MEDIAWATCH: Everything wrong about NZ politics in one John Campbell interview with a new MP property speculator
Last week, John Campbell hosted Q+A and it was John’s usual blinding light of intense insight.
He was interviewing National MP Carlos Cheung who has beaten Michael Wood in an electorate as deep red as Mt Roskill.
John was testing who National’s election win was for, landlords or renters and when Carlos eventually agreed it was for Landlords who would then pass those savings to renters that John asked if Carlos would be passing those savings onto his tenants to which Carlos said he charged low rentals anyway.
Other than tripping up the obscene self interest of National’s policies for the rich, John’s focus on Carlos raised deeper questions.
It’s not just the new religious migrant community flexing their political muscle in Auckland thanks to decades of exploitative and open migration policies, it’s that Carlos himself went from scientist to real estate pimp.
That’s the true shock of this interview, that NZs only road to boomer wealth and privilege is property, property, property.
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:
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- 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.
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 $2Billion annual subsidy in the form of the Accommodation Allowance EVERY SINGLE YEAR!
New Zealand’s Covid-19 response saved 20,000 lives – research
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.
Carlos represents the end conclusion of mass immigration and a speculative real estate economy.
There is a reckoning to this venal self interest.
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Its called a conflict of interest but they don’t want to see it. They say property collecting is not investment as such but on the other hand they say it is? So what is it?
What struck me was the irony of it all, in the literary sense of the word. Although his position was clear to many viewers Carlos Cheung appeared utterly unaware there was a conflict of interest. I wonder how long he’ll last.
Yes right on.
When all the money goes into something that is actually non productive or innovative is it little wonder our productivity is so poor.
But why would I invest in a business where I actually have to think and work to make a profit when I can buy a house, get someone to pay the mortgage, get a tax free capital gain while doing sweet bugger all.
Don’t tell me being a housing investor is hard, if it was how come so many of are doing it and rubbing our hands with glee right now.
Who said the savings from tax breaks would be passed on. Nicola in her ( nails down a blackboard voice) debate admitted they would not be passed on.
Both National and Labour have been guilty of this. Our country is full of f’ing idiots and now it’s getting worse. Forget interest deductibility, David wanker Seymour doesn’t want any bright line test at all.
The stupid thing is a tax capital gains is not stopping people making money. Clearly both main parties think those that have multiple properties are self entitled pricks that shouldn’t contribute. I am not sure that’s actually the case.
Well I hope someone finds out how much he actually charges for his rentals.
It is all bloody sick!
I tautoko that sentiment ‘Wheels’…..and feel your anger.
Hardly surprising when you have the leader of National and many National MPs owning multiple properties wanting to reverse Labours policies to allow landlords massive rebates on rents. Never seen a landlord drop rent under any government, particularly a National one.
He has a biology degree not exactly a good qualification for him to be a politician for our country and at crucial and critical time for our country still recovering from an epidemic and a natural disaster we don’t really need real estate agents. When interviewed by Campbell Carlos Cheung said he was charging below market rent for his houses to his tenants, but market rent is too high anyway due to lack of supply and increased demand exacerbated by increased immigration causing a shortage of rentals. So does all these newbies bring us so called change with no political experience need consultants to help them do their job properly, probably.
Real estate pimps do a lot for the community though through sponsorship of pet projects.
The new govt. and their friends are like a bunch of little children.
Their personalities have yet to develop properly.
They are still self-centered, selfish, smug, full of their own importance, have never learnt to share, are mean and greedy, loud and abrasive, tend towards being bullies and cowards, and don’t realize how horrible they appear to normal people looking on.
They don’t seem to be aware of how deeply repellant they are.
Sadly, they are adults who have got to whatever age, without their personalities being complete. They blindly continue behaving like silly children.
However, they also have no loyalty and while they can be cruel to strangers, it’s also not hard for them to turn on their supposed friends. If they see an advantage to themselves, loyalty is forgotten. Let’s hope it turns into carnage.
I am picking we will see plenty of carnage in Labour as they sort out their new style and who will lead the new party
Mentioned briefly is the effect mass-immigration is having on a cultural level in NZ – and therefore the outcomes of elections. Large portions of those who immigrated are from the Philippines, who are quite religious, so therefore who do you think they vote for. The Chinese block usually are told who to vote for via propagandist Chinese media sources, whether local or into national sources, and of course it’s no surprise where their votes usually end up.
It also seems to be true that the more pressured people get, the more insular and self-interested we become. With much of the immigration population being exploited and on poor salaries, struggling at the bottom, a sniff of a self-interested tax cut is enough to move voters under pressure. Mass immigration is destroying NZ from the inside out purely for the greed of the few.