David Cormack: Profiting off the housing crisis is the Kiwi Way

"I could be wrong, but it seems like what National really means by Kiwi way of life is 'profiting tax-free off of a housing crisis'," David Cormack writes. Photo / Mark Mitchell

In theory we have an Opposition in Parliament to hold the Government to account, and to provide the sense that there's an alternative Government in waiting. To that end, the Leader of the Opposition should give us the sense of being a Prime Minister in waiting. What does New Zealand want from its Prime Minister, and are we getting it from Simon Bridges?

It's been days since Tax Working Group released its report recommending a capital gains tax and we've had reckons pouring forth from everywhere. Is it a good idea? I'm not sure! But boy has there been a lot said about it.

If you had hoped for reasoned debate from our politicians about the benefits and negatives of what the Tax Working Group recommended, you would have been very sad. The Government has said practically nothing, James Shaw said nobody should be elected unless they implemented a capital gains tax, and National has vomited up an incredible amount of negativity.

Bridges rushed out a statement saying the Tax Working Group report was "an assault on the Kiwi way of life" and that he'd "fight it every step of the way." He may have fancied that this was his Churchillian moment. That after a year of not being liked, his soaring wartime rhetoric would cause New Zealanders to rally around him. He may have also believed that a capital gains tax would create a system where so much was owed by so many to so few. Except nobody was sure what Bridges meant by "Kiwi way of life".

To clarify his thinking, Bridges rushed out a video that provided no clarity. He explained that the "Kiwi way of life" was to him "planning reform for affordable housing, better health, education". Aside from a painfully dull view of our way of life, Bridges didn't make clear how the Tax Working Group's report assaults any of those things.

He also said "New Zealanders aspire and want to get ahead for themselves and their families. How is it right that an $8 million home in Auckland won't face a CGT but a couple scrimping and saving for a bach or crib for their family will get slammed with the top tax rate? That's not the Kiwi way."

First off, Bridges is so bad at counter-arguing the CGT that when he does it, it sounds like he wants an even bigger CGT than the one proposed. But mainly I'm worried that the Leader of the Opposition thinks that you pay a tax on gains before you've actually gained anything. Nobody is paying a capital gains tax while "scrimping and saving". You wouldn't pay a capital gains tax on your bach until you bought it. And then you have to sell it. Either he is willfully misleading the public or he is ignorant on how this works. Neither of those inspires confidence that this man should be Prime Minister.

I could be wrong, but it seems like what National really means by "Kiwi way of life" is "profiting tax-free off of a housing crisis". Even if you build up an empire of houses you'll still earn money.

The Tax Working Group isn't coming to nationalise your rent-stock. The proposed CGT would tax the income you made by selling those properties at a profit. If you just held on to them and kept collecting rents then there's no new CGT! But this applies to such a small sliver of society. And it's a sliver who would largely be voting for National anyway.

Most people in New Zealand don't actually own multiple homes. Most people aren't scrimping and saving for a bach. They're scrimping and saving for a first home. Or for rent. Or for food. Or to have enough money to buy their children shoes. Most people in New Zealand will actually pay less tax as a result of the recommended CGT by the Tax Working Group, because there'll be an income tax cut.

It's also not necessarily going to pass. National isn't even attacking the Government. They're ham-fistedly attacking a recommendation. If the Government doesn't implement everything the Tax Working Group recommended then Bridges has blown his wad of rage all for nothing.

All of this takes away from some genuine problems with the proposed changes. Just one concern is that the recommendations seem to create a perverse incentive to invest money in my family home instead of just about anything else, which does nothing for New Zealand's chronic shortage of capital. There's definitely plenty to debate here instead of deploying the hyperbole that this is an assault on a national identity.

On the one hand I feel sorry for Bridges. His leadership of the National Party is so awful and fragile that he leaps at any opportunity he can to show he's up to it. But on the other hand, between this and the rubbish he's been putting about justice reform and the cannabis referendum, the man is either making stuff up or hopelessly wrong about some serious issues. And we can't trust our country to the hands of someone like that. It's just not the Kiwi way.