NZ Green Party
Podcast: Taxing Investment Properties

New Zealanders love their houses and love investing in them. In fact, we borrow more money to invest in houses than we do to invest in business or agriculture combined. As Bernard Hickey tells it, “New Zealand doesn’t have an economy as such. It’s a housing market with a few other things tacked on.”

Why is it that we have such an unbalanced economy and how can we fix it? Here’s an interview with Green Party Finance Spokesperson Russel Norman on this and all the recent talk about a possible new tax on property.

Click to play (10:37 mins):

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51 thoughts on “Podcast: Taxing Investment Properties

  1. Nothing to add to this. Russel has it nailed down. The only problem is hitting Key with a meteor shower.

    BJ

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  2. Because the lower paid and first home owners can’t afford a house we import people who can; the rest can stay servile “m’lord“.

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  3. jh – following on from your red/green quip this morning…would you clarify for me, just what it is you believe that someone calling themselves ‘green’ should believe and do?
    Cheers
    green fly

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  4. No chance of that my Dear Fly – jh says Greens are the modern Communists, working against society. He is instructed to carry this line regardlesss of logic, and when caught in a Lie he posts a neutral cut and paste job.
    The most pernicious of Moles – keep the Rat-suit handy….
    regards mark

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  5. Surely, e hoa, the free-wheelin’ jh will address my simple question and clarify his thoughts? ‘Green’ means something, 4sure, to him. I know it does to me. Jh won’t let me down, I’m confident.
    If jh claims we/I/commenters here aren’t ‘green’, he’ll have a clear idea of what is..

    … jh?

    Like a field of corn…
    or a basket of sproutin’ spuds…

    (Though blind and prone to stumbling, moles are widely respected by all at Toad Hall, but is ours a True Mole, or some other subterranean crawler, apea…he noke e okeoke ana ia?)

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  6. I’m no economist but I’ve heard of Supply and Demand.
    1)They’re not making anymore land.
    2)Godsown is the place to be.
    CGT wont change either (unless you’re a property investor).
    Russel said in podcast that CGT (by itself) wont change the market. If there are more people moving to NZ than leaving then the demand goes up. It’s all related to population.

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  7. BJ,

    Heap to add, unfortunately the CGT is not the silver bullet, nor is the abolition of LACQ companies.

    I wont be selling rental properties so no CGT to pay. When I do the property is a listed asset of a company. The company is sold, not the house. So still no capital gain tax payable.

    Abolish LACQ will only effect PAYE tax payers. As a multible business owner, losses from one company are offset by gains made in another.

    Why discriminate agains the poor PAYE tax payer?

    Remembering that this tax regime was set up by the government as a cheaper way to fund state housing replacement and remove owning housing property from the public purse.

    The only way to prevent a housing bubble is to have a greater supply then demand of housing units.

    The Greens will no doubt advice the government to build cheap state houses. Well if you can build a unit (house, section and subdivision cost) for $200K, great. I’ll buy one and sell it the next day for $400K (plus pay the tax on that income). Unless you are going to keep them in state ownership in which case home ownership will still be as unachieveable as now.

    Your cheap house will be worth the market rate the minute it passes into private ownership.

    With 10 years of deficit budget ahead of us (remember we are borrowing $400M a month just to keep the country in the manner it thinks it is accustomed to), do you think the New Zealand economy can afford to build cheap houses? Where will the funding be coming from?

    Unfortunately I dont see the way how one could ever afford to buy a property these days. I know my kids struggle to get the deposit together.

    Russel goes on about investing in the tradeable sector. Yes we all want that but where would you place your hard earned money?

    It is a point that the much refered to Bernard Hickey never mentions. There simply is none (stockmarket is too small, finance companies are dodgy, government bond and bank deposits pay very little interest).

    I’m in business and could expand by buying more machinery and employing staff. But with the $250K required to be borrowed would I be better off buying new machinery or another rental property?

    Answer is quite clear. Rental property is still the best.

    I wanted to hear from Russel how he would he would incenticize (sp?) me to buy a new CNC lathe versus a rental property.

    I did not get any of that. Thus the message is lost.

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  8. The rental property capital gains tax should be in the form of a land tax payable each year and deductable against any CGT liability when the property is sold.

    As for incentives, new property should be free of land tax for the first 5 years (to encourage new building).

    The money raised by the land tax/CGT placed into new state house building.

    To encourage investment in the wider economy there would need to be policy to lower the dollar (to make investment in exports viable) and to reduce tax on interest income. This can be done by a surcharge on mortgage – say 1% to 2% as set by the RB Governor. This would enable a lower OCR and thus lower dollar.

    A lower OCR would adversely impact savers so the money raised by the surcharge should be used to reduce tax on interest income (the policy objective should be to ensure that people receive an after tax return higher than inflation). There are two options – only apply tax on interest rate (income) above the CPI, or to simply reduce the withholding rates down to 20% in place of 30 PIE/38%, 15% in place of 30%and 10% in place of 19%, which should realise the same purpose.

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  9. SPC,

    A land tax is still beating the housing sector with a stick without producing a carrot for tradeable incentives.

    You would need to spell out quite clearly how the value of the property is set to base the land tax on. Currently the market value of any property is way below the QV value.

    I dont know how you would feasably ringfence residential housing only for the tax. There would be so many loopholes (commercial units with accomodation of which there are hundred in East Tamaki alone would be one way) that one can easily avoid the tax.

    In which case you would need to do it on all property. Not a good incentive for someone like Fisher and Paykel to build a multimillion dollar factory and pay tax on. Why build in New Zealand when Veitnam, Thailand, etc. actually pay tax breaks to set up production there.

    The money raised by the land tax/CGT placed into new state house building.

    Does not make housing more affordable. Will see BJ paying the state as a tenant instead of a private landlord. Still wont make his dream more achieveable.

    A surcharge on morgages will kill any new SME business. Most of whom are funded by borrowings against the operators home. Have a look at who employes the most people in New Zealand and why would you make it harder for that sector to finance their endeavours.

    To channel that money back again in way of tax cuts is very much like FFW. Why tax in the first place and then give a little back. Keeps state servants employed but adds nothing to the tradeable sector.

    The NZL dollar in only high against the US dollar because the US dollar is weak. Check against the new world currency of the Euro and it basically flat lines. It is much more relevant to track it against the Chinese currency as that is where to market and money will flow from in the future.

    I’m actually looking forward to see what the new tax review report has to say. I have a feeling that CGT will not be in there as it has absolutly no impact on the housing bubble.

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  10. The question is really about party policy Greenfly, which is the result of a membership which tends to be unrepresentative of the general green population. For example while 88.7 voted No in the recent referenda just about everybody in the Green Party was of a similar mind to Sue Bradford and voted “Yes.
    I know many people who say things like “life wasn’t meant to be like this” and just want to live day to day and enjoy the simple things of life but they aren’t into a radical political/social situation where (for example) a tangata whenua are kaitiaki of the foreshore and seabed for eternity and neither are they rampantly anti capitalist (ie they are in the middle on that- where the Greens aren’t).
    Incentivising birth is another issue when you would expect a “green” party to be cautious here they act as advocates (having a membership heavily drawn from beneficiaries groups. Objectivity not advocacy is what you would expect of a green party. Unfortunately “green” (environment) is conflated with “world-wide Green Movement”… it’s in the fine print at the bottom.

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  11. Jh- from what you write, all I can find that adresses my question is that you believe that a ‘green’ would want,

    to live day to day and enjoy the simple things of life

    that they would be objective .

    Is that your answer?

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  12. Nope. I asked you to provide your definition of ‘green’. You are forever telling us that we are not green, so it is beholden of you to make it clear what you think it is, (without reverting to pontificating over what you think it isn’t).

    Are you dodging and weaving?

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  13. you seem to have a better idea of what you mean by “green” so you go first.
    Presumably your point is a green is a member of the political party that calls it self the “Green Party” whereas I mean an environmentalist or (at least someone who is concerned/ values)

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  14. For example while 88.7 voted No in the recent referenda just about everybody in the Green Party was of a similar mind to Sue Bradford and voted “Yes.

    You know this how? I suspect that a significant minority of Greens voted “No” and not because they were confused.

    Not arguing your other points but this one jumps out as something you can’t have a clue about. This forum is NOT entirely representative.

    Have you ever attended a meeting of Greens where this was even discussed (or the topic carefully avoided)? I am quite sure that I have better clues than you do, and I would be loathe to claim I KNOW what Greens did collectively.

    respectfully
    BJ

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  15. For Wkipedia:
    1.Green has become the symbolic color of environmentalism, chosen for its association with nature, health, and growth. 2.The Green Party is any of various political parties emphasizing ecology, grassroots democracy, nonviolence, and social justice.

    green (to me) is definition one. the other is arbitrary (a chimera) although Green Party stalwarts would argue that they merge seamlessly together. The degree to which a Green party is “green” might be reflected by the degree of people who are genuine ecologists as opposed to leftists.As someone said on TV “these are the “red greens” (ie that is the common perception).

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  16. Gerrit, remember Russel said a capital gains tax was one of a suite of measures the Greens are proposing to address a possible future housing bubble.

    It seems to me our conspicuous absence of a capital gains tax needs addressing immediately. As Professor Len Burman has recently about our situation, “With a 38 per cent top income tax rate and 0 per cent capital gains tax rate, a tax shelter that could transform $1 million of ordinary income into capital gain is worth up to $380,000 to create. That is why geniuses who might otherwise do productive work have been drawn into financial engineering.”

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  17. jh – I’m taken-aback that you’ve had to go to Wikipedia to find your definition. I imagined you’d have sorted out your thoughts long ago.

    I take it then, that you believe that a ‘green’ should be an environmentalist. Full-stop.
    The Green Party should consist of:
    genuine ecologists.

    I wonder how you think we might engage in any issues other than ‘ecological’ ones?

    Yours is a very, very simplistic view, jh, and one that, if I may say, lacks much semblance of balance.
    It’s little wonder you are constantly tied in knots over Green Party decisions.
    Perhaps politics is the wrong field for you to be commenting on.

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  18. frog,

    That is the nub of my question, what is the “suite” being proposed?

    While the erstwhile profesor is right, my question remains. Where would you have put your money?

    There was absolutely nowhere where the return were greater.

    See if you want to “sell” the idea of a CGT you need to have the whole tax caboodle sorted otherwise the “customer” (voter) will see it as another rort to empty their pockets.

    Same goes for the ETS. Unless you signal how you will leave some money in the pocket of the voter to put bread and jam on the table, the voter is going to be unlikely to vote for it.

    That report that jh refered to has the final line that is the most important.

    it is not the collecting of land tax that is the problem, it is the distribution. That is what I would like to see adressed.

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  19. Yes Gerrit, and I don’t mind the people who are doing it as a profession. You’d be paying tax if you were flipping them, you pay tax on income and you are smart enough to keep the Real Estate salesman honest.

    However, it is specifically the guy who does this as an accounting gimmick on the PAYE scheme, who needs to be stopped.

    The most recent rort was that they used their trusts and LAQC claims to collect from Working-For-Families. The papers reported the top end, where people who had no business claiming taxpayer assistance with 150K and up of income, were claiming something, but there would be others more numerous, who were simply claiming much more of the WFF money. Not reported.

    The reason to discriminate against the “poor PAYE tax payer” is because I AM one of those people.

    So are a lot of other people who would like to buy a house to LIVE in but who find that the prices have been driven up by people who are using this “investment” tool to outbid us and we, by paying a higher effective percentage of tax, are SUBSIDIZING them in the process… AND that money is going overseas because that’s where the banks are.

    The “market rate” is whatever the fair free market would set. This is a subsidized market, a twisted and distorted market, and removing some of the distortions has to count as one of the better ideas the Greens have.

    To the extent that supply is not meeting demand, the price has to rise, but there are limits to this as well. There is no fncking way that people in this country can afford to pay 50% of their yearly wage for a house mortgage… but they COULD do that if they rented the house out, because the mortgage interest was deductible, and there is no Capital Gains when they sell the house.

    Moreover, they have a large incentive to sell it and trade up to a more expensive house, also for renting, as this allows them to make gains in their net-worth and keep deducting large amounts from their actual income.

    Finally, there is the issue of money availability. This is the thing that trashed the US and UK markets. We STILL have money flowing into this country looking for high interest returns, and the ability of Dr Bollard to reduce the cash rate and stifle the high dollar and the carry-trade is limited almost entirely by the fact that a low interest rate will make even more money available for housing mal-investment. This is not going to go away.

    The balance that will be struck in an honest market will see SOME private ownership increases… not everyone in a privately owned house. It will see prices based on supply and demand, NOT on the wishful thinking of someone who is getting a free ride from the tax man.

    That is another way of saying that properties did not NATURALLY go up 100% in seven years due to “supply and demand” Gerrit. There was stuff-all immigration in some of those years but the prices kept on at +15% each year. They have to come back down from these rarefied heights and there is only one way I know of to make that happen. It has to be a clear and unambiguous signal from the government that housing is no longer getting favors from the tax man.

    Moreover, this was NOT about doing just the one thing and expecting everything to be “all better now” because the supply-and-demand issue is also real. To paraphrase Twain, “First God made idiots, but that was just for practice, then he made City Councils”.

    We screwed up supply by building a whole decade worth of garbage housing under the rules that allowed the “leaky homes” debacle. That is (as far as I am concerned) a whole decade worth of housing that is uninhabitable, wasted money and labor, and units that would better be scrapped than trying to fix the problems.

    Worse, because people here are encouraged to be irresponsible (it is the council’s responsibility to certify that the home is built properly and in good repair !!??), we taxpayers are on the hook for THAT problem as well.

    We continue to screw it up by playing silly games about where we allow people to build… case in point being the Wellington City Mayor insisting that we can’t put developments along a right-of-way through the hills (Transmission Gully).

    Here I part company with the Greens, as I believe we’d better get on with it and build that particular piece of infrastructure (or SOMETHING similar because our coastal road is subject to variations in the location of the coast, which could be quite a problem in the future.

    “The Greens will no doubt advice the government to build cheap state houses. Well if you can build a unit (house, section and subdivision cost) for $200K”

    I COULD do so for ~ $300K in many places near Wellington… the land prices are key, but the construction is not so much. Affordable at that price, not at your $400K and absolutely not reasonable at the $420-500K that is on offer in most places where builders and speculators rule. Get a builder to work for me? Couldn’t.. they were all building spec. houses, half-million dollar hovels with single glazing. “I’ll pencil you in for August next year” – Yeah Right. They’re not doing THAT now… but the price is still driven by the money, which is still easy. Foreigners owning our land? That’s just dumb.

    One of the things discussed, but not by Russel here, is that the finance companies here ARE dodgy and the regulation and insurance situation with them is incredibly perverse. Fundamentally, we have broken the NZ money market as far as firms wishing to borrow for internal investment is concerned, and fixing it is going to require additional work at that end. We don’t do the regulation or the business ratings very well at all.

    I know this came up in the banking discussions. I know I’ve brought it up before as well. Russel could have mentioned it but did not because he was discussing housing as a problem, not the entire range of issues.

    Your incentive to invest in a CNC lathe basically comes from an improvement of security for you when you put your money in an investment company (or a basket of company stocks)… with a reduction in tax incentives putting that same money in the rental. This discussion only focused on the latter.

    Probably does not work for you if you do the property thing professionally, which makes it an area of your special knowledge, but for a lot of people it would make sense.

    respectfully
    BJ

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  20. “Yours is a very, very simplistic view, jh, and one that, if I may say, lacks much semblance of balance.”

    the ecological principle should be paramount and the priority should be to aim for the centrist vote on everything but ecology.
    You are familiar with “watermelon”.

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  21. If there’s “nowhere to put your money” people will go on a treasure hunt for productive (profitable) enterprise?

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  22. I’m trying to recall the arguments against a land tax (given that it is new in the public mind and so opponents don’t really need to try very hard to be dismissive).
    1. It has been tried before (1800′s) and was seen as unfair: a struggling farmer just on the land paid the same as an established farmer.
    2.

    This is from Wikipaedia: Limitations
    Assessments
    In theory, levying a Land Value Tax is straightforward, requiring only a valuation of the land and a register of the identities of the landholders. There is no need for the tax payers to deal with complicated forms or to give up personal information as with an income tax. Because land cannot be hidden, removed to a tax haven or concealed in an electronic data system,[13] the tax can not be evaded.

    However, critics point out that determining the value of land can be difficult in practice. In a 1796 United States Supreme Court opinion, Justice William Paterson noted that leaving the valuation process up to assessors would cause numerous bureaucratic complexities, as well as non-uniform assessments due to imperfect policies and their interpretations.[14] Austrian School economist Murray Rothbard later raised similar concerns, stating that no government can fairly assess value, which can only be determined by a free market.[15]

    When compared to modern day property tax evaluations, valuations of land involve fewer variables and have smoother gradients than valuations that include improvements. This is due to variation of building style, quality and size between lots. Modern computerization and statistical techniques have eased the process; in the 1960s and 1970s, multivariate analysis was introduced as a method of assessing land.[16]

    Land value for LVT purposes is assessed using market evidence. Such evidence may comprise both selling prices and rentals. Where development already exists on a site, the value of the site can be discovered by various means, of which the most easily understood is the residual method: the value of the site is the total value of the property minus the depreciated value of buildings and other structures.

    The valuation process commences with a measurement of the most and least valuable land within the taxation area. A few sites of intermediate value are then identified and used as “landmark” values. Other values are filled in between the landmark values. The data is then collated on a database and linked to a unique property reference number,[17] “smoothed” and mapped using a geographical information system (GIS). The initial valuation is the most difficult; once the system is in use, successive valuations become easier.
    Sufficiency of revenue
    Requires clear ownership
    http://en.wikipedia.org/wiki/Land_value_tax

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  23. jh says: the priority should be to aim for the centrist vote on everything but ecology.

    You indicate that, when it comes to ‘ecology’, the centrist vote might not align with the best result for the ‘ecology’.

    The Greens, as you know, have 4 guiding principles which I take to be aligned with their ecological core. I guess that’s why they/we are able to take the position we do on matters other than clearly ecological ones. Having to default to the ‘centrist’ vote is an odd call, in my opinion. I’d question also, which issues should be regarded as having no connection to the environment.

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  24. I missed something here. If we had a capital gains tax, would it not be a GENERAL CG tax with the exception being the house you live in, not a CG tax just on housing?

    If so, selling the companies would give you a tax (well unless you sell at a loss)… whether the house is an asset or not.

    No?

    BJ

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  25. Eric Crampton says:
    “There is no need for a capital gains tax to remove purported distortions in the housing market. I can imagine a case for a move from an income tax to a land tax as efficiency-augmenting, but I have a hard time believing that such a move [I presume he refers to capital gains tax] would be an equilibrium. ”
    http://offsettingbehaviour.blogspot.com/2009/09/bollard-on-capital-gains.html#comments

    This comment is in the junior section (by mistake).

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  26. Gerrit

    Shame on you!

    CGT will not be in there as it has absolutly no impact on the housing bubble.

    It clearly DOES have an impact, and the impact will depend on how it is implemented.

    The US as a Capital Gains tax that is almost laughable. 15% or 20% tops.. and the income tax. My income tax ranged upwards of 25% and the top rate is 35%…. and people structure their businesses and their personal finances to take advantage of this all the time.

    At the same time the USA gave away money to anyone who could fog a mirror. They basically pushed the “no risk in housing” mantra and if you walked in you could sign the papers and buy a house without even getting your income verified, with 0% down and 0% interest for the first year… or for more money than the house was worth. We are talking about EXTREMELY stupid lending practices and extremely loose money. We don’t have that here. If we did, we could overwhelm the tax, of course.

    However, because we don’t have the TAX we can’t lower our cash rate, diminish the carry trade and push down on the value of our currency. We’re already quite loose in terms of monetary policy for a country that does NOT have a tax.

    respectfully
    BJ

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  27. Test Greenfly: Did Sue Bradford say that the anti-smacking stance was “because of the Green Party anti -violence principle”?
    Ans = Yes

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  28. Jh – I had some coin on the likelyhood that you’d cite Sue’s bill. (Thanks btw.)
    Your definition of ‘what a ‘green’ is is too narrow to be of any practical use. It’s no wonder you jump up and down over so many issues. No credible political party could restrict itself to such a field and still have a chance to be involved in Government. What you would like the Greens to be is a lobby group. They’re not.

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  29. Heck… who did you find fool enough to take the other side of THAT wager? :-)

    JH is an odd sort. He does keep “Green” tied solely to environmental sustainability issues. I am pretty far left-of-center myself, just not quite as far as some in the party.

    The question I ask myself though, is something he comes closer to discovering than some of the party faithful.

    The balance where we maximize our power AND adherence to our principles seems to be something we don’t often achieve. That IS a function of how “centrist” we keep our message.

    Without political power we have a very hard time staying influencing the outcome on an issue that IS more important than a social injustice, One that threatens survival of many species, possibly including our own. I have pointed out internally and I think also here, that there needs to be a 5th principle, a governing principle, of survival.

    Some members claim not to care if we get enough votes to get into parliament as long as their “principles” are upheld. That is just a complicated way to say political suicide is preferable to compromise.

    I have to consider that such members may well be an important core constituency in the party. I have to wonder if they truly understand the nature of the climate disaster we are courting or whether it is merely something to which they offer lip-service.

    Survival of our civilization clearly seems unlikely under unaltered National or ACT policies. Dinosaurs will continue to be fossilized by an unforgiving Mother Nature. Limiting our own power by refusing to compromise in any respect is not IMHO, a good survival strategy.

    That this sort of consideration can be taken too far is clear, and JH often provides us an example of how that looks. However, he DOES have a point about the degree to which some of us seem to go off in the other direction. I suspect that it is just one or two of us, prominent members of the party, to whom he objects.

    We do need that 5th principle. As a party we have to be aware of how close to the edge we are AND of how much of the center we must pull towards us in order to become impossible to leave out of government… as we have been for too long.

    respectfully
    BJ

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  30. BJ,

    With respect, no it does not otherwise those that have the tax (eg, Australia) would have a minial bubble.

    This is NZL where people with money to invest saw more potential to invest in rental housing and commercial property then placing said money in the institutions.

    This is not the USA where “free” money was given to those who could not repay the loans.

    Now adding a tax to any possible increase in capital is fine and good, but how will it reduce housing and commercial property costs? What you are hoping for is that the investor will be swayed away from property investment into other forms of investment. My question stands, where would YOU have placed your money if not in housing and commercial property.

    PS, dont like the way the comments thread develops. Great if you have it on all the time, not so good when you pop in for a quick visit every now and then. It meanders all over the place.

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  31. Well, yes, Bj (and jh in as far as you’re ideas meld with bj’s), but where does the adoption of a ‘centrist’ stance leave us with an issue such as genetic engineering of crops in New Zealand, where the ‘centrist’ view might be that it’s something that should be adopted. If ‘survival’ is the bottom line for all decisions made by the party, then there is grave danger, I believe, of imitating the ‘frog in the slowly heating pot’ and inviting ‘death by a thousand cuts’ – an incremental loss of small things that don’t quite make the cut for a party that sets it’s bottom line too high. Maui’s dolphins? Drinking water standards? 1080? All ‘too minor’ to make a stand on?

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  32. There is probably a parallel between climate change denial and opposition to a CGT.

    Economic self-interst is a powerful reason to obstruct change in either area.

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  33. SPC

    Actually there is a lot of money to be made in advocating for climate change. Ask Al Gore as he clips the ticket for 30% to sell you a carbon credit that may or may not exist.

    Why do you think the financial people are so for climate change? There is a pot load of money to be made. All money that will not even feature on a CGT regime?

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  34. but where does the adoption of a ‘centrist’ stance leave us with an issue such as genetic engineering of crops in New Zealand,

    The technology environmentalists love to hate really could play a big role in saving the planet.
    http://www.newscientist.com/article/mg20327251.600-better-world-learn-to-love-genetic-engineering.html

    “there is grave danger, I believe, of imitating the ‘frog in the slowly heating pot’ and inviting ‘death by a thousand cuts’ ”

    that’s a myth; the frog feels hot and exits the pot.

    Same principles; different people; different policy.

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  35. So, jh. Your link suggests that you are supportive of genetic engineering.
    You’d have the Greens abandon their opposition to ge because the ‘centrist’ view supports it?
    Bullsh*t to that, my wishy-washy friend. You seem to have no spine at all. The pay-back for your willingness to lie down in the middle of the road would be? Votes?
    As Phil might say, whore!
    You’ll see merit in mining the Conservation estate as well (it’s not a question).

    I’m well aware, btw, that the ‘warming frog’ example is fictitious. The frog would be attempting to exit the pot, no matter what the temperature, in my experience.

    Have you any bottom line, jh, or do you run with the hares? I get no sense of integrity from you.

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  36. I keep an open mind Greenfly, I think I said that it might be justified if there were rare earth minerals which could be used in green technology. Nature doesn’t begin and end in national Parks and there may be away of compensating elsewhere.

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  37. Finally, is social justice theory naïve and utopian? No, it isn’t. This is what is least understood about social justice: it’s already here. The society we live in is much closer to the social justice ideal than it is to either of the ideals of classical socialism or classical laissez faire capitalism.

    When people point to the successes of the market in creating goods and employment, it’s a very constrained market that they are talking about – constrained by legal requirements like compensation, contract and intellectual property law and a vast number of semi-legal compliance regimes. It’s because markets operate in that framework that they can deliver benefits. It’s because markets operate in that framework that market forces don’t create a free market in slaves and kidneys.

    I’d suggest intellectual property as the perfect model of social justice: it’s because creators of books and inventions morally deserve to be rewarded that there ought to be such protections; implementing IP law is possible but it took several centuries and as we all know China hasn’t caught up even now. And there are major economic benefits from it, through the encouragement of the bright ideas that drive technological progress.

    http://www.onlineopinion.com.au/view.asp?article=6896&page=1

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  38. Phony Baloney jh – if you can insult the friends and family I lost fighting Commies and Fascists, you are are a sly and souless monster, without belief or ethic – begone Nark – oh wolf in sheeps clothing – you will grow up to be herpes on the face of an otherwise decent NZ.
    I dont run with succinct disgust too often – but putting a fire out with kind words has never worked.
    Frog you de-loused the site of one pernicious monster – keep right on Baby!!!!

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  39. Balance means we don’t dive into the center and abandon principles wholesale. That would leave us open to being bought like the two major parties are bought. It means reasoned rather than reflexive stands on issues. A serious approach.

    Non-negotiable values are very expensive. I maintain only the one of those – survival. The Green party appears to have a good half-dozen or more and doesn’t have the one I regard as essential. Without which at least two thirds of New Zealanders will refuse to take us seriously.

    How does one survive the loss of drinking water standards Fly? That’s EASY for us to win on, we’d carry a good part of the country on it. We can campaign on Maui’s dolphins if we like, it is expected of us and doesn’t affect our polling. GE similarly.

    This isn’t simply matter of not taking stands where we think it matters, it is a matter of NOT unnecessarily p!ssing off a large majority of people in the country. It is a matter of NOT going confrontational on fringe issues. We could confound our enemies by the simple measure of explaining a nuclear power plant that we might find acceptable here. It doesn’t have to be advocacy, but giving the lie to people who paint us as incapable of thinking about these issues or compromising on them, is damned useful. It makes them think more seriously about the things that really matter.

    Nope. That thing JH harps on is one of the best examples of where and how we DID hurt ourselves. It weakened us and I stated the risks clearly enough in the official forums as well as here.

    The Election issue hurt too but I don’t think that had anything to do with principles being at stake. I think that was a more ordinary error in judgment.

    The Marijuana issue is one where we might well hurt ourselves, but on which we’ve managed to compromise appropriately. Nation isn’t QUITE ready, we’re not going all confrontational about it. Even though the majority are exposed as hypocrites.

    You misread me badly if you think I would have no principles. The point I make is exemplified by the fact that we HAVE a defense policy. Non-violence does not trump survival… survival dictates that non-violence be abandoned in some circumstances. Similarly, social justice, and in fact ANY of the others. What we never state in our sacred principles was recognized by the existence of that policy.

    Yet it is NOT stated and the image of grinning lunatic pacifists who would adhere to principle while allowing the nation to be overrun by violent nasty people persists… and National WAS elected, wasn’t it.

    We should be aspiring to co-equality with labour in opposition, Not remaining on the fringes of power. I think the leadership of the party is working towards a more respectable, less confrontational, image. All good. The point about survival is that some things are more important than others.

    Would it kill us to accept Transmission Gully? ( or to propose a different less steep, rail friendly version through from the Hutt valley ). Wellington NEEDS another way out of the city. We need to be seen as something other than completely obstructionist with respect to roading, even as we advocate for more electrification and more rail. There is a reflexive opposition to certain things that has to be replaced by a more considered approach. Kevin and Russel and Met are doing that well.

    Because we HAVE to be taken seriously when we face the public and say… “this is a lifestyle we have to give up in order to survive”… or nothing we value will survive.

    respectfully
    BJ

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  40. Now adding a tax to any possible increase in capital is fine and good, but how will it reduce housing and commercial property costs?

    Removing the incentive to gain “tax free” income by swapping properties back and forth at ever increasing prices would be where that tax comes in. Rolling back some of the income tax to compensate for it, so that people who earn a wage are no longer penalized for it relative to the property investor.

    Then there is the LAQC which penalizes the wage-earner owner-occupier yet again.

    I am not at all cognizant of the extent of the bubble in Oz or its causes. I can speak with authority on the USA. Which had no housing “bubble” form until it got “free money” policies. My point (which has been repeated by others to you as well) is that CG does not operate in a vacuum and there is a lot that needs to be done here to make the market sane again.

    The fact that people with money to invest saw what the government created and said “throw me in ‘dat briar patch” simply speaks ill of what the government created and well of their ability to recognize an opportunity to profit from the malfunction of mental processes that permitted the policies in the first place.

    It certainly does NOT make those mental malfunctions sacred and immutable standards of New Zealand policy.

    When I saw what was going on I bought myself some bullion Gerrit. Did OK, but it would not be my first choice in a healthy economy. Would not be my first choice if I could TRUST a financial advisor in this country any further than I could throw Te Papa. Probably would put it in CDs if not Gold.

    The country penalizes business by leaving the property incentives in place, because the businesses have less access to money, competing as they do with the property market for that loan money, and the property market ties the hands of the Reserve Bank Governor so the currency value is excessively elevated. He CANNOT lower it, the property market would go ballistic, and so instead the currency does, beating our surviving industry with a rod of our own making.

    This country has “sucker” tattooed on its forehead as far as its monetary and housing policies are concerned. Anyone from outside the country can look at it and see it with crystal clarity. It affects everything in the country.

    Bollard knows this. I know it. Russel knows it. Cullen knew it but apparently was profiting from it. English is possibly cut from similar cloth.

    respectfully
    BJ

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  41. He/she definately wants to be able to legally give his/her kid a whack if they’re incorrect.

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  42. bj – this comment from The Standard says succinctly what I’m circling around.

    Robert Winter
    September 25, 2009 at 2:24 pm

    May I suggest that a Green politics without a class politics will be a failed politics? Environmental degradation does not stand apart from the system that promotes it.

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  43. Greenfly, if you are trying to get me to “admit” that there are real issues aside from the environment that’s easy. I always recognize these. We would be speaking past each other in that case.

    A condition which maximizes policy gains is NOT one that abandons power in favor or principle or principle in favor of power. We need power to get ANY policy gains… yet if we seek only power we have abandoned principle. It is a not-simple balance.

    Then there is survival. The MISSING principle.

    The species will eventually correct instances of injustice, totalitarianism, monopolies, despots and corrupt banks. What it cannot do is fix any of those things if it fails to survive.

    Principles have no vote in parliament. In order for us to represent them we MUST have representatives elected. That’s an extreme. If the party has no principles, it is of no use to except to get and keep power. Another extreme. I am not a big fan of extremes.

    What is it you want? If we are guided by “class politics” we follow the agenda of a group that understands things ONLY in terms of class struggle. We join the class struggle to solve the environmental problem…

    …we lose the center, we lose representation and we lose the ability to change anything except through revolution.

    Moreover, non-violent revolution is unlikely… so the non-violence principle goes out the window immediately.

    Putting those things ahead of the environmental catastrophe in the making and opting to try to correct problems that socially and historically we have NEVER successfully addressed – as a solution to the environmental problems is a mistake.

    The whole concept is poorly thought through at best, even though there IS a kernel of truth there. The system that created the problem IS a legitimate target. I am more specific about this however, than adhering to class politics… and this allows agreement by and with some people who are notably NOT leftist.

    Which isn’t to say that social justice is not an important principle. It just means that we must choose our battles.

    respectfully
    BJ

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  44. Not trying to lever an admission out of you bj, just pointing at the interconnectedness of things. Choosing the battles is indeed the call – not easy to do, when critics wail if they can’t see the link and that wailing damages voter confidence. Survival (I assume you mean the ‘of all god’s chillen’ sort, not the ‘political’ sort)is the bottom line, but there are seemingly non-ecological issues that threaten that also. (Apologies if I’m going over ground already covered).

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  45. That’s fine. My take on this is to let Labour and “The Standard” and others battle for the left-left vote.

    There is a perfectly good and natural left-wing party and we do not have to work the same street corner they do.

    We can work a somewhat different pitch down the road and attract a different crowd. Together forming a rather larger crowd.

    Together we can agree on things we can change. I think that mostly we’d get along… as there ARE some natural areas where the “class” oriented viewpoint has great explicative power.

    The thing is, to take the center away from the Nactoids is going to require us, and labour, to occupy more of it or educate it enough to move it towards us. Both can happen… but on Labour’s current form we could wind up senior partners, even without doing any better ourselves.

    Yes… ‘all god’s chilluns’ is what I mean there. Political survival is a lesser form of the principle though, and just as real.

    respectfully
    BJ

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  46. Bj: If you go on to the Socialist Aotearoa site Joe is calling for a united front of the left.
    Something I was trying to promote in the nasty ninties.

    Labour hasn’t been very kind to the Greens in their last term in office and with Phil Goffs views on more tarrif cuts and ‘free’ trade. I very much doubt weather they are a left party any longer. If they were a genuine left government they would have put a capital gains tax on developers long ago.

    Your answer to “Now adding a tax to any possible increase in capital is fine – - – but how will it reduce housing and property costs”. I agree with your reply but there is another angle on this.
    When the government spends revenue collected by Capital Gains Tax to build state housing that would have to (1) provide more accomodation and (2)reduce the rental and house prices simply by supplying a demand.

    This is where Joseph Savage had it right.

    State houses are very good quality regardless of the aesthetics and here is where there is common ground between the socialist left and environmental Greens, future state housing can be well insulated and double glazed with solar panals to address the carbon issue.

    The trolls are going to say this is all very well and utopian, and how is one to address the low life’s renting these properties and vandalising them? The answer there is ‘rent to own’.
    It is on that small point I will have to part company with Karl Marx.

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