Handle9: 

 

It’s a yes or no question.

Is it possible? Yes.

Is it likely? No. 

ockel:

 

Handle9: @GV27 do you believe that the projected National numbers around foreign buyers are at all realistic?

 

I did the math a few weeks ago.  When you look at the proportion of homes sold above $5m (IIRC 0.4% of total volume and assuming a median price of $5m which is conservative) and the number sold between $2m and $5m (median price $3.5m).  Take a 15% tax on the total value based on those volumes and median values to get the potential tax pool and then start to overlay assumptions on foreign home buyers then its possible but not probable.

 

That's on current volumes with the current FBB (which I have my own thoughts on but that's another matter). 

National from memory rely on an uplift in volume but that's the bit I struggle with. 

GV27:

 

ockel:

 

I did the math a few weeks ago.  When you look at the proportion of homes sold above $5m (IIRC 0.4% of total volume and assuming a median price of $5m which is conservative) and the number sold between $2m and $5m (median price $3.5m).  Take a 15% tax on the total value based on those volumes and median values to get the potential tax pool and then start to overlay assumptions on foreign home buyers then its possible but not probable.

 

 

That's on current volumes with the current FBB (which I have my own thoughts on but that's another matter). 

 

National from memory rely on an uplift in volume but that's the bit I struggle with. 

 

Velocity at the moment is lower than pre FBB (and considerably lower than the housing boom of 2021).  In 2022 there were ~57,000 homes sold, in 2018 (before the FBB) it was ~78k.  Stress test the volume assumptions top and bottom, stress test the foreign buyer % for different ranges when looking at historical % of total homes bought by residence, etc etc.  Good old Monte Carlo simulations gives an envelope of possible outcomes.  Draw your own conclusions vis a vis other political party promises.  

GV27: Everyone" meaning your circle of friends and the people you surround yourself with? Echo chambers will do that.

 

Your friend's link fails the basic logical test: with an absolute majority, if any of this stuff mattered to Labour, they could already have done it. They've chosen not to. Ask yourself why. 

 

You can flog yourself into the ground thinking that these parties actually care about you and are suddenly going to come good on all the stuff they said they would do but didn't, or you keep gambling that someone who actually can deliver something, anything, will come into power before they stuff it up so much that we need decades to fix. 

 

At the end of the day, the tedious partisan red team good, blue team bad logic that's used to excuse the absolute failure of governance that we've had over the last three years while our institutions unravel and more and more Kiwis struggle with the basics like keeping their families fed and paying for things like power is more about reinforcing your own sense of tribalism than any legitimate interest you might have in solving these problems. It would at least be believable if people didn't look the other way on Labour's huge policy failures while they tried to make National out to be some sort of satanist overlords but being angry about someone proposing something you don't agree with is easier than asking hard questions of your own beliefs and whether the people you support actually care about them as much as you do. 

 

Not at all, if I was making it a cornerstone policy that without which means $800M less in the tax take I would at least on the first, second or perhaps third time to put up to shut everyone up be prepared to release the background analysis.

It's funny you raise power as something that costs more, which government exactly sold off 49% of a previous SOE with a loss of year on year revenue of over $100M that could have been re-invested in the country rather than sold to overseas pension funds?

Personally I think Labour has under-performed and was overwhelmed for a long time by the COVID response and the enormity of the under-spend that they were presented with when taking office.

They did help save in excess of 10,000 NZers from dying from COVID so that is a net positive.

I was working with central government agencies as a high paid contractor by Nationals standards during the last National government and it was a mess, decades of under investment and squeezing every department until they stop functioning. Housing was a mess, health was also a mess which was just two of the agencies I worked with. Sure Labour didn't fix the problem as much as I would have liked, but they at least tried to not make it worse.

Also happily stand behind my statement that when significant cuts which National and ACT have already been clear about the cuts they want. Also making the responsibility of implementing those cuts to the leadership of those agencies rather than taking ownership of the implications of those cuts to central government the good people leave, the bad people stay and services in general grind to a halt. 

This provides a self-fulfilling prophecy that central government cannot deliver anything. Which leads to more cuts and privatisation of functions that should be core government but don't align to National and ACTs desire for small government such as Charter Schools, Private Prisons, funding cuts to Kainga Ora and giving it to private companies. I saw it happen before and I have no doubt it will happen again.

Edit: Tangible ways in which National's Policy will make things worse for the most vulnerable:

• Re-Adding the $5 prescription change from it currently being free.
• Changing increases of the unemployment and disabilities benefit to inflation rather than wages. Leaving all beneficiaries who depend on those benefits $20 every week worse off than under the current policy.
• Moving the bright line test back to 2 years from 10 years further fueling property speculations making housing even more unaffordable
• Encouraging overseas speculation on the property market for $2M+ houses. I am not sure this will actually fly but if it does it will most certainly be inflationary, otherwise it will leave a large hole in the budget which will either cause more borrowing (which is only bad when Labour does it) or further cuts to central government services.
•  

Tangible ways in which Labour's Policy is not really addressing the wealth gap in our country:

• Refusal to address capital gains tax
• Refusal to address rapid rises in rents with tools such as rent control
• Allowing OT to continue operating the way it has without significant reform with cash injection to support our most vulnerable children to be a pipeline to prison
• Refusal to look at other ways to generate revenue to fund needed funding across Health and Education.

Much of this is for a good reason as if they introduced many of these policies they would be undoubtly removed by National, so it is a failure on both of them to reach a ongoing consensus on how lifting our most vulnerable out of Poverty really benefits all of society and is in everyones best interests even if it means those at the higher end pay more tax.

BarTender:

 

Also happily stand behind my statement that when significant cuts which National and ACT have already been clear about the cuts they want. Also making the responsibility of implementing those cuts to the leadership of those agencies rather than taking ownership of the implications of those cuts to central government the good people leave, the bad people stay and services in general grind to a halt. 

 

This provides a self-fulfilling prophecy that central government cannot deliver anything. Which leads to more cuts and privatisation of functions that should be core government but don't align to National and ACTs desire for small government such as Charter Schools, Private Prisons, funding cuts to Kainga Ora and giving it to private companies. I saw it happen before and I have no doubt it will happen again.

 

Edit: Tangible ways in which National's Policy will make things worse for the most vulnerable:

 

• Re-Adding the $5 prescription change from it currently being free.
• Changing increases of the unemployment and disabilities benefit to inflation rather than wages. Leaving all beneficiaries who depend on those benefits $20 every week worse off than under the current policy.
• Moving the bright line test back to 2 years from 10 years further fueling property speculations making housing even more unaffordable
• Encouraging overseas speculation on the property market for $2M+ houses. I am not sure this will actually fly but if it does it will most certainly be inflationary, otherwise it will leave a large hole in the budget which will either cause more borrowing (which is only bad when Labour does it) or further cuts to central government services.
•  

Tangible ways in which Labour's Policy is not really addressing the wealth gap in our country:

 

• Refusal to address capital gains tax
• Refusal to address rapid rises in rents with tools such as rent control
• Allowing OT to continue operating the way it has without significant reform with cash injection to support our most vulnerable children to be a pipeline to prison
• Refusal to look at other ways to generate revenue to fund needed funding across Health and Education.

Much of this is for a good reason as if they introduced many of these policies they would be undoubtly removed by National, so it is a failure on both of them to reach a ongoing consensus on how lifting our most vulnerable out of Poverty really benefits all of society and is in everyones best interests even if it means those at the higher end pay more tax.

 

Services are already in major trouble, this is what infuriates me about this election. Lots of panicking about cuts but a refusal to accept that things like healthcare are already in chaos and we are already seeing emergency departments closing and people giving up on being seen at emergency rooms. You know, the kind of thing people are trying to spin as being the kind of thing that would happen under National... that's already happening. 

Core Crown Revenue is up something like 70% since Labour came into office. They are collecting plenty of money. You can't piss hundreds of millions of dollars away on polytech centralisation and then say there's not enough money for education so we need to collect more and more and more tax from people. And it's not just people at the higher end - the refusal to index means that people on minimum wage will likely be paying 30% tax on part of their income in the next three years. Not high earners. Minimum wage workers. Either those workers matter or they don't - they can't just be political props when it suits. 

IMO this is the exact same kind of callous neglect that people complain about in the health and education sectors - it's just that those sectors as so dysfunctional that you can't discuss the concept of indexing without it being cynically framed as a tax cut. 

Just throwing money at things has resulted in poor outcomes for the last six years. The idea that the people who blithely did so are qualified to get us out of this mess, and their solution of just spending even more like there's a magical point at which available funds overrides the fact you're not going to monitor or be held accountable for the actual quality of the spend is absurd. We literally cannot afford to keep vapourising money and having nothing to show for it.

GV27:

 

 

 

Services are already in major trouble, this is what infuriates me about this election. Lots of panicking about cuts but a refusal to accept that things like healthcare are already in chaos and we are already seeing emergency departments closing and people giving up on being seen at emergency rooms. You know, the kind of thing people are trying to spin as being the kind of thing that would happen under National... that's already happening. 

 

Core Crown Revenue is up something like 70% since Labour came into office. They are collecting plenty of money. You can't piss hundreds of millions of dollars away on polytech centralisation and then say there's not enough money for education so we need to collect more and more and more tax from people. And it's not just people at the higher end - the refusal to index means that people on minimum wage will likely be paying 30% tax on part of their income in the next three years. Not high earners. Minimum wage workers. Either those workers matter or they don't - they can't just be political props when it suits. 

 

IMO this is the exact same kind of callous neglect that people complain about in the health and education sectors - it's just that those sectors as so dysfunctional that you can't discuss the concept of indexing without it being cynically framed as a tax cut. 

 

Just throwing money at things has resulted in poor outcomes for the last six years. The idea that the people who blithely did so are qualified to get us out of this mess, and their solution of just spending even more like there's a magical point at which available funds overrides the fact you're not going to monitor or be held accountable for the actual quality of the spend is absurd. We literally cannot afford to keep vapourising money and having nothing to show for it.

 

 

 

Are you responding to Bartender or summarising how successive Governments have mishandled these sectors? You mentioned 6 years so I take it that the last 6 years is all that matters and the previous 50 are ok?  Well, they haven't been ok for many decades. 

https://archive.ph/3Zcrr >> assuming ACT become part of the next Goverment, thank Christ this moron won't get anywhere near Parliament. ACT seem to be have some issues finding decent candidates this election, although I daresay they aren't the only ones.

GV27: Services are already in major trouble, this is what infuriates me about this election. Lots of panicking about cuts but a refusal to accept that things like healthcare are already in chaos and we are already seeing emergency departments closing and people giving up on being seen at emergency rooms. You know, the kind of thing people are trying to spin as being the kind of thing that would happen under National... that's already happening. 

 

Core Crown Revenue is up something like 70% since Labour came into office. They are collecting plenty of money. You can't piss hundreds of millions of dollars away on polytech centralisation and then say there's not enough money for education so we need to collect more and more and more tax from people. And it's not just people at the higher end - the refusal to index means that people on minimum wage will likely be paying 30% tax on part of their income in the next three years. Not high earners. Minimum wage workers. Either those workers matter or they don't - they can't just be political props when it suits. 

 

IMO this is the exact same kind of callous neglect that people complain about in the health and education sectors - it's just that those sectors as so dysfunctional that you can't discuss the concept of indexing without it being cynically framed as a tax cut. 

 

Just throwing money at things has resulted in poor outcomes for the last six years. The idea that the people who blithely did so are qualified to get us out of this mess, and their solution of just spending even more like there's a magical point at which available funds overrides the fact you're not going to monitor or be held accountable for the actual quality of the spend is absurd. We literally cannot afford to keep vapourising money and having nothing to show for it. 

So the alternative of cut central government services until it bleeds is better plan?

I agree tax rates should be indexes, but it shouldn't involve cuts to core services that are already underfunded.

It's the same supply side economics argument used as to why minimum wages can't be raised but completely disregards the rampant growth in house prices that has been occurring over the last 20 years.

https://www.qv.co.nz/news/imf-says-new-zealand-house-prices-have-increased-almost-four-times-average-increase-across-oecd-countries-1998/

and

https://businessdesk.co.nz/article/property/house-prices-now-at-a-record-88x-nz-incomes

Both parties answer is "build more houses" with Labour also saying "build more state houses too" but that is it. With a 50% increase accommodation supplement it's government paying private landlords mortgage.

https://www.stuff.co.nz/business/125195278/accommodation-supplement-propping-up-rental-market-by-30m-a-week

And Superannuation which is by far and above the biggest line item on the governments balance sheet on a per-citizen basis.

Neither party has a solution to tangibly bring housing prices into a more realistic 3 to 1 ratio of median house price to median wage which is where society actually succeeds and no one apart from ACT is prepared to touch Super. And the 1313 folks who joined Share my Super is a drop in the bucket from the 858300 folks claiming super.

NZ has a lot of underlying generational issues that will take billions to fix, having a block of cheese tax cut based on cutting core services is terrible for our society.

quickymart:

 

https://archive.ph/3Zcrr >> assuming ACT become part of the next Goverment, thank Christ this moron won't get anywhere near Parliament. ACT seem to be have some issues finding decent candidates this election, although I daresay they aren't the only ones.

 

Cue the "this is not who I am" crap.

BarTender:

 

So the alternative of cut central government services until it bleeds is better plan?

 

I agree tax rates should be indexes, but it shouldn't involve cuts to core services that are already underfunded.

 

It's the same supply side economics argument used as to why minimum wages can't be raised but completely disregards the rampant growth in house prices that has been occurring over the last 20 years.

 

https://www.qv.co.nz/news/imf-says-new-zealand-house-prices-have-increased-almost-four-times-average-increase-across-oecd-countries-1998/

 

and

 

https://businessdesk.co.nz/article/property/house-prices-now-at-a-record-88x-nz-incomes

 

Both parties answer is "build more houses" with Labour also saying "build more state houses too" but that is it. With a 50% increase accommodation supplement it's government paying private landlords mortgage.

 

https://www.stuff.co.nz/business/125195278/accommodation-supplement-propping-up-rental-market-by-30m-a-week

 

And Superannuation which is by far and above the biggest line item on the governments balance sheet on a per-citizen basis.

 

 

 

Neither party has a solution to tangibly bring housing prices into a more realistic 3 to 1 ratio of median house price to median wage which is where society actually succeeds and no one apart from ACT is prepared to touch Super. And the 1313 folks who joined Share my Super is a drop in the bucket from the 858300 folks claiming super.

NZ has a lot of underlying generational issues that will take billions to fix, having a block of cheese tax cut based on cutting core services is terrible for our society.

 

The 'alternative' to not doing it is that the government erodes more and more of people's take-home wages and the pain just gets felt at a household level, while someone gets to swan about and pump up their chops by claiming that they're prudent fiscal managers - when all they've done is neglect basic administration of the tax system and opened the floodgates on spending. 

 Household budgets are a lot more finite that the government's and they don't have the same ability to just absorb huge losses. And the idea that all spending is sacrosanct is how you make this worse, not how you make it better. You seem to constantly mention the funding levels, but not the outcomes they should be be generating, and one thing does not automatically lead to the other. The assumption it does is blowing out our finances and it's how we got into this mess. 

And if you are genuinely concerned about Super, then lifting the age is a great place to start.

Just think how much more substantial that tax cut could be for people if the government wasn't covering $9B in direct losses from RBNZ - the overseer of which was rewarded with a higher pay and a second term as Governor. But $9b is a really big number, so it must be good right? Again, quality of spend matters. Accountability matters. But not to this government. 

BarTender:

 

 

 

Not at all, if I was making it a cornerstone policy that without which means $800M less in the tax take I would at least on the first, second or perhaps third time to put up to shut everyone up be prepared to release the background analysis.

 

It's funny you raise power as something that costs more, which government exactly sold off 49% of a previous SOE with a loss of year on year revenue of over $100M that could have been re-invested in the country rather than sold to overseas pension funds?

 

 

 

Interesting that you have that perspective.  Its clearly a discussion for another thread but I think the mixed-ownership-model has been an outstanding success for the Govt and its coffers.  

Take Mercury for example.  The Govt sold 49% for $1.7bn in 2013 and owns 51% of something worth $8.7bn and has received significant dividends since 2013 (FYI the TSR for Mercury in the 5 years to June was 127% cf the market  return of 33%).  At best it would have returned WACC on is pre-list value (probably less than WACC given most state owned organisations underperform relative to their cost of capital).  There has been ~$1.8bn of value earned plus the dividends over 10 years.  

From Mercury alone it received $141m of after tax dividends in 2023 that will have been reinvested in the country.  Add Meridian and Genesis to your analysis and your argument kind of loses its water, dont you think?  

If we'd stayed with the ECNZ model then taxpayers would be continuing to export electricity at sub-economic prices to the likes of Rio Tinto and Sumitomo.  At least there is a demand for better pricing and the right process for determining investment in future generation (all without rigor when owned by the state (eg Onslow)).

The counterfactual is something like Ports of Auckland.  A sub-economic millstone with poor governance and a wasted asset.  Thats thanks to it being acquired in full by an organisation that doesnt understand economics.

But like I say, its another thread. 

And FYI the real price of residential electricity has gone from 33c/kwh in 2013 to 31c/kwh in 2023 (both march years).  Not exactly nose bleeds.

https://thespinoff.co.nz/politics/26-09-2023/groans-and-giggles-at-the-tvnz-young-voters-debate maybe this is a better write-up for you then Ockel.

Do you think Chris Ipkins makes a better case than Chris Hipkins Will the real Chris Ipkins standup

ockel:

 

BarTender:

 

 

 

Not at all, if I was making it a cornerstone policy that without which means $800M less in the tax take I would at least on the first, second or perhaps third time to put up to shut everyone up be prepared to release the background analysis.

 

It's funny you raise power as something that costs more, which government exactly sold off 49% of a previous SOE with a loss of year on year revenue of over $100M that could have been re-invested in the country rather than sold to overseas pension funds?

 

 

 

 

Interesting that you have that perspective.  Its clearly a discussion for another thread but I think the mixed-ownership-model has been an outstanding success for the Govt and its coffers.  

 

Take Mercury for example.  The Govt sold 49% for $1.7bn in 2013 and owns 51% of something worth $8.7bn and has received significant dividends since 2013 (FYI the TSR for Mercury in the 5 years to June was 127% cf the market  return of 33%).  At best it would have returned WACC on is pre-list value (probably less than WACC given most state owned organisations underperform relative to their cost of capital).  There has been ~$1.8bn of value earned plus the dividends over 10 years.  

 

From Mercury alone it received $141m of after tax dividends in 2023 that will have been reinvested in the country.  Add Meridian and Genesis to your analysis and your argument kind of loses its water, dont you think?  

 

If we'd stayed with the ECNZ model then taxpayers would be continuing to export electricity at sub-economic prices to the likes of Rio Tinto and Sumitomo.  At least there is a demand for better pricing and the right process for determining investment in future generation (all without rigor when owned by the state (eg Onslow)).

 

The counterfactual is something like Ports of Auckland.  A sub-economic millstone with poor governance and a wasted asset.  Thats thanks to it being acquired in full by an organisation that doesnt understand economics.

 

But like I say, its another thread. 

 

And FYI the real price of residential electricity has gone from 33c/kwh in 2013 to 31c/kwh in 2023 (both march years).  Not exactly nose bleeds.

 

The electricity market as a whole hasn't acheived at all what it was sold to the public. In particular residential power prices have increased by 50% in normalised dollar terms since 2001 while introducing gamification and price fixing into the market.

The cost of electricity has wide reaching implications for all aspects of the economy. Treating these types of assets in terms of what return they generate directly has been fools gold all over the world. Basically privitisation encorages gross underinvestment as that pushes up commodity prices and ignores the wider economic implications.

The UK water sector is another case in point. It's basically collapsing under it's own weight and looking for public handouts after transfering the economic value to it's shareholders.

ockel:

 

 

 

Interesting that you have that perspective.  Its clearly a discussion for another thread but I think the mixed-ownership-model has been an outstanding success for the Govt and its coffers.  

 

Take Mercury for example.  The Govt sold 49% for $1.7bn in 2013 and owns 51% of something worth $8.7bn and has received significant dividends since 2013 (FYI the TSR for Mercury in the 5 years to June was 127% cf the market  return of 33%).  At best it would have returned WACC on is pre-list value (probably less than WACC given most state owned organisations underperform relative to their cost of capital).  There has been ~$1.8bn of value earned plus the dividends over 10 years.  

 

From Mercury alone it received $141m of after tax dividends in 2023 that will have been reinvested in the country.  Add Meridian and Genesis to your analysis and your argument kind of loses its water, dont you think?  

 

If we'd stayed with the ECNZ model then taxpayers would be continuing to export electricity at sub-economic prices to the likes of Rio Tinto and Sumitomo.  At least there is a demand for better pricing and the right process for determining investment in future generation (all without rigor when owned by the state (eg Onslow)).

 

The counterfactual is something like Ports of Auckland.  A sub-economic millstone with poor governance and a wasted asset.  Thats thanks to it being acquired in full by an organisation that doesnt understand economics.

 

But like I say, its another thread. 

 

And FYI the real price of residential electricity has gone from 33c/kwh in 2013 to 31c/kwh in 2023 (both march years).  Not exactly nose bleeds.

 

Perhaps we can privatise health, housing, education,infrastructure, garbage collections, traffic tickets?