Which is what the govt is trying to achieve, but Grant borrowed and spent it all
A nation of grasshoppers
Politics 🗳️ NZ Politics
- Thread starter wizard of Tauranga
- Start date
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Yeah, ok, so like Bayleys. I just don’t see that being the case. The reason being, a donation here and there to what, restore interest deductibility (on existing rental properties that are funded by debt), so that the Bayleys family can gain from:
Their rentals and/or
Marginally increased property sales prices and commissions
Seems like a lot of donating to try to get a return
Smoking lobby - that’s a clear group with a clear gain. The big winners of the tax changes aren’t agencies. It’s the landlords themselves
Do you notice no one refuted your central premise. Kiwis are a nation of takers, always want more.
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It is the case - and no surprise the the policy was reversed so quickly.
Of course the real estate sector don't want the property market cooling.
You're delusional if you think it's just Bayley's donating.
The government prioritise their donors over regular voters.
And how would you prove that Frank?
For someone who seems to spend all day posting on a forum of a rugby league club from NZ, you seem to have some serious issues about New Zealand. Who hurt you? Could you not make as a success in NZ?
In a tight housing market like we have, interest deductibility on investment properties skews the market in favour of investors. By lowering investor holding costs compared to owner-occupiers, it lets investors borrow more and outbid first-home buyers, driving up prices and worsening affordability. This dynamic has placed NZ as one of the least affordable housing markets in the OECD. The Labour policy was actually quite good, because it still allowed interest deductibility on new builds which we need.
We are still viewing government debt incorrectly. It’s not like a household budget or running a business. As New Zealand issues its own currency, there are no inherent issues with the size of government debt or spending, so long as the spending is used to expand productive capacity (healthcare, education, R&D funding, infrastructure etc) or when there is slack in the economy (underutilised resources and high unemployment), as we have now. The real constraint is inflation, not the size of the debt.
The current government appears to fundamentally misunderstand how government financing and debt work, treating surpluses as a silver bullet for economic growth, when, in reality, the opposite is often true. A government surplus means a deficit in the private sector, forcing households and businesses to borrow more to make up the shortfall. This often reduces economic growth and is especially counterproductive during a recession, when the private sector is already struggling.
Remember: a government deficit is a private sector asset. This is rooted in the concept of sectoral balances, which show that the government’s financial position is inherently linked to the private sector’s. When the government runs a surplus, the private sector must run a deficit, and vice versa.
In New Zealand, where private sector debt (mostly housing debt which is closely linked to SME business debt) is already a significant issue. Surplus targeting risks making matters worse. By draining financial resources from the private sector, the government leaves households and businesses more reliant on borrowing, creating the conditions for private debt bubbles and further economic instability
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We are (now) a nation with famine mentality
We aren’t interested on growing the pie
We are all just trying to reallocate it
We have become intoxicated with living outside of our means
Prime example. Angry defence of mediocrity.
So long as Govt spending (debt) is expanding productive/economic capacity - it's good for economic growth.
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ROI - much like a business
This includes health, education, welfare state.
But the debt balancing isn't the same - is my argument.
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The real estate sector makes far more money from transaction frequency than they do from the growth of property valuation. Doesn’t matter a great deal if the market is cooling. They just need properties to change hands
I was using the Bayleys as an example, which you introduced when you referred to Paula Bennett
My point is that National responded to the electorate. Not some evil property empire pulling the strings
Housing always goes through cycles depending on supply and demand, really people are suffering from FOMO and whether investing in houses is good at the time. TBH, at least in my opinion, the deductibility was a way for the previous government to be seen to be doing something on at least one of the points.
But, and it's a big BUT, it only effected some landlords... those with large mortgages. Those with smaller mortgages weren't effected that much and those with none, weren't effect at all. And now, with mortgage rates dropping, the benefit of the reinstatement of mortgage deductibility is even less. A landlord with a $500K mortgage on a property at 7.5% would be paying just over $1,600 per fortnight and a total of just over $34,500 per year in interest. That means that the interest deducted from their tax bill would be $11,400 each year (assuming a 33% tax rate).
Drop the interest rate down to 6.0% with the same fortnightly payments and the total is just over $27,800 per year in interest. That means that the interest deducted from their tax bill would be $9,200 each year (taxed at 33%).
Then, to show how much smaller the reduction is for a landlord with only a $150,000 mortgage... a change from 7.5% to 6.0% (if they kept their mortgage at the same minimum payment of $545.00 per fortnight) would see the amount they could deduct of their tax bill drop from just over $3,400 PA to $2,740 PA (again taxed at 33%).
And, with interest rates being picked to drop even further, the amount a landlord can deduct also drops.
No, it's more fascinating that a poster who is self proclaimed self starter business guru... feels the need to run down on a rugby league forum of all places.
NZ contributes in a global context - far above it's population and location.
We have a shit load to be proud of. Could things be better... yes - but we overachieve.
You seem to have a cry way way too much about how shit NZ is and it's way out of perspective.
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This is a considered and unemotional response, which I appreciate
And I agree on the role of government debt, and borrowing your way out of a recession. Particularly focusing on growth
My understanding is that the govt is forced to trim here and there because
Grant has left the books in such a poor state that $10b is purely the interest bill on his increased spending. Fine if he built something that led to long-term growth like better schools, hospitals, light rail, ferries, roads. Things that we all want now. As you say, that would be a good use of govt debt
Instead, he’s given the govt a penalty of $10b per year of interest to overcome. And that’s why National is trimming things where it can
But is interest deductibility good for the current nz housing market? I'd argue it isn't. Esp. if the majority of investment is focused on existing supply rather than new builds.
National responded to it's donors.
Property industry tops political donations
The property industry gives more in political donations than any other, and its millions of dollars almost all go to two parties.
www.rnz.co.nz
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The books being in bad shape was a false narrative. Our debt wasn't an issue - and even if we tripled it, still wouldn't be. The interest bill from the debt, doesn't impact the govts ability to spend.
Also, the trimming exercise is completely without direction - they have simply given a directive to the public sector to cut. This is destroying NZ productive capacity and increasing the productive capacity of Australia by about 300 people a day.
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Most of the examples of property owners in the article are commercial, not residential, landlords. Certainly not owners of “existing dwellings”National responded to it's donors.
Property industry tops political donations
The property industry gives more in political donations than any other, and its millions of dollars almost all go to two parties.
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Nobody is reading this thread right now.
