Could New Zealand's estimated almost $50 billion tax deficit be paid by the rich? Photo / Getty Images
Could New Zealand's estimated almost $50 billion tax deficit be paid by the rich? Photo / Getty Images
New Zealand's estimated almost $50 billion tax deficit could be paid by rich people keen to move here, multi-millionaire Australian investor Mark Carnegie says.
Carnegie, who as of late last year is a resident in NZ, said there was a stark choice facing the country: raising taxes on the workingpoor and cutting services, or finding new money from somewhere — or someone — else.
The now hobbyist Nelson farmer said rich people living outside NZ would happily pay to move here, including friends of his like a "not headline, headline, A-list actress, but close" and tech company founders who would come tomorrow with their families if they could.
"The truth is somebody is going to pay [for covid-19]," Carnegie said, pointing to the complete halt in international tourism and students.
"New Zealand is the one place where you can get the foreigners to pay, if you are willing to do it."
New Zealand's Covid-19 'triumph'
He said NZ had an improving position in the market for rich people.
"There is just no doubt that the world thinks that the handling of the coronavirus has both been a triumph, and also made a huge number of people interested in coming."
Data from Immigration NZ showed an uptick in the number of people visiting the New Zealand Now website for those interested in migrating. Year-on-year, website visitors from the United States increased 159 per cent in June with more than 112,000 visitors compared with about 43,000 in June 2019.
NZ's border remained closed to most people without border exemptions if they were not citizens or permanent residents, Immigration New Zealand said.
Investors had been able to apply for investor visas to gain residence in NZ if they had a minimum of $3 million to invest for four years, or $10 million to invest for three years in the investor plus categories. The $3 million category required applicants to be 65-years-old or younger and be a capable English speaker. Both categories had minimum requirements for days spent in the country and to meet health and character requirements.
As a result of covid-19, expressions of interest for skilled migrant and parent categories were deferred by the government, the agency said.
Too many barriers
Carnegie now owns a 96-hectare farm near Takahe, Nelson, where he had two "retired" dairy cows and was expecting delivery of pigs and chickens.
The venture capitalist was running his Australian business, MH Carnegie & Co, via Zoom after the covid-19 pandemic put a halt to his trans-Tasman travel. His business background was in private equity with US-based Hellman and Friedman, media businesses with well-known Australian businessman John Singleton, and he had sold a firm — Carnegie Wiley — to financial advisory and asset management company Lazard.
Carnegie said he had become an NZ resident so he and his partner who is British - Lady Katie Percy, daughter of the Duke of Northumberland - could move here. He didn't want to live in the United Kingdom, and she didn't want to live in Australia, he said.
But there were too many barriers for investors, the multi-millionaire said.
"The coalition government means New Zealand has turned into the globe's greatest prick tease," he said.
"You hung out the advertising, people want to come here, but then you look and it's 'oh, where do I want to park my money? Oh, I can't'. You have all these rules, that's the part that's just dumbfounding to me."
Rod Drury. Photo / Getty Images
He said it was incredibly hard to invest in NZ in the areas where investor money wanted to go, in particular land or land-rich businesses. Carnegie had been looking seriously to invest in NZ companies in the last six months, and had bids in on three or four, he said, with an interest in hops grown for export to US craft beer makers, fishing and gold mines.
"The question for New Zealanders is do they want people to come invest in the areas they want to invest in. People want to buy a lifestyle block in New Zealand, and you've decided you don't want to sell them lifestyle blocks in New Zealand."
In 2018 the government introduced legislation that restricted many overseas people from buying residential land and existing housing.
Rod Drury's clever idea
Xero founder Rod Drury's plan to offer 1,000 sections to wealthy international buyers who pledged to build on them quickly was the best idea Carnegie had heard.
It was not about letting the rich buy citizenship, he said, noting the outrage in NZ after it was revealed billionaire American Facebook investor Peter Thiel had been allowed citizenship after only spending 12 days in the country.
"The whole idea that these foreigners can buy their way in really, really upsets people here, and its antithetical to the culture."
Carnegie said the idea was sensible but the price "was in the 90 percent off bin." Thiel claimed he would represent NZ on the world stage, and had high profile backers like Drury and Trade Me founder Sam Morgan. Thiel had invested in Xero, and more recently his Founders Fund invested in a number of local startups including Narrative, an artificial intelligence photo selection software company for professional photographers.
"The government of the time could have told him to do 10 times as much for the economy and made him stick to it."
An incredible number of people wanted to come here, but they did want to buy land and house, Carnegie said.
He said NZ had made a clear choice when it had a balanced government budget that it didn't want foreigners to own houses or land here.
Whether that was still the choice Kiwis wanted to make now was the question.
"I would be taxing the rich foreigners. But I understand that maybe New Zealand says no."
