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Fiji
The Reef Endeavour ferries passengers around remote Fijian islands for days at a time. (Photo: Supplied / Treatment: Tina Tiller)

BusinessSeptember 3, 2022

A tropical cruise for one is a profoundly weird experience

Fiji
The Reef Endeavour ferries passengers around remote Fijian islands for days at a time. (Photo: Supplied / Treatment: Tina Tiller)

After being decimated by Covid, ocean cruising is making a huge comeback. First-time cruiser Chris Schulz joined the boomer brigade in Fiji.

I didn’t think about it. Didn’t even blink. The weather had been wet and wild. A recent brush with Covid left me with a persistent hacking cough. I’d angrily deleted Instagram to avoid tropical holiday snaps posted by family and friends. The All Blacks kept losing.

Would I like to travel to Fiji to cover the return of cruising? Of course I would. Get me the fuck out of Auckland immediately. Please.

It took standing in a queue full of old people on a sunny Denarau jetty for reality to set in. Surrounding me were mostly rich, white and retired couples ready and eager to get back to their cruisy lifestyles after two Covid-affected years off. I, meanwhile, have never been on a cruise. It felt like I was being dropped into foreign territory, sent to secretively observe, then write about, the same people I would mingle with around the breakfast buffet.

“Should I tell them I’m an undercover agent?” was a question that crossed my mind as I befriended Margie and Rob*. We’d just arrived on the deck of the 22-year-old ship Reef Endeavour and the retired Gold Coast couple were beaming, happy to be finally taking a trip they’d first booked two years ago. Learning I was on my own, the cruise veterans quickly sized up the pitfalls of solo cruising – it’s expensive, and, potentially, lonely. “I was wondering about the cost,” laughed Margie.

Reef Endeavour
Life on board the Reef Endeavour includes a small pool. Photo: Supplied

Advice flowed. Buying drinks from the boat’s bar is expensive, they warned. Rob explained how to tip apple juice from a bottle and replace it with gin, using food colouring to disguise it and sneak it past the crew. Margie made sure I knew to cram as much food onto my plate as possible with every meal, and to join queues early to grab the best grub. They reminisced about meals from past cruises. “You’ll put on weight on those American ones,” warned Rob. “I ate steak four nights in a row. You can buy all-you-can-drink passes.”

I looked around at my 65 fellow cruisers and suddenly realised I would be eating, drinking and socialising alone at an event built entirely for two. Everyone was coupled up and most were more than 20 years outside of my demographic. Pondering my predicament, I decamped to the boat’s empty second floor, stretched out on a lounger and attempted the New York Times quiz, Are you even fun? Before I could finish it I fell asleep, soothed to slumber by the boat’s gentle sway.

When I woke up, I knew what I had to do: I needed to find friends, fast. It turned out others did too. That afternoon, as the Reef Endeavour left Denarau and began exploring some of Fiji’s 333 remote islands, I met several people just like me. Americans Amber and Jenny were old school friends on an overseas trek before starting new jobs. In their mid-20s, they kept getting asked if they were a couple, and the constant explaining was exhausting. Meanwhile, Antonio, from Austria, and Kimberley, from London, quit their jobs and fled Hong Kong’s strict lockdowns for a nine-month world tour before their wedding.

Fiji
Another remote island to explore in Fiji. Photo: Chris Schulz

Like me, neither duo had anticipated the whopping age difference they’d have with their fellow passengers. That night, over drinks that weren’t that expensive after all, the five of us bonded over our shared awkwardness. Armed with people I could dine with, drink with, share gossip with, and rely on for some dependable laughs, the cruise took on a completely different vibe. Finally, I could relax and enjoy everything Fiji, and our cruise ship, had to offer. It was time to meet some boomers.

It’s easy to see why retirees love to cruise. Removing paid employment from your daily schedule leaves a gaping hole and cruise ships easily fill it. The list of daily activities, left on a folded piece of A4 on our pillows every day, started at 7am and didn’t finish until after 9.30pm. For those that wanted them, there were oceans to plunge into, coral reefs to snorkel, remote islands to explore, and paddle boards and kayaks to ride. There were talks and tours by crew members, a marine biologist and captain Ken Bellantine. Occasionally, we fed reef sharks in the same water we swam in.

At night, there were cocktail hours, cultural events and canapes to enjoy while being serenaded by musical guests. If you ever got bored, there was food. Holy wow was there a lot of food. Breakfast buffets full of all-you-can-eat bacon and eggs, pastries, cereals, coffees and juices were followed by shovel-it-in lunches of steamed fish, fried chicken, salads, and dessert. Dinners involved multiple courses of squid, fish, chicken and gigantic steaks that I’m sure made Rob happy. In the background, easy listening staples were provided by a keyboard crooner who seemed keen to perform ‘Escape (The Piña Colada Song)’ as often as possible.

On a cruise, food is a major attraction. Several people admitted to me that they felt it was the best way to get value for money out of the trip. Knocking back a hearty breakfast on day two, Perth couple Tina and Paul explained their second reason for cruising: ticking off their bucket list. “Soon, we won’t be able to do it,” said Tina, pointing out their advancing years. The two, originally from New Zealand, eagerly explained their upcoming 77-day touring itinerary for the rest of the year. But it was all practice for the big one: a 33-day Antarctica trip departing in January, a journey that starts at $68,000 per person.

How do they afford all this? “Drugs,” joked Paul. At least, I think he was joking. Sometimes, as he told stories of backpacking alone through Berlin and Mexico, and finding then snorting a kilo of cocaine floating down a Brazilian river, it was hard to tell. He later admitted the pair funded their lifestyle with 60 investment properties dotted around the world. “I retired my kids at six,” Paul boasted, showing off photos on his phone of his son, now 18, trekking up remote mountains. Then he listed all the rare meats he’d tried, including donkey, horse, whale and even cat.

Reef Endeavour
The Reef Endeavour has room for about 145 passengers. Photo: Supplied

However they made their money, travellers like Tina and Paul are needed by Fiji. The country relies on tourism to keep the economy ticking over, and its residents employed. The industry was decimated by Covid, a tour van operator called Shaz told me after picking me up from the airport. He lost his job and his family converted the back of their house to farmland, selling fresh chillis and coriander door-to-door to survive. Now, the 27-year-old worked 14-hour days ferrying tourists around, a job that allowed him to support his four siblings. Shaz sipped a 4pm coffee and kept his phone on his lap in case his wife called – she was due to go into labour with their first child any minute.

It’s true that tourists are returning with gusto. “Since Fiji’s borders opened in December 2021, over 180,000 Fijians have been able to return to work,” Sonya Lawson, Tourism Fiji’s regional director for New Zealand, told me. This year’s visitor numbers are already more than double last year’s, and many of the arrivals are from Aotearoa. Fiji remains a compelling tourism hotspot. “Considering Kiwis have only been travelling since March, these numbers have exceeded our projections, and holiday-makers are showing no signs of slowing down,” Lawson said.

On the Reef Endeavour, most passengers were from Australia, and many were taking their first cruise in several years. But everyone’s discovering that travelling is not as easy as it used to be. At Auckland International Airport, many bars and eateries remain mothballed. Just one other plane left over the nearly three hours I waited for my flight. Queues are also longer; it took nearly an hour for Fiji’s border security to check everyone had the appropriate paperwork. Proof of Covid vaccination, evidence of travel insurance, and a paid RAT test are required to pass. The Reef Endeavour required a negative test for boarding.

Fiji
The Reef Endeavour drops anchor in a remote harbour. Photo: Chris Schulz

Confidence has been a little slower to return to the cruise industry. The Reef Endeavour, with a capacity of 130 guests, is on the smaller side, but only 65 were on board for the three-day leg I joined. Perhaps the memory still lingers of early pandemic cruise ship horror stories, like the Diamond Princess, which saw infected passengers confined to their tiny cabins for weeks. Still, crew members were delighted to be back at work. One, called Sam, told me his salary helped support his seven siblings. He had dreams of one day captaining his own ship, a gruelling 10-year process of training and monitored sailing. 

To succeed, Sam needs cruise ships to return to full capacity. Time and again I was asked by cruise ship guests and crew to send them my story once it was published. Across my trip I built up a catalogue of email addresses and Instagram accounts to do just that. As soon as I landed back in Auckland, I received a message from the ship’s PR team asking when my story would run. It felt like a lot was riding on what I wrote. I hope it’s not.

“We’ve got a problem,” declares captain Ken. He’s leaning on the balcony of his boat, his weathered skin taking in yet another sunset. Until recently, a small sandy island that passengers had been ferried to for a terrific mid-ocean afternoon swim had been visible. Two years ago, the island was never covered fully by water, even during the highest of tides. Now, we couldn’t see it, and high tide was still an hour away. “We’re going to need to find somewhere else to take people for a swim,” he pondered.

Climate change is a huge concern to Fiji. No one seemed to want to talk about it, despite Fiji’s prime minister Frank Bainimarama warning, at a summit in 2015, “the Pacific as we know it is doomed”. Cruise ships are not environmentally friendly, producing at least twice the CO2 emissions per passenger of a long-haul flight. The other concern is plastic. The stuff keeps washing up on Fiji’s beaches, and before each swim we’d wander along the shore filling bags with discarded water bottles, pegs and two-minute noodle wrappers.

It’s understandable that no one wants to risk ruining their good times with tough talk. After the last two years, many of those onboard the Reef Endeavour wanted to use their first holiday in years to forget Covid dramas and climate concerns and fill up their plates with buffet food while sinking another bottle of Fiji Gold in the sun. To be fair, it’s pretty easy to forget your day-to-day concerns when another tropical island and coral reef swim is just around the corner. We visited so many stunning, isolated beaches I lost count. Isn’t that the point of a holiday anyway?

Fiji
The Reef Endeavour’s crew make for formidable rugby players. Photo: Chris Schulz

Pulling up on one particular island, I suddenly realised I recognised it. My family are diehard fans of the TV reality show Survivor and the last two seasons of the show were filmed in Fiji. Some of the structures, including a hut, remained on the beach. Delighted, I snapped photos to send back home and began searching, fruitlessly, for a hidden immunity idol. That afternoon, we visited the island where Tom Hanks’ Castaway was filmed, and turned brown coconuts into our own version of Wilson, Hanks’ volleyball friend.

On the final day, on yet another stunning beach, with palm trees looming over us and my footsteps the first to disturb the smooth sand, a portable speaker was set up and a rugby ball procured. A game of beach rugby between a New Zealander, an Australian, Rob from the Gold Coast and three superior Fijians erupted. “Good step,” yelled one at me generously as I twisted, turned and fell into shallow waves. Cardi B’s ‘WAP’ – the uncensored version of the brutally explicit banger – blasted across a beach full of mostly retirees. I’d just scored another story to share with my squad over dinner that night.

When magic moments like that happened, my initial despair at taking a solo cruise turned into something else. I have new Facebook friends and email chains full of people I never thought I’d meet, and a collection of memories I never thought I’d have. Some of us are already planning a catch-up in November. My Covid cough has disappeared. Traveling overseas for the first time since 2019 really did change my vibe. As the crew sang us off board on my final morning, I took my time departing, sharing hugs and saying lingering goodbyes with my new mates. I almost – almost – didn’t want to come home. 

Names have been changed. The writer travelled courtesy of Tourism Fiji and Captain Cook Cruises.

Keep going!
Revenue minister David Parker speaks to media after his GST u-turn (Photo: RNZ / Angus Dreaver)
Revenue minister David Parker speaks to media after his GST u-turn (Photo: RNZ / Angus Dreaver)

OPINIONBusinessSeptember 1, 2022

A one-day epic tax fail – and the far bigger tax tragedy behind it 

Revenue minister David Parker speaks to media after his GST u-turn (Photo: RNZ / Angus Dreaver)
Revenue minister David Parker speaks to media after his GST u-turn (Photo: RNZ / Angus Dreaver)

Bernard Hickey tells the story of an almighty tax furore, the backroom attempts to contain it – and the original sin that started us on this road more than 30 years ago.

This is an edited version of an article first published on Bernard Hickey’s newsletter The Kākā.

David Parker denied yesterday that the Labour government tried to “sneak through” a $225m tax increase by extending GST to Kiwisaver fund management fees – but the optics did look plenty sneaky.

The initial announcement from the revenue minister early on Tuesday afternoon didn’t even mention the GST change, despite the extra tax raised being five times that of the other main measure announced – and the FMA having warned it would reduce Kiwisaver and other savings by over $163b by 2070. Parker’s explanation yesterday was that the IRD had checked with a few fund managers, who didn’t seem that concerned. The implication seems to be that the government hoped the change would go through to the keeper, or bizarrely, that big and small fund managers would come out in support of it, and the opposition and media would either not notice or care that much. Whatever the thinking, it blew up in the government’s face spectacularly.

The detail about the extra taxes was on page 95 of the bill’s 225-page commentary and the detail about the potential loss of $163b in lost savings was on page 10 of the IRD’s 19-page Regulatory Impact Statement. The NZ Herald’s Thomas Coughlan and Stuff’s Rob Stock both reported those key details later on Tuesday afternoon. I found them around 4.30pm. The NZ Herald’s ‘Government quietly introduces $103b tax on KiwiSaver’ headline caused all sorts of ructions in the afternoon, including attempts to get it taken down or changed. The Herald doubled down with a banner ‘Tax Grab’ headline in the physical paper yesterday morning.

Parker defended the plan on RNZ’s Morning Report yesterday morning, shortly after National leader Christopher Luxon attacked it on the same show as a “retirement tax” and a “wealth tax” that he would repeal immediately.

Within an hour or two, Parker and finance minister Grant Robertson had clearly started considering a reverse ferret. In the end, it was a rapid and complete capitulation, as the announcement below sent at 1.16pm makes clear.


Follow Bernard Hickey’s When the Facts Change on Apple Podcasts, Spotify or your favourite podcast provider.


I’m reproducing it here in full, if only because the explanation is the clearest about the problem the government wanted to solve, and its justification for first going ahead with it and then abandoning it within 24 hours.

Inland Revenue and Treasury advised this change be made to remove a loophole used by large financial companies, so they would have to align with how others in New Zealand pay GST.

The move would also have brought New Zealand fund managers more into line with the approach in Australia.

“Smaller fund management providers who were doing the right thing were at a competitive disadvantage compared to others, mostly larger providers, who were using the loophole,” David Parker said.

“Generally it’s bad to have these sorts of distortions in the tax system as bigger players can exploit them, but if the sector as a whole is happy to operate with the status quo then we will leave them in place.

“During extensive consultation views were mixed on the merits of the technical change. The large companies profiting from the current set-up were opposed to the change, while smaller providers were more supportive of the change. This was because these providers who did charge the full GST on their service fees faced unfair competition from the bigger players.

“However since the announcement it has become clear that smaller providers now oppose it too.

“It’s important to clear up some inaccurate representation of the proposal. New Zealanders’ KiwiSaver contributions and balances were not going to be taxed under this legislation. However it is clear from the reaction to this proposal that it has caused concern for Kiwis,” David Parker said.

“I am proud of Labour’s role in introducing KiwiSaver and its role in securing the future of New Zealanders. We will never do anything to undermine it.

“By contrast, National will not commit to keeping KiwiSaver in its current form, and cannot be trusted to support this important scheme. When last in Government National ditched the Kick-Start payment and introduced a tax on employer contributions,” David Parker said.

“Because of the importance of public confidence in KiwiSaver and the need to ensure nothing unduly affects New Zealanders’ willingness to save, the Government will not to go ahead with the proposal contained in the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Bill.”

The absence of this rationale from the original release is made all the more glaring by its inclusion in the about-face.

In theory, the GST decision all made perfect sense and is totally in line with Treasury and the IRD’s three-decade-plus quest to design the perfect tax system, one which is broad-based, low rate and free of unfair exceptions and loopholes. That’s the basis for our current income tax and GST systems, which are among the world’s least-exception-ridden tax codes in the world.

‘He mea tautoko nā ngā mema atawhai. Supported by our generous members.’
Liam Rātana
— Ātea editor

This government’s embarrassing and politically damaging backflip was an epic fail from all angles, but it was only a short-term one. The real tax failure highlighted by yesterday’s drama was a much longer-term and more damaging one for our economy and society. It was the failure of the fourth Labour government in 1989 to complete its redesign of the tax net to include capital gains or land wealth in any form.

It was then finance minister David Caygill’s inability to complete the “pure” trifecta of a simple exception-free income tax, a comprehensive value added tax and a capital gains tax, that led to this week’s contortion, which is just the latest of many to try to rectify that failure in a politically acceptable way.

Failing to complete the capital gains leg of that trifecta has changed Aotearoa in a fundamental and negative way. And now that failure is piling on the political pressure to further pollute the purity and effectiveness of the other two legs.

It is the biggest “if only” in our political history. If only Caygill’s proposal from December 19, 1989 had been implemented, we would be living in a different place now. Its failure created the conditions for our brutally expensive housing market which now dominates our political landscape, is a major factor in our child poverty, health and education crises, and is holding back our attempts to get to carbon zero.

Capital gains was the missing link that would have made our income tax and GST systems sustainable, and removed the tax advantages in leveraged residential land investment. Instead, its loss has screwed the scrum of our banking system, dramatically widened inequality and embedded over $1t in wealth into homeowners, whom centrist politicians must now attract in order to win or retain power.

We built a perfect tax system – except for the exceptions that turned us into a housing market with bits tacked on.

And there is Aotearoa’s political economy and predicament in one sentence.

Sadly, perfect was much more than the enemy of the good in this case. “Almost perfect” just plain wrecked the good.

An aerial view of Māngere
The housing crisis of today has its roots in the failures of 1989 (Photo of Māngere via Getty Images)

The long-term epic fail

Roger Douglas, David Caygill, Geoffrey Palmer and Ruth Richardson were the driving political and legislative forces behind the tax reforms, resource management, public finance and labour law reforms that are now the bedrock of our economy. In many ways, their logic and intent was pure and good.

They reformed everything to get away from the all-encompassing morass of tax and industrial law that appeared to bog down the economy in a tangled mess of:

  • wage and price freezes to fight endemic inflation;
  • a fixed exchange rate that was bankrupting the nation;
  • import and export tariffs, controls and subsidies designed to reward farmers and punish consumers to attain trade surpluses;
  • nationally arbitrated and set wages and conditions to bolster the power of workers at the expense of industrial firms’ profits; and,
  • a tax code designed to enhance the wealth of the connected and their accountants and advisers, rather than improve the health of the Crown’s finances.

They decided to rewrite the tax code in a “broad-based, low rate and neutral way” to:

  • lower and simplify personal income taxes by cutting the top tax rate from 66% to first 48% in 1988 and then 33% in 1989 (with just two rates of 33% above $30,000 and 24% below that);
  • create a value added tax (GST) of 10% in 1986 (subsequently lifted to 12.5% in 1989 and 15% in 2010);
  • removing tax subsidies for savings into pension funds between 1987 and 1990; and,
  • lowering the corporate income tax rate from 48% to 28% in 1988 (subsequently lifted back to 33% in 1989, cut to 30% in 2008 and then 28% in 2011);

But these were all ultimately reliant on introducing a capital gains tax to fill out the landscape completely, as Caygill pointed out in December 1989:

“As the Consultative document points out, investments which are not attractive in their own right can be attractive merely because the income they produce is untaxed.

“The tax exemption therefore encourages investment in areas offering low pre-tax returns.

“On that basis, and on the basis that the advantage of existing concessions is greatest for those with most wealth, it is both efficient and fair to include currently untaxed income in taxable income.”

National’s ‘Let’s Tax This’ ad from 2017, arguing that Labour planned to bring in a capital gains tax on property

The third leg was just left hanging

The rest is history. Labour lost the 1990 election and never got the chance to introduce a capital gains tax. National didn’t introduce one and both National and Labour have been trying to directly or tangentially fill the hole ever since. Meanwhile, home-owning voters, savers, investors, businesses and the whole economy more broadly has been sniffing out the hole and piling into it with a passion. Renters can only stare into the edges of the abyss as it recedes into the distance with their dreams of bringing up families in their own secure and healthy homes.

National won the 2011 and 2014 elections, at least partly, by campaigning against Labour’s plans for a CGT beyond the family home, but it was National which introduced the “bright line” test for taxable capital gains on property trading by landlords in 2015 to try to squeeze the hole a bit. Labour extended National’s two-year test to five years in 2018 and then 10 years in 2021 in what was a politically adept move to squeeze it a bit more.

The current Labour government has also tried to throw up barriers to home owners using their untaxed and leveraged home equity to buy ever more rental properties. It has done that by ring-fencing rental property losses from other income and removing interest as a deductible expense for tax purposes for residential landlords.

While these are all positive moves, these “fixes” are a long way from the pure and simple tax model laid out in the 1980s. They create confusion, break basic principles of taxation and create grey areas and boundary issues all over the place.

No wonder the tax geeks at IRD and Treasury jumped at the chance to do something “pure” this week by removing the confusion about whether funds management fees were eligible for GST or not. Some used to be. Most weren’t. Now, after the back flip, all aren’t. That’ll learn them.

Don’t forget Working For Families and the accommodation supplement

Meanwhile, the politics of imposing capital gains taxes got ever tougher as the leveraged and tax-free gains got larger and harder to give up. That led to increasingly expensive, difficult to build and unhealthy housing. This growth of housing as the preferred investment class has made it politically impossible to achieve a capital gains tax now.

So other ways to help those struggling with housing costs were dreamed up and delivered via the income tax and welfare systems. Working For Families (WFF) was created as a rebate scheme to help low-to-middle income earners with children cope with high housing costs and low wages, both of which were driven by low public and private investment in infrastructure and business technology (because any surpluses were being ploughed into land values).

Now WFF has created an income tax system pocked with the most awful ulcers of marginal tax rates nearing 100% at points. Meanwhile the costs of the accommodation supplement, along with emergency housing and emergency benefits, are now approaching $4b a year. That would be more than enough to service $100b of debt – enough to build half a million homes.

All because we couldn’t get a capital gains tax across the line 32 years ago. Now that was an epic and long-term tax fail.


Follow Bernard Hickey’s When the Facts Change on Apple Podcasts, Spotify or your favourite podcast provider.