We are at the mercy of blandishments to buy, and the media has to pay for itself with advertisements.

      If you are looking for whom to blame, I suggest the economists who designed neolib and gave us their twisted cult; it's similar to Scientology but has a wash of academic respectability over it. Economic theory is useful if it is kept as a tool, but neolib has big teeth which are used to chase and bite people, who they consider big sheep.

  17. Tiger Mountain 17
    7 December 2020 at 11:38 am

    As Noam Chomsky paraphrased a line from Karl Marx “Theses on Feuerbach”…
    “The task is not just to understand the world but to change it”.

    So, do we accept Jacinda and “Robbo’s middle class vote herding “Blair Lite” approach, or does the left organise and do something about it? Including direct action–occupying empty houses, rent strikes, picketing Ministers wherever they appear, delegations to new Labour MPs electorate offices, unity of action between NGOs, supporting Māori issues such as Ihumātao, wards and water rights, poverty action etc.

    Incognito’s “neither fish nor fowl” post mimics the passivity and confused thinking that reigned during the Clark years really. An era that saw the authoritarian “Jobs Jolt” and WWF expanded, and largely the continuance of “Roger’n’Ruth’s” toxic legacy.

    • greywarshark 17.1
      7 December 2020 at 12:23 pm

      Words to live by TM. And unless they are heeded, there will be no change. The smug unknowing who enjoy the country's services and way of life, every now and then comment wisely with amusement at what they see as the antics of protesters. When the time is right they say, the wisdom of the leaders will institute all the things you are calling for, just be patient, you don't understand enough to know why these things can't be done now. And so it goes.

      Older and wiser and after deep thought, people know that those who don't ask, and don't get thoroughly informed so they press with the facts behind them, may get to be heard, but patted on the head and sent out to play. It probably takes some leader's loss or pain to get fast action on that particular need.

      The people have to advocate for themselves and get closer to power to achieve. It takes constant effort. Michael Savage had cancer while he was ushering his welfare bill forward, he died soon after Labour got it through Parliament. A curator has recently found the original of his photo that hung in so many homes. I have the one from my elderly aunt's wall. The people knew then what was needed. They didn't have television then constantly diverting them from their own reality, and selling them the expensive artifacts of higher society on 'higher purchase'.

      On Michael Joseph Savage – much heard about but do we know the man? And aspects from the history are applicable to today!

      …Savage, who from 1908 had been secretary of the Auckland branch of the New Zealand Socialist Party, opposed the formation of the first New Zealand Labour Party in 1910 because it refused to include socialist objectives in its platform…

      The onset of the economic depression of the late 1920s and early 1930s and the deprivation and suffering that many people, especially the unemployed and the elderly, experienced put tremendous pressures on members of Parliament. Savage was distressed by the hardship he encountered, and in 1931 was admitted to Auckland Hospital with mysterious abdominal pains; they were to recur throughout the 1930s.

      From 1933 he traversed New Zealand repeatedly with an intensity and evangelical fervour previously unknown in New Zealand politics. In the months leading up to the 1935 election Savage came to personify the Labour Party's commonsense humanitarian approach. He spoke with sincerity, eloquence and power, convincing many voters that he and his colleagues not only understood their problems but could be trusted to solve them…

      He…suggested that New Zealand might need to foster secondary industry or find a market other than Britain for its primary products…

      In April 1938 Savage outlined the government's social security proposals. … he started to use the term 'applied Christianity' to describe the government's scheme, now before Parliament… A week after the Social Security Bill was introduced to Parliament on 12 August 1938, Savage collapsed in Auckland. The diagnosis was cancer of the colon necessitating immediate surgery. Any delay, Savage was informed, could be fatal.

      Although he realised his medical advisers were probably correct, Savage was reluctant to be incapacitated over the next two months during which the Social Security Bill had to be enacted and a critical election fought against a revitalised opposition. A change of leadership would be very destabilising for Labour. The threat of war in Europe was a further concern, as was the erosion of New Zealand's overseas reserve funds. Savage decided to delay the operation until after the election and in the view of one of his confidants, the Anglican bishop of Wellington, 'thereby signed his own death warrant'.

      https://teara.govt.nz/en/biographies/4s9/savage-michael-joseph

      • Tiger Mountain 17.1.1
        7 December 2020 at 2:07 pm

        Well put Greywarshark.

        I admire our current PM’s COVID performance as much as many New Zealanders did Savage’s. Have seen for myself over the years how many still have the famous portrait in home or office.

        Interesting too for some of us that like photography, and appreciate what it means that the original negatives have been tracked down.

        BUUT…Labour’s thumping great majority is not going to go quietly unnoticed as far as I am concerned.

  18. arkie 18
    7 December 2020 at 12:49 pm

    We have also come to this hallowed spot to remind America of the fierce urgency of Now. This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism. Now is the time to make real the promises of democracy.

    – Martin Luther King, Jr. 28 August 1963

    Now, almost 60 years later, King’s words still accurately describe the challenges we face.

    I’d prefer to stay off the Tranquillum, thank you very much.

    • Tiger Mountain 18.1
      7 December 2020 at 2:22 pm

      Not too much “Tranquillum” this Xmas at food banks, predatory loan sharks, women’s Refuges, A&E Depts, or for car and garage sleepers, and precarious low paid workers.

      • arkie 18.1.1
        7 December 2020 at 4:43 pm

        Absolutely, it would be wise for some to think of the urgent need of those unable to afford the 'tranquilising drug of gradualism'. The status quo/establishment apologia is fine if you're comfortable, but if you're struggling, well then you haven't got the time to wait.

      • Patricia Bremner 18.1.2
        7 December 2020 at 6:00 pm

        Apparently giving has been hugely generous this year. Sallies have a scheme near you .As little as $39 up to $89 makes a difference to a Christmas Day. Cheers.

        I am surprised Jacinda has not done what Helen did and double the Christmas benefit.

        • Tiger Mountain 18.1.2.1
          7 December 2020 at 8:08 pm

          A few miserable hundreds of dollars per Bennie is surely conscionable after the multi billion COVID business bailouts, and rather shameful second tier “COVID Benefit”

    • Incognito 18.2
      7 December 2020 at 11:55 pm

      Heh! I thought of making a reference to the infamous benzodiazepines Valium and Librium that are anxiolytics (for treatment of anxiety disorders) and coin Tranquillum the new ‘opium for middle-New Zealanders’. Instead, I opted for a wordplay on Interregnum.

      • Tiger Mountain 18.2.1
        8 December 2020 at 9:04 am

        Interregnum is commonly an interval of time, between leaders etc. or as the Marxist Antonio Gramsci put it–“The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”

        Maybe Antonio’s take fits the NZ situation. Neoliberal Hegemony had its day years ago, even the World Bank and others have admitted the “Chicago Boys” school of economics abject failure for many millions of people.

        So it is a matter of when, not if, the Reserve Bank Act and the rest of Roger’n’Ruth’s toxic legacy is retired for good.

  19. Scud 19
    7 December 2020 at 3:32 pm

    If i was to bring in a CGT, it would be based on the Australian Model that is currently in place here in Oz atm.

    But it would be for all Residential Properties including undeveloped land expect for your primary residence.

    But i would not apply CGT to any other form of investments, as a way to encourage investment outside of housing and this could also allow those NZ Companies listed on the NZX an alternative way of raising money instead of going to banks. I would also get rid of Withholding Tax on Savings and Super accounts as i would also like to encourage people to save.

    I would also scrap any stand down period for casual/ part time seasonal work or undertaking paid voluntary work for example the Doc's High Country Fire Teams and or those in the NZDF Reserve Forces which both would also be Tax Free as you are being twice the citizen as you are giving sometime back to not only your community, but to your national as well.

    • greywarshark 19.1
      7 December 2020 at 7:00 pm

      Hope they read that in the Wellington bubble Scud.

      • Scud 19.1.1
        7 December 2020 at 11:49 pm

        I doubt if the muppets in Wellington aka NZLP or the NZ Greens read anything I post here 😂. That resembles anything sensible or forward-looking policy, they would probably trip over any sensible or forward- looking policy like the town drunk stumbling out of the pub after spending his last 50 bucks.

  20. george.com 20
    7 December 2020 at 11:01 pm

    "A CGT – So we all pay our fair share"

    "A CGT – and you'll pay less income tax"