The Minister of Broken Promises
Grant Robertson has now broken his clear promise not to extend the bright-line test.
An extended bright line test is a capital gains tax on housing. And because Robertson’s version of the tax is charged at a rate of up to 39 percent, it’s one of the harshest capital gains taxes in the developed world.
Housing investors will get around an extended bright line test by simply holding their properties for longer. That’s terrible for home buyers, because it means less liquidity in the market. In fact, it can drive up prices as more buyers bid for fewer homes.
The Government’s other big housing announcement was to remove interest deductibility for rental properties. This makes it even more costly to be a landlord, with economists predicting significant rent hikes as a result.
It gets worse: industry insiders are predicting the Government will respond to rent hikes with rent control – a policy that Swedish economist Assar Lindbeck, who chaired the Nobel prize committee for many years, once declared is “the best way to destroy a city, other than bombing.” The Government has refused to rule out this policy.
The Government is pushing through its tax changes in a matter of days without a select committee process. Tax policy is notorious for its unintended consequences, meaning it deserves proper scrutiny.
However, one result of the tax change is easily foreseeable: the Government will collect more revenue. Probably between $500 million and $1 billion more.
The tax changes have been sold to New Zealanders as a tool to rebalance the housing market, not as a revenue gathering exercise. So why is Grant Robertson keeping the extra cash?
A sad number indeed
Megan Woods rightly copped flack for boasting about how her $400 million “Progressive Home Ownership” scheme has housed a total of 12 families.
But now Carmel Sepuloni is giving Woods a run for
her our money. The $50 million Māori Trades and Training Fund has assisted just four people into work. That’s $12.5 million per job.
It’s fallacy for the Government to think it can spend its way into job creation. A more effective approach would be to ease off on the taxes and regulatory barriers that make employers less able and willing to employ (and train) staff.
We caught a Council harvesting submissions from school children
Your humble Taxpayers’ Union can reveal that Hamilton City Council staff members have been visiting classrooms and harvesting submissions from children on the Council’s Māori partnership strategy.
We were contacted by a Hamilton ratepayer who was surprised to discover the name of his 13-year-old daughter among the publicly-listed submitters for the Council’s ‘Pillars of Wellbeing’ strategy.
It turned out that the student and her classmates at Rototuna Junior High School were visited by a Council staff member who spoke to them about the proposals, and prompted the children to fill out forms which were then processed as formal submissions.
The Council has mentioned these school visits to media previously, but until now it wasn’t clear that the goal was to harvest submissions from school children.
This propaganda campaign had a big effect on total submissions. A Council meeting agenda reveals that 20% of submissions on the strategy came from children below the age of 16, and a further 7% from 16-19 year-olds:
This is a local council rigging its own consultation process in the most cynical way imaginable. We all know that children will happily fill out a form without a second thought if it means they can get out for lunch.
It’s also a gross violation of parental rights. Parents were not asked for their consent, or given any opportunity to request the presentation of an alternative viewpoint to the one being pushed by the Council onto impressionable students. This was an explicit and direct campaign to bring politics into the classroom, that discredits not just the Council’s consultation methods, but its ethics.
Hamilton City Council is quackers
Now for a less serious story about the same council:
Using an official information request we have obtained a photo of Lego ducks created by Hamilton City Councillors during a Council meeting.
Yes, this is a real photo of something that really happened at a Hamilton City Council meeting.
Dr Damien Puddle consults to the Council as a “local play advocate”. One of his first acts was to have ten members of a Council Committee make ducks out of Lego. As you can see, only a couple are even vaguely duck-like.
Worse, Dr Puddle says he has made a further 41 Council staff create Lego ducks by way of ‘introduction’ (his words).
Meanwhile, Hamilton is facing a proposed rates hike of 8.9%. Priorities!
WorkSafe’s $400,000 meerkat endangers taxpayers
On Sunday the Herald reported that WorkSafe spent $400,000 of your money on animated meerkats.
If only someone at WorkSafe was looking out for the safety of the poor old taxpayer.
The meerkats are mascots for the “You Can Sense It, You Can Stop It” safety campaign, which cost $2.7 million in total. Here’s one of the campaign ads.
Big ad agencies know that Government departments have deep pockets, so they naturally pitch their grandest, most out-there ideas that are lapped up by bureaucrats keen to be “cutting edge”.
Call us philistines, but we don’t think Hollywood-level production is needed for a health and safety ad.
$2 billion for SkyPath?!
Government reports reveal no more steel can be added to the Harbour Bridge. Despite that, the SkyPath cycleway scheme refuses to die.
The Automobile Association say they understand the Government is considering rejigging SkyPath as a standalone bridge running parallel to the existing one. The expected cost: $2 billion – that’s $1,800 for every Auckland household!
The SkyPath agenda has become completely out of control. SkyPath devotees are welcome to develop new ideas, but they should do it without our money. SkyPath was originally pitched to Aucklanders as a self-funding, private initiative.
Here’s a timeline of the increasing SkyPath budget:
- 2010: $16 million, privately-funded
- 2015: $33 million, privately-funded and underwritten by Auckland Council
- 2018: $67 million, Government-funded
- 2020: $360 million, Government-funded
- 2021: $2 billion, Government-funded
You’d have to hate yourself to commute using this new $92m train service
The $92 million Te Huia train service opened by the Prime Minister last week is claimed to “transform the journey of Waikato commuters travelling between Hamilton, Huntly and Auckland.”
Let’s see whether it’s possible to commute from Hamilton to Auckland using this train service. The following itinerary is based on already-announced timetables and fares.
4:30am: You wake up to your alarm blaring in the suburbs of Hamilton. Your day is already off to a bad start.
5:30am: Your commute begins. You drive to the Frankton train station.
5:46am: You board the train in the nick of time. The carriage is empty. Thanks to a massive taxpayer subsidy, your fare is only $17.
7:25am: You arrive in Papakura, after 98 minutes on the train. That’s more than enough time to watch the 1996 Ewan McGregor classic Trainspotting. But your commute is not over.
7:36am: You transfer onto Auckland Transport’s Southern Line. Hopefully you’ve got a HOP card. Your fare is $6.80.
8:43am: You arrive at Britomart station 67 minutes later. That’s enough time to watch 12 episodes of Thomas the Tank Engine.
9:00am: Three and a half hours after you left home, you arrive at the office. You receive a formal warning for being half an hour late to work.
8:15pm: You finally arrive home in Hamilton. Your total commute was seven hours. You spent $47.60. By the end of the week, that adds up to 35 hours, costing $238 – the same amount you pay in rent. Taking into account the contribution of taxpayers, the real cost for the week is over $1,000.
9:00pm: You crawl into bed after a microwave dinner. You are sad, you are poor, and you are so, so tired.
Conclusion: Anything is possible if you hate yourself.
I joined RNZ’s Morning Report to discuss why this project will be an expensive flop, with a massive per-passenger subsidy.
Timaru Mayor should put his shirt back on
Timaru Mayor Nigel Bowen has had a topless photoshoot, splashed in a council-funded full page ad in yesterday’s Timaru Herald:
Perhaps going topless was an attempt to show solidarity with Timaru ratepayers who are being asked to give the shirts off their backs with a ten percent rate hike.
It may be a funny ad with good intentions, but we don’t think Mayors should be using council funds on ads that boost their public profiles and re-election chances. Imagine if the Prime Minister put her face on the official COVID-19 posters. That would be an abuse of her position, and the same principle applies to local government.
The Mayor defended the ad in the Timaru Herald by saying the ad was funded through the Government Waste Levy (i.e. taxpayers), not Timaru ratepayers. Sorry Nigel, but that doesn’t make it any better!
All the best,
New Zealand Taxpayers’ Union