Politics changed, facts haven’t

March 28, 2019

Sir Michael Cullen is being paid $1000 to sell the capital gains tax.

It’s a task made more difficult by records of his views on a CGT  which the parliamentary library holds from his time as an MP:

Stuff reported that although the chairman of the Tax Working Group once called a capital gains tax “extreme, socially unacceptable and economically unnecessary”, he has since changed his mind.

New documents compiled by the Parliamentary Library for the ACT party reveal just how far he shifted since leaving Government in 2008.

The 84 pages of research included every reference Cullen ever made in the House in reference to a CGT between 1987 and 2008. . . 

They include:

. . . “I think it is extremely hard to make that connection between a capital gains tax and the affordability of housing, insofar as there has never been a theoretical argument put forward about a capital gains tax on housing. It is more in the direction of a level playing field around investment; it is not around the notion that it will make houses cheaper. Indeed, it is very hard to see how it would necessarily make houses cheaper,” Cullen said at the time.

On June 20, 2007, when Bill English asked Cullen about explicitly ruling out a capital gains tax, he responded saying: “One of the problems with a capital gains tax – apart from the fact that if it were done, it should apply to all asset classes—is that countries overseas that have capital gains taxes have significant inflation in house prices on occasion”.

Then on June 21, 2007, he was asked about the possibility of combining ring-fencing with a capital gains tax on all investments except the family home, and more Government investment in low-cost rental housing.

He responded saying: “I think it is fair to say that, if one was looking at a capital gains tax, which I am certainly not, it would apply to all asset classes. I think the arguments in favour of such a tax, which probably 20 years ago were quite strong, become much, much less strong in the intervening period of time, for a whole host of reasons. So I think that that is actually not a very worthwhile avenue to explore, not least because it comes, in effect, at the end of a process, rather than trying to address the over-investment at the start of the process”. . . 

He says he was Finance Minister at the time and following the government line.

When asked why he changed his mind, he quoted John Maynard Keynes: “When the facts change, I change my mind”.

What facts have changed? It wasn’t a good idea then and it still isn’t, for the same reasons.

As Robin Oliver, former deputy head of Inland Revenue, former Treasury advisor, an expert on the tax system, and one of three dissenters on the Tax Working Group said:

There’s a strong argument for taxing capital gains, as you put it, in theory, the problem is the practicality and of making it work. . .

Kathryn Ryan asked him if, all things being equal and as a tax expert would it be good to do it and her replied:

In the actuality of what you have to do to get such a tax in place, no.

Most of the arguments in favour of a CGT are theoretical ones based on a notion of fairness, whatever that is.

Most of the arguments against it are practical based on facts including that it has done nothing to rein in house prices elsewhere and has led to overinvestment in housing, underinvestment in business, and acts as a handbrake on succession.

The politics have changed but the facts haven’t.

A CGT with exceptions as recommended by the TWG would be expensive to administer, contain loopholes which would only provide work for lawyers and accountants, promote over-investment in housing, stifle investment in productive assets, and result in lower tax revenue in tough times when capital gains fall.


What’s fair?

February 28, 2019

Definitions of fair include: treating people equally without favouritism or discrimination and: without cheating or trying to achieve unjust advantage.

By either of these definitions attempting to make the tax system fairer is doomed. To take a lot more from some people than from others in very similar circumstances is not fair.

There’s rarely a tax the left doesn’t like and it is particularly enamoured of capital gains tax.

A CGT might be fair in theory but as one of the three dissenters to the Tax working Group’s recommendations, Robin Oliver, said, he’s against it in practice.

There’s a strong argument for taxing capital gains, as you put it, in theory, the problem is the practicality and of making it work. . .

Kathryn Ryan asked him if, all things being equal and as a tax expert would it be good to do it and her replied:

In the actuality of what you have to do to get such a tax in place, no.

Oliver is a former deputy head of Inland Revenue, former Treasury advisor and an expert on the tax system whose views should be taken seriously.

He gave several examples in the interview of how the CGT as recommended would not only not be fair but would lead to perverse consequences including making it more attractive for foreigners to invest in New Zealand and for New Zealanders to invest overseas, and for people to hold on to assets and businesses when without the tax they would be better to sell them; and that it would have made little difference to the housing boom.

He also said that the current law on the bright line test has low compliance and we should make current rules work before starting to think of highly punitive  ones.

That would be fair.

 


Patriotic Call To Yarn

February 23, 2015

The National Army Museum at Waiuru made a patriotic Call to Yarn:

They started by calling for a handcrafted poppy for each of the 18,166 New Zealanders killed in service during World War I:

On 16th October the National Army Museum officially launched their ‘Patriotic Call to Yarn’ project commemorating all those who paid the ultimate sacrifice on an important day in history when the first soldiers left New Zealand for Europe and the First World War.

On 16th October 1914 over 8,000 New Zealand troops and their horses left Wellington harbour and New Zealand shores bound for Egypt. They left thinking, “it will all be over by Christmas”, that it was an adventure of a lifetime, the opportunity for overseas travel. Little did they know what awaited them on the other side of the world.

Over the course of the next four to five years on the battlefields of Gallipoli and later Europe, New Zealand lost 18,166 men and women to the ravages of war.

Back home the war effort was strong as the women realised they also could ‘do their bit’.

“For the empire and for freedom, we all must do our bit, the men go forth to battle, the women wait and knit” Lady Liverpool

Patriotic associations were formed all over the country with over 5 million pounds raised. Women got together and knitted and stitched items of clothing for the soldiers including balaclavas, shirts, underclothing, socks and darning kits.

In honour of all those men and women 100 years ago, the National Army Museum is seeking assistance from the general public of New Zealand and have made a ‘patriotic call to yarn’ by aiming to produce one hand crafted poppy for each serviceman and woman lost by our nation in the Great War. That is 18,166 poppies!

These very special tributes will be on show in the form of a cascading waterfall of poppies in the museum’s Tears on Greenstone memorial area.

Poppy project coordinator, Alison Jones said, “We hope to achieve this traget by 2018 and have already had an overwhelming response with well over 1,000 poppies made.

Poppies can be knitted, crocheted, sewn or hand crafted in anyway and there are several different patterns available to assist people in their contributions.

With that total of 18,166 already exceed, they are now making a bigger call:

A Patriotic Call to Yarn – The Last Post

To achieve, one hand crafted poppy for EVERY New Zealand Serviceman or Woman lost during War or conflict.

Based on the Tears on Greenstone database at the Museum – that is 30,475 personnel from all services
(Army, Navy, Airforce and Merchant Navy).

We have already achieved 18,166 – so that is a further 12,309 poppies.

These poppies must be smaller – no more than 7cm in diameter* – so that they can be remembered together in one memorial piece.

*Please note: All poppies will be accepted so do send poppies already constructed larger than 7cm. Smaller poppies are encouraged for the new format to ensure they are able to be displayed all together. . .

poppy reveal 4 200x300 A Patriotic Call to Yarn

The first panel is unveiled in the Tears on Greenstone memorial

Rural women has links to patterns.

Kathryn Ryan interviewed the project coordinator, Alison Jones on Friday.


Yesterday, this morning, this afternoon . . . .

June 23, 2014

Labour said it would announce its list yesterday afternoon.

That changed to this morning.

Now former party president Mike Williams has just told Kathryn Ryan that the list will be released at 3pm this afternoon.

The timing isn’t significant the party management is.

One suggestion for the delay was that the party couldn’t handle the list ranking while dealing with the fallout from the Liu donation allegations.

It is just as likely to be a problem with telling MPs and candidates

Whatever the cause for the delay, how can a party that is once again demonstrating problems running one of its most important internal activities smoothly hope to convince voters it can run the country?


Which election is Labour trying to win?

March 3, 2014

Last Monday when interviewed by Kathryn Ryan, Labour leader David Cunliffe said:

“We all know the Government is going to change. It’s either going to change this time or next time. I think it’s more likely to change this time, and if it does, the question in front of New Zealanders is what is the composition of that new government going to be?”

For a leader to suggest he’s focussed on anything other than a win in the next election is unusual.

Could it be that he has a two-election strategy, to increase Labour’s vote at the expense of the Green Party this year in the hope that will give him a really strong foundation to win the election in 2017?

His interview on The Nation adds to that suspicion:

• Cunliffe refuses to guarantee the Greens’ place in Labour-led government – “that depends on how the voters decide.”
• Withdraws promise by previous Labour leader David Shearer that Greens will get a proportionate share of Cabinet seats – “we’re different roosters, I’m not doing it that way” – and won’t discuss coalition deals before election.

How the voters decide is the sort of game-playing Winston Peters indulges in.

Giving voters a good indication of what sort of government their votes might result in gives them the power. This shilly-shallying leaves the power with the parties.

But Cunliffe is firing a warning shot across the Green’s bow on purpose.

Voters in the centre aren’t keen on the radical left policies of the Green Party and many would prefer a strong National-led government than a weak Labour-led one beholden to the Greens.

All polls put National well ahead of Labour which would need Green support to govern, and probably some of the other minor players as well.

If Cunliffe could suck votes from the Greens on its left flank it wouldn’t increase the left-bloc but would make Labour stronger.

The swapping of votes within the left wouldn’t be enough to win this election.

But a stronger Labour Party would have a much better chance in the next one if it relegated the Green Party to a very distant third and therefore a much more minor player in government that it would be on current polling.

The trick for Cunliffe would be to lose but not so badly that he’d be deposed as leader.

That would be a delicate balancing act at the best of times and will be even more difficult if the ABC –  Anyone But Cunliffe – decide they’d prefer a big loss and the chance of a new leader.


Appropriate sponsors

April 30, 2011

John Drinnan, the Herald’s media commentator muses on the suggestion that sponsorship might be introduced to RadionNZ National:

With its medical disease of the week, Kathryn Ryan’s Nine to Noon could be brought to you by Prozac. Chris Laidlaw would work well with extra strong coffee. Mary Wilson on Checkpoint would suit Mack trucks. . .

It would be hard to beat the Mack Truck for mary Wilson on Checkpoint, but who could sponsor other programmes like Morning and Midday reports, Afternoons, Nights, Country Life or Kim Hill on Saturday morning?


Here to help which cause?

March 25, 2011

The principal and all but a couple of teachers at a primary school were happy with the introduction of National Standards.

Then the people turned up to train them and mixed with the training they had a lot of criticism of the introduction of the standards.

How unprofessional is that?

As former States Services Commissioner  Mark Prebble told Kathryn Ryan:

“Public servants have to implement the policies of the government of the day

Many people come to government to try to support a good cause. They don’t realise the one who has to determine which good cause is to be supported is the democratically minister of the day.  . . .

 A key part of the role of senior public servants is to explain to them well it is the minister who has to take the heat in public about that and the public servant really isn’t just employed to follow their own interests and if they want to follow their interests they can go and work in the private sector like anyone else. . .

. . . No public servant should be zealous about the particular cause they’re interested in. They should be zealous about democracy and respecting the law. . .”

The  public service must be apolitical. . .

The people who visited the school were paid from the public purse to help implement government policy but instead were doing their best to sabotage it.

If it happened at one school, how many others also found the people sent to help were advancing their own cause rather than giving the professional development the teachers sought and how often does this happen with other policies?

We’ve spent this week with a group of farmers. Each time tenure review was raised the glacial pace at which it proceeds was criticised.

You could be excused for wondering if this is a deliberate policy on the part of some of the public servants involved in the hope that they can delay the process until the government changes.


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