Don’t ever agree with all of what Bernard Hickey says but he is interesting in his Herald blog:
The bigger issue for New Zealand’s exporters right now is the high currency and a lack of access to capital for investment. The banks aren’t lending, New Zealanders aren’t investing in exporting and the currency is killing exporters. It’s all very well having markets to export to, but the real problem is being able to produce competitively here.
What is John Key doing to rebalance the economy away from investing in property and towards investing in exporting? Not much if his initial comments on a capital gains tax or a flat tax system are anything to go by.
And what is he doing to reduce the pressure on the New Zealand dollar? His government is about to suck in NZ$40 billion worth of foreign currency over the next five years to fund its deficits, pushing up the New Zealand dollar and interest rates.
If Key was serious about helping exporters he would be freeing up resources and leveling the playing field for exporters to do their thing by slashing those deficits and broadening the tax system to include property.
Grand summits with silly shirts are fun, but they’re not as useful to exporters as more investment and a lower currency. I’d like to see the ’smiling assassin’ do more of the assassinating (of government budget deficits) and less of the smiling (and waving at summits).
A call from a right winger for the government to do some right wing stuff (well dunno if CGT is)? Why is this interesting to you Trevor?
Because he has highlighted the effect of the high currency and high real interest rates on the real economy.
Not because he was having a go at John Key?
It is interesting that some of the veneer is wearing thin. Pete’s post is good. :- http://blog.labour.org.nz/index.php/2009/10/27/a-retail-politician/
Trevor,
Cheers. I’d love to see Labour take the high road and work with National to bring in a capital gains tax and/or land tax to pull the richest 10% into the tax base.
At the moment half the National cabinet (and a few of the shadow cabinet?) are playing the property tax rort game. It would be nice to see New Zealand’s political classes look beyond their own self interest.
Your thoughts?
cheers
Bernard
So Trev, and other Labour fiscal geniuses, what is your cure to the high dollar? Let me guess, quantitative easing as your messiah has done in the US?
The real problem is you lot never managed the economy in a sensible fashion, you thought that by letting house prices super inflate, made everyone rich – never mind the money we borrowed to do it. You lot are like the person that has only read half the book on economics 101.
Here’s hoping Bollard has the spine to cut interest rates, driving away currency speculators and thereby making our currency depreciate. In turn forcing up borrowing costs for the banks and therefore mortgages – so a lot of those people who “bet the farm” on the housing market get the rude shock they are due. Because if they don’t get it now, it is only going to be a damn site worse in 5 years time.
Why does anybody listen to David Hickey. I understand before he started his website he was the Editor of Xtramsn.
And before that did he have a career as a financial guru elsewhere?
gww I think you mean Bernard.
Bernard Phil has made that offer with regard CGT – rejected by Key.
mattyroo I agree your suggestion is worth a go. Maybe Dr Bollard will take the risk. The main people who will get hurt are the currency traders who have banked on an increase over the next six months.
I wonder the same thing as ghostwhoalksnz. Hickey is over-rated, over-used and seems to be an expert on everything.
it would be good if Labour took up the case of the high dollar- the government don’t seem interested.
Robert Wade- visiting UK economist has an article in today’s Herald which is very similar to Bernard’s.
In Australia left wing economists like Ken Davison are also pointing to the looming foreign investment bubble. So its not just righties that want something done.
Of course those currently benefiting from the current situation will do everything they can to oppose change, though I suspect they will be on the losing side, the world simply can’t go on with huge trade and currency inbalances.
Trevor – pretty easy for Mr Goff to make the offer in Opposition, but I don’t recall the Labour Government falling over itself to introduce a capital gains tax from 1999 to 2008.
Well I was in the meeting where Michael Cullen offered to work with National to develop a bipartisan approach on the ring fencing of property investments – Key and English agreed in the room and then English went out leaked the details of the meeting and vetoed working together. Bet he is kicking himself now.
Mattyroo – it’s wonderfully ironic that you rant about Labour MP’s reading only half of Econ101, when it’s clear you didn’t get as far as the International Economics 200 level papers.
Bet he is kicking himself now.
Kicking himself that National isn’t implementing a wildly unpopular tax, while Labour almost falls over itself in support?
Could have been implemented before they were in government.
Trevor
I think has left himself some wiggle room on CGT and hasn’t ruled out a land tax yet. What about a land tax? One way to pull in the richest 10% who have made a killing in the last 5 years from the property boom but have paid no tax.
To others
I was the editor of XtraMSN in 2005. Before that I was Business Editor of the Dominion Post and worked for Reuters and the FT group as a journalist and editor in Wellington, Canberra, Sydney, London and Singapore. After XtraMSN I worked as the editor of The Independent and Head of Fairfax Digital. It’s true I have views on lots of things, as I’m sure many people (and politicians) do.
cheers
Bernard
Bernard Hickey decried the banks for their senseless lending to Alan Crafar’s farming group. Now he decries the banks again for not lending to businesses. Hickey is all over the place and not consistent. He is more left-wing than right-wing StephenR. The man doesn’t have a political philosophy. He only wants to raise his public profile, by saying anything that suits the left and the right.
There’s an interesting paper on capital gains tax and the lack thereof here:
http://www.goodreturns.co.nz/article/976485506/capital-gains-tax-the-new-zealand-case.html
Iparticularly enjoyed this paragraph:
“The average salary earner has few opportunities to earn tax-free capital sums. One opportunity was a redundancy payment. This is, in effect, a payment for human capital. Since in many circumstances such payments could be traded off for taxable salary, the New Zealand Parliament made redundancy payments taxable. However, payments for humiliation on redundancy have retained their tax-free status. As this opportunity has become more widely known, New Zealand employers have shown a tendency to ensure that redundant staff have been subject to increasing levels of humiliation.”
Sensible, was more looking at his views on tax rates generally more than anything else, admittedly. But it ain’t a left view.