Little ‘transformational’ about Government so far

Jacinda Ardern promoted her Government as being transformational, but apart from transforming Winston Peters and Shane Jones into well funded promoters of their own interests these is not much transforming going on.

Ardern opened her year claiming that this would be her Government’s year of delivery, but what they have delivered so far has been underwhelming.

The just announced welfare ‘reforms’ have been paltry – see Welfare advisory group – 42 recommendations, 3 to be implemented.

Tim Watkin: Government is running out of chances to be ‘transformational’

Strike one: Capital Gains Tax. Strike two: Welfare reform. The Labour-led government is running out of chances to be the “transformational” administration Jacinda Ardern promised in the 2017 election campaign.

Today the Welfare Expert Advisory Group handed the government a radical blueprint to not just tinker with welfare, but – in their words – to make “urgent and fundamental change”.

It was scathing about sanctions against beneficiaries, saying evidence shows they do little but create more harm to those already at the bottom of society. And it recommended a massive 47 percent increase in current benefit levels.

Those would be hugely controversial reforms… or, you could say, transformational. And they are not of the cuff ideas.

The current and previous Children’s Commissioners have urged such substantial benefit increases as the most effective way to tackle child poverty.

What people seldom consider though is that since then wages and salaries have continued to grow. Super, linked to wages, has grown to. But other benefits – with any increases linked to inflation, not wage growth – have not been increased nearly as much. Until, that is, Sir John Key and Bill English famously raised them in 2015. So the gap between work and welfare has grown since the 1990s.

That’s why the report today says, “The level of financial support is now so low that too many New Zealanders are living in desperate situations”.

In sum, the argument in support of this radical prescription is that you can raise abatements here and offer support there, but the best and least bureaucratic way to tackle poverty is to – wait for it – give the poor more money.

So as part of their coalition deal, Labour and the Greens commission this report. They get the transformational advice most of them would have wanted. How do they respond?

Welfare Minister Carmel Sepuloni agrees the welfare system is not working.

Marama Davidson agrees the welfare system is not working.

And then they commit to ignore the report’s big recommendations.

They say no to up to 47 percent benefit increases, preferring “a staged implementation”. The call for “urgent change” is rejected. Remarkably, Ms Davidson has put her quotes into the same press release, tying the Greens to this approach, when they could have been dissenting from the rafters.

The political and institutional reality is that no government can make these changes overnight. But the cold water thrown on this report underlines what we’ve learnt about this government in its handling of tax, its debt level, labour reform and more.

It is not just incremental, it looks timid.

If the Ardern administration wants to be the transformational government she and her allies think they are in their hearts, they are running out of issues.

A lot of transformation has been limited by NZ First, who seem to have got most of what they want while limiting Labour initiatives (like the CGT) and hobbling the Greens.

Much may depend on what the Government come sup with on climate change, the issue Ardern describe as the nuclear free issue of the present time. Announcements on climate change have been delayed months already. There have been further delays, but promises for next week.

RNZ: NZ First voters will be happy with Zero Carbon Bill deal – Peters

New Zealand First leader Winston Peters says his party’s voters will be happy with the deal he’s struck with the Green Party over the Zero Carbon Bill.

Climate Change Minister and Green Party co-leader James Shaw this week delayed the release of two reports from the Interim Climate Change Committee until the government makes a decision on how to respond, which will contribute to the final climate change legislation.

Mr Peters wouldn’t be drawn on what the specifics of the bill are but did give an inch when RNZ asked whether his voters would be happy with the legislation, replying, “yes”.

That won’t be encouraging for those wanting transformative action on climate change.

Mr Peters said he couldn’t comment on when the bill would go to Cabinet because that was a matter for the Prime Minister but he understood it would be “sooner rather than later”.

Asked if it would be on the agenda at Cabinet on Monday, Mr Peters said he couldn’t answer that question.

Ardern and Shaw will have a lot of questions to answer if they fail to measure up on climate change. Their reputations are depending on actual transformation.

The future of the Greens in parliament may well depend on this one.

 

Bridges tries to keep tax debate going

When Jacinda Ardern announced that the Government was ditching any change to a Capital Gains Tax, and also that she was dropping any CGT plans while she remained leader, some (notably Michael Cullen) claimed that that neutered Simon Bridges and any tax debate in next year’s election campaign.

But Bridges is trying to keep the tax discussion going. He has gone as far as putting a a bill into the member’s ballot that would index tax brackets to inflation. This would avoid the bracket creep that harmed Labour’s re-election chances in 2008 when the Clark/Cullen government list to John Key and National – but Bill English also let bracket creep erode take home pays through their nine years in office.

National went into last election with legislation already in place to adjust tax rates and brackets, but lost power, and the Labour led government reversed those adjustments.

The Spinoff – The Bulletin: Bridges pushes for bigger focus on tax debate

As Stuff’s Henry Cooke points out, under the member’s ballot it almost certain not to pass if it gets pulled out, “but would force the Government parties to vote against an effective tax cut.” National has signalled they intend to campaign on the issue, which means that if it does come out there will be a voting record of that come election time. If Labour in turn opt to campaign on any of the other, non CGT recommendations from the Tax Working Group, that would set the terms of the debate on ground that National would be comfortable with.

The policy would result in the loss of about $650 million a year in tax revenue, according to Mr Bridges’ figures, reports the NZ Herald. When the policy has come up, finance minister Grant Robertson has often pointed to that figure as money that will have to be cut from elsewhere. And while the Budget Responsibility Rules are in place – vocally hated as they are by those who want bigger investments in social services – it’s difficult to argue that the government is currently over-spending.

A point of clarification – as people go up tax brackets, they only pay higher rates on their income above the previous threshold. So while the percentage of people earning above the 33% rate for incomes of $70,000 up has risen (11% of earners in 2011 to 17% in 2016) those people are only paying 33% on what they make on top of the $70,000. Even for those in that bracket, income earned at lower thresholds gets taxed at a lower rate.

How the tax rates and brackets work is poorly understood.

The current Government has passed legislation that they have promoted as An end to unnecessary secondary tax

Workers who are paying too much tax because of incorrect secondary tax codes are in line for relief with the passage of legislation through Parliament late last night.

The Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill passed its third reading and will come into effect on 1 April.

“We promised to eliminate unnecessary secondary tax for workers with more than one job. We are delivering on that promise,” says Revenue Minister Stuart Nash.

But this is quite misleading. Secondary tax rates (there are several) won’t change. Workers who paid secondary tax will continue to pay secondary tax, and their tax for a year will be no different.

All this does is encourage IRD to advise employees through the tax year if their secondary tax rate is appropriate to their level of earnings or not.

“The changes mean Inland Revenue will more closely monitor the tax paid by wage and salary earners through the year. If it appears the worker is being over taxed, Inland Revenue will suggest a more suitable PAYE tax code tailored to that worker.

“Till now the tax on the second job has often seemed too high. These changes ensure wage and salary earners are only paying the tax they should. Just under 600,000 secondary tax codes are used every year.”

Again this is misleading. The end of year tax calculation which determines how much tax you pay in a year remains exactly the same.

All this change does is attempts to tax more accurately through the year. It will reduce the chances of underpaying or overpaying (it can work both ways) interim tax via secondary tax rates, that is all. The end result will be exactly the same.

Secondary tax is a system designed to prevent employees from getting big tax bills at the end of the tax year. People who earn variable amounts in different jobs will always have a greater chance of inaccuracy through the year, regardless of this change.

Shaw contradicts Peters on timing of CGT decision

On the day it was announced that the Capital Gains Tax implementation would be dumped, Winston Peters said the decision was made “in the last few hours, but James Shaw has said “We knew about this last week and had been preparing for it,”

Stuff Apr 17, 2019 3:00 PM:

NZ First leader Winston Peters says the decision on CGT was reached in the last few hours, but the direction of travel had been clear for a long while.

NBR today on Twitter:

Who to believe?

The left lambasts Labour’s CGT capitulation

Labour didn’t just limit what the Tax Working group could include in any Capital Gains Tax, they didn’t just water down the subsequent TWG recommendations, they didn’t just drop any changes to capital gains taxing, Jacinda Ardern ruled out doing any CGT while she remains leader of the Government.

It wasn’t just a capitulation to Winston Peters. Ardern back down from a policy she said she supported. She ruled out going to the next election with any sort of CGT proposal as she had previously promised, presuming she is still leader then.

And the left, who wanted so much to have a ‘fairer’ tax system, and who wanted the Government to live up to it’s own labelling as transformative, are pissed off.

From Political Roundup: Progressives despair over the CGT decision

Danyl Mclauchlan argues that the CGT programme was one of four key policies agendas for this Government – the others being KiwiBuild, the Carbon Zero Act, and the Wellbeing Budget – and there are clear problems now in delivering them – see his column, Four months in, Labour’s ‘year of delivery’ is a disaster.

He despairs that Labour axed the tax after first initiating “one of the most bafflingly disastrous public policy debates imaginable, making John Key’s flag-change campaign look like the Normandy landings”.

He says any strategic wins from ditching the tax, will come “at a cost of one of Labour’s most important, long-term policies, and it was their failure to control their coalition partner or even attempt to make the argument for taxation reform that forced them to pay such a bitterly high price.”

Mclauchlan argues that Ardern could have won the debate and got a mandate for the changes, but simply didn’t bother.

That’s how it appears. She appeared to do nothing to fight for the CGT she proposed. It also appears she left James Shaw and the Greens out in the cold. Shaw has tried to paper over the cracks but sounds unconvincing (see James Shaw on “do we deserve to be re-elected if we don’t?”)

No Right Turn…

…is now calling for a leftwing boycott of the Labour Party: “If you want change, don’t vote Labour, don’t donate to Labour, don’t volunteer for Labour. Give your vote, your money, your time and effort to another party, any other party that promises change, than the one who betrayed you. Because if you don’t, Labour will continue to treat you like a fool, and continue to promise change while delivering none” – see: Don’t get fooled again.

They also argue the decision means the Government won’t have the money to afford many of their future policy goals: “Effective policy costs money, and this government has just robbed itself of that vital tool. Remember this next time they plead “poverty” as an excuse for not doing something: they chose to be poor. They chose to have a government which could not afford things. They chose to not be able to do the things they promised” – see: The cost of cowardice.

Inequality researcher Max Rashbrooke…

…argues that many other Government priorities will now be hamstrung by the lack of future revenue: “building more state homes, eliminating introduced predators, and repairing mental health services, among others – also require significant funds, again well above what will be generated under existing tax settings” – see: Capital gains tax shutdown threatens govt’s other plans.

In particular, “Consider the Prime Minister’s pledge to halve child poverty within a decade, possibly the political priority closest to her heart. It is very difficult to see how that can be achieved without the $3.4 billion a year that the capital gains tax was, according to the most recent estimate, going to raise.”

Some loyal Labourites had tried to put some spin on the backdown, like at The Standard (currently down so can’t link).

And former Labour Party President Mike Williams…

…suggests that although there are “elements of, particularly the unions and the extreme left of the Labour Party, which would be annoyed”, he “did not think the wider Labour Party base would be too worried about the CGT rejection”.

But Newshub’s Anna Bracewell-Worrall reports that…

…”Labour is facing a massive backlash from its base for ditching any hope of a capital gains tax (CGT) – even Young Labour and the ever-loyal unions are fuming” – see: Young Labour furious at capital gains tax backdown, leak reveals.

“Newshub’s been leaked a discussion from a secret Young Labour Facebook group revealing they’re frustrated with the decision. The Labour Party faithful say they’re ‘mighty disappointed’ and ‘exponentially angry at New Zealand First’s role’, and complaining of ‘unfulfilled promises’.”

And media are asking questions too.

Thomas Coughlan asked the very pointed question of Ardern: “Are you worried you now lead the party of capital, rather than labour?” And now he’s followed this up with an article suggesting that rather than Ardern and her Government implementing transformation, it’s actually them who are transforming – into a cautious and weak government not willing to make the hard and necessary decisions – see: Capital gains tax: Let’s not do this.

The Dominion Post asked if the decision came out of “cowardice or pragmatism”, but suggested the two are indistinguishable anyway. The editorial suggested more debate and leadership had been required for the CGT proposals to get off the ground: “Labour voters were evenly split on the pros and cons of a capital gains tax. It is a situation where brave political leadership and persuasion were required but for whatever reasons, a deep and thorough debate about fair and unfair tax failed to eventuate” – see: Capital gains tax: Political capital but for what gain?.

The newspaper says that Ardern had a “a failure of nerve”, and laments that an opportunity has been missed: “If there was ever a moment when significant change to the tax system could have happened, as the fairness and transformation her Government promised, that moment was now.” And there’s the question of “if the Tax Working Group was merely an expensive waste of time with a predetermined outcome.”

Likewise, according to the New Zealand Herald, “The decision has the hallmarks of pragmatism rather than strong leadership”, leaving “little evidence so far that Ardern will make tough but unpopular decisions to deliver on her convictions” – see: Capital Gains Tax surprise raises doubts on coalition.

It is going to be a challenge for Ardern and Labour to recover from this. They may survive in Government, but they have lost a lot of credibility from the left.

Ardern’s ‘pragmatic realism’ doesn’t sit well with political activists and idealists who thought that with Labour and Greens in  Government there would be substantial changes.

James Shaw on “do we deserve to be re-elected if we don’t?”

In his opening speech in Parliament this year Green co-leader James Shaw suggested that ‘we’ – the Green Party at least – may not deserve to be re-elected unless a more comprehensive Capital Gains Taax – “tax income from capital the same way that we tax income from work” – is introduced.

Green Party Economic Policy:

Capital Gains Tax

  • In order to treat all income the same, introduce a comprehensive capital gains tax on inflation adjusted capital gains at the time the capital gains are realised.
  • Exempt the family home from capital gains tax.

Now Jacinda Ardern has said that not only will the Government not be proceeding with plans to introduce a CGT, but that it will never happen while she leads the Government, Shaw is left looking silly and impotent, again.

And Shaw has made things worse by they do deserve to be re-elected because of other things they are doing on climate change, tackling homelessness, and cleaning up rivers – but progress on those issues is hardly worthy of self praise.

Shaw was interviewed on RNZ Morning Report: Capital gains tax plan dropped – James Shaw responds

The Green Party co-leader James Shaw has been dealt two hefty blows – not only the confirmation the capital gains tax has been ditched but that Jacinda Ardern has also taken it off the table as long as she is Prime Minister.

In February he suggested on this programme that the government didn’t deserved to be re-elected if it didn’t follow through with a capital gains tax. Now he’s changed his mind saying they do deserve to be re-elected for their work on climate change, tackling homelessness, and cleaning up rivers.

Suzie Ferguson: New Zealand First pulled this down, didn’t they.

James Shaw: Well as the prime Minister said they couldn’t form a consensus in Cabinet around that um recommendation on the Capital Gains Tax and so the pulled it.

Suzie Ferguson: And so you are outside Cabinet but clearly were supportive.

James Shaw: Well, you know we were consulted on the indecision, um and so you know we just got to a point where we said well, you know this is clearly not going to go any further so Government has to proceed.

Suzie Ferguson: But the Prime Minister ultimately must have buckled under pressure from Winston Peters, because Labour supported it, and the Greens supported it, so who’s left?

James Shaw: Well, I mean that’s a question for her and the Deputy Prime Minister. I wasn’t privy to those conversations. Um, you know our relationship primarily was through Grant, you know we were talking to him on a regular basis about where we were hoping it might go. Um but it is a coalition government and ultimately in coalition governments not everyone gets everything they want all the time.

Labour and NZ First have a coalition agreement, Greens are outside of this arrangement providing ‘confidence and supply’. It sounds hear like Shaw was not a part of the CGT discussions at all, he was merely being informed by Grant Robertson of the lack of progress. So sitting on the sidelines, impotent.

Suzie Ferguson: Indeed, but what is the quid pro quo?

James Shaw: Ah there isn’t a quid pro quo. I think the, um, you know the thing about this government actually is that you actually look at each issue, um, by issue, and and each thing stands or falls on it’s merits.

This issue fell seemingly without Greens having a say.

Suzie Ferguson: Mmm, but you’re having to swallow quite a dead rat on this one, so are you saying you’re not getting anything in return?

James Shaw: Well like, we’re getting to be in government, ah and along with that ah comes a substantial ah set of policy gains that we wouldn’t have if we weren’t in government.

Greens have achieved or are trying to achieve some policy gains, but these are dwarfed by the policy gains that NZ First have been able to achieve – which must be with Green approval. it looks like Greens give a lot, and get little. Word is that Shaw is struggling to get his Climate Change policy past NZ First. These are big impediments to core Green policies.

Suzie Ferguson: Mmm, but what is the point in being in government if you don’t get some of the major wins?

James Shaw: Well we are getting some of the major wins. So I’ll give you some examples. Um we’ve put fourteen and a half billion dollars into a rapid transit um buses, light rail, aah walking and cycling over the next ten years.

That’s proposed, not done. Greens will struggle to be in Parliament let alone Government for anywhere near that long. Recently the Minister of Transport conceded that light rail is likely top be scaled back. And the Auckland City rail loop cost has just jumped by a billion dollars, this must put pressure on other transport spending.

James Shaw: We’ve had the largest funding in conservation in the last sixteen years.

The funding of most things goes up over time, so it is only a gain if funding increases are significantly above inflation (I don’t know in this case if it is).

James Shaw: Um we’re about to introduce the zero carbon bill into Parliament. So you’ve got you know across the whole range of areas huge progress, more progress than we were able to make in  the last twenty years we were in opposition.

Suzie Ferguson: It’s been reported though this morning on Politik that New Zealand First will be folding their opposition to Labour’s climate change policies, and that is the price. Is that not the case?

James Shaw: I haven’t read Politik this morning, sorry.

Suzie Ferguson: But is that something you know about or not?

James Shaw: Look I’m not aware of that report so I can’t comment on it.

Suzie Ferguson: So there is no quid pro quo as far as you know? That’s what that report would seem to indicate.

James Shaw: Well like I said I haven’t seen it so I couldn’t, it’s hard for me to comment on something I haven’t seen.

Suzie Ferguson: Mmm but it’s not anything you’ve heard from the Prime Minister or indeed as these final negotiations have been taking place?

James Shaw: No it’s not.

This is what was said at Politik:

Jacinda Ardern claimed to her press conference yesterday that the decision to dump the tax was made without any sort of a deal with NZ First.

But nothing comes for nothing in politics.

And NZ First must surely expect there will be a price to pay. Most likely this will be in them folding their opposition to Labour’s climate change policies.

That may just be speculation.

Suzie Ferguson: Can the Government still claim to be transformational?

James Shaw: Yes, I think we can…

Suzie Ferguson: Why?

James Shaw: Well because like I said, on so many areas, and Grant Robertson was talking about that earlier this morning, the work that we’re doing on ending homelessness, on lifting people out of poverty, ending child poverty, on mental health, on climate change, on conservation, on cleaning up our water, those are the areas that really tipped the election in 2017, and those are the areas we are making progress on.

Most of those are being worked on rather than making notable changes. It may take another year (or longer) to judge how successful they have actually been.

James Shaw: Now, I’m not saying that I’m not disappointed about this decision, I am, and Green party policy hasn’t changed on that, but you know as with anything. You’ve got to take it all in the round, and when I said aah that I think that we should you know be questioning ourselves, we should always be questioning ourselves about how transformational our Government is.

And actually I think that we’re doing in fact have done more in the last eighteen months than the previous government did in nine years, and so I would choose it every time.

That’s a tired old comparison that Labour and Greens keep trotting out. It’s rhetoric with no factual basis.

Suzie Ferguson: To achieve targets around lifting children out of poverty and social justice, the only way to achieve those targets now is going to be with borrowing isn’t it.

James Shaw: (deep breath) Ah well that is a question for the Minister of Finance, um and…

Suzie Ferguson: But I’m asking you because it’s Green Party policy as well, so how would you be wanting to achieve those targets. You’re going to need extra money coming from somewhere. Are you going to borrow it?

James Shaw: Yes we are. Um but but I can’t comment on this year’s budget obviously because that’s about to be announced.

This year’s budget has nothing to do with the future plans that will be affected by no longer being able to get on previously relied on tax from a CGT.

Suzie Ferguson: But you’ve been talking about relaxation, or possible relaxation of the fiscal rules you signed up to. Is that how you get these over the table.

James Shaw: I believe so, yes.

Suzie Ferguson: So there is going to be extra borrowing.

James Shaw: I can’t tell you that.

Shaw is Associate Minister of Finance so must be privy to some sort of discussions on how policy promise might be funded without having a CGT.

Suzie Ferguson: But you believe so.

James Shaw: Well well look no ultimately I think that if you look at the long term fiscal strategy ah of ah Government um you know we have said that we think that needs to be reviewed, and we intend to do so.

Um at the moment actually the economy is doing very well, ah and we’ve got revenue coming in, so you know we are able to invest in things we wouldn’t have otherwise been able to invest in otherwise.

Suzie Ferguson: You famously said that the government didn’t deserve to be re-elected if you didn’t follow through with a capital gains tax…

James Shaw: …that’s not strictly true…

Suzie Ferguson: …hang on a minute. Um why did you say that?

James Shaw: What I said was we should be asking ourselves the question of whether or not we deserved to be, and we should be asking ourselves that question al the time, on the basis that at the last election ah you know a majority of New Zealanders voted for change, they voted for bold change.

I don’t see how he can claim that. People vote the way they do for a wide variety of reasons. Some may even have voted for NZ First hoping they would go into Government with National. The party wanting the most radical change, the Greens, got substantially fewer votes than they got in the previous election.

James Shaw: Now you know tax reform was…

Suzie Ferguson: And now you say they’re not getting it as of yesterday.

James Shaw: …well no tax reform is a part of that picture but it’s only a part of that picture. And like I said if you look at everything that we’re doing, whether it’s in the domain of lifting people out of poverty or ending homelessness or cleaning up the environment, ah you know action on climate change.

We have taken some really big calls and we will be taking some really big calls over the course of the coming eighteen months before the next election.

Depending on what Winston allows them to call.

James Shaw: And so in the round yes, I do believe that we deserve to be re-elected, but we should never stop asking ourselves that question.

On the basis of losing the CGT battle, and the big calls to be made over the next 18 months, I think it is premature to claim the Greens deserve to be re-elected.

From Shaw’s big speech to start the year in Parliament in February:

Now, the Green Party has long been calling for that fundamental imbalance to be addressed, and every single expert working group in living memory has agreed with us, but no Government—no Government—has been bold enough to actually do it. But if we are to be the Government of change that New Zealanders wanted and elected, we must be bold.

The crises that we face on multiple fronts—the wealth gap, climate change, the housing crisis—we cannot solve without fundamental reform. These crises have been allowed to metastasise because generations of politicians have timidly tinkered rather than actually cut to the core of the problem.

And the consequences of that timidity—the consequences of that timidity—are being felt by Karen and by hundreds of thousands of New Zealanders just like her, trapped in “Generation Rent”. So when the commentators pontificate about whether this Government can politically afford to do what no other Government before it has done, I ask “Can we afford not to?”

Can we afford not to?

We were elected on the promise of change. If we want to reduce the wealth gap, if we want to fix the housing crisis and to build a productive high-wage economy, we need to tax income from capital the same way that we tax income from work.

The very last question that we should be asking ourselves is: can we be re-elected if we do this? The only question we really ought to be asking ourselves is: do we deserve to be re-elected if we don’t?

That’s a question that voters will answer in 18 months.

See James Shaw slams tax timidity, calls on Labour, NZ First to be bold with CGT

 

 

NZ First on the Capital Gains Tax capitulation

NZ First have prevented the Government from proceeding with any changes to capital gains taxes, despite a CGT being a core policy of Labour, backed by Jacinda Ardern, and despite it being something Greens have wanted for a long time (and James Shaw stated earlier this year that the Government didn’t deserve to be elected if they didn’t introduce a CGT).

New Zealand First Leader media release:

Tax Working Group Report

New Zealand First Leader Winston Peters has welcomed Cabinet’s decision not to implement an extension of capital gains taxation, following the Prime Minister’s statement in response to the Tax Working Group Report.

“This decision provides certainty to taxpayers and businesses. We in New Zealand First wanted first and foremost for New Zealanders to have time to discuss and debate the contents of the report,” stated Mr Peters.

“During that time we have listened very carefully to the public.

“There is already an effective capital gains tax through the Bright Line test brought in by the last National Government and New Zealand First’s view is that there is neither a compelling rationale nor mandate to institute a comprehensive capital gains tax regime,” said Mr Peters.

“We also welcome the announcement that the coalition government will be urgently exploring options with the Inland Revenue Commissioner, in concert with central and local government, for taxing vacant land held by land bankers and reviewing the current rules for taxing land speculators. Tightening these rules was a priority for New Zealand First.

“Current tax policy, rigorously enforced by an Inland Revenue Department properly resourced will by itself 1) improve the administration of existing tax policy, and 2) target those multi-nationals not paying their fair share of tax,” Mr Peters said.

There was nothing about a CGT in the Labour-NZ First coalition agreement. This was the only reference to tax:

  • Increase penalties for corporate fraud and tax evasion.

Peters via Twitter yesterday:

Despite the claimed hearing and listening, Peters has done what he has said he would do for a long time.

During the 2017 election campaign (Politik): Peters ready to throw spanner in Labour’s capital gains tax plans

Peters says he is not ready to support any moves labour might want to make to extend capital gains taxes.

Finance spokesperson Grant Robertson has arrived at a neat compromise. Labour would set up a Taxation review once it got into Government.

Phil Twyford (on The Nation): “In the first three years we’re going to do a taax working group that will redesign the entire tax system”.

Robertson (on NZ Q&A): “We will have a working group that will have a look at getting a better balance into our tax system between how we tax assets and how we tax income”.

Peters though is adamant.

“I am not for an extension of the capital gains tax” he told POLITIK.

Peters is critical of the review and Labour’s plan to provide details on it’s water levy policy after the election.

“How many times can you get away with this sort of nonsense” he said.

So why did Labour insist on going ahead with the Tax Working Group that had an aim of recommending a capital gains tax?

It seems to have been a wasted exercise, unless the intention was to provide Peters with an opportunity to say NO CAPITAL GAINS TAX.

CGT backdown, everyone claims victory

Winston Peters says he has just decided today to not back a CGT as recommended by Tax Working Group and championed by Jacinda Ardern and Labour, despite opposing a CGT for a long time.

Surprisingly Ardern didn’t just scrap the CGT, she ruled out trying again with one while she remains Prime Minister – this is despite taking a CGT to the next election to let voters decide.

Winston now claims to be the CGT stopper. Simon Bridges claims he and National stopped the CGT. Jordan Williams claims he and his ‘Taxpayers Union’ stopped it with a petition.

Meanwhile Michael Cullen claims that is a defeat for National’s election campaign plans next year. This plus claiming victory for the Government was claimed by Te Reo Putake in a lipstick overload on the pig at The Standard – see CGT Dumped.

Jo Moir (RNZ) – CGT backdown: You win some, you lose some

It wasn’t even an hour after the Prime Minister had put the final nail in the coffin that is the capital gains tax (CGT) when RNZ asked Mr Peters whether Labour will be expecting his party’s support on another issue in return for losing this flagship policy. Mr Peters fired back: “May I remind you, the Labour Party is in government because of my party.”

No reading between the lines necessary.

And despite previously saying that the government didn’t deserve to be re-elected if they didn’t do a CGT James Shaw as busy claiming victories with other policies.

As for the Greens they had no hope of getting any points on the board today and while co-leader James Shaw came out with his best disappointed-but-optimistic face on, it was clear yet again NZ First had served them a gigantic dead rat to eat.

Even Mr Shaw is aware they’re starting to stack up.

Asked whether this was the biggest dead rat yet (bear in mind the waka-jumping legislation and Chinese water bottling expansion were pretty substantial) Mr Shaw replied: “I don’t rank my list”.

He couldn’t even hold on to the hope of a CGT under a future Labour-Greens coalition after Ms Ardern killed that today as well.

The Greens have been campaigning on a CGT for the entire two decades they’ve been in Parliament and today the Prime Minister stood and told the country there is simply no public mandate for it.

But we won’t all be winners. This must seriously affect the Government’s transformational reform agenda, given that they won’t have more tax to pay for it.

The official announcement:


Government will not implement a Capital Gains Tax

The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern announced today.

“The Tax Working Group gave the Government, and the country, an opportunity to look at the fairness of our tax system and debate options for change,” Jacinda Ardern said.

“All parties in the Government entered into this debate with different perspectives and, after significant discussion, we have ultimately been unable to find a consensus. As a result, we will not be introducing a capital gains tax.

“I genuinely believe there are inequities in our tax system that a capital gains tax in some form could have helped to resolve. That’s an argument Labour has made as a party since 2011.

“However after almost a decade campaigning on it, and after forming a government that represented the majority of New Zealanders, we have been unable to build a mandate for a capital gains tax. While I have believed in a CGT, it’s clear many New Zealanders do not. That is why I am also ruling out a capital gains tax under my leadership in the future.

“The Tax Working Group was a valuable exercise that has delivered some useful suggestions well beyond just the debate on CGT, and I want to thank the Group for its work. In fact the majority of recommendations will either be investigated further or have formed part of our work programme.

“There are other things that can be done to improve the fairness of our tax system. As such the Coalition Government has agreed to tighten rules around land speculation and work on ways to counter land banking.

“Work will also continue to cut red tape for business and crack down on multi-nationals avoiding paying their fair share of tax in New Zealand. We have already made changes to address base erosion and profit shifting, and we will shortly release a discussion document on options for introducing a digital services tax.

“My job now is to focus on the things we can and are doing to improve the wellbeing of all New Zealanders.

“The Coalition Government is addressing the long-term challenges New Zealanders face such as mental health, climate change and child poverty and responding to the March 15 terrorist attack and keeping New Zealanders safe. Those challenges will be my priorities for the remainder of this term,” Jacinda Ardern said

 

Shane Jones interview on Nation

Shane Jones on Newshub Nation:

Have you offered your resignation to the Prime Minister at any point?

Oh, no. Absolutely not.

Newshub:  Shane Jones drops capital gains tax clue (includes video of the interview):

Shane Jones has hinted the upcoming capital gains tax announcement could include relief for the regions.

The Regional Development Minister declined to comment on what exactly the Government has come up with, following the Tax Working Group’s recommendations, which were made public in February.

The Regional Development Minister told Newshub Nation on Saturday revealing its contents was off-limits.

“There’s various ways that I could be sacked,” he told interviewer Tova O’Brien.

“One of them that will definitely get me sacked by the end of this programme is if I offer any view whatsoever in terms of what lies exclusively in the realm of my leader and Prime Minister.”

Asked if he could give assurances that “farmers and regional businesses” wouldn’t be hit hard, Jones gave one of his typically cryptic replies.

“Well, in the near future, all I would say is that to the folk who have dirty boots and hard-working calloused hands, watch this space.”

Transcript:


Tova O’Brien: He’s the self-styled champion for the north – as he so often likes to remind us – the first citizen of the provinces, but does Shane Jones’ bluster and bravado mean he gets away with far more than most other ministers? Once again he’s in hot water, once again he’s been reprimanded by the Prime Minister and once again it’s over allegations of a conflict of interest and interfering in a judicial process. Regional Economic Development Minister Shane Jones joins me now. Kia ora, Matua. Thank you for joining us. Minister Jones, you directly spoke to the Chief Executive of the NZ Transport Agency about its case against Stan Semenoff Logging failing to meet safety standards. A High Court case, you’re a minister, you’re not allowed to interfere. Why did you?

Shane Jones: No, well, the facts are being distorted by the National Party. Not once have I ever had anything to do with the prosecution decision that you refer to. Those decisions, I imagine, are made in windowless rooms by lawyers and an independent body. I have no delegations for those matters.

The brief discussion I had with the acting CEO of NZTA, I’m glad to see, has been taken up now by the industry leadership. I accept, however, the cautionary words that the Prime Minister expressed with me. It is a distraction.

It is very difficult to maintain the entirety of the Cabinet Manual if perceptions start to grow that a minister’s interfering with a High Court case. But I’ve probably seen more High Court cases and, in the Maori Fisheries, funded more High Court cases than any other MP. I know exactly where the boundary line is.

But you’re related to the managing director of this Northland company. You once received a donation from him. What made you think it was appropriate to get involved and make that call to the NZTA CE?

You see, I have not made any call to the NZTA CEO. I have raised, in Parliament, with him issues that are now actually being agreed to by the broad leadership of the industry, and people misapprehend what my role is. My role is to isolate those issues that time to time thwart and undermine regional development.

Now, try as much as the Tories might to brand me as someone breaking High Court rules, the reality is I am a feisty, earthy, industrial-grade politician. That’s what the people expect of me, and when I’ve been around the motu, the country, over the last two weeks, not one single garden-variety Kiwi has raised this with me as being a problem.

That’s not necessarily on them, though, and being feisty and industrial-grade doesn’t preclude you from the Cabinet Manual and interfering in judicial processes is against the Cabinet Manual. The NZTA had taken a case against Semenoff Logging.

And that case is, I presume, going to continue in the High Court, and I have nothing to do with that case. I’ve never had anything to do with that case. They are a body that exercises statutory power, and our democracy works on the basis that when we who hold power, i.e. the officials, they’re capable of looking after themselves and having their decision tested in any court. Just because I raise an issue about the essential importance of logistics, supply-chain, doesn’t mean that I’m involved in a High Court case. I absolutely reject-

The reason the ministers need to keep an arm’s length is because of ministerial influence, so even having that conversation can be perceived as influence.

So this is where, Tova, I think that you run the risk of repeating non-credible memes being driven by the National Party. I utterly reject their assertions, and the reality is that I will remain the champion of the regions. The industry love my contributions. From a party that is pro-industry, you should not expect me to shut up. Just because I say things that make the windy bureaucrats feel a bit nervous, in actual fact that makes me more popular amongst the people who back me.

Yeah, there’s windy bureaucrats and then there’s ministerial interference. But anyway, this isn’t the first time you’ve been accused of this. You were also accused of interfering in legal proceedings against fishing company, Talleys, the PM hauled you over the coals for overstepping with the Serious Fraud Office investigation. You have form here.

Well, I don’t recall saying anything untoward about the SFO. I remember giving a general debate speech.

It was enough for the Prime Minister to give you a call and to tell you not to.

Yeah, I mean, the reality is that there’s the role that I have as a minister and then there’s the role that I have as a politician. Look, I wouldn’t read too much in it. I think that people from time to time in the media misapprehend the role that I have. In terms of any other court cases — well, I’ve got nothing to say about them. The people that are embroiled in litigation, they can look after themselves.

So was the Prime Minister wrong to reprimand you?

No, she is totally within her rights to do what she does. I thoroughly understand the Westminster system of democracy. I’ve just got a very robust— and as I’ve said, I’m a retail politician, I’m industrial-grade and I don’t care if it sounds as if I’m always leading with my chin. That is what the people who support me expect me to do.

Yeah, perhaps there needs to be more of a demarcation between those two hats because former National minister, Maurice Williamson, he interfered in a police case, made a call, also said he wasn’t trying to influence an active police case, but he was forced to offer his resignation to the then Prime Minister and resigned. Have you offered your resignation to the Prime Minister at any point?

The difference between Maurice Williamson and me is that I was an ambassador, then I became a politician. Maurice was a politician, now he’s an ambassador in America. He’s done it the other way round.

Have you offered your resignation to the Prime Minister at any point?

Oh, no. Absolutely not.

OK, what about — because it looks a bit like the Prime Minister, she kind of hauls you into the office, says, ‘Don’t do this, Shane.’ You say, ‘Sure, sure, sure.’ Then you walk out and perhaps do it again. Does she have any control over you?

No, I take very seriously what the Prime Minister says, but the Prime Minister also realises that there has never been a consistently loud, focused voice from the regions and the provinces. She, I believe, realises that from time to time there might be a bit of bump and grind, and she’s well within her rights to caution me to ensure that I don’t represent an unwelcome distraction to the overarching narrative of the government. I don’t believe I do. In fact, where I go, I’m met with popular acclamation.

What about Winston Peters? Has he ever chastised you or cautioned you?

What happens in our caucus is tapu. That’s where it stays.

Okay, on the Provincial Growth Fund, how many full-time jobs is your PGF, Provincial Growth Fund, created so far?

Yeah, so the most recent announcement was well over 500. The challenge that I’ve got is that although we’ve allocated $1.6 billion the pace at which the bureaucrats and officials can roll out the approval process, I can’t interfere with that. I can encourage them to go quicker. I do, every week. But at the end of the day, there are strictures that they have to observe in terms of the allocation of public money.

You say over 500, but the list provided by your office says that only 272 full-time jobs have been created so far. That’s a long way off the 10,000 promised.

Yeah, well, look, can we just deal with the 10,000? That 10,000 figure is an extraordinarily important and ambitious figure associated with the full import of the programmes, once they’re up and running. And as I said to you, the Provincial Growth Fund, whilst we are allocating putea, there are other things happening in the provinces. I’m a great supporter of those other things because I’m pro-industry. I’m pro-fishing, I’m pro-dairy, and I’m pro-mining. The fact that oil and gas is actually going to get a boost down in the South Island, then they’re going to find in me a great champion.

Let’s talk about oil and gas. Let’s talk about a region that is crying out for more funding and jobs, Taranaki, thanks in large parts to your government’s oil and gas ban. What responsibility does the Government — and you, as champion of the regions — what responsibility do you have to ensure economic stability there.

Well, I don’t want to go into too much detail, but in the near future there’s going to be a transitional, large meeting up there. But I would say that Taranaki stakeholders, they have various proposals that they’re promoting. There is a proposal doing the rounds called 8 Rivers. That’s associated with storing gas in the ground, using gas for hydrogen energy.

But I want to remind everyone, Tova, that when the Prime Minister made her announcement, which I supported, but we secured the on-going existence of entitlements that are already in place, which is why I’m an enthusiast for the various mining entities, oil and gas mining in the South Island, who are rolling out through the process that they’re entitled to do.

OK, so, 8 Rivers, you raise that now, you also raised that last time you were on this programme, last year. But we haven’t heard much more about it, so what’s happening with that? It wants $20 million from the PGF, is that right? Is it going to get that money?

Yeah, well, it’s just going through the process. I mean, obviously these things take a bit of time, because it is an enormously large project. I’m not the only Minister that would make that decision. And, look, I accept that when I associate myself with the oil and gas industry it does lead to criticism.

And you mentioned Greenpeace, well, you mentioned the accusations that Greenpeace made against me about a fishing court case. I’ve got no time for their lime-coloured righteousness. And if people in the South Island are allowed to use their rights to explore and develop oil and gas, I know the South Island people want that to happen. And before Greenpeace lecture me about that, they can explain to New Zealand why their boat has been under investigation for polluting the Bluff harbour.

Greenpeace aside, what about Labour and the Greens. What do they think about what you’re saying today?

No, they know, the Prime Minister knows that when we made our announcement, no more fresh mining applications offshore. We did, however, retain the ability of International and Domestic firms to use their current entitlements.

Which means 8 Rivers could go ahead, cause they—

Well, they would need to go through a statutory consent process, but the point I’m making—

With the help of your $20 million dollars from the PGF?

Well, we don’t know what the amount of putea is.

But there is going to be some?

Well let’s not taint the process, allow them to go through the process. Ministers will make a decision, yea or nay. But the point that I’m making — I can’t fund, and we don’t fund everything that happens in provinces. We make decisions that have impacts. An impact that was made from our oil and gas decision is people are legally allowed to continue to explore and invest hundreds of millions of dollars in the South Island.

So, 8 Rivers, for those who don’t know, is a development project – it would create hydrogen, urea, and electricity using natural gasses. So, that’s controversial within your Government. How much biffo is going on behind the scenes between you and David Parker, say?

Oh, no, David Parker is a very good friend of mine. Although as Attorney General, he has been known from time to time to warn me to be very conscious of the blurry lines between my writ as the champion of the provinces and other legal obligations.

OK, let’s move on to Westland Milk. Chinese Company Yili is buying Westland Milk for nearly $600 million dollars, $588 million dollars. Are you comfortable with China buying such a significant New Zealand dairy asset?

Well, in phase two of the overseas investment rules that David Parker is leading, he is going out to consult whether there should be criteria dealing with a test of national significance, not necessarily for land, but for strategic industries.

Is that a ‘no’?

No, what I’m saying is that I don’t want to say anything that taints the ability of the Mongolian milk company to acquire whatever consents that they might have.

Well, one of your colleagues, Mark Patterson, has said that it’s an erosion of New Zealand control in our significant dairying assets. Do you agree with him?

Well, you’re talking to me as a Minister of the Crown. And I feel like I have an obligation—

Sometimes it’s hard to differentiate.

Yeah, fair point. But please listen with your taringas. I don’t want to taint whatever process the Mongolian milk company is going through. Mark is a dearly loved colleague of mine and I thoroughly understand his anxieties, but people are playing by the rules. And the rules at the moment allow them to proceed. I’m disappointed with the ineptitude and how absolutely useless the directors of New Zealand’s second-largest dairy co-op are, but that’s not the problem of the Mongolians. That’s the problem of how useless those directors are.

The $10 million that the Provincial Growth Fund loaned Westland Milk, was that an attempt to stave off an offshore purchase like this?

Well, I must be very honest, I had no idea that the directors had only one plan in mind, and they never ever shared that with me that they were preparing the company for sale via Macquaries, I think those are their advisors. So we put a caveat on that $10 million dollars in the event that there was a change of ownership, then the deal would vaporise.

Now it’s been suspended. And it’s not the only time you’ve offered a loan through the PGF. You also gave Oceania Marine in Whangarei a $4.8 million dollar loan. Is the Government becoming a lender of last resort?

Well, look, the policy underlying the Provincial Growth Fund is imaginative. It is bold. And, look, I accept that it inverts what used to happen. And I realise there are risks in doing that. But if there is a genuine case of market failure, then we have the criteria, endorsed by Cabinet, for the four ministers to proceed in that direction. Now, I know I’m attacked by the National Party for doing this, but I’m reminded of that great saying which I’ll adapt from my Grandmother, which is that if the Epsom cat wants to eat fine fish, then he’s got to get his feet wet.

OK, let’s move on to the capital gains tax, an announcement is going to be made very soon by your Government. Are you happy with where the Government has settled?

So, there’s various ways that I could be sacked. One of them that will definitely get me sacked by the end of this programme is if I offer any view whatsoever in terms of what lies exclusively in the province of my leader and Prime Minister.

Yes, but as the much-lauded, by your good self, champion of the regions, that includes farmers and regional businesses, can you give them assurance that they’re not going to be stung by a capital gains tax?

Well, in the near future, all I would say is that to the folk who have dirty boots and hard-working calloused hands, watch this space.

Sounds like New Zealand First got a win, and perhaps the tail is indeed wagging the dog. It was Winston Peter’s birthday this week, 74-years-old, what did you get him?

Every time I go overseas I bring a gift back for my rangatira, and that gift is the subject of great privacy between him and I. But we shared a day yesterday in Whangarei, and although the announcements were relatively modest, it’s always a pleasure to be with, yeah, the rangatira of New Zealand First.

What about the gift of succession? Who would win in a leadership fight between Shane Jones, Ron Mark and Fletcher Tabuteau, say?

Right, well, I don’t think we should contemplate a future at all without our leader, Winston Peters. And when I had the opportunity, Tova, to come back into politics, I wanted to demonstrate that the provinces would have a champion, and that champion doesn’t need to hanker after anything else.

Yeah, that’s not a no. Thank you very much for joining us, kia ora, Matua Shane.

Transcript provided by Able. www.able.co.nz

Poll – most people against Capital Gains Tax

A Business New Zealand/Reid Research poll has found that most people are opposed to a Capital Gains Tax. Labour has found in the past that a CGT was unpopular with the electorate.

CGT should be a priority for the Government?

  • No – 65%
  • Yes – 22.8%

Has CGT harmed the Government?

  • No – 33.1%
  • Yes – 47.8%
  • Don’t know – 19.2%

I don’t know if the CGT proposals have damaged the Government. I don’t know how anyone else can say with any certainty that it has or hasn’t.

Do you think there should be a capital gains tax on things like businesses and farms?

  • No – 54.3%
  • Yes – 31.6%
  • Don’t know – 14%

Do you think there should be a CGT on earnings on KiwiSaver?

  • No – 90%
  • Yes – 4.4%
  • Don’t know – 5.6%

The Reid-Research poll was conducted between March 15-23. It had a sample size of 1000 voters, with a margin of error of 3.1 percent. 

Source – Newshub

No reported and presumably not asked – do you understand what a Capital Gains Tax is?

Also not asked – will NZ First allow Labour to implement a CGT?

Also today, a pro-CGT protest at Parliament was very poorly supported – Few people at campaign launch in favour of capital gains tax

About 10 people were present for the launch of the campaign by Tax Justice Aotearoa NZ at Parliament this morning.

 

 

‘Tax Justice Aotearoa’ pushing for Capital Gains Tax

A group linked to an international tax reform movement, but seemingly light on tax expertise, is launching a campaign to push for a Capital Gains Tax, plus tax cuts for low income earners and increases for high earners.

It seems to be late in the tax reform process, with Cabinet due to announce what it plans to do following with the Tax Working Group recommendations this month.

NZ Herald: Tax Justice Aotearoa launches campaign pushing for capital gains tax

A nationwide campaign pushing for a capital gains tax is being launched today by Tax Justice Aotearoa NZ.

The campaign, which is officially launched at Parliament at 10am, is backed by advertising in major newspapers across the country, and on billboards and in bus shelters in Wellington.

“The campaign will add balance to the current tax debate and give voice to the many people and organisations who believe it’s time for a capital gains tax to help reduce inequality in Aotearoa,” the group said in a statement.

I’m not sure that this group is big on balance.

As well as a capital gains tax, the campaign calls for tax cuts for low to middle income-earners and hikes for the highest paid.

It also suggests reducing GST, pressuring multinationals to pay more tax in New Zealand and taking stronger tax action against polluters.

An advertisement in today’s New Zealand Herald from the group said tax reform was good for the public good.

“Tax Justice Aotearoa welcomes tax reform. It’s well known we have a stubborn gap between rich and poor and we don’t have enough money to sustain and grow decent public services.”

Campaign supporters include the Public Health Association, New Zealand Council of Christian Social Services, Council of Trade Unions, Public Service Association, Hui E! Community Aotearoa, Equality Network, Closing the Gap, Poverty Action Waikato, and UCAN (United Community Action Network).

That looks like the social side of the tax and economic equation.

Website: About Tax Justice Aotearoa

Tax Justice Aotearoa NZ seeks a fairer society through tax reform. We represent the growing number of people who wish to see greater transparency, equality and fairness in national and global tax systems. Founded in August 2018 and linked with the global Tax Justice Network, we provide analysis, ideas and information to create an informed dialogue about how tax builds societies where all people flourish.

Read our charter here.

The steering committee:

Louise Delany

Louise is a public health lawyer and academic. For most of her working life Louise has been employed as a public servant in the health sector on public health law and policy; she has also worked as a legal researcher at the Law Commission; as a drafter; and adviser in the Ministry of Justice. Currently Louise works part-time as a senior lecturer, teaching public health law and ethics; and global health law.

Paul Barber

Paul is a Policy Adviser with the NZ Council of Christian Social Services. He coordinates the NZCCSS policy and advocacy work that responds to poverty, housing, inequality and exclusion and is a member of the steering group for the Equality Network.

Jo Spratt

Jo has a doctorate in policy studies, is a registered nurse, and has worked in international development for over fifteen years, predominantly in Melanesia. Jo brings a global perspective to the work of TJANZ.

Mike Smith

Mike is a retired community, union and political organiser, most recently as General Secretary of the Labour Party. He is currently Treasurer of the NZ Fabian Society.

Gervais Lawrie

Originally from the Brighton in the UK, Gervais recently became a resident in his adoptive home of Wellington. Interests include words, evidence and being outside.

These are probably capable and well intentioned people.

But for finding a fair and equitable balance to our tax system I think that economic, tax and employment expertise would be useful if not essential.

Their timing isn’t great either, with the Tax Working Group public engagement happening last year.

Perhaps Tax Justice Aotearoa is concerned that the TWG and the Government aren’t going to go far enough with tax reform.