GUEST BLOG: Gerard Otto – What Transformational Government looks like.

About a year ago the New Zealand political commentariat was doing it’s nut about how this government was promising to be transformational but living in a straight jacket called Budget Responsibility Rules.

Why not borrow tens of billions more some cried?

Why not build 500,000 houses instead of only 100,000?

The money tree was laden with free money and we were delivering surpluses so how about Christmas every day for noble causes?

At the time I recalled the Mainlander Cheese advertisements that told us “Good things take time” and that the first budget of a new government was no final measuring stick to apply to a promise to be “a transformational government”.

The actual words used by PM Ardern, that nobody quotes from the Speech from the throne are :

“This will be a government of transformation. It will lift up those who have been forgotten or neglected, it will take action on child poverty and homelessness, it will restore funding to education and the health systems to allow access for all, it will protect the environment and take action on climate change, and it will build a truly prosperous nation and a fair society, together.”

We all saw $5.5 Billion go to the families package almost immediately. The effect was to lift tens of thousands of children out of poverty almost immediately.

Plus who can argue that Budget 2018 did include $3.2 billion extra for health services over four years.

Record spending on Health.

Plus an extra $1.6 billion went to early childhood education and was a boost for students with higher learning needs.

Did the ban on off shore oil and gas exploration help protect the environment too? Given the serious risk of spills and possibilities that sonar pulsing and drilling upset endangered dolphins and marine life?

If you don’t think much of that try this :

“The agreement between Labour and the Green Party also provides for up to $1 billion of new investment to be stimulated in low carbon industries by 2020, kick-started by a government-backed Green Investment Fund of $100 million.”

It’s hardly the case that National were doing this sort of thing in its long nine years of playing the fiddle while Rome burned.

The Speech from the Throne also included this promise about tax :

“The government will review the tax system, looking at all options to improve its structure, fairness and balance, including better supporting regions and exporters, addressing the capital gain associated with property speculation and ensuring that multinationals contribute their share. Penalties for corporate fraud and tax evasion will increase. Personal income taxes, taxes on the family home and GST will remain at the same rates as they are today.”

As pledged during the election campaign, any significant decisions on tax changes will not take effect until the 2021 tax year.

Right now the Coalition are delivering on that promise and “better supporting the regions and exporters” probably spells good news for farmers ( despite the drama right now ) by April 2019 when final decisions are made.

But property speculators are going to take a canning.

The Housing crisis is partially about them, and the joyride they have exploited for decades while wage increases stayed close to the CPI.

To a lesser extent it is about immigration and a failure to supply houses at a rate that tackled house price inflation.

But wait – now we have also discovered the net population gain from migration may be around 27% lower than the previous data suggested.

Under the new system, Statistics NZ said 105,900 non-New Zealand citizens arrived in the country on a long term basis in the 12 months to November 2018 and 54,700 departed, giving a net gain of 51,300 non-New Zealand citizens.

Remarkably a transformation of sorts has taken place here, simply by measuring the flow more accurately.

Had we all been spooked by numbers inflated by 27%?

Yes we had.

It was back back in 2014 that a net gain number was around 50,000 new citizens but even then it was actually 27% lower.

We still have massively inflated house prices whilst the rate of inflation has recently plateaued somewhat.

Now a transformational CGT will help to suppress that inflation on a longer term basis.

The party is over for the speculators, time to go home.

Speculators may well put up their assets for sale and prices fall as houses sit unsold – which is all part of inter-generational transformation.

No foreign buyers allowed sorry.

The greedy may raise the rent – but slowly they will lose against the competition as the overall mix adjusts.

Young people might start to be able to buy their first home without the need for a $200,000 deposit in Auckland.

This is what transformational government looks like.

Newstalk ZB is outraged.

The moaning and bitching of the mob of wealthy benefactors now reaches fever pitch because they may have to play fair.

Labelling people socialists and communists is rife while the government starts to make the big changes that selfish, privileged nation wreckers are damned they will see happen, as long as they can enjoy the inequity of their ill gotten gains at the expense of all our great grandchildren and a more egalitarian future.