WEBVTT - Leighton Smith Podcast #247 - July 17th 2024 - Jordan Williams & George Friedman 0:00:09.133 --> 0:00:12.013 You're listening to a podcast from news talks it B. 0:00:12.413 --> 0:00:16.173 Follow this and our wide range of podcasts now on iHeartRadio. 0:00:16.813 --> 0:00:19.813 It's time for all the attitude, all the opinion, all 0:00:19.853 --> 0:00:24.933 the information, all the debates of this now the Layton 0:00:25.053 --> 0:00:27.413 Smith Podcast powered by news. 0:00:27.213 --> 0:00:27.733 Talks it B. 0:00:28.093 --> 0:00:31.653 Welcome to podcast two hundred and forty seven for July seventeen, 0:00:31.733 --> 0:00:35.453 twenty twenty four. When I framed this podcast at the 0:00:35.613 --> 0:00:38.573 end of last week, there was no way of knowing 0:00:38.733 --> 0:00:41.733 the political temperature chains waiting in the wings, and I 0:00:41.813 --> 0:00:45.413 state the obvious. Just prior to recording. On Wednesday morning, 0:00:45.493 --> 0:00:48.973 I was listening to the most recent opinions on what 0:00:49.093 --> 0:00:53.333 took place in Butler, Pennsylvania a few days ago. As expected, 0:00:53.413 --> 0:00:57.133 there are many and varied opinions. In the second interview, 0:00:57.213 --> 0:01:00.413 George Friedman offers his thoughts and the connection of the 0:01:00.453 --> 0:01:03.893 attempted assassination of Donald Trump to what he wrote in 0:01:04.013 --> 0:01:08.093 the book The Storm Before the Calm. But first, in 0:01:08.133 --> 0:01:12.293 a Jordan Williams, co founder of the Taxpayers Union, a 0:01:12.333 --> 0:01:16.333 discussion which I based on the suggestion that Christopher Luxon 0:01:16.493 --> 0:01:21.053 should consult with the Estonians read their tax system the 0:01:21.093 --> 0:01:23.213 best in the world. I might add while they were 0:01:23.413 --> 0:01:27.373 both attending the NATO conference in Washington, but Jordan and 0:01:27.413 --> 0:01:31.853 I covered much more regarding the palace state of New Zealand, 0:01:32.013 --> 0:01:34.493 and I think you'll find it very good listening. Now, 0:01:34.493 --> 0:01:36.373 I think you'll find in both the interviews there is 0:01:37.053 --> 0:01:40.573 as much comment as is needed in one podcast. So 0:01:40.613 --> 0:01:44.613 I'm going to add nothing new apart from at the 0:01:44.733 --> 0:01:48.253 back end of this podcast, i'll read you the opinion 0:01:48.373 --> 0:01:52.733 of one retired senator on what took place in Butler. 0:01:53.173 --> 0:02:03.733 But first, in just a moment, Jordan Williams, there are 0:02:03.973 --> 0:02:06.893 essential fat nutrients that we need in our diet as 0:02:06.933 --> 0:02:10.093 the body can't manufacture them. These are omega three and 0:02:10.133 --> 0:02:14.213 Amega six fatty acids. 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Farmer broker Auckland. 0:03:37.013 --> 0:03:37.813 Layton Smith. 0:03:39.093 --> 0:03:42.013 I'm looking at a headline that arrived in my inbox 0:03:42.013 --> 0:03:43.773 a few days ago, and I'll read it to you 0:03:43.773 --> 0:03:45.413 in just a second. Before that, I want to quote 0:03:45.413 --> 0:03:49.893 you something from the back of a book. In twenty thirteen, 0:03:49.933 --> 0:03:52.813 a couple of political troublemakers called David Farr and Jordan 0:03:52.893 --> 0:03:56.693 Williams created what they called the New Zealand Taxpayers Union. 0:03:57.253 --> 0:04:00.853 The country had never had anything quite like it. Taking 0:04:00.893 --> 0:04:03.933 a cue from similar advocacy groups abroad, the new group 0:04:04.013 --> 0:04:09.973 set itself against unaccountable government spending, physical, wasteful and unnecessary 0:04:10.093 --> 0:04:13.973 tax Now. I don't know that there would be anybody 0:04:13.973 --> 0:04:16.413 listening to this podcast who would disagree with any of 0:04:16.453 --> 0:04:19.133 those things and not be right behind this group. They 0:04:19.133 --> 0:04:21.253 have since been joined in their quest by two hundred 0:04:21.293 --> 0:04:24.813 thousand Kiwi well Wishes, along with an absolute pig of 0:04:24.853 --> 0:04:28.933 a mascot called Porky the WTATA, and they have just 0:04:29.053 --> 0:04:32.653 recently celebrated their tenth birthday. They published this book, The 0:04:32.693 --> 0:04:36.933 Mission the Taxpayers Union at ten were the Ford by 0:04:37.373 --> 0:04:41.173 Sir Bill English and edited by David Cohen. It was 0:04:41.213 --> 0:04:46.333 the Taxpayers Union that issued the email that I'm talking about, 0:04:46.413 --> 0:04:50.853 and the headline was something that I grasped instantly, p M. 0:04:50.973 --> 0:04:56.173 Luxon needs to talk tax with Estonian Prime Minister And 0:04:56.213 --> 0:04:58.773 it begins like this Taxpayers Union is calling on the 0:04:58.773 --> 0:05:02.493 Prime Minister, Christopher Luxen to discuss tax policy with Estonia, 0:05:03.013 --> 0:05:06.733 which has ranked number one on the tax Foundation International 0:05:07.093 --> 0:05:11.373 Tax Competitiveness Decks for ten years in a row. Estonia 0:05:11.453 --> 0:05:15.253 World leader. Estonia's world leading tax policy has led to 0:05:15.413 --> 0:05:21.653 significant economic growth, far outpacing New Zealand's. It caused me 0:05:21.693 --> 0:05:24.173 to pick up the phone and ring somebody with whom 0:05:24.173 --> 0:05:28.213 i'm familiar, co founder of the Taxpayers Union, Jordan Williams. 0:05:28.933 --> 0:05:31.453 And you said yes, and I'm grateful that you didn't 0:05:31.493 --> 0:05:37.133 thank you. Laden. It was very subdued. You've had a 0:05:37.133 --> 0:05:40.813 busy day, I gather having a big, long day, long 0:05:40.853 --> 0:05:41.453 staff meeting. 0:05:41.533 --> 0:05:46.173 Right, yeah, Well, we sort of every every quarter we 0:05:46.213 --> 0:05:50.093 get together the staff and plan out what's on the 0:05:51.133 --> 0:05:54.373 priority list over the next few months. The nature of 0:05:54.493 --> 0:05:59.053 the organization as it's difficult to plan out much more 0:05:59.093 --> 0:06:02.773 than six months or even a year because you're so 0:06:03.013 --> 0:06:05.853 dependent on the agenda of the day. You know, there's 0:06:05.933 --> 0:06:08.773 some things that we can set the agender on. I'd 0:06:08.773 --> 0:06:11.013 hold up three Waters as being a good example. No 0:06:11.053 --> 0:06:13.173 one was willing to talk about that. No one was 0:06:13.613 --> 0:06:17.253 willing to take on this scary thing called co governance, 0:06:17.293 --> 0:06:20.653 although you couldn't really use that word three years ago 0:06:20.693 --> 0:06:25.013 when we launched that campaign. But on most things, actually 0:06:25.173 --> 0:06:27.733 the agenda is set by the government of the day 0:06:28.333 --> 0:06:31.693 and our job is to make sure whatever debate it 0:06:31.813 --> 0:06:34.573 is that the taxpayer point of view is injected into. 0:06:34.413 --> 0:06:38.533 It good Sticking with Estonia at the moment, Estonia has 0:06:38.573 --> 0:06:41.573 the best tax code in the OECD. It ranks first 0:06:41.573 --> 0:06:45.173 overall and second behind Latvia and Neighbor. I called them 0:06:45.253 --> 0:06:50.253 the three communist kids who grew up anyway, Whilst New 0:06:50.333 --> 0:06:53.693 Zealand ranks highly overall, our corporate tax ranking is where 0:06:53.813 --> 0:06:56.333 in relation to Estonia's. 0:06:57.053 --> 0:06:59.773 Well in terms of the complexity of the tax system, 0:06:59.973 --> 0:07:04.333 and the same that the tax foundations INDIEX Historically since 0:07:04.333 --> 0:07:07.253 the early nineties, we haven't gone too badly. The point 0:07:07.333 --> 0:07:11.413 is that we quickly marching backwards, and that particular media 0:07:11.453 --> 0:07:15.693 release was slightly tongue in cheek focusing at Christopher Luxan 0:07:15.933 --> 0:07:20.413 because the National Party have seemed to adopt it, this 0:07:20.533 --> 0:07:25.413 drift that continued under the last government of going backwards. So, 0:07:25.533 --> 0:07:28.813 for example, the reason Estonia's tax system is really held 0:07:28.893 --> 0:07:30.973 up as a model, there's a couple of things. Firstly, 0:07:31.013 --> 0:07:35.613 they don't tax company profits until they're actually distributed, which 0:07:35.693 --> 0:07:39.733 incentivizes reinvestment back in the good things in terms of 0:07:39.733 --> 0:07:45.053 capital and promoting labor productivity, and that if only we 0:07:45.053 --> 0:07:48.253 could do that here. But the other thing that they 0:07:48.293 --> 0:07:51.333 have is all the rates of twenty percent, which is 0:07:51.373 --> 0:07:54.973 what New Zealand used to strive for of having our 0:07:55.013 --> 0:08:00.093 company rate roughly aligned with our top marginal personal tax rate, 0:08:00.213 --> 0:08:02.213 our trust rate, et cetera. 0:08:02.573 --> 0:08:04.813 You know, labor stuff that up. 0:08:04.733 --> 0:08:07.813 With a thirty nine percent top marginal tax rate, and 0:08:07.853 --> 0:08:10.933 then that's come along and instead of abolishing that, they 0:08:10.973 --> 0:08:16.453 have held on to Labour's money grab on or tax 0:08:16.613 --> 0:08:21.453 rate on trusts. I think that for many farmers across 0:08:21.533 --> 0:08:24.533 New Zealand, it's come into law. Labour kept us. Sorry, 0:08:24.613 --> 0:08:27.573 the new national government kept it. It won't be until 0:08:27.613 --> 0:08:30.253 the end of this tax here there's a nasty surprise 0:08:30.773 --> 0:08:33.253 coming for a heck of a lot of farmers that, 0:08:33.573 --> 0:08:38.853 for quite legitimate reasons hold their businesses or farms and trust. Now, 0:08:38.893 --> 0:08:42.133 for the big end of town, they will reorganize, they 0:08:42.253 --> 0:08:46.333 will shift over to company structures and pay only twenty 0:08:46.333 --> 0:08:50.453 eight percent tax. Meanwhile, for the smaller end of town 0:08:51.213 --> 0:08:52.453 this is going to be very expensive. 0:08:52.453 --> 0:08:54.613 Indeed, But I use it as an example. 0:08:54.893 --> 0:08:59.453 Because it just shows that the government has sort of 0:09:00.013 --> 0:09:04.133 reverted it is not taking a leadership in terms of 0:09:04.693 --> 0:09:09.453 making changes to our tax system that promote economic growth, 0:09:10.053 --> 0:09:13.053 efficiency and attract the sort of investment that you know 0:09:13.213 --> 0:09:17.453 Estonia or the other examples Ireland set out to achieve. 0:09:17.853 --> 0:09:21.093 Now I look at the test like this, and it's 0:09:21.093 --> 0:09:24.133 a good test between whether a Minister of Finance is 0:09:24.173 --> 0:09:27.813 a minister of finance first or a politician first. So 0:09:27.893 --> 0:09:29.973 a lot of politicians and it's and it's quite a 0:09:30.053 --> 0:09:33.173 popular set of ideas. The idea of something like tax 0:09:33.213 --> 0:09:38.213 free thresholds or lowering the marginal rates at the bottom end. 0:09:38.973 --> 0:09:42.093 Now that's good, and you know, the tax payer, you know, 0:09:42.253 --> 0:09:44.893 we'll take tax relief pretty much any day, you know, 0:09:44.933 --> 0:09:50.533 that's our job. However, it is always the marginal rate, 0:09:51.853 --> 0:09:54.653 Like any sort of economic thing, it's it's the incentives 0:09:54.693 --> 0:09:59.933 at the margins that incentivize the person to work that 0:09:59.973 --> 0:10:03.173 but extra hard to take that extra over time, to 0:10:03.373 --> 0:10:07.093 make the investment to improve their business or make it 0:10:07.133 --> 0:10:13.533 more productive. And tax free thresholds, invariably over the long term, 0:10:13.613 --> 0:10:17.373 increase what you're paying at the margins. And I use 0:10:17.413 --> 0:10:21.453 it as an example because the National Party's are tax 0:10:21.493 --> 0:10:26.653 relief that frankly only went a little way of even 0:10:26.693 --> 0:10:32.373 compensating for the fiscal drag, the increase in tax that 0:10:32.453 --> 0:10:34.973 we pay because of inflation. We earn no more, but 0:10:35.373 --> 0:10:40.693 we get pushed into higher marginal tax brackets. It only 0:10:40.733 --> 0:10:44.853 went partially way to compensate for that. And the way 0:10:44.893 --> 0:10:49.493 it was structured is it doesn't really increase the incentives 0:10:49.653 --> 0:10:52.653 to work or be more productive. And then i'd point 0:10:52.653 --> 0:10:56.853 to you the National Party playing the politics as opposed 0:10:56.973 --> 0:10:59.893 to the good economics and putting New Zealand on a 0:10:59.933 --> 0:11:03.773 more productive path. And you know, we saw that mister 0:11:03.853 --> 0:11:07.413 Luxon was seeing the Estonian Prime Minister. He might learn 0:11:07.453 --> 0:11:11.093 a thing or two from the approach the Estonians take. 0:11:11.253 --> 0:11:13.373 I suppose you didn't. You didn't find out whether we 0:11:13.413 --> 0:11:13.853 did or not. 0:11:14.893 --> 0:11:17.773 I haven't run into Christphal lux did an event with 0:11:19.333 --> 0:11:22.813 our donors earlier this year. We haven't had them back yet. 0:11:23.133 --> 0:11:27.333 Okay, break that down for me in very simple language, 0:11:27.333 --> 0:11:29.773 if you would, so that we can all understand it. 0:11:30.213 --> 0:11:32.173 When you talk about when you talk about the margins, 0:11:32.173 --> 0:11:35.893 when you talk about incentives, give me an example that 0:11:36.533 --> 0:11:39.533 or build an example for me that will explain to 0:11:39.573 --> 0:11:43.333 all of us exactly how you would have it work. 0:11:43.533 --> 0:11:47.453 Ideally, so the New Zealand used to strive for this. 0:11:47.653 --> 0:11:51.413 It shouldn't matter how you structure your affairs, whether you 0:11:52.453 --> 0:11:57.093 earn the income personally as a payu uner or whether 0:11:57.133 --> 0:11:59.813 you own a business and a company structure or whether 0:12:00.333 --> 0:12:04.173 you own it in a trust, that tech should at 0:12:04.293 --> 0:12:09.213 least be roughly the same to avoid business decisions or 0:12:09.253 --> 0:12:14.293 structural decisions being driven by tax incentives, that's what you're 0:12:14.293 --> 0:12:17.533 trying to strip out. So these stoneans just make everything 0:12:17.573 --> 0:12:20.853 twenty They even go as fast for capital gains at 0:12:20.893 --> 0:12:24.133 twenty percent. And there's a very mixed economic literature whether 0:12:24.173 --> 0:12:29.133 you should tax capital gains differently. But the point is 0:12:29.133 --> 0:12:31.773 is that you wouldn't have that incentive that is happening 0:12:31.853 --> 0:12:32.293 right now. 0:12:32.333 --> 0:12:33.213 For example in New. 0:12:33.173 --> 0:12:37.413 Zealand, where you've got a big difference between twenty eight 0:12:37.453 --> 0:12:42.013 percent and thirty nine percent tax rate dependent on if 0:12:42.053 --> 0:12:45.413 you'll farm, for example, is owned in a company structure 0:12:46.013 --> 0:12:47.013 or in a trust. 0:12:47.573 --> 0:12:50.013 How big is that difference, Well. 0:12:50.213 --> 0:12:54.413 In that case it's eleven percent twenty eight percent versus 0:12:54.453 --> 0:12:58.573 thirty nine percent on the dollar. These are not small amounts. Now, 0:12:59.333 --> 0:13:01.293 you could argue that you know, there's still a difference 0:13:01.293 --> 0:13:04.613 between the old trust rate of thirty three percent and 0:13:04.653 --> 0:13:08.613 twenty eight. Now that marginal you might you know, you 0:13:08.693 --> 0:13:13.573 might affect decision making, but certainly, eleven percent, eleven cents 0:13:13.573 --> 0:13:16.813 in the dollar is a heck of a big incentive 0:13:17.613 --> 0:13:20.893 to change your affairs. Now, for many farmers, they won't 0:13:21.013 --> 0:13:24.093 miss you know that, they won't have business advisors and 0:13:24.093 --> 0:13:26.453 management accountants of tax accountants. 0:13:26.013 --> 0:13:26.733 Up the wazoo. 0:13:26.973 --> 0:13:29.013 They're probably going to be caught by this when it's 0:13:29.013 --> 0:13:31.453 too late to change. Whereas I can tell you the 0:13:31.453 --> 0:13:35.573 beginning of town. Of course, they are restructuring their affairs 0:13:35.813 --> 0:13:38.253 for it because they see it coming down the line. 0:13:39.013 --> 0:13:43.413 They see it from the thirty second floor exactly all right. 0:13:44.773 --> 0:13:48.253 Just with regard to something else, but associated the money 0:13:48.253 --> 0:13:52.573 that's available in this country for business, for working, for development, 0:13:52.733 --> 0:13:57.173 for advancing is in very short supply. It has been 0:13:57.213 --> 0:13:59.853 said by others that we need we need to get 0:13:59.973 --> 0:14:02.973 foreign money into the country and it doesn't matter where 0:14:03.013 --> 0:14:05.773 it comes from. Do you subscribe to that. 0:14:07.173 --> 0:14:09.813 Yeah, I mean, the the thing is is we are 0:14:10.093 --> 0:14:15.493 the most, according to the OECD, the most restrictive in 0:14:15.613 --> 0:14:19.413 terms of being able to get foreign direct investment in 0:14:19.533 --> 0:14:23.093 New Zealand. Now, I appreciate that you will have listeners 0:14:23.133 --> 0:14:30.413 that don't like the idea of having businesses owned from overseas. 0:14:30.493 --> 0:14:33.013 You know, the other end of that spectrum would be Ireland, 0:14:33.093 --> 0:14:38.293 where enormous amounts of capital have flown in. And a 0:14:38.293 --> 0:14:41.093 big reason for that is that they took the very 0:14:41.093 --> 0:14:45.693 conscious decision in the nineteen seventies that we no longer 0:14:45.733 --> 0:14:48.213 want to be the poor man in Europe anymore. I 0:14:48.253 --> 0:14:52.093 mean it's the prior to Jacinder Ardurn resigning, I re 0:14:52.173 --> 0:14:55.453 called doing a similar sort of planning day with the 0:14:55.493 --> 0:14:58.293 board and staff in December. 0:14:58.373 --> 0:15:00.053 What was that December twenty twenty two. 0:15:00.853 --> 0:15:03.933 And the assumption we were working on is that, you know, 0:15:03.973 --> 0:15:07.773 the Ardourn government is toast, we were likely to get 0:15:07.813 --> 0:15:10.213 a change of government in twenty twenty three. 0:15:10.813 --> 0:15:12.533 What is the role of the taxpas union? 0:15:12.573 --> 0:15:17.613 And we were actually calling it a Project Horizons or 0:15:17.653 --> 0:15:22.053 Project Ireland because one thing that New Zealand seems to 0:15:22.093 --> 0:15:25.453 have fallen into the trap of is not only are 0:15:25.453 --> 0:15:29.493 we getting progressively poorer and in this sort of economic drift, 0:15:30.333 --> 0:15:32.533 is we seem to have not we seem to be 0:15:32.573 --> 0:15:36.373 accepting it a big I think I may have told sorry, 0:15:36.373 --> 0:15:38.053 I may have told you this story before, but it 0:15:38.093 --> 0:15:40.533 was particularly influential on. 0:15:42.253 --> 0:15:42.293 Me. 0:15:42.333 --> 0:15:46.173 And I tell the story about in Ruth Richardson's Batch 0:15:46.213 --> 0:15:50.293 and Warnakah. There is the Garrick Tremaine cartoon from when 0:15:50.293 --> 0:15:53.253 she was sacked by Bulger and ruth A. 0:15:53.453 --> 0:15:55.133 She's in a space. 0:15:54.853 --> 0:15:59.453 Costumer and you know, a spacesuit on the moon and 0:15:59.573 --> 0:16:05.653 the speech bubble coming out is inflation under two percent. 0:16:06.093 --> 0:16:09.493 I think she inherited it about six or seven government 0:16:09.573 --> 0:16:14.133 books in the black which he inherited. The bailout wasn't public, 0:16:14.173 --> 0:16:17.573 but she inherited the bailout of the old old ben 0:16:17.653 --> 0:16:23.733 zed economic growth five percent. My job here is done. 0:16:24.013 --> 0:16:27.853 Beat me up, Scotty. Now. It really stood out to 0:16:27.933 --> 0:16:29.813 me because. 0:16:29.653 --> 0:16:33.253 I cannot remember the last time he had a politician 0:16:33.453 --> 0:16:39.093 even talk about aiming for the goal of growth at 0:16:39.133 --> 0:16:42.693 five percent. You know, that's what Ireland and Estonia are 0:16:42.733 --> 0:16:45.773 achieving on average, whereas we are more sort of two 0:16:45.773 --> 0:16:50.213 to three percent and even worse right now, where we've 0:16:50.213 --> 0:16:53.173 got a tiny bit of growth, but we are getting 0:16:53.253 --> 0:16:56.133 on a per capita basis, on a per person basis, 0:16:56.733 --> 0:17:00.053 we are not only getting poorer on that measure, we're 0:17:00.053 --> 0:17:05.413 in the longer recession since records began. When you look 0:17:05.453 --> 0:17:10.373 at GDP per capita or or per person. So we 0:17:10.533 --> 0:17:14.333 saw the role of you know, a group like the 0:17:14.373 --> 0:17:19.013 Taxpayer's Union to actually promote that conversation of what, you know, 0:17:19.573 --> 0:17:22.973 the little country that could, what could New Zealand be? 0:17:23.093 --> 0:17:25.693 And we see symptoms of that every day. You know, 0:17:25.773 --> 0:17:30.973 the the drugs that until recently we weren't able to 0:17:31.173 --> 0:17:32.093 we didn't have the money to. 0:17:33.253 --> 0:17:35.253 How could we still don't have the money to do it. 0:17:35.293 --> 0:17:40.933 But the services and drugs that are available in Australia 0:17:41.773 --> 0:17:45.893 because they produce on a per per hour work or 0:17:45.933 --> 0:17:47.533 per capita. 0:17:47.093 --> 0:17:48.373 They produce a third more. 0:17:48.973 --> 0:17:54.333 It's not having those options for what government services you 0:17:54.373 --> 0:17:56.973 can have, what households can afford. 0:17:57.293 --> 0:17:59.213 That's what you. 0:17:59.173 --> 0:18:03.133 Know when you're in a fiscal fiscal drift for basically 0:18:03.173 --> 0:18:07.973 a generation, when you haven't when your labor productivity hasn't. 0:18:07.733 --> 0:18:12.773 Moved a decade. It these are the flow on effects. 0:18:12.813 --> 0:18:15.453 So the role of the taxpayers units is to focus 0:18:15.493 --> 0:18:19.173 on how do we promote the political conversation, So it's 0:18:19.213 --> 0:18:23.533 not just about how you slice the pie, but actually 0:18:24.053 --> 0:18:29.333 getting ruthlessly focused in the electorate, focused on how do 0:18:29.413 --> 0:18:32.653 we grow it and how do we make not just 0:18:32.653 --> 0:18:33.653 an asiell and catch. 0:18:33.493 --> 0:18:34.253 Up with Australia. 0:18:34.333 --> 0:18:36.253 At least John Key used to talk about that but 0:18:36.333 --> 0:18:39.773 we don't even hear that anymore coming from the beehive, 0:18:40.853 --> 0:18:44.453 but actually setting our sites higher. And i'd hold up 0:18:45.373 --> 0:18:51.053 Estonia or Sorry, or Ireland in particular. You know, Ireland's 0:18:51.093 --> 0:18:55.613 the only country in Europe that its population now is 0:18:55.653 --> 0:18:57.573 still less than it was at the beginning of the 0:18:57.573 --> 0:18:58.453 eighteen hundreds. 0:18:58.493 --> 0:18:59.373 It's the only. 0:18:59.733 --> 0:19:04.613 Basically its history was Its history was exporting people and 0:19:05.013 --> 0:19:08.093 being poor. In the nineteen seventies, they took a very 0:19:08.333 --> 0:19:10.613 anxious decision that we're not going to be poor anymore, 0:19:11.293 --> 0:19:14.373 and they made public and continue to make public policy 0:19:14.493 --> 0:19:19.693 choices to get off that track. And I'd argue, have 0:19:20.453 --> 0:19:22.573 they are on the very opposite end of us in 0:19:22.653 --> 0:19:27.453 terms of foreign direct investment. They've made themselves very attractive 0:19:27.973 --> 0:19:29.573 and they've also reaped the rewards. 0:19:30.373 --> 0:19:34.173 There's a couple of things I'd mentioned, And see how 0:19:34.213 --> 0:19:38.213 you feel if it had been Bulgerho had been sacked 0:19:38.253 --> 0:19:41.613 and by Ruth Richardson in the positions that they were 0:19:41.613 --> 0:19:44.333 both in. But let's say he was sacked and she 0:19:44.533 --> 0:19:48.733 was and she remained in business. Do you think the 0:19:48.773 --> 0:19:50.533 world would be a better place for New Zealand. 0:19:52.053 --> 0:19:56.893 Well, New Zealand profited for a long time off the 0:19:57.013 --> 0:20:00.493 hard work that was done by a generation of politicians 0:20:00.933 --> 0:20:03.973 in the mid eighties to about the mid nineties, and 0:20:04.013 --> 0:20:07.133 then we've really drifted. I mean, this is the common 0:20:07.173 --> 0:20:11.533 theme of the economic experts you have on your show 0:20:11.733 --> 0:20:15.173 late and you know we've we look at that and 0:20:15.173 --> 0:20:18.693 it's what made that budget, you know, so disappointing that 0:20:19.053 --> 0:20:21.733 you know, I sweet, I've had a lot of kickback 0:20:21.773 --> 0:20:24.413 from our people how rough we were. 0:20:26.333 --> 0:20:27.253 On the maze. 0:20:26.933 --> 0:20:31.053 Budget, because of course we all know that Grant Robinson 0:20:31.093 --> 0:20:34.613 in the last government put us on a terrible, terrible path. 0:20:35.573 --> 0:20:38.773 I sweated bricks to get rid of the last government. 0:20:38.853 --> 0:20:42.333 You know when when Ardurn resigned and Chris Hipkins took over. 0:20:43.013 --> 0:20:45.693 Let me tell you, those plans absolutely went out the 0:20:45.693 --> 0:20:50.853 window when the polls tightened and it wasn't clear you know, 0:20:50.893 --> 0:20:53.813 what the election result may be. I sweated bricks to 0:20:53.813 --> 0:20:56.933 get rid of them, but I didn't do it to 0:20:57.053 --> 0:21:02.013 have a national lead or a Tory coalition government which 0:21:02.053 --> 0:21:06.933 is spending more than Grant Robinson, including as a percentage 0:21:06.973 --> 0:21:12.853 of GDP, is pushing back us getting the books back 0:21:12.973 --> 0:21:18.613 into black and instead of you know, sacking those twenty 0:21:18.693 --> 0:21:22.453 thousand extra public servants is actually I think the last 0:21:22.493 --> 0:21:24.413 count it's only two hundred and fifty. They talk about 0:21:24.453 --> 0:21:26.853 all these sackings, but then the new ones they're coming 0:21:26.853 --> 0:21:31.533 in the latest Public Service Report Public Service Commission reporters 0:21:31.573 --> 0:21:34.533 that only two hundred and fifty have actually met, have 0:21:34.653 --> 0:21:39.373 actually gone. What their own effect doing is locking in 0:21:39.453 --> 0:21:42.893 that sort of post COVID bonanza of government spending. 0:21:43.173 --> 0:21:44.213 Oh and that's the other thing. 0:21:45.053 --> 0:21:50.213 Is the pathway back to surplus under Nichola Willis's first 0:21:50.213 --> 0:21:55.173 budget relies on the exact same mischief of fiscal drag, 0:21:55.293 --> 0:21:59.813 of not changing tax thresholds with inflation that she spent 0:21:59.933 --> 0:22:03.973 all her years in opposition complaining about, and rightfully so 0:22:04.573 --> 0:22:09.013 about Grant Robertson. And yet that instead of rationalize in spending, 0:22:09.613 --> 0:22:12.813 that is what the government is relying on to get 0:22:12.893 --> 0:22:14.613 us back into surplus. 0:22:14.973 --> 0:22:17.173 All right, let me back up a bit. You mentioned 0:22:17.213 --> 0:22:20.653 capital gains a couple of times. That's one blessing we 0:22:20.693 --> 0:22:22.893 do have that we don't have capital gains. Every time 0:22:22.893 --> 0:22:27.693 it comes up for discussions, it's shot dead. Do you 0:22:27.853 --> 0:22:30.693 think there is grounds for capital gains? 0:22:31.013 --> 0:22:33.493 I think reason our minds can differ on it. The 0:22:33.733 --> 0:22:37.533 proposal that was put in front of us by the 0:22:37.573 --> 0:22:40.653 Tax Working Group in Sir Michael Cullen would have been 0:22:40.893 --> 0:22:44.293 one of the most aggreatable, actually not one of the most. 0:22:44.413 --> 0:22:46.493 We could not find an example in. 0:22:46.453 --> 0:22:49.133 The world as aggressive as that one for a couple 0:22:49.173 --> 0:22:52.573 of reasons. The first is that unlike I mean, it 0:22:52.613 --> 0:22:57.053 was a minisatively very complex because it had everything came 0:22:57.093 --> 0:22:59.333 in from day one. It wasn't like the Australians where 0:22:59.373 --> 0:23:04.853 it was it came in as assets were sold and purchased. 0:23:05.253 --> 0:23:07.733 That's the first. The second is that it would be among. 0:23:07.493 --> 0:23:12.173 The highest in the world because poy income or if 0:23:12.173 --> 0:23:15.333 you know, you go and turn up for work and 0:23:15.373 --> 0:23:19.493 get wages as much lower risk than putting capital on 0:23:19.533 --> 0:23:23.213 the line and investing in say a business, and almost 0:23:23.293 --> 0:23:26.533 all of the world have a much lower rate for 0:23:26.653 --> 0:23:31.093 capital gains for that reason because you're risk adjusting it, 0:23:31.413 --> 0:23:38.773 whereas Michael Cullen's proposal had it at the at your 0:23:38.973 --> 0:23:42.413 marginal rate. So it was it was, it was very high. 0:23:42.813 --> 0:23:44.213 I was also not reven neutral. 0:23:44.253 --> 0:23:45.013 It was done. 0:23:44.853 --> 0:23:50.453 Clearly as a tax grab rather than attach a tax switch. 0:23:50.933 --> 0:23:56.053 And it also tax inflation. If you simply your return 0:23:56.173 --> 0:23:59.053 on the on the asset was no higher than the 0:23:59.093 --> 0:24:02.293 inflation rate. The politicians still came along and grabbed you. 0:24:02.573 --> 0:24:04.973 So it was an unfair tax in that regard to 0:24:05.453 --> 0:24:08.493 that wasn't the model I would hold up, but it 0:24:08.573 --> 0:24:11.733 was the model that was in front of us when 0:24:11.773 --> 0:24:15.853 we had that capital gains fight some years ago. In 0:24:15.973 --> 0:24:21.613 terms of we survey our supporters pretty regularly, and you know, 0:24:21.693 --> 0:24:23.613 I can tell you that you know, as I say, 0:24:23.693 --> 0:24:27.053 reasonable minds can differ on this. I remember my former 0:24:27.613 --> 0:24:33.493 Chia Barry Saunders, is relatively relaxed about the capital gains 0:24:33.493 --> 0:24:38.133 tax in principle. But the problem that we didn't have 0:24:38.253 --> 0:24:39.893 to have that argument because of the one that was 0:24:39.893 --> 0:24:42.173 in front of us was so bad. Just step back 0:24:42.253 --> 0:24:46.733 though in a New Zealand context. The problem, the economic 0:24:46.973 --> 0:24:52.093 problem that you and I have talked about around our 0:24:52.453 --> 0:24:57.733 productivity issue, it's the story of the economic history of 0:24:57.773 --> 0:25:02.813