But first…the “shock and awe” tactics being deployed by the government against the teaching profession are extensive. They include ramming through rushed and comprehensive curriculum changes, enforcing a narrow and simplistic approach to the teaching of reading and maths, promoting rote learning, recall and compliance, reducing the te reo elements in classroom texts, reducing teacher representation on the Teaching Council etc etc. Collectively, all of this needlessly accelerated change will serve to extinguish any sparks of resistance within an already stressed profession.
In the face of the avalanche of additional work coming their way, more and more exhausted teachers are likely to simply acquiesce, in the interests of survival. Nothing about this push for conformity is likely to be good for children, all of whom have varied learning needs. As Auckland school principal Stephen Lethbridge has pointed out, the government’s reforms are not neutral tools:
They carry with them a different vision of education: one that values compliance over creativity, delivery over dialogue, and uniformity over professional judgement. They reduce teaching to the following of a script, eroding the artistry that makes learning meaningful.
And then comes the clincher: fidelity. We are told that in order for students to succeed, programmes must be followed ‘with fidelity’ – as though all brains learn in the same way and the teacher’s professional judgement is an inconvenience rather than an asset. Fidelity becomes the escape clause. If the programme does not work, it is not the design at fault but the teacher who is blamed for failing to implement it faithfully….Over time…teaching becomes less about knowing your learners and responding to their needs, and more about implementing someone else’s script.
In essence, the natural anxiety of parents about their children’s progress is being weaponised by the government, in order to promote conformity. Ultimately though, any gains from short term compliance are likely to come at the cost of snuffing out many a child’s long term creativity.
Rich and sensitive
The wealthy, as F. Scott Fitzgerald suggested in his short story The Rich Boy, are different to you and me. Softer in some ways, harder and less trustful in others. Thanks then to Lady Deborah Chambers KC, for offering us a glimpse into the sensitivities of the more well-to-do, via her recent NZ Herald commentary on Labour’s proposed capital gains tax.
The original headline on Chambers’ article (“Bugger off: why taxing property feels like punishing thrift”) conveys the flavour of the piece more accurately than the neutral header “Why taxing property hits a nerve” that currently adorns it. While Chambers cannot be held responsible for the original headline, the article beneath her by-line does invite our empathy with the hurt feelings of the property-owning classes. Apparently, we need to come to a better understanding of how they might now be feeling, in the wake of Labour’s nightmarish proposal.
Since Chambers article sits behind a paywall, it risks being accessible only to the like-minded. So let me share. As you will be aware, Labour is proposing to tax the capital gains made from the sale of residential and commercial properties beyond the family home or the family farm. To the wealthy, Chambers explains, this is being felt as an injustice, since (she argues) it is the equivalent of “double taxation” and would amount to “a punishment for prudence.” In her view, such people have accumulated their property portfolios via honest sweat and toil, while paying income tax and GST along the way:
Psychologically, there’s a huge difference between a Government saying, “as you earn, we’ll take a share”, or “as you spend, we’ll take a share”, and a Government saying, “nice property you’ve got there. Now pay up.”
Labour is not of course, proposing to do any such thing. Its version of a CGT is not a property tax. Belatedly, long after the property boom has collapsed, Labour is proposing to tax the profits made on a limited extent of property investment and speculation, where such profits can be shown to exist. Yet Chambers asserts:
…A tax on property value feels like a tax on thrift on what’s been carefully set aside, or meant to be passed on to the next generation. But taxing the property itself, the product of those savings, strikes at something more personal. It feels confiscatory. It cuts across our psychological and deep-rooted longing for security and provision against future uncertainties.
Her plea in mitigation culminates in this cri de coeur:
Why sell your bach to invest in a business if the Government clips 28% off the top?
Hmm. In reality, those thrifty bach owners can rest easy. No one is suggesting the sale price of their bach (or multiple baches) would be taxed at 28%. Under Labour, the 28% tax would apply only on the profit made between when they bought it, and when they sold it. Even then, the vendors will still get to pocket over two thirds of those profits. The tax applies only to that capital gain. That’s why they call it a capital gains tax.
The rest of Chambers article is padded out with claims that a CGT would deter productivity and investment. Instead, a CGT is designed (and is more likely) to do the opposite. A CGT would help to channel investment away from the buying and selling of houses, currently seen to be – as Chambers says – our sole, reliable source of income security. Instead, the funds are intended to go into productive enterprises that would create jobs, and help to create a more equitable and sustainable economy. Maybe that last bit is wishful thinking. We won’t know for sure until we try it.
Lastly, Chambers claims that a CGT would be complex, expensive to administer, and unlikely to significantly reduce the deficit. She may be right on that last point, but only because what Labour is proposing is such a narrowly conceived, CGT-lite proposal. If Chambers wants to see this instrument “significantly reduce the deficit” then she should be calling for the CGT to be applied to the capital gains made on all sorts of other transactions – such as perhaps, the buying and selling of boats, art, jewellery etc. I may be wrong, but I don’t think she cares that passionately about reducing the deficit.
Beyond that point… can it be that New Zealand stands alone among developed nations for being incapable of devising and administering an efficient capital gains tax? Other nations find this task to be entirely possible, and well worth the candle.
On this issue, it seems to me that Chambers is making much the same point about a CGT that the higher echelons of the legal profession previously made about the proposal to scrap appeals to the Privy Council. Allegedly back then, we lacked the expertise, wouldn’t be able to do it properly, and the whole exercise would be more trouble than it was worth.
Well…as things have turned out, the sun still rises and sets even though the Supreme Court is now our final court of last resort. Lady Chambers KC can be assured that life as we know it here would survive a capital gains tax, just as it has in the rest of the developed world. Sometimes, as another famous writer once pointed out, some things have to change, if only in order that the prevailing system can endure.
Footnote One: In passing…lets just say that thrift, prudence, the shunning of conspicuous display and the denial of self-gratification are not the moral values that most of us would associate with the people (Michael Fay, David Richwhite and their successors) who have comprised New Zealand’s top tiers of wealth for the past 40 years.
By necessity, the habits of thrift, prudence, and self-denial tend to be practiced more often by people living solely on the minimum wage or subsisting on benefits or pensions, as they struggle to get by on patently inadequate incomes. They have to battle to do so in the face of the rents imposed by some of the same property investors for whom Chambers urges us to feel compassion.
Footnote Two: Basically, there is no logical reason why income from capital gains should not be taxed with the same rigour as the taxes we levy on wages, benefits, and spending. New Zealand is a global outlier not only in lacking a meaningful CGT, but in the lopsided extent to which the state derives its revenue from income tax and GST.
Footnote Three: Denmark and Ireland – two countries of comparable size to this country – have long had in place more comprehensive capital gains taxes than the stunted model that Labour is proposing. Interestingly, Denmark’s CGT can be applied to gains from selling the family home if the property exceeds a certain size, and somewhat similar provisions apply to taxing the gains made on vacation homes. Scroll down here to find the details about Denmark’s CGT.
Go here for details of Ireland’s 33% CGT rules.
Footnote Four: Within the charmed circles of the rich, I’m sure that wealth is often regarded as being the just reward for hard work, thrift and prudence. (The “prosperity gospel” preached by some leading US evangelicals is based on that premise.) Such beliefs predate not only this century, but the one before it as well. It was during the last half of the 19th century that the American writer Horatio Alger found a huge audience for his inspirational tales about honest and thrifty young men e.g. Ragged Dick, published in 1868.
Alger’s message, peddled across some 100 short novels, was that success lay within the reach of any industrious young lad who worked hard and saved his pennies, no matter how poor his origins may have been, and regardless of the handicaps he may have brought to the competitive arena. In reality, Alger’s model of upward social mobility had lost most of its credibility by well over a century ago.
Some politicians though, still find it an extremely useful device. The tellers of such tales – from Alger to Margaret Thatcher to David Seymour to the op ed writers for the NZ Herald – share an obvious self -interest in peddling the success stories of people who have pulled themselves up by their bootstraps. Such parables hide the extent to which privilege stacks the deck.
Trump whispering
Positive relationships with Donald Trump are usually built on flattery and concessions. Yet Finland’s President, Alexander Stubb – another centre-right politician from a small country – has used other means to forge a positive relationship with Trump, and earn himself regular invitations to Mar-a -Lago.
How has Stubb come to be known as Europe’s “Trump whisperer?” True, Finland does have something to sell that Trump wants: the ice breaking ships that Trump feels he will need once he annexes Greenland and Canada. Stubb also plays golf. But then, so do a lot of other political leaders. The crucial difference is that Stubb is a far, far better golf player than Trump is. While still at high school, Stubb played golf for the Finnish national team, later won a US golf scholarship and briefly contemplated a career on the pro circuit.
While a narcissist, Trump appears to seek out the company of people who are more talented than he is in the disciplines that he respects. So what exactly, does New Zealand have that the US might want ? In particular, what superior talents does Christopher Luxon possess that Donald Trump might recognise and respect? Alas, there are no obvious answers to either of those questions.
In fact, many New Zealanders would probably be stumped if asked to name any notable talents that our current PM may possess. And since Trump is reportedly on the warpath to make foreign countries pay a higher price for US pharmaceuticals, just wait until Trump hears about Pharmac.
Fingers to the bone
Back in the 1950s, the mother of songwriter Hoyt Axton co-wrote “Heartbreak Hotel,” Elvis Presley’s breakthrough single. Later, Hoyt himself wrote a string of hits including “Joy To The World” for Three Dog Night, and “ The Pusher” for Steppenwolf. In the context of today’s column though, the track below may be his most significant single. When you work your fingers to the bone, what do you get? Bony fingers….