When I started my first real journalism job in January 2020, one of my first stories was about “the outbreak of a new respiratory disease in China”.
It quoted New Zealand’s Director of Public Health, Caroline McElnay, saying human transmission of this novel coronavirus seemed limited but it was being monitored carefully anyway.
Travel and tourism stocks were down a couple of percentage points on the NZ and Australian share markets, with analysts wondering if it might dampen demand in the Lunar New Year travel season.
A few months later, most major economies had closed borders to all foreign travellers and imposed lockdowns or strict social distancing. Covid-19 changed everything.
Almost every story I have written since has stemmed, directly or indirectly, from that one thing. It has underpinned almost all political, social, and economic events.
It seems passé to say this, most people are eager to put the pandemic in our collective memory hole and move on. But it's helpful to recognise that we are still living through the aftershocks, and that it has caused lasting structural change.
This was clear even in 2020. That April, I sent a voice note to a friend: “What happens with this lockdown over the next four weeks, and with future alert levels, will shape the next four years economically, and the next decade socially.”
I was only looking back to the 2007 Global Financial Crisis, which still hung over New Zealand when I left school in the mid-2010s. My friend went further, calling back to 1918 to 1939, when there was also a pandemic, a depression, de-globalisation, fascism, and then war.
History doesn’t repeat exactly but I have often recalled that conversation.
I remembered it when rioters stormed the US Capitol in 2021 and when Russia invaded Ukraine a year later. When Kiwi protestors hurled paving stones at police outside Parliament, and as first home buyers went bust in the housing bubble. Or when social intolerance crept back into the global mainstream through toxic algorithms, and those 2021 rioters helped elect a US president that shocked the world with hateful nationalism, disruptive tariffs and threats of possible military action.
None of this is over, and neither is the economic fallout in NZ. The fiscal and monetary response to the pandemic was oversized. It swung the economic pendulum too far and we are still waiting for it to settle.
From next year, the cycle ought to normalise. That is, the pandemic will no longer be the main driver of economic and social outcomes, though it will still be an underlying factor for decades to come.
There are probably countless examples of the structural change left behind, but I want to focus on just two economic elements that I’m convinced will feature in the new era.
Betting against the house
NZ’s decades of building wealth by buying houses has likely ended. Property price growth from the 1990s to 2021 was driven by three factors: strong population growth, restrictive zoning laws, and steadily falling interest rates.
Population growth has slowed and longer-term interest rates trend up. But even if that reverses, big and medium cities have been forced to zone an unbelievable quantity of housing development opportunities.
Low interest rates and high population growth should now manifest in the economy as construction activity and more homes, rather than as house price inflation.
Other reforms to building materials and consenting regulations will hopefully keep a lid on construction costs increases, plus the Reserve Bank’s stricter loan-to-value and debt-to-income ratios are likely to prevent future ‘FOMO’ bubbles.
The 2022 interest rate shock and house price crash will also have scared some would-be home buyers in much the same way the 1987 stock market crash did.
Baby Boomers and their eldest children saw property as the safest and most profitable investment. Gen Z and younger Millennials will be much more aware of property’s risks and accustomed to seeing enormous returns in equities and even crypto.
If you add the prospect of Labour’s capital gains tax on investment properties, a continuation of the foreign buyers ban, and maybe the removal of interest deductibility, public policy starts to look like open war on house prices.
Betting on a high return from property now means betting against ‘the house’.
Tax truthers
In economic terms, debt takes an expense—a pandemic, for example—and spreads it over a longer period of time. It doesn’t make an expense magically disappear.
The recently departed Jim Bolger understood this in July 2020. He told RNZ that all political parties were “dreamwalking” unless they admitted the need for higher taxes.
“Over the decades, we tend to elect mayors who promise they'll never increase rates…then we see the infrastructure of cities falling apart. We elect political parties who say they’re going to reduce taxes, not increase them, and then we see the deficits,” he said.
Bolger said higher taxes would be a “stark reality” of the post-pandemic economy and political leaders needed to front-up and be honest about it.
Instead, Labour continued to run big budgets without enough revenue to support them and National won in 2023 pledging to cut taxes despite enormous deficits.
New Zealand does not have abnormally high debt but it is expensive. Taxpayers will spend $8.5 billion servicing public debt this year, largely pandemic-related borrowing.
Add to this the need for more defence spending, as superpowers flirt with the idea of rounding out the 1930s parallels with a third world war, and the constant costs of climate change — whether we try to prevent it or not.
That’s a lot of money that now cannot be spent on public services and investments that often looked underfunded even before the pandemic. As voters seem unwilling to scrap big ticket items, e.g. universal healthcare and pensions, higher taxes are needed.
Current efforts to refocus spending and improve value for money are an excellent first step, governments have an obligation to maximize efficiency before raising taxes, but it won’t be enough.
Taxes can take different forms. The National Party wants to rely on ‘user pays’ public services as much as possible, therefore avoiding the need for broad tax hikes, while Labour has proposed at-least one increase with its capital gains tax policy.
Treasury and IRD have floated the possibility of lifting the GST to 18% with some sort of rebate for low income earners. The Greens want a big wealth tax and ACT would rather privatize everything (swapping higher taxes for extra household costs).
You can take your pick, but pull your head out of the goddamn sand.
67 Comments
Hi Dan
Who should own the houses that renters live in while they save up to buy their own? Housing New Zealand is also broke due to mismanagement.
Plenty of articles online about how we need to prevent more increases. None address what happens when the boomers have all sold up and the next wave of migrants or graduates want a place. They will leave, I guess.
Under Labour, the number of community housing providers exploded, as the government enacted tax policies to punish owners and then gave an exemption for social housing. You can find evidence for this in the debt you mention, or perhaps KO's debt. Either way, it was public debt and a lot of it.
I dont have the answers either. I am a bit tired of reading articles that ignore the question.
I expect articles ignoring the notion that there will be no rentals without rampant house price growth is because it's overstated or non-issue.
There are not that many people calling for rental properties to be outlawed, they will still exist. A hopeful future would one where a small class of investors are happy to buy properties to rent out, making a small return and capital gains in line with inflation. Relatively low risk and low return - the natural place of property investment somewhere on the risk/reward spectrum between term deposits and stocks.
What needs to change is the last couple of decades where capital gains were expected to be significantly above inflation, driving investment in rental properties at the cost of all else and making the country poorer. Not only were house prices driven up and debt levels increased, but we missed out on the economic gains of the productive investments that never happened because everyone wanted to buy another house instead.
we missed out on the economic gains of the productive investments that never happened because everyone wanted to buy another house instead.
People tend to automatically assume this is the case, i.e. if we only didn't invest in housing, we'd have such a more productive economy.
It neglects that productivity gains plateau as economies maturate, and real estate gets more and more expensive as nations do most of their growing in a small handful of cities.
It's not like people are weighing up buying a nice 3 beddie in Devonport for too much, over dumping it into new and improved plant and machinery. There's money involved for both, but they're usually not competing for the same dollar.
Yes I agree it's not as simple as that. But the result is we have a country that is starved of capital. A few of companies I'm invested in, listed and unlisted, have really struggled to get the money needed to go ahead with their business plans. Investments are not made, because there isn't the capital available, partly because it is allocated to housing. We don't have that strong middle class out there looking for productive investments because everyone just wants to buy another house.
Ultimately, many look overseas for investment and many do very well, primarily benefiting those overseas investors.
partly because it is allocated to housing.
That's not really the main reason though. It's due to risk appetite and pricing, speed of return and scale of market. We can see large industry here attracting funding fairly well, because they have very large global export markets. And they're often agricultural based, many a fairly predictable income stream. An SME has a much harder time.
We tend to view housing as this miracle ailment that's behind all our problems. It's just a symptom, although it may also be self reinforcing.
Risk appetite and pricing are effected by the alternatives that are available. Why put money into a speculative software or healthcare company when houses are doubling every decade and you can leverage so easily?
I am thinking more of the SMEs who fail to get off the ground or scale as they might in other countries because funding is so hard here. But you also see it with bigger successful companies like Xero and A2 milk who tend to drift over to Australia or America as they outgrow out capital markets. Many of these companies are not just active in New Zealand, so their scale isn't bound by our small size.
Yes, some of that is because of the population difference, but even accounting for that our market is puny. The NZX is 60% of our GDP, while the equivalent for Australia is 120% and for America nearly 200%. Part of that is down to individual capital allocation.
That is the comparison people make. I know from running angel investment funds. And our lack of sophistication in investment is also a product of focusing on houses. That's all people talk about at barbeques. There is an issue that banks will lend to you to buy a house but not stocks and shares - although if that is a mindset
"I dont have the answers either. I am a bit tired of reading articles that ignore the question"
My understanding is you have a rental portfolio so how I interpret your comment above is: 'i'm not interested in any solutions or changes to the status quo as it is not in my financial self interest for things to change'.
Perhaps things go back to how they were decades ago where young people live with their parents until they are ready to get married and then together with their partner they buy an affordable home at 2-3 times incomes!!! You know, a period of sanity before people lost the plot and all purchased up 'rental portfolios in order to "get ahead" ' - but you wouldn't like this solution as you're all in on house prices never falling and exploiting the housing situation for your own financial gain. It is difficult (or actually impossible) to see the solutions to the problem when one is part of the problem.
To solve the problem you should sell you rental portfolio and thus add more supply to the market and thus further increase the supply/demand imbalance an thus drive prices lower and thus make it easier for those currently renting to buy. But you won't do this because you like the current problem and are happy exploiting it for your own financial benefit. This is the truth of the situation but you will ignore it and say 'i don't have the answers either. I am a bit tired of readying the articles that ignore the question'. Instead just sell your rentals and help prices drop further - but your own greed (financial self interest) doesn't want the problem to go away - this is the truth that is happening right across society - but you will say there are not solutions even though you (and other landlords) could collectively solve the problem within 12 months by all collectively selling houses that you never intend to live in personally - but you won't - then you will say that are no good solutions.
People overestimate how much the investor market is driving up prices. In the 2010s, we all thought it was foreign buyers, so we banned those, and problem solved - oh wait no everyone still kept paying over the odds for houses.
Here's a video from the archives about how there's not enough houses to meet demand, and young couples can't get married and buy a house. Modular and prefab housing may potentially resolve the problem:
https://youtu.be/a42UnqSKMyo?si=ai_vEeb-so1FFuvT
It's 80 years ago.
Haha good try. I can remember going to auctions in Auckland in the 2015 - 2019 period and there were sooooo many times I watched young potential FHB's being outbid at auctions by investors using capital gains on other properties to buy even more properties! So those property investors turned potential owners into renters for longer...and making the hurdle of ownership even harder than it needed to be (the deposit requirements and size of mortgage kept getting higher each time investors purchased properties for higher and higher prices).
But then investors turn around and say there are no good solutions to this problem - but it is impossible to see the problem other than when one looks in the mirror!
As I say, if one is an investor who owns a pool of rentals - sell up. Sell all of your rentals and flood the market with supply of houses and lets see what house prices do and lets see if home ownership rates improve. As investors kept saying when prices were rising that there was a 'supply/demand' imbalance - well fix the problem buy selling up all your rentals and flood the market with new listings. But you won't - because greed is your game - and you don't even want to acknowledge this as a solution because it is not in the investors financial self interest to do so.
Haha good try. I can remember going to auctions in Auckland in the 2015 - 2019
You can have a bob each way. If you track entry level house prices relative to government policy around lending to FHBs (either low deposit, low interest, or increased maximum purchasing thresholds), there's a strong relationship between the two.
We have constrained supply and manipulated demand. Unless you upend that, nothing will substantively improve.
"you (and other landlords) could collectively solve the problem within 12 months by all collectively selling houses that you never intend to live in personally - but you won't - then you will say that are no good solutions"
I_O, I assume if you can afford the subscription to be able to comment then you must have a few excess dollars each dollars, cancel your subscription today and go give that money to the homeless and needy, unless, you are a hypocrite...??
You're comparing a parasitic investment practice to a beneficial and educational news subscription worth a minute fraction of the aforementioned investment. Clutching at straws there.
Maybe, but now you can see how ridiculous both comments were.
I don’t have an investment property, but I have however rented in the past…and luckily some parasite had a house available for me.
The more things change, the more they stay the same. This isn't a 2020's story it's a old as time.
The climate change tax is a huge burden on western citizens.
Free education, free healthcare, warm homes, good roads. Never had it so good.
Real estate has ownership has always been the privilege of a few.
Stable government allows us to leverage future income in order for many to have the ability to choose to own a home.
It could be so much worse.
WHH,
Free education, free healthcare, warm homes, good roads. Never had it so good.
Real estate has ownership has always been the privilege of a few.
What planet are you living in? It certainly isn't down here. It's hard to know where to begin. Warm homes? For some, sure but for all too many read, poorly built, uninsulated and seriously cold. Good roads? again some, but no sooner than a new road is built anywhere, than it has to be resurfaced. Home ownership was widely enjoyed, but is falling steadily. Free healthcare? GP visits for most are getting more expensive all the time, dental care is expensive and the entire healthcare system is under tremendous and ever increasing strain. Go to any ED and expect a very lengthy wait. Education is subject to political change every few years and is in real strife.
Pull your head out of the sand and open your eyes.
Bolger?
An image to go along with Dans final sentence. https://www.istockphoto.com/photo/hiding-head-in-sand-gm143921073-18295…
Jim Bolger was astute, courageous and a big picture thinker, and I say that even never having voted for him, because one man doesn't make a political party. I haven't noticed that any of our present politicians have these qualities, hopefully if they do they will step forward, or other relatively unknown potential leaders will step up, because they are greatly needed.
No. Taxes can't rise. They need to reduce.
And we can do that by cutting out the dross. Plenty of dross.
Factoid. The English fought France way back. They had a "Home Office". Staff of 12.
Building a vast superstructure on top of a weak and narrow base will lead to involuntary collapse. Meaning anarchy, no health or education service. No welfare.
As for house read mfd's comment.
Capital gains as the core driver has led us NZs greatest social disaster of exploding house prices. Thank God we see a minor retreat from that. It needs to continue. And never again
Factoid. The English fought France way back. They had a "Home Office". Staff of 12.
Bad example. Information only moved at the pace of a pigeon, boat or horse. You wouldn't need much more than that. Now the rate of data transfer is exponentially higher and requires more humans to receive, collate and process it all. Unless machines do it.
Most of our government expenses aren't for discretionary items/dross. I believe something like 45 cents in the dollar alone goes to people over 65, and that demand is only going to increase. Not something you can just turn on and off like a tap.
@Painter
"........Now the rate of data transfer is exponentially higher and requires more humans to receive, collate and process it all........"
Painter describes the disaster without realising it.
Try the information processing model by Thomson et all.
Basically it says there is a choice between adding more information processing capacity, or, reducing the need. Organisations usually choose the former.
The real problem is determining the usefulness of information.
The battlefield example is bad, because we can observe a good relationship between situational awareness and combat effectiveness
It's bad when you have a system that prioritizes the record of what you're doing, over what you're doing.
Yes Painter
I worked in an Italian Mental health service that kept few records. And thus spent minimal time in the office and more time with the folk. Hugely.
Work output about four times as much.
And, and this is the rub, despite the mountains of records endemic in our services, the Italian workers actually knew their clients inside out, which our crew don't.
Which is what it's all about.
One issue on the public realm is voters demand accountability and evidence. So psychologically state services engage an inordinate amount of resources on measuring and recording.
This can be evidenced by instances of "just giving people money" being more efficacious than the state trying to supply the services people would otherwise acquire with money.
The problem is that one man’s dross is another man’s wants. A young professional may consider things like NZ super and free healthcare a complete waste of their tax money as they don’t need it, while a cycle path or light rail is something they may use daily, things you would consider vanity projects.
I read an article recently that Auckland Council wasted money on Christmas decorations and that was crazy when people are homeless etc. But if we turn NZ into a country can’t have anything nice, the taxpayers that pay for everything will think Aussie looks even better.
@Jimbo. This underling our inability to solve and get on. We need to, but we don't.
Bit of welcome fresh air thinking from a younger thinker, thanks.
In 2018 when I was about to head offshore in a volunteer role for 2 years, I had 2 choices regarding my owned home. Rent it out or sell it. I chose sell for a few reasons:
1 I was at a crossroads and didn't see myself living back in Wellington when i returned.
2 My house value had increased 50% in 4 years, which I perceived as excessive and that there would be a significant risk of values falling. I.e. bank the gain
3 Rents had risen significantly and to what i perceived an exorbitant level. Perhaps a good way to maintain passive income from the asset value. But i had never wanted to be a landlord and from a few years working in the property maintenance area, perceived property management companies as parasitic and a significant contributor to driving up rents.
4 In a cashed up position i would be free to explore where I wanted to resettle on my return, which I have done, with a comfortable part of that capital invested for my retirement. Although comfortable is a subjective term and in my case it is working nicely.
I guess the 1930s depression shapes my approach to money management, passed from my parents who lived the realities of those extremely stressful times. And I've always viewed housing as a basic human need, not a commodity for maximised profit extraction.
So, I'm in full agreement that residential property should not be a primary form of wealth generation. I see it more as a utility, like a car for example. No one buys a car, new or otherwise, thinking it, in itself, will grow their wealth - it depreciates, it is a cost to maintain and fuel.
As for taxes.....I subscribe to the traditional NZ policy of universal access to free health care and education. The exorbitant rise in residential property values, i think, has driven erosion in the services because rents have decreased housing affordability for those working in these sectors.
Perhaps the government needs to revisit a mechanism from the 1930s to reset property values: reinstitute the mortgage relief court and equitably share the cost of reducing property values by say 20%, shared 40% by the crown, 60% by banks. A fair bit of pain to be endured, but is it really any greater than the pain being experienced by a significant portion of the NZ population now?
No one buys a car, new or otherwise, thinking it, in itself, will grow their wealth - it depreciates, it is a cost to maintain and fuel.
I guess because they're always making more Toyota Corollas. Rather than smaller, shittier Toyota Corollas that take longer and longer to get you to work.
And we're always creating new sections and building new houses! Like..everywhere.....go for a drive and have a look around.
As I said, they're smaller, shittier, and take you longer to get where you need to go. Yet cost increasingly more money to produce. Old larger houses closer to the centre then get to go up relative to value.
These are all basics of property in pretty much every city, ever.
More tax to do - what? And, more importantly, how?
Given people watched the public service grow by over a third in the period 2017-2023 with no noticeable improvement in services, there might be some amenability to tax increases if there was some assurance, even something as fluffy as an undertaking, that every effort would be made to make effective and efficient use of the money.
Waste inside government, particularly on big one-off projects, like infrastructure and IT, is well known. The current attempts at reducing the public service seem clumsy, ineffective, and to be incentivising the wrong things - and are being opposed by a public service acting to protect itself from painful detail changes that do nothing to address what the departments are meant to be doing and how they are doing it.
This not a libertarian argument of all government is too big, but an argument for evolution to meet new circumstances, and while that will likely include more tax, what and how we run things needs to change
And the private sector is also wasteful, with the bonus of being monopoly prone, but at least that's visible through their balance sheet.
Read "Abundance" for more and clearer thinking on the subject - https://en.wikipedia.org/wiki/Abundance_(Klein_and_Thompson_book)
no noticeable improvement
A key quip oft mentioned, but not understood.
Why/how would you notice? How is improvement measured, if it is at all? Over what time frame? Is there benefit to having more in paid employment regardless?
How is employing people to produce essentially nothing other than a drain on national productivity?
Looks better for employment stats vs more on the dole which is a definitive drain but they can't fluff the numbers and calculations to make it look better
I remember the days when the railways, post office, ministry of works and others were used to soak up the unemployed. It sounded good on paper, but was terrible for all concerned.
Having observed this play out for decades now the conclusion I've come to is that a significant proportion of society don't actually desire solutions to any of these problems as they view their own financial self interest to be is greater than the stability of the whole nation. (that is the economic and social factors that make a nation a good place to live).
So they will say 'it is impossible to solve any of these problems we face' - but all they really mean is that I'm unwilling to sacrifice anything of my own in order to improve the economy and society as a whole. This occurs throughout history around the world and in time resolves itself.
"I don't want house prices to be lower even though our private debt to GDP levels have been dangerously high" - this is selfish delusion as why would you want the economy to be in a high risk situation just so you yourself can't be wealthy?
"I don't want to pay taxes on my capital gains even though I've made millions of dollars on my rental properties for which I have done only a handful of hours of labour per year to make this significant financial gain" Why should those slaving away labouring pay 30% in taxes, paying rents and trying to save for a house, but your housing portfolio goes up 10% and you make a million dollars in capital gains across 10 properties - but you are unwilling to even consider taxing this gain? This is how society has become unbalanced in a very unhealthy and unsustainable way.
It is interesting that all of these types of ideas and conversions align with the concepts put forward in 'The 4th Turning'. It says that we're in a period of transition and that come the late 2020's people will be so sick and tired of the leadership of the boomer generation/gen X (primarily self interest and not public interest) that all of the old ideas will be thrown in the bin and the ideas of Dan's generation will become the dominant force within society (guessing Dan is a millennial). Ideas that will return social and economic stability as the dominant theme - as opposed to ideas that are based upon self interest.
It is interesting that all of these types of ideas and conversions align with the concepts put forward in 'The 4th Turning'. It says that we're in a period of transition and that come the late 2020's people will be so sick and tired of the leadership of the boomer generation/gen X (primarily self interest and not public interest)
Yes that's my reckon too. People might say the 4th Turning only applies as a model in the U.S. context, and that's partly true, but I still think that it will reverberate across the Anglosphere and even other countries - look what's happening in Mexico City as I type. As of late 2025, we are deep into the "Crisis" or climax phase. The next few years are expected to be pivotal, with high stakes for both risk (escalation, conflict, institutional collapse) and opportunity (renewal, reform, technological and social transformation).
The boomers need to loosen their grip and get with the program. They don't understand that they rely on the younger generations.
I reckon there's not a very high percentage of policy makers that are boomers now. And i reckon there's a fairly high percentage of boomers who support Dan's position.
For myself, I bought a house to live in in 2014 and thought the price was pretty high. The it gained 50% in value over 4 years with no effort on my part. Sure, when I sold it wasn't unhappy with the value. But I reckon if house prices hadn't appreciated so much in that time, I would still be in a similar financial position now, as the selling price would have been relative within the market and my next purchase would have been cheaper, liberating a similar level of capital to support my retirement.
NZ needs another taxable source. One that dosent drive more future taxpayers to Australia, and hopefully lures some back. Due to population dynamics (more retired than PAYE workers) it cannot be higher income tax or higher GST.
So where can the tax come from? It's going to have to be a property related tax. It has to be regular or it's meaningless. It has to be unavoidable or it is meaningless. Only one tax can do that. Yes spec town will cry foul but we are over the precipice and making a tax loss every year.something....has to change.
A Land Tax paid quarterly, with a higher premium for foreign ownership.
Thanks, Dan. It needs to be said more often, and more bluntly. The housing ponzi is over. Time to invest in people.
We need higher taxes to build state-owned income-moderated rental housing, to provide free health care and education, and to sustain a universal retirement benefit. And hey, to buy back the bloody power companies to provide nonprofit electricity, which in turn will boost business, and the wider economy.
Time to invest in people.
We've been doing that. It all sounds super easy. Tax here, amazing services there, magical productivity gains here, all self funding because we love the sound of it.
The problem is, the relative value of a person is now lower than it was half a century ago. Well, for most of us cannon fodder anyway. And we're continuing to max out our cities, basically eating each other for the pursuit of what I don't know.
At some juncture there will be a tipping point where the juice isn't worth the squeeze and the cities will empty, only to have its emigrants return to the land and provide for themselves. Or the cities dwellers will under breed themselves to extinction.
Same cycle, thousands of years. Is now that point? Probably more the beginning of a new cycle.
The crown is making too high a % of the electricity market profits to want to get off the teat, but a great idea
How would it help? Lower power prices but lower crown revenue, so they either need to cut government services or increase tax. And of course the crown would run it like a dog’s breakfast. Look at Kiwibank: not cheaper, not better, and not more profitable than the Aussie banks that are creaming it.
All works out roughly being same same anyway.
It's like when people want to make an argument that the taxpayer subsidizes trucking companies using the roads.
Except most taxpayers' standard of living is heavily dependent on trucking using the roads. If you charge the trucking companies more to use the roads, they will charge you more for freight so you pay either way.
In a global world I don't think there will be too much appetite for high taxes. We can already see what’s happening with people flocking to Aus for better incomes, imagine if our taxes were way higher too. NZ would be left with lots of tax takers and no tax payers, and that problem could escalate pretty quickly. Our super situation is already a massive tax problem compared to Aus.
I am perplexed that Labour did not try this vs CGT, QV values are already available.
Easy to turn on, if you don't have the cash it attracts interest and is a mortgage on the property, ie must be paid at point of sale or transfer. Thus little impact on oldies...
NZ needs another taxable source.
Like Aussie and open the migration floodgates for taxpayers and cheap labor? I personally think this is a disaster. Aussie has an infrastructure deficit. Aotearoa's is even worse in many respects.
We are a poor nation thinking we are rich. We face the usual consequence. It will bite us bad.
Its often described we an economy based on selling houses to each other.
Rather I suggest we specialise in doing poor work at excessive cost. That's our economy.
So we are an economy reliant on passing excessive cash around between us in return for crap items and poor services.
Taxpayers will spend $8.5 billion servicing public debt this year, largely pandemic-related borrowing.
Well played Labour, well played. Economic vandalism in the name of maximising the sale of a leaky, non sterilising, experimental gene therapy in a bad flu season.
One mans economic vandalism is another mans Keynesian utopia.
Save us, oh economic theorist from another point in global economics!
Remember how, almost overnight, the authorities went from having a press conference over every rest home death to declaring, hey, old people die, it's normal, don't worry about it, when they realized, yes, it was just a bad flu season, and massive, if not apocalyptic, economic and societal damage was being done.
profile,
Taxpayers will spend $8.5 billion servicing public debt this year, largely pandemic-related borrowing.
Well played Labour, well played. Economic vandalism
And yet, it seems that, based on a new poll, more people now see Labour as better for the economy. How is that possible when they were spectacularly, even magnificently, incompetent? What does that say about the current lot?
It says that the average voter is bound to historical norms of voting the way t heir parents did, or just for red or blue as they value their voting power so little they don't bother to do any research on parties, proposed policies, candidates etc and therefore make uneducated, and easily swayed and controlled votes. This is why I feel politicians treat the population like idiots. For example the National party facebook page keeps claiming mortgage costs are lower under national than labour......which is nonsense given they have no sway over this given it is linked to the OCR from the RBNZ.
Could the companies operating out of low tax spots just pay their fair share please.
I'm not going to admit that taxes have to rise. First convince me that the growth in staff numbers at RBNZ have improved anything. Second quality of management decisions at eg Kiwirail. Third, Commissioners. Has eg the children's commissioner ever improved the life of any children?
There should be a much more critical questioning of aspects of what is spent to supposedly improve public life.
Lastly, superannuation policy. Very well covered in the comments section here. Might not agree with all the points, but clearly some review is essential.
Lordy.
The fiscal and monetary response to the pandemic was oversized. It swung the economic pendulum too far and we are still waiting for it to settle.
Nope. Our fiscal response was pretty average. RBNZ went too loose and too tight with monetary policy, but, more importantly we haven't settled yet because our economy is only functional when private debt is increasing (reliant on houses prices going up), interest rates are below 2%, and we have a steady supply of tourists and foreign students to keep a lid on our current account deficit. The fundamentals have changed and we're too stupid to see it. This started around 2015 by the way.
Property price growth from the 1990s to 2021 was driven by three factors: strong population growth, restrictive zoning laws, and steadily falling interest rates.
You missed favourable tax settings and political success being dependent on securing the votes of homeowning swing voters. Restrictive zoning laws is a damp squib - made out to be bigger than it is by the urban planning nerds who don't appear to understand development economics. Houses get built when the forecast yield is high enough and that depends on prices, debt costs, construction costs, rents, etc.
In economic terms, debt takes an expense—a pandemic, for example—and spreads it over a longer period of time. It doesn’t make an expense magically disappear.
Is that expense in the room with us now? The idle hours that got utilised, energy used, materials remoulded? Govt debt creates financial assets (our savings). We went 100 years building stuff and ran 5 surpluses (a few by mistake).
Taxpayers will spend $8.5 billion servicing public debt this year.
Gross, but Govt will pay the private sector about $1bn interest net. Govt debt servicing costs (weighted average on the total) are currently less than inflation.
Remember that Govt deficits create private sector financial wealth. Taxpayers don't pay for things in aggregate, they receive cash when Govt spends and pay some of it back when Govt taxes.
Oh, and if Govt want to tax back as much as they spend, the only thing that makes sense to tax is accumulated rent - the piles of wealth created when Govt ran the big covid deficits and RBNZ sent bank lending to the moon. Sorry, guys, hand it back.
"The fiscal and monetary response to the pandemic was oversized. It swung the economic pendulum too far and we are waiting for it to settle.
"Nope. Our fiscal response was pretty average."
Nonsense - we were not average - we carried on spending when all other countries wound it back. Other nations quickly reined in their spending but Robbo carried on throwing the cash - and by your theory we should be rich by now with all that debt. All it has done is root savers and pass the bill on to the unborn. But who cares - in the long run we are all dead.
Sweden nailed it - all we did was nail a cushy job for Robbo.
"If you look at fiscal policy, other countries also went all out with the
wage subsidies and the big surge in spending, but then they wound up back
very quickly. We didn't we didn't have to because our
government debt was very low to start with and an international comparison.
We also had a left leaning government. They had pre-funded using that long,
large scale exit program. So I had money sitting there saying,
what should I do with this? And they had a very, very ambitious
reform program in a whole lot of areas, nothing to do with Covid.
So the fiscal policy remained extremely expansionary for years."
Five Years On: How Sweden and New Zealand's Covid-19 Response Fared
https://www.youtube.com/watch?v=NnLZ7n1xwEI
Any data to support your rant? Our fiscal response, however you measure it, was pretty average. Our deficits were actually low relative to other countries, they were average if you consider the deficit stepup compared to pre-covid. They were no more persistent than many other countries - reflecting the macro reality of what happens when import prices spike and don't fall back.
Your left vs right thing is boring - it's clouding your judgment.
Is Sharon Zollner just making it up? If you don't have time for a 5 min Bloomberg vid here are some handy charts for you so you can get up to date. You're welcome.
"We used to have smaller deficits or larger surpluses than the typical other advanced countries (consistent with that our net public debt as a share of GDP was materially lower than the median advanced country). But no longer.
Using data from the same WEO, on the IMF’s estimates we had one of the very largest structural fiscal deficits of any of the advanced countries."
https://croakingcassandra.com/wp-content/uploads/2024/04/image.png
https://croakingcassandra.com/wp-content/uploads/2024/04/image-1.png
https://croakingcassandra.com/2024/04/02/not-very-bothered-by-deficits/
Still makes me angry thinking about the COVID response. Such stupidity.
Yeah, nowhere near enough death of the weak. Proper crazy.
The covid response was more poorly allocated than oversized. Less should have been given to corporations who could afford to look after their own, and a lot more should have gone to small tourism and hospitality operators, for example, who were destroyed by the border closures.
There were a lot of faces in the trough that shouldn't have been.
we haven't settled yet because our economy is only functional when private debt is increasing (reliant on houses prices going up), interest rates are below 2%, and we have a steady supply of tourists and foreign students to keep a lid on our current account deficit.
Which also means that the economy is only functional when the cost of credit is much lower than the understated and unknown inflation rate. And that means that we're wholly reliant on monetary debasement for the economy to function.
It's not debasement though is it? It's the creation of financial assets and liabilities in equal measure. How is that diluting the value of the dollar?
When central banks lower interest rates below the natural market rate, especially amid expansive monetary policy, the cost of borrowing falls and credit creation accelerates. This leads to a rapid expansion of the money supply without a corresponding rise in productive economic output, diluting the value of existing currency units. Savers experience negative real yields, prompting a flight to hard assets as a hedge against further loss of purchasing power.
The fact that assets = liabilities is irrelevant.
Freelancer chief executive Matt Barrie reckons "Australia’s economy is on a hamster wheel to nowhere with new dollars being printed to finance migration-fuelled home loans while the government “p**ses” money away on taxpayer-funded jobs and the NDIS".
“Supply of Aussie dollars up 11%/year,” he wrote, sharing a chart showing Australia’s M3 money supply reached a record $3.3 trillion in September.
Advocates of gold and bitcoin often use the gold price as a proxy for “real” inflation.
Mr Barrie’s post suggested the growth in money supply was directly tracking gold’s average rise of 11.8 per cent in Australian dollar terms since 2010.
https://www.news.com.au/finance/economy/australian-economy/wonder-why-p…
Time for everyone to relearn what tax is and what it does
Time to flip the script. Lets reward working, and tax asset speculation. Would transform NZ, and only the over leveraged tax avoiders and those with low/negative yields will moan.
Gonna have to be an election debate as NZ has punished workers at the expense of asset owners for far to long.
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