The Dim-Post

February 9, 2010

The Sun King stumbles

Filed under: Politics — danylmc @ 1:43 pm

They haven’t decided what they’re going to do yet, just what they’re not going to do.

Nothing about LAQCs, nothing about company tax, nothing about trusts or aligning rates. Vague promise to change the way property investment is taxed (while ruling out the TWGs various recommendations) and pablum about looking at high income earners and WFF.

The build-up to the speech was a huge strategic blunder; it was supposed to prove that Key has a grand plan and can make the hard decisions, instead it’s done the opposite. Goff’s response has been spectacular – the high point of his leadership.

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44 Comments »

  1. Er, like align tax rates, introduce stamp duty and raise GST?

    Comment by Tarquin Montford III — February 9, 2010 @ 1:47 pm

  2. FFS man, he’s said ONE of those three things. Where are you getting this stuff from?

    Comment by garethw — February 9, 2010 @ 2:00 pm

  3. He didn’t even say he was going to raise GST just that they will look at it. In other words “I’m floating the idea to see if it’s hugely unpopular because I don’t actually lead I just follow public opinion”

    Comment by Philonz — February 9, 2010 @ 2:08 pm

  4. Ha, true, I stand corrected. He said 0.5 of those 3 things =)

    Comment by garethw — February 9, 2010 @ 2:10 pm

  5. It’s LAQC, maybe you took your glasses off Danyl?

    The media will get the blame for building it up.

    Comment by Gooner — February 9, 2010 @ 2:18 pm

  6. “The build-up to the speech was a huge strategic blunder”
    Agreed – even if you’re of the belief that we don’t need much changing with the tax system (which I’m not but still) then you aren’t exactly going to have a huge degree of respect for the guy just because he hasn’t done much after his “stepchange” this and “stop your grandkids leaving” that…

    Comment by garethw — February 9, 2010 @ 2:21 pm

  7. Excoriating comments from Bernard Hickey:

    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10625085

    Comment by Carol — February 9, 2010 @ 2:22 pm

  8. All the Herald’s commentators are being pretty scathing (even John Armstrong can’t say a good thing) yet the Breaking News ticker is “Most NZer’s will be better off says Key”

    Why don’t they just give up on the pretence of being any more than a PR-aggregator?

    Comment by garethw — February 9, 2010 @ 2:30 pm

  9. not inspiring but then I don’t think there is much that Key or anyone can do. Goff was full of populist rhetoric with no specifics – again because they wouldn’t be doing much different.

    i’ve never much gone for Hickey’s inter-generational warfare. a lot of non-boomers have made plenty of money out of property and many boomers didn’t. can’t really see the point of such scapegoating.

    the least axe-grinding piece I’ve seen so far is from scoop –

    http://business.scoop.co.nz/2010/02/09/key-takes-middle-road-whacking-home-investors/

    Comment by Neil — February 9, 2010 @ 2:34 pm

  10. There was nothing in the speech that had not already been foretold. Still at least it is better than a slash and burn.

    Comment by millsy — February 9, 2010 @ 2:34 pm

  11. i’ve never much gone for Hickey’s inter-generational warfare. a lot of non-boomers have made plenty of money out of property and many boomers didn’t. can’t really see the point of such scapegoating.

    Firstly, I don’t believe you. Secondly, I think scapegoating is useful, because the debate has been captured by people who would rather we didn’t think boldly. If generating anger is necessary for generating change in this watered down policy-“debate”, then I’m all for it.

    Comment by George Darroch — February 9, 2010 @ 2:45 pm

  12. Did the rounds of various blogs to see reaction – was quite taken by the first comment on Red Alert: “I might have missed it – was there an update on the cycleway?”

    Comment by garethw — February 9, 2010 @ 2:45 pm

  13. “the least axe-grinding piece I’ve seen so far is from scoop”
    That would be because it is just a collection of quotes from Key’s speech – I don’t think he has an axe to grind with himself…

    Comment by garethw — February 9, 2010 @ 2:47 pm

  14. Based what he was proposing doing to national parks, David Slack though he might have meant ‘steppe change’.

    Comment by lyndon — February 9, 2010 @ 2:50 pm

  15. All the Herald’s commentators are being pretty scathing (even John Armstrong can’t say a good thing)

    Considering that Fran O’Sullivan thinks ACT is a pack of wimps, I don’t know if that’s such a bad thing.

    Comment by Craig Ranapia — February 9, 2010 @ 2:51 pm

  16. yet the Breaking News ticker is “Most NZer’s will be better off says Key”

    Why don’t they just give up on the pretence of being any more than a PR-aggregator?

    Yes, garethw, it is pretty fucking outrageous bias to… well, summarise what Key actually said on a news ticker and leave the editorialising to the commentators. FFS…

    Comment by Craig Ranapia — February 9, 2010 @ 2:54 pm

  17. Ha, true Craig.

    And wow, can property investors make themselves any more hated?
    “[Martin Evans, Property Investment Federation president] says his organisation will recommend that investors stop maintaining their properties, put up rents as much as they can, and sell up if holding onto the property proves unsustainable.”
    To translate: “Keep giving me my taxpayer handout or I’ll make you all live in shitty housing and charge outrageous rents”.

    Comment by garethw — February 9, 2010 @ 2:55 pm

  18. Craig you honestly believe that the ticker comment they went with is the best all-encompassing lead in to that story? Perhaps “most tax changes to property ruled out” or “GST likely to hit 15% to fund tax cuts” would have been a more honest title to everything that speech encompassed, no? Not an empty statement from the man making the speech.

    If you think they shouldn’t lead the news with their own opinion (as I do), then perhaps equally they shouldn’t lead the news with the opinion of the person pushing the speech?

    Comment by garethw — February 9, 2010 @ 2:58 pm

  19. Meh, maybe they’ll align top rates, company and trust at 30%, fully fund that with ring-fencing losses and removing depreciation rules (anyone know if those things would fully fund the alignment?) and then raise GST and compensate lower-income-earners with matching benefit/WFF raises.
    If they do that then I’d actually call that a good move – but given how underwhelming this was to expectations I get the feeling they are unlikely to fully deliver on the rest?

    But waiting for the Budget isn’t half as much fun…

    Comment by garethw — February 9, 2010 @ 3:06 pm

  20. Goff’s response has been spectacular – the high point of his leadership

    Not exactly a demanding bar to clear, Danyl. But Goff's got the same old problem — plenty of populist tub-thumping, but I've got to wonder when he suddenly noticed that GST is a regressive tax and increases are "not fair on all New Zealanders". Did he not realise this when it was introduced in 1986, and increased in 1989.

    And it's all very well to attack Key as "timid", but what is Labour's grand vision? Coded race-baiting, cutting Howard Broad's pay and a rather confused concern about protecting landlords from their fair share of the tax burden?

    Jesus, it's like watching a bad am-dram production of The Wizard of Oz: Phil needs a brain, and John needs the nerve.

    Comment by Craig Ranapia — February 9, 2010 @ 3:21 pm

  21. Goff’s response has been spectacular – the high point of his leadership..

    Not exactly a demanding bar to clear, Danyl. But Goff’s got the same old problem — plenty of populist tub-thumping, but I’ve got to wonder when he suddenly noticed that GST is a regressive tax and increases are “not fair on all New Zealanders”. Did he not realise this when it was introduced in 1986, and increased in 1989?

    And it’s all very well to attack Key as “timid”, but what is Labour’s grand vision? Coded race-baiting, cutting Howard Broad’s pay and a rather confused concern about protecting landlords from their fair share of the tax burden in a flaky populist crust is all we’ve had so far.

    Jesus, it’s like watching a bad am-dram production of The Wizard of Oz: Phil needs a brain, and John needs the nerve. I need a stiff drink.

    Comment by Craig Ranapia — February 9, 2010 @ 3:23 pm

  22. Craig, I’m agreed with you on most of those points. Goff inspires me as much as a dunked gingernut. And his position now is of course hardly consistent with that he espoused 20 years ago. There are people in the Labour caucus with vision, but they’re too timid to speak out, and the leadership appears to have put a lid on anything other than caution and management.

    But right this moment, Phil doesn’t need a vision – he only needs to rile a section of the population up against this Government. And if he has success in that, then I’ll applaud him.

    Comment by George Darroch — February 9, 2010 @ 3:30 pm

  23. Disagree. It pisses off the far-right and the left meanwhile the headlines will be GST increased to 15% and across-the-board tax cuts. Nobody is losing out. WFF increased in line with GST increase. Harder for people to go on the benefit but doesn’t hurt those who will be temporarily unemployed. Doesn’t harshly affect those with Rental properties nor will they have a land tax. That would be so detrimental to retirees and first-home buyers. Its a good formula.

    Comment by gingercrush — February 9, 2010 @ 3:36 pm

  24. WFF increased in line with GST increase.

    Do you have a citation for that statement? As I understand that will not happen.

    Once tax-cuts for the higher incomes are included, it’s almost impossible.

    That would be so detrimental to retirees and first-home buyers

    I haven’t any party advocating a tax that would include the first home, occupied by the owner. So to that extent, such a tax would have a very positive effect, deflating the market sufficiently to allow actual owner-occupiers the chance to buy their first home.

    Comment by George Darroch — February 9, 2010 @ 3:43 pm

  25. I don’t pay attention to Keith Ng. And its not impossible to give tax cuts to lower income people to offset a rise in GST. Nor is it impossible to re-align working-for-families, superannuation etc.

    As for your second point. A land tax is just that a tax on land. A land tax would include everyone. A Capital Gains Tax can be selective so could be applied to rental properties only etc. But they’re very inefficient and don’t raise as much revenue as they’re meant to nor would they do much to curb buying of houses etc.

    Where rental housing will be damaged is in the area of claiming back tax. That is far more effective than a lands tax that would hurt others or a capital gains tax that isn’t efficient.

    Comment by gingercrush — February 9, 2010 @ 3:55 pm

  26. [...] Offsetting Behaviour, Brad Taylor, Public Address (1 and 2), The Standard, Homepaddock, Education Directions, Colin Espiner, Dim Post. [...]

    Pingback by TVHE » Key’s tax speech — February 9, 2010 @ 3:59 pm

  27. I don’t pay attention to Keith Ng.

    Translation: I don’t like the actual figures.

    Comment by George Darroch — February 9, 2010 @ 4:25 pm

  28. I don’t think there is much that Key or anyone can do. Goff was full of populist rhetoric with no specifics…

    Ah, the joys of being in opposition. Someone better tell the current Prime Minister that you need to stop doing that when you get elected and actually come up some policy.

    Comment by Zoo Neeland — February 9, 2010 @ 4:27 pm

  29. I listened to John Key’s and one thing came through loud and clear – Annette King.

    Comment by Pat — February 9, 2010 @ 4:44 pm

  30. George wrote: “I haven’t any party advocating a tax that would include the first home, occupied by the owner. So to that extent, such a tax would have a very positive effect, deflating the market sufficiently to allow actual owner-occupiers the chance to buy their first home.”

    Yes, it would ultimately help people to buy their first home. But I think the short-term effect is likely to be an increase in rents, making it harder for renters to make ends meet.

    Comment by kahikatea — February 9, 2010 @ 4:55 pm

  31. I’m not paying attention to what Ng has to say because he based it on crap where he didn’t even pay attention to what John Key said and he’s ultimately had to change some of his thinking as others pointed out to him where he was wrong. Key hasn’t ruled out changes to Working for Families either. Nor does it factor in increased revenue due to likely changes on depreciation losses on rental properties no longer being allowed.

    Comment by gingercrush — February 9, 2010 @ 4:55 pm

  32. Nice to see TVNZ explaining the rise in GST in terms that ordinary New Zealanders can relate to: apparently the cost of a $60,000 car will increase by over $1000.

    Comment by danylmc — February 9, 2010 @ 5:12 pm

  33. the cost of a $60,000 car will increase by over $1000

    This is the same network which informed us during breakfast that; No, you cannot fit a baby-seat in the back of a Ferrari California.

    Maybe they’ve seconded Clarkson and May to the editorial staff during TG-Live downtime.

    Comment by Phil — February 9, 2010 @ 5:28 pm

  34. gingercrush, since this is on the Internet, perhaps you can prove your case with hyperlinks.

    Comment by George Darroch — February 9, 2010 @ 5:29 pm

  35. there’s some changes in the right direction. I don’t know if we really want to have too large an overhall.

    property investment is the scapegoat de jour but dealing with it is not really that easy and Key has made some moves.

    Goff needs to have something more tangible than the not very new and not very helpful “Oz is doing better”.

    I take it he’ll be 100% behind more mining since that’s the only way we will clsoe the gap given we can’t fathon how to divestour rich neighbours of their money.

    Key should have made it an inspirational speech rather than a details speech.

    With those boomers, do they get to take their houese with them when ghey die or do they have to leave them to their (X, Y etc gen) kids like everyone else?

    Comment by Neil — February 9, 2010 @ 6:08 pm

  36. My question is what will the worker earning $60,000 not on working for families, the benefit or super get? Well…apart from having to pay another 2.5% on everything. The figures just don’t stack. In order for Key to get an extra $500 a week and the dufus from telecom to get another $2000, it looks like those earning between $38000 and $70000 will get $10 a week – less than what they will be paying in GST. But don’t worry 300,000 of the top earners will be getting a significant break (oh…actually there will only be about 80,000 that will make more than they are having to pay in extra GST – but boy they will make a lot) and about 2 million will get nothing or actually lose. Duh!

    Comment by Tim — February 9, 2010 @ 6:24 pm

  37. With those boomers, do they get to take their houese with them when ghey die or do they have to leave them to their (X, Y etc gen) kids like everyone else?

    Property markets rely on new entrants into the market to help churn money (mortgages/debt) upward, by me entering a market I bring in new money, trading up houses brings in smaller amounts of new money and recycles old money (smaller growth). People always want to trade up or sideways. Boomers tend to tell us to not have coffees and go without like they did, but they fail to realise that since they bought the average property has gone from 3x the average wage to sitting around 6.5x. At the height of the property boom, the average person on the average wage did not have enough disposable income to save fast enough for a deposit. For boomers (big population bulge) to retire they need to sell up their homes in know relatively gentrified suburbs at current prices, the problem is we as a nation have made the first step up to the ladder much harder for first home buyers. They need 2x incomes over 60k sans student loans and not have any kids, just to get buy on the average house, that is no longer average.

    If boomers want to keep a nice lifestyle I think they are going to need to sell the house and the kids will get the scraps. The problem is we have passed peak earnings and since the 80’s middleclass incomes have shrunk masked by the fact that we can buy crap ever cheaerp from the warehouse. That is the elephant in the room. Key can’t afford to address it and Goff doesn’t know how to.

    Comment by andy (the other one) — February 9, 2010 @ 6:32 pm

  38. “The problem is we have passed peak earnings and since the 80’s middleclass incomes have shrunk masked by the fact that we can buy crap ever cheaerp from the warehouse. That is the elephant in the room. Key can’t afford to address it and Goff doesn’t know how to.”

    i think that’s right. we have become poorer and have borrowed to disguise the fact. No political party is going to say that although I think that’s what National is saying out of the corner of their mouth.

    I’m not sure if the boomers should take the blame for the high price of housing. If you were lucky enough to have bought into Grey Lynn in the 80s then you benefited from bungalos and villas being majorly undervalued, proximity to the central city on the verge of being sort after and massive immigration.

    Not all of those people were boomers. And why the demonisation?

    Comment by Neil — February 9, 2010 @ 6:57 pm

  39. more bluntly, Hickey’s blame boomers is on the same level of econmic analysis as blame the Jews.

    Comment by Neil — February 9, 2010 @ 7:04 pm

  40. Boomers is a massive generalisation on my part.

    The cohort that got voted in in 84 and have been running the show since, and appear to be wanting to run the show for some time yet. They tend to vote in their interests (like we all do) and those interests run counter to the generation behind them which have been given two massive recessions from the liberalisation free market thingy (three actually 87, mother of all budgets and the current econocopolypse) at the start of their work career and in the middle, the usual time to have kids buy houses, lots of studies show that people who enter the workforce in recessions do poorly throughout careers due to poor start or broken employment.

    I think Hickey is on the right track, he could refine the argument from boomers to vested interests.

    Comment by andy (the other one) — February 9, 2010 @ 7:41 pm

  41. The build-up to the speech was a huge strategic blunder

    hell yes, not matching the hype is a fail even Armstrong and Espiner had to grudgingly say “WTF”. It gave Goff a toe hold on the slippery cliff face of media likeability and he needed it, Labour front bench must have been all high fives and fist bumps. The Nats had done a good job at the hype about the speech, but as it appears that all they have in the policy cupboard is a fucking big wurlitzer organ making a huge amount of noise, with an ordinary man hiding behind a curtain operating a giant console of spin for the stupid people who think that the grown ups are running the show after we had nine long years in a Nth Korean labour camp called Helengrad.

    Comment by andy (the other one) — February 9, 2010 @ 8:00 pm

  42. And its likely you’ve now seen that Keith Ng has retracted his post so I shouldn’t have to provide any hyperlinks.

    Comment by gingercrush — February 9, 2010 @ 8:42 pm

  43. “Boomers is a massive generalisation on my part.”

    i think the notion of inter-generational equity is quite complex. looking at the history of my family, the biggest factor determining who won out in the asset stakes was gender not age.

    but there is a problem and Key has done something about it. not as much as some people want but then Labbour didn’t face up to it and it’s a complex issue.

    the people I know who have LAQCs come from working class backgrounds – solo mums, worked in logging, freezing works – get some money together, do what govts have been sayin gwe have to do ie take care of our own retirement – and have invested in rental properties. Getting lots of grief for not much gain.

    and now they are the destroyers of our economy.

    I gather that Key understands that point.

    Comment by Neil — February 9, 2010 @ 9:44 pm

  44. “econocopolypse)”

    i prefer “moneygeddon”

    Comment by fraser — February 10, 2010 @ 7:04 am


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