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Dame Pasty Reddy says her generation were wrong to simply work hard and wait for change. (Photo: Getty)
Dame Pasty Reddy says her generation were wrong to simply work hard and wait for change. (Photo: Getty)

BusinessSeptember 19, 2018

Even the governor general is sick of workplace sexism

Dame Pasty Reddy says her generation were wrong to simply work hard and wait for change. (Photo: Getty)
Dame Pasty Reddy says her generation were wrong to simply work hard and wait for change. (Photo: Getty)

The NZ governor general, lawyer Dame Patsy Reddy, called out the “egregious” behaviour her generation endured from male colleagues in a powerful speech at the Women of Influence awards last night. Disruption, she said, is the only way to effect change

The 125th anniversary of suffrage in New Zealand is the ideal time to come together to celebrate mana wahine and wahine toa. To acknowledge the achievements of New Zealand women from all walks of life.

Kate Sheppard, and those who worked so hard to advance the cause of votes for women in this country, have long provided us with a great example of the power of influence. Speak up, organise, do the hard yards, form useful relationships with those who can help, and never give up. The suffragists, both female and male, wrote the book on how working together can influence powerful societal transformations.

It’s wonderful to see how much of an icon Kate Sheppard has become for New Zealanders. 125 years on from that ground breaking Electoral Act, she is a role model for anyone wishing to challenge the accepted order of things.

When I was growing up, Kate Sheppard had nothing like the universal name recognition she has now. In fact I was only dimly aware of her and her legacy when I first saw her image on our $10 note. It was a great pity, as strong female role models beyond teachers and nurses were rather thin on the ground when I was considering my career options.

There was the Queen. A fabulous role model in many ways but more of a fantasy figure. It’s tricky to aspire to being a Monarch when you live in New Zealand.

Later, when I was at university, there were activists like Germaine Greer and the New Zealand feminists of the 1970s who established the Women’s Electoral Lobby and reinforced the message that girls can do anything. They were simultaneously inspiring and a little frightening.

As thrilling as they were, as a young lawyer I found my role models were more closely aligned with the Establishment and my own working environment. Through necessity, not choice, most of my role models were men.

For today’s young women, the environment is different. There are female role models in every career choice and many older women to look up to and use as inspiration in their careers and personal lives.

For those of us who belong to these older generations, it’s our responsibility to encourage, advise and advocate for the young women of today.

Of course, just as women today can learn from the achievements of those who went before them, they can also learn from our mistakes.

Many of my generation felt that in order to succeed we had to be one of the boys or at least not make a fuss. That often meant ignoring some fairly egregious behaviour. That’s just how things were.

Were there other ways of doing things? Probably, but for many of us, it was hard enough getting permission to come aboard. We didn’t want to rock the boat, no matter how much the accepted order of things grated, or even adversely affected us. We were encouraged to keep our heads down and work quietly from within.

We thought things would change – it was just a matter of time. We now know that we were wrong – or at least too optimistic. It seems that for culture change to occur at anything faster than a glacial pace, disruption is inevitable.

It is challenging to speak truth to power. I applaud the strength and courage of those who have recently spoken up to expose toxic workplace cultures. I hope those actions spur real change. If not, I encourage you to keep speaking up. If we keep quiet and do nothing, nothing changes.

The suffragists of the 1890s didn’t keep quiet. Three times they took petitions to parliament, each one bigger than the last. The “monster” petition of 1893, fastened together with flour and water paste and rolled around a broom handle in Kate Sheppard’s kitchen, remains one of the largest examples of influencing in our history.

The 32,000 signatures represented one quarter of the female population of New Zealand – the equivalent of over half a million women in 2018 terms. Imagine having that level of support for an issue that directly affects women today – we could move mountains!

We’ve come a long way since 1893 but there are still areas of concern. The gender pay gap, the lack of female representation on boards, unconscious bias, moral licensing, harassment and micro-aggressions in the workplace and inflexible work hours are just a few of the issues that continue to affect women.

My challenge to you, as women of influence, is to use your influence to change whatever it is that is stopping us achieve true gender equity. By doing so, we will make a better New Zealand for ourselves and others.

Kate Sheppard would approve.

Kia ora huihui tātou katoa.

Dame Patsy Reddy gave this speech at the Women of Influence Awards in Auckland last night.

Keep going!
National’s ‘Let’s Tax This’ ad from 2017
National’s ‘Let’s Tax This’ ad from 2017

BusinessSeptember 18, 2018

Capital gains tax? Yeah, nah, definitely, maybe

National’s ‘Let’s Tax This’ ad from 2017
National’s ‘Let’s Tax This’ ad from 2017

Will the latest review of our tax system be another instance of New Zealand dancing around a capital gains tax? Tax specialist Terry Baucher investigates.

The news that the Tax Working Group’s interim report due out very shortly won’t specifically recommend a capital gains tax (CGT) begs the question:  Is this the fifth such group in 50 years to have considered the issue before concluding ‘Yeah, nah’?  

Not quite.  Firstly, this is an interim report which is intended to invite further commentary on the Tax Working Group’s (TWG’s) initial proposals.  This is broadly similar to the process followed by the McLeod Tax Review in 2001. My understanding is that the interim report will analyse in some detail not only the merits or otherwise of a CGT but also how it might work in practice.  It will probably be the most comprehensive review of the issues around CGT since the Consultative Document on the Taxation of Income from Capital in 1990.

Although the issue of CGT is dominating attention, the TWG has a wide brief and its interim report will examine other issues such as the overall design and fairness of the tax system, environmental taxes, the taxation of savings, GST exemptions for particular goods, the taxation of companies and multinationals, the possibility of a land tax and taxpayer rights in dealing with Inland Revenue.  The resulting report will be substantial and is probably likely to run to over 200 pages. Yet, for all that, the focus will be on the TWG’s proposals around the taxation of capital.

Rather like Banquo’s Ghost, the issue of CGT has been an unwelcome guest for every tax review since the 1960s.  During that time the CGT debate has developed a Groundhog Day quality to it. Every few years a review of New Zealand’s tax system is announced. Some months later, after due deliberation, a report is released which includes passages summarising the pros and cons of a CGT before concluding, somewhat reluctantly, it is not appropriate. In between each review, a major change is introduced widening the scope of income tax to include transactions previously treated as exempt capital gains. These legislative changes essentially undermine the previous review’s reasoning against a CGT. At frequent intervals, international organisations such as the OECD and the International Monetary Fund (IMF) will call for a CGT to address imbalances in New Zealand’s economy around housing and saving.  The IMF’s recommendation in March 2017 for a CGT was just the latest such instance.

Meantime, as if thumbing their noses at each tax review’s arguments against a CGT, the list of countries introducing capital gains tax legislation grows: Canada in 1972, Australia in 1985 and South Africa in 2001.  

This rather pusillanimous pattern began with the Ross Committee in 1967 which after declaring On grounds of equity there is strong justification for taxing realised capital gains,” concluded “we have finally decided against such a recommendation”.  The Ross Committee was followed in 1982 by the McCaw Task Force. which opined “the Task Force considers that failure to tax real capital gains is inequitable in principle, and is seen by many to be so”. Ultimately, the McCaw Task Force was “not convinced of the need for a separate capital gains tax, does not propose its introduction, even though capital gains are being made by some which should in principle be taxed”. 

The McLeod Tax Review in 2001 determined New Zealand should not adopt a general realisation-based capital gains tax. We believe that such a tax would not necessarily make our tax system fairer and more efficient.” It then proceeded to hedge its bets by adding “Nevertheless, we also remain of the view that the absence of a tax on capital gains does create tensions and problems in specific areas.”

In 2010 it was the turn of the Victoria University of Wellington Tax Working Group. In time-honoured fashion its report concluded:

“The most comprehensive option for base-broadening with respect to the taxation of capital is to introduce a comprehensive capital gains tax (CGT). While some view this as a viable option for base-broadening, most members of the TWG have significant concerns over the practical challenges arising from a comprehensive CGT and the potential distortions and other efficiency implications that may arise from a partial CGT.”

And yet, despite all this previous consideration and rejection, another tax review finds itself confronting the CGT issue anew.  There are several key factors as to why this pattern endures but three merit closer review.

Tax Working Group

Firstly, in the absence of a comprehensive CGT, there is presently no clear legal framework to deal with the taxation of capital gains in general, let alone the arrival of completely new asset classes such as cryptocurrencies like Bitcoin.  This results in confusing uncertainty as some taxpayers report gains as income whilst others treat the gains as tax-free. Although issues still arise in other jurisdictions with capital gains regimes, investors know that returns will be taxed either as income or under the relevant CGT regime.  By contrast, investors in cryptocurrencies are presently unsure about whether gains are taxable or exempt. This all-or-nothing approach understandably tempts investors to treat gains as tax-free sometimes on the most dubious of grounds. Even though the bright-line test relating to sales of residential property has been law now for almost three years, there appears to be widespread non-compliance.

Secondly, as every tax review has acknowledged to varying degrees, the present tax treatment of capital is inequitable and creates unfairness. Differing tax treatment applies to different classes of assets leading to what the 2010 review called ‘incoherence’. The TWG’s brief includes reviewing the overall fairness of the system and in this regard, the background issues paper noted that real property held for more than two years (soon to be five) is undertaxed relative to other investments when there are capital gains”.  Since peaking at 73.8 % in 1991 homeownership has fallen steadily to 63.2% in 2016.  This means those substantial untaxed capital gains are being derived by fewer people.

Separate from the issue about unfair tax treatment, the TWG is also considering the issue of wealth inequality.  A background paper on the taxation of capital Income and wealth commented:

“Something that may not have been given enough attention in the discussion until recently has been that wealth ownership has a very skewed distribution, and reducing the tax on capital income may have contributed an increasing level of inequality in many developed countries in recent years.”

This combination of growing wealth inequality and favoured tax treatment for some assets, most notably property, means that the issue of a CGT is unlikely to fade away even if the TWG decides not to recommend it. At some point, the nettle must be grasped either through a comprehensive CGT or some other tax such as a land tax.

Finally, there’s plain, simple self-interest. Not just of groups such as the NZ Property Investors Federationbut of our elected representatives. As Thomas Coughlan pointed out last week, currently 113 MPs own 306 properties between them or an average of 2.6 each. At a time of falling home ownership only seven MPs do not own any property meaning property owners are greatly over-represented in Parliament. Even if the TWG does recommend a CGT, getting it into law will require a large number of MPs to decide their self-interest in getting re-elected outweighs their pecuniary self-interest.   

We’ll know in a few days whether the present TWG is proposing to break the pattern of five decades or whether we’ll find ourselves re-hashing the same arguments in ten years’ time.  I’m hopeful that we will see the TWG signal a change of approach, either in the form of a CGT or some other mechanism such as a land tax. For now, it’s a question of wait and see.