TL;DR: It started with pomp, pageantry and a speech from the throne laying out the new National-ACT-NZ First Government’s plan to turn back much of the legislative clock to 2017 and beyond.
It ended with PM Christopher Luxon accusing former PM Chris Hipkins of being an arsonist and then Hipkins branding Luxon’s Government as having the most shambolic start in our political history. The first claim isn’t true and the second isn’t relevant. None of it mattered.
None of this noise from the gears grinding into action in our core institution of democracy and governance for the next three years had any signal. Our core problems were not addressed. Real solutions were not put forward. All our leaders did was proclaim and shout at each other and past each other into a void where the debate should be about fixing our housing affordability, climate change and poverty crises.
In The Kākā Project’s spirit of covering these issues and suggesting solutions, today’s edition steps back to detail these core problems and puts forward some solutions for debate, including:
a multi-party agreement of a infrastructure funding and building strategy to cater for an agreed population growth strategy to 2100 of 1.5-2% per year, the same rate as we’ve had for the last 20 years; and,
a multi-party agreement to create independent crown agencies to achieve affordable zero-carbon housing and transport (40% of disposable income) for all by 2040, with that population growth strategy.
We have opened this edition up fully and immediately to celebrate the arrival soon of ‘Gravy Day’ on the 21st of December, which will be our final publication day of the year. It’s also the day when this special 50% off offer for the first year for new subscribers expires. The podcast above was recorded last Thursday.
Usually at this point in the edition, there’s a paywall that only paying subscribers can see below and hear more detail and analysis in the podcast above. But we’d love you join the community of paying subscribers, who can read and comment on everything inside the paywall all the time and get access to our weekly ‘Hoon’ webinar on the news of the week on Thursday’s at 5pm here via YouTubeLive for an hour. The 50%-off offer is open to new subscribers until December 21. I also invite paying subscribers to vote in our poll below on whether we should open up all our articles immediately to everyone until Gravy Day.
And here’s a repeat of our special, special offer for under 30s.
So much noise and so little signal
Last week, the machinery of our new 54th Parliament and the new National-ACT-NZ First fired up to start detailing plans, repealing legislation and restarting Parliamentary debates.
Just as in the election campaign, the real issues weighing on both the present and future of Aotearoa-New Zealand were not addressed in any meaningful way that acknowledged by the scale of the problems and proposed real solutions, including that we have:
the least affordable rents in the OECD, with almost 60% of renters in the bottom quintile of income paying more than 40% of disposable income in rent;
stagnant productivity growth per hour worked that is at least 30% behind that of our nearest neighbour, which is also easiest outlet for frustrated young renters wanting to start families, as shown by record high migration of residents to Australia;
a $200 billion infrastructure deficit after 30 years of underinvestment and population growth of 1.5-2% when less than 0.5% population growth was forecast, let alone planned for; and,
we have barely started electrifying our transport and industrial sectors in a way that would allow us to meet the international commitments both main parties have signed up to and would lock our exporters out of global trade if we failed to meet them.
Those failures are enabled by parties, policies and voters in the median of the spectrum who agreed in a defacto way:
a (non) population and (non) infrastructure policy that simply assumes in a self-delusionary way without debate that the 1.5%-2% population growth rate of the last 20 years is only a short-term thing that will stop as soon as temporary labour gaps are filled by locals and the 230,000 people here on temporary work visas are sent home;
a tax system that does not tax capital gains, wealth or inheritances, especially the $600 billion of unarned capital gains from the value of residential land over the last 20 years, but does heavily tax wage and salary incomes, corporate profits, pension fund savings and consumption in a way that means our homes are worth 10 times our stock market and eight times our retirement savings (whereas Australia’s homes are worth four times its stocks and three times its savings, and US homes are worth the same as its stock market and twice its retirement savings);
a bi-partisan fiscal strategy that prioritises balanced budgets and low public debt and overall tax ratios to GDP of less than 30%, when other OECD peers have ratios closer to 50%; and,
a bi-partisan approach to climate policy that assumes in a self-delusionary way that the Government can meet its international committments by spending up to $24 billion on international carbon credits.
These policies mean:
there are nearly 8,000 people living in emergency housing of motels, caravans and relocatables, including nearly 4,000 children;
nearly 600,000 people are dependent on food banks in part or whole to have enough food for themselves and their children to eat;
over 250,000 or over 66% of people on benefits have a debt to MSD for over-payments, benefit advances and emergency assistance grants averaging $4,000 per beneficiary and debt of $3.5 billion owed to MSD, IRD and Justice; and,
nominal GDP growth is growing fast because the problems outlined above are masked by record-high net migration of temporary workers to suppress wage inflation and inflate rent and land price inflation in a way that generates ever-growing and tax-free gains on values of residential land.
The Kākā Project’s Briefing to Incoming Ministers
This is the briefing that no one inside the ministries will write or deliver to the newly sworn-in coalition Government in the coming days because the election debates and the winning parties’ manifestos either didn’t talk about the issues it addresses, or ruled out the best solutions.
Fair enough. The officials are no doubt nervous before a job-slashing mini budget on December 20, but we have nothing to lose by saying the quiet things out loud. The Kākā Project is all about addressing the big and awkward problems and suggesting solutions that might work in the long run for all, even if they are difficult for those protecting their versions of the status quo right now. Luckily, I’m unelectable and unappointable. So here goes…
Before they launch into a frenzy of repealing and dealing, PM-elect Christopher Luxon and his deputies David Seymour and Winston Peters should stop, take some deep breaths and address the biggest problems in front of Aotearoa for the long term.
They are:
an investment-lite, infrastructure-lite and housing-lite economy that is growing its population much faster than it can handle without busting a few gaskets and throwing off thousands more New Zealanders to live and work in Australia every month;
a housing market and set of infrastructure funding, tax rules and assumed property rights that make our housing costs the most expensive and stressful in the world for both renters and potential first-home-buyers without their own Banks of Mum and Dad; and,
an accidentally-on-purpose population-non-policy that is completely out-of-whack with the current combination of tax policies, NZ Super and health entitlement assumptions and Government debt policies that are are seen as untouchable and therefore undebateable by National and Labour.
The coalition should take a fresh look at their own manifestos and look at doing the following;
agreeing a population growth strategy and infrastructure funding plan that distributes the benefits of high population growth (1.5-2% per year) much more clearly and fairly to local councils to fund their shares of water, transport and housing infrastructure;
reducing housing and transport costs for those in the lowest income quintile to less than 40% of disposable income, reducing the chances of them getting into debt and allowing the removal of $4 billion a year of subsidies for housing;
that means massive building of affordable homes by Government, NGOs, Build-to-Rent funds and everyone else; and
meanwhile, MSD debts should be wiped and not built up again.
I’d also propose:
the eventual phase out of accommodation supplements, working for families payments and other MSD payments in favour of a simple Universal Basic Income of 66% of the median wage for all residents under 30, to match the UBI for those over the age of 65, once housing and transport is affordable at no more than 40% of disposable income; and,
stopping burning oil and gas as fast as possible as part of a just transition to gross zero emissions from housing and transport by 2050, and to halve them by 2030.
A true emergency response, in my view, would include:
stopping imports of petrol and diesel cars and utes from a set date, such as 2030;
offering incentives for people to replace their cars and utes with electric vehicles, buggies, bikes and scooters, potentially involving some sort of voucher-for-electric vehicle scheme to hand in clunkers;
reconfiguring main urban roads urgently to replace road-side car parks with cycle, scooter and walkways, as well as rapidly upscaling electric bus fleets to increase bus route frequency and coverage at low cost ($1 tickets);
state-subsidised charger networks throughout towns, cities and rural areas that provide $1 charges for cars etc, fueled by state-funded solar panels and batteries on roofs and carparks surrounding those charging stations;
state-funded rollouts of roof-top panels and batteries for any household, farm or business who wants them, with surplus electricity sold back into the grid by the panels’ owners (either Government or individuals) at current wholesale prices;
the state-funded building up of electric rail networks to shift freight and long-haul passenger traffic out of trucks and planes, again with low and subsidised rates for freight companies and passengers; and,
moving the funding of road repairs and public transport to a weight and fuel-burning levy system that front-loads the costs onto heavier petrol and diesel vehicles and subsidises light electric vehicles, with the eventual aim of paying for roads and public transport subsidies through road-user and congestion charges.
The Kākā Project’s big idea to change incentives and pay for the changes
The Kākā Project’s main idea is a 0.5% annual tax on the value of residential zoned land, with multiples for unoccupied land and houses, to fund housing, water, transport, health and education infrastructure to drive the cost of housing down to 30% of disposable income for the bottom quintile of earners by 2050, along with infrastructure and public housing investment to drive the cost of transport down to 10% of disposable income by then.
The other core aim is to halve gross transport and housing emissions by 2030 and remove them completely by 2050.
So in this situation, the various fudges and kluges designed to get around the no-go area of taxing capital gains or wealth would be dropped and replaced by the residential value land tax. So that would include:
removing the interest deductibility policy, which really messes with the purity of taxation settings;
reinstating depreciation as a valid expense for both residential and commercial property owners;
removing the ‘bright line’ test for capital gains for rental property owners, given they’ll already be paying the broad-based and low-rate residential land value tax and not having a capital gains tax is a good thing to encourage business value creation;
removing all council consenting fees and development contributions for new homes and other infrastructure projects;
replacing the current benefit, accommodation supplement, Working For Families and NZ Superannuation systems with a simple UBI for all those under the age of 30 and over the age of 65;
making all education (including preschool) publicly funded, along with all healthcare and dental care;
bringing in a progressive income tax system that exempts all individual income below $35,000 and ramps up to 50% for those earning more than four times the median wage;
allowing the non-taxation of retirement savings while in their funds, but taxing income normally on the way into and out of the funds, as is the case often overseas; and,
reducing GST to 10%, while keeping it on all current items, and bringing in financial products such as mortgages, bank fees and life insurance.
I welcome feedback, challenges, suggestions for improvements, unintended consequences and problems in the comments below. Only paying subscribers can comment.
Poll of the day for paying subscribers to The Kākā
Quote of the day
On Casey Costello being given responsibility for anti-smoking
“Unbelievable! Having a pro-tobacco health minister in charge of tobacco control. She is more of an anti-health minister by opposing SF (smoke-free) laws and wanting to allow oral tobacco in NZ! She chaired the taxpayers union which receives tobacco $$. How much did Act and NZ First get?” Public Health academic and activist Boyd Swinburn on the appointment of NZ First MP Casey Costello as Associate Minister of Health being delegated responsibility for anti-smoking efforts.
Comment of the day in The Kākā community
‘They f**ked around, and now they’re finding out’
“As Chris Slane highlights in his cartoon, this is a feature not a bug. Inflation doesn't affect everyone the same way: For the wealthy and powerful, it gives them cover to hide all manner of sins of tax obstruction, lobbying and, of course, price rises; high interest rises protect the wealth of those who can afford to live outside of debt.
“Our naive insistence on "change" at all costs has walked us right into this idiocy, and the best defence the centre voters seem to have for their vote now is "Give them a chance - Labour were no better!"... Protests like yesterday's are so important to ensure this new government understands its leash is far shorter than the centrists who fell for their slimy mistruths seem prepared to give them.“ Tim in yesterday’s Chorus
Timeline-cleansing nature pic of the day
Ka kite ano
Bernard
Kia ora Bernard, thank you for so thoughtfully exposing, analysing and suggesting solutions to the challenges affecting NZ society. Ka pai eh hoa.
NZs challenges pale in comparison to the injustice and inhumanity being inflicted on the people of Gaza and Palestinians, but the lack of worthy political principles is enabling both.
Go Bernard.
Bernard, you write:
* replacing the current benefit, accommodation supplement, Working For Families and NZ Superannuation systems with a simple UBI for all those under the age of 30 and over the age of 65;
* bringing in a progressive income tax system that exempts all individual income below $35,000 and ramps up to 50% for those earning more than four times the median wage.
If a flat income tax rate of 50% were imposed would it not be possible for the UBI you propose to be a life-supporting-sized untaxed, unconditional, universal basic income for everyone, not only under-30s and over-65s?
We would need free health care and free education for all.
A lower UBI child benefit, also untaxed and universal, would be needed for under-18s.
And with a universal UBI covering life's necessities, there would be no need to reduce GST from 15%.
Thanks John. Great challenges. I'd have to a do a proper analysis of the fiscal additions and minuses. A lot of income for the richest isn't taxed at the moment. My understanding of the numbers is we couldn't afford the UBI right across the population with those sort of tax levels. I like GST cuts because they help the poorest the most.
Plenty of hurdles, I agree. A $500-a-week tax-free UBI would not be enough to survive on for a retired renter with no other income. Yet even with a flat tax of 50% on other income it would mean someone earning $1000 a week living tax-free ($1000x0.5= $500+$500=$1000) and someone on $10,000 a week being taxed only 45% ($10,000x0.5=$5000+$500=$5500). A household of two adults and two kids would be rolling in it, with the retired penniless renter still struggling. Tax to fund the UBI would have to move beyond taxing income to taxing land as the principal revenue source; not only residential land, but commercial and agricultural. The flat tax on income would temper the largess of the UBI, and along with GST, control inflationary effects.
Wasn't 50% only for income greater than 4x the median? So for each dollar earned above about $220k per year you would pay 50%
Not in my proposition. I argue for a flat 50% tax on all income; as I explain above, it is the UBI that effectively turns the 50% flat rate into a graduated tax.
As usual a brilliant exposition Bernard. Problems and solutions all addressed with doable solutions that require 21st Century thinking. I doubt you will get it from this chaotic lot who still believe in trickle-down economics the idea that has created our present problems of gross inequality. Good luck.
Patrick Medlicott
Yes please, open to public.
Wonderful morning chorus Bernard... thank you and whole heartedly agree...
Thank you again Bernard for an excellent summary of the ongoing problems facing NZ, and your proposed solutions which make so much sense.
As a Green Party candidate in the recent election and long term member I will be sharing your policy suggestions with the Green Party policy team and trying to persuade them to take on as many of them as possible. There is already close alignment on a lot of policies, but often the devil is the detail. A land tax over a wealth tax for instance. $35 000 tax free threshold instead of $10 000 (this was a modest starting figure to get the idea rolling). UBI at 60% of median wage versus an Income Guarantee of $360 per week per individual plus extras for children, etc.
In terms of climate finance, I would like to see NZ adopt a Carbon Border Adjustment Mechanism (CBAM) like the EU is introducing. This would level the playing field for NZ industries both as exporters and protection from imports. It would allow us to lead the way on carbon reductions and efficiencies, and finally bring in the agricultural sector who have legitimate claims to not wanting to be unfairly disadvantaged against overseas markets. Until, (and it might never happen) we have a legally enforced global carbon tax, CBAMs are the only way to move forward to properly price carbon into our economy.
Bernard Hickey for Prime Minister if Greens dont pick up and run with some of these ideas
Yes, I agree with this. Would be happy to vote for Bernard. 😀
Thanks Rick. Interesting on CBAM.
I’m sure your party will love the ideas here. 😀
It can be done! Real policy. Real solutions. Strategic, inspiring, intelligent thinking. Thank you.
Great work, Bernard. (As if they'll listen...🤐) The lingering question for me is how does a country which exports low margin (negative margin if you count environmental externalities!?) animal protein and unprocessed wood, but wants to continue importing high value iPhones, Teslas and AI, pay its way in the world? In the same way as we're missing a population and infrastructure strategy, Aotearoa is also missing a coherent technology investment strategy and it's starting to bite our trade balance...
Indeed. It's one of the reasons I think we should leave capital gains on Intellectual property untaxed, and to effectively boost the amount of savings available to invest in real businesses by not taxing the returns while in the funds.
Absolutely Ben! Some years back I sat beside an elderly gentleman on a bus from Dunedin to Chch, What a knowledgeable man - am sorry I was too polite to ask who he was. Anyway two images have stuck in my head.
somewhere around North Otago he pointed out a row of trees across a paddock and told me about a Japanese dairy operation. He'd been able to visit in some capacity I've forgotten. He'd found it impressive. By the time we got nearer to Chch we'd discussed land, industry etc in the south Island and he wound it up almost sadly by saying that NZ kept sticking with a low wage, low technology economy.
And meantime our techy young people find rewarding work with enough pay to buy a house in some other country - my families are in Australia, the US and Canada. - Happy Christmas !!
Now when technology can ease the distance fact are we still back where we've always been.
Do rich people think we want their taxes to pay poor people to do nothing ( nothing the same as rich people do) ? If they thought it would be paying for exciting technology might they stop hiding it in caves?
Yes !!!yes!!! yes!!! to a LAND TAX 👍and hit the land bamkers !!
Thanks Bernard ..
Excellent summary but did notice no mention of agriculture?
No land tax on farming. Only residential. Haven't addressed nitrates in water and climate emissions. I'm in favour of a simple carbon tax and a simple methane/nitrous oxide tax.
Maybe rather than a new tax which would probably end with some irate Groundswell member dumping a load of manure on your drive perhaps a subsidy to move to alternative crops? Likely much cheaper than trying to clean up livestock farming. The consumer may precipitate this with trend towards eating less meat for both health and environmental reasons.
I think TOP excluded both Māori and agricultural land from their proposed land tax. I understand the TWG also rejected the idea of a land tax on the basis of its impact on Māori land-owners post settlement. Would you advocate for this too?
Great stuff Bernard. Now how do we get the turkeys to vote for Christmas. Maybe it’s time for us all to start doing rather than talking. Maybe it’s time for the peasants to be revolting...
Wonderful Bernard! I fully support opening up this ahead of December 20! Have you thought of something like a dashboard like a kaka kpi to track how this government is going against your key areas?
Love it Ben! A Kākā KPI!
We still need a wealth tax on the 1%ers Wealth inequality causes a great deal of harm. High levels of wealth enables some to buy politicians
The trouble with a general wealth tax is that wealth is so easily transportable: the very rich you want to tax have the means to remove their wealth from New Zealand.
Land tax has two advantages:
(1) land cannot be hidden, or whisked off overseas, so is easily taxable;
(2) taxing land will tend to make it a less desirable investment; that will tend to reduce the price of land, making it more affordable for people to use it to put a home on, rather than to speculate on. Thus there is an identifiable social dividend.
Maybe a higher rate of gst on ultra luxury items - helicopters, super yachts and the like? Not items any of the 99% would be able to afford
No not really, you can’t pick up a forest and take it somewhere else. The wealthy would like us to believe that they can take their money and run but the assets they hold their wealth in cannot be taken
They can be sold to foreigners and should be stopped
If tour wealth is invested in property, it isn't transportable. Would some wealthy people sell and go overseas? Probably. Should we be scared of it? Absolutely not. They are not productive members of our society and contribute very little.
Thanks elaine. Most of that wealth is in land so it would be taxed, and if unoccupied (ie second homes and holiday homes and land-banked land) then taxed at a higher rate.
A question on land taxes - can these be deferred until the sale of the house? I guess that would turn them into inheritance/capital gains taxes.
We are fortunate to own our own home. Bought shortly before COVID for $520k. The price of our house increasing doesn't benefit us in any way I can see.
But with mortgage, rates and childcare costs taking up over 50% of our income it's tough to make ends meet and an additional tax would be difficult to manage while the kids cost $500 a week in ECE.
This could be solved by free ECE of course! And it's temporary until our kids are old enough for funded education. But I'm interested in the idea of deferrals for people on fixed/temporary reduced incomes.
Rates can be deferred until the sale of the house, so a similar mechanism could be used for land tax.
A zero tax rate for the first $35,000 will more than cover the 0.5% tax you will pay on the value of the land.
What about the people aged 30 - 65. Why should they be excluded from UBI? Seems unfair. It should apply to all. Also, Nicole McKee, a firearms advocate, has been put in charge of firearms policy. She advocates allowing automatic weapons. So it is not just the tobacco lobby that will be happy with this government.
Bravo Bernard so organized & doable, get the voting age to 16 & get the young to vote just maybe get rid of Grey brigade, we want to keep experience but at not cost we are currently paying in the suffering of daily stress for those who have not got stable living conditions.
Hi Rae, suggest you look at some old footage of civil unrest in the 1960s-80s. Many of your ‘grey brigade’ were there, and are still protesting for ‘rights’, here on the Kaka if no longer on the streets. Belief for the human right to justice, equality, and fair distribution of resources doesn’t go away with age, but we do get ignored and sidelined by most msm.
I was there also, however bad knees not useful for marching now.
Agreed Rae on the voting age. I'd suggest including voting for the first time in the last three years of the school curriculum.
Thanks Bernard, If first vote is before exit school will encourage lifetime voting, even maybe in local body elections.
Great stuff Bernard, is it financially doable? Have some rough order figures been run? I like Andrew P’s comment, question the elephant you haven’t discussed “agriculture” the country is going nowhere without getting the the rural sector on board! The EU know all about farming complexities either subsidies or some form of compensation will be required if the environmental goals are to be met! Ch
Well said Bernard!
Thanks Bernard. I’m glad to see what you did with this column idea.
Love your work in many areas BUT as commented previously the generic 0.5% land tax should only be on investment properties.
Those who have 1 property, are either retired or have limited disposable income, do not have other investments, and are managing mortgages are already paying high rates to the bank, and they pay high council rates based on inaccurately high valuations, and this is exacerbating their position.
Council rates are rising substantially.
Given this cohort would be high this seems a terrible policy.
Bank rates hike effects are increasingly going to manifest as fixed rate terms end.
A UBI would not be able to be greater than current super.
A capital gains tax on investment properties as in Australia seems much more sensible.
A generic 0.5% land tax on all property will never fly politically, it will be hard enough to get a capital gains tax (that doesn't include the family home) across the line, let alone this.
A capital gains tax is something most people can understand - why should some income be taxed but not capital gains? (whether it be on property, shares or businesses).
A worker pays tax on 100% of his income but not a more wealthy person. Even my National Party friends concede this point, though everyone is able to come up with the exceptions and problems with implementation such as allowing for inflation.
the last Labour government enacted excellent legislation that taxed any capital income from a residential rental (and/or speculative) property if it was sold within 10 years. this had the very desirable effect of slowing (and even slightly reversing) the raging inferno of increasing residential property prices. now the current nasties in government are going to repeal that excellent legislation which will have extremely deleterious effects on NZ's economy and society. a lot of msm is actively promoting the current government's decision to repeal that legislation of the last Labour government.
Maybe a 1-1.5% land tax on investment properties..
Does your comment still. apply if the land tax is accompanied by a reduction in income tax (Bernard suggests no income tax in the first$35,000)?
For the large number in the cohort who are only on govt super or low income, yes it does.
(It could in theory be means tested, but that can be tricky in multiple senses, and outwitted probably with good money management.)
Very thoughtful and necessary! It would be great to promote your ideas as widely as possible so that there can be public discussion. Well done!
Cheers
Bill
Excellent piece, Bernard. Yes, I vote open up till Gravy Day.
Two questions:
I find your analysis and logic compelling but are there those who have a principled disagreement with you, and if so who are they?
And, accepting what you say, as you yourself are saying and as our depressing election shows, there's little or no political will for this. Do we just hope we get lucky at some point with a new political leader or do you see some other way for this to change? Just keep chipping away?
Thanks Glen. The Opposition parties are reconsidering their wealth tax/capital gains tax policies. I'd suggest they look at a land value tax.
Gotta say,as many readers will already know, that a Land Tax was a TOP policy in the last election. And a tax free threshold.
Nice one Bernard. Superb, insightful, and desperately needed pragmatic, evidence based, advisory. Luxon and Co, please at least listen. Your inaugural speeches promoted your acknowledgement and understanding of the fact that New Zealanders through an MMP election system have elected you to govern and ‘do public service’. Please do it.
Maybe they should have appointed Phillip Morris Rep, Chris Bishop , to look after smoking growth. See https://www.youtube.com/watch?v=WoTUo5iRI1Y
Did I hear you say only 1m people in NZ own homes? If that 1m mostly have dependents, this may be OK, but not if it actually works out that 4/5 of the NZ population are renting, this is not OK. Can you do the figures and reassure me?
Fortunately not one home per person
About one million owner-occupied homes or second homes with 3m, with the remaining 700k or so being owned by landlords and occupied by around 2m.
Hi Bernard - tis is a great piece apart from one fundamental flaw - you seem to subscribe to the endless growth paradigm - just argue that government needs to be investing more in infrastructure to accommodate this growth.
No one is asking the rest of us whether we want to live in a country with a population 10+ million
No one has considered the vast subsidies this growth entails - the hundreds of billions you speak of is a direct wealth transfer (subsidy) from those living here now to those yet to arrive -and we wonder why we have a cost of living crisis? Population growth isn't contributing to our productivity - but it is adding considerably to our consumption of goods and services. NZs population has doubled in the past few decades but our export economy - which pays for our imports is still the same old rural mix that it was half a century ago - the income now has to be shared across twice as many consumers as it used to.
Then there is energy - we can barely keep the lightbulbs shining with our present population - how will we provide for the energy needs of a doubling of our population particularly with need to replace the 60% of our present energy supply provided by fossil fuels with renewables? This could only be achieved by building nuclear power stations.
Muldoon got pilloried for subsidising export production (a policy China has most effectively followed to the present!) but no one is critiquing the current massive subsidies applied/imposed by effectively uncontrolled population growth.
So you are just as guilty as the politicians you are critiquing here - you should be upfront about the beliefs underpinning your comments - so that the rest of us may understand upon what basis you are making these statements and express our own views accordingly. Our "Infrastructure Deficit" is nothing more than the unfunded costs of population growth. It ($200billion) amounts to a liability of $50,000 for every single person living in NZ now. It also understates substantially the cost of future population growth.
You make great points about choices about population. I think reasonable people can argue the case in the way you do. The problem we have at the moment is we're not having the debate. And we also believe we have a choice. I actually don't think we have a choice. We will become a climate refuge that about 100m rich people from north and south asia will want to live in.
Agree with this Bernard except that we do have a choice if we wish to have it - as it will be our leadership that sells us out - not others that take it from us. Like Luxon's tax on rich foreign property buyers being presented as benefit to the nation - all it will do is add to property price inflation.
The interesting thing with the present Treaty debate is that it wasnt "colonialism" that marginalised Maori - it was capitalism - Maori took to trade and farming and milling wheat within one generation of first contact with the wider world - they were the nation's first land owners and the first small business owners - until the big money turned up. As with the Highland clearances and other examples of the end of tribal ownership - the clan chiefs/rangatira got the money and the rank and file got dispossessed - this process continues to this day - but now to all of us. Chris Luxon is quite happy to sell the country from out under our feet just as many rangatira where happy to take cash/guns for land. Just as with today's population, Maori used the income to fight their old battles with renewed vigour (violence!) not seeing the new threats upon their collective horizon. We need to be looking to the challenges presented by the future rather than squabbling over perceived slights from a couple of centuries ago.
What is happening in Palestine is a classic example of when separatism and an inability to leave the past behind overwhelms any consideration of the issues of future - it is just another episode in the three thousand year old conflict between the Judeans and the Assyrians (see 2 Kings 17:1–6). This conflict not only doesn't do anything to prepare either side for the future - it severely restricts their future options - there be a lesson for all of us!
Don't let the extraordinary tobacco repeal issue cloud the fact that Philip Morris et al also sell vapes. Where they are nervous about bad press on tobacco they massively endorse vapes as the healthy option. We are 2nd highest vapers globally, with the vape industry loving the amendment allowing all! retailers to display and sell 3 flavours of vapes with a one off $600.00 licence fee, 600 colourful specialty vape stores, online sales, main messaging being it's the healthy,
alternative to tobacco and serious lack of description of risks, quitline is just for quitting tobacco and directs addicts to vape. There is no govt quit assistance for vapes or for nicotine! Addicts are left dangling, with vape displays everywhere, even in pharmacies.
NZ mimics this Philip Morris spiel.
https://www.pmi.com/our-business/smoke-free-products/e-vapor-products
As mentioned before the FDA haven't licenced vapes even as a means if quitting smoking duevto health rusks. Also see lung.org, Mayo and Cleveland clinic info.
NZ vapers invlufing children thinkbitvis safe, just addictive.
Hi Bernard. Is it your intention to send this work to politicians?
They already get it. Everyone in Parliament subscribes, along with Treasury, DPMC etc.
What you need Bernard is a rich supporter who pays for a two page ‘advertisement’ in the NZ Herald and put your blog above in!
Well done Bernard this is brilliant and thoughtful work. I wish we lived in the country you set out in these policies! Incredibly sad and demoralising to see the new govt's direction play out from Aus.
"our homes are worth 10 times our stock market and eight times our retirement savings (whereas Australia’s homes are worth four times its stocks and three times its savings, and US homes are worth the same as its stock market and twice its retirement savings" - that's the kind of nugget that makes subscribing to The Kaka worthwhile.
Thanks David.
As always, thanks for this, Bernard. Another element is the high cost of actual building a house here. We recently built, and when we were dreaming of a custom, sustainable house build and looked at houses of similar specs that had just been built in Australia, they were about half the price of what we were estimated here. We ended up upspec-ing an off-the-plan house, which is a modest size for these days and it still cost 500k to build. Renovating the in US, you could buy top spec windows with insect screens built in, in standard sizes from the Bunnings equivalent. Standard sizes meant the windows were a third of the price of custom sizes. Nothing like that is standardised here.
There are two organisations that have figured out how to build efficiently and cheaper, housing NZ and Simplicity building to rent
I suspect prefabricated is much cheaper
It’s like the difference between a Taylor made suit and an off the peg one. Unfortunately, hardly any off the peg housing solutions in NZ as no incentive for building suppliers to produce standardised commodity products
All good (albeit, shouting-into-the-void) ideas as usual Bernard 😉... Honestly, at this point I'd just settle for the PM and his lackeys stopping blaming the previous government for how "hard" it's going to be to deliver all their #slogans to the public... When exactly are we ending the division? ...Getting back on track? ...Reducing the cost of living?
NZF, ACT and the anti-climate/anti-health lobbying crowd seem to be well leveraging National's incompetence (and betrayal to their largely centrist base) to roll out their racist, conspiracy-laden, life-destroying nonsense - represented in 90% of the "100-day plan" - but, meanwhile, the supposedly 'mainstream' [sic] Luxon, Willis and the rest of the National Party are apparently still unable to escape campaign-Groundhog Day.
Te mīharo hoki! Kia ora Bernard, thanks so much for this vision. It is super inspiring.
I'm wondering if you've been able to put rough numbers to the policies you've outlined. As in how much comes in from the land tax, other revenue streams, and the dumping of some policies, such as WFF?
And then how much the other policies would cost? Such as UBI for under 30s etc.
Ka nui te mihi, thanks so much again for this beautiful visionary work.
Instead of lowering GST I would scrap it entirely and replace it with the broadest based tax there is - a Financial Transaction Tax (FTT).
The major selling point is that it would immediately solve the cost-of-living crisis by reducing the cost of groceries, power, petrol, etc by more than 10%.
And the FTT would catch all that current speculative activity (share trading, currency trading) that currently operates largely tax-free.
The FTT would be collected by the banks (and a few bank-like organisations) making it very difficult to avoid or evade. And with the abolition of GST all those businesses who have to do GST returns would be freed of that duty.
Unintended consequences and stuff: -
1) Remember the Domestic Purposes benefit (DPB)? And the accusations by some that it encouraged "those people" to baby farm. Every child earned a higher DPB. Might a similar scenario occur with everyone under the age of 30 getting the UBI? So mum and dad get their UBI's plus that of each kid they have.
2) A 0.5% residential land tax feels like it is peanuts. If the council increase my rates next year by, say, 8%, then roughly half of that is on the land component of the capital value - 4%.
Great work Bernard! I would also like to see the inheritance tax reinstated that was reset to zero percent by Ruth Richardson in 1992. However, the legislation was not repealed. The arguments on inheritance taxes were well canvassed by Thomas Piketty in Capital in the Twenty-First Century as you know. The previous NZ inheritance tax scheme exempted the family home (indexed to the median house price?) and was set at 40%.
Hi Colin
I would go with the UK version if an inheritance was introduced. From memory it taxes the recipient, not the estate. So it becomes a bit like income tax in that you are on a graduated tax rate. As you receive an inheritance (dad say) it is recorded in a register and you are taxed on it as it is received, then the next inheritance (mum say) is recorded and taxed at a higher rate because of the graduated tax rate.
This method would work better at catching the concentrate of wealth in fewer hands.
New Zealand First wanted a population target in their coalition agreement with Labour back in 2005. Total net migration hovered around there for a few years before NEGATIVE migration from 2010. The last nation government dialed it up with their student policies. There were no other substantive changes to migration settings. It's strange how little is written about how "export education" drove such big societal changes.
It's not quite right that we kick people out after three years of work. For decades we've enabled people to live in New Zealand long term on temporary visas. These visas relied on constant work and constant health. But as soon as someone was unable to work or the job was no longer there, they and their family had to leave. People were trapped in low wage jobs in industries that couldn't recruit New Zealanders (halal slaughterers, "ethnic" food chefs, agreed care workers) until their kids aged out of few education and the family has to make tough choices.
The three year work visa was a short lived attempt to make temporary mean temporary. And to avoid making tough choices as a country about immigration and society.
Hi Bernard. I would go way stronger on a managed growth policy. We currently have natural growth of around 20,000 per annum, not from birth but from longevity. And also on average around net 20,000 leave. So let's call it zero.
But then, based on pressure from businesses (and government services too) we open the borders, flooding the country with people. So new labour, and new GDP, at the cost of infrastructure and housing burdens, and of course demand on all the public services. Don't governments know they are their own worst enemy, or perhaps more correctly central government is the enemy of local government, because the bounty of new tax goes to central government, while the burden of infrastructure is often with Local Government. And of course all of us either benefit or lose in the housing market, depending whether you are in or out.
So I think the number one priority for government should be managing immigration. Because it affects so much else. Yes allow immigration, but say manage it to 25,000 per annum, with a focus on filling public sector jobs. And let the rest of the market adjust to the "labour shortages" created, through investment in training, automation or just higher wages.
And knowing our growth rate, underpins all other infrastructure investment plans
Entirely unsurprised Casey Costello has the 'tobacco control' mandate
Yes to all of that!
We will need extra revenue during the catchup in housing and infrastructure etc.
After that if we can just stick to the plan NZ will be a great place for our kids and their kids to grow up in.
Just how long the catchup takes is how much in borrowing/tax hikes we can tolerate politically.
On free preschool education for all, I have some concerns. Firstly, preschools don't run from 9am till 3pm like primary schools. Secondly, there is a critical bonding and learning period in the first 5 years that parents should spend to some extent with their children. I'd rather see better paid parental leave conditions, especially for fathers, than free preschool offerings. In addition, I'd like part-time work to become much more common and acceptable. Maybe free kindergartens for 2-5 year olds that are only open for 6 hours/weekday?
This would only work if parental leave matched up with free preschool. At present, paid parental leave ends when a baby is six months old and childcare subsidies start when the child is 3. That leaves two and a half years with no support. I had to go back to work because we could not pay the mortgage on husband's income (even before he was made redundant during COVID). Those two and a half years are incredibly expensive and stressful which negatively affects bonding and massively exacerbates parental guilt.
We were spending more than $500 on childcare a week (4 days, two kids, one subsidised) but as that was less than my income I needed to work. I would have loved to have more time with my children when they were young but that is now a luxury for families with a highly paid parent who isn't the primary caregiver.
I think the government plans to solve the social problems by banning gang patches and building more prisons. No need for anything else.
What about increasing the UBI age by one year every year so that in 35 years everybody gets a UBI
Great work Bernard! Particularly pleased to see you advocating free education from pre school to tertiary, ( as we had from 1936 - 1991). Education is the high road to prosperity.
If Labour had the courage & the vision to run with your Social Democratic proposals, then along with the Greens & TPM, they'd sweep the country in 2026 & consign this current rabble to the dustbin of history.
Bernard, you mention that we may have to pay up to $24 billion for international carbon credits. I'm wondering why we can't invest in indigenous forest within NZ to defray at least part of this cost. Here is one specific proposal: https://pureadvantage.org/recloaking-papatuanuku/introduction/
Surely spending, for example, $1 billion dollars here is vastly better than sending the same $1 billion offshore for buying carbon credits? With the latter it just disappears whereas the same spend here would provide a great many jobs, to would support nurseries and other related businesses, and all of that money, of course, would get circulated within the NZ economy. That's got to be better, right?
Mike
I'd set the residential land tax higher. Assume a target return on asset value of say 7.5% then tax that at 33% - so you're effective tax rate would be 2.5% of asset value. At 0.5% any residential property investments which generated a return greater than ~2% would still have a tax advantage over any earnings generated by comparable business assets.
Hi Bernard - your idea of a land/property tax is a good one but why not stand back and look at how property is funded - through bank loans - which - since our banks were sold to the Australians has been a massive drain on our economy through the influx of foreign cash to fund our property bubble - which has required a constant flow of foreign exchange out of the country to pay for interest on this foreign capital and profits - these outward cash flows consume most of the earnings of the dairy industry but create no value for the national economy. We dont need foreign banks to be funding mortgages - we could simply crank up a "State Advances v2" and fund the entire property market using fiat money created by the government - property transactions are just that - transactional - there is nothing preventing government from simply underwriting the process and then utilising the interest as income - in effect treating mortgage interest as a tax - BANKS ARE COMPLETELY UNNECESSARY -- banks have simply privatised the land allocation functions once exercised by church or crown!!
The Australians have used their banks' domination of our property market to impose a form of economic colonialism upon us and this has been a prime cause of our current economic circumstance - picture what our balance of payments would look like of there were no foreign banks involved in funding our property market!
There is nothing new in the idea of government (the Crown) allocating ownership of land and charging a fee or tithe for the right to occupy - it is as old as civilisation - even now ownership of all land ultimately resides with the state. All sorts of interesting permutations of funding land ownership (and consequently funding government services) are possible if one exercises some imagination.
Hi Bernard
A very good summary. My thinking has been along those lines for years. Decreasing direct taxes and taxing un-taxed gains would be a game changer in my opinion. Encouraging investment in the productive side of the economy can only be good. A share market that has more company's and more breath has to be better for us. Other small countries can do it why not us. Policies and thinking that have been announced could lead to a recession ie cuts to spending and encouraging investing in housing leading to an interest rate rise. I hope not but we shall see. Anyway, Bernard keep-up the good work.
Excellent apolitical enunciation of the problem set. Keep it up.
Agreed, though there is the Best Start payment until age 3 and under 96k income. It is a challenging time with under 3s.
National and Māori party brought in the Smokefree campaign. Judith Collins, of all people, created the most globally groundbreaking legislation which overnight took smoking out of the entire prison system. That little known fact, as far as I know, is still in effect. By comparison, the future-loaded legislation creating a cut-off point for tobacco sales was a train wreck-in-waiting. It would create a surging backlash like nothing else. How do you justify a two-tier justice system based on an arbitrary date?so a 22 year old can’t buy tobacco but his 23 year old neighbour can? It has felt like Labour /Greens want to be seen doing the right things while making things as ineffective and toothless as possible. The Smokefree Campaign could have been run to achieve success. Instead too little too late is the MO of the existing campaign.
So please let’s be honest about this political football. As a Smokefree 2025 campaigner myself, Labour / Greens were myopic and self-congratulatory about their minimal efforts. The same wish-washy, try -to-have-it-both-ways attitude we saw with Capital Gains Tax was how Smokefree 2025 was treated. Politics over real change. If you look at the legislation passed, the:most important aspect of the whole thing are the CULTURE CHANGE actions, which were NEVER implemented. They were supposed to be Giving money to establish Smokefree community groups, education programmes. But instead they relied on only funding the quit smoking organisations- the ambulance at the bottom of the cliff. Totally lame. They ignored the groundswell back lash that came on since Covid lockdowns. They wanted to pat themselves on the back and claim the Smokefree battle was all but won, taking an early victory lap while ignoring the growing signs of an about face toward acceptance of ‘smoker’s rights’ to smoke where they like. We have not yet approached the toughest but of Smokefree culture change and the mood is shifting so fast under our feet. It is utter delusion to publish articles about how young people want smoking restrictions. Of course some do, but the NZQA health curriculums Smoking component is out of date and so weak as to laughable. Without the equivalent grassroots groups that tackled drunk driving, the Smokefree campaign is dead in the water.
I have had the sneaking suspicion that Big Tobacco controls much more than an Anto-Smoking minister. The ASH Smokefree group was defunded and thus defanged and left with nothing but quit smoke advice.
If an individual were to try to start a Smokefree Campaign right now, they would find there is zero support from local councils or the government. The fact there are Smokefree signs around Waiheke is because I fought for them for over a year. I asked for a lot more, but all I got were signs. And those signs are regularly being torn down. I tell you, there is an undercurrent of strong support for smoking and smokers that no one has even recognised yet.