1 00:00:05,080 --> 00:00:05,480 Speaker 1: Kiota. 2 00:00:05,559 --> 00:00:08,800 Speaker 2: I'm Chelsea Daniels and this is the Front Page, a 3 00:00:08,880 --> 00:00:16,800 Speaker 2: daily podcast presented by the New Zealand Herald. Labor has 4 00:00:16,840 --> 00:00:21,720 Speaker 2: announced what Summer describing as a watered down version of 5 00:00:21,760 --> 00:00:23,000 Speaker 2: a capital gains tax. 6 00:00:23,320 --> 00:00:26,040 Speaker 1: Labour's targeted CGT would. 7 00:00:25,880 --> 00:00:30,680 Speaker 2: Affect profit made after July twenty twenty seven from selling 8 00:00:30,720 --> 00:00:35,040 Speaker 2: a commercial or residential property excluding the family home. 9 00:00:35,479 --> 00:00:38,960 Speaker 1: Leader Chris Hipkins promises nine out of ten kiwis won't 10 00:00:39,000 --> 00:00:40,559 Speaker 1: pay tax on what they own. 11 00:00:40,800 --> 00:00:45,400 Speaker 2: And it'll allow everyone to get three three doctors visits 12 00:00:45,560 --> 00:00:48,959 Speaker 2: a year. On the flip side, National's calling it an 13 00:00:49,000 --> 00:00:54,120 Speaker 2: attack on investment and savings, with Finance Minister Nikola Willis 14 00:00:54,120 --> 00:00:57,400 Speaker 2: saying it would put New Zealand's economic. 15 00:00:56,920 --> 00:00:58,600 Speaker 1: Recovery at risk. 16 00:00:59,240 --> 00:01:03,080 Speaker 2: Today on the front, infometrics economist Brad Olsen is with 17 00:01:03,240 --> 00:01:06,760 Speaker 2: us to dive into the details of Labour's latest to 18 00:01:06,880 --> 00:01:13,120 Speaker 2: pitch to the public. Brad, tell me what your first 19 00:01:13,160 --> 00:01:15,360 Speaker 2: thoughts were when you saw this policy. 20 00:01:16,880 --> 00:01:19,479 Speaker 3: Look, it was challenging to see when we got their 21 00:01:19,480 --> 00:01:21,800 Speaker 3: policy announcement. It came out very early in the morning 22 00:01:21,840 --> 00:01:24,080 Speaker 3: five o three am. I think that it didn't have 23 00:01:24,120 --> 00:01:26,240 Speaker 3: some of the fairly basic policies that you might have 24 00:01:26,360 --> 00:01:30,320 Speaker 3: inspected or basic elements of a policy on cats. It 25 00:01:30,360 --> 00:01:32,280 Speaker 3: didn't have any numbers around it. We didn't know how 26 00:01:32,360 --> 00:01:36,080 Speaker 3: much revenue this capital gains tax or limited capital gain 27 00:01:36,160 --> 00:01:38,000 Speaker 3: tax and expected to bring in, So it was a 28 00:01:38,000 --> 00:01:41,560 Speaker 3: bit challenging to start with, alongside the fact that you know, 29 00:01:41,600 --> 00:01:44,080 Speaker 3: looking through the detail, it was clear that this was 30 00:01:44,120 --> 00:01:46,560 Speaker 3: a very narrow capital gain sex. It was focused on 31 00:01:46,600 --> 00:01:49,720 Speaker 3: the lacks of residential property outside the family home and 32 00:01:49,880 --> 00:01:52,880 Speaker 3: commercial property, but it had a much longer list of 33 00:01:53,080 --> 00:01:55,840 Speaker 3: exceptions that weren't included. And when you sort of have 34 00:01:55,880 --> 00:01:58,200 Speaker 3: a policy that includes two bullet points of what is 35 00:01:58,280 --> 00:02:00,840 Speaker 3: in and a whole lot of bullet point of what's 36 00:02:00,880 --> 00:02:03,080 Speaker 3: cast out, you really do start to get the feeling 37 00:02:03,160 --> 00:02:06,680 Speaker 3: that it's sort of quite constrained. The idea generally with 38 00:02:06,720 --> 00:02:09,119 Speaker 3: a tax policy, certainly from an economics point of view, 39 00:02:09,400 --> 00:02:11,400 Speaker 3: is you want it as broad based as possible so 40 00:02:11,440 --> 00:02:15,000 Speaker 3: that reduces those administration costs. It means that income has 41 00:02:15,040 --> 00:02:17,760 Speaker 3: broadly sort of taxed a similar way instead of at 42 00:02:17,760 --> 00:02:19,720 Speaker 3: the moment, we now start to risk having a whole 43 00:02:19,720 --> 00:02:22,720 Speaker 3: lot of different silos that things fall into. Probably one 44 00:02:22,760 --> 00:02:25,400 Speaker 3: of the more challenging ones that we've started to uncover 45 00:02:25,560 --> 00:02:28,440 Speaker 3: as we've started to get through the policy detail is 46 00:02:28,480 --> 00:02:31,680 Speaker 3: the fact that this policy is expected to pay for 47 00:02:31,800 --> 00:02:34,800 Speaker 3: a new healthcare policy for three VP trips per person 48 00:02:34,919 --> 00:02:37,680 Speaker 3: per year. The difficulty is this, it looks like what 49 00:02:37,720 --> 00:02:40,560 Speaker 3: we call a hypothicated tax that the money that is 50 00:02:40,800 --> 00:02:43,200 Speaker 3: coming in from the capital gains taxes ring fenced and 51 00:02:43,240 --> 00:02:47,120 Speaker 3: can only be spent on that new health proposal. So done, 52 00:02:47,120 --> 00:02:49,079 Speaker 3: seeing a little bit odd to tie capital gains to 53 00:02:49,880 --> 00:02:53,160 Speaker 3: health funding. Good to sort of see a connection in 54 00:02:53,240 --> 00:02:55,680 Speaker 3: terms of the government wants to highlight a priority area, 55 00:02:55,880 --> 00:02:58,320 Speaker 3: but seemed a little bit sort of specific to link 56 00:02:58,360 --> 00:02:59,799 Speaker 3: those two parts together. 57 00:03:01,720 --> 00:03:05,000 Speaker 1: First of a couple of things to unpack there. First off, 58 00:03:05,080 --> 00:03:07,359 Speaker 1: can you tell me a little bit more about the numbers, 59 00:03:07,440 --> 00:03:07,959 Speaker 1: how much. 60 00:03:07,840 --> 00:03:14,280 Speaker 2: Do they actually expect to generate from this ring fenced policy? 61 00:03:14,760 --> 00:03:18,280 Speaker 2: And secondly, can you even I mean, is it even 62 00:03:18,320 --> 00:03:22,920 Speaker 2: possible economically to make sure that that specific money goes 63 00:03:22,960 --> 00:03:24,520 Speaker 2: into this specific pot? 64 00:03:28,280 --> 00:03:31,399 Speaker 3: I mean, certainly you can make sure that it goes 65 00:03:31,440 --> 00:03:34,240 Speaker 3: into that specific pot. We have very limited sort of 66 00:03:34,280 --> 00:03:36,640 Speaker 3: direct funding initiatives in New Zealand, but one of them 67 00:03:36,680 --> 00:03:38,920 Speaker 3: is that likes of the National Land Transport Time. So 68 00:03:39,040 --> 00:03:41,320 Speaker 3: all the money that goes from the likes of petrol 69 00:03:41,360 --> 00:03:43,960 Speaker 3: text and similar goes into a separate pot that can 70 00:03:44,000 --> 00:03:46,760 Speaker 3: only be spent on transport. So we do do that. 71 00:03:47,280 --> 00:03:49,720 Speaker 3: It is an option, but it's unusual to link something 72 00:03:49,760 --> 00:03:52,000 Speaker 3: like capital gains and health If you were to link 73 00:03:52,040 --> 00:03:54,960 Speaker 3: health money into health money out maybe, but to have 74 00:03:55,080 --> 00:03:57,320 Speaker 3: something sort of quite different on the INDs and the 75 00:03:57,320 --> 00:04:00,280 Speaker 3: outside as unusual. You can technically do it. But to 76 00:04:00,720 --> 00:04:03,000 Speaker 3: first question around how much is expected to be brought in, 77 00:04:03,360 --> 00:04:05,320 Speaker 3: it's not going to be nearly as much of anyone 78 00:04:05,640 --> 00:04:08,320 Speaker 3: probably would have thought of before. Capital gains just aren't 79 00:04:08,400 --> 00:04:11,640 Speaker 3: nearly as strong forecasts into the future, and so you know, 80 00:04:12,000 --> 00:04:14,400 Speaker 3: the figures are in sort of the low hundreds of 81 00:04:14,440 --> 00:04:17,119 Speaker 3: millions of dollars that have been talked about, and Labor 82 00:04:17,279 --> 00:04:20,640 Speaker 3: themselves highlighted that the expected amount coming in is expected 83 00:04:20,680 --> 00:04:23,320 Speaker 3: to be small and to sort of scar up over time. 84 00:04:23,400 --> 00:04:25,640 Speaker 3: I think that's understandable given where the likes of the 85 00:04:25,640 --> 00:04:28,920 Speaker 3: property market and SMAR is. But we're not talking a lot. 86 00:04:28,960 --> 00:04:30,920 Speaker 3: It's not billions of dollars a year that we're going 87 00:04:30,960 --> 00:04:33,800 Speaker 3: to be generating if from this sort of proposing going forward, 88 00:04:33,960 --> 00:04:36,400 Speaker 3: if it were to come into action. 89 00:04:37,080 --> 00:04:39,440 Speaker 2: Well, if we speak hypothetically as well, if it did 90 00:04:39,440 --> 00:04:42,160 Speaker 2: come into action, I can see everybody selling off stuff 91 00:04:42,200 --> 00:04:44,040 Speaker 2: before the tax takes effect. 92 00:04:44,560 --> 00:04:45,640 Speaker 1: Does that usually. 93 00:04:45,360 --> 00:04:49,359 Speaker 3: Happen Potentially, I think that'll be a little bit short 94 00:04:49,360 --> 00:04:53,159 Speaker 3: sighted from people, I mean, and realistically that's because of 95 00:04:53,200 --> 00:04:56,160 Speaker 3: one of the biggest misconceptions of the capital gains taxes 96 00:04:56,200 --> 00:04:58,120 Speaker 3: that oh, well, I've got all these gains that are 97 00:04:58,160 --> 00:05:00,720 Speaker 3: going to be taxed for the last fifty years. No, 98 00:05:00,839 --> 00:05:03,440 Speaker 3: the policy is quite clear that it's not retrospective. It 99 00:05:03,480 --> 00:05:06,040 Speaker 3: starts from I think the first of July twenty twenty 100 00:05:06,040 --> 00:05:08,039 Speaker 3: seven if it were to be enacted. So it means 101 00:05:08,080 --> 00:05:10,520 Speaker 3: that you could buy a house right here today, it 102 00:05:10,640 --> 00:05:14,400 Speaker 3: might make let's say, fifty thousand dollars between now and 103 00:05:14,480 --> 00:05:16,960 Speaker 3: twenty twenty seven, and then after twenty twenty seven you 104 00:05:17,320 --> 00:05:19,720 Speaker 3: make another fifty thousand dollars, so one hundred k all 105 00:05:19,800 --> 00:05:21,640 Speaker 3: up before you sold it in I don't know twenty 106 00:05:21,680 --> 00:05:24,640 Speaker 3: twenty nine. You'd only pay tax and it would be 107 00:05:24,640 --> 00:05:27,880 Speaker 3: twenty eight percent of the profit. So the additional gain 108 00:05:28,200 --> 00:05:30,520 Speaker 3: that you'd make, which would be the fifty thousand dollars 109 00:05:30,520 --> 00:05:32,800 Speaker 3: made after July twenty twenty seven, so you might have 110 00:05:32,839 --> 00:05:34,920 Speaker 3: had an asset for forty years, doesn't matter how many 111 00:05:35,160 --> 00:05:37,120 Speaker 3: how much of a capital gain it has made. None 112 00:05:37,120 --> 00:05:39,159 Speaker 3: of that would be taxes only sort of going into 113 00:05:39,160 --> 00:05:42,080 Speaker 3: the future. So I'd find it pretty hard to believe 114 00:05:42,080 --> 00:05:43,560 Speaker 3: that there'd be a whole bunch of people out there 115 00:05:43,560 --> 00:05:45,800 Speaker 3: who would have an asset at the moment and he'd go, 116 00:05:45,839 --> 00:05:47,440 Speaker 3: you know what, I'm going to sell it off and 117 00:05:47,480 --> 00:05:50,240 Speaker 3: then do what with the money, presumably buy another APT 118 00:05:50,360 --> 00:05:53,200 Speaker 3: in the future. So there's a lot of talk about it. 119 00:05:53,240 --> 00:05:55,720 Speaker 3: I just don't think it would be necessarily as sensible 120 00:05:55,800 --> 00:05:58,560 Speaker 3: to do it. Quite different though, this proposal from the 121 00:05:58,600 --> 00:06:01,440 Speaker 3: Lakes and All wealth tax, where no matter if you 122 00:06:01,520 --> 00:06:03,000 Speaker 3: sold it or not, you were going to be paying 123 00:06:03,000 --> 00:06:05,080 Speaker 3: a whole bunch of pecks out each and every year, 124 00:06:05,120 --> 00:06:07,560 Speaker 3: which is generally why capital gain sex is a much 125 00:06:07,600 --> 00:06:10,200 Speaker 3: more appropriate way to move things to the tech system 126 00:06:10,440 --> 00:06:12,120 Speaker 3: than to go for something like the wealth tax. 127 00:06:13,240 --> 00:06:15,000 Speaker 2: I only say that because a lot of people sold 128 00:06:15,040 --> 00:06:17,919 Speaker 2: their houses and cars before the rapture was meant to 129 00:06:17,920 --> 00:06:20,080 Speaker 2: be coming, so I know that there will be a 130 00:06:20,120 --> 00:06:24,520 Speaker 2: few people selling off their farm or their commercial property beforehand. 131 00:06:25,560 --> 00:06:29,120 Speaker 2: In terms of so that I know that they want 132 00:06:29,160 --> 00:06:32,799 Speaker 2: they're allowing for I think she's Aishaverel said four point 133 00:06:32,880 --> 00:06:35,760 Speaker 2: five million extra doctor's visits. 134 00:06:35,560 --> 00:06:38,599 Speaker 1: A couple of hundred mil. Do you reckon that that'll 135 00:06:38,600 --> 00:06:39,080 Speaker 1: cover it? 136 00:06:40,880 --> 00:06:42,960 Speaker 3: Well, I mean, look, they've done some costing, so at 137 00:06:43,040 --> 00:06:45,280 Speaker 3: least we've got some numbers now. So far we've sort 138 00:06:45,279 --> 00:06:47,680 Speaker 3: of were operating a little bit in the blind always 139 00:06:47,760 --> 00:06:49,880 Speaker 3: nice and a little bit more detail behind them. But look, 140 00:06:49,960 --> 00:06:53,120 Speaker 3: all sort of work with what we've got for the minute. Look, 141 00:06:53,360 --> 00:06:55,440 Speaker 3: I think going forward, there's a question of, you know, 142 00:06:55,480 --> 00:06:58,120 Speaker 3: how does that sort of change demand for health care 143 00:06:58,160 --> 00:07:00,560 Speaker 3: in general? But also, I mean one of the questions 144 00:07:00,560 --> 00:07:04,839 Speaker 3: and the challenges here why universal? Why do people who 145 00:07:04,880 --> 00:07:07,000 Speaker 3: earn I don't know, two one hundred thousand dollars a year, 146 00:07:07,040 --> 00:07:09,320 Speaker 3: what do they need three free GPS? It's a year 147 00:07:09,920 --> 00:07:12,360 Speaker 3: that seems like an expreme amount of funding to sort 148 00:07:12,360 --> 00:07:16,800 Speaker 3: of put universally for something like that, rather than targeting 149 00:07:16,840 --> 00:07:18,600 Speaker 3: it to those who need it the most. And I 150 00:07:18,640 --> 00:07:20,320 Speaker 3: mean part of that seems to come down to an 151 00:07:20,320 --> 00:07:24,560 Speaker 3: ideological sort of divide. We have some groups and parties 152 00:07:24,640 --> 00:07:27,160 Speaker 3: and similar who going while everything should be universal, others 153 00:07:27,200 --> 00:07:29,880 Speaker 3: who think it should be quite sort of specific and targeted. 154 00:07:30,320 --> 00:07:33,640 Speaker 3: Look generally, personally and economics. So I generally lean into 155 00:07:33,640 --> 00:07:35,440 Speaker 3: more of the let's get it to the specific people 156 00:07:35,440 --> 00:07:37,880 Speaker 3: that need it can because that's where you then can 157 00:07:37,960 --> 00:07:39,640 Speaker 3: reduce some of the costs, so you don't have to 158 00:07:39,640 --> 00:07:41,520 Speaker 3: sort of put it out to everyone. But look, there 159 00:07:41,560 --> 00:07:43,480 Speaker 3: will be a question I think around the likes of 160 00:07:43,520 --> 00:07:46,440 Speaker 3: resourcing and similar in the health system, given it's already 161 00:07:46,520 --> 00:07:50,520 Speaker 3: under pressure, but getting more money into frontline services and 162 00:07:50,600 --> 00:07:54,160 Speaker 3: through that sort of proactive preventative work that GPS do 163 00:07:54,640 --> 00:07:56,960 Speaker 3: is important. If you can get more resource in there, 164 00:07:57,000 --> 00:07:59,040 Speaker 3: then you don't you shouldn't have to put as much 165 00:07:59,120 --> 00:08:02,120 Speaker 3: resource into the other end of the spectrum because people 166 00:08:02,160 --> 00:08:05,160 Speaker 3: will actually go and get their issues sorted earlier rather 167 00:08:05,160 --> 00:08:08,040 Speaker 3: than waiting and waiting, waiting, going to the hospital late 168 00:08:08,080 --> 00:08:09,800 Speaker 3: and then costing a whole lot more. So I can 169 00:08:09,840 --> 00:08:12,240 Speaker 3: see that part of the approach on balance as being 170 00:08:12,320 --> 00:08:15,160 Speaker 3: quite efficient. It's just can you resource it? And look, 171 00:08:15,240 --> 00:08:17,240 Speaker 3: they're the challenge there at the moment. I think there 172 00:08:17,240 --> 00:08:21,920 Speaker 3: will be an ongoing challenge in the future. 173 00:08:24,080 --> 00:08:27,640 Speaker 4: Other countries have been doing this for years across the 174 00:08:27,720 --> 00:08:31,720 Speaker 4: Tasman Australia has had a capital gains tax for decades. 175 00:08:32,800 --> 00:08:37,359 Speaker 4: BIT treats rising wages, better conditions and strong public services 176 00:08:37,640 --> 00:08:40,560 Speaker 4: as signs of success and New Zealand should do the 177 00:08:40,640 --> 00:08:42,720 Speaker 4: same in terms. 178 00:08:42,520 --> 00:08:46,080 Speaker 2: Of the exemptions for family homes, farms, ki we saver 179 00:08:46,440 --> 00:08:48,160 Speaker 2: business assets, that kind of thing. 180 00:08:49,320 --> 00:08:51,400 Speaker 1: Why do you think they've taken this approach? 181 00:08:53,000 --> 00:08:55,520 Speaker 3: Look in my mind, the exemptions that they've made with 182 00:08:55,600 --> 00:08:58,080 Speaker 3: this narrow capital gains tax, it's very much sort of 183 00:08:58,080 --> 00:09:02,160 Speaker 3: politics over economics. There is an argument for a capital 184 00:09:02,200 --> 00:09:04,480 Speaker 3: gains tax at a comprehensive level, and in my mind 185 00:09:04,559 --> 00:09:07,040 Speaker 3: as an economist, that would include the family home, just 186 00:09:07,080 --> 00:09:08,840 Speaker 3: so that you don't have this sort of ability for 187 00:09:08,880 --> 00:09:11,120 Speaker 3: everyone to sort of play games with it, and you know, 188 00:09:11,160 --> 00:09:13,360 Speaker 3: you sort of say, well, my family home is the 189 00:09:13,360 --> 00:09:15,079 Speaker 3: one I grew up in, and my partner's family home 190 00:09:15,160 --> 00:09:16,560 Speaker 3: is the one that they grew up and so we 191 00:09:16,600 --> 00:09:19,680 Speaker 3: get to, you know, all that sort of question around 192 00:09:19,760 --> 00:09:24,319 Speaker 3: inheritance and everything else. You know what happens to that 193 00:09:24,360 --> 00:09:26,520 Speaker 3: sort of farm if you then sort of divide something 194 00:09:26,520 --> 00:09:28,520 Speaker 3: off and you add an extra property onto it, is 195 00:09:29,200 --> 00:09:30,960 Speaker 3: that a second home or is that just a farmster 196 00:09:31,080 --> 00:09:33,920 Speaker 3: which becomes exeent. Like you just get into this really 197 00:09:34,040 --> 00:09:36,880 Speaker 3: big challenge of sort of ruling in, ruling out that 198 00:09:37,320 --> 00:09:39,839 Speaker 3: causes for an administration, you need to get the accountants 199 00:09:39,840 --> 00:09:42,760 Speaker 3: and the lawyers and all that involved. So I find 200 00:09:42,800 --> 00:09:45,320 Speaker 3: that a bit challenging, but I think that's pragmatic from 201 00:09:45,360 --> 00:09:47,319 Speaker 3: the Labor Party because they want to manage the politics 202 00:09:47,320 --> 00:09:50,800 Speaker 3: of this hit. The form glorries around a more comprehensive 203 00:09:50,840 --> 00:09:53,120 Speaker 3: capital gains tax and wealth tax on similar that would 204 00:09:53,120 --> 00:09:55,400 Speaker 3: be quite broad. This time it's sort of focused very 205 00:09:55,480 --> 00:10:00,439 Speaker 3: much into areas that I except they think as a 206 00:10:00,600 --> 00:10:04,080 Speaker 3: political party has a little bit more ability to influence 207 00:10:04,120 --> 00:10:07,160 Speaker 3: the electorate if you're sort of looking to taxing people 208 00:10:07,200 --> 00:10:10,079 Speaker 3: who have a second home that's on a particularly large 209 00:10:10,160 --> 00:10:12,880 Speaker 3: large group, or those commercial properties that's not sort of 210 00:10:13,200 --> 00:10:16,040 Speaker 3: it shouldn't be inhabiting business activity itself and everything else. 211 00:10:16,120 --> 00:10:18,720 Speaker 3: I think that's the argument, and that came through in 212 00:10:18,760 --> 00:10:21,960 Speaker 3: the release from the Labor Party focusing on the fact 213 00:10:21,960 --> 00:10:24,560 Speaker 3: that I think nine to ten people wouldn't be hit 214 00:10:24,920 --> 00:10:27,199 Speaker 3: by this narrow capital gains tax. So again, there's sort 215 00:10:27,200 --> 00:10:29,400 Speaker 3: of a variety there in terms of what they're trying 216 00:10:29,400 --> 00:10:32,040 Speaker 3: to focus on politically as well as economically. 217 00:10:33,040 --> 00:10:35,559 Speaker 2: And the fact of the matter is Labors spent years 218 00:10:35,720 --> 00:10:38,640 Speaker 2: avoiding the issue of a wealth tax or a capital 219 00:10:38,679 --> 00:10:40,600 Speaker 2: gains tax. Will they won't they? 220 00:10:40,720 --> 00:10:44,319 Speaker 1: What do you reckon? Shifted the dial with Hepkins. 221 00:10:45,960 --> 00:10:48,320 Speaker 3: Well, I mean probably a little bit of the response 222 00:10:48,360 --> 00:10:50,120 Speaker 3: to the last time they tried this. I mean, remember 223 00:10:50,160 --> 00:10:52,480 Speaker 3: that last time that labor was in government. I think 224 00:10:52,480 --> 00:10:54,000 Speaker 3: this is probably one of the worst ways you could 225 00:10:54,000 --> 00:10:57,000 Speaker 3: ever go about tax policy, to be clear, is telling everyone, 226 00:10:57,040 --> 00:10:59,320 Speaker 3: telling the electric, telling the people, no, it's not happening, 227 00:10:59,320 --> 00:11:01,520 Speaker 3: We're not looking at it's not going to happen, designing 228 00:11:01,559 --> 00:11:04,240 Speaker 3: a whole system behind everyone else's back, and then done thing. 229 00:11:04,320 --> 00:11:06,280 Speaker 3: It's sort of a month or so before the budget, 230 00:11:06,320 --> 00:11:08,600 Speaker 3: which is exactly what we saw. And I think twenty 231 00:11:08,600 --> 00:11:13,040 Speaker 3: twenty three we need to have a conversation about tax 232 00:11:13,080 --> 00:11:15,160 Speaker 3: and I absolutely think that's true, But we need to 233 00:11:15,160 --> 00:11:17,560 Speaker 3: have a good conversation rather than sort of a bit 234 00:11:17,600 --> 00:11:19,600 Speaker 3: of a bat and switch where you tell everyone one thing, 235 00:11:19,679 --> 00:11:22,600 Speaker 3: do the other, and then you just undermine everything because well, 236 00:11:22,640 --> 00:11:24,480 Speaker 3: at the moment, who sort of would trust what later 237 00:11:24,520 --> 00:11:27,079 Speaker 3: says on tax that That's the challenge that I think 238 00:11:27,120 --> 00:11:29,240 Speaker 3: they has, which is also why I think they've come 239 00:11:29,240 --> 00:11:31,800 Speaker 3: out with this fairly narrow approach and going well, look, 240 00:11:31,880 --> 00:11:33,960 Speaker 3: this is not going to knock this, so of everyone, 241 00:11:34,000 --> 00:11:37,800 Speaker 3: that's a sort of a more quite constrained option. It's 242 00:11:37,800 --> 00:11:40,719 Speaker 3: a constrained tax policy being taken on. It's a more 243 00:11:40,760 --> 00:11:43,920 Speaker 3: sort of and softly approach. The risk, of course with 244 00:11:44,080 --> 00:11:45,840 Speaker 3: that is that what does it do enough to sort 245 00:11:45,840 --> 00:11:48,280 Speaker 3: of change the dial And after a period where let's 246 00:11:48,280 --> 00:11:50,920 Speaker 3: be clear, canceital gains of runne course a little bit, 247 00:11:51,040 --> 00:11:53,480 Speaker 3: maybe not fully, but some of your bigger capital gains 248 00:11:53,480 --> 00:11:55,520 Speaker 3: happened over the last sort of ten twenty years, and 249 00:11:55,559 --> 00:11:58,960 Speaker 3: with house prices currently down on a year ago depending 250 00:11:58,960 --> 00:12:01,880 Speaker 3: on the measure, years not looking particularly strong to have 251 00:12:02,000 --> 00:12:05,160 Speaker 3: those in the future. What I think changed is political polling. 252 00:12:05,640 --> 00:12:08,160 Speaker 3: You know, you've seen continued support actually in the last 253 00:12:08,200 --> 00:12:10,720 Speaker 3: couple of years for a capital gains tax, at least 254 00:12:10,720 --> 00:12:12,600 Speaker 3: at this more sort of narrow level. So it does 255 00:12:12,679 --> 00:12:15,320 Speaker 3: give an ability to say, well, look, people are asking 256 00:12:15,400 --> 00:12:18,199 Speaker 3: for it. It's clearly a want as well to invest 257 00:12:18,280 --> 00:12:21,199 Speaker 3: more into health. So I think that's where coming bringing 258 00:12:21,200 --> 00:12:23,920 Speaker 3: everything together, there was an economic reason as well as 259 00:12:23,920 --> 00:12:24,760 Speaker 3: a political reason. 260 00:12:29,880 --> 00:12:32,720 Speaker 5: Now I watched Chris Hipkins stand up. There were three 261 00:12:32,800 --> 00:12:40,680 Speaker 5: words he refuses to say capital gains tax. Mark my words. 262 00:12:41,200 --> 00:12:45,040 Speaker 5: That is what labor is proposing and far from what 263 00:12:45,200 --> 00:12:48,800 Speaker 5: Hipkins and Edmonds have claimed. This is a broad capital 264 00:12:48,840 --> 00:12:53,360 Speaker 5: gains tax. It will include all commercial property that is 265 00:12:53,400 --> 00:12:57,800 Speaker 5: to say, land and buildings that are not residential. That 266 00:12:57,960 --> 00:13:01,160 Speaker 5: is effectively a tax on every are you business in 267 00:13:01,480 --> 00:13:02,160 Speaker 5: New Zealand. 268 00:13:03,040 --> 00:13:04,920 Speaker 1: It's a disappointing that they haven't gone the. 269 00:13:04,880 --> 00:13:08,840 Speaker 3: Full hog though, oh as an economist, I think it 270 00:13:08,880 --> 00:13:11,760 Speaker 3: is a missed opportunity to not have done the whole thing, 271 00:13:12,080 --> 00:13:13,760 Speaker 3: or to be honest, have thought about what we could 272 00:13:13,760 --> 00:13:16,600 Speaker 3: do or should do more broadly around the likes of 273 00:13:16,640 --> 00:13:19,240 Speaker 3: the tax system in terms of how you sort of 274 00:13:19,280 --> 00:13:22,679 Speaker 3: support more economic activity, but also sort of the efficiency 275 00:13:22,800 --> 00:13:26,640 Speaker 3: and the equity of the tax system. Like the idea 276 00:13:26,720 --> 00:13:29,400 Speaker 3: here right should be that you bring together as much 277 00:13:29,480 --> 00:13:32,240 Speaker 3: money as you need to fund the government from as 278 00:13:32,360 --> 00:13:34,400 Speaker 3: broad of a set of sources as you can, so 279 00:13:34,480 --> 00:13:36,800 Speaker 3: that there's sort of no one area that doesn't get text, 280 00:13:36,840 --> 00:13:38,640 Speaker 3: which means that another area has to get text a 281 00:13:38,640 --> 00:13:40,680 Speaker 3: whole lot more to make up for it. And so 282 00:13:40,760 --> 00:13:43,560 Speaker 3: in my mind, having something like the comprehensive capital gains 283 00:13:43,640 --> 00:13:45,920 Speaker 3: tax does seem sensible. It might not make a lot 284 00:13:45,920 --> 00:13:48,560 Speaker 3: of revenue at the moment, that's fine, but also looking 285 00:13:48,559 --> 00:13:51,319 Speaker 3: at other options like a land value tax or similar 286 00:13:51,720 --> 00:13:54,400 Speaker 3: or importantly, trying to reduce the top tax rate, which 287 00:13:54,400 --> 00:13:56,920 Speaker 3: at thirty nine percent, really does diminish the ability for 288 00:13:57,000 --> 00:14:00,520 Speaker 3: people to want to or the ability to invest in 289 00:14:00,559 --> 00:14:03,280 Speaker 3: businesses to quite the same degree because when they get 290 00:14:03,320 --> 00:14:05,520 Speaker 3: those returns will once they get over a certain amount 291 00:14:05,760 --> 00:14:07,840 Speaker 3: they get you lose a sort of you know, nearly 292 00:14:07,880 --> 00:14:10,880 Speaker 3: forty percent all at once. So there is a challenge there, 293 00:14:10,920 --> 00:14:13,200 Speaker 3: I think around this sort of cohesiveness of the entire 294 00:14:13,240 --> 00:14:15,560 Speaker 3: tax system. I think it is a missed opportunity to 295 00:14:15,559 --> 00:14:18,160 Speaker 3: have done more. But at least we're having the tax debate. 296 00:14:18,200 --> 00:14:20,520 Speaker 3: The concern, of course, is that this has already started 297 00:14:20,520 --> 00:14:23,960 Speaker 3: to turn into you know, a real misinformation while people 298 00:14:23,960 --> 00:14:26,640 Speaker 3: talking about tax you know, I've seen some parties who 299 00:14:26,680 --> 00:14:29,360 Speaker 3: are opposing this saying, you know, this is coming for 300 00:14:29,720 --> 00:14:32,200 Speaker 3: the businesses, and no it's not. It's coming for the 301 00:14:32,240 --> 00:14:34,680 Speaker 3: profit on someone who's got a commercial holding, so they 302 00:14:34,720 --> 00:14:38,320 Speaker 3: might have a twenty five million dollar factory or something 303 00:14:38,360 --> 00:14:40,640 Speaker 3: that they've had for thirty years, if it makes sense 304 00:14:40,720 --> 00:14:43,520 Speaker 3: for thirty thousand dollars over the next couple they will 305 00:14:43,520 --> 00:14:46,240 Speaker 3: pay twenty eight percent tax on the thirty thousand dollars 306 00:14:46,280 --> 00:14:48,480 Speaker 3: more not on the entire value of the asset. Like 307 00:14:48,520 --> 00:14:51,320 Speaker 3: there is some real stupid scare mungering out here that 308 00:14:51,360 --> 00:14:53,760 Speaker 3: I think misses the issue. But at the same time, 309 00:14:53,840 --> 00:14:56,040 Speaker 3: as an economist, yeah, I would have definitely liked a 310 00:14:56,040 --> 00:14:59,080 Speaker 3: more comprehensive option, if not having thought even more broadly 311 00:14:59,120 --> 00:15:00,400 Speaker 3: about the tax system. 312 00:15:00,760 --> 00:15:03,680 Speaker 2: Yeah, and certainly not small businesses as well, who I 313 00:15:03,760 --> 00:15:07,400 Speaker 2: assume would be renting their premises or or the shops 314 00:15:07,480 --> 00:15:10,480 Speaker 2: or whatever they're working out from. Why do you reckon 315 00:15:10,520 --> 00:15:15,880 Speaker 2: they stopped short at introducing a wealth tax? 316 00:15:16,080 --> 00:15:17,040 Speaker 1: I mean, do you reckon that? 317 00:15:17,080 --> 00:15:20,160 Speaker 2: They had to look at the Greens and saw the 318 00:15:20,200 --> 00:15:22,640 Speaker 2: backlash they got on all of their wealth tax stuff 319 00:15:23,000 --> 00:15:25,400 Speaker 2: from that Green budget, and they just want backed off 320 00:15:25,400 --> 00:15:27,720 Speaker 2: and said no, like, we're not We're not dipping our 321 00:15:27,800 --> 00:15:28,320 Speaker 2: toe into that. 322 00:15:29,600 --> 00:15:31,960 Speaker 3: I mean potentially, I sort of expect as well that 323 00:15:32,000 --> 00:15:34,080 Speaker 3: they will have done quite a bit of work in 324 00:15:34,120 --> 00:15:35,920 Speaker 3: the background, and I know, you know, you've talked to 325 00:15:35,920 --> 00:15:38,480 Speaker 3: people that seem to have a little bit more inside 326 00:15:38,480 --> 00:15:40,520 Speaker 3: knowledge and they highlight that over time they have been 327 00:15:40,560 --> 00:15:43,000 Speaker 3: discussions within the Labor Party over which way the sort 328 00:15:43,000 --> 00:15:46,600 Speaker 3: of tack on this. But the evidence around the likes 329 00:15:46,640 --> 00:15:49,240 Speaker 3: of wealth tex I just I don't think it stacks up. 330 00:15:49,240 --> 00:15:50,560 Speaker 3: I mean, you can see them in terms of how 331 00:15:50,560 --> 00:15:54,320 Speaker 3: many countries developed countries actually have a walth text in comparison, 332 00:15:54,560 --> 00:15:57,000 Speaker 3: a comparison to something like a capital game stick and 333 00:15:57,080 --> 00:15:59,360 Speaker 3: some of the advice that was coming through from Trusury 334 00:15:59,400 --> 00:16:02,080 Speaker 3: when Labor last tried to look at when they were 335 00:16:02,120 --> 00:16:05,000 Speaker 3: in government, there was a much greater focus on careful 336 00:16:05,000 --> 00:16:08,240 Speaker 3: gastacks or doing something more in that area. So I 337 00:16:08,320 --> 00:16:11,520 Speaker 3: sort of think that it's a combination of politics and 338 00:16:11,520 --> 00:16:14,120 Speaker 3: and economics again trying to find the best middle ground. 339 00:16:14,120 --> 00:16:18,360 Speaker 3: But the questions with how narrow a policy this is, 340 00:16:18,400 --> 00:16:21,120 Speaker 3: both in terms of the money it brings in and 341 00:16:21,200 --> 00:16:24,240 Speaker 3: what it pays for. Isn't enough to turn the doll 342 00:16:24,360 --> 00:16:26,360 Speaker 3: because you know, you've seen a lot of calls from 343 00:16:26,360 --> 00:16:28,600 Speaker 3: some political borders saying it needs to be a whole 344 00:16:28,600 --> 00:16:32,480 Speaker 3: lot more investment in government. If there's not the ability 345 00:16:32,520 --> 00:16:34,040 Speaker 3: to sort of raise a huge amount of revenue from 346 00:16:34,040 --> 00:16:36,160 Speaker 3: the policy, are we spending a lot more time on 347 00:16:36,200 --> 00:16:38,320 Speaker 3: a policy then it's actually going to sort of influence 348 00:16:38,320 --> 00:16:40,119 Speaker 3: in our daily lives potentially. 349 00:16:41,200 --> 00:16:42,920 Speaker 1: Yeah, And they could know that as well. 350 00:16:43,000 --> 00:16:45,520 Speaker 2: The hesitancy, you know, tacking it on to such a 351 00:16:45,560 --> 00:16:46,680 Speaker 2: big issue. 352 00:16:46,520 --> 00:16:48,400 Speaker 1: Like health and what. 353 00:16:48,560 --> 00:16:51,760 Speaker 2: I don't know whether you saw the press conference with 354 00:16:51,840 --> 00:16:57,280 Speaker 2: Barbara and Ben's Chris Hepkins and Aisheveril, but a majority 355 00:16:57,320 --> 00:17:02,840 Speaker 2: of it was talking about help right. They started off saying, look, 356 00:17:03,040 --> 00:17:06,880 Speaker 2: they led with aspirations of a better healthcare system. They're 357 00:17:06,920 --> 00:17:10,399 Speaker 2: saying Luxon's bringing the country backwards. There are Kiwis leaving 358 00:17:10,440 --> 00:17:12,840 Speaker 2: the country. And this is all before they mentioned the 359 00:17:12,880 --> 00:17:16,199 Speaker 2: word tax, mind you, So that kind of seems to 360 00:17:16,280 --> 00:17:19,680 Speaker 2: me like they were hesitant with their so they've tacked 361 00:17:19,680 --> 00:17:21,800 Speaker 2: it onto something that Kiwis care about. 362 00:17:23,320 --> 00:17:25,879 Speaker 3: Yeah, definitely. Look, I think the challenge going forward for 363 00:17:25,920 --> 00:17:28,359 Speaker 3: all political partings is how you sort of square the 364 00:17:28,359 --> 00:17:31,160 Speaker 3: current finances that the government has where we are still 365 00:17:31,200 --> 00:17:34,440 Speaker 3: expected to spend more as a government than it will 366 00:17:34,480 --> 00:17:36,600 Speaker 3: earn all the way out to something like twenty thirty, 367 00:17:37,119 --> 00:17:39,920 Speaker 3: but at the same time needing or certainly expecting from 368 00:17:39,960 --> 00:17:42,399 Speaker 3: New Zealand, it's more money going into the healthcare system 369 00:17:42,400 --> 00:17:44,200 Speaker 3: because of some of the challenges. So there's a real, 370 00:17:44,560 --> 00:17:46,639 Speaker 3: I think difficult balance there. We're on one hand, you 371 00:17:46,720 --> 00:17:48,920 Speaker 3: need more money generally to try and balance the book 372 00:17:49,000 --> 00:17:52,000 Speaker 3: seed through higher revenue or not spending as much, but 373 00:17:52,080 --> 00:17:54,159 Speaker 3: you also need to be spending more apparently on the 374 00:17:54,160 --> 00:17:57,520 Speaker 3: healthcare system to increase those outcomes. That means that again 375 00:17:57,840 --> 00:18:00,200 Speaker 3: it's sort of still got this tension there where even 376 00:18:00,240 --> 00:18:02,399 Speaker 3: under these sort of policy settings and still have a 377 00:18:02,440 --> 00:18:05,200 Speaker 3: deficit or half a decade or so, it's still pretty 378 00:18:05,240 --> 00:18:07,320 Speaker 3: unpalatable for a lot of New Zealanders. So a lot 379 00:18:07,359 --> 00:18:09,720 Speaker 3: of difficult choices I think ahead, a lot of balancing 380 00:18:09,760 --> 00:18:10,560 Speaker 3: to be done. 381 00:18:11,320 --> 00:18:13,560 Speaker 2: And lastly, does this latest policy, because I know that 382 00:18:13,600 --> 00:18:17,400 Speaker 2: this is just a nugget of Labor, the Labor Party's 383 00:18:17,840 --> 00:18:22,719 Speaker 2: fiscal policy that they'll obviously announce ahead of the next election, 384 00:18:22,880 --> 00:18:27,080 Speaker 2: does this make you excited for it or a bit hesitant? 385 00:18:28,040 --> 00:18:30,160 Speaker 3: Oh? Look, I don't know if economists ever gets sort 386 00:18:30,160 --> 00:18:32,560 Speaker 3: of too excited before we get details and similar So look, 387 00:18:32,560 --> 00:18:35,760 Speaker 3: we'll continue to open see and assess how that happens. 388 00:18:35,800 --> 00:18:38,719 Speaker 3: And that's true sort of of all political parties. You know, 389 00:18:38,840 --> 00:18:40,760 Speaker 3: all of this stuff is important. It makes a big 390 00:18:40,760 --> 00:18:44,159 Speaker 3: difference to people's lives. It has been consequences for the government, 391 00:18:44,200 --> 00:18:47,520 Speaker 3: so we do look at that and try and understand 392 00:18:47,560 --> 00:18:50,760 Speaker 3: what it means. But look, so far we're always withhold judgment, 393 00:18:50,840 --> 00:18:53,960 Speaker 3: and probably most importantly as economists, we're looking at this 394 00:18:54,000 --> 00:18:57,359 Speaker 3: from a policy perspective. Yes, there's politics involved, and simply 395 00:18:57,440 --> 00:18:59,560 Speaker 3: there's to be some sort of more personal politics involved 396 00:18:59,560 --> 00:19:02,080 Speaker 3: all the time at the moment, but we're looking at 397 00:19:02,119 --> 00:19:03,480 Speaker 3: it from a policy point of view. What does it 398 00:19:03,520 --> 00:19:05,400 Speaker 3: mean for the country, what does it mean for the economy, 399 00:19:05,440 --> 00:19:07,880 Speaker 3: what does it mean for people in society. So that's 400 00:19:07,880 --> 00:19:09,560 Speaker 3: sort of how we're focused on it, and we'll take 401 00:19:09,560 --> 00:19:12,040 Speaker 3: all the information that continues to come through and try 402 00:19:12,080 --> 00:19:14,680 Speaker 3: and understand what that means and hopefully add a little 403 00:19:14,680 --> 00:19:17,640 Speaker 3: bit more context through what is a usually quite politically 404 00:19:17,760 --> 00:19:20,400 Speaker 3: charged conversation. We want to make sure there as economists 405 00:19:20,400 --> 00:19:22,240 Speaker 3: that we're bringing a little bit more of the sort 406 00:19:22,280 --> 00:19:24,320 Speaker 3: of underlying facts to it. 407 00:19:24,840 --> 00:19:26,600 Speaker 1: By the fact of the matter is this just hasn't 408 00:19:26,640 --> 00:19:27,919 Speaker 1: let the world on fire. 409 00:19:29,600 --> 00:19:31,920 Speaker 3: No, And to be honest, maybe that's a good thing 410 00:19:32,119 --> 00:19:34,360 Speaker 3: from a text policy point of view, because you know 411 00:19:34,680 --> 00:19:36,480 Speaker 3: the way that text policies go, they can either like 412 00:19:36,520 --> 00:19:38,320 Speaker 3: the world on fire in a good way. I can't 413 00:19:38,440 --> 00:19:40,560 Speaker 3: think of one that's really done that in recent times, 414 00:19:40,720 --> 00:19:44,119 Speaker 3: or in various various shades of people getting quite concerned 415 00:19:44,119 --> 00:19:47,520 Speaker 3: about it. So potentially a slightly small one, is a 416 00:19:47,560 --> 00:19:51,800 Speaker 3: lot more politically experient and more efficient, but certainly economic. Cly, 417 00:19:51,880 --> 00:19:53,920 Speaker 3: it feels like a little bit of a missed opportunity 418 00:19:54,480 --> 00:19:57,320 Speaker 3: to have sort of more comprehensively laid out how to 419 00:19:57,320 --> 00:20:00,440 Speaker 3: structure things in a better way, but as usually, politics 420 00:20:00,440 --> 00:20:01,560 Speaker 3: probably will rule the day. There. 421 00:20:02,680 --> 00:20:03,800 Speaker 1: Thanks for joining us, Brad. 422 00:20:03,880 --> 00:20:05,399 Speaker 3: Thank you. 423 00:20:10,240 --> 00:20:13,479 Speaker 2: That's it for this episode of the Front Page. You 424 00:20:13,480 --> 00:20:17,400 Speaker 2: can read more about today's stories and extensive news coverage 425 00:20:17,440 --> 00:20:21,520 Speaker 2: at enzidherld dot co dot nz. The Front Page is 426 00:20:21,600 --> 00:20:25,000 Speaker 2: produced by Jane Ye and Richard Martin, who is also 427 00:20:25,200 --> 00:20:25,840 Speaker 2: our editor. 428 00:20:26,359 --> 00:20:27,840 Speaker 1: I'm Chelsea Daniels. 429 00:20:28,240 --> 00:20:31,439 Speaker 2: Subscribe to The Front Page on iHeartRadio or wherever you 430 00:20:31,480 --> 00:20:35,160 Speaker 2: get your podcasts, and tune in tomorrow for another look 431 00:20:35,200 --> 00:20:36,400 Speaker 2: behind the headlines.