Archive | Labour policy

Little sets out 8 planks to remedy housing issues

Labour Party leader Andrew Little announced yesterday that Labour would, if elected next year, carry out 8 actions aimed at fixing the housing crisis.

They are:

  1. Build 100,000 affordable homes around the country
  2. Ban foreign speculators from buying existing homes
  3. Introduce an affordable housing authority, partnering with the private sector, to fast-track development in our cities
  4. Tax property speculators who flip houses within 5 years
  5. Help 5100 more Kiwis into emergency housing every year
  6. Make Housing NZ build more state houses & maintain them properly, rather than paying dividends & selling stock
  7. Require all rental homes to be warm, dry & safe to live in, and
  8. Abolish the urban growth boundary and allow Auckland to grow up & out.

Mr Little said: “The Kiwi dream of home ownership is slipping away and we’re facing the biggest housing crisis New Zealand has ever seen. This is a game-changing policy package to fix the housing crisis.

“Labour will establish an affordable housing authority to work with the private sector to cut through red tape and get new homes built fast. It will partner with private developers, councils & iwi to undertake major greenfields & revitalisation projects, building affordable homes with KiwiBuild & the private market. These homes will be part of great communities built around parks, shopping centres & transport links.”

The party would put all surplus urban Crown land under the control of the affordable housing authority for use in its development projects.

“Only a quarter of adults under 40 own their own home, compared to half in 1991. Too few houses are being built, which is helping to drive up prices beyond the reach of middle New Zealand, and too few of the houses that are built are affordably priced for new home buyers.

“In Auckland, despite more than 13,000 new houses being needed to keep up with population growth, just 9400 new houses were consented in the past year. The trend for new consents is falling when a dramatic increase is needed.

“The Government’s estimate that only 5% of new builds are priced in the lowest quartile means fewer than 500 affordable houses will be built in Auckland this year.

“There is no single body tasked with driving the construction of affordable homes. Most developments are smallscale & slowed down by long consenting periods. To ensure profitability, private developers focus on building large, expensive houses.

“At the same time, regional centres are crying out for redevelopment of rundown town centres & suburbs but there is no support from the Government to get this done.”

100,000 affordable homes

Mr Little said Labour’s KiwiBuild programme would build 100,000 high quality, affordable homes over 10 years, 50% of them in Auckland. Standalone houses in Auckland would cost $5-600,000, apartments & townhouses under $500,000. Outside Auckland, houses would range from $3-500,000.

Growing the building workforce

Increased house-building will require a larger workforce, but the Labour policy is aimed more widely than that: “Labour’s dole for apprenticeships policy will subsidise employers to take on around 4000 young people for on-the-job training in fields including building & construction. Labour’s policy of 3 years’ free post-school education will see tens of thousands more people study in all fields, including building & construction. KiwiBuild is projected to create 5000 new jobs at its peak.”

Remove barriers that are stopping Auckland growing up & out

“Up & out” has become a common cry, often without thought on what the “out” would achieve. The constraining urban boundaries were put in place to prevent sprawl into rural areas and to enable infrastructure to service new development most efficiently, and therefore more cheaply. Auckland’s old councils were at odds on urban growth – the outer councils were attracting more housing development but had trouble meeting the infrastructure programmes & costs, while the old Auckland City Council favoured intensification as a regional policy.

Mr Little said: “Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering & holding up development. New developments, both in Auckland & the rest of New Zealand, will be funded through innovative infrastructure bonds.”

Crackdown on speculators

He said Labour would ban non-resident foreign buyers from buying existing New Zealand homes: “This will remove from the market foreign speculators who are pushing prices out of reach of first-homebuyers.”

Labour would extend the bright line test, requiring income tax to be paid on any gains from the sale of residential property, from the current 2 years to 5 years: “This will target speculators who buy houses with the aim of making a quick capital gain. Current exemptions from the bright line test will continue.”

Mr Little said Labour would consult on way to close the negative gearing loophole: “Negative gearing can be used by speculators to make taxpayers subsidise losses on their properties. This is effectively a subsidy for speculation.”

Focus Housing NZ on helping people, not making a profit

Labour will make Housing New Zealand into a public service rather than an SOE, and will substantially increase the number of state houses. Unlike the current government, Labour will not milk state housing for a dividend, and will end its programme of state house sales.

Establishing an affordable housing authority
Focus Housing NZ on helping people, not making a profit

Attribution: Party policy announcement.

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Goff shoots at farmers & residential investors as he reveals his vision

Published 23 May 2011

Labour Party leader Phil Goff made farmers a target yesterday, fired a shot at residential investors, talked up r&d and trade training, crossed the Puhoi-Wellsford “holiday highway” off the to-do list and scorned National’s notion that selling assets was good economics.

For a Labour leader, drive-by shooting of farmers is an easy sport: the party’s wage-earning & beneficiary bases are guaranteed to love it. Likewise canning the “holiday highway”.

Holding on to state assets will be supported by anyone who believes the public sector can perform just as well as the private if it’s managed properly.

Research & development has been a popular economic segment to support from time immemorial, but the money doesn’t flow, or does so only in fits & starts.

So Mr Goff will have secured some votes from his address to the Labour Party congress in Wellington yesterday. But he’ll also lose the votes of middle-income people who just happen to want to drive a short distance to their bach or to get away to a beach at the weekend, only to find themselves in an hours-long traffic jam.

And his shot at owners of rental investments will have an aftershock: These people paid no tax on those investments under a system which has been changed, but still needs to change further. The sector is priced wrongly, so drawing tax out of it will mean sharp adjustments to rents, for one thing.

Despite some blemishes, the Goff advocacy of a different economic way forward has some positives, though his real voter base is likely to pull those positives apart in the event that he wins power.

That’s an unlikely event, given National’s numbers in Parliament and polling which indicates Labour’s chances of a huge lift in support remain poor.

The question, then, is whether John Key needs to pay attention to the plank Mr Goff has laid out, to pick some good bits off it and thereby reduce Labour’s chances of winning support from the rest. Mr Key can win with what he’s put forward in last week’s Budget, even though it’s a lazy attempt at prudent management.

Below, I’ve taken excerpts from Mr Goff’s speech yesterday:

I want to focus on the huge task we face to pay back the debt and grow the economy so everyone gets ahead…. I don’t pretend that is going to be easy. We can’t simply wish away a deficit of $16.7 billion. That is National’s legacy. It’s real and it has got to come down.

But we won’t do that by selling out our future. We will be keeping not selling our farmland to foreign buyers. We will be keeping our power companies, Solid Energy & Air New Zealand community-owned & Kiwi-owned. Selling our efficient & financially successful assets is just dumb. It doesn’t improve our financial position. It actually worsens it. Our power companies alone paid back over $700 million last year to the taxpayer. No wonder foreign investors can’t wait to get their hands on them.

Selling them to pay off debt is economic stupidity. Once they’re sold, that source of money is gone forever. No business or individual would do it, and nor will we. It’s like selling the house to pay off the mortgage and then renting from a landlord who is going to keep pushing up the rent…. Contact Energy was sold by National in 1999. Since then $1 billion in profits from it has gone out of the country to foreign investors….

Muldoon destroyed the 1975 Superannuation Fund. The Key Government seems to want to do the same to KiwiSaver. Because they broke their word, hundreds of thousands of Kiwis stand to lose over $500/year in tax credits….

Things that we would like to do will have to wait until we rebuild the economy. Part of the solution will be axing projects & programmes that we don’t think are priorities to free up cash for more important areas. The Puhoi-Wellsford holiday highway and the missile system for our frigates are examples…..

The Tax Working Group set up by the Government pointed out that half of the top 100 earners in this country didn’t pay the top tax rate. They said that $200 billion in investment in rental properties returned no net tax to New Zealand. They stated that wealthy people using trusts or company structures treated taxation as if it were a voluntary exercise, and they weren’t volunteering. That has to stop. Labour will crack down on tax dodging.

A fairer & smarter tax system will help Labour fund its promise to provide some relief for low- & middle-income people who are struggling. The full 15% of gst will come off fresh fruit & vegetables. That will ease the pressure on household budgets. It will help families put healthy food on the table. And tax rates on the first $5000/year earnings, the first $100/week, will be tax free, as it is in Australia. That will be introduced progressively and our full taxation policy, when released, will set out precisely how it will be funded….

In our first year, Labour will increase the minimum wage to $15/hour to ensure that people who work for a living get a fair living wage….

We need to grow our economy. A growing economy is the best way to pay off our debt and pay for the services we need. Our goal must be to grow a high-skill, high-tech, high-wage economy. A small & distant country like New Zealand will not compete by trying to provide the world’s cheapest goods & services, but we can compete by being the best.

We need to focus on upskilling our labour force. The building & construction industry tells me that within 18 months we will have a shortfall in their industry alone of 90,000 skilled & semi-skilled workers.

There is Christchurch to rebuild, leaky homes to repair and growth of population in Auckland, where new houses haven’t kept up with growth in population. The need to upskill is a no-brainer when you have 155,000 Kiwis out of work while there is a huge shortage of skilled workers.

We also have to address the ticking time bomb we have with many of our young people out of work. There are now 77,000 young people under 25 who are unemployed. That’s one in 4 – one in 3 in the Maori & Pasifika community. We risk a lost generation. It is a social disaster waiting to happen.

Labour will make sure young people leaving school are either earning or learning. Labour will revitalise trade training & apprenticeships. We will create a modern equivalent of schemes like Maori trade training in the 60s & 70s. This produced a generation of skilled & confident young Maori workers.

It’s a disgrace that 9 months after the first earthquake, no new training schemes have been established and no new trainees have yet been taken on in Christchurch. And the money put aside for training is less than the amount which the Government cut from industry training schemes last year. Over 10,500 15-24-year-olds are currently unemployed in Canterbury. The numbers are still going up, but John Key talks about bringing in skilled workers from Malaysia & the Philippines.

Labour will be investing more in research & development. We have to build a smart economy, capable of innovation so that we can lead the world. Yesterday on this stage, New Zealander of the Year Paul Callaghan outlined 10 New Zealand companies which are leading the world, but we need 100 more like them. Labour brought in an r&d tax credit to promote this. We recognised that having r&d a third of the level of comparable countries wasn’t good enough. Our third-largest sector in the economy is hi-tech industries, which produce $6.5 billion-worth of earnings each year – 78% from exports.

But National, against the advice of Treasury, killed Labour’s scheme. No wonder our economy isn’t delivering.

I want to formally announce today that Labour will introduce a research & development tax credit. This is one of the best ways we can lift productivity & growth. In clean tech, there is enormous potential from companies like Lanzatech, Aquaflow, Flotech & Windflow. PriceWaterhouseCoopers predict that this area could add $7-22 billion more/year in value for the New Zealand economy. We will introduce an r&d tax credit initially at 12.5%. That will cost an average of $160 million/year – $800 million over 5 years.

This confirms Labour’s commitment to a smart economy. But it is a lot of money. It has to be paid for and the deficit means no new money is available. So we have to find savings. Today I am announcing how we will pay for it.

In another example of poor economic choices, National left every New Zealander having to pay for their transport & electricity emissions, but exempted farming from paying for their agricultural emissions. That is not fair. Having the taxpayer meet the cost simply means that the pollution goes on for longer. The exemption removes the incentive to agriculture to move more quickly to reduce global-warming gasses which account for 48% of New Zealand’s greenhouse gas emissions.

Labour is proposing to restore the entry date of 2013 for agriculture to come into the emissions trading scheme. This means farmers will pay for just 10 per cent of their 2005 agricultural emissions, plus any growth since then. We don’t believe this is asking too much. Agriculture is important, but all sectors need to pay their fair share.

National’s delay costs around $800 million over 5 years. We, as taxpayers, are paying for this. By reversing the delay, we can transfer this money to pay for the r&d tax credit. Boosting r&d can help our farming sector to be at the leading edge of work to reduce agricultural emissions.

Earlier this year, I outlined Labour’s action plan for jobs & growth. This is:

Tax changes to better support exports, not speculationIncreasing innovation to grow productivity & smart, successful businessesBoosting skills & trade trainingOwning our own future by increasing savings, stopping asset sales and keeping Kiwi land in Kiwi hands, andChanging monetary policy to support exports & jobs.

Today’s announcements build on this and show New Zealanders we have a plan to make the economy stronger and their lives better.

Want to comment? Go to the forum.


Attribution: Speech notes, story written by Bob Dey for the Bob Dey Property Report.

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Cullen on taxes, capacity constraints, more local body reform

Published: 14 August 2005

Finance Minister Michael Cullen didn’t sound at all like a politician about to lose his job when he addressed a Property Council breakfast in Auckland on Thursday. Straight into it, he talked about the economy “over the next 5 years”. He spoke with an expectation that he’d be dealing with it, not in pious hope of being allowed to continue.

Was this just a ploy, when the real Labour message is contained in electorate bribes and the previous lack of clear ongoing policy messages?

Below are notes from his address & answers to questions, covering issues of tax, capacity constraints and further local government reform.

Dr Cullen said the economy had grown by 20% over the last 5 years. There wasn’t room to debate whether that was by this government’s good management or a legacy from previous quality management.

Opponents harp on about lowering taxes. The Cullen answer, now as before, is that tax comparisons are often not like with like: “We & Australia are the only 2 countries in the world with a full imputation system. In the US they have double tax. These comparisons are often not properly made. It’s tempting to return to a full tax rate, and we could lower the tax rate. Everybody would be happier but it would in fact not be more efficient.”

Dr Cullen mentioned taxation of offshore investment as “the tricky bit” considered in a recent Treasury discussion paper “released to a resounding lack of applause”. He lumped the critics together as advisors who had built up skills in a complicated system which earned them large fees.

The present tax system on offshore investment was “a total mess and its rationale is non-existent now..… Investment is being driven into offshore low-tax countries for tax reasons.” Dr Cullen said no final decisions had been made on this aspect of tax, and nobody had come up with alternatives yet.

But it’s hard to argue tax policy with somebody who says that cutting taxes “creates instability”. In Labour’s case, this is because “our traditional constituency want us to spend….. contrary to what the media tell us.”

On the inevitable questions of Ireland & tax, Dr Cullen said Ireland had a zero manufacturing tax in the 60s-70s and nothing happened. It had “an inefficient peasant economy….. We don’t receive any subsidy. We’ve become a prosperous country with both our hands tied behind our back.

“Every time we take somebody off the land and put them in a factory, we probably lower productivity….. We are very thin on large corporates….. We don’t have a future as an electronics maker….. In Ireland, actually, the corporate taxes are quite high.”

In a challenge to New Zealand business, he said: “If you’re really serious [about wanting tax cuts], give me a payroll tax a la Australia, and I can give you a corporate tax cut. Which you don’t want. It’s not a fair comparison. It’s comparing one element, but I think it would be a wrong decision [to go that way]. Payroll tax focuses on labour & employment.”

As for property taxes, Dr Cullen told his Property Council audience: “I’m not going to stand up here and say we don’t have any capital gains taxes in New Zealand. That’s patently untrue [untrue to say there are none]. Our position on property is that the status quo is adequate….. so any form of property tax is off the agenda.”

On further local government reform, Dr Cullen said this was a matter to be brought up local rather than imposed from Wellington. “One of my people spends half his life just herding the Auckland cats,” he said, adding that there was a need to co-ordinate regional economic & infrastructure strategies.

He said Gwen Bull, deposed as chairman of the Auckland Regional Council when she lost her council seat last October, had done a very good job leading the Auckland mayors in their quest for an infrastructure package, and Labour would look favourably on further local body amalgamation moves. He added that having 3 district health boards in the Auckland region didn’t promote efficiency.

On public-private partnerships, Dr Cullen said the Labour Government “doesn’t have an ideological set against” them. Citing the example of the Alpurt (northern motorway extension to Puhoi) project, he said it was “almost cheaper for the Government not to pay for it off current income but raise a loan.

He said one of the gains in Australia in this area wasn’t well understood in New Zealand – that it wasn’t so much a matter of putting together the financial package but to look at the outcome, ‘Here is this problem, how do we solve it?’ “What we tend to do with Transit is a very rigid tender approach. That’s a thing we could do more thinking around.”

“We’re now getting severe capacity constraints. I’m surprised it’s taken so long for those to emerge on the labour side….. Importing skills can only be part of the answer.” Dr Cullen said New Zealand stretched its capacity in 2001-02 with a huge lift in immigration – adding to the workforce also required an increase in workforce skills and capital investment.

“We’re seeing the revival of the long-term industry apprenticeship, which the Government is keen to encourage.”

He said the student loan changes, “while having some benefits politically….. were designed to attract New Zealanders back to New Zealand.” Nearly all the big student debts were owed by Kiwis who’d gone overseas.

While the aging of New Zealand’s population has been emphasised in many ways, Dr Cullen said we now had more full-time students than people on superannuation, which brought its own extra requirements: “A more skilled workforce needs more capital investment.”

For Auckland, Dr Cullen said the land transport funding now was 10 times the level of 6 years ago, but there were limits: “Over the next 2-3 years in this region we are building as much as can be built. The challenge now is to get continuity, phase projects in a way the construction industry can deal with them.”

That statement is an indictment of the short-term thinking of New Zealand governments over a long period. Dr Cullen showed that, in welcoming industry apprenticeships, funding infrastructure and trying to get an investment focus on local projects rather than tax-effective schemes elsewhere, what’s needed to sustain long-term growth has dawned on him.

Our history is littered with downturns in which many skilled workers take off for Australia, never to return, and a significant downside to the Rogernomics freeing of the economy was that the Government didn’t play a strong enough role in workforce retraining during that national restructuring.

Infrastructure projects become a solution for many ailments – skilled jobs justifying a resurgence of skills training, improving the lot of the ordinary citizen. Dr Cullen also indicated his frustration – at one point on “the relatively weak leadership of the Tertiary Commission & the NZ Qualifications Authority”, later at the way Transit NZ has handled projects. He said Transit needed to be more flexible in its tendering, while the country need to turn business investment around, with a stronger focus on technology and research & development.

Dr Cullen said Transit “may have pre-empted a number of options” on Auckland’s western ring route and on bank bundling.

While New Zealand’s new national superannuation fund is nicknamed the Cullen Fund, Dr Cullen said he’d like to see more private investment on top of that enforced saving, and away from the nation’s savings focus of residential investment.

“I’m not saying we’re over-investing in property. What I’m saying is we are under-investing in everything else.” He said lower immigration over the next couple of years would lead to a fall in residential investment.

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