KiwiBuild failed

September 5, 2019

The government’s KiwiBuild reset is an admission of how flawed the policy was in the first place.

The 10,000 houses it said it would build wasn’t a target, it was a figure plucked out of the air, completely distanced from reality.

Worse than the unrealistic number, was the money wasted on houses no-one wanted to buy and houses sold to people who should not have been beneficiaries of taxpayer assistance.

Now Housing MInister Megan Woods has announced another plan, with no targets, which includes selling the houses no-one wanted – almost certainly to be a win for the buyers and a lose for the public.

There’s also a government backed low equity scheme that sounds horribly like the Fannie Mae and Freddie Mac scheme in the USA that precipitated the Global FInancial Crisis.

The Taxpayers’ Union points to the potential  dangers that poses to taxpayers:

Replacing KiwiBuild with easy credit policies for first home buyers places significant risk on taxpayers, says the New Zealand Taxpayers’ Union. 

Taxpayers’ Union Economist Joe Ascroft says “The American housing crash and ensuing Global Financial Crisis was driven in part by the American Government’s decision to offer subsidized mortgages to low income households, who then failed to meet debt repayments when interest rates increased. Our Government’s decision to adopt a similar approach by offering taxpayer-backed mortgages to households who can only scrape together a 5 percent deposit is an uncomfortable echo to those easy credit policies which induced a housing crash overseas.”

“If households on ultra-low deposits ever failed to meet repayments due to rising unemployment or interest rates, either taxpayers or the banking system would be put under significant pressure.”

“Of course, the best approach to housing unaffordability isn’t to load on more debt and subsidies – which will inevitably push housing prices higher – but to enact meaningful supply-side reform. Allowing our cities to become more dense and removing the rural-urban boundary would be good places to start.”

The new policy, like many of this government’s lack details and the Minister’s repeated “we’ll build as many as we can as quickly as we can” is no substitute for a target tand a concrete plan to get there.

The root of the housing problem is simply one of supply not keeping up with demand, this hasn’t been helped by Prime Minister Jacinda Ardern’s calling a halt to development at Ihumātao.

The solution is more houses, faster which requires sorting out the infrastructure restraints, regulations that make the consent process so long and costly, and building here so much more expensive than in many other countries.

Anything which gives people more money without increasing the supply of houses will only make them more expensive.

KiwiBuild failed because it didn’t deal with the underlying causes of the problem and the so-called reset will do very little, if any, better.

We’d all benefit if the government set about addressing the constraints on supply rather than throwing more taxpayers’ money at policies that will benefit a relatively few people at considerable cost and risk to all of us.


Houses bad, trees good?

August 15, 2019

The government has launched a draft National Policy Statement for Highly Productive Land (NPS-HPL) that proposes a nationwide approach to protecting our most productive land.

New policies and standards could protect the most fertile and versatile land as soon as next year.

Agriculture Minister Damien O’Connor and Environment Minister David Parker have put out proposals to value high-quality soils as a resource of national significance.

“The threat to elite soils in this country has been very real,” O’Connor said. 

“We’ve been losing soils for the past 20 years at an alarming rate.

“You don’t have to be a rocket scientist to visit Pukekohe and see what is happening.

And not only Pukekohe. Urbanisation creep and the development of lifestyle blocks have been encroaching on productive land all over the country.

The Government has released a draft National Policy Statement for Highly Productive Land that proposes a nationwide approach to protecting NZ’s most productive land for future generations . . .

It is intended to target the high-value classes 1 and 2 soils that account for 5% of NZ’s soil profile but almost 85% of high-value crop production.

“One of the greatest challenges facing the world right now is the need to feed a growing population. 

“We have a well-earned reputation for producing some of the best food in the world,” O’Connor said.

“Continuing to grow food in the volumes and quality we have come to expect depends on the availability of land and the quality of the soil. 

“Once productive land is built on we can’t use it for food production, which is why we need to act now.” . . 

These are exactly the arguments farmers, councils and other advocates for rural communities have been using against the government’s policy that incentivises planting pine plantations on land better suited for cattle, deer and sheep.

We can’t eat trees and once farmland is converted to forestry it is both difficult and expensive to convert it back.

“We appreciate the balance for councils between the need to provide more houses and the need to protect their soils and economic activity,” O’Connor said.

Since April last year the Government has been looking at the best options for the protection of NZ’s high-value soils.

“This is not about spatial planning.

“It doesn’t dictate exactly what will happen.

“But it does place an obligation on councils to ensure there is enough highly productive land available for primary production now and in the future and to protect it from inappropriate subdivision, use and development.”

Councils will have to complete a cost-benefit analysis of using land for growing fruit and vegetables, assessing that against the short-term value of converting it to housing.

The criteria will be consistent nationwide but be flexible enough to allow councils to take into account their local situation and circumstances. 

“The NPS is not absolute protection for all soils. 

“It does consider local growth aspirations and the reality of where urban growth is now but it does force the councils to recognise the value of this soil for its productive capacity not just its subdivision capacity.”

Until now councils have not always had to consider the productive value – decisions have simply been based on market value and the potential for subdivision. . . 

All of that sounds vague enough to drive several tractors through especially if people who have bought land on the edge of urban areas at prices that reflect development potential seek to prevent the loss of value if it has to kept for food production.

The Taxpayers’ Union points out:

The Government’s plans to prohibit housing on ‘productive’ farmland will serve as yet another regulatory tax on housing, and is a shameful breach of Jacinda Ardern’s promise to fix housing supply, says the New Zealand Taxpayers’ Union.

“Maddeningly, Government is now introducing even more restrictions on housing, ensuring prices will continue to rise, all for the sake of a small gang of potato-growers who want to keep urban farmland prices artificially low. This is a slap in the face for aspiring homeowners, and makes a joke of the Government’s claimed concern over housing affordability.”

“There is no need for the Government to intervene here, because the market already works to allocate land to its most productive use. If the land is more productive as farmland then farmers will outbid housing developers, and vice versa.” . . 

Ending the incentives for forestry on farmland could happen immediately without providing anyone with viable reasons to oppose the move.

It must happen for exactly the same reasons the government wants to protect class 1 and 2 soils – so we can keep growing the quantity and quality of food the country and the worlds needs.


Are electric vehicles as green as they’re painted?

July 10, 2019

Stuff asks which are the cleanest and dirtiest car brands in New Zealand?

. . .Actually, the car brand currently on sale in NZ with the lowest emissions of all is Tesla, which boasts an unbeatable CO2 output (or non-output?) of 0.0. Obviously that’s because they are fully electric, which means the only connection with CO2 these cars might have, would be from what emerges from any gas or coal-fired power stations that generate the electricity in the first place.

But, as so often in the climate change argument, this doesn’t give the whole picture. It counts only the emissions from running the car, what about the emissions in making it, in particular the battery?

A friend has recently returned from Africa where he saw a continual procession of fuel tankers making the journey from the coast to supply mines in the Congo so that cobalt and lithium can be exported to allow people in rich countries to buy electric cars to save the world.

If you take into account the emissions from the many thousands of kilometres those tankers travel and everything else involved in their manufacture and disposal when judging the CO2 output of electric and hybrid cars, would they still be as green as they’re painted?

I don’t know the answer to that question and it raises another: how can we know what is green and what is greenwash if only the emissions from running vehicles are quantified and not those from their manufacture to their eventual end?

The answer to those two questions is even more important now the government is proposing a ‘feebate’ scheme on the sale of new vehicles.

The Government’s proposal for a sweeping fuel-efficient vehicle policy is being criticised because it doesn’t apply to the majority of cars being sold.

It would only apply to newly-imported used and brand new light vehicles from 2021 onwards, and would only hit those vehicles when they are sold for the first time – taking in about only a quarter of vehicle sales.

School Strike 4 Climate NZ criticised the proposal and said all vehicle sales should be affected by fuel efficiency standards.

The “feebate” scheme wouldn’t cost the taxpayer anything, instead using money gained by putting a fee on imported high-emissions cars in order to make imported hybrids, electric cars, and other efficient vehicles cheaper with a subsidy. . .

It wouldn’t cost the taxpayer anything but who would it help and who would it hurt?

The proposed penalty on ‘gas guzzling’ vehicles is a painful, regressive tax, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union Executive Director Jordan Williams says, “Let’s be very clear: this is a tax on Otara vehicles to subsidise Teslas in Remuera.”

“Only a few, largely high-income, motorists will benefit from this subsidy, while many more low income motorists will have to choose between a nasty penalty or delaying the purchase of a new car. And as this tax leads driver to hold on to their existing vehicles for longer, we’ll miss out on improvements to safety and environmental standards.”

Older cars are less efficient and also not as safe as newer vehicles, but what’s the environmental impact from holding on to them longer?

Would spreading the emissions from making them over a longer period compensate for the emissions from driving them?

What about utes and trucks that are used for business and transporting goods and for which there are no hybrid or electric alternatives.?

“Successive Governments have already whacked motorists hard with hikes to petrol tax. Now Julie-Anne Genter is mixing it up with scheme to ‘take from the poor, give to the rich’.”

“Just because something is shrouded in environmental branding doesn’t make it any less nasty to the poor.”

Electric and hybrid cars cost less to run than petrol or diesel ones and newer vehicles are more efficient than older ones so  people who can’t afford newer, more expensive vehicles will be paying a bigger proportion of the fuel tax.

London has emission charges and diesel vehicles, including taxis, have to use AdBlue  to their fuel. When we were there recently we noticed the air was much cleaner than it had been several years earlier.

Clean air is to be encouraged but until the total lifetime emissions, not just from driving vehicles, but from their conception to their ultimate end, are quantified, we won’t know if the policy will make a positive difference or not to global CO2 emissions or not.

The emissions picture is a very complex one to which the ‘feebate’ policy, like so many other climate change ones, provides a simple answer but we don’t have enough information to know if it’s the right one.

The push towards electric vehicles raises two other questions: does our electricity generation and transmission have the capacity for a significant increase in electric vehicles?; and what will replace fuel taxes when the uptake of hybrid and electric vehicles reduces them to the point a replacement is required?


Tax Freedom Day at last

June 1, 2019

We’re nearly half way through the year and have only just got to Tax Freedom Day:

A media release from the Taxpayers’ Union says:

From today until the end of the year you are finally working for yourself, and not the taxman, says the New Zealand Taxpayers’ Union.
 
‘Tax Freedom Day’ marks the day on which New Zealanders have collectively worked enough to pay off the cost of government for the year.
 
Taxpayers’ Union spokesman Louis Houlbrooke says, “For the average New Zealander, getting to work on Monday represents the first day they’re working for themselves.”
 
“This year’s total government expenses have been forecast to suck up 41.5 percent of the economy. That means, if a taxpayer wanted pay off their share of government expenses as soon as possible this year, they would have to work sacrifice all their wages from January the 1st, until today, June 1st.
 
“Today is worth celebrating, but it’s a shame we had to wait so long to pay off the politicians’ expense card. Unfortunately, government spending increasing faster than economic growth means the continuation of the trend of a later Tax Freedom Day.”
 
“Some other groups chose to observe Tax Freedom Day earlier this year. But our chosen date – based on OECD figures – takes into account local government and spending paid for with debt, meaning it reflects the full burden of government on taxpayers.”

And on the eve of Tax Freedom Day, the government pushed through an increase to fuel taxes under urgency:

The Taxpayers’ Union is slamming the passage of legislation hiking the price of petrol at the pump to see that more than 50 percent of the price paid will soon be tax. Union spokesperson, Jordan Williams says:

“Clearly ‘wellbeing’ is just marketing fluff.  Petrol taxes are highly regressive – they hit the poor, those in regional New Zealand, and those who live on outer suburbs the hardest. It’s one of the cruelest forms of tax.”

“Rushing these new petrol taxes through Parliament under urgency is disgraceful. They are a total breach of the Prime Minister’s ‘no new tax’ election promise.  And Labour know it.”

“Pain at the pump underscores the fact that big-ticket Budget announcements come at a real cost, regardless of the fuzzy wellbeing language the politicians use to promote them.”

Petrol was more than $2.45 a litre when we passed through Omarama earlier this week. Tax is already too big a contributor to that.

Taking more money from everyone and adding to the cost of everything will not contribute to wellbeing.


CGT would hit middle hardest

February 22, 2019

It there’s such a thing as a fair tax, it’s not one based on misplaced envy as the Tax Working Group’s capital gains tax appears to be.

No photo description available.
Fairness is desirable but not at any cost and  it’s best achieved by helping the poor up not pulling the better-off down, especially when those who will be hit hardest are those with modest investments, not the really wealthy, and worse still, they’d be hit by one of the most penal CGTs in the world:

The Tax Working Group’s report released today proposes a broad-based top rate of 33% capital gains tax (CGT).

The New Zealand Initiative argues in a new policy note, The Pitfalls of CGT, that headline rate would immediately push New Zealand to the top of the international CGT rankings among industrialised economies, just behind Denmark and Finland.

“The proposal is conspicuous by a lack of exemptions and concessions around business investment, so a full rate would arguably qualify New Zealand’s CGT regime as one of the harshest in the world,” said Dr Patrick Carvalho, Research Fellow and author of the note.

“Worse, given New Zealand’s recognisably low-income tax thresholds by international standards, a new CGT would disproportionately hit middle-income earners already struggling to invest for retirement.”

“New Zealand should be cautious about siren calls for a top-ranking CGT. Trying to punch above our weight can sometimes place us in the wrong fight category,” concludes Dr Carvalho.

A good tax would foster investment that would help businesses grow, produce more and employ more.

A good tax would encourage and reward thrift and delayed gratification.

A good tax would improve productivity and promote growth.

The CTG as proposed would do the opposite.

New Zealand needs foreign investment because we don’t have enough of our own capital. The CGT would aggravate that by making investing overseas more attractive than investing domestically:

The Tax Working Group (TWG) proposals released this morning would skew New Zealand investors away from local assets, distort the KiwiSaver market and mangle the portfolio investment entity (PIE) regime if introduced, according to the founder of the country’s largest direct-to-consumer managed fund platform.

Anthony Edmonds, InvestNow founder, said while the TWG final report includes some welcome reforms, overall the capital gains tax (CGT) recommendations would add cost, complexity and confusion to New Zealand’s relatively efficient managed funds market.

“For example, the TWG’s plan to increase tax on New Zealand shares by applying CGT while leaving the fair dividend rate (FDR) tax for offshore shares unchanged would naturally drag capital offshore at the expense of local assets – at a time when New Zealand needs to fund major infrastructure projects,” Edmonds said. “In trying to discourage people from investing in residential property, the TWG has created a tax disincentive for Kiwi shares, which can only distort investment allocation decisions.”

Essentially, the TWG recommendation to tax unrealised capital gains on PIE funds marks a return to the ‘bad old days’ when Kiwis paid more tax on managed funds than direct share investments. . .

Concern over the housing shortage is one of the motivating factors for a CGT but It won’t improve home affordability in the long term:

Bindi Norwell, Chief Executive at REINZ says: “In the short-term there may be some initial relief in house price affordability as investors look to sell their property to avoid paying CGT. This may create opportunities for first home buyers.

“However, in the long term it’s likely to push house prices up as people look to invest more money in the family home, as there will be less incentive to invest in rental properties or other forms of investment e.g. equities.

“This will also have a flow on effect for the rental market with fewer rental properties available for tenants, thereby further pushing up weekly rental prices when they are already at an all-time high.

“The report even recognises that any impact on housing affordability could be small, therefore, we question whether all of the administrative burden and cost to implement GCT is worth it? Especially as CGT coming at the end of a raft of legislative changes the housing market has faced recently including the foreign buyer ban, ban on letting fees, insulation, healthy homes and ring fencing. . .

A tax that results in fewer and more costly rentals and more expensive homes is not a good one.

Nor is a tax that is fatally flawed:

Today’s Tax Working Group report recommendation for a new capital gains tax will not address residential housing affordability but it will penalise business owners and create costly complexity in our tax system, meaning it is fatally flawed, according to Business Central.

“New Zealand’s tax system is envied worldwide. The proposed capital gains tax increases compliance costs without boosting productivity,” says Business Central Chief Executive John Milford.

“Business Central agrees with the conclusions of the minority view on the Tax Working Group.

“A capital gains tax is just another cost on business, nothing more. . .

It would hit small and medium businesses hardest:

Key areas of the Tax Working Group Final Report released today were disappointing, says Canterbury Employers’ Chamber of Commerce Chief Executive Leeann Watson. . . 

Ms Watson says the proposed capital gains rules should not be implemented because of the significant impact on small and medium-sized enterprises (SMEs).

“We support the Government’s review to ensure that our tax system is fit for purpose for a changing business environment. However, there is very real concern that taxing both shares and business assets under a comprehensive capital gains tax regime would create double taxation.

“This could disadvantage New Zealanders owning shares in New Zealand and create inconsistencies around overall taxation on investment.”

Ms Watson says a capital gains tax would be unlikely to achieve the desired outcome for business.

“There is concern around the effect for capital markets in a capital constrained economy with a long-term savings deficit. Adding further tax on the savings and investment of those New Zealanders in the middle-income bracket won’t drive the deepening and broadening of the capital base that we need for business investment, which is higher productivity and wages.

“While the impetus behind the changes are aspirational, there is little to indicate they would significantly reduce overinvestment in housing or increase ‘tax fairness’. In addition, there is concern that additional administration costs and investment distortions could outweigh any benefits and potentially discourage much-needed investment and innovation by locking businesses into current asset holdings.

“It is vitally important that we remain competitive as a country and are not continuing to add further compliance for business and in particular small business, who represent 97% of all businesses in our economy.”

Ms Watson says there needs to be a viable business case for any changes to the current tax system.

“There seems to be a real focus on ‘fairness’ in the system design, as opposed to revenue-building, so we need to be careful that any tax changes are for the right reasons and are backed by a clear, practical and sustainable business case. We currently have a fairly simple and efficient tax system that should be kept and better enforced, with changes to specific rules where needed.” . . 

The costs of a good tax would not outweigh the benefits:

The Employers and Manufacturers Association (EMA) says the key issue in the Tax Working Group’s proposal released today is that the cost of its capital gains tax rules will outweigh any benefits.

Chief executive Brett O’Riley says any gains from such a broad-based capital gains tax would be eaten up by administration and other costs, leaving little revenue.

“Fundamentally the proposed capital gains rules don’t address the Tax Working Group’s objectives of reducing over-investment in housing and increasing tax fairness,” he says.

Mr O’Riley is also concerned that capital gains tax on business assets could discourage investment and innovation, locking businesses into their current asset holdings. He says there are other policy settings that could be changed to increase investment in different asset classes, away from property.

“I also fail to see how taxing growth on the value of assets from the proposed commencement date of 1 April 2021 would work, because it would be open to conflicting valuations,” he says. “It could also act as a further disincentive to growth when New Zealand already has issues with business not growing from SME’s into larger scale operations and a CGT may also limit the availability of capital to reinvest in businesses as smaller businesses face an additional tax bill.

“It’s difficult to see any benefits for the business community from implementing the proposed capital gains tax rules, as taxing both shares and business assets appears to be double taxation,” says Mr O’Riley.

It is relevant to note that a number of the Tax Working Group do not favour its recommendations on capital gains tax. The minority view summary is available here

One reason for dissension was compliance costs:

Former IRD Deputy Commissioner Robin Oliver was one of the 11 in the Tax Working Group.

Along with two others from the group, he believes the costs and bureaucratic red tape involved in adopting all the capital gains options outweigh the benefits.  

“We didn’t agree that this was in the best interest of the country to go the full extent, particularly in the business area, taxing share gains which result in double taxation,” he said.

“To get a valuation for all business assets in all parts business and all business will easily cost over a billion dollars in compliance costs. The amount of revenue you’ll get is relatively minor.”

As for taxing shares, Mr Oliver said it would result in New Zealanders who invest in New Zealand companies paying more tax when foreigners investing in New Zealand companies will pay no more tax. Furthermore, New Zealanders investing in foreign companies will pay no more tax.

“The obvious conclusion is New Zealanders will own less New Zealand companies and more foreign companies, and foreigners will own our companies,” he said. . . 

The proposed tax is no panacea for fairness:

Deloitte tax partner Patrick McCalman warns that a CGT is not a panacea for tax fairness.

“At one level, there is an attractiveness in the argument that a ‘buck is a buck’ and everyone should bear the same tax burden on every dollar earned. However, when one delves into the detail of the design, other issues of fairness emerge,” says Mr McCalman.

“For example, is it fair that property could pass on death without an immediate CGT cost, while gifts made during one’s life would be taxed? For family businesses, wouldn’t it be more productive to be able to pass assets from generation to generation before death,” he says.

“Accordingly, we need to be cautious as to how much ‘fairness’ a CGT will introduce. It may simply change where the ‘unfairness’ is perceived to sit within the tax system, creating new tax exemptions that would distort where investments are made.”

Complicating matters further is the political dimension. And MMP only exacerbates the political difficulty and increases the likelihood of whatever ultimately sees the light of day being less coherent from a policy perspective. . . 

The Deloitte paper raises several questions about fairness:

At one level there is an attractiveness in the argument that a “buck is a buck” and everyone should therefore bear the same tax burden on every dollar earned. However, when one delves into the detail, other issues of fairness emerge including new tax exemptions which would distort where investments are made – in effect, in seeking to create fairness, the proposal creates a number of layers of unfairness. For example:

    • With a CGT applying at full rates with no inflation indexation, is it fair that someone who buys an asset is taxed on the full amount of any gain when part of that gain is simply inflation? How will they be able to re-invest in a new asset if the inflation element is taxed?
    • Is it fair that the family home and artwork are excluded but most other property is not? Consider a plumber who has a $500,000 house and a $500,000 commercial building who would be taxed on the disposal of the commercial building. Should they have instead bought a $1,000,000 house, rented a business premise and enjoyed a tax free capital gain?
    • Is it fair that that investors in New Zealand shares would pay tax on capital gains but investors in foreign shares would continue to be subject (as they are presently) to the 5% FDR rate (even if gains are less or more)?
    • Is it fair that small business (turnover less than $5 million) could sell assets and defer the CGT bill if they reinvest the proceeds, while medium and larger size business cannot?
    • Is it fair that property could pass on death without an immediate CGT cost but gifts made to children during one’s life would be taxed?
    • Is it fair that there are proposed tax reductions for KiwiSaver to compensate for CGT but not for other forms of investment?

At one level, true fairness can only exist if all asset classes and forms of remuneration are subject to the same tax rate. But even then, anomalies will always arise. . . 

The proposed tax would be especially bad for farming and farmers:

Federated Farmers has said from the outset that a capital gains tax is a mangy dog, that will add unacceptably high costs and complexity.

“There is nothing in the Tax Working Group’s final report, released today, that persuades us otherwise,” Feds Vice-President and Commerce spokesperson Andrew Hoggard says.

“A CGT would make our well-regarded tax system more complex, it will impose hefty costs, both in compliance for taxpayers and in administration for Inland Revenue, and it will do little or nothing to ease the housing crisis.”

It is notable that even the members of the working group could not agree on the best way forward, with three deciding a tax on capital gains should only apply to the sale of residential rental properties and the other eight recommending it should be broadened to also include land and buildings, assets, intangible property and shares.

“Federated Farmers believes that the majority on the tax working group have badly under-estimated the complexity and compliance costs of what they’re proposing, and over-estimated the returns.”

The recommended ‘valuation day’ approach to establishing the value of assets, even with a five-year window, will be a feeding frenzy for valuers and tax advisors, “and just the start of the compliance headaches for farmers and other operators of small businesses that are the driving force of the New Zealand society and economy. . .

Farm succession is difficult enough as it is.

A CTG would make it harder still and encourage older farmers to hold on to their farms. That would lead to more absentee ownership and leasing with less investment in improvements as happens in other countries.

New Zealand doesn’t have a lot of many wealthy people and while those relatively few would pay more with the CGT as proposed, if their accountants and lawyers didn’t help them find ways to minimise their liability, they’d still be wealthy.

The many small business owners and more modest investors would not. They’d have the reward for their hard work and thrift cut back and lose enough of the value of their investments to hurt – unless they’d invested in art, cars or yachts which would be exempt.

That sends the message that such luxuries are good while investing in businesses and productive assets is not.

Where’s the fairness in that?


KiwiBuild is KiwiFail again

January 24, 2019

A report from the New Zealand Initiative calls KiwiBuild Twyford’s tar baby:

  • Relative to income, dwelling prices in New Zealand are among the highest in the OECD. This is New Zealand’s housing affordability problem in a nutshell.
  • High population-driven demand growth has collided with inflexible supply-side constraints.
  • Land prices have sky-rocketed, but construction costs are also too high.
  • KiwiBuild cannot hope to materially increase home ownership proportions – the original 2012 objective. Additional housing, if achieved, will likely lift renting and ownership more or less in tandem.This report explains why KiwiBuild – defined as the government’s pledge to build or deliver 100,000 homes within a decade – fails against all the objectives set for it:
    • It is not about social housing to help those at the bottom.
    • Nor is it about helping struggling first-home buyers. They cannot afford KiwiBuild homes at current costs. KiwiBuild is for the relatively well-off.
    • It is intended to be subsidy free, since wealth transfers to the well-off are hard to justify. But its inducements to attract private developers are subsidies.
    • Even more paradoxically, if there were no subsidy, there would be no gap for KiwiBuild to fill. Private developers will meet unsubsidised market demand.
    • It cannot hope to increase the housing stock sustainably. Only enduring lower property prices can induce people to own more dwellings than otherwise. KiwiBuild reduces neither land values nor construction costs at the margin.
  • The enduring effect of the policy is a changed composition of the housing stock by decree rather than by public demand.
  • KiwiBuild is floundering having no clear public interest objective. It constitutes a massive political and bureaucratic distraction from what is really needed – direct action to reduce land values and construction costs.

The government should not be in the business of subsidizing property developers and people on well above average incomes.

It purports to be focused on helping the poorest and most vulnerable.

Instead, policies like KiwBuild and fee-free tertiary education waste millions on people who aren’t poor, many of whom are or will be wealthy.

Not only is it a bad policy, it hasn’t a show of meeting its target to build 1000 houses by July.

KiwiBuild is KiwiFail again.


Tax cuts could cut strikes

January 17, 2019

The Taxpayers’ Union has a simple way to reduce strikes:

Implementing tax relief would relieve the pressure of low take-home pay and resolve much of the current industrial action, says the New Zealand Taxpayers’ Union.

Taxpayers’ Union Executive Director Jordan Williams says “It’s understandable that junior doctors and the Wellington bus drivers feel under pressure – no Government has delivered a tax cut since the 2010 Budget. If the Government delivered tax cuts, take-home pay would increase and workers would feel welcome reprieve.”

“Tax cuts would help all workers. The Taxpayers’ Union is calling on our union allies to help back collective action for tax cuts. Acting together, the union movement could put pressure on the Government to boost pay for everyone and end the pressure of industrial action on our heath and transport sectors.”

The Government surplus is running ahead of forecasts which means it’s taking more tax than it needs.

Tax cuts would boost take home pay for workers and increase pensions which are based on after-tax income.

The government should be letting us all keep more of our own money.

It should throw out whatever suggestions the Tax Working Group has for introducing any new taxes – especially a Capital Gains Tax.

It should end wasteful spending.

And if it can’t bring itself to cut taxes, at the very least t should increase tax thresholds so modest pay rises don’t push people into higher tax brackets.

 

 


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