“Actually not that hard” reducing prison population by 30%

Andrew Little, in an interview on The Nation this morning, spoke about his plans to reduce the prison population by 30%, saying “it’s actually not that hard if we choose to resource it properly.”

That’s optimistic – and ‘resourcing it properly’ alongside resourcing health ‘properly’ and resourcing education ‘properly’ and paying for all the Government’s promises and commitments might be a wee bit challenging.

@TheNationNZ:

Little says they’re going to take a sensible approach to reducing the prison muster.

He says there are people in prison who with proper assistance could be set up as productive citizens again.

“We’re not only sending more people to prison, we’re sending them there for longer” says Little, and some prisoners can’t be paroled because there aren’t the resources for them to do the necessary courses.

Little says there’s merit in setting up a sentencing council to ensure consistency in the decisions.

Ministry of Justice research says that more Police officers means more people in prison – but Little says the style of Policing for the 1800 new officers will be around deterring crime.

Time will tell where idealism meets realism. I wish Little well with this, really. Crime, imprisonment rates and mental health problems and drug and alcohol problems are all too big, but reducing them all with budget constraints will be a bit of a challenge.

NZH reported on this: Andrew Little says he will reduce the prison population

The Minister of Justice and for Courts has revealed how he plans to reduce the prison population by 30 per cent during the next 15 years – by ensuring offenders with mental health problems get better rehabilitation and that judges are consistent in sentencing.

Speaking to Three’s The Nation Andrew Little said he was going to approach the issue “very sensibly”.

“It’s actually not that hard if we choose to resource it properly.”

Although some hardened criminals needed to stay locked up because they were a danger to society, a “whole chunk” of prisoners were there because they were battling other issues which had driven their offending, he said.

Too many people with mental health problems and other issues weren’t getting the help they needed while in prison, Little said, and so were unable to meet the conditions they had to get parole.

Ensuring they were properly rehabilitated would make it easier for ex-prisoners to integrate back into society and reduce reoffending.

He also revealed he would review how sentencing and bail was being managed by the courts.

Part of the reason our prison population was so high was because we were jailing people for longer, he said.

Little said the issue was not necessarily with the legislation, but instead more likely stemmed from how it was being applied and enforced.

“What we do have to do is get some consistency.”

Little would also look into how bail was being administered. He questioned whether it was reasonable to lock up many people who had been charged but were yet to be tried.

While there was “no question” the safety of the community needed to come first, it needed to be balanced against the actual risk offenders awaiting trial posed to the public.

Full interview here.

Ardern interview on The Nation

Headlines from the Jacinda Ardern on The Nation this morning:

Prime Minister Jacinda Ardern says discussions have already begun on how to bring climate change refugees into New Zealand under a Pacific seasonal employment plan.

Ardern says for now doubling the refugee quota is enough of an increase, as the country doesn’t have the resources to support more refugees than that.

Ardern has repeated that New Zealand would only get involved with military action against North Korea if it was supported by a United Nations resolution. And while she says there’s been no request so far for Winston Peters to help with the North Korea situation, she says he is available to play whatever role he can in reaching a peaceful resolution.

Ardern says New Zealand should have a conversation about using measures such as a Happiness Index, rather than just GDP, to measure the country’s well-being.

Interview: Jacinda Ardern

Transcript:


Patrick Gower: Prime Minister, thank you so much for joining us. On this trip, refugees have been a very big issue for you, a very serious issue, personally. Is it a conviction issue for you?

Jacinda Ardern: Oh, yes, it is. But also, of course, my job is to advocate on behalf of New Zealanders. And I’ve certainly sensed a sentiment from New Zealanders that we should make sure that we do our bit. You know, we are in a position to be able to help – both our neighbour, in Australia, but also to lend assistance to those who are refugees who are currently being held and resident on Manus Island and on Nauru.

Yeah. And on that, there has been some pressure on Australia from you, from New Zealand, essentially. Is that fair, though, given that Australia takes five times more refugees per capita than New Zealand? Is it fair for us to sort of knock them around when we take five times less?

My expectation, or what I have undertaken to do here, is certainly not to knock around Australia. I accept that they play a huge role when it comes to their contribution to refugees and taking refugees. What I’m trying to do is make sure that New Zealand takes its share of refugees as well. We’re on the back doorstep. We’ve made an offer; we’re here to help. They’ve been seeking places to resettle those who are on Manus and Nauru, and I saw an opportunity for us to be a part of that solution. So, certainly, I’m not here to knock them around but to at least make the case, on New Zealand’s behalf.

Yeah, but is it that we need to be more ambitious with our target for refugees? I know that your government will double the quota. But do you now see, five times behind Australia, is there a need to be more aspirational than that? Than doubling the quota?

Yes. Look, the doubling of the quota was an important step to take – it was – and that was the right thing to do.

But do you want to go beyond that is the question.

When we made that offer, we looked into what capacity we had – the ability to make sure that we resettle people properly. And this is a key point as well with Manus and Nauru. People will ask, “Well, why only 150?” I looked carefully at the capacity we had in our system to make sure that when we take on those refugees, we’re able to wrap support around them. We’ve got to keep in mind these are, in some cases, victims of torture who have gone through an extreme set of circumstances, who we need to make sure that when we take on that responsibility, we do it properly. And that’s what we need to do with our quota as well.

So do you see a time when you will go beyond doubling the quota? Do you want to do that?

For now I think the responsible thing to do is double the quota and see that we’re able to do that properly.

One other conviction issue for you is obviously climate change, and you’ve spoken a lot about that. But for the first time, I saw you talk about how you believe that New Zealand’s glaciers have been shrinking because of climate change. Is that right?

Certainly that’s the advice that I’ve had. And we have been advocates on this issue. I see in part, and I’ve spoken on this before, that we have two roles—

It’s costing New Zealanders glaciers – is that your personal view?

Yes. Yes. Well, yes – it is my personal view. But we have a role here. I use that to illustrate a point. We have a role here not only to lead from the front and to use our voice but to demonstrate we’re taking action ourselves. And one of the reasons that we need to do that is because we sit within the Pacific and we see and know that those around us are already feeling the effects of this global issue. In fact, Asia-Pacific, where these meetings are being held and where the attendees have been from, will be gravely affected by climate change.

Sure. And one thing – specific thing – you brought up is climate change refugees.

Indeed.

You want New Zealand to lead on that, do you?

Yeah, I absolutely see a role for us to play in acknowledging that all of us will face climate changes.

What are the practical steps to that?

One of the things we’ve already talked about is we of course already have a programme within the Pacific where we have seasonal workers coming into work directly with New Zealand from our Pacific neighbours. Whether or not we can build in, for instance, an element where we target those who might be affected by climate change and potentially be climate refugees as part of that programme. We’re in the early days, but we’re looking at some options.

So you’re actually working on that. And is this urgent, actually dealing with climate change refugees? Is this urgent for you or is this a sort of “off in the future” thing?

I think the most important thing is for us to try and slow the trend – of course do what we can to make sure that we’re not in a position where we see a large-scale refugee situation. But we also need to make sure that we’re resilient, that we’re also planning, that it’s about mitigation and adaptation. And part of that planning is looking around us and saying — what might be the needs in our regions as well and being prepared for that.

And specific action has started on that, Prime Minister?

Yes. It is very very early stages. Very early stages. Of course we’ve only been in for several weeks, but it’s a conversation that we’re having.

Actually bringing “climate refugees”, so to speak, to New Zealand.

But using some of our existing programmes to see how we can accommodate within that those who might be affected by climate change.

Okay, I want to move now to North Korea, which has obviously been a subject of lots of discussion with you and the other leaders. Now that you have spoken and interacted with these people, how real is the threat of North Korea?

Oh, look, absolutely it is taken as a genuine and real threat by those in the region. Absolutely.

And you, personally, what would you say to New Zealanders? How real is this threat?

Oh, you know, we’ve seen significant increases in testing and the capability of those tests. I think most people would see that and know that it’s a genuine threat and that every member of the international community needs to play a role in doing what we can to de-escalate the situation, put pressure on Pyongyang to make sure that they are responding to the sanctions and the message that’s coming from the international community.

And if they don’t, or if there is a need for military action, is your position – because your position on the record is that New Zealand will not join military action against North Korea unless it is backed by the United Nations. Is that still your position?

The statement I used today at the East Asia Summit was we should use every tool available to us, bar military action. And one of the reasons we’re so firm on that is that we are yet to exhaust all the channels that we have. In fact we’re deploying many of them now, and with some success. So our point is those are the channels and those are the avenues we need to keep pursuing.

And that position still stands?

Yes.

It needs to have the United Nations Security Council resolution?

Yes.

Even if Japan, the United States, Australia…?

Of course. You know, our view has always been multilateral approach is best. We maintain our independent foreign policy, of course, and we’ll continually assess every situation. But, as I said today, we need to pursue every available avenue, bar military action.

And is there an option – when you talk about dialogue with North Korea, which is an important way – is there, in your view, a role, potentially, for Winston Peters, the Foreign Affairs Minister, to play in terms of talking to North Korea? Do you think he is the kind of person that could interact with that regime?

Oh, that’s happened in the past. And I think it is a good reminder that actually, there was a direct request made a few years ago now by the United States administration for support from Mr Peters in navigating a situation with North Korea in the past. That speaks to the level of diplomacy and the level of relationship that I’ve seen Mr Peters has with members of the international community. And I’ve seen it in play during this trip. It is an asset.

And do you think it’s an asset that could be used with North Korea?

To date, we haven’t had that request, but we remain absolutely available as a government – that includes our Minister of Foreign Affairs – to play whatever role we can in reaching a peaceful resolution.

I mean should you put Winston Peters forward?

Look, I would certainly be open to a range of options that we can play our role. To date that hasn’t risen as a potential possibility, but I’d never be closed off to the option.

Now, on the Trans-Pacific Partnership – and without getting into the detail and the nuts and bolts of it – your overarching view on why that’s good for New Zealand. What is your overarching view on why the Trans-Pacific Partnership is good for New Zealand?

We had a set of five goals we wanted to reach. We wanted to make sure that, yes, we had some decent outcomes for our exporters. But we also wanted to protect Pharmac, protect the Treaty of Waitangi, protect our right to legislate, protect our right to maintain our housing market—

Sure. And you’ve done that. What’s the good bit? If someone’s saying to you, “What’s the good bit here”?

And the point we make is that we’ve done that. That therefore enables us to actually place a little more emphasis on the trade deal. Because before, the trade deal was somewhat masked by all of the bits that were much more negative. Now, we haven’t reached a perfect agreement. But there’s no denying this deal gives us access to Japan, in particular, for our beef, for our kiwifruit, for our wine, in a way that we just did not have before.

And what about locking us into the world? Is that important to you? Put the trade to one side; interacting with the world – is that an important part of the TPP for you?

Look, what we have to acknowledge is that we are a small nation, and negotiating free trade agreements, multilateral agreements, give you much greater access often in this environment. And so this has been a way that we’ve been able to access multiple markets.

And very quickly on Australia – I mean, we’ve got leaks in the Australian media; we’ve got your threat of retaliation; we’ve got the Julie Bishop issue; we could go on and on and on. What word would you use to characterise our relationship right now? Because it does not look great to the outside.

Oh, look, New Zealand and Australia’s relationship is much stronger than any political new story of the day – much, much stronger.

So what word would you use?

“Robust”. Robust.

Now, speaking of robustness – to look at a robust measure, to look at the way we measure economic growth – GDP – do you think there is time under your government for a different measure, for a different official government measure beyond GDP?

I see room for a range, and we’ve talked about this before. You know, I want to make sure that people have a set of markers that they can measure our success by.

Do we need to create a new one – a new official measure that looks at different elements of human happiness?

Yeah, we’re very open as a government to exploring markers that sit alongside some of those traditional economic measures. Now, some of them we’ve already talked about. Let’s look at what’s happening for kids.

Like a happiness index?

Well, there have been talks about how you measure well-being, and I think that that’s a conversation a lot of developed countries are starting to have, and we should too.

Okay, and just finally, how have you found the trip? You used the word ‘robust’ before; what word would you use to describe your first outing on the international stage?

Pretty successful.

Grant Robertson on The Nation

New Minister of Finance Grant Robertson was interviewed on The Nation this morning. From @TheNationNZ:

“We understand the importance of fiscal responsibility, but that can’t be an end in itself.”

He says he’s absolutely confident the Labour-NZF govt can meet its budget responsibility rules.

The Govt will be an active one – will partner with the regions, rather than meddling.

Robertson says the govt wants to invest in the long term – it’s not just about the numbers on the sheet but living standard.

He says the regional development fund is an opportunity to correct under-investment in areas like Northland. It will be a “rigorous” process based on the best projects.

Robertson says there’s a lot more work to do to understand where Auckland’s port would be best placed.

He says Labour was heading in the same direction on the min wage as NZF – $20 by 2020 was NZF policy.

The Tax Working Group will be appointed before the end of the year.

He will always make sure the most vulnerable in society are protected.

As Sports Minister, he says he’s looking forward to a conversation with about pay equity.

Interview: Grant Robertson

There wasn’t much of substance in that going by the summary.

Newshub: Finance Minister Grant Robertson won’t cut ‘core’ spending if economy tanks

New Finance Minister Grant Robertson is backing up Jacinda Ardern’s view the economy has been a “blatant failure” when it comes to helping New Zealand’s most vulnerable.

Mr Robertson told The Nation on Saturday the “days of a hands-off, laissez-faire Government hoping for the best for New Zealand are over”.

“What Jacinda Ardern has said is if you’ve got the world’s worst homelessness, then the form of capitalism that we’ve seen in New Zealand isn’t working for those people – and I would agree with that,” he said.

“That’s the foundation principle of the Labour Party… we believe in the fact there is an obligation on Government to help ensure fairness, to make sure everybody gets a chance to achieve their potential.”

To fix it, he says Labour will lead an “active” Government “that partners in the regions with local government, with business, with iwi”. But he appears to want to avoid the ‘nanny state’ accusations that plagued Labour’s last administration under Helen Clark.

“That’s a different thing entirely from meddling and telling people what to do. We actually want to listen.”

“I came into politics to make sure that we provided better opportunities for New Zealanders, that we protected our most vulnerable. There are certain areas of spending that we must do to be a decent society, to care for other people. I would never compromise on that.”

He praised the National-led Government for continuing to spend during the global financial crisis.

“They made sure those core areas of spending carried on – that’s what responsible Governments do.”

Mr Robertson is confident Mr Peters’ “dark days” won’t happen.

“I don’t think we’re going to need to have that conversation.”

Winston Peters can’t be too concerned about the prospects for our economy either, given that his focus is overseas as Minister of Foreign Affairs, and he has negotiated $1b per year finding for Regional Development.

It’s very early days for Robertson – he has been Minister of Finance for two days – so we will have to wait and see how well he manages New Zealand’s finances. His past experience is largely irrelevant. He has time preparing for the role in Opposition, now he has the opportunity to pout into practice what he and Labour think will will work.

James Shaw on The Nation

James Shaw didn’t get Greens into a coalition deal as he said he wanted, and that leaves them outside Cabinet rather than ‘at the heart of a new progressive government’, but he is promoting the positives. Greens are in play in Government far more than they have been in the past.

He was interviewed on The Nation this morning.

“Obviously we’ll be talking to each other over the course of the coming days and weeks” says of his contact with Peters.

Shae, Julie Anne Genter, Eugenie Sage and Jan Logie will be the Green minister.

Actually Logie looks likely to be the under-secretary, Greens have three ministers.

“I think it’s a really significant step for us” says of the Greens holding the associate finance position.

Also significant that it looks like NZ First won’t have a Finance role.

Will the cannabis referendum be binding? “We haven’t worked through that yet”.

So a referendum in 3 years may be toothless?

Shaw says we can expect something that would satisfy the Greens on irrigation to be announced next week.

More when the interview and transcript is online.

 

Ardern on The Nation

Jacinda Ardern featured in an interview on The Nation this morning. She has successfully stepped up another notch or two in her leadership role, however like most politicians is adept at avoiding answering questions she doesn’t want to answer.

Notably Ardern indicated that the Labour policy on reducing immigration stands, meaning Winston Peters hasn’t got the major reductions he sought votes from.

From @TheNationNZ:

She says it will be an “active” government that won’t leave things to chance.

“There is synergy between those agreements” of the agreements with NZF and the Greens.

“I’m ambitious that we eradicate child poverty” expects families pkg will lift 10,000s of children out of poverty.

“You will see change in that area” on the minimum wage, raise to $16.50 as a first step.

“We need to get started pretty quickly” on Kiwibuild.

Where is the sweet spot on immigration? “Labour’s policy remains absolutely unchanged” by the negotiations.

Ardern says Labour wants to cease ongoing investment in irrigation scheme…

…but will leave existing irrigation arrangements in place.

Ardern says there will be a Climate Commission to guide the government, but not to bind them.

The climate change minister will not be in cabinet, but says it doesn’t devalue the position.

This will obviously be James Shaw.

“It’s for the Greens to explain why confidence and supply works for them” says Ardern.

Ardern says she’ll be reviewing petroleum block offers – it’s not where the future lies.

More when the interview and transcript is available.

The Nation: welfare, social investment and poverty

This morning on The Nation :

What’s the best way to provide for those who need help? and talk welfare, social investment and child poverty.

These are two MPs not generally to the forefront of election campaigning. Tolley is 11th on National’s list, Sepuloni is 8th on Labour’s. Both are electorate MPs.


Tolley talking about what the Government has been doing to improve help for beneficiaries, and what is planned to happen in April next year through their Families Package.

Sepuloni is doing little more than reciting Labour’s election lines, in line with what Ardern and others recite. Some of them quite are quite misleading.

The main points from al of the panel – Lisa Owen, Patrick Gower, Fran O’Sullivan and Sue Bradford – was the vagueness and stark lack of policy on welfare from a quite likely incoming Government led by Labour. Fairly scathing from all of them.

The Nation: Coleman v Clark on health

 

There will be a debate this morning on The Nation on health spending, between the Minister of Health Jonathan Coleman, and Labour’s health spokesperson David Clark. These two have clashed a number of times in Parliament.

Health is on of the biggest issues of concern to New Zealanders. In the latest Herald-ZB-Kantar TNS online survey of 1000 voters…asked which of eight issues was most likely to affect their vote:

  • Economy 25%
  • Health 16%
  • Housing 12%

You need a healthy economy to provide good health care (and housing).

Providing healthcare is very expensive. here will never be enough money to provide all the health care wanted. Governments have to balance health spending against need and against other spending demands.

Labour have claimed that health funding has been effectively cut.

Stuff: Frustration, disappointment over health funding in Budget 2017

Patients and healthcare workers say they have been left frustrated and disappointed by “inadequate” funding for health in the 2017 Budget.

They said the Government’s announcements on Thursday would not go nearly far enough in addressing concerns about overworked staff, access to new medicines, and access to mental health treatment.

The Government said total health spending would be a record $16.77 billion in 2017/18 – an increase of $879 million, with an overall increase of $3.9b over the next four years.

However, the record claim does not take inflation into account, and sidesteps the fact that almost half the spending will go toward mandated wage increases as part of the pay equity settlement.

Budget 2017: Health funding to record levels with $1.7b injection to DHBs 

A strained health sector is set to receive a record $3.9b shot in the arm, with $1.8b going to District Health Boards (DHBs) alone.

While DHBs funding is above the $1.7b figure Labour claims has been stripped out of the health service, the Council of Trade Unions is warning the devil is in the detail.

The increase to DHB funding has built on previous years – going up to $1.8b across four years, up from $1b last year. As a yearly figure, DHBs will get $439m, up from last year’s $400m.

 

Labour’s capital gains tax plans

Labour’s campaign plans for a Capital Gains Tax seems to be to say how bad a lack of a CGT is, but not admit the intention to introduce one once they are leading government.

Housing spokesperson Phil Twyford on The Nation:

Lisa Owen: So is it Labour’s goal to get it down to that – about four times?

Phil Twyford: We want to stabilise the housing market and stop these ridiculous, year on year, capital gains that have made housing unaffordable for a whole generation of young Kiwis.

Lisa Owen: But in essence, you’re going to drop the value of houses, if you want them to be four times the price of the average income.

Phil Twyford: Well, we’re going to build through KiwiBuild. We’re going to 100,000 affordable homes.

Lisa Owen: I want to come to KiwiBuild in a moment. I just want to talk to you about the price.

Phil Twyford: That will make housing affordable for young Kiwi families. That’s our policy.

Lisa Owen: Well, do you need a capital gains tax to get that threshold down to where you would want it to be?

Phil Twyford: Well, we are going to shift the goalposts by taxing speculators. So under our plan, if a speculator sells within five years—

Lisa Owen: Yeah, that’s the bright-line. I am asking you about capital gains – a bit of a sensitive issue for Labour.

Phil Twyford: Not a sensitive issue at all.

Lisa Owen: So do you think we need a capital gains—?

Phil Twyford: If a speculator sells a rental property within five years, they will pay income tax on the capital gain.

Twyford keeps referring to taxing speculators. He must know that speculators and property developers who by and sell property with the intention of making a capital gain are taxed now.

From Inland Revenue “If you’re selling a residential property and one of your intentions when you bought the property was to sell it, then you’ll have tax to pay on any profit you make from its resale.” – http://www.ird.govt.nz/property/property-selling/selling-property.html

The bright line test (currently two years, Labour say they will increase it to five years) just makes it easier for IRD to enforce taxing capital gains.

Lisa Owen: Yeah, we know about the bright-line. What we don’t know about is a capital gains tax. So do you think that you need a capital gains tax to get house prices down to the ratios that you think are right?

Phil Twyford: Well, we think comprehensive tax reform is overdue in this country, not only to tilt the playing field away from real estate speculation

Lisa Owen: Last chance – capital gains tax?

Amy Adams: Answer the question, Phil.

Phil Twyford: In the first three years, we’re going to do a tax working group that will redesign the entire tax system.

So Labour are campaigning on “redesign the entire tax system” but generally avoid saying whether their intention is to include a more comprehensive capital gains tax.

The lack of pre-election clarity on Labour’s CGT intentions continued on Q+A yesterday. Grant Robertson repeated how ‘transparent’ Labour has been, and said Labour “won’t shy away from hard decisions”, but refused to be transparent about their intended decisions on a CGT.

Grant Robertson: It’s also about cracking down on speculators. We have to make sure that if someone’s flipping their third or fourth property within five years of of buying it then they’ll pay tax on that.

I would be very surprised if that example wasn’t already covered by current tax law and  IRD now. See Property tax decision tree – Is your property sale taxable? “To work out if the property you are buying or selling is taxable”.

Grant Robertson: “We’re saying that we’ve got to take some action both in terms of cracking down on speculators, building more affordable homes, and we will get better balance in our housing market.

Corin Dann: A capital gains tax. You need to clear up for us what exactly is the position here, because it’s, what’s going? Is there going to be a capital gains tax within side the next three years if you’re elected.

Grant Robertson: So we’ve been absolutely clear. We’re going to this election with a policy that says that if you sell off an investment property, not your family home, within five years, you will pay tax on that. That’s building on a form of capital gains tax that Steven’s government’s introduced.

What we’ve then said, and I’ve been saying since 2015, is that we will have a working group that will look at getting a better balance into our tax system, between how we tax assets, and how we tax income.

Labour wants ‘a better balance’ – that is, a change.

Corin Dann: Would you seek a mandate for that capital gains tax?

Grant Robertson: Just as the working group that Steven had in 2010, didn’t go back to the election and then increased GST, which he’d campaigned against, we will look at the outcomes of that.

It seems clear that Labour has intentions to introduce a more comprehensive CGT if elected (if the working group they appoint recommends it), before the 2020 election.

Corin Dann: That’s a change from Andrew Little.

Grant Robertson: It is a change from Andrew Little.

A significant change. In 2015 Little told The Nation: “Well, we won’t introduce it in our first term, and we won’t introduce any change that significant to the tax system, any material change to the tax system, without going to the people first and getting a mandate to do so.”

Grant Robertson: Let me be absolutely clear about this. We have a housing crisis. We’re not going to sit on our hands for years, the first term of government and not do anything about that. I want the experts to talk to us about that.

Steven, is it right at the moment that someone who goes to work every day, pays tax on every cent of their income, that someone who flips a property after owning it for three years doesn’t tax on that property?

Steven Joyce: Well actually…that’s actually taxed now. So there’s the news for you Grant, if someone actually buys a house, gets an income…

Grant Robertson: Why did you put a bright line test on it then?

See Govt to tighten tax on capital gains (RNZ)  on the budget announced in May- “Capital gains on residential properties bought and sold within two years will soon be taxed by the Government. Unlike the current regime, the new test will not rely on proving a seller’s intent to make a capital gain.”

Steven Joyce: That’s the absolute minimum, under the New Zealand law right now if you’re buying and selling houses for profit you must pay tax.

You know that’s not happening…

Steven Joyce: Well actually it is happening now, that’s the truth, if you go and have a look at Inland Revenue that’s the case.

But coming back to your point. So you’re saying a capital gains tax, is that on unearned capital gains? So when the value of somebody’s business goes up, or somebody’s farm goes up, this us why you don’t want to talk about it…

Grant Robertson: This is why we’re doing a working group.

Steven Joyce: I get that. So that’s why you don’t want to talk about it.

Grant Robertson: This is why…because we’re not going to shy away from the tough challenges.

Steven Joyce: So it could be on the business.

Grant Robertson: We’ve been absolutely clear. If we ever put a capital gains tax on it would not apply to the family home, but right around the world people do this to stop speculators in the housing market.

Turning to Joyce.

Corin Dann: Is it an equity issue, is it a fairness issue? People have made an enormous amount on capital, and income earners, the vast bulk of the population who are earning wages are not seeing anywhere near the gains of capital.

Steven Joyce: In terms of capital gains tax the answer to that question is it depends on what it is. If it’s an unearned capital gain, which is actually what a comprehensive capital gains tax is, ie if your house price goes up in value the tax man sends you a bill, or if it’s your business goes up in value the Tax man sends you a bill, or if your farm goes up in value the tax man sends you, that’s what a capital gains tax is about, that you get taxed on capital gains.

Corin Dann: So how is it that the OECD, the IMF, Treasury, the Reserve Bank, just about every mainstream economic organisation you can think of says New Zealand has needed a capital gains tax for years.

Steven Joyce: Yeah but they want it on the family home. That’s what they want.These are the theoreticians saying tax the family home, and tax them on the unearned capital gain every year, so you should get a bill at the end of the year, if your house has gone up a hundred thousand dollars you should get a bill for thirty thousand dollars or whatever your tax rate is for that unearned capital gain.

That’s never going to fly, Grant’s acknowledged that, but what he isn’t telling people…

Grant Robertson: exactly because we’re not proposing that.

Even if Labour’s working group recommends it.

Steven Joyce: …he’s not telling people whether it would go on their business or on their farm or on their second house…

Corin Dann: Well lets clear that up because it will come up.

Grant Robertson: What we want to do is to address the fact that we’ve got a huge imbalance in our tax system between hardworking people who go to work every day and pay their taxes and people who are speculating in the property market who don’t. We’re going to get the experts in. We’ve been transparent about this…

Steven Joyce: Have you ruled out small businesses?

Steven Joyce: Are you going to rule out small businesses?

Grant Robertson: …we’ve been transparent about this from the very beginning. In 2015 I announced that we were going to be having this working group. What we’re not prepared to do is shy away from hard issues, and that’s what Steven and his Government have done for nine years.

Steven Joyce: Are you saying that you won’t be taxing small businesses on their capital gains?

Grant Robertson: We are focussed on the speculation in the housing market.

Steven Joyce: Is that saying you won’t…

Grant Robertson: We’re focussed…because I actually want to listen to the experts

Steven Joyce: …so you won’t do farms?

Grant Robertson: I don’t want to shy away from these tough issues…

Steven Joyce: …will you do capital gains on farms?

Grant Robertson: This is about speculation in the housing market.

Steven Joyce: No I don’t think it is, because he’s refusing to rule it out.

 

 

Robertson keeps pushing for tax on property speculation, which is already taxable, but keeps refusing to say whether they will widen tax to capital gains on businesses.

Despite Roberton’s assertions that Labour is being transparent and won’t shy away from ‘the hard issues they are very shy about saying what sort of capital gains tax they want to introduce next term if they are in government.

I expect this to keep coming up through the campaign. Jacinda Ardern will need to be well prepared on this or Bill English will hammer her and Labour on CGT.

 

Tax is likely to be a key election issue

There have been major distractions in politics over the last two weeks, with the fall of Andrew Little followed by the euphoric rise of Jacinda Ardern, plus the self destruction of the Greens which included the end of two MPs and the effective end of Metiria Turei’s political career.

Amongst that earlier this week there were two polls that showed a shrink in support for the greens and NZ First, and the likely return of a head to head battle between National and Labour.

And in a debate on The Nation yesterday between Steven Joyce and Grant Robertson the battle lines were drawn.

Robertson: So, under Labour’s package, every family earning $62,000 or less will be better off than under National’s package. What I don’t want is for Steven and me to get a $1000 tax cut when we’ve got families living in cars and garages, when we’ve got a health system that’s not coping. What we’re saying is we’ll get the money to the families in need, but we’ll get the money that Steven wants to give to us as tax cuts – to wealthy people like us – we’ll get that money, and we’ll make sure it’s invested in public services that have been run down.

Joyce: Well, it’s not actually about me – or about Grant, actually. It’s about those people who are on the median wage who are currently facing a 30-cent-in-the-dollar tax rate, and we have to change that. And the only way we change that is shifting the thresholds. Now, Grant’s allergic to actually reducing taxes and allergic to adjusting thresholds. He’s about increasing taxes.

Labour have pushed the anti-tax cut for rich people since National’s tax cut package was announced in the budget in May.

But it doesn’t just reduce tax or ‘rich people’, it reduces tax for all workers who pay PAYE:

Increases the $14,000 income tax threshold to $22,000, and the $48,000 threshold to $52,000. This provides a tax reduction of $11 a week to people earning $22,000 or more rising to $20 per week for anyone earning $52,000 or more.

https://www.budget.govt.nz/budget/2017/family-incomes-package/index.htm

That’s $1,000 less tax per year for everyone earning over $52,000 (affecting ‘rich people’ of course but also the majority in wage earners).

Of all the polices announced this one directly affects me the most. Labour would scrap it, and that has to be a significant factor in deciding who to vote for.

More on possible tax changes;

Lisa Owen: Capital gains tax — are you ruling it out in the first term absolutely, if you’re in in the first term?

Robertson: We’ve got a tax working group. I can’t pre-empt what they’re going to come back and decide.

Lisa Owen: So you can’t rule it out? Could come in the first term?

Robertson: I can’t pre-empt what that group says, but here’s the important point — right now today we have something called the bright-line test that the National Party brought in. It says that if you sell a house that’s not your family home within two years, you’ll pay tax on it. Steven has a form of capital gains tax.

Lisa Owen: I’ll give you the chance to talk about your policy, Mr Robertson. So a capital gains tax is still on the table? You’re not taking it off?

Robertson: What we’re going to the election with is a commitment that if you sell a property that is not your family home within five years, you’ll be taxed for that.

Robertson clearly avoiding stating a position on a Capital Gains tax, something he has favoured in the past but Little took off the table. It appears to be under consideration again.

Joyce: I think there’s a problem there for the Labour Party, because they’re dodgy on tax. They’re refusing to say about the capital gains, they’ve mentioned a water tax last week, but they won’t tell us how much it is, and then, of course, they’ve got a regional fuel tax they won’t talk about where it goes beyond Auckland.

Expect National to hammer the uncertainty over what additional taxes a Labour government could implement.

Labour are trying to avoid details by deferring to a future tax working group (on CGT) and an ‘expert panel’ (on water taxes).

Lisa Owen: So top tax rate — can you rule out lining yourselves up with the Greens and having 40 cents over 150 grand? Are you going to go for that?

Robertson: No, I don’t think we will be going for that, but what we will do…

Lisa Owen: …but you are not ruling out raising that tax rate.

Robertson: I’m not ruling it in; I’m not ruling it out.

On a water tax:

Lisa Owen: What about your water levy? What’s that going to be?

Robertson: The water levy? Look, what we’ve said there is for every thousand litres of water that’s used in irrigation, perhaps one or two cents.

Lisa Owen: One or two cents. There you go, Mr Joyce. That’s not going to make a huge difference, is it?

Joyce: This is the problem is that he’s not telling.

Robertson: One or two cents, Steven. How big a difference?

Joyce: Well, hang on. Don’t ask me; ask the farmers, because I’ve seen some figures that even at those levels, you’re talking about 50,000 a year per farm. So I think it’s beholden on the Labour Party to actually come a bit more clean on their tax stuff, because they’re being very dodgy.

Robertson: We’ve been completely upfront.

Joyce: You haven’t, actually. So you’ve got a water tax that you won’t tell anybody—

On the Panel discussion on The Nation:

Patrick Gower: I actually think that Grant Robertson probably got in a few more jabs in…however in terms of actual overall damage I think some of the talk about tax there that Steven Joyce, in terms of long term damage beyond the debate, in terms of that capital gains tax is back on the table.

The capital games tax is back baby. Labour were going to go to the next election with that, but that could come in next term.

Lisa Owen: Jane, are they doing themselves a disservice by not putting numbers on stuff now.

Jane Clifton: Absolutely. They’re their own worst enemy. This week alone with the water tax issue, because finally we’ve got a figure for irrigators and wineries and so on of one to two cents, although David Parker said three.

…but yeah, just get your ducks in a row, announce them all, don’t leave room for speculation about $18 cabbages and $70 on a bottle of wine…

The Newshub video cut Gower off at the end, but he pointed out a significant power shift in Labour. When Andrew little took over the leadership in 2014 he put a number of Labour policies on ice, including the CGT.

But with Little dropping to the ranks and Ardern taking over the leadership Gower said that this meant also a significant rise in influence of Robertson – he and Ardern have been close allies for a long time. We are already seeing glimpses of what that may change in Labours tax policies.

Gower followed up on Twitter:

So expect tax to be a prominent issue in the election.

It may have a significant effect on the outcome of the election. Labour will need to be much better prepared for the inevitable attacks from National.

Ardern will need to be well prepared for the leaders’ debates with Bill English. She will likely have a ready response to a ‘show me the money’ type line (Key used that to devastating effect against Phil Goff in 2011), but she is likely to get challenged over and over if she remains vague of what taxes a Labour government may impose or increase.

And tax could also have a significant impact on the outcome of coalition negotiations. Both Labour and National will have to try and find enough partners to support their tax (and spending) plans.

Personally a water tax or a CGT or a fuel tax in Auckland won’t affect me.

But I will be seriously taking into account whether National’s income tax cuts might be reversed or not when I decide who I will vote for.

The Nation: Joyce v Robertson on Finance

The election campaign is getting serious – there will be a debate between the Minister of Finance Steven Joyce and Labour’s finance spokesperson Grant Robertson on The Nation this morning.

This could define National’s approach to combating the resurgence of Labour, and also give us an indication of how well Robertson grasps economic issues.

A key difference on tax.

Robertson says Labour wants to target those who need help the most and it is wrong to give tax cuts to high earners.

Joyce says that Labour’s policy will give ‘baby bonuses’ of $3,000 to high earners and won’t give anything to middle income earners.

I don’t think either argued their tax policies clearly enough, but this is likely to be a big election issue.

There’s a lot of debate about whether the Government is cutting expenditure on health and education, something Labour have pushed for a while, but Joyce claims otherwise. A lot of numbers quoted.

Tax and spending policies can’t be finalised yet.

Until that comes out the amount of money available can’t be finalised. Robertson won’t commit to not raising income tax rates.

Scoop has the transcript: http://www.scoop.co.nz/stories/PO1708/S00249/the-nation-economy-debate.htm