Finally, Labour has released its capital gains tax policy. Labour’s CGT would levy a 28% tax on sales of commercial properties and investment housing, and the $850 million it is expected to raise will be used to fund three free doctors visits per year, for everyone.
The scope of Labour’s CGT is deliberately narrow, in that it exempts the family home and farm and other forms of investment for capital gain. Significantly, the revenues raised by the tax are not being targeted solely to those people who are currently finding it prohibitively expensive to visit the doctor.
Obviously, it could be argued that wealthy people don’t need to have their visits to the doctor subsidised by the taxpayer, every year. Many of them will already have private health insurance. However, even middle-income New Zealanders are struggling to afford the medical care they need. Also.. targeting is an expensive and wasteful process to manage.
So….you’d have to say that anything that improves access to primary healthcare is welcome, and there will be definite health benefits from this measure. Because it is being offered as a general entitlement that’s available to everyone, this fact alone could also make it far more politically difficult for any future government to scrap it, or reduce it.
For several reasons though, this capital gains tax announcement might have been better presented as merely the funding mechanism for a health policy – rather than as a tax policy that’s likely to channel significant amounts of money away from housing speculation, and into productive enterprises. (It remains to be seen whether a CGT on this modest scale would be a major deterrent to housing speculation.)
This form of a CGT will do even less to bridge the gap between the haves and the have nots, in the way that a wealth tax would have done. According to Labour, a wealth tax would be feasible here only if Australia also put one in place. Really? There would be nothing to stop Labour from offering this CGT and a one-off 5% wealth tax that could be used to pay decent wages to our hardworking, underpaid nurses, doctors and teachers. Not to mention the option of a one-off 5% “windfall” tax on the excessive profits being racked up by the four Aussie-owned banks and the supermarket duopoly. Labour’s chosen version of a CGT really wasn’t the only viable tax game in town.
Finally, and for a useful comparison…if its supporters can collect the 870,000 signatures required to put this proposal on the midterms ballot in November 2026, voters in California will be able to vote on whether to impose a one-off 5% wealth tax on the state’s 200 billionaires. The initiative has been co-designed by Emmanuel Saez, the Berkeley economist and long-time contributor to the work of Thomas Piketty.
Some 90% of the estimated $100 billion likely to be raised by this wealth tax proposal in California would go directly into compensating the poor for the cuts to their Medicaid assistance imposed by Donald Trump via his big beautiful bill that provided massive tax cuts to Trump’s wealthy friends. All up, the California initiative is what a progressive tax meant to address social inequality looks like.
That said, Labour’s plan is still definitely better than the nothingburgers being served up by the current government. A shame that it is still only a shadow of the tax policies we need, in order to repair the harm done to this country by the tax-cutting brigade.
When governments are instinctively mean
“Meanness is incurable; it cannot be cured by old age, or by anything else” – Aristotle
Several times prior to the 2023 election, Christopher Luxon vowed to restore this country’s spirit of can-do optimism. Unfortunately, the subsequent hallmark of his government has been its crabbed, mean-minded readiness to kick people once they’re down. It has pushed people out of emergency housing onto the street, and bragged about it. It has made it harder for jobseekers to get benefit support even though in region after region, job applicants vastly outnumber job vacancies. It has bragged about its success in kicking people off benefits, and in collecting penalty payments. Etc, etc.
To cap things off…Yesterday on Stuff, Verity Johnson reported that children abused in state care could lose their right to compensation if they commit a crime punished by five years or more in jail. The headline for Johnson’s excellent story (“A grubby, grotty attempt to shirk responsibility for decades of horror”) conveyed the essence of what the government has in mind. As Johnson put it:
So if you’re a good victim, who never rebelled against the system that destroyed you, you’ll get automatic access to compensation. But if you’re a bad victim, you won’t. You’ll have to be assessed for your worthiness. Christ. The Royal Commission explicitly found a link between the abuse these kids suffered, and their later life offending. There’s clear consistent evidence that these kids went on to commit crimes because of what was done to them in “care.”
The Luxon government has talked a lot about the need to accept responsibility for one’s failings. In this case, the government itself is trying to dodge its share of responsibility, in order to shave a few bucks off the abused-in-care compensation bill. This is petty, spiteful stuff. As the heart-rending personal accounts to the Royal Commission showed in detail, the effects of childhood/teenage abuse tend to be life-long.
Abused children who do – and don’t – go on to commit serious crimes are still disproportionately at risk of (a) alcohol and drug addictions and (b) physical and mental health problems, and those addictions and problems need to be addressed, if rehabilitation is to be successful. Yet at present, many of the experienced providers of such services are facing either significant cutbacks, or the withdrawal of their funding altogether. The funds, and the services, are being corporatised.
Footnote: Even for the “good” victims who haven’t gone on to commit serious crimes, the process of compensation should not end with a lump sum payout, and with the state then washing its hands of the people damaged in its “care.” The compensation money is a retrospective payout for harm done, not a full and final payoff that leaves people high and dry when it comes to future assistance.
IMO, the state has an ongoing duty of care, which should be being expressed through ready access to physical and mental healthcare. As Johnson’s eloquent article makes clear, if some of the people abused in state care later go on to commit crimes in adult life, that doesn’t allow the state to discard them, while absolving itself of any further responsibility.
Unfortunately though, this government is looking for any excuse to wash its hands of people in need. Its capacity for mean-ness runs bone deep.
Privacy worries
As this column has mentioned before, the advocates of a social media ban for kids under 16 appear willing to ignore the privacy implications that the proposal would have for everyone. For a glimpse into the void, check out the United Kingdom’s Offcom advice page on the subject, which cheerily makes a case for wholesale privacy intrusions, with a minimum of reliable safety rails.
Nothing to see here. Just make your credit card/facial recognition data /bank account numbers and recent banking history etc available to the social media platforms, so that they will then be able to verify that you are indeed old enough to view their fine wares, while responding to their algorithms in ways that can be further monetised.
No doubt, the recipients of this deluge of valuable data will all solemnly promise – hands on hearts – to never re-use this information, or on-sell it, or expose it (oops)via a security lapse. All in order to keep the kids safe online until they turn 16, right? If you truly care about the kids, hand over your data. All of it.
Timor-Leste Joins the Club
This week will see Timor-Leste become the 11th (and youngest, and poorest) member of the ASEAN grouping of regional nation states. Decades ago, New Zealand played a prominent role in an Australian-led international force that helped to bring about the final transition to independence of this former Portuguese, former Indonesian colony.
It had been a long and bloody struggle. By the time of its birth as an independent nation in 2002, Timor-Leste had endured four centuries of Portuguese control and 27 years of harsh Indonesian misrule. Moreover, as this article points out, Indonesia’s vengeful military exit decimated Timorese infrastructure, leaving the new, impoverished country with no telephone lines, electricity, running water or roads.
Today, Timor-Leste faces a different set of challenges. The oil reserves on which it has largely depended (in 2023, its oil earnings comprised 88% of GDP!) are running out, and are expected to be depleted by the second half of the 2030s. Labour- intensive forms of agriculture remain the main source of local employment, and the leaders that have steered the country thus far are all now in their 70s. (Jose Ramos-Horta is 75 and in his second term as President. Xanana Gusmao, the country’s current Prime Minister, is 79.)
So far, the oil proceeds have not led to significant diversification of the Timorese economy, or to much in the way of private sector development. Successive Timor-Leste governments have pinned their hopes on the Greater Sunrise liquefied natural gas field — estimated to have a potential worth of over US$33 billion— as the country’s economic saviour.
However, haggling between Australia and Timor-Leste over where the processing of the gas will occur, has stymied this joint venture between Timor-Leste, Australia’s Woodside Energy and Japan’s Osaka Gas. If processed onshore, Timor-Leste’s share would be 70%, rising to 90% if carried out in, or near, Darwin. (The difference would be due to the need to upskill the Timorese labour force for the job.)
Ramos-Horta has held out for local processing in order to capture those employment and job training benefits. Briefly last year, he floated the possibility of China and/or Kuwait as replacement partners, even though neither country had publicly expressed any interest. Ramos-Horta has since backed off. For now, the negotiations with Woodside over Sunrise and adjacent gas fields still appear to be a work in progress.
Footnote: New Zealand tends to pat itself on the back over its role in Timor-Leste’s final surge to independence. This selective memory overlooks the private diplomatic messages that MFAT conveyed to Indonesia approving their bloody 1975 invasion of the territory.
Come the mid 1980s, this clandestine green light to the Indonesians was fleshed out via a visit and secret report by MFAT diplomats. This document was drawn on by PM David Lange, who (when queried on the subject) repeated New Zealand’s de facto acceptance of both the 1975 invasion and the brutal realities of Indonesian rule. Lange claimed in an interview with me at the time, that events on the ground had consigned East Timor’s quest for independence “to the dust-bin of history.”
Only after the rebels led by Xanana Gusmao had fought Indonesia to a standstill and the UN had conducted a national referendum in 1999 on the fate of the territory, did our government become a belated supporter of Timorese independence. Evidently, New Zealand has learned very little from this episode. Our support for West Papua’s long struggle for independence from Indonesia has been lukewarm, to stone cold.
Taylor’s version
Long ago, Taylor Swift agreed with what Aristotle said about mean-minded people in power, and the lonely fate that awaits them. Christopher Luxon, take heed :
I can see you years from now
In a bar talking over a football game
With the same big mouth opinions
But nobody is listening
Washed up and ranting about the same old bitter things…
But all you are is mean
All you are is mean
And a liar, and pathetic…
This week, Jamaica is battening down for the arrival of Hurricane Melissa, projected to the biggest storm to hit the island since Hurricane Gilbert back in 1988. Despite the damage it caused, Wild Gilbert also inspired this infectiously happy hit single by Lovindeer. The video (and the song) show a people refusing to be bowed down by the weight of the disaster that has struck them…