Who has the power in this coalition? (Getty Images)
Who has the power in this coalition? (Getty Images)

The BulletinApril 18, 2019

The Bulletin: Heavy fallout from capital gains tax axe

Who has the power in this coalition? (Getty Images)
Who has the power in this coalition? (Getty Images)

Good morning, and welcome to The Bulletin. In today’s edition: Heavy fallout from axing of capital gains tax, cost blowout for City Rail Link, and wrongly evicted Housing NZ tenants to get debt wiped.

PM Jacinda Ardern has ruled out a capital gains tax. Not only now, mind you, she’s ruled out Labour ever campaigning on it ever again while she’s leader. The party has now tried to campaign on one for multiple elections, and it has never taken hold. It’s a monumental moment for this government to reject one of the major recommendations of their own Tax Working Group wholesale – rather than just going for a lighter version. What happened?

Arguably, Winston Peters is what happened to it. The deputy PM and long-standing opponent of any such tax was certainly happy to talk to media yesterday about it, and told Newstalk ZB there was neither a coalition consensus nor a public mandate for it. Certainly, Sir Michael Cullen who chaired the Tax Working Group was entirely comfortable blaming Winston Peters – One News reports he said that was “100%” the case. And it fits the pattern of so much of the history of this government, where NZ First has frequently flexed their muscles to stop things they don’t want going through.

The politics of all of this now are pretty incredible. Remember, NZ First isn’t the only party propping up the government – the Greens are too. And they were huge supporters of a CGT, to the point where co-leader James Shaw earlier questioned whether the government deserved to be re-elected if they didn’t pass one. But let’s go back to just how total the rejection was – Labour under Jacinda Ardern will never campaign on it ever again.

It raises the question – what exactly are the Greens in government to do? They’ve been bulking up on a dead-rat heavy diet over the last 18 months, while having their most important piece of legislation (the Zero Carbon bill on climate change) interminably delayed. And it throws into serious question just what exactly is actually being delivered on, in the government’s so-called ‘Year of Delivery’, writes Danyl McLaughlan on The Spinoff.

Could anyone have seen this coming? Well, Matthew Hooton in the NZ Herald did, on the grounds that the CGT recommended by the TWG was too extreme for Labour to be seen siding with. There may have been something in that – the proposed tax was after all described by National leader Simon Bridges as “big and hairy” and an “attack on the Kiwi way of life.” Both sounded utterly absurd at the time, and still do now, but you’ve got to admit, he did get quite a bit of cut-through with his campaigning. And the proposed CGT was certainly hefty.

The reaction to it all has been pretty explosive from interest groups. The Taxpayers Union are absolutely thrilled, as are Federated Farmers, the NZ Property Investors Federation, and Business NZ. The unions are horrified. For those who supported a CGT, it was cast as both an issue of fairness (or unfairness, when labour gets taxed but capital does not) as well as a mechanism for changing elements of the housing market away from property speculation. Jesse Mulligan – a huge supporter of a CGT – wrote about his disappointment in a piece published this morning on The Spinoff.

So what now? The CGT was just one proposal in a much wider suite of recommendations made by the TWG. Among the most important other bits were environmental taxes, which were covered here when the report was released. They’re now going to be considered in depth by the parties of government, with new announcements likely over the rest of the year. And to again return to the politics of it all, Politik’s Richard Harman argues that it’s probably pretty bad for Simon Bridges, who now doesn’t have a massive CGT-shaped target to aim at. Mr Harman, in fact, believes that the government have probably just ensured they’ll get another term.

Now, for some this whole exercise of debating and researching and polling and punditeering on the CGT might now seem like a massive waste of time. Not for me – I barely covered the CGT in The Bulletin because I assumed something concrete was going to be put forward by the government, and then it could be picked over properly. So even though I was wrong I’ve come away from this all feeling like the last few months have been worthwhile. But for those who do feel like they’ve just wasted a precious chunk of their life, my condolences, and we’ll all strive to come up with some other issue to get totally worked up over.

There has been a massive cost increase for the City Rail Link, with the new figure a billion dollars higher than 2014 estimates. One News reports that after a comprehensive review of project costs, the new number will be presented to the co-sponsors of the project – Auckland Council and the government. The cost escalation is partly because there’s far more work in the Australasian infrastructure pipeline now than there was in 2014. Transport minister Phil Twyford, meanwhile, is blaming the previous government for not setting aside enough money for it. The NZ Herald reports that Auckland Council is looking into selling or leasing its carpark blocks, so that they’ll have some spare cash to pay their share.

Housing NZ tenants who were evicted after flawed meth tests will have their debts to MSD wiped, reports Radio NZ. Money already repaid by beneficiaries over post-eviction support will also be refunded. Minister Carmel Sepuloni says the debts were incurred through no fault of the tenants, and so the move is about righting a wrong. About 900 adults were affected by the evictions.

I wouldn’t normally include a story in The Bulletin that I didn’t think was entirely trustworthy, but this one is too interesting not to. Chinese news agency Xinhua is reporting that the Waikato town of Kerepehi has been absolutely revitalised by China’s Belt and Road initiative. There has certainly been Chinese investment in a factory in the town, and there may have been some revitalisation as well. But would the locals necessarily see themselves as part of the wider Belt and Road project? And regardless of whether they do see themselves as part of it or not, does that matter?

President Joko Widodo appears to be on track to win re-election in Indonesia, reports the BBC. According to unofficial results, he’s a long way ahead of his rival, former general Prabowo Subianto. Official results won’t be likely until next month – there’s quite a few votes to count after all.

If you’ve got some spare time today, consider filling in your feedback on Official Information Act changes. Submissions close today, and it only takes  a few minutes if you’ve got thoughts on how the OIA could be improved. Remember, under the OIA legislation you as a member of the public have the right to access information. Even the minister responsible for overseeing it, Chris Hipkins, says the legislation needs more teeth, reports Stuff.

A bit of housekeeping: There won’t be Bulletins over the Easter break I’m afraid, nor on ANZAC Day next week. However, there will still be Tuesday, Wednesday and Friday editions. I’m taking the opportunity to get out of Auckland for an extended period of time, but will still be doing those Bulletins.

So in the spirit of being out of Auckland, I want to run an extremely stupid but possibly fun competition next week. I’ll take a photo of myself somewhere in NZ, put it at the end of the edition, and if you’re the first person to email through a correct guess of where it is I’ll send you a Spinoff pen.

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Right now on The Spinoff: Economist Eric Crampton takes aim at the Provincial Growth Fund in an explosive opinion piece. Marc Daalder explains the troubling phenomenon of the far right trying to make political capital out of the Notre Dame fire. Leonie Hayden explores the lost knowledge of traditional Māori attitudes to menstruation, and talks to women trying to revive it. And we’ve republished the speech rapper Tom Scott made on winning the Taite Prize, because it’s a hell of a good speech.

George Monbiot has been trying to draw attention to the impending crisis of climate change in the Guardian for a long time now. On the basis of what the science is clearly showing, he has now abandoned all moderation and is calling for mass civil disobedience, in the manner that Extinction Rebellion have been doing around the world this week. Speaking personally here, I’m not sure whether or not that group’s tactics are the right ones, or whether the protests are effective. But if you don’t agree that urgent action needs to be taken to address climate change, or that things can proceed exactly as they are right now, you’re in denial about the science. Here’s an excerpt from Monbiot’s piece.

Those who govern the nation and shape public discourse cannot be trusted with the preservation of life on Earth. There is no benign authority preserving us from harm. No one is coming to save us. None of us can justifiably avoid the call to come together to save ourselves.

I see despair as another variety of disavowal. By throwing up our hands about the calamities that could one day afflict us, we disguise and distance them, converting concrete choices into indecipherable dread. We might relieve ourselves of moral agency by claiming that it’s already too late to act, but in doing so we condemn others to destitution or death. Catastrophe afflicts people now and, unlike those in the rich world who can still afford to wallow in despair, they are forced to respond in practical ways.

In Mozambique, Zimbabwe and Malawi, devastated by Cyclone Idai, in Syria, Libya and Yemen, where climate chaos has contributed to civil war, in Guatemala, Honduras and El Salvador,, where crop failure, drought and the collapse of fisheries have driven people from their homes, despair is not an option. Our inaction has forced them into action, as they respond to terrifying circumstances caused primarily by the rich world’s consumption. The Christians are right: despair is a sin.

Are we already halfway through Super Rugby? Where does the time go? No matter, it’s a chance to check in on one of my favourite ongoing sporting feature: Radio Sport commentator Nigel Yalden’s NZ Form team. He’s just published a summary to mark the halfway point of the season, and it’s an invaluable resource if you want to have meandering, pointless, but incredibly enjoyable arguments about who should be in the All Blacks.

From our partners: Climate change has already affected how electricity gets delivered to customers, and it’s only going to get more challenging. Vector’s Chief Networks Officer Andre Botha outlines what the lines company is doing to respond.

That’s it for The Bulletin. If you liked what you read, and know other people who would find it useful, pass on this signup form to them. Have a lovely Easter break, drive safe, see you Tuesday.

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