English on flat house prices, warns foreign buyers; Won't say 'no' to tax cuts ahead of Prefu; English and Bennett lay into Gareth Morgan; Winston accuses Nats and Labour of spending big on election bribes, says NZF keeping their heads

By Alex Tarrant

Monday’s politics got so crazy that we didn’t even have time to bring you Bill English’s comments on house prices. So, before we get to our review of what else happened yesterday, here’s a sugar-hit:

Journalist: Are you concerned that we’re going to see another spike in house prices if you guys get into government, like we did last election?

English: “The market will do what the market does. I think the indications are the flattening out of house prices is more than just a pre-election…"

Journalist: There was a similar pattern last election though, with Labour campaigning on – they’ve said they will potentially do a Capital Gains Tax, which is what they were saying last election. So it’s a similar sort of scenario.

English: “Well I don’t think there’s any doubt there’ll be concern about the Capital Gains Tax proposals. I think Labour are trying not to say it. But for those couples who bought another house as their retirement savings vehicle, they’ll be pretty keen to hear the answers to the questions about just what the Labour Party mean on Capital Gains Tax.”

Meanwhile, the PM was also asked for his views on Labour’s proposal to crack down on foreign purchasers. The last part of the answer is potentially interesting – is he warning investors to be careful? Here it is:

“They’ve reheated this announcement for the last couple of elections. Overseas buyers have been a small influence on the housing market. All the work that’s gone in to KiwiSaver, Homestart…working with councils, funding infrastructure – all that is now working. There’s 200,000 houses being built over the next six years. And with rising incomes, that gives people a much greater chance of affordability. Whoever’s buying and selling houses is probably going to find they’re taking significantly more risk in a market that’s now flattened out.”

There you go. In terms of what happened yesterday in relation to the election campaign, we covered National’s announcement of $18 GP visits, Labour’s regional trains plan & the Greens on public transport, Nikki Kaye’s plan to attract teachers back to New Zealand with relocation packages and Peter Dunne’s shock retirement from politics. After all that, the PM said the election had now become a drag race and called on soft Nats to come back in from the cold.

What else happened?

Well, TOP’s Gareth Morgan set everyone off by calling Jacinda Ardern lipstick on a pig. I’m sorry Gareth but you can’t go around saying things like that. Yes, you were trying to lament Labour’s lack of policy announcements over the weekend. So, why not just say that?

That gave English and Deputy PM Paula Bennett the chance to have a proper go at Morgan. No one’s certain yet where he’s picking his votes up from exactly – Legalise Cannabis for sure, but the remaining 1.5-2 points perhaps mainly ex-Greens, with a smattering of Labour, ACT and National voters? Either way, it’s looking much more likely Winston will hold the balance of power so no harm having a pop at the rather eccentric economist.

“I think they are deliberately appalling comments,” English said. Bennett piped up that Morgan would probably be buoyed by the fact journalists were asking questions about him. He hadn’t had much publicity recently so needed to do something.

Could English work with Morgan? “Look, if you’ve got an attitude like that I don’t think anyone in public life would want to work with him. That’s outside the acceptable boundaries of political criticism and language. But I think he knows what he’s doing. I think he’s designed the comments to stir up attention, because he hasn’t had much lately.”

I threw a question in there about Wednesday’s pre-election fiscal update (Prefu), where Treasury essentially tells everyone what shape the books are in a month out from the election. They haven’t been that exciting in recent years, with the 2008 version while Michael Cullen was in the Finance Minister seat perhaps the most famous – “decade of deficits.”

This year’s one may well point to a decade of surpluses, and larger ones than expected in Budget 2017 back in May. The government’s books for the fiscal year just ended are expected to show perhaps $1.5bn more in the government’s operating balance than expected.

The key consideration for any juicy election promises then will be whether that strength is sustained, or whether it’s just a one-off this year and forecasts remain what they were in May. Tax cuts if sustained, or money for a nice lolly if a one off? I asked English whether a tax move could be on the table:

“That would be getting ahead of ourselves. The Prefu will come out – it comes out shortly – that’s the Treasury’s opening of the books. You’ll just have to wait and see what the numbers are. I think it be getting ahead of ourselves to anticipate them.”

Perhaps don’t read too much into the little smile on his face as he was giving the answer – that’s normal when we ask about anything fiscal. But it wasn’t a no. If National is thinking tax cuts then I’m not sure they’d announce them this early in the campaign. They might need to save a bit of the strong stuff up their sleeves for the final week or two.

Labour meanwhile is waiting with trepidation on what Prefu might show. Will there be enough money to bring forward its three-years free tertiary education policy or will they have to shift spending around and perhaps announce a higher top tax rate to be able to afford such a move? Wednesday will be the biggest Prefu since 2008.

Oh, and one more thing. Winston Peters had a go at the two large parties for promising too many billions of dollars in election year bribes.

Yep. Seriously:

The 2017 campaign of promises demonstrates the old parties in Parliament are desperately doing anything to get political power.

New Zealand First accuses them of making promises without regard to the fragile state of the New Zealand economy within a seriously unstable world economy, says New Zealand First Leader and Member of Parliament for Northland Rt Hon Winston Peters.

“New Zealand’s National debt is at record levels as headlined by the New Zealand Herald in June,Kiwis drown in debt (NZ Herald, 20 June 2017, page C1). It said:

‘New Zealand’s debt is past half a trillion dollars and is forecast to continue to rise.’

“Other political parties have no idea how to grow the economy and have had 33 years of their failed policies attempting to do so.

“New Zealand’s GDP per person is flat lining as is productivity.

“In this environment political parties are making consumptive promises that are breath-taking in their naivety.

“In two days alone the National Party has made over $12 billion in promises – $18 GP visits, Dunedin Hospital rebuild and roading.

“Labour’s promises are as bad, and even Gareth Morgan points out they have no substance, and the Greens have joined them.

“Clearly there is only one sane and stable party in this election that has warned time and again of the imminent economic crisis this country faces.

“Policies not based on growing our national wealth by production but by consumption risk New Zealand becoming like some South American economies.

“In the words of Kipling: ‘If you can keep your head when all about you are losing theirs’.”


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31 Comments

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34

"Overseas buyers have been a small influence....."

You lost me right there bill.

IMO if overseas buyer had any influence in pushing up house prices, then we should have had a policy to restrict overseas buyers. The mainstream media unfortionately turned it into a race thing, which it couldn't be further from.

Winston, lets not forget your $20 per hr minimum wage proposal !

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22

that's right Bill, it wasn't overseas buyers, it was overseas money that was the problem.

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13

I see they are still (deliberately) misquoting Gareth Morgan. His remark was that Labour's new policies under Jacinda were lipstick on a pig. The pig being the policies as they are still the same as Andrew Little's policies. Maybe National are getting a bit scared?

Don't be so naive.
Of course they are misquoting him. When you don't have anything better to talk about, the chief occupations will always be malicious gossip and talking nonsense.

(John Ward)" It really matters very little whether the subject is Putin, Household debt, the MH17 shootdown, Charlottesville, Stock markets, Brexit, Greece, Hungary or North Korea: the Left reads one version of the facts, the Right another, and those of us in the Middle, who don’t believe anything that’s agendered, can choose to either argue or just smile benignly and then wait a polite few minutes before retreating to another room, topic, location or problem. We are none of us in a good place. It’s whether we realise that or not that often makes the difference...."

Mainstream media are all about what gets clicks.

TOP is all but politically irrelevant. Checking out the FB posters (they have names you can check unlike the keyboard warriors here), his supporters appear to be anti-vaxers and other fringe types. Where he does help is reducing the valid left vote, and on that point I salute him and his $1,400,000.

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12

The attitude of attributing everything to the market and the invisible hand is pretty irresponsible.

It's always impressive how negatives are the fault of some other factor beyond control, whereas credit is immediately and greedily snatched at for any positives.

It's magical thinking which is what you can expect from someone who maintains religious belief into adulthood.

It's the same as saying god is responsible for all good, and free will is responsible for all bad. Socialism for the rich, and ruthless freemarket capitalism for the poor.

Hypocritical and "black and white" thinking. Not something that we want from someone leading our country.

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11

Bill's pissing down our backs, and expects us to believe him when he tells us it's raining.

Ridiculous and unfounded statement. Try and keep your comments fact based.

I don't think Kakapo meant literally. Bill's no Donald Trump in a Russian hotel.

Brilliant, haha

I can confirm that Mr English is not literally pissing down my back.

But he is metaphorically doing exactly that when he says that foreign money hasn't been a factor in the housing crisis. Not just self-serving, dishonest, and thoroughly debunked, but totally insulting that he holds us in that kind of contempt.

Or apologizes because the shower nozzle is not working well

keep things in perspective people. You get nothing for nothing. The Labour election lolly scramble will have to be paid for somehow. Under Labour we will be faced with years of higher taxes and budget deficits. For those who don't understand the impact of budget deficits, it means somebody else has to pay in the future for consumption/spend now.
Vote Labour and everybody will hurt for a long time.

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13

Take your own advice - keep things in perspective.
Why would we be more likely to have a budget deficit if taxes are raised?

As far as I see it, neither Labour or National are any better at operating under a balanced budget. Except for in the past 15 years where the Last few Labour governments managed it pretty successfully.
https://tradingeconomics.com/new-zealand/government-budget

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17

Labour took us from nearly bankrupt down to $20 billion in government debt. National have taken us from $20 billion to $90 billion in debt in 9 years. I hate to think how much our private debt has multiplied in that time too. But hey, at least the wealthy got rid of their 40% marginal bracket, and didn't have to pay tax on their capital gains. The poor got their 2.5% pay decrease through increasing GST. Clearly they aren't working hard enough.

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20

Yes it's been horrible to watch just how callous National have been towards Kiwi citizens and residents. They have been fully aware about the damage they've been doing though being down right lazy and doing nothing to even collect revenue from Foreign Buyers.

Instead they've just allow them to asset strip and lock out local buyers. Even choosing to restrict local investors by increasing LVR rates which of course allowed Foreign Investors unrestricted access to the Auckland property market.

Unless of course you're in the 45-70 age group, and own a property or two (or 5) - then its been the party of choice.

Yes I see your point. But try telling that to those in the (45 to 70 age) catogory who have had to sell their investments and or downsize to provide capital to their children so they can buy their first homes. You're probably looking at least half of them who have been effected.

Things certainly haven't been easy for the bank of Mum and Dad.

Socialism for the rich, Capitalism for the poor - the Conservative approach.

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14

We still need the Foreign Buyers tax to at least try to stop this false economy from happening again.

Every other gateway city has imposed a Foreign Buyers Tax to help dampen their influence on their economies and sensiably collect revenue from them.

All National have done is to help nurture a false economy by encouraging foreign investors, restricting new builds sending existing housing stock sky rocketing and trying to change our flag to help Kiwis to lose their identity.

It's been a long nine years National, time to go!

#BEExit

We still need the Foreign Buyers tax to at least try to stop this false economy from happening again.

That all depends. There will be some capital flowing into NZ that only requires a small proportion of it to be returned to the beneficiary. Things are really heating up and even natural Chinese enemies such as Vietnam are now targets for being able to :keep money." However, cynical it sounds, it's part of the current reality. Possibly the purchase of housing in NZ may be executed with less dubious funds, but the extent of capital flight globally should make people wonder about the sustainability of it all. Unfortunately, the sheeple don't look it at like that. They tend to look it at it purely from the extent to which it increases their wealth or imposes cost burdens.

Regarding Gareth Morgan, Geoff Simmons and the TOP party, is he trying to set a world precedent with his equity tax policy? I cannot find any country where there isn't a tax-free threshold for assets. Is housing performing at more affordable levels in any of these countries with an equity tax, or is this just more wishful thinking on what is not working?

A capital tax is different from a capital gains tax. The latter is difficult to administer and needs thresholds, losses, tapering, indexation, exemptions etc. The former is already used in the FIF regime and, as a long-time overseas shareholder, I can verify that it is extremely simple to administer and follow and, hard to avoid.

http://www.ird.govt.nz/toii/fif/how-taxed/how-tax-threshold/
You mean this FIF regime which has a threshold?
http://www.ird.govt.nz/toii/fif/how-taxed/how-tax-rules/
And these exceptions?
Are you then confirming my point that no country in the world has an equity tax, or capital tax if you prefer, that does not have thresholds and exceptions?