The 2023 Election is a class war without the political vocabulary.
Bernard Hickey calls it the ‘Dark Heart of NZ’s Political Economy‘, and it’s the Real Estate Pimps protecting their golden goose while Governments simply import fake growth from exploiting migrant workers but not taxing the rich to pay for the infrastructure…
The failure of yet another pre-fabricated house builder1 and a legal threat2 against our biggest council to force more greenfields development are two more signs, if we needed them, that our economy and society are now just a residential land market with bits tacked on.
These two latest events again demonstrate the massive skew in our tax settings in favour of housing land ownership has so changed the DNA of our political economy that nothing really changes without the removal of that skew. They also show the election debate we’re having has yet again failed to address the three elephants in our societal room:
-
- residential land will have to be taxed and business investment incentivised to change the land-seeking, inequality-widening and low-capital-investment biases now embedded throughout our economy, politics and society;
- our infrastructure financing and taxation systems are totally broken and inadequate at both central and governmental level, yet no politicians want to have honest conversations with each other or voters about how to fix it by increasing taxes and/or user-pays charges; and,
- the bipartisan and accidentally-on-purpose Government policy settings enabling and encouraging population growth of 1.5-2% per annum through migration of guest workers dominates our economic and societal outlook, and remains undebated and unacknowledged.
…none of this is being acknowledged or debated…
The dominant way that house builders, land owners, land bankers and households make outsized profits and capital gains in Aotearoa-NZ is to buy more land, preferably with a big mortgage, and wait. They don’t need to build a house efficiently, or any house at all. They don’t need to build a profitable business or invest in shares in someone else’s business. It’s always, always about the business of driving up land values and using mortgage debt to increase the leveraged returns, which aren’t available from other investments.
Home owners and land bankers just need that land zoned residential, and can then wait for the leverage, time and the failure of central and local Government to build the infrastructure to cope with regular 1.5-2% population growth to deliver the rents and untaxed capital gains to make the owner far richer than they ever be from saving wages or profits.
Working in a job or profession or investing in a business or managed fund is a mug’s game, compared to the leveraged, spectacular, government-guaranteed, ongoing and tax-free capital gains on residential land. The differences in incentives between investing equity in leveraged-up land and investing equity in unable to be leveraged stocks or business investments are so vast. In other countries, capital gains on land and other asset value increases are taxed, while savings in funds that invest in businesses receive tax incentives, either on the way into the fund or in the fund itself. Savings in our investment funds are taxed throughout.
This royally skewed set of incentives is why our housing market is worth NZ$1.6 trillion, which is four times our GDP (NZ$400 billion), 10 times the value of our listed companies (NZX total market value of $160 billion), eight times larger than our total managed funds sector ($200 billion including NZ Super Fund and ACC) and 16 times larger than our only-very-marginally-incentivised household pension funds (Kiwisaverat $100 billion). For comparison, Australia’s housing market is worth the same four times GDP, but is worth four times stocks, three times and funds under management. In the United States, its housing market is worth twice GDP, once the stock market, twice funds under management and 7.5 times its comparable ‘subsidised’ household pensions market, which is known as 401k in America, rather than KiwiSaver.
This dark heart of our political economy shows up regularly in all sorts of ways, in particular the focus of investors, developers, politicians and equity-rich home owners on greenfields development of clearly-titled and mortgageable plots of land. An actual occupied house on the land is a bonus, but not necessary to be exposed to these gains.
…I told you the Real Estate Pimps were buying this election!
Analysis: Property industry tops political donations
An RNZ analysis of political donations since 2021 shows people involved in the property industry are giving the most – and almost all of it is going to National, ACT and NZ First.
Since 2021, people aligned with the property industry have donated more than $2.5 million to political parties.
More than half of the cash from the property industry went to the National Party (53 percent), followed by ACT (32 percent) and New Zealand First (12 percent). Labour received 2 percent.
Real Estate Pimps have donated millions to National and in return National have lifted the Foreign Buyers Ban and will give landlords the right to kick tenants out with no notice.
National and ACT will also role back Tenants rights while reopening Landlord tax loop holes.
There is a class war on renters but we don’t have the political vocabulary to articulate it, and we don’t have that vocabulary because woke middle class activists have robbed the Broadchurch of class from the debate and produced pure temple of woke identity politics.
As I posted recently, the woke will need to be purged if the cancel culture ammunition they provided the Right see the Alliance of Arseholes win.
By opening NZ up to foreign speculators while reopening landlord tax loops holes, National and ACT are opening NZ up for sale to their overseas wealthy mates.
Let’s remind ourselves just how vested the Landlord class is..
…there is an unspoken promise between the neoliberal State and the untaxed capital gains private landlord class that the neoliberal State never builds enough State Houses to alleviate housing desperation so that the untaxed capital gains private landlord class can exploit that housing desperation ON TOP OF getting a $1.5Billion annual subsidy in the form of the Accommodation Allowance EVERY SINGLE YEAR!
Renters are about to be thrown to the wolves and horrifically the culture war ammunition middle class activists handed to ACT and the Far Right is eclipsing this reality from the vast majority of renters who are not voting or spite voting ACT, NZFirst or National.
Key won 3 terms because he kept overseeing home valuation jumps larger than people’s actual annual salary. National are aiming for the same magic as Kiwis addiction to land wealth and property investment warps all other considerations.
One day there is going to be a vicious reckoning to this rigged Property casino. The reason why the identity politics woke wish to ignore that is because they have benefitted from the rigged capitalism and it’s easier to virtue signal than change the economic hegemony.
Increasingly having independent opinion in a mainstream media environment which mostly echo one another has become more important than ever, so if you value having an independent voice – please donate here.
If you can’t contribute but want to help, please always feel free to share our blogs on social media
Woke causes are all fine and dandy, but feed the kids first. Roofs over heads, living wages. Support for families. Good health care. A little bit of focus on what is important please.
Vote Green and demand Labour adopt the 3% rent increase cap in return for support.
National is offering to restore the mortgage cost deduction against rent income – this benefits landlords up to $1m each year
(based on 100 homes with $600 a week rent – 3M of income not subject to a $1M in tax because of the mortgage payments made) (the number of homes Luxon wants to own once he can borrow and deduct mortgage cost against rent income) (the born again estate believe in rapture to greater wealth than the rest of us down below).
Simple arithmetic: if the lower sector of people benefits less than the benefit to the upper sector of people then there is a trend to increase the inequality between the upper and lower sectors of people.
Labour have achieved that in spades.
“…but not taxing the rich to pay for the infrastructure…”
No. No,no,no,no,no,no,no…! That’s not it man. Sorry @ MB but that’s not it. It’s not a fly just because you’re holding the leg of one.
The question should be ” Who earns our money but then where, and how, does it go? ”
Grant Robertson? Do you know where the money is? Are you going to broach that subject? I already know the answers to both of my own questions and the answer is as one might expect.
I’m trying to think of an analogy that town people might use to relate. I hope I can think of one condescending enough to cause offence, otherwise what’s the point, right?
Chad and Sharlene bump their heads and go down to the farm and farm a ram and ewe and that ram and ewe, Bruce and Debra, love each other very, very much and soon they have a twin babies called Colin and Shona. Colin, being a boy, has little walnut like woolly-danglers called ‘testicles’ which, he soon learns, are all but useless except for once a year so his Gods, Chad and Charlene, put a cute little love-rubber band on them which causes Colin’s testicles, or ‘mountain oysters’ to go black, hard and dead then fall off. Poor Colin. But wait? There’s more. Now that Colin has no nasty ol’ testicles, he gets fat. And then fatter and fatter still until one day Colin gets to go on a big truck to the city where his throat’s cut then he’s hung upside down to bleed out then he’s skinned, has his little guts ripped out, then he’s chopped up, his flesh is minced, his bones and sinew are boiled down and then some of him goes back to the farm as fertiliser.
His little body’s best flesh goes to the Big Shop where he’s packaged, sold, cooked and eaten by beautiful people in beautiful clothes who live in beautiful houses where they speak beautifully, own beautiful things, think beautiful thoughts and do beautifully dirty little deeds, usually to one another for ‘money’.
Shona, meanwhile, is still back ‘down on the farm… “Yee haw! Twang that guitar girl and dance that pretty dance! Tha’s it! Faster! Now Bleat like a sheep! Oooooooooo- Eeeeeeeee! S’gonna be a party right here, right now I tell ya ”
Poor little ol Shona. When she finally gets all her teeth ( Full-mouth.) She’ll be done like her mama after poppin out lambs to be eaten or bred from then it’s the freezin’ works… Get a few dollars for er.
This is where the story takes on a darker hue. Chad and Sharlene farmed Bruce and Debra for money. Love had nothing to do with it. To make matters so much worse, after all that work and the brutalities and betrayals, the money made from now shaved and minced Bruce and Debra and from the skins and sausages that were Colin and Shona who are now beautiful-people bowel motions. The blood-money never gets back to Chad and Sharlene.They just get debt from banks to function, read enslaved. Meanwhile, the Beautiful People who are protected from the tax system because they designed the tax system get all the money, mince and wool socks.
Once a sheep’s shorn and dissected and the farmer’s paid a little stipend then waves good by to it, the sheep and the sum of its parts then becomes a money spinner for pretty pink people in warm offices. Taxing the rich simply launders their ill gotten gains. The rich need investigating, never mind the fucking scam that’s taxation. Only the working poor pay taxes, that should be obvious to us all by now.
AND as long as, when they decide to retire, all the Chads and Sharlenes, sell only to other Chad and Sharlene New Zealanders, and not to the pretty pink people in warm offices and corporations of the Beautiful People who are protected from the tax system because they designed the tax system get all the money, mince and wool socks, and who now want the Chads and Sharlenes of NZ to become their serfs… Hold onto our land Kiwi farmers because unless you do all that our families before us strived to achieve in NZ for us – opportunity – will be taken from us.
Identifying yourself within a class is a form of identity politics.
Let’s say my brother lives hand to mouth in a house truck, I have a mansion and a few investment properties…What class am I? What class is he ? Should we be at war ?
Class definitions are becoming as irrelevant as left/right.
it’s what you actually are rather than what you were born as….different class different interests it’s that simple
it’s what you actually are rather than what you were born as…
_____________
Gender dysphoria is like class dysphoria ?
Different identity, different interests ?
If only it were they simple.
“Identifying yourself within a class is a form of identity politics.”
Not really. A class is a description of your material, economic circumstances. It can change in response to changes in the world outside yourself – e.g. if you are made redundant you might be tipped into a lower class, temporarily or permanently. If you receive an inheritance and buy property, this elevates you into a different class.
An identity is something more intrinsic to yourself – once established it seems to be settled more or less. It might change but these are changes within yourself, like getting older, or getting in touch with a different part of your cultural heritage, etc.
If we give primacy to either, or ignore either, things get confused and false antagonisms are created.
How does your class define your politics and how does that differ from how your identity/culture defines your politics ?
Little brother (us) follow big bent brother …..” Our politicians own a lot of investment properties. How do they vote on housing, rent reforms?” https://youtu.be/yCj19NURzqY
Will have to get my thinking cap on to read this. Yes, I’m at that stage. Another one I put away for another time is on Stuff. Back to there.
I’ve just read Denis Welch’s column on Stuff. So succinct. Please re-publish it. Describes EVERYTHING.
Reminds me of Campbell’s article on the head of the Dunedin Study on ‘Sunday’.
Some nice things about immigration, the neglected subject, on RNZ National’s group discussion today.
Altogether, ghostly, these debates up to this election. Confirming Welch’s view of how hollowed out everything is after letting the rich take over. I’m willing to vote for a Labour-led coalition ‘cos the others will be worse, no other reason. I thought the debates would bring out the power of the rationalist Left, but no.
Labour’s ads on TV are like the flour and water paste of my childhood in the 70s to my tongue.