What will happen to National now?

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#2893359 29-Mar-2022 09:11

GV27:

But to the bigger question relevant to the thread; do I think National would do anything about most of this stuff? A: Less and less with each passing day.

I'm wondering if some voters are starting to think "Labour aren't doing the business for me, so I'll vote National as I'm sure they'll do things differently and fix all of my problems". I agree with your point.

Query, what do you think National could do to turn things around? I don't think a new leader would improve their fortunes much, plus they've changed them several times over the last few years to no effect (although I'll admit that under Luxon they have seen a polling increase).

GV27

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#2893378 29-Mar-2022 09:54

quickymart:

Query, what do you think National could do to turn things around? I don't think a new leader would improve their fortunes much, plus they've changed them several times over the last few years to no effect (although I'll admit that under Luxon they have seen a polling increase).

Luxon is very good at talking about making housing affordable, and then in the same breath suggesting we return to pre-Covid levels of migration, giving investors back all of their tax advantages over the same FHBs they used to be bidding against at auctions as well as trashing any plans for rapid transit in our cities.

He probably needs to think about how these things might be related and whether Kiwis want to be spending more time in traffic, commuting to jobs where wages are never allowed to find a market equilbrium because we keep importing more and more people. But if that is the plan then he needs to say it outright, then we get to have a frank conversation about it, instead of adding 80,000 people a year and wondering why our commuting times are blowing out and our living standards are dropping year on year.

floydbloke

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#2893384 29-Mar-2022 10:16

quickymart:

... I don't think a new leader would improve their fortunes much, plus they've changed them several times over the last few years to no effect (although I'll admit that under Luxon they have seen a polling increase).

It worked for Labour prior to the 2017 election. I don't think they would have won if Little had still been the big cheese. Bring in some charisma and a smiley face, hey presto.

Thanks for explaining "plethora".

It means a lot.

quickymart

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#2893388 29-Mar-2022 10:24

I know that, I wasn't talking about Labour, I was asking what National could possibly do. I think Luxon is most likely a step in the right direction for them, but past that...?

Rikkitic

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#2893411 29-Mar-2022 10:46

floydbloke:

It worked for Labour prior to the 2017 election. I don't think they would have won if Little had still been the big cheese. Bring in some charisma and a smiley face, hey presto.

They wouldn't have won. But Jacinda Ardern is a lot more than just some charisma and a smiley face. People on the right have a real hard time accepting that and that is why they still can't get over the fact that Labour got in and then went on to score the biggest election victory in MMP history!

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floydbloke

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#2893425 29-Mar-2022 11:06

Rikkitic:

... But Jacinda Ardern is a lot more than just some charisma and a smiley face. ...

Fair point, she gives good hugs as well😜

Thanks for explaining "plethora".

It means a lot.

antonknee

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#2893629 29-Mar-2022 18:23

sen8or:

I don't buy the "prices are up all over the world, it wasn't us" excuse. Governements all over the world have done exactly the same thing during this pandemic, printed money and dished it out like a lolly scramble. Printed money = inflationary pressure. They can't very well blame everyone else when they have done exactly the same thing.

Rents are up (in part) because our wealth hating Govt has loaded significant costs on the evil landlords. What did they expect when they took measures that would increase costs, landlords would simply go "oh okay, I guess I make enough money already, I'll happily pay more......." More poorly thought out legislation with quite foreseeable consequences that they were well aware of but chose to ignore.

If you're saying Labour can't use it as an excuse, you also can't blame it on Labour.... you cannot have your cake and eat it too (which incidentally seems to be incredibly common amongst right wingers on the internet).

Rents are up in very small part because of that. There's extremely good data suggesting those changes are a very small part of what caused rent increases - case in point the horrendous rent increases over the last 10 years while the gravy train was well and truly open for property "investors" (speculators).

GV27:

But to the bigger question relevant to the thread; do I think National would do anything about most of this stuff? A: Less and less with each passing day.

Of course not, that party is absolutely devoid of talent or ideas with very few exceptions.

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quickymart

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#2893764 29-Mar-2022 20:10

Inflation is indeed worldwide, it's not a NZ-only thing. This is an American cartoon, but you can guess who most Americans blame (although I don't think it's all personally Biden's fault; I doubt he wants high inflation either) - nor is high inflation here all the Government's fault either:

sen8or

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#2894063 30-Mar-2022 08:32

antonknee:

If you're saying Labour can't use it as an excuse, you also can't blame it on Labour.... you cannot have your cake and eat it too (which incidentally seems to be incredibly common amongst right wingers on the internet).

Rents are up in very small part because of that. There's extremely good data suggesting those changes are a very small part of what caused rent increases - case in point the horrendous rent increases over the last 10 years while the gravy train was well and truly open for property "investors" (speculators).

A property speculator and a property investor are two completely different creatures. Whilst it suits "the left" to label them as the same they are not.

Property speculators are now , as they have always been subject to income tax on profits, their business is buying and selling for a profit. This may be through simple holding of the property for time, but more likely, picking lows in the market and/or do er uppers.

Investors are in to property ownership over the long term and whilst some may be impacted by the bright line test (certainly now that its out to 10 years), buying / selling for a profit was not their only goal.

Absolutely there are cases where this has been abused, properties put into childrens / relatives names to try and mask the transaction, but the tax law is quite clear and captures such activity. Whether or not every case is found out is highly doubtful, but dishonesty is dishonesty and I would hope that they get their comeuppance when the tax man catches up with them.

GV27

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#2894067 30-Mar-2022 08:48

sen8or:

A property speculator and a property investor are two completely different creatures. Whilst it suits "the left" to label them as the same they are not.

Property speculators are now , as they have always been subject to income tax on profits, their business is buying and selling for a profit. This may be through simple holding of the property for time, but more likely, picking lows in the market and/or do er uppers.

Investors are in to property ownership over the long term and whilst some may be impacted by the bright line test (certainly now that its out to 10 years), buying / selling for a profit was not their only goal.

Absolutely there are cases where this has been abused, properties put into childrens / relatives names to try and mask the transaction, but the tax law is quite clear and captures such activity. Whether or not every case is found out is highly doubtful, but dishonesty is dishonesty and I would hope that they get their comeuppance when the tax man catches up with them.

As far as 'investor/speculator' go, when there is a housing shortage, they are functionally the same. Houses that FHBs might own at the entry level get taken off the market by people who, up until recently, could claim one third of their financing costs as expenses against personal income, whereas owner-occupiers could not.

The point of the Brightline was to introduce a de minimis timeframe where the intent of the purchase that distinguishes one from the other doesn't matter, because a) it takes a lot of effort to prove it, and b) so many people were simply flipping over property and claiming they had always planned to hold it a as a long term rental, and the massive tax free gain in a short period was just incidental. Even the 'pattern' rules still let you do it an absurd number of times.

Ironically National really ramped up the enforcement around property investment and revisiting compliance issues around rentals with substantially more IRD funding. At one point I think they were making something like $7 back for every extra dollar they put into funding compliance investigations.

And let's be honest; Kiwis aren't an imaginative bunch. The 'get an investment property' seems to be the default wealth building process in NZ. That's partly a result of business lending being so much harder to get than residential, but it also shows an expectation and apparently an entitlement to tax-free gains. Unfortunately this has the effect of concentrating a lot of the tax base on salary and wage earners while a bunch of the money that gets made outside it just gets plowed back into housing portfolios.

sen8or

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#2894106 30-Mar-2022 10:04

I don't think its lack of imagination that holds kiwis back from investing in things other than bricks and mortar, its risk aversion and bone laziness. How many business provide a reasonable rate of return over the medium-long term. I can't recall the stats exactly, but IIRC something like 50% of small businesses go bust in the first 2-3 years and that jumps to 75% (+/-) in 5. Given the often high cost of entry into business and things like fixed leases on premises etc and it doesn't take long before someones nest egg has been swallowed up and they have nothing but debt left. How often does that happen with property?

There are always other investments, stock exchange, international markets etc etc, but often these require quite specialist knowledge and active participation from the investor to see returns from. There are more avenues now than there used to be (sharesies, banks providing investment opportunities outside of term investments etc), but unless someone is prepared to work an investment and adjust to changing markets, this will be easily put in the too hard basket.

quickymart

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#2894130 30-Mar-2022 11:08

Luxon disagrees with former National PM Jim Bolger and thinks the Fair Pay Agreement is a bad thing: https://www.newshub.co.nz/home/politics/2022/03/christopher-luxon-says-former-national-leader-jim-bolger-s-claims-fair-pay-agreements-will-lift-wages-and-productivity-are-completely-wrong.html

GV27

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#2894460 31-Mar-2022 07:04

sen8or:

How often does that happen with property?

It's almost like things have risk!

In all seriousness though, property has now essentially been de-risked following years of questionable interventions or lack-there-of. Strong signals like:

a) There will not be a capital gains tax

b) The LVRs for investors getting wound back

c) The RBNZ will effectively print billions that will get channeled into housing and support asset prices during times of market turmoil

....all eventually have a flow-on effect. So yes, starting a business does have a lot more pitfalls and risk, but only if you accept the status quo of the state underwriting rents through the accommodation supplement, strangling land supplies and making the questionable interventions above to effectively totally de-risk property investment by comparison. Which... you know, we shouldn't.

antonknee

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#2894589 31-Mar-2022 10:49

Property is extensively derisked in this country - it's the number one reason we have so many people "investing" in it. For years it has been seen and treated as a sure thing, and for years it has been a sure thing because regulations make it so.

Is it really investment if you're "investing" in a negative cashflow/equity situation on the basis that capital gains will sort you out? Is it investing if you're flipping properties? Is it investing if you buy and do little to no maintenance or improvements? Not really IMO. I'm not saying all property investors are in that boat, but I would wager it's the vast majority of them - particularly the "mums and dads". (Which incidentally is a logical fallacy I hate and which is designed as an emotional appeal - eg you don't often hear about the plight of mum and dad sharemarket investors...)

Rikkitic

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#2894603 31-Mar-2022 11:25

Just as a point of information (not pushing any agendas here), I happen to have two close friends who are both property 'investors'. Both started with very little. One had an old farmhouse he worked his way up to and a bit of land. After a long period of not doing much with the land, he built a number of rental accommodations on it. He is very good at working with his hands and did much of the building work himself. I happen to know he did a lot of physically demanding work on this over a few years. When it was finished he rented the properties and was able to apply the equity to buying a couple of other properties. He has now bootstrapped himself into a comfortable retirement position. He is a fair landlord liked by his tenants and he worked for what he has.

My other friend started out as a single mum on a benefit raising two young children on her own while studying for a qualification. She and her former partner had managed to buy a cheap house in a poor area with help from her parents and she struggled to keep up the payments on that as she studied and fed her children with budget food. Eventually she got her qualification and was able to go to work, which improved her financial situation. Over time her position improved to the point that she was able to buy a better house to raise the children in. She also kept the old one. She may have used that to leverage the mortgage on the new one. I'm not sure.

After several years of paying off debt, she was able to buy another house, then another. She now has two that she rents out, the one she lives in, and another house and two flats that she operates as short-term accommodation. She is carrying maximum debt at this time (and recently learned she could never have done what she did under the new regulations) but she is a millionaire on paper and has enough equity to protect herself even if the market collapsed.

These are just two anecdotal examples I happen to know about. I personally think our tax system is pretty badly screwed up, but both of these people earned what they have, and worked bloody hard for it.

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