George Orwell once observed that “political speech and writing are largely the defence of the indefensible… Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness…”. 

The current argument about whether the government’s decision to extend the so-called bright line test for the taxation of profits arising from the sale of non-owner-occupied resident investment properties from five years to ten years provides a good example. 

At present, capital gains arising from the sale of non-owner-occupied residential investment properties sold within five years of purchase are taxed at the taxpayer’s marginal tax rate (usually 33% or 39%, depending on their income level). The government has now announced the doubling of that five-year period to ten years, with virtually immediate effect. It argues it is doing so to rein in rapidly rising property prices and to curb speculation. It has also vehemently denied that this amounts to a capital gains tax on investment property sales, so does not break its earlier promises not to introduce such a tax. 

In classic Orwellian style, the Finance Minister has also denied it breaks his own earlier promise not to extend the bright line test. Rather than admit to an about-turn he merely says now that his original commitment had been “too definitive”. It is eerily reminiscent of the language of the fourth Labour Government where the phrase “we have no present plans to” actually meant that the decision was still being finalised. Both statements are true as far as they go, but they convey a clearly different meaning to those hearing them, which conveniently hides their true intent. But then no politician ever likes to admit to breaking an election promise. 

On the broader question of whether the extension of the bright line test constitutes a capital gains tax, the Prime Minister says it does not because it relates only to investment property and does not include land, shares, business and intangible assets as recommended by the Cullen Tax Working Group in 2019. But in the infamous words of Mandy Rice Davies “(s)he would say that, wouldn’t (s)he”. After all, she promised to resign if her government ever moved to introduce a capital gains tax. Most people took that to include property, the most prominent asset of all. 

For that reason, her comments have the air of Orwell’s “defence of the indefensible”, particularly given the “question-begging and sheer cloudy vagueness” that has accompanied them. In reality, the only difference between the government’s plans for taxing investment properties, and the Cullen Tax Working Group’s own proposals in that respect is one of timing. Both propose taxing the capital gains at the taxpayer’s marginal tax rate – the only variation is that the Working Group wanted that to apply to all such transactions, whereas the government is limiting the scope to changes within a ten-year period. 

Admittedly, the Working Group also proposed including capital gains other than on property sales, something the government has ruled out so far. However, that does not mean, as the Prime Minister has argued, that the extension of the bright line test on investment property is not a capital gains tax because it does not include these other items. 

More important, though, is what impact the government’s moves are likely to have on cooling the increase in house prices and making housing more affordable for new buyers. The Cullen Tax Working Group was cautious in its 2019 report, saying that it expected “an extension of capital gains taxation would lead to some small upward pressure on rents and downward pressure on house prices. These impacts are likely to be small…”. On a broader front, the Real Estate Institute is already suggesting that based on its own sales figures the new higher housing price caps announced in the package will help less than 500 first home buyers. 

Herein lies the nub of the problem. The real issue with the housing problem in New Zealand is shortage of supply. We simply are not building enough new houses to meet the demands of our population. The Cullen Report emphasised the importance of other government initiatives in this regard, like the ill-fated Kiwibuild project, and there have been other reports over the last couple of years, highlighting the need to build more houses. 

Yet, despite its apparent largesse, this week’s package contained no commitment to a more expansive government sponsored affordable home building programme. Much has been made of the package’s multi-billion-dollar price tag as if that alone means meaningful, action, a good case of “sheer cloudy vagueness”, if ever there was one. 

Even when she ruled out the Tax Working Group’s recommendations for a comprehensive capital gains tax two years ago, the Prime Minister said she still personally believed there should be one on investment property sales. This week, she got her way, despite her persistent promises to the contrary. 

George Orwell would feel his point had been proven.

 

The issue of deporting people who have completed sentences in prison for criminal offences is a vexed one. It has been brought sharply into focus by the application of Australia’s so-called s501 policy which since 2014 has seen the deportation to New Zealand of around 2,000 people who had previously been sentenced to a term of twelve months or more in prison. Events over the last week regarding the apparent deportation of a 15-year-old child have sharpened that focus further and aroused some anger, although the precise circumstances of that case are still somewhat unclear. 

It is an accepted principle that countries have the right to send home convicted criminals who are neither citizens nor residents and many countries do so. New Zealand, for example, allows a residents or other form of visa to be cancelled and a person sent home if they have been sentenced to a term of three months or more in prison. 

But that is not the point at issue here. The objections to Australia’s deportation policy are less because of the policy itself and much more about the harsh and indiscriminate way it has been applied under both Labor- and Liberal-led governments. Often people have been deported to New Zealand after lifetimes in Australia, having left New Zealand as babies or small children, and with few remaining family connections in New Zealand. 

Australian Home Affairs Minister Peter Dutton’s callous analogy to putting out the trash may resonate well with his domestic electorate but exemplifies the contemptuous approach Australia has always taken to this issue. Australia’s response that it is simply putting the safety and welfare of its own citizens first does not justify treating those who do not fit as vermin. Their approach is completely out of step with a wider world that no longer tolerates discrimination against minorities in this way. 

I was Minister of Internal Affairs at the time when the deportation flights commenced. The first flight had not even obtained clearance to land in New Zealand prior to arriving, causing some panic in civil aviation and Foreign Affairs circles before it was finally permitted to land here. Moreover, the Australian authorities had made little effort to ensure any of the deportees on that flight had valid papers to enter New Zealand, leaving Internal Affairs and Immigration officials literally scrambling to process arrivals on the tarmac. Such was the contempt that underpinned the Australian approach. 

The difficulty all along has been that from a sovereignty standpoint Australia is following the provisions of its own law as passed by its Federal Parliament. The issue is therefore not a legal one, but a moral one, and Australia has shown itself to be utterly deaf to any criticism of it. 

It is symptomatic of the wider approach Australia has been taking since the early 2000s to New Zealanders who have made their homes in Australia. Despite the annual ritualistic invocation of the special relationship between the two countries each ANZAC Day, Australia has been moving steadily to ensure that New Zealanders living in Australia are treated no differently from any other non-Australian residents. The problem is, though, as the deportation policy typifies, because of the large number of New Zealanders living in Australia – well over half a million at last count – and the basic similarity of our cultures, treating New Zealanders no differently from other non-Australian residents is actually a form of discrimination. 

That is what makes the issue political and is why successive Prime Ministers from Helen Clark onwards have been vocal in their remonstrations to Australia about the policy’s adverse impact on New Zealand. Jacinda Ardern has gone so far as to describe it as a “corrosive” factor. However, reports this week that New Zealand did not raise its concerns with the United Nations when it was reviewing Australia’s human rights policy detract from this somewhat. 

Be all that as it may, New Zealand is right to take the moral high ground approach it has since the early 2000s and to push for better treatment for its citizens resident in Australia. While the brutal candour of Peter Dutton’s comments suggest the current Australian government is a lost cause, it is more worrying that the Opposition Labor Party is showing little enthusiasm to turn things around. But then deportation policy began during its last term in government. 

So, it seems an awful bipartisan consensus is emerging about New Zealand, reflecting once more the maxim that “all politics are local”. As long as the approach remains popular with Australian voters, as currently appears to be the case, the harsh reality is that awful consensus will prevail. More New Zealanders will be deprived of access to government health and welfare services in Australia, despite being taxpayers there, and more petty criminals will be deported to a country that while theirs by birth, they may have never known. 

It will be fascinating to see how Scott Morrison justifies this modern Australian interpretation of “mateship” and the “Spirit of ANZAC” this April 25^th.    

 

 

Around August this year a new Governor-General will take office to replace Dame Patsy Reddy upon the conclusion of her five-year term. A few months before then the Prime Minister will announce whom she has chosen to be the next Governor-General. Following the custom since the late 1960s it will be a prominent New Zealander and the Prime Minister has already indicated it will not be a former politician. 

Again, following the customary practice, the decision will be largely the Prime Minister’s, with the major Opposition party informed shortly before the announcement is made. There will be no public input into the process, nor will the nominee be subject to any form of Parliamentary scrutiny or endorsement. The Governor-General is, after all, the Queen’s Representative as New Zealand’s Head of State so in that respect is not subject to the approval of the New Zealand Parliament. 

The appointment of the next Governor-General is usually a process that passes under the national radar screen until the appointee is announced. However, recent events in the form of the Oprah Winfrey television interview with the Duke and Duchess of Sussex give added flavour to this coming appointment. Whatever view one may have about the appropriateness or otherwise of their actions, the impact and flow-on effects from their comments are likely to colour perceptions of the wider Royal Family for some time to come. For many, they will have confirmed that the Royal Family has been living in a world of its own for years, with no real signs anything much is likely to change in the future, if the attitudes of Princes Charles and William are anything to go by. 

The relevance of all this for New Zealand is that during the five years of the next Governor-General’s term it is more than likely that the long reign of the Queen will come to an end, and that Prince Charles will become King, and thereby New Zealand’s Head of State. The Governor-General will be his representative in New Zealand. 

That change alone is likely to bring into stark relief New Zealand’s future relationship with the British monarchy. There is undoubtedly deep affection and respect for the Queen in this country, which has stalled the steadily growing feeling here that it is time to become a republic with our own Head of State. There is no real sign that any of that respect or affection will transfer to her successor, meaning calls for cutting the umbilical cord with the monarchy and becoming an independent republic within the Commonwealth – like almost two-thirds of the Commonwealth’s members are already – will most likely intensify. The reaction to the Sussex’s interview may well fuel that further. 

A potentially complicating factor is the special relationship Maori have held with the British monarch since the signing of the Treaty in 1840. However, the reaction of the Maori Party to the Sussex’s interview suggests that special bond may not now be felt as strongly among younger Maori as earlier generations. Nevertheless, it will be an issue to be carefully navigated in any future constitutional discussions. 

Against that backdrop, the government should be taking the view that in all probability the next Governor-General will be our last Governor-General. It should be seeking to use the five years of the next Vice-Regal term to initiate the debate and referendum process needed for New Zealanders to determine whether we remain tied to the British constitutional monarchy, or whether we will become the republic that so many have described over the years as an inevitability at some point. 

Critical to that decision will be the role and form of our own Head of State. Ideally, we would move to a non-executive President as Head of State, following the example of the Republic of Ireland where the non-executive President performs a virtually identical role to that of our Governor-General, within a Parliamentary system of government headed by a Prime Minister and Cabinet. 

That then raises the question of the process by which the President would be chosen. In the Irish case, and in other Commonwealth republics, the process is one of direct public election, with terms varying between usually five and seven years. While candidates often run under party political labels, the connections are a little looser than in Parliamentary elections, given the more broadly based role that being President of the republic requires. 

If there is a sense of wariness or disdain for an elected Head of State on the grounds that could lead to the process and role becoming more politicised than is desirable, an alternative process would be for the President to be appointed by a super-majority (say two-thirds or three-quarters) of Members of the House of Representatives voting for the appointment. Were that process to be adopted it would require a transparent nomination process to be established to ensure that the best candidates were forthcoming. 

Over the years, New Zealand has been extremely fortunate to have been served by a succession of high quality domestically chosen Governors-General. But the concentration of the current process in the hands of the Prime Minister of the day, and the secrecy that attends that, would be neither adequate nor appropriate for the selection of the President of the Republic of New Zealand.

That needs to be much more an appointment of the people, by the people (or their representatives) than the appointment of the British monarch’s representative in New Zealand could ever be. 

Previously, successive New Zealand governments have been able to put off considering the republic question on the grounds that it was not the right time to do so. However, with the second Elizabethan era most likely drawing to a close during the term of our next Governor-General, the timing excuse will pass. 

All this adds interest to the appointment of our next Governor-General. Will the government use the appointment to signal that future change may be in the wind, or will it play safe with a very status quo appointment? Only the Prime Minister knows the answers to those questions, and for the time being, at least, she is not telling.

 

 

 

 

 

 

 

Last year the Prime Minister laid out an astonishingly simple but extremely effective plan for dealing with the threat Covid19 posed to New Zealand. It was basically to take advantage of our isolated location and seal our borders to keep the virus out until such time as there was a vaccine available to minimise the risk it posed. Until then, we would need to be prepared to accept some restrictions on our daily lives, including possible national or regional lockdowns from time to time. But, in return, we would be the first in the queue when vaccines became available, so any hardships to be endured would be relatively short-term. 

The deal seemed so reasonable that most New Zealanders readily bought into it and set about reorganising their lives accordingly. After all, all the indications then were that the disruption would be short-lived and that the advent of vaccines and the early access we were being promised to them would mean that it would not be too long before things were back to normal. 

All the while we were buoyed along by uplifting phrases like “be kind”, live in your “bubble” and play your part in the “team of five million”. People initially adopted an almost jolly and somewhat unreal approach to what was happening, seeing it as more an exciting new adventure to embark upon, so, not surprisingly, went along with it. After all, it was but a short-term problem that would pass soon enough, or so they thought. They listened intently to the daily media conferences and elevated the Director-General of Health to sainthood alongside the Prime Minister for “saving’ the country. 

A lot has changed since then. Our border control system has morphed into an extremely bureaucratic and complex managed isolation and quarantine system which is being breached frequently. Far from being at the head of the queue for a vaccine, we are now at least the 80^th country to begin a vaccination programme, lagging behind previous Covid19 basket cases like Britain and even the United States in vaccinating our general public. Despite the reassuring promises before the election, we are now told vaccination is not the same priority here as in other countries because we do not have the number of Covid19 cases they do. 

Massive government business support and wage subsidy programmes have shielded the economy from total collapse, although many small businesses have gone to the wall, and more look likely to do so in the coming months. Veiled government warnings suggest that the days of largesse may be coming to an end. And regional lockdowns, far from being rare and occasional, are becomingly increasingly common, with the eerie feeling abroad that there are more yet to come. 

Meanwhile, the virus has mutated, and more virulent strains have appeared. It is now by no means clear that it will ever be completely eradicated. Around the world knowledge and understanding about the virus, its spread and its impacts are constantly being updated as scientists and doctors learn more. 

This greater knowledge is also shaping public opinion about the virus and what happens next. If Covid19 is going to be around for a lot longer than first imagined, public response strategies will need to be adjusted frequently to remain relevant.  

Already in New Zealand we are seeing that the messaging we all responded to so well last year is now being increasingly ignored. It has been dismissed by young people as too old, too long and too boring to inspire their compliance. Yet the government seems slow to recognise the changing situation, preferring instead to cling to the approach that worked so well last year. 

And the previously unambiguous message is starting to look a little blurred. For example, Ministers are clearly frustrated and want people to “dob-in” those who are breaking the rules, but properly stop short of referring such instances to the Police to follow up. But that leaves the message appearing somewhat confusing, and the real point about following the rules gets lost as a consequence. Even the international media that has previously lauded New Zealand as the country to follow in terms of an effective, co-ordinated Covid19 response is now beginning to snigger at what is happening here. 

None of this should come as any surprise. Many other countries are suffering similarly from what is being called Covid19 fatigue, and it would be naïve and foolish to think New Zealand should be any different. The ongoing presence of the virus is starting to irk people wondering whether their lives will ever get back to normal. What makes things more difficult in New Zealand is the irony that because of our success to date in keeping the virus from our shores increasing numbers of people feel the battle has been won, making the compliance challenge that much more difficult. 

The events of the last week have shown that New Zealand’s Covid19 response strategy has reached a crossroads. Carrying on the way we are with the real possibility of more regional lockdowns, while mass public vaccination remains many months distant, will become increasingly difficult to enforce, even if the government was of a mind to. Relying on familiar reassuring faces delivering the same messages no longer has the impact it once did. 

Therefore, the government urgently needs to upgrade its strategy. It needs to rebuild its early partnership with New Zealanders (keep to the rules and in return we will keep you safe). The last thing it can afford to do though is resort to a “do this or else” approach that some are advocating. New Zealanders, many of whom feel they have already been through enough, will simply not comply with that. They have to feel included once more in what is happening, not just be told what to do and to fall into line. 

Therefore, the government needs to be more open about what is going on. The growing impression that it is controlling the flow and timing of information to its advantage needs to be immediately dispelled by more transparency. There also needs to be a precise public timetable for the national vaccination programme set out and a clear plan for its delivery made public. Rightly or wrongly, the current impression is that all this is being made up as we go along. It is simply not good enough given the earlier insinuations we would be all lining up for our jabs by now. The current shambles affecting the contact tracing system needs to be sorted out to ensure maximum compliance. In a word, the government has to inject a greater degree of certainty into what it is doing. 

But above all, the messaging around Covid19 must become much sharper and better targeted. All we need to know is the essential information – case numbers, spread and regional implications, vaccination details – without the  ritualistic press conferences, accompanying spin, endless explanation, and mawkish exhortations to be good. 

How the government responds to the changing public sentiment will determine the success of our Covid19 strategy from this point onwards. More of the same will just not be enough. Dark warnings about not complying will be disastrous – if we really are a team of five million, we should be treated like one, not harangued. New Zealand has come a long way in the last twelve months. While other countries have suffered more, New Zealanders have made many sacrifices and endured hardships in the pursuit of the national good. 

This is the time to reinvigorate the partnership that has already contributed so much to achieving that, not put it all at risk by blaming people when they do not follow the rules the government has decreed.