Category: housing

I don’t fully know how to feel so here’s some graphs

The day after the election I said “I’d be extremely surprised if it doesn’t turn out to be National-NZ First.” Well, I have the pleasure (I think?) of being able to say again: I was wrong.

I’m not entirely sure how I feel yet.
(I guess I’m happy? We’ll have to wait and see the content of the agreement and what the govt actually does. I hope the Greens demanded a lot and got it (this looks promising but we don’t have details or confirmation yet), and that Winston emphasised the 1/3 of him that’s like Sanders rather than the 2/3 of him that’s like Trump. There is real hope of climate action, more paid parental leave, faster minimum wage increases, reversal of the step-backwards pay equity law, adequate funding for health especially mental health, more support for students and some free education, repeal of national standards and charter schools, more affordable housing even if limited crackdown on speculation, adequately funding a full superannuation system in the future with the taxes future retirees are paying now, less poverty in families where adults are in paid work, and maybe even some benefit rises/humanisation.)

So instead of reactions or analysis I thought I’d do what I do best and make a couple of graphs.

Here’s the first one. It compares the votes received by the parties that ended up making up the government with the votes received by other parties who (a) managed to make it into Government and (b) plausibly might have banded together to form a government.1

votes for govt bloc vs alternative blocs

The takeaway from this is:

  • The 2017 government represents a majority of votes as well as a majority of seats. Under FPP, the government hadn’t represented the majority of votes since 1951. And even under MMP, governments don’t represent a majority of party votes every time (five times out of eight so far).
  • The alternative bloc (National & NZ First) would have been an even bigger majority: it got 1.29% more party votes than the bloc that formed the government. But this isn’t new. In 1996, the alternative bloc (Labour & NZ First & Alliance) got 4.42% more party votes than the bloc that formed the government. Both times NZ First chose what they thought was the best government bloc, not the biggest government bloc.
  • As I argued in my last blog, MMP creates monarch-maker situations more often than FPP because it more accurately reflects how people vote. As Winston pointed out in his reveal speech, neither National nor the Labour-Green MOU succeeded in winning a majority and king/queenmaking themselves. This left NZF able to make up a majority with either side. A lot of people don’t like kingmakers—especially when they’re people we don’t like, and especially when they don’t choose how we’d like. And I get it. But First Past the Post was worse. It artificially advantaged major parties and leads to disproportionate situations like 1978, 1981, 1984, and 1993 where the opposition bloc won more votes (often substantially more votes) than the government bloc but didn’t get the all-important majority of seats.

Here’s the second graph:

govt gender makeup

The takeaway from this one is pretty obvious.

Footnotes

  1. This means I’ve excluded other parties who might have liked to be part of a government bloc but they didn’t make it into Parliament (TOP, Conservatives, Christian Coalition, Legalise Cannabis, Values, sometimes Social Credit, sometimes NZ First, etc.). I’ve also excluded parties where it’s not plausible that they might have worked together: e.g. ACT with National and NZ First this time (they wouldn’t have been needed or wanted). I dunno if it’s plausible that Social Credit might have gone with Labour in 1978 and 1981 and National in 1984 because I don’t really know anything about Social Credit, but I’ve erred on the side of “who knows—maybe”. If we removed Social Credit from the numbers, the opposition blocs would be reduced. But still, in ’78 and ’81, Labour won the popular vote but National won a majority of seats. 
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After the election trauma: disappointment, anger, fear, hope

seatprojections

Election results: disappointment and anger

After the last election I wrote a blog entitled I was wrong. This time I was right, but I’m not happy about that, because what I was right about was basically that the polls would be pretty accurate.

I’m expecting special votes will be slightly favourable to the Greens and/or Labour at the expense of National, but it won’t be enough to change the basic configurations and possibilities.

So the result is about what we could have expected from recent polls and past polling accuracy. But of course this is a big disappointment for me and everyone who leans to the left, especially because slightly-less-recent polls were more positive for Labour vs. National. Those polls got our hopes up that we would have government change.

The main thing I’m devastated about is the Māori party being driven out of government, and I mainly blame Labour for that. Two kaupapa Māori parties have been driven out of Parliament in the last two elections. Of course, this is partly because of their decisions to sit at tables with rich white men. But it’s also partly because they’ve been taken out by their political opponents. I know that’s politics (and Te Ururoa himself helped defeat Hone last election), but it’s sad. The Māori party were an effective voice for Māori and for justice, and they held the major parties to account on Te Tiriti, which needs to happen. They were the best part of the National-led government and they would have been a good part of a Labour-led government.

Once again I’m angry at the undemocraticness of the 5% threshold for representation. The thousands of party votes TOP and Māori received mean those parties deserve a few seats between them: those party votes should be worth as much as party votes for the big parties. But the threshold (and their failure to qualify for the local-seat exemption) blocks those parties from getting those seats, because of the Electoral Commission’s undemocratic fear of a “proliferation of small parties” with extremist views. And yet ACT survives again because they & National use the local vote to their advantage.

 

The incoming government: hopes and fears

We don’t know yet what the government will look like, except that it will be some combination of just the four big parties (National has already cast David Seymour aside). While a Labour-NZ First-Green govt is technically possible, it would be a bit of a poisoned chalice for Labour and the Greens: firstly because a lot of people would (rightly or wrongly) consider this government illegitimate, and secondly because they’d have to work with Winston Peters. A National-Green government is also technically possible, but National would have to give some pretty enormous concessions for the Greens to decide the situation has changed and they’re now willing to risk electoral suicide by working with National.

On the whole, I’d be extremely surprised if it doesn’t turn out to be National-NZ First.1 We’ll have to wait and see what a National-NZ First government will look like. We’ll get some clues with coalition negotiations, and find out the rest over the next three long years.

They’re both terrible parties, so their government could be doubly terrible. But my hope is that since they’re terrible in different ways, they could somewhat cancel out each other’s terribleness. E.g. National are too committed to globalisation (for the sake of capitalism) to go too far in appeasing Winnie’s anti-immigrant sentiments. And NZ First are far more economically left-leaning than National,2 so they could hopefully stop National from going too far on neoliberalism. A bunch of things that were passed over the last nine years by National, ACT and Peter Dunne were opposed by NZ First. There is precedent for NZ First holding National to account on its extreme capitalism, such as in the 90s when the minimum wage was not increased during the whole term of the Bolger government until NZ First forced them to increase it in 1997. So I think there is some hope that this government will be not as bad as the government over the last three terms has been.

Secondly, there’s some hope that private members’ bills from the left will be taken over the line by NZ First. For example, it’s possible that a zero carbon by 2050 law could be passed this term.

Thirdly, there’s hope in the way the Overton window has shifted slightly leftward during this election campaign. Earlier on, it looked like it was shifting in a worrying immigrant-scapegoating direction, but the Greens repented of their immigration stance, Labour toned theirs down, National didn’t join in,3 and NZ First somewhat fizzled. The political conversation became more about issues that matter: poverty, homelessness, housing unaffordability, and river water quality (sadly, climate change not enough).

And I think there is some hope that this government will do at least something on these issues. Under Key, National’s line on these issues was basically “there’s no issue”, but under English it’s more like “there is an issue and we’ve got it under control”—not a dramatic difference but an important one. And there are some signs National are starting to actually act on some of these issues. For example, they’ve done some encouraging Housing First experiments in Hamilton and Auckland and it would be great if they made this nationwide.4 And in Paddy Gower’s debate, English famously committed to lifting 100,000 kids out of poverty (even if they have been conveniently vague on what poverty measure he’s using). If this happens, great. If not, it’s something to hold them to account for.5

My biggest fear is that NZ First will push National to revive its policy to abolish the Māori seats. It’s still their policy to do to this eventually, but it’s on hold because “now is not the right time” (translation: we have a government arrangement with the Māori party). Bill English has already said this won’t happen, and I don’t want to believe that he’d do it. He’s seemed quite different to Don Brash on te Tiriti and te ao Māori (and on basic human decency), but Bill English has disappointed me quite a bit over the last few months.

Last but not least, I also have hope that there will be a strong Labour-Green government in three years time. Hopefully Labour has got its act together more by then and is more Corbynite than it is now.

 

Footnotes

  1. Though Winnie will milk his technical queenmaker powers to gain maximum concessions out of National. 
  2. I see NZ First as roughly 2/3 Trump and 1/3 Sanders. 
  3. Not out of concern for immigrants so much as concern for immigrants’ low-wage employers, in my opinion. 
  4. Housing First is quite a radical reversal of the currently dominant mindset of having a bunch of conditions and sanctions in exchange for any welfare support. It gives an unconditional roof over the head first. Any state involvement in trying to change people’s lives comes after this, and isn’t a condition for having a roof over the head. And it works – it basically eliminates rough sleeping. 
  5. However, a third option is probably more likely: they’ll find a measure that allows them to say that they’ve met their target, even though the opposition and pretty much everyone else will say it hasn’t happened. They’ll continue to insist they’re right next election, as they did with the 11 billion dollar hole this time. 

 

Breaking news: Occupations extremely likely to be property speculating

Cartoon by Vincent Konrad for Socialist Review - used with permission

Cartoon by Vincent Konrad for Socialist Review – used with permission

I have undertaken cutting-edge statistical analysis of the Register of Pecuniary and Other Specified Interests of Members of Parliament, which has revealed some shocking information.

People of the following occupations are all extremely likely to own real property beyond the family home and Māori land interests:

Labour MP: 50%

National MP: 76.27%

Green MP: 50%

NZ First MP: 58.3% or 61.54%*

United Future MP: 100%

These rates are all extremely high – far higher than any ethnic or national group, for example. It is clear what we must do to curb property speculation and solve the housing crisis: Ban MPs from buying property in NZ.

*Info not available for new MP Ria Bond.

Averages, intentions and inequality: more Key trickery

median vs mean

Graph from latest Household Incomes in New Zealand report; yellow and pink annotations are mine

John Key is being a Spurious George again. In explaining why he’d love to cut taxes for (mostly) the rich, but just can’t afford to yet…

Key pointedly said that when National took office the average wage was $47,000 a year but had risen to around $55,000 today, and was expected to climb to $62,000 by 2017. This was creeping towards the top tax bracket, where salary earners pay 33c in the dollar for earnings over $70,000.

“I don’t think it was anyone’s intention that someone on the average wage would be paying the highest marginal tax rate in New Zealand,” he said, echoing arguments National has been making in private for months.

Well, Mr. Key, it also wasn’t anyone’s intention for the incomes of the rich to rise so much faster than those of the poor, pushing up the average (mean) income to a level less than 30% of people reach. (Actually it was some people’s intention: right-wingers who think inequality is a good thing)

Key is trying to give the impression that the average (mean) income is the income earned by the person in the middle. But mean doesn’t measure the middle of the people, but the middle of the money; and of course the money is weighted towards wealthy outliers at Mr. Key’s end of the spectrum, who push the average up with their exponentially higher incomes.

A far more useful statistic is the median income: the amount that half the people earn more than, and the other half earn less than. This truly represents the average Kiwi. The median individual income is almost exactly $30,000 p.a. – just under the middle of the third-to-top tax rate band.

It’s actually getting more and more misleading to portray average income as a reflection of middle-income earners: As inequality worsens, the “middle of the money” (average income) is moving further and further from the “middle of the people” (median income). My eye makes it less than 10% difference in 1980, up to about 25% now:

Mean and median over time

Graph from latest Household Incomes in New Zealand report; yellow and pink annotations are mine

It’s also worth noting that the increased average income Key mentions has accrued almost entirely to above-median earners:

income changes recession and recovery

Graph from latest Household Incomes in New Zealand report; yellow and pink annotations are mine

Another problem with mean income figures is they hide inequalities like these and portray a boon for the rich as a boon for everyone.

I do agree in principle with indexing tax-rate thresholds (in fact, all thresholds… *cough*student loan repayments*cough*) for inflation, but Key’s trying to use that principle as a smokescreen for more tax cuts to the rich, spinning this as a release for the average NZer from crippling over-taxation, which is not true on any level whatsoever. Taxpayers between the median and mean incomes actually pay the lowest proportional tax:

Salmond Fig 8-2-01

Graph from Rob Salmond; yellow and pink annotations are mine

And in the context of a supposedly progressive tax system it’s the rich who are really best off:

“At very low incomes, New Zealand’s taxes are a little above the OECD average … But for high incomes, our overall “tax wedge” … is the lowest in the developed world.

Our tax system asks too much of those with little, and too little of those with much.”

This would only get worse under National’s proposed 2017 tax cuts.

In any case, if Key is really worried about too many NZers in the top tax bracket, there’s an obvious solution: Implement a new top tax rate(s) for the super-rich, like most similar countries have:

income taxes NZ aust
income tax UK france
income tax US

Soooooooooo: whatever people’s intention about who should be on the top tax rate, it’s clear John Key’s intention in referring to the mean income, rather than the median, is to mislead (or perhaps he simplify misunderstood statistics in a conveniently misleading way, as with child poverty at the last debate). Sadly he’ll probably largely achieve that intention.

Don’t believe the scaremongering on capital gains tax

capital gains tax first world problem

The unholy trinity of National, right-wing blogs and the mainstream media are scaremongering about Labour et al’s proposed capital gains tax again. Because it’s new and because it’s a tax, it seems scary and there’s easy political points available in opposing it. But in fact most countries have capital gains taxes. New Zealand’s tax system is one of the most generous to the rich, and part of that is our anomalous lack of CGT.

The current scaremongery relates to inherited family homes of deceased family members. The impression John Key et al are putting across is that a grieving, struggling family will have to scramble to sell their deceased parents’ family home to avoid being stung with a hefty capital gains tax they can’t afford. IF that were the case, a one-month “grace period” certainly doesn’t sound like long enough to grieve, get organised & sell the house to avoid financial ruin.

But it’s NOT the case. Even without a grace period, only profit since inheritance – I repeat, profit since inheritance – would be taxable (and at a modest 15%). If a family inherited a house worth $400,000, and sold it a year later for $430,000, they’d incur tax of $4,500, but they’d get to keep the other $25,500. They’d still be $25,500 better off than if they’d sold the house straight away, and $425,500 better off than if they hadn’t inherited the house.

This is no different from inheriting any other profitable asset. Currently, if you inherit a company, and it makes $30,000 profit over the next year, you’ll be liable for 28% ($8,400) company tax on that profit. There’s no “grace period” there. And more importantly, there’s no “grace period” on the profits – 72% of which you’ll keep and no doubt enjoy.

So it’s extremely dishonest of Key to portray families inheriting profitable assets as somehow hard-done-by, simply because they’ll incur tax on those profits. Truly hard-done-by families are the families of (increasingly numerous) people who’ve never managed to buy a house (largely because of tax-free property investment). Those families will receive no inheritance (let alone profitable inheritance), and many struggle to pay for (increasingly exorbitant) funeral and burial costs.

Years from now, if my siblings and I inherit my parents’ house and it makes capital gains by the time we get around to selling it, we’re not hard-done-by if we incur tax on those gains. We’re lucky my parents own their home in the first place, and have something to leave us (in fact, something that continues gaining value until we sell it).

That said, I do tend to agree there should probably be a grace period of maybe six months, because the tax is supposed to target people who buy extra houses for profit, not people who gain an extra house by accident because a relative died. Besides, it may take some months to decide whether they’ll sell it, keep it as a rental, or have other family move in (in which case it remains a family home, thus exempt from CGT). But a grace period would be an act of compassion to people who don’t really need it; certainly not a demand of justice or need.

Of course, Cunliffe didn’t help his own cause by remembering the policy wrong and declaring unequivocally that the grace period will be one month. In truth, the length of the grace period is a detail that they’ll leave to an expert advisory group to work out. It was incompetent of Cunliffe not to know this.

Anyway, despite those two caveats: don’t believe the hype. Look into it, listen to David Parker’s explanation, think about it, etc. After doing so, no right-thinking person would think there’s anything to worry about.