Brace yourselves, people. It's voting time. (Almost.)
An alternative look at the New Zealand election, with writing from the 3news.co.nz team.
By Ally Mullord
Every election people put on their serious faces and say “Let’s focus on the policy,” and every time something far more scandalous turns up.
Amidst the teapot dramatics, we have been flooded with emails saying “But what about the policy?” And so I have decided. It’s time for a bit of policy.
Before I started working In The Media what I knew about political policy could comfortably fit on a large toenail clipping and I did not care about the elections. I imagine I’m not the only one. But you should care!
This is a blog about why you should care. It outlines a few key policies (and a few Goff ones as well, ba-dum tsssh!) so that when it’s time to put the tick in the box you’re not just voting for the party with the most interestingly defaced billboards.
For more policy, visit the 3 News policy page.
Why to care:
Imagine, for a second, you’re going to give someone $5,000 and they’re going to spend it on upgrading your house however they see fit.
Presumably you’d ask what they were going to add on and, if they said excitedly, “Heaps of wicker chairs and hanging plants, and a smoked glass conservatory that makes your house look like a 70s porn den” you would politely usher them out and choose someone else.
Political maxim 1: Don’t vote for anyone who’s going to use your taxes to make New Zealand look like a 70s porn den.
Hire the political party who will upgrade your house in a way that suits you – all the parties have various policies on how taxpayer money will be spent.
(If it was a very close friend or well-known interior designer who approached you, you might just give them the money and trust that they’re going to do something sensible with it. This is sort of the same as your parents always voting National.)
We All Care About Money
The country is in quite a lot of debt.
It isn’t because we’ve budgeted like chumps, spending all our money on large plastic wakas: it’s just that the day-to-day running of the country costs more than the amount the Government makes from taxes and assets. To make up the difference, we borrow money from other, wealthier countries. Then they charge us interest – which drives up our daily cost – and the debt climbs.
Example: On Monday, it costs $60 to run New Zealand – schools, hospitals, public services and so on. The Government makes $40 from taxes and assets.
Late that night and 6,000 miles away, a telephone rings in China. “Wei?”
It is John Key. “Hey bro, can we borrow 20 bucks?”
China sighs and says yes, but we have to pay them $5 a day until it’s all paid back.
On Tuesday, it costs $60 to run the country, but we also owe China $5.
Taxes and assets still bring in $40, and so once again we ring an overseas friend – but this time we want to borrow $25. This is how we get debt.
National and Labour both have a plan to do something about this swelling pimple of debt before it turns into a massive boil on Palmerston North: National wants asset sales and cuts to the public service and Labour wants a capital gains tax.
National’s Asset Sales
National wants to sell some of our assets and use the proceeds to fund things like schools and hospitals, allowing Finance Minister Bill English to get that nice payday feeling where the bills are paid but you haven’t run out of money yet.
It’s a nice idea. Government puts company up for sale, New Zealanders buy company, company makes profit, profit goes to shareholders - New Zealanders and the Government – and this stimulates the economy (not in that way, get your mind out of the gutter).
Government still owns just over half of the company in case the shareholders collectively lose their minds and decide to turn it into a factory which makes knitted beanies for Chihuahuas.
Also, New Zealanders are fairly chumpy budgeters themselves and National thinks the asset sales plan will make it easier for us to invest sensibly and grow our personal incomes.
Those opposing the policy (Labour, the Greens) are worried that the chain will in fact go like this: Government puts company up for sale, foreign interests buy company (in the examples this is usually China, waving a gold-topped cane and twirling its moustache in a sinister fashion), company makes profit, profit goes to shareholders overseas, New Zealand economy is not stimulated.
Your choice: do you think the cash injection from the sale is worth the possible loss of long-term profits to overseas investors? Will big New Zealand companies end up pouring money into someone else’s economy, or is this a great opportunity for Kiwis to invest in reliable companies?
Labour’s Capital Gains Tax
Labour has a tax trident with which they hope to romp to victory on Saturday: a capital gains tax, making the first $5,000 of earnings tax free, and taking GST off fresh fruit and vegetables.
When they released this plan, an unusually poetic John Key said they were “baking a tax cake in Hell’s kitchen”, although it is unclear if he’s talking about the afterlife or that thing on telly with Gordon Ramsey.
The Capital Gains Tax (CGT for short) is the flour, butter, milk and eggs of this devil’s food cake. (The first $5,000 tax free bit and the no-GST bit are the sugar, and the cherry on the top.)
The CGT would mean 15 percent of money from the sale of personal assets went to the Government. So: you sell your bach and keep 85 percent of the money, and the Government takes the other 15 percent and does something useful with it (we hope).
Family homes aren’t included but farms, baches, businesses and a whole lot of other things that I don’t own are, along with a couple of things I do own but am still confused about the purpose of (shares and intellectual property).
As well as raising money to pay off debt and finance the everyday running of the country (especially the increasing number of old people, who are expensive), supporters of a CGT (Labour, the Greens) say it would make the tax system fairer.
People earn masses of money buying and selling investment properties, and Labour wants to bring their taxes in line with lower and middle-income earners.
A CGT also acts as a clever mechanism for redirecting where Kiwis invest their money. Currently, because investment properties are a bit of a tax-free earner a lot of our spare cash gets buried under the house so to speak.
With the tax-free incentive taken away, Kiwis may be more inclined to invest in other sorts of businesses – businesses that might improve the economy for people who aren’t a) builders, b) letting agents or c) lawn mowers.
Opponents of the plan say the tax means Kiwis get taxed twice: once when they earn money, and again when they dispose of it. They also say a CGT is an attack on people who are financially successful, and it won’t raise enough money to pay for Labour’s other policies.
Your choice: do you trust that the tax will bring in enough money to cover our spending, or will it just be a bureaucratic nightmare? Is a tax on property a good way to make sure high-income earners are paying enough, or a punishment for doing well financially?
Labour has made a lot of headlines with its election promise to raise the retirement age to 67 (it’s currently 65), which would bring NZ into line with Australia, the US and the UK.
Even if you have some time to go before reaching this magic number, the decision will still impact on you: eventually determining how many years you have to get up and drag yourself into work for, but more immediately influencing how much of your taxes go towards superannuation, and how much those taxes rise as the number of pensioners increases.
While pensioners do prop up the boiled sweet industry magnificently, their superannuation, around $400 per retiree per week, adds up. By 2050, the number of New Zealanders over 65 will double and the amount of money required to pay the pension will soar to the dizzying heights of $74.9 billion per year.
Considering that it currently costs $8.8 billion a year, the impact will be massive – which is why Labour wants to raise the retirement age, giving us two fewer years to pay for.
Goff would put the age up by two months every year between 2020 and 2033 then fix the retirement age at 67. The Retirement Commissioner suggested exactly the same plan, but got knocked back by the National Government.
Labour says it is a very sensible thing to do and will take the burden of two years’ worth of superannuation payments off younger generations and stop the economy being dragged down by the combined weight of its over-65s.
Key, however, has roared a political version of “Over my dead body;” he said in 2008 that he’d resign from Parliament if any changes were made to the retirement age while he was in charge.
National says their projections show the country will be able to afford the growing numbers of superannuitants, and Labour is making New Zealanders work for longer so it can pay for its other policies.
Opponents of the policy also say that despite its gradual introduction, it will affect the long-term savings plan of people who are currently in their 40s.
Your choice: is two more years of work a small price to pay for more economic stability, or an unnecessary burden on older New Zealanders?
For more policy, visit the 3 News policy page.