There is a hole in @NZLabour’s fiscal plan


#GarethMorgan wants sitting tenant laws

Morgan wants to restrict the ability to evict tenants for reasons other than damage to the property and non-payment of rent. This includes not been able to evict a tenant on sale of the property.

We intend to change the regulations around residential tenancy law so leases make it far easier for a tenant to remain in the premises long term…

This will be achieved by restricting the conditions under which a landlord can evict a tenant to those of non-payment of rent or property damage. Sale of a property is not necessarily a legitimate reason for eviction. Tenants will be able to give 90 days notice.

That policy will make winding up of estates difficult. Houses will be have to be left vacant rather than rented while affairs are put in order. That is to name one of many flaws in a policy announced by a party that prioritises being different over been useful and right.


Source: RENTING Werner Z. Hirsch at encyclopedia of law and economics.

Morgan’s capital tax forgot 30% retirees move every 5 years @TaxpayersUnion


With 30% of retirees changing address every 5 years, they will have to downsize into hovels because they have to pay IRD the great big new tax on their capital championed by Morgan and his Opportunities Party well before they die.

retirees at same residence 5 years ago

Morgan’s 1.8% tax on equity capital is not an inheritance tax for the majority of retirees. It is a nest egg tax as they downsize after the kids fly the nest, grandchildren appear or they move to a more convenient place as they become frail.

Because they will have to pay back taxes of tens of thousands of dollars to IRD every time they sell their house, retirees either will not be able to move closer to family because of grand-children or health issues or they will have difficulty moving into a retirement home of their choice.

This is the first in a series of blogs showing how the Opportunities Party is too clever by half in its manifesto development. By insisting on having different policies to everybody else by a good country mile, it ends up having to take up the policies others rejected because they do not work.

In the case at hand, they put an inheritance tax on ordinary New Zealanders at the same rate as the rich including the founder of the Opportunities Party. This tax will be the only capital tax anywhere that is not progressive.

Over 70% of the retired own their own house mortgage free. The majority of that equity will now go to IRD plus interest by the time both members of the couple die given the average capital tax will be about $10,000 per year in Wellington and twice that in Auckland. They face up to 20 to 25 years of deferred capital taxation that will take half the value of their house easily. It will be hardest if they must cash-out their house to go into retirement home.

The purpose of buying a house is to have a nest egg for retirement. You may draw down that capital because of health issues or pass it on to children if you are luckier than that.

Morgan wants to radically change the way in which retirees go into the evening of their days. People who just managed to save for a house will have nothing to pass on to their children. No more bank of mum and dad either.

Gareth Morgan has fallen for the oldest populist delusion

In founding his own political party, Gareth Morgan has fallen to the populist delusion that all that is needed is for a great leader to get in who is one of us rather than one of them and she will be alright.


Source: About – The Opportunities Party.

In common with all populists, Morgan believes there is one will of the people frustrated by a conniving elite rather than many clashing visions of the good life that politicians must balance. Judis explains

Leftwing populists champion the people against an elite or an establishment. Theirs is a vertical politics of the bottom and middle, arrayed against the top.

Rightwing populists champion the people against an elite that they accuse of favouring a third group, which can consist, for instance, of immigrants, Islamists, or African American militants. Rightwing populism is triadic: it looks upward, but also down upon an out group.

Leftwing populism is historically different to socialist or social democratic movements. It is not a politics of class conflict, and it does not necessarily seek the abolition of capitalism. It is also different to a progressive or liberal politics that seeks to reconcile the interests of opposing classes and groups. It assumes a basic antagonism between the people and an elite at the heart of its politics.

John Rawls talked about the need for reasonable pluralism because so many people have different ideas of the way to go forward. Political institutions must be designed with that diversity in mind as David Gordon explained in a book review

The situation that drives Rawls to his theory is that of people in a large society like the United States who are divided by conflicting conceptions of the good. Some of these conceptions may be better than others, and one may in fact be the correct one: Rawls does not commit himself on this question. But none of these conceptions can be shown to be true in the strong sense that it would be unreasonable for anyone to reject it. This state of affairs Rawls terms “the fact of reasonable pluralism.”

Given reasonable pluralism, it would be wrong for the holders of one conception to impose their views on others; respect for others requires that we defend our political views with reasons others could acknowledge.

Our aim, Rawls holds, should not be a mere modus vivendi with those who profess other conceptions of the good. Rather, we should seek a stable society in which people decide disputed questions by democratic discussion.

The idea is to have a political system with sufficient checks and balances that whoever is in power does not do too much harm nor gets seriously out of alignment with the wishes of the electorate. That was the idea behind MMP: divide power between more parties and make all elections close.

It goes back to James Madison’s idea that governments are not populated by angels and so the powers of government and how they are distributed should take account of that. The idea is politicians behave in line with public interest because of the institutions that constrain and shape their choices.

It is wise to design constitutional safeguards to minimise the damage done when those crazies to the right or left of you get their chance in office, as they will sooner or later rather than focus on the powers you and those that currently agree with you should have in your few days in which you fleetingly have a majority.

Too many policies and ideas of the one political party or another assume that they are the face of the future, rather than just another political party that will hold power as often as not and always for an uncertain time. Too many policies and ideas of the Left assume that they are the face of the future, rather than just another political party that will hold power as often as not.

Will @NZLabour have any list MPs in 2017 after deal with @NZGreens?

There is a memorandum of understanding agreed yesterday between the New Zealand Labour Party and the New Zealand Greens. There is some speculation that there will be more coordination over electorate votes so that the Labour Party wins more electorate seats.

Labour has five list MPs at the moment. Winning a few more electorate seats will mean that the leader of the party and a future leader may be out of parliament if there is more tactical voting.

Unless this tactical voting leads to an overhang in parliament with Labour holding more electoral seats than it is entitled to on the basis of its party vote, it seems to be shooting itself in the foot.

How big are @JohnKeyPM’s $3 billion in tax cuts & threshold changes in 2017 going to be?

On morning radio on Monday, Prime Minister John Key said "We are not ruling that out for 2017 or campaigning on it for a fourth term in 2017, but having a bigger one, to be blunt, than $1 billion." Asked how much was needed to deliver meaningful tax cuts, he said: "$3 billion, I reckon."

The table below uses the Treasury scoring of how much tax cuts can be delivered through $3 billion if they include changes in the income tax thresholds as well. That scoring is static. That is, no behavioural changes are assumed as the result of the tax cuts on labour supply, investment or entrepreneurship.


Source: computed from Revenue Effect of Changes to Key Tax Rates, Bases & Thresholds for 2015/16 — The Treasury – New Zealand.