Finally the mainstream media is waking up to the fact that you have to own your wealth generation to actually create wealth for New Zealand. It’s a simple concept but it’s amazing how long it has taken to get it into the public debate. Fran O’Sullivan correctly identifies the issues. For more on this subject watch the Beatson interview.

Gareth Morgan takes a look at how the Budget will effect the investment landscape and concludes that if the government was serious about ending our reliance on property investment then it must be given a fail mark on that score:

“And we are left more than ever with the tax regime and its application to investment, giving investors little choice but to either surrender sovereignty over their savings to some faceless institution, or to opt out of the wider investment market and just buy property.”

Read Gareth’s piece over at the NZ Herald

Gareth Morgan outlines just why residential property investment is costing us dollars in terms of tax and missed opportunities:

“So why, if residential property investment is taxed the same as shares or any other business, is it a tax rort? If you were to include capital gains in the profit measure you would instantly see that residential landlords aren’t running at a loss at all - their core business is capital growth.

And that of course isn’t taxed. So the root of the problem is that capital growth in property is by far the main component of the “profit” line of this business and it’s not taxed.”

Read the full article over at The NZ Herald

“If nothing changed, New Zealand would eventually be selling all its assets to service debt, leaving the country as nothing more than a cash cow for foreign interests,”

Selwyn Pellett, along with Ganesh Nana, John Walley and Rod Oram get stuck into economic orthodoxy at the Fabian’s Christchurch ‘Bold Choices‘ seminar, as reported by the Timaru Herald.

“There is a general consensus across all political parties and government bodies that New Zealand’s economic future is precarious - our exports are low, our debt is high, our relative standard of living continues to decline. As a small, open trading economy with a heavily reliance on commodity exports, coupled with a volatile exchange rate, we are prone to “boom and bust” cycles.

But the public discourse for many years has been limited to the solutions of the neo-liberal right. They haven’t worked. New Zealand Fabians believe that we need a wider debate, and a wider range of progressive options and solutions to consider and discuss.”

Mike Smith, Chair of the New Zealand Fabian Society announces its seminar and lecture series kicking off next month in Auckland, Wellington and Christchurch, over at Publicaddress.net

“He is saying, I don’t like the activity of investing in property to avoid paying taxes, but I’m not brave enough to challenge them or convince them what is in their best long term interests.

He has finally shown his colours. He is a mediocre leader without the vision or the ability to change New Zealand. He is a seat-warmer who is too scared to scare the masses.”

Bernard Hickey reacts to Prime Minister John Key’s outlining of his economic plans today - NZ Herald

“Labour has also to rethink tax, productivity growth and innovation. Like Mr English, it worries about the serious imbalance between exports and the domestic economy, low savings and seriously high foreign debt. Unlike Mr English, Labour is much concerned with “economic sovereignty”.”

Colin James analyses Labour’s shift in thinking on inflation targetting in The Dominion Post

In a speech to Federated Farmers today Labour leader Phil Goff  has indicated that at least one of the major political parties appears to be getting the message, saying:

“… our Reserve Bank policy targets are not well designed to produce a stable and competitive exchange rate, nor to keep interest rates as low as possible. In fact, it often operates the other way round. When there is a surge in domestic demand, the policy response is to increase interest rates. Ironically, higher interest rates attract even more inflows of foreign capital, which then gets lent out and sometimes causes even stronger domestic demand. So New Zealand’s overseas debt increases inexorably, while monetary policy punishes our most productive businesses and first home-buyers - just about the two sectors that we least want to affect.”

The full text of his speech is available here.

“Alan Bollard deserves to be congratulated for quietly leading the world’s central banks towards a new tool for monetary policy that might help New Zealand avoid the tyranny of a high official cash rate (OCR) killing our export sector.”

From The NZ Herald

“If productivity growth were to improve by 2 per cent a year, labour force participation was 3 percentage points higher than it is today, and new migrants added 15,000 to national population annually instead of the 10,000 forecast, net debt would rise to 146 per cent of GDP by 2050. “This is still an unsustainable fiscal position,” the report says.”

Treasury paints a picture of a Third-World future for New Zealand.

From The NZ Herald