Treasury's pre-election fiscal update throws a curve ball at Election 2017; Better government position in 2016/17 to be nearly washed out by weakness through to 2020; Joyce rules out more tax cuts until 2020; What will Labour do?

Treasury's pre-election fiscal update throws a curve ball at Election 2017; Better government position in 2016/17 to be nearly washed out by weakness through to 2020; Joyce rules out more tax cuts until 2020; What will Labour do?

By Alex Tarrant

A one-off sugar hit then a bit of a damp squib.

Treasury’s much anticipated pre-election fiscal update has thrown a curve ball to the election campaign, with a set of forecasts that could best be described as a headache for Labour while giving National the ability to tout its ‘steady as she goes’ approach.

The results indicate Labour may have to lean towards announcing a higher top income tax rate if it wants extra revenue for new spending promises under Jacinda Ardern – particularly if it wants to bring forward its three years free tertiary education policy as Ardern indicated on Tuesday. Labour finance spokesman Grant Robertson put out a 'holding pattern' statement after Prefu was released - you can read it below.

Finance Minister Steven Joyce meanwhile told media at the Treasury lock-up Wednesday that the numbers meant any second ‘family incomes’ package would be on hold until at least 2020, unless growth came in ahead of projections. National would not entertain extra borrowing to allow for earlier tax cuts following on from the heels of its Budget 2017 families package, he said. See more from Joyce on a 2020 tax package below.

National on the campaign trail will indicate how some of the unallocated capital spending of $4bn over the next four Budgets is set to be spent – although not all would be allocated, leaving room for promises over the next few years, Joyce said. This also effectively leaves some cash aside for coalition negotiations.

Meanwhile, of interest to readers will be that, Treasury, in the few months since its previous forecasts were published in May, is now expecting residential investment (ie house building) to be lower than previously expected, as capacity constraints hit building plans.

But first, the good news. The government’s operating balance before gains and losses (OBEGAL) for the 2016/17 fiscal year is expected to come out $2bn above forecast in the May Budget at $3.7bn.

That could provide for a nice Election 2017 policy sweetener from each of the two main parties. However, Joyce said he didn’t expect to be doing too much with the kitty, as it was effectively washed out by lower projections for later years.

Now the bad news. That strength in tax revenue in 2016/17 isn’t expected to stick around – it was boosted by “one-off” factors last year, Treasury says. This means the Crown’s OBEGAL surpluses from 2019 through 2021 are forecast to be a cumulative $1.7bn lower than expected in the May Budget.

This does still leave a $400m boost from the higher than expected 2016/17 tax take – not really the funds some were expecting before the Prefu figures were released, but at least some cash to do something with if you don’t want to rock the debt-to-GDP or income tax settings boat.

EY Executive Director, Tax, David Snell said Treasury had called an increase in corporate tax revenues over the past year as a one-off rather than a structural change. “Most of the income has come from the finance and investment sector – they’re notoriously volatile. I can understand where [Treasury] is coming from on that," he said.

These institutions included banks, investment houses, and the New Zealand Superannuation Fund, which is a big corporate tax payer. “It will be a bold call to sustain it [in the forecasts] when you’re facing capacity constraints and you’re facing changes in monetary policy over the coming period,” Snell said.

Because of the higher-than-expected revenue in 2016/17, the government’s revenue base is starting higher than was expected in May. This feeds through to its net debt to GDP ratio tracking slightly better over the next four years – Treasury is effectively assuming that extra $2bn in 2016/17 is all put towards paying down debt.

This could be where Labour is able to find a few billion for each year of the period – by sticking with its own previous debt track – they’ve already promised to get net debt to GDP back to 20% a year or two later than the Budget projections. Much of that is already incorporated into Labour’s fiscal plan, which the party has said it will review based on the Prefu numbers.

The Crown’s residual cash position looks set to be slightly stronger than Budget projections – although still in deficit in 2018 and 2019. This is the figure leading to Joyce’s comment that National wouldn’t want to announce any second ‘families package’ until the cash position is back in surplus ($1.7bn) in 2020. We’ll hear more from National on the campaign trail about this potential package, Joyce said.

Meanwhile, nominal GDP is expected to track pretty similar to the May projections – slightly under, but not so much of a difference as to cause any worry, Treasury said.

However, real GDP is forecast to come in lower than projected in May. A higher terms of trade over the next four years will essentially be offset by lower-than-expected residential investment, the figures show. Treasury has also built in higher than expected CPI inflation every year from 2017 through 2020, which impacts on real GDP forecasts.

Treasury secretary Gabriel Makhlouf outlined Prefu's key projections. Watch his presentation below:

Meanwhile, Steven Joyce later put out a press release detailing National's committment to a second 'families income package' from 2020, including what might trigger National to bring it in earlier:

The National Party will commit to implementing a further Family Incomes Package in the next term of government, subject to certain fiscal conditions being met, Finance Spokesperson Steven Joyce says.

“Our strong economy means the Budget 2017 Family Incomes Package will provide a positive boost to after-tax family incomes on 1 April of next year,” Mr Joyce says.

“We are committed to delivering more for New Zealand families in the next term of government, subject to maintaining our strong plan which is allowing New Zealand companies to compete and succeed on the world stage.”

“The best indications from today’s PREFU announcement is that a similar sized Family Incomes Package to the current one would be possible from 2020, unless the economy performs better than expected,” Mr Joyce says.

The first Family Incomes Package will deliver an average of $26 a week to 1.34 million working families from 1 April 2018 through a combination of tax threshold changes, increases in Working for Families tax credits, and increases in the Accommodation Supplement. The Package will also provide an additional $13 a week per couple for 750,000 superannuitants.

Mr Joyce laid out a number of key conditions to be met for a second Family Incomes Package to proceed. These are:

Maintaining the Government’s debt targets of reducing net debt to 20 per cent of GDP by 2020 and 10-15 per cent of GDP by 2025

Meeting the Government’s spending commitments and forecasts for building infrastructure and improving public services laid out in Budget 2017.

Funding any Family Incomes Package from cash surpluses and not from additional borrowings

The Pre-election Fiscal Update showed that cash surpluses beyond current and future budget spending commitments would commence from the 2020 financial year.

Mr Joyce says that a second Family Incomes Package would have a similar emphasis to the first package that commences 1 April next year.

“We would want to focus particularly on lifting the incomes of low to middle income families, look to simplify further the tax and transfer system so people can more easily see the link between their work and their earnings, and continue to lift the lower tax thresholds as incomes grow,” Mr Joyce says.

“The average wage is predicted to grow from $58,900 at March 2017 to $65,700 over the next four years. It is very important that we aren’t taxing middle income earners at 30 cents in the dollar. ”

“National has shown it can lift incomes and invest in public services and infrastructure. Under our responsible programme we can continue to do both.”

Mr Joyce said that the ability to have an ongoing conversation about boosting family incomes is only possible because of New Zealand’s strong and growing economy.

“Whether it’s investing in better public services, investing in infrastructure, or boosting family incomes, every budget initiative is only possible because our small and medium-sized businesses operate in an economy that allows them to compete successfully on the world stage.

“It’s crucially important that keep encouraging them to compete and succeed and not weigh them down with poorly thought through new taxes and polices that would stall the economy and stunt growth,” Mr Joyce says.

Labour finance spokesman Grant Robertson:

The Government accounts revealed in today’s Pre-Election Fiscal Update (PREFU) show a National Party drifting along as economic growth stalls and productivity stays flat, says Labour’s Finance spokesperson Grant Robertson.

“Growth in our economy is being propped up by rapid population increase and Kiwis working longer and longer hours. That is not sustainable. We can do better than this. We need a government that does more than drift along, but has the drive to lift productivity and wages.

“The Pre-Election Fiscal Update shows lower per person growth and lower productivity than expected over the next three years. Exports are static. In this year, Kiwis’ wages will not keep up with inflation. Overall, wages as a share of the economy are projected to fall. We are falling behind other countries; our unemployment rate is now higher than the UK and the US.

“Once again, while the top line numbers might look healthy, just below the surface this is an economy that is not sustainable and is not giving all Kiwis a fair share in prosperity.

“Labour’s plan for the economy is built around building decent jobs with higher wages. We know that the key to doing this is lifting the skills of our workforce, investing in research and innovation and supporting our cities and regions to grow.

“The update also shows National cutting $600m of capital investment this year, including a $200m cut to the City Rail Link. This shows a lack of commitment to the modern transport infrastructure required to allow our largest city to grow.

“With the housing sector forecast to stall, well below the numbers of new houses we need, and exports are falling as a share of the economy, National’s lack of a plan is laid out in black and white.

“Labour has been clear through our Budget Responsibility Rules and our Fiscal Plan that we will manage the economy responsibly, while making the investments that are urgently needed in health, housing, education and lifting children out of poverty.

“There is much to do to build a better New Zealand, and that must be our priority. Now is not the time for tax cuts that give hundreds of millions of dollars to the wealthiest New Zealanders,” says Grant Robertson.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

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Very well summarised

Can you get to the point, HO.

Alex, did the full disclosure actually quantify what the "one-off" factor(s) was in 2016/17?

Hi Kate - yeah it was stronger corproate tax take - will put an update in there in a second. Basically an upswing in tax collected from financial instututions, which can be volatile apparently.



Yes good point Kate I was about to ask the same thing. So what are these 'One off factors'?

Quote: "That strength in tax revenue in 2016/17 isn’t expected to stick around – it was boosted by “one-off” factors last year, Treasury says".

Would those one off factors be a FALSE ECONOMY careated by National by any chance? The boost being the massively over bloated housing market, bloated by Foreign buyers and speculative Investors that have now gone?

Here you go - also video of Makhlouf in there too

EY Executive Director, Tax, David Snell said Treasury had called an increase in corporate tax revenues over the past year as a one-off rather than a structural change. “Most of the income has come from the finance and investment sector – they’re notoriously volatile. I can understand where [Treasury] is coming from on that," he said.

These institutions included banks, investment houses, and the New Zealand Superannuation Fund, which is a big corporate tax payer. “It will be a bold call to sustain it [in the forecasts] when you’re facing capacity constraints and you’re facing changes in monetary policy over the coming period,” Snell said.


That's what I figured, but then does that mean EY and Treasury are predicting that the bank profitability will plummet and that the share market will crash?

Will watch the videos, ta.

Steady as she Goes ... few small bumps ahead but no worries,

Look out for rent increase in the next 2-3 years if lower-than-expected residential investment eventuates as predicted by Treasury !!


Look out for the tenant market collectively saying "no" to rent increases if the higher-than-expected CPI increases eventuate, combined with current anaemic wage growth and rising interest rates on any debt held. Best to plan for that in one's calculations.

It will not happen , tenants are not represented by a Union of any sort , and as long as you have 1,500 new people and migrants arriving here EVERY WEEK , those migrants will soon discover we have a housing shortage and they will pay whatever rent is asked .

yep, and you will have 10 people for a 3br home.

Regrettably , this is so .

Wallet beats union every time IMHO. ie its been pretty much happening for the last 5+ years. Probably we will be seeing a "2 speed" market? ie those who can afford to pay more and those that cannot so move.

Is the possibility of a recession in the next few years "steady as she goes" with "no worries?" Who's going to pay of the extra $70 ish billion in government debt borrowed in the last 9 years? Will the absurdly high immigration levels ever be reduced? Who's going to pay for the $100+ billion in infrastructure Auckland desperately needs? What happens if house prices continue to outpace wage growth? Will all the sub-standard, damp and mouldy rental stock that Gen Yers will be renting for life ever be fixed to become habitable?

Can't you see it's the exact opposite of steady as she goes, Eco Bird?

"Is [there] the possibility of a recession in the next few years " I think so, all depends on how long oil stays cheap IMHO.

"$70 ish billion" if its not defaulted on, our grandchildren.

"Will the absurdly high immigration levels ever be reduced? " Yes, only National wants it to continue.

I went to the first townhall last night. It was very interesting as I live in a pretty much national electorate. The room seemed very positive to everyone (ie on the left) except for the no name National MP who apart from coming across as a complete d*** really had no messages/answers for the problems like housing costs ppl were asking about. If the way that meeting seemed to go meeting was any indication national is in deep deep, doo doo.

The question is actually whether rent increases will ever catch up with house price increases?

I favor the alternate scenario, where house prices decline to match the rent prices such that being a landlord pencils out without factoring in capital gains in order to make a rational return on investment. At present, it is silly to own investment rental property unless one assumes rather large capital gains for the future.

IMO, we are in the process of defining who is the greater fool...



"However, Joyce said he didn’t expect to be doing too much with the kitty, as it was effectively washed out by lower projections for later years"

So the rockstar Minister has invested in areas that will not provide future returns. Meanwhle more and more spending required to meet the stress rampant immigration has created. Easy pickings for Labour here.


Turns out the old population Ponzi wasn't so profitable after all.


Ends up the Rockstar was only a "stars in their eyes" contestant

How true Rastus - clearly no business case for the investment so he should just resign now! No one else has today have they?

JK already has. As has Mr Dunne. Could see the wrting on the wall.

Sound economic management, so we were told.

Many have figured out for a while now that it was an unsustainable ponzi.

Treasury has also built in higher than expected CPI inflation every year from 2017 through 2020, which impacts on real GDP forecasts.

An expectation not matched by 10 year NZGS investors - the current yield ~ 2.91% discounts few growth opportunities that would underpin a CPI rise.

Which calls for an explanation:

What eurodollar futures tell us is today’s market’s expectation for money conditions in the future. They don’t tell us exactly what the 3-month LIBOR rate will be when the June 2018 contract is settled on the third Wednesday of next June.

And they don’t tell us what most people seem to think they do (of those who have ever heard of eurodollars or eurodollar futures). Conventionally speaking, a high eurodollar futures price (meaning closer to 100, further meaning current expectations for a relatively low LIBOR rate at contract expiration) is not suggestive of “stimulus.” As a deep and liquid pool, eurodollar futures are a suggestion of liquidity preferences.

I’ve written in the past the FOMC’s tortured history with eurodollar futures, especially over the last ten years. The reason for that is simple; policymakers have it backward. They believe eurodollar futures are nothing more than what they say they are. In reality, eurodollar futures are not obligated to follow the script policymakers would prefer, and often demand. Starting in late 2006, eurodollar futures began to suggest what was wrong when instead the FOMC debated all the ways that couldn’t possibly be true (obviously, it was).

What eurodollar futures have indicated since 2007 is the state of the world in which monetary policy would have no choice but to react to. The final break in 2011 is the dominant feature, when at that time policymakers were modeling their exit. Eurodollar futures instead traded into what the massive (“unexpected”) illiquidity of that year might mean for global money and economy (nothing good, which is why prices apart from the brief 2013 and 2016 “reflations” have tended to rise).

It is akin to Milton Friedman’s interest rate fallacy, but in eurodollar funding. We often think of illiquidity in terms of money rates as being what LIBOR did in 2008 – to surge upward. Eurodollar futures, even though tied to LIBOR, did not do that during the panic, nor in the follow-up near-panic of 2011. They traded as what illiquidity would mean for the future – the results of panic rather than the panic itself. Prices relate to opportunity in the real economy. Read more

let's tax it!


Afraid so. Labour will do just that how else can the promises be funded?Tax anything that's moving & tax anything that's not moving until it does move. Won't stop them succeeding at the polls though. Party vote NZF safety brake, only option now.

Wouldn't this report indicate that we need to increase the tax take going forward, though?

That being the case, it certainly invalidates the earlier, shall we say hints, by National of cuts to income tax being on the table, as ill-founded premature electioneering.

You can't get blood out of a stone Nymad!
And you can't tax yourself to wealth.

NZ has to increase productivity.....and the public services must be reigned in they are too big and unafforable.


So you will vote for someone who wants to renationalise all the utilities at their issue price? Apart from the reputational damage that would do to NZ,it is economically and financially illiterate.

What would be financially literate Linklater, is that the electricity market was made to work properly. If so, then electricity would be much cheaper, the share price would not have risen so much beyond the issue price. Electricity users being ripped off has led to the share price rise.
Time we had a strong referee on electricity prices, rather than the rort we have now.
You might disagree it's a rort, but you would have to then explain the really high share price.

Listening to a discussion last week about a Syrian refugee family who arrived into Dunedin with a bunch of other Syrian refugees and settled into a house somewhere in Dunedin, possibly a state house. They just got their first electricity bill for one month of $900. They don't how they're going to pay for it

They hand it to WINZ.

^That comment.
A perfect example of financial illiteracy.

So you advocate a continuous never-ending supply of homeless street-dwellers car-sleepers, garage-dwellers being squeezed out of the social-sausage-machine that was built by National

Let's have your solutions to the Nat made social problems instead of mindless sloganeering

We already know what the response will be from the govt.

"Those Treasury numbers are rubbish".

So this is it? This is the cyclical peak of this current ponzi expansion? Disappointing.

Surely it doesn't get better from here. Private debt flat lining, public debt flat lining, people ponzi maxed out.

As much as I want change, this is still a good election for Labour to lose.

And some heroic assumptions in there as well. Terms of trade, residential investment, wages growth, GDP per capita growth to name a few. I don't think there's any way we'll hit these. Highly unlikely anyway.

Statement from Robertson in there now. Bit of a holding pattern.

Video of Joyce there too.

Okay so Robertson has said what we now already know ........... problem is that he is offering no solutions whatsoever , not a single suggestion , except the 'we " can do better .

He could explain exactly how they will do this.

More taxes and reversing tax cuts will just bring on the downturn quicker

Because he never had any, same BS and generic statement of "trust us , we will do better"...

I said before: there are few reasons why Labour will NOT win this election, Phil Twyford is one and Grant is the other ... what a couple of moaning widows they are ??!!
I doubt that both have anything positive to say at all !!

Hi Alex,

How about comparing the Treasury's report card on 9 years of the last Labour government (PREFU 2008) with its report card on 9 years of the National government (PREFU 2017)?

After 9 years of relatively benign economic conditions, PREFU 2008 stated: "We are now expecting weaker economic growth over the next few years, resulting in slower growth in tax revenue and higher government expenditure. Combined with increases in the costs of some existing policies, these factors lead to sustained operating balance deficits and higher debt-to-GDP ratios."

Following the GFC, the Canterbury Earthquakes and a major fall in the world price of our principle export, PREFU 2017 states that: "New Zealand's economy and the Crown's books are in a sound state."

Who in their right mind would want Labour running the economy?


Measuring success as you suggest ignores how we got there. Excessive, immigration, trashing of our rivers,lakes and lands, crumblng infrrastructure, unaffordable hosuing, homelessness, suicides and on it goes.

Short term gain on the books...the true cost kicked onto the next generation.

Who in their right mind would want National running the economy?

We got here through good economic management.

Labour got to where it did by pissing way its good fortunes: "There's no money left, we've spent it all"

Failing to account for damage that has yet to crystallise in a monetary sense is not sound economic management. It is short term, kick the can down the road management.

I knew a farmer once...made more cash than his neigbours over a few short years - by grading off the top soil on the best flats in the district and hocking it off to landscapers.

Very sound economics when you ignore lomng term consequences.

What good economic management has National done for the last 9 years?


"Christchurch's February 22 earthquake was the third most expensive insured natural catastrophe in history, according to Swiss Re."

Now go and read the state of the books in 2008 after Cullen had "spent the lot".

"National had barely got its feet under the Cabinet table before the Treasury further revised its forecasts and projected deficits of $6 billion-plus.

So much for “careful management”. Labour is relying on short memories to rewrite history, however. It won’t fool everybody. But in the heat of an election campaign, it is easy to spout fiction and difficult to establish fact."

Is quoting suicide the latest in the political playbook? Suicide rates haven't changed per 100k this century and have dropped since the late 90's.

"In 2016, the rate of people who took their own lives hit 12.33 for every 100,000 Kiwis, compared to 12.65 in 2011." Compared with 14.7-15.1 in the late 90's. gosh you are defensive on even basic stuff like this. The denial of a truth due to a political bias using selective data screening is very sad.

An ivory tower I assume you occupy?

Try recent times, recent trends, youth rates, self harm, global comparisons. Its grim amd grimmer.

It is basic stuff rastus. The stats don't back up your assertions. Or have Stats NZ got it wrong? Is 2016 not recent enough for you? I'll tell what is sad - bull shitting suicide stats for political ends.

Simple stats over a long period incl when Labour was in power, shows that the suicide rate is actually slowly declining.

Now yes it is too high, but NZ is 12.4 and OZ 12.2 ie NZ is not a horrendous outlier, that would be [South] Korea.

Agree, though you wouldn't think that given breathless Stuff/Herald headlines.

Vote Labour get Venezuela.

The 2008 PREFU was quickly followed up by the more dire Dec 08 forecast. Labour policies were forecast to get 71B gross debt without the Christchurch earthquakes...

"In total, over the five year forecast period, there is a core Crown residual cash shortfall of
around $47.9 billion forecast, compared to $31.9 billion in the Pre-election Update.
The expected cash shortfall is forecast to be met by additional borrowings of around
$39 billion, with the remainder funded from the run-down of New Zealand Debt Management
Office (NZDMO) financial assets. "

"Gross debt is forecast to increase by $40.3 billion in nominal terms and as a
percentage of GDP by 15.6% over the forecast period. By the end of the forecast
period in the June 2013 year, gross debt is expected to be $71.6 billion or 33.1% of
GDP. "

Who in their right mind would want Labour running the economy?

Many. Wait for election and be surprised :)

Are you seriously quoting the PREFU issued just as the world tipped into the biggest recession since the 1930s and attributing the predictions of "weaker economic growth" solely to Labour's policies?

I had to go and look up the PREFU to see whether you'd chosen to leave out some useful context. Sure enough, immediately prior to what you quoted:

"In the five months since the Budget Update was finalised, we have witnessed a number of significant domestic and international developments: in particular, the deepening of the international financial crisis, the slowing housing market, and growing pressure on households and businesses. These developments are key factors in our updated view of the economy and the government’s finances set out in this Pre-election Update."

In fact, the only mention of specific Labour policies contributing to the deterioration in outlook was a higher than expected uptake of free early childhood education and Kiwisaver participation. Happy to have an argument as to whether those two factors were ruinous to the economy.

In all, I'm not sure you're the person to be deciding who is in their right mind or not - you seem to have a rather large blind spot. You also seem to think a PREFU is a "report card" on a Government, which is an interesting take. Not sure Treasury would agree.

Ok, go back to Budget 2008 and you will see a dramatically worsening fiscal balance.

And of course the PREFU is a report card. NZ's economy and Crown's books didn't get into a sound position by accident.


I am confused .

What Andrew Little set out in the gospel according to Andrew has been flip-flopped on its head .

No CGT in Andrew's Gospel , has become a maybe

Closed immigration taps in Andrew's Gospel has now become a "we'll see "

Housing policy remains as clear as mud , how much is going to be affordable ? How much is going to be social housing for the poor or unemployed ? Just how are they going build the houses , where are they going to build 100,000 houses and more importantly, how will they ever pay for it .

Jacinda is vague about everything , CGT , Immigration, taxes , TPP , vague about what we are going to do about homelessness , the Auckland housing crisis .

Their revised policy document is full of platitudes to appease its existing constituency , but nothing of substance .

Here you go, Boatman;

Detail in the links below each of the specific policy areas - lots to read, as lots of detail.

Take housing for example. You have this as this major heading;

And then these as the further detail in additional links;

And on where they are planning the specific affordable housing developments, the numbers announced so far are:

50,000 Auckland
400 Hutt Valley
200 Hamilton
1000 Queenstown
149 Palmerston North

In Palmy North for example, the actual plots of govt owned land and the streets in which the development will take place was announced today.

@Kate , each of these links are to nice sounding ideas devoid of any plan to implement them or even to deal with them .

I have red their policies from start to end

The first is announced policies............ building affordable houses ......... How ?

We have massive constraints and not enough builders , no money for a massive public works housing program , and it simply cant be done when a $500,000 section in Auckland costs 10 times the median wage

What on earth does "levelling the playing field for FHB's mean ? We have a net housing shortage and as long as it continues on the back of will immigration , so will current silly prices hold up and so will investors continue to buy the properties .

Making Immigration work ............... what does this mean and what is the point of difference with current
Govt. policy ?

Increase accomodation supplement .... to simply go to landlords pockets ?

What does "people -over -profit " actually mean w.r.t. State houses , most of them pay nothing anyway there is already almost zero return on the capital tied up in over 60,000 State homes , which are routinely damaged and willfully neglected by their occupants .

What on earth will an affordable housing Authority actually do apart from have fancy offices with expensive staff being paid $100k per annum each ?

It eludes me that a bureacrat could ever hatch a plan to miraculously make houses cheaper or more affordable for all and sundry , when we have a free market of willing buyers and willing sellers at current ridiculous house prices .

What does cracking down on speculators actually mean ? The brightline test is not new , and extending it to 5 years in meaningless if you are not tax resident in NZ . Chinese non-resident landlords are mostly outside our tax net

Labour does not have policies .... it has wishlists

@ Boatman, Labour does not differentiate or understand the difference between Speculators and Property Investors and call them all "Speculators" ... so they mix brightline with tax loopholes and negative gearing ...!

it is quite obvious that they are using the harsher definition that suits their campaign and that would have more impact - meanwhile it shows ignorance and stupidity - they will not live long enough to apply all these policies unless they bend back under pressure and eat some of these silly words !!

Every question you raise just requries a more comprehensive understanding of their policies. Take for example this point of yours;

building affordable houses ......... How ?

If the "how" means - where does the money come from, here's the detail;'s_Fiscal_Plan.pdf?1500426488

If the "how" means where will the workforce comes from, here's the detail;

And in particular Where skills shortages are identified, Labour will develop training plans with Industry Training Organisations so that the need for skilled workers is met domestically in the long-term. We will invest in training through Dole for Apprenticeships and Three Years Fees Free policies.

As I said, you really just need to drill down to answer all of your questions. None of our policy problems exists in a silo.

@Kate , I wish I shared your optimism , but I dont .

I am voting for Winston , but not before he commits to who he is going to work with .

If he does not commit , I will register my protest at the current messy setup by going fishing on voting day and give the whole election thing a wide berth .

I don't think you'll need to go fishing.

Perhaps but after the I'll-advised utterance by one Mr Prosser, it might likely be flounder fishing.

None of "our" policy problems exists in a silo.

"Our" as in yours, mine, Aotearoa/New Zealand's.

Though if the question is whether I am a Labour Party member, the answer is no.

Also useful to compare the Labour policy detail with that of National - from a website to website perspective. Here are National's election 2017 policies;

Nothing there yet on housing specifically, ... indeed nothing there yet on much of anything.

Great critiquing Boatman, looking forward to your review of National's wishlists next... They only have 6 policies listed so it wont take you long.

My favorite is "boldest ever trade push", if flying over pregnant sheep to die in the desert, and giving millions of dollars to rich arabs as "facilitation payments" aka bribery isn't bold, then I am worried about what they are planning next.

Of course the ten roads sounds nice, till you see the vague end date of 10 years away, and then you are reminded about the ten bridges they promised Northland, and have not delivered any yet..

And of course you have the bootcamps for young offenders dog whistle out to those talk back radio listeners who might have been thinking of voting for NZ First.

Maybe it isn't the policy we are voting for, but the faith that our leaders are going to make decisions based on what is good for NZ, no matter what the future holds. I feel Bill English has lost that good faith in his dealings with getting a benefit to pay himself to rent his own house ("I accept that it was not a good look"), and his complete lack of transparency over the Barclay affair ("I said what was in my head at the time")..

Maybe Jacinda will be just as bad, and she just has not been around long enough to trip up as much. Time will tell, I imagine she will be PM for at least two terms.

@ The Joneses , the issue here is this article is about Labour , its a video clip about Jacinda Ardern and tax policy .

I can easily critique National , and FYI , I am really pissed off with National , this game of bull-rush we call and immigration policy is utter nonsensical and I refuse to vote for them because of it .

Immigration has also ensured the next generation is relegated to being tenants , but Labour does not have a plausible policy framework to address the housing crisis .

I am also frightened by Labour who have ensured that my pay packet has always been less than under National , and Labour have done no favours for us in the past .

Helen Clark was so far left that she might as well have been taking her instructions directly from Moscow back in the day . I detested her , and I dont know if anything has really changed in Labour , they love controlling everything ( or trying to ) and love taxes .

Our only hope is with Winston Peters , and that's Hobsons worst horse in the stable , but at least we will not get increased taxes with him inside whichever tent he chooses.

LOL - Amy Adams is tag teaming Jacinda Ardern;

Elsewhere on the campaign trail, Labour have promised to build 149 homes in Palmerston North, half of them starter private homes and half of them social housing. Social Housing Minister Amy Adams immediately responded by promising roughly the same number of new social houses.

I remember Key and the leader of the opposition last time, when he was queried by Key about whether it would apply to peoples own family homes that were in trusts. He couldn't answer it.

But people have to check the wording of these polices. They say it won't apply to peoples own family homes they are living in, but what does that mean if you have your house in a trust, will it then apply? What about art work, and other assets that may go up in value. What about losses, will they give a tax refund if you sell your house for a loss?

Also it says they will ban 'foreign speculators' from buying houses. But what is the definition of a foreign speculator, over just a foreign buyer?

Here's the explanation on the "foreign speculators" question;

Labour’s ban on foreign speculators purchasing existing houses will be based on the Australian policy. Under our policy only citizens and permanent residents will be able to buy existing homes. The ban will also apply to foreign trusts and foreign corporations. Removing this speculative demand from the market will help stabilise prices and give Kiwi families a fair shot at buying a place of their own.

DC confirmed last election that a family home in trust would be exempted, but the important thing is Labour have no policy for a CGT going into this election - rather they intend to set up a tax working group that will look more comprehensively at the entire tax mix/system.

And sure - there's every possibility that that tax working group might look at a comprehensive capital tax (as per the TOP proposal) which might consider some of those other capital assets you mention.

On capital losses, I don't know of any jurisdictions that have a CGT that provides refunds on losses - as the point is that a CGT is only paid on sale of an asset - so the point is you haven't before paid any tax on it - therefore how could a loss be offset, as there is no prior tax paid on the capital asset.

Different treatment would be available I assume under a pay-as-you-go comprehensive capital tax - as there would be room to design in consideration of some kind of tax refund on sale where a loss is recorded. But again, not familiar with such treatment in other jurisdictions.

Thanks for the comprehensive reply and info.

And if your interest is more specifically in social housing -'s policy comparisons is useful;

Although National haven't announced theirs yet, according to that summary.

Will there be an income cap for Kiwibuild eligibility?

@ Fritz ............ of course there will be an income cap .

But relax , the whole idea is simply wishful thinking and Labour could never see it through , so it wont happen.

How on earth will they ever be able to build "affordable " houses for everyone irrespective of their income .

For starters the 24,000 Kiwis who are homeless will get the first 6000 to 10,000 new houses then the 80,000 new immigrants who have just arrived here will need the next 20,000 affordable houses.

Just remember we built just 8,000 houses in Auckland last year and we have run out of builders to do the work

If they are going to build houses and sell them at a loss of a few hundred thousand dollars each , then I have 3 adult children who will qualify instantly , and there must be 100's of thousands more out there .

Either it will never happen or it will be means tested , with so many strings attached you will be amazed .

I will wager it will never happen

@ boatman .. I would like to know who are the stupid gullibles who would buy in those " Innovative building Bonds" that are guaranteed to make a loss in 5 years ....??

If they established a prefab plant then they could produce homes at volume, efficiently.

I have been told there are no income limits on eligibility, just need to be a first home buyer

Ok so hold on am trying to understand how Labour is selling the idea they are a better government for average working income families. Grant says "Kiwis working longer and longer hours." "In this year, Kiwis’ wages will not keep up with inflation. Overall, wages as a share of the economy are projected to fall, they are not getting a fair share of their prosperity blah blah blah. On the other hand they are rejecting the change in tax brackets which will give lower and middle income earners something back each week from next year. They want to grow workers income but at the same time they will be happy taxing half of it via PAYE and GST and will dish it out to people on dole.
What next will they be telling us how to spend the left over pittance, get $1 loaf of bread and switch off your shower taps in 3 minutes instead of five. How is this incentive for people to want to do better, it is back to nanny state unfortunately, don't be fooled with their rhetoric about improving workers incomes, it's hogwash.

@GS its simple .......... Robertson has this plan to strengthen the wage earner by weakening and pulling down the the wage payer .

An oxymoron , or just a moron

And now they will be more inclined to raise taxes and introduce CGT in the second term and Lady Jacinda mentioned !! that is if they get elected and last that long - God Forbid!!

I would say a lot of the wage payers can afford to pay the wage earners more.

Really , if I had to pay my staff more, I would prefer to be a wage earner rather then a wage payer , thank you.

You obviously have no idea how hard it is to manage a business with cashflows , meet the wage bill along with a raft of other weekly , monthly and annual expenses , and still deal with staff problems , which never seem to end .

Wages are already way too high , and the issues of compliance , and taxes are problematic , not to mention staff issues , absenteeism , carelessness and people who are at times disengaged .


Do you think it is sustainable for pay rises to always be in the form of tax cuts? Who's going to pay for health and education, etc? Maybe some of the very rich corporates out there could increase pay levels?
And will the tax cuts even pay a fraction of the increase in housing costs that National are responsible for?

The house price increases are due to demand going through the roof , caused my inward migration .

If you dont like your pay packet , you can negotiate more , resign and find a better paid job , or move to Australia .

That ability to negotiate however doesn't necessarily apply to your daughter who is in the education sector, though does it? Neither do I imagine she wants to leave the education sector, nor move to Australia.

And I agree, wage increases via tax bracket movement is no solution to our generally depressed/low wage economy. Nor are increasing the tax transfers, by way of WFF and Accommodation Supplements.

We really do need a government with a plan to lift wages overall - and the support Labour has given to pay equity (that is to scrapping National's current bill and starting over) is a really good step in that direction.

Oooh zing! Well played Kate, well played indeed. It's funny how right wingers in general and boomers for the most part (I'll exclude you from this as I understand you are in that age bracket) only see things when it personally affects them.

Can't see the people living in cars been able to do much "negotiating".

In response to a question above about volatile investment income returns, I'd emphasize we're not investment advisors. Take the NZSF as an example of the point I was making. It has a strong track record of investment returns year-on-year. Its effective tax rates vary significantly depending on the make up of those investment returns and things like movements in our exchange rate. And it is big enough to materially affect New Zealand's total tax take.

Thanks David, yes, that was my question.

I agree, the NZSF tax paid certainly skews results - we tend to think it is our SME sector that must be doing well when the company tax figures look improved, and it's often not the case with NZSF and the banks making up much of the growth in contribution.

how do the "projections" change by $2 billion in just 3 months?