1 00:00:00,080 --> 00:00:02,040 Speaker 1: Labour successfully got their day in the sun, of course, 2 00:00:02,120 --> 00:00:04,440 Speaker 1: yesterday for a policy idea, a capital gains tax on 3 00:00:04,480 --> 00:00:06,760 Speaker 1: your business or investment house. A lot of questions came 4 00:00:06,760 --> 00:00:09,239 Speaker 1: out of the leaked announcement, not least of which was 5 00:00:09,440 --> 00:00:11,559 Speaker 1: why was it leaked? But as for the numbers, Ed 6 00:00:11,640 --> 00:00:14,720 Speaker 1: McKnight is the resident economist at Ope's Partners and is 7 00:00:14,720 --> 00:00:15,000 Speaker 1: with us. 8 00:00:15,160 --> 00:00:17,440 Speaker 2: Ed Morning, great to be here, Mike. 9 00:00:17,640 --> 00:00:20,280 Speaker 1: As you look at the numbers yesterday and their claims, 10 00:00:20,320 --> 00:00:23,360 Speaker 1: would you be confident that they're accurate or are we guessing. 11 00:00:24,360 --> 00:00:26,759 Speaker 2: Well, one hundred million dollars that are expecting trays in 12 00:00:26,760 --> 00:00:30,520 Speaker 2: the first year. Sounds pretty reasonable to me. They are 13 00:00:30,560 --> 00:00:33,080 Speaker 2: relying on probably a couple of percentage points worth of 14 00:00:33,120 --> 00:00:36,279 Speaker 2: capital growth in the first year, but it's based off 15 00:00:36,400 --> 00:00:39,120 Speaker 2: some pretty realistic numbers in terms of how many investors 16 00:00:39,240 --> 00:00:42,000 Speaker 2: might actually sell, which is about six to seven thousand 17 00:00:42,000 --> 00:00:42,760 Speaker 2: by my numbers. 18 00:00:42,840 --> 00:00:45,080 Speaker 1: I don't think it's your area. But the stalking horse 19 00:00:45,159 --> 00:00:47,520 Speaker 1: aspect of it is this the beginning of something bigger. 20 00:00:47,560 --> 00:00:49,920 Speaker 1: Potentially if you were writing the policy. 21 00:00:50,600 --> 00:00:52,239 Speaker 2: It could be. But what I would say is this 22 00:00:52,280 --> 00:00:56,120 Speaker 2: isn't a real capital gains tax because not everything's captured 23 00:00:56,120 --> 00:00:59,400 Speaker 2: by it. This is a real estate investor tax. Now, 24 00:01:00,000 --> 00:01:02,160 Speaker 2: so I don't know I look like a football, but 25 00:01:02,200 --> 00:01:04,600 Speaker 2: I certainly feel like a political football at the moment 26 00:01:04,640 --> 00:01:07,480 Speaker 2: being kicked around between the two major parties. 27 00:01:07,760 --> 00:01:10,639 Speaker 1: Yeah, exactly, Now this one, I mean everyone, the idea 28 00:01:10,680 --> 00:01:12,919 Speaker 1: that everyone's got one, and that was their line yesday. 29 00:01:12,959 --> 00:01:14,520 Speaker 1: Oh lots of people have got one. Is that a 30 00:01:14,520 --> 00:01:16,199 Speaker 1: good enough reason to implement a tax? 31 00:01:17,560 --> 00:01:20,200 Speaker 2: Well, not everybody's got an investment property. We've got this 32 00:01:20,280 --> 00:01:22,520 Speaker 2: idea that every man and his dog is out there 33 00:01:22,560 --> 00:01:26,080 Speaker 2: buying investment property, but only somewhere between ten to fourteen 34 00:01:26,200 --> 00:01:31,240 Speaker 2: percent of people own residential investment properties in New Zealand. 35 00:01:31,400 --> 00:01:33,959 Speaker 2: And it's come into this kind of national psyche that 36 00:01:34,040 --> 00:01:36,240 Speaker 2: everybody's doing it. But it's kind of not the case. 37 00:01:36,360 --> 00:01:39,400 Speaker 1: No, indeed not. What I meant was that everyone internationally, 38 00:01:39,440 --> 00:01:42,080 Speaker 1: every country has a capital gains tax, therefore we may 39 00:01:42,080 --> 00:01:43,160 Speaker 1: as well have one as well. 40 00:01:44,200 --> 00:01:46,520 Speaker 2: I've got chen out. Yes, well, most countries do have 41 00:01:46,560 --> 00:01:49,640 Speaker 2: capital gains taxes. There are a couple of small exceptions, 42 00:01:49,760 --> 00:01:53,680 Speaker 2: like Singapore, the United Arabemraates, Hong Kong and Macaw. I 43 00:01:53,680 --> 00:01:56,040 Speaker 2: always thought it wouldn't it been nicer to be like Switzerland, 44 00:01:56,120 --> 00:01:59,320 Speaker 2: Singapore and the United Arab Emirates rather than like everybody else, 45 00:01:59,360 --> 00:02:01,480 Speaker 2: because those center of something, right. 46 00:02:01,480 --> 00:02:03,400 Speaker 1: So that was our point of difference. Nicola Willis was 47 00:02:03,440 --> 00:02:05,960 Speaker 1: making that point yesterday. It's our point of difference with Australia. 48 00:02:06,040 --> 00:02:08,080 Speaker 1: She has a point, then you would argue. 49 00:02:08,919 --> 00:02:10,760 Speaker 2: I think there's something to be said about it. The 50 00:02:10,800 --> 00:02:12,960 Speaker 2: other thing that I'd say about the capital gains tax 51 00:02:13,080 --> 00:02:14,840 Speaker 2: is we've always thought of it as a bit of 52 00:02:14,840 --> 00:02:16,960 Speaker 2: a house price killer. But I've got some numbers that 53 00:02:17,040 --> 00:02:21,359 Speaker 2: suggest that's not the case. Tell me, well, Australia introduced 54 00:02:21,360 --> 00:02:23,959 Speaker 2: a capital gains tax nineteen eighty five. Since the in 55 00:02:24,040 --> 00:02:26,440 Speaker 2: house prices have gone up and averages six point five 56 00:02:26,520 --> 00:02:30,200 Speaker 2: percent a year. The UK they brought one in nineteen 57 00:02:30,320 --> 00:02:32,799 Speaker 2: sixty five. Since then house price is up over eight 58 00:02:32,840 --> 00:02:36,120 Speaker 2: percent a year. Canada nineteen seventy two. Since then, house 59 00:02:36,120 --> 00:02:38,320 Speaker 2: price is up six point seven percent a year. The 60 00:02:38,440 --> 00:02:42,360 Speaker 2: USA nineteen thirteen is when they introduced their capital gains tax, 61 00:02:42,639 --> 00:02:45,600 Speaker 2: and since nineteen seventy house prices up five point four 62 00:02:45,600 --> 00:02:48,840 Speaker 2: percent a year. So this idea that caperal gains taxes 63 00:02:49,000 --> 00:02:52,239 Speaker 2: are going to kill capital gains in the housing market 64 00:02:52,400 --> 00:02:53,040 Speaker 2: just not the case. 65 00:02:53,160 --> 00:02:55,560 Speaker 1: Good insight. I'd appreciate it very much. Ed McKnight, who 66 00:02:55,600 --> 00:03:01,760 Speaker 1: was the resident economist at OPEZ this morning Mike Hipkins' 67 00:03:01,760 --> 00:03:04,200 Speaker 1: proposal to meet a new demand on GPS. How are 68 00:03:04,200 --> 00:03:06,320 Speaker 1: they going to do that when everyone gets free visits? 69 00:03:06,320 --> 00:03:08,399 Speaker 1: It's a good question. And why are they giving free 70 00:03:08,480 --> 00:03:10,480 Speaker 1: visits to people who don't need them. Hipkins is going 71 00:03:10,480 --> 00:03:12,960 Speaker 1: for shock and or mic to bring attention to the 72 00:03:12,960 --> 00:03:15,239 Speaker 1: party and the young revolutionaries, bring them out of the 73 00:03:15,280 --> 00:03:17,960 Speaker 1: closet to vote. I'm not sure that's true. 74 00:03:18,000 --> 00:03:20,880 Speaker 2: For more from the Mic Asking Breakfast, listen live to 75 00:03:21,000 --> 00:03:24,079 Speaker 2: news talks it'd be from six am weekdays, or follow 76 00:03:24,120 --> 00:03:25,679 Speaker 2: the podcast on iHeartRadio.