Stupid statement of the week

When only the best and brightest will do, who should you hire? Bring out your colour charts and alphabets coz if you ain’t diverse you’re in trouble. That seems to be the thinking in a major New Zealand engineering company. Quote.

Last year, 70 percent of Tonkin and Taylor’s new engineering graduates identified as New Zealand European.

Engineering companies say they are struggling to hire M?ori and Pasifika graduates. 

The rest identified as Indian, Asian or ‘other European’.

The company said it was pushing for diversity, but struggled to find M?ori and Pasifika graduates to hire.

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Jacinda’s vast business experience

Photoshopped image credit: Rick H

You may remember that, while discussing CGT, Jacinda implied to Mike Hosking that she had some considerable business experience, including running an NGO. This was news to most of us, who had believed that she had never worked outside of the public sector, except for a few after-school jobs.

A reader on Kiwiblog decided to find out and made an OIA request. Here is the result. quote.

The Prime Minister on Mike Hosking?s show said:

?Again, well again I would speak to my? you know, to my own experience. Yes, I haven?t been an owner/operator I have um? I have run a small NGO, um? I have worked in small businesses and I have been a small business spokesperson, I even worked in a small business in the UK.?

One of my readers sent the following OIA to the PM?s Office:

1. What was the business you have claimed to run that was not an NGO?
2. What were the small businesses you worked in?
3. What was the business you were a spokesperson for?
4. What was the small business you worked in while in the UK? end quote.

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Don’t worry, business owners: Jacinda has your back

Jacinda has clearly had a serious wake-up call with the public reaction to the TWG’s report. It is as if, after the voters rejected the idea of Capital Gains Tax (CGT) in 2011, 2014 and even during her own election campaign in 2017, she thought that a bit of fairy dust would change everything. Now she knows that CGT is as politically toxic as ever and she is reacting as if she has just taken a cold bath. quote.

Prime Minister Jacinda Ardern says small business owners and farmers will be at the top of her mind when it comes to making final decision on a capital gains tax in the next two months.

“Small businesses and farming are crucial to New Zealand’s economy and I want to be clear that the effects on them will be top of my mind when assessing options,” she said at her post-Cabinet press conference yesterday.

“I want them to know that I hear them.” end quote.

If that were true, she would have dropped the idea when it was rejected by voters at the last election, instead of opting to farm it out to a working group who were told what answers to give. That is not listening to voters. That is refusing to accept that your ideology is not popular with anyone other than your own elite group. quote.

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How to tank the NZ housing market

Labour hammers in the final stake

If you wanted to deliberately tank the New Zealand housing market to make homes worth less, then you would do what the current Labour-led government is currently doing.

Step one would be to put financial pressure on landlords to dissuade them from buying more investment properties and to encourage them to sell the rental properties that they already have.

That is already happening and Phil Twyford’s latest announcement put the final stake through the landlord’s heart. The new demands to make a tenant’s home of a higher standard (than in many cases the landlord’s own home) coupled with the coming Capital Gains Tax will stop all but the most dedicated landlords in their tracks.

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Slack on tax

David Slack

My favourite tax expert is back. David Slack, an average broadcaster and activist, has taken the opportunity to tell all doubters that they should embrace the idea of a Capital Gains Tax. Yes. David Slack has spoken, and, as always, he knows best. quote.

For every good idea, for every decent change, there’ll always be someone saying: “yeah nah” and: “just keep things the way they are” and also: “get your hands off my stuff, you commies”.

So here comes Michael Cullen and his panel of experts to review our tax system and suggest ways to make the tax system work better, and they say, among other useful things: “capital gains taxes.” end quote.

I would like to point out here that three of those experts have written a minority report saying that they disagree with the idea of CGT. One of those experts is a former deputy commissioner of the IRD. quote.

According to Man Who Owns 80 Rental Properties, the overnight star of this week’s reportage, if you want to own your own home you need good money habits, rather than a different tax system.

Yes; and absolutely no; and for pity’s sake man what are you smoking? You can have all the good money habits in the world but greed and fear have carried our property prices miles ahead of what today’s pay rates might get you. end quote.

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Capital Gains Tax will decimate the start-up industry

Cartoon credit: SonovaMin

It is tough enough starting a business in New Zealand, particularly a truly innovative one. There is little in the way of tax concessions and a lot of red tape is wrapped around what little there is. Capital gains tax is about to make that process even harder… or, at least, there will be even less incentive to go through the years of long hours and hardship that is required. quote.

Rocket Lab founder Peter Beck isn’t a fan of the Tax Working Group’s recommended capital gains tax system.

“Just saw the NZ capital gains tax recommendations,” Mr Beck said on his Twitter account.

“Taxing IP and stock will decimate the already fragile NZ start up industry. NZ already has big problems around creating large valuable technology companies and this will not help.” end quote.

Start-ups take time, are expensive and may require substantial borrowings or significant investors. Make no mistake, though, that the initial costs of the average start-up will not be taken into account when it comes to calculating CGT. There is enough uncertainty around starting up any business now, without the added risk of having to pay 33% (if the top tax rate stays at 33%) of the business value in tax in any future sale. This is a massive disincentive. quote.

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Advisor Talk Podcast – Kiwisaver changes for 2019

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Mike unplugs the hype

In a typically hard-hitting opinion piece, Mike Hosking tells us what we already know. If electric vehicles, as we currently know them, are the answer then it was a stupid question. Quote.

The never-ending drive of lobby groups to get the Government on board to solve life’s problems is, I note, already up and running for the new year.

There is a lobby group called “Drive Electric” that wants the Government more on board with incentives to get people on board with EVs. End quote.

The government has just given away $11 million of your money to this scam, but that’s for another post. Quote.

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Skilled migrant numbers in freefall

Well, well, well… in the middle of a housing boom, an infrastructure boom, shortages of nurses, teachers, midwives, doctors… guess what? The number of skilled migrants coming to the country has fallen sharply. I find this more than a little surprising. Apparently, since this government took office, more than 96,000 people (not counting wife-beating Czech drug dealers) have been granted permanent residency here. So if those 96,000 people are not skilled migrants, then what are they? quote.

New figures show the number of skilled migrants has halved in the past year, and politics is to blame. 
It’s making it harder for businesses who need migrants to fill jobs. Dunedin?s Madam Woo restaurant blamed lack of workers for its closure this week and construction and decorating businesses struggling to find workers 
New Zealand Association for Migration and Investment chairwoman June Ranson says the drop in numbers has a political cause.

“It started really from a political point of view, and it was part of the campaigns for the elections to reduce migrants, because the public was saying there are too many here.”

end quote.
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Another blow to landlords

Rental Property

From 1 April 2019 residential landlords will not be able to offset their rental losses against other income. Rental losses can only be carried forward to be offset against future profits, which may be years away. This is yet another landlord-bashing policy from a government that hates capitalists. The really sad part is that landlords can generally sell easily in today’s property market, whereas tenants are finding things tougher and tougher. Still, you know what socialists are like. They’d rather have people living on the street (and dependent on the government) than have a ‘rich prick’ make any money. That is already the result of its landlord bashing policies, and things are only going to get worse from here. quote.

Soon landlords won’t be able to offset their residential rental losses against other income, as the Government introduces ring-fencing legislation.
The legislation is a move to reduce the Government’s perceived unfairness between property investors and owner-occupiers.

The Government expects the rules to improve a first-home buyer’s ability to compete with investors, improve housing affordability, and increase tax revenue by about $190 million per year.

In the coversheet to the Regulatory Impact Assessment issued by Treasury and the IRD which accompanied the legislation, the IRD Quality Assurance reviewer stated:

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