Analysis – The main parties launch their campaigns and Labour’s attack ads draw an angry response, National’s tax cuts are challenged, the policy deluge continues and is this “the most negative campaign in New Zealand history?”
Labour and National launched their campaigns and there was a marked difference in style.
Chris Hipkins came out with a big policy – free dental care for people up to age 30 – while National’s Christopher Luxon revealed a pledge card setting out his party’s priorities in government.
Luxon’s policy-free launch was overshadowed by a controversy over whether National could actually implement one of the main schemes it plans to use to fund its tax cuts. (More about that later – it has important implications.)
Labour’s launch was a folksy affair, reported to be energetic and lively, while National’s was seen as a slick, made-for-television production.
The Herald’s political editor Claire Trevett was at both of them and reported: “National walked out of there thinking they could win, but clearly wary it could slip away. Labour walked out of theirs thinking they might be able to win, after all.”
She said Luxon’s aim had been not to offer up treats for voters, but rather to convince them he was primed and ready to become prime minister, while Hipkins had to show his supporters he was not tired, he was not giving up and would not make it easy for National.
Trevett thought both leaders could head out on the campaign trail knowing they had done their job.
However, Luxon’s good day only lasted until the post-launch press conference.
He found himself surrounded by reporters wanting to know whether National’s proposal to tax foreign home buyers was actually possible.
This was to become the issue of the week, and for good reason.
To fund its $14.6 billion of tax cuts, National proposes a set of measures including partially lifting the ban on foreign home buyers and taxing them 15 percent on houses over $2 million.
The tax on foreign house sales is the biggest revenue-earner in the policy; the party says it would raise $2.9bn over four years.
National checked out New Zealand’s free trade agreements to make sure the foreign buyer tax did not cut across them. But it does not appear to have thought about bilateral tax agreements with countries like China which mean its nationals cannot be taxed more than New Zealanders.
New Zealand Herald senior political correspondent Audrey Young was onto this, pointing out in an interview with Q and A’s Jack Tame that National’s finance spokesperson Nicola Willis had said the party talked to people “subsequently” about the tax treaties.
“That suggests National overlooked the possibility it might breach the rules of New Zealand’s bilateral tax agreements until it was too late,” Young said.
“That gives it a very strong incentive to say it doesn’t, even if it does – and National is saying with the utmost confidence that it doesn’t.”
Young said the issue was leading to an important dispute that stretched the credibility of the policy and perhaps ultimately to National’s claims to be better economic managers.
“The trouble for Luxon and Willis is that while National is not willing to release its own advice on the policy, tax experts and economists are openly casting doubt on it,” she said.
There is a thorough analysis of this on RNZ’s website.
“Tax experts and economists believe National’s revenue projections are ‘optimistic’ and have raised concerns on what it could do to New Zealand’s international reputation,” the report said.
Houses in NZForeign buyers of luxury homes worth over $2m would be taxed under National. Photo: RNZ / Angus Dreaver
Foreign sales hard to swallow
Aside from potential problem with the purchase tax, there are doubts about whether foreigners are going to buy enough expensive houses to raise the revenue National expects.
“To bank its forecast $740 million annually from the mansions tax, National needs about 2000 of the estimated 50,000 houses in that bracket to be sold to overseas buyers every year,” said Stuff columnist Vernon Small, a former senior adviser to David Parker when Parker held the revenue portfolio.
“That is more than $5 billion of New Zealand real estate going into overseas ownership every year. Sales of that magnitude will be hard for voters to swallow, although Christopher Luxon and Nicola Willis clearly believe the tax income will sugar the pill,” Small said.
“More to the point, the sales assumption is beyond heroic. Based on pre-foreign-buyers-ban numbers, CoreLogic’s Nick Goodall has estimated the tax could raise as little as $50 million a year, leaving National roughly $700 million shy of the revenue it has budgeted for.”
The one thing that National has going for it is that none of this, either the tax on foreign buyers or how many houses they buy, will be tested until the policy is in place.
Until then Luxon and Willis can continue to say there are no problems, and after the election it will not matter much. If National and ACT form the next government and the policy starts falling apart, all the critics will be able to say is “we told you so”.
Here is how Newshub journalist Patrick Gower saw it playing out.
National would “bluff and bluster their way through their jiggery pokery and hope that Kiwis don’t understand it or don’t care,” he said on the AM Show.
“I’ll tell you what their tactic is. It’s ‘keep going… we’ll just say we’re going to do it and we reckon we will just get through’.”
Also on National’s side is the complexity of the issue. “The dispute is being fought in a hotly contested area that only a handful of people can claim to fully understand,” said Herald deputy political editor Thomas Coughlan.
“It is complicated stuff. Many people contacted for this story politely declined to give their views on the issue, citing the niche complexity of international trade and tax agreements.”
NZCTU President Richard WagstaffCTU president Richard Wagstaff. Photo: RNZ / Samuel Rillstone
Attack ads under fire
Is the election campaign really becoming “the most negative in New Zealand history”? Has it really descended into “never before seen depths”?
Those extravagant claims were made by National’s campaign chair Chris Bishop after billboards started springing up this week carrying a picture of an unsmiling Luxon over the caption “out of touch… too much risk”.
It also ran as a full page wraparound in the Herald on Monday with bullet points saying, among other things, that Luxon was “focused on the wealthiest few”, wanted to scrap fair pay agreements and planned to give billions in tax cuts to landlords.
The Herald’s Trevett said the image of Luxon had “an eerie likeness to Mussolini”.
The ads and billboards were the work of the Council of Trade Unions (CTU) – Labour said it did not have anything to do with them.
That was confirmed by CTU president Richard Wagstaff.
Wagstaff said Labour was not involved at all.
“Labour are not even mentioned in the ads… we’re not asking people to vote for Labour we’re simply saying that Christopher Luxon and his policies would present a major danger to working New Zealanders,” Wagstaff said.
Bishop did not buy that. He said the CTU was intimately connected to the Labour Party. “It’s in the name, it’s the Labour Party because they’re part of the labour movement.”
Willis told First Up the ad was nasty and personal, while Hipkins said on Morning Report National should get used to it if it wanted to be in government and Luxon wanted to be prime minister.
“You get scrutinised and criticised every day,” he said.
“I have been every single day since I became prime minister – much of it from the National Party. That’s just the nature of the democratic system and it’s not actually unhealthy.”
Labour strategists were not taking National’s complaints seriously, Stuff reported, and quoted Hipkins: “They’re desperately trying to distract attention away from the fact that they’ve been caught out with the numbers and their policies just not stacking up… they’re trying to create a diversion.”
Three people cycling the Otago Central Rail Trail in a row towards Middlemarch, South Island, New Zealand.National has pledged to put ebike chargers on tourist attractions like the Otago Rail Trail. Photo: 123RF
There was another deluge of policies this week, and with five weeks to go even the most intensely interested voters will surely have difficulty remembering more than a few of them.
Luxon, explaining his policy-free campaign launch, said National had already released more than 40.
Among the latest were:
Hipkins promise to add another 300 frontline police and expand the use of mental health officers for callouts. He said Labour would also explore making stalking a crime, in line with Australia and the UK.
National said it would boost tourism by adding another Great Walk, putting e-bike chargers on cycle trails and reworking holiday visas.
Labour, National and the Greens each promised to build at least 1000 state houses in Auckland every year, if elected.
ACT leader David Seymour said his party would prioritise productivity over everything else, and announced the four sectors that would be the first to come under review for red-tape-cutting. They were early childhood education, the health workforce, primary industries and financial services.
Luxon promised a National-led government would deliver 10,000 electric vehicle (EV) chargers by 2030. He said New Zealand was lagging behind other countries – it had one charger per 95 EVs while in the UK there was one charger for every 20 EVs.
Labour announced the launch of a youth intervention programme. Children’s Minister Kelvin Davis said the programme would help assign an intensive support social worker for up to 60 recidivist young offenders and their families.
National said it would set up a cyclone and flood recovery ombudsman and “unblock” the EQC assessment pipeline.
Hipkins made a pitch to business, saying it would have “a seat at the table” if Labour was re-elected, and it would be the more fiscally prudent party. Citing the pandemic response, he said the government had done some things “very, very quickly” and he thought “a bit of that sense of urgency” should be applied to other challenges.
Labour released a five-point economic plan including growing an export-led economy, turning New Zealand into a sustainable agriculture and agri-tech centre of excellence, being a global leader in renewable energy, harnessing digital creativity and boosting premium tourism offerings.
He explained how the next Labour government would do that, and all the details of the latest policies are on RNZ’s website.
That is probably enough promises to remember for now.
ACT Party MP Brooke van Velden speaks during debate on the report of the Standing Orders Committee, 31 August 2023.The latest Talbot Mills poll is showing ACT with 12 seats in the next government. Photo: Johnny Blades
Sorry showing for Labour
The week ended with more bad polling news for Labour.
The Herald reported on Friday that the latest Talbot Mills corporate poll showed Labour dropping to 30 percent, down from 32 percent last month.
National was on 36 percent, up one point, the Greens jumped two points to 12 percent and ACT dropped a point, falling to 10 percent.
The poll showed NZ First on 5.4 percent – which is over the threshold to get into Parliament without winning an electorate seat.
On those numbers, National would have 45 seats and ACT 12. They would need NZ First’s seven seats to govern.
*Peter Wilson is a life member of Parliament’s press gallery, 22 years as NZPA’s political editor and seven as parliamentary bureau chief for NZ Newswire
Air NZ sorry for charging tourists $13,000 to change flight after terminal diagnosis
Air New Zealand has admitted it made a mistake when it tried to charge two US tourists $13,000 to change their flights after one of them received a grave medical diagnosis.
Todd and Patricia Kerekes flew business class from New York to Auckland in January. The return tickets cost $37,500.
They intended to stay until April, but six weeks into their visit Patricia was diagnosed with cancer of the gallbladder. Their surgeon advised them to head home immediately, so Todd contacted Air NZ to have their flights moved up.
“Right away on the first call I told them my wife was gravely ill, and we were on holiday and we needed to go back home,” the 60-year-old told Checkpoint.
“And it was a whole series of long pauses, and I couldn’t tell whether they were conferring with co-workers or working at it on the computer, or what it was. But I would go through a whole series of 15- to 30-minute hold periods, and sometimes the people would come back and basically tell me something I didn’t want to hear, like it was gonna cost me NZ$13,000 to change my flight.”
Housing Minister Chris Bishop sets ‘long-term’ price target of three to five times household incomes
The new housing minister has set a target of having homes costing just three to five times household incomes – well below what they are now in most of New Zealand.
But Chris Bishop does not want too quick a fix to the country’s housing affordability crisis – saying a crash “tomorrow” would “cause enormous economic and financial instability to people”.
“What I want is for house prices to moderate over time, so that in 10 to 20 years’ time, we have essentially gone a long way towards solving our housing affordability problem,” he told Checkpoint on Tuesday.
Earlier in the day he outlined the first steps in his plan, saying most of the country’s biggest cities will be flooded with land for residential development.
In a speech delivered to Wellington’s Chamber of Commerce, Bishop confirmed councils will have to earmark 30 years’ worth of land for housing development.
They will be able to opt out of housing density rules that allow homes up to three stories high on most residential sites without the need for a consent – a bi-partisan rule that National signed up to in opposition. Instead, councils will be able to choose exactly where high density housing goes.
He also promised to make it easier to build granny flats or dwellings less than 60 square metres.
In his speech, Bishop said the status quo was costing the country the equivalent of 15 Transmission Gully motorways every four years “just on helping people to be housed”.
“The taxpayer subsidises rents for people in social housing, we pay for emergency housing grants, we pay for transitional housing, we help people with their bond payments and so it goes. A failure to reform housing has made it extremely expensive for government.”
And in a briefing to Cabinet, Bishop said housing affordability was arguably the single most pressing economic and social issue.
Speaking to Checkpoint, Bishop said New Zealand was not short of land, but rules “make it very difficult to use that land”.
“What we’re saying is we need to go out at the edge of our cities and we also need to go up inside our cities.”
Inside existing limits, Bishop said the coalition government would keep Labour’s policy of allowing up to six storeys “within walkable catchment areas of rapid transit stops”, and give councils more discretion over what areas had to allow up to three storeys.
Asked how councils would be prevented from pushing most of the intensification to certain suburbs and leaving others alone, he said: “There are natural limits on the intensification that would take place in suburbs. There are infrastructure limits, for example.
“But also, you know, over time suburbs will change and the nature of our cities will change. I mean, if you think about the Auckland CBD now, compared to say 50 years ago, it is much more dense, many more people live in apartments, they live in tower blocks in the CBD. The same is true to some extent of Wellington.
“But you know, the Wellington of today will look very different to the Wellington of 30 years’ time. Change will be gradual. It is not going to happen immediately, change will happen over many, many years.
“But what I am saying and what the government is saying is that we need more houses. We have an affordability problem in New Zealand and have done so for 30 years because we have designed a planning system that has made it very difficult to build more housing, and it is a social and economic problem we’ve simply got to grapple with.”
Pressed on how much he would like to see house prices drop, Bishop cited the internationally popular metric of prices to household incomes.
“In housing markets that we consider to be affordable, a house price to income ratio of between three and five is considered affordable. That’s not the case in most of our major cities right now.”
Current data shows that multiple nationwide is currently 6.6. In Auckland it is 8.1, Wellington 6.14, Christchurch 5.84, Hamilton 6.57 and Dunedin 5.7. In Queenstown-Lakes, the multiple is almost 15.
“Over time as you moderate house prices and incomes grow, [three to five] is what we would like to see things get to, but as I say, that is not going to happen immediately and it is not going to even happen in the next two to three or four years. This is something that has to happen in the medium- to long-term.
“And unless we do that, house prices will continue to go up and people will continue to be locked out of the housing market.
“I want house prices to be affordable, and a house price to income ratio of seven, eight, nine, 10, 11, 12, in some cases 13 to one in some parts of New Zealand is not affordable, entrenching inequality and poverty in our cities.”
He refused to give an exact timeframe, saying that would be making the same mistake the Labour-led government did in claiming it could build 100,000 houses in 10 years.
“Land markets and the economy is much more complicated than that. What I am saying to you is that we have [an] extensive and comprehensive work programme based on evidence to make housing more affordable in the medium- to long-term.”
Everton punishment reduced to six points
Everton have had their points deduction for a breach of the Premier League’s profitability and sustainability rules reduced to six points from 10 after an appeal, the club and the Premier League said on Monday.
Everton were docked points with immediate effect in November after being found to have breached profitability and sustainability rules (PSR) relating to losses.
“An independent Appeal Board has concluded that the sanction for Everton FC’s breach of the Premier League’s Profitability and Sustainability Rules (PSRs), for the period ending Season 2021/22, will be an immediate six-point deduction,” the Premier League said in a statement.
The original points deduction meant Everton dropped from 14th in the standings into the relegation zone with four points. The club filed an appeal against the initial deduction, which they labelled “wholly disproportionate and unjust”.
“Everton can confirm an Appeal Board has concluded that the points deduction imposed by an independent Premier League Commission in November be reduced from 10 points to six points, with immediate effect,” a club statement said.
The sanction was appealed on nine grounds, each of which related to the sanction, rather then the breach and two of those nine grounds were upheld by the Appeal Board.
Everton admitted to a breach of PSR for the period ending with the 2021-22 season, with their total losses for that period amounting to 124.5 million pounds according to an independent commission.
According to the Premier League’s Financial Fair Play regulations, clubs are permitted to lose a maximum of $216 million over a three-year period.
The Merseyside club recorded four straight wins after their deduction to climb up to 16th, but have been dragged back into the relegation battle following a run of nine league games without a victory.
The reduction means Everton move up to 15th in the standings with 25 points, five points above the relegation zone.
The club say they are still considering the wider implications of the decision and will make no further comment at this time.
Everton were then charged once again by the Premier League in January for a separate PSR breach, along with Nottingham Forest.
Both clubs were referred to the chair of the Judicial Panel, the Premier League said, who will appoint an independent commission to determine the appropriate sanction, which may include a further deduction for the Sean Dyche-led club.
A second points penalty would increase risk of relegation and add to the uncertainty over the future of Everton, who are currently in the midst of protracted takeover talks with U.S. investment fund 777 Partners and also hoping to move to a new stadium ahead of the 2025-26 season.
BACKGROUND ON OTHER CLUBS
Last year, Manchester City were referred to an independent commission over more than 100 alleged breaches of finance rules since the club were acquired by the Abu Dhabi-based City Football Group in 2008.
No verdict has been reached in that case. Premier League CEO Richard Masters said last month that a date had been set for a hearing. City have denied any wrongdoing.
Clubs in England’s top flight have been docked points before.
Middlesbrough had three points deducted in 1997 when they failed to fulfil a fixture, while Portsmouth received a nine-point penalty in 2010 when the financially-troubled club entered administration.
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