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Dump those rental properties now


In two years, John Key will be looking for a new career and Judith Collins will be opposition leader.

Amy Adams or Simon Bridges will be her new-generation deputy.

In the Beehive, David Shearer will be setting up New Zealand’s most left-wing government since 1975 in partnership with Russel Norman.

This outcome has been almost inevitable since Steven Joyce discouraged campaigning against MMP in 2011, fearing it could risk National’s win.

His short-term calculation was almost certainly right, with National squeaking in by fewer than 10,000 votes, being re-elected only because of a big boost to its Christchurch vote.

Holding that edge, absent strong economic growth, was always unlikely.

Now, Mr Shearer’s decisive action against spoiler David Cunliffe, and his uncosted but attention-grabbing KiwiBuild policy, have made him the overwhelming favourite.

According to the polls, Labour and the Greens have picked up more than 185,000 new votes since the election (see table) and probably more, with polls historically over-estimating National’s support and under-estimating Labour’s.

Unless Winston Peters wins back some left-leaning voters and then supports National, Mr Key is toast.

Price controls
Changes to monetary policy and the housing market will be at the centre of the new government’s policy programme and are inter-related.

The Greens’ lunatic idea of printing money even with interest rates still above zero will obviously not be implemented, but changes to the Reserve Bank Act will be as signalled by Mr Shearer’s finance spokesman, David Parker.

Foremost will be abandoning the bank’s primary focus on price stability to deliver lower official cash rates.

That, along with market fears about the government’s economic credibility, will lead to a lower New Zealand dollar.

Lower floating rates and a lower dollar would normally fuel a housing boom so the bank’s liquidity policy will be tightened to restrict borrowing against residential property. 

Property investors will also be subject to the new capital gains tax.

Those measures, combined with the 10,000 KiwiBuild houses each year, should put downward pressure on residential property prices – ironically, creating a long-term fiscal risk for the new government because its new capital gains tax would then fail to raise revenue.

Decisions would need to be made on whether property investors could get tax refunds as prices fell.

Investors concerned about the new government’s policy programme may choose to dump their rental properties now while others might see shares in construction companies as buys.

Across the rest of the economy, inflation would be fuelled by the Christchurch and KiwiBuild construction booms, the inevitable looser fiscal policy under the Labour/Green government, the lower dollar and consequent higher prices for tradables, and lower short-term interest rates.

Inflation might also be fuelled by increasing the minimum wage to $15, although the associated increase in unemployment would mitigate it.

To help low- and fixed-income households deal with inflation, the government may need to look at price controls on milk, bread, meat, vegetables and other essentials.

Price controls on electricity would make it cheaper for the government to buy back Mighty River Power shares, although capping rates would put it offside with its allies in local government.

Tax rises could also dampen consumer demand.

They will be implemented for ideological reasons but also to plug the fiscal hole created by the failure of the capital gains tax, the expansion of paid parental leave, higher student allowances, R&D tax credits, a ban on new mines and deep-sea oil exploration, an increase in spending to clean rivers and parks, and a massive boost to rail.

As well as higher income-tax rates, petrol taxes will be increased and the government may opt for a $25/tonne carbon tax now ETS carbon credits are below $3.

Increasing the age of eligibility for superannuation to 67 and scrapping KiwiSaver subsidies, after making it compulsory, would also help plug the fiscal gap.

It is uncertain whether this economic prescription will be successful but it could be popular.

Labour/Green are also early favourites for 2017.

More by Matthew Hooton

Comments and questions

Interesting speculative article. It appears you're proposing inflation and deflation in the same breath. I wouldn't suggest anyone dump rental properties without a whole lot more analysis about's their own individual position including factors such as debt-loading, primary income, age and purchase history of their property portfolio. And a look at the detrail of any proposed CGT e.g. property purchases made before a particular timeframe (such as the implementation date) may be exempt.

Thanks, but be clear I am not saying there would be both inflation and deflation.

Under the scenario I outline, overall there would be higher inflation than under current policy (lower short-term rates and a lower dollar make that pretty much certain). But just because the general price level is rising doesn't mean some prices, including house prices, couldn't fall.

For example, see the graph and "annual prices" commentary at Audiovisual equipment prices have been falling pretty much consistently since 2008 and telecommunications prices have been doing the same since the mobile termination rate issue was resolved.

I think the Green/Labour government policy mix would push down house prices while pushing up the price of pretty much everything else, especially tradables - and that they would then intervene for political reasons, with price controls for some of the food and household utility items on the CPI (see ).

However, I certainly agree no one should take financial advice from me and would need to do a whole lot more analysis before deciding what to do.

Mathew - what basis do have to say that a Green/Labour government policy mix would introduce price controls for some of the food and household utility items on the CPI?

In case no-one has noticed its cashed up Asians who are buying up large tracts of Auckland. Lowering the dollar or making it harder for kiwis to borrow will only make it easier for Asians. Doh! Are polticians and analysts really that stupid?

Certainly Russel Norman is, and Carter makes noises along similar lines. It's a concern alright.


If this hypothesis comes true, New Zealand is going down the tube.

Yep, banana republic here we come. Labour or the Greens will be the death knell of any hope NZ ever had on the global stage. Sell more than your rentals - sell up totally and head for Oz if there's any truth in this articel.

What Aussie with a CGT, stamp duty, 9% employer super contributions, high taxes for the wealthy and where any mug that can hold a shovel or stop go sign makes $25-30hr. If your worried about the Greens and Labour then Aussie would be your worst nightmare even with a liberal government.

If Mathew is right with his predictions then Aussie would be going down the drain rather than now ranking higher in the OECD that Canada, Germany and Denmark etc. Policy that rewards hard work rather than speculation and focuses on exports and R&D etc is common sense internationally on both the right and left of politics. It's the current path that will send us down the Banana republic route of our fellow bottom of the OECD strugglers Greece, Portugal and Spain!


Because this right wing National Government means more unemployment and houses the average New Zealander cannot afford because of investors and speculaters, esp non residents,
then for the sake of the country, bring on a left wing Government ASAP, I say.
Yes, I voted National last time but because of their greedy, self serving housing policies, I will never do it again!!

National a right wing government. I dont think so.

And Labour will make things better how? They are obsessed with taking money off anyone who is remotely succcessful and giving to their freeloading voters.

How do you determine a person successful.

Is it someone who is community minded, and gives their time for free?

Or is it someone who makes alot of money through greed and from other peoples misery?

NZ use to be a much better place, when everyone helped each other out. Sadly, now its every man for himself (mostly).

While there may be short term gains for the few under 'so called freemarket policies (my ass)', we all will be worst off in the end and we are seeing signs of it already.


It's anyone who gets off their bum, puts in some hard graft, takes some risk (potential to gain or lose all) and gets on with it rather than sitting around doing stuff-all waiting for a handout.

So, I imagine that each year you have commended those who have appeared on the NBR Rich list. Funny thing is, the number of "ex Rich listers" appearing in court and and in bankruptcy. Something rotten in the state of NZ??

How can you say it's 'every man for himself' when over half of the country's households receive transfer payments?

So, your point is what?

What exactly is the difference between a future Labour/Green government and the last several years of a National government?

Results are measured in outcomes not political party branding.

Mr Hooton - I fear your predictions will prove right.
I hope some talent among the NBR readership can post ideas for those of us needing some guidance on how best to survive the looming catastrophe even if that means fleeing to warmer climes.

John Key - where is your initiative, creativity and entrepreneurial strengths. Stop relying on the team around you to do your thinking we want to see the brilliance you have shown in the past. Don't lose to Labour please. Trump them.

John Key was a currency speculator, NOT an entrepreneur!!!

True, but Oz and NZ have weathered the global crisis better than the rest. Think about it.

Only because we had a Labour government that resisted the currency speculators.

Gee that will be a sad day for NZ as a country, not as individuals, so you think we will go back to a welfare handout nation, and bugger the future of the country as a whole, man that is so sad, surely there is more intelligence around than that??!!!

As some one who owns rentals i think MH's reasoning is very sound. CGT's are retrospective unless there is a grandfather clause and if that is so then very little tax will be paid to cover the outrageous damage done by additional spending promises made to get back into power by Greens/Labour.

An additional point that is rarely raised by papers in NZ is amounts owed by tenants to landlords for overdue and unpaid rent and damage to properties.It costs an awful lot of time and energy to pursue rogue tenants and i was told by Tenancy Tribunal the backlog was around 6 weeks to get a hearing.All the time your cash flows are being hit as banks don't like it when you miss mortgage payments nor do innocent landlords who cop o/d and penalty interest fees as well as a hit to their credit rating through no fault of there own.

I don't begrudge the problems you have as a landlord although, like any business, all the things you talk about are tax deductible.

But what about your property investment entitles you to avoid capital gains tax on your capital when that is your investment objective? Why is property different to what applies to my investments in shares?

There is no difference between shares and investment property as far as taxation goes, in spite of a common belief to the contrary.

Correct you are -there is already legislation to effectively tax traders as opposed to long term holders.

Also the idea of a CGT on rental properties might only be the start-next it will be the family home as the free spenders in govt decide to widen the net to pay for promises.

But if I selll my shares in the short to medium term, I can be exposed to a capital gains tax on my profit. That currently does not apply to property - which is the whole point.

If you sell property the same tax rules apply as when you sell shares. What I don't understand is why the IRD doesn't take some high-profile cases to show that tax is payable on property sales made for a capital gain.

There is no capital gains tax in NZ. What you may be exposed to is income tax on the profit. That applies to any investment: shares, properties, etc. Trade the odd shares for shares with a better income and you haven't acted to spend the money on personal items, world trips, etc, but to further your taxable income and you most likely not be taxed unless you make a habit of it. Same applies to property. It's all about intention.

Not so. You can sell shares occassionally without incurring tax, and generally if you sre not selling just for the capital profit, e.g. not living off capital profits, but selling shares or property may be liable for income tax. As other posters have said, your intention is the guide IRD apply.

What planet are you on Henry Horse? I would suggest as an investor of both that if your financial advisors are telling you that then change . You are being given bad advice in my experience.

I also invest in both - commercial property and shares. I have not paid income tax on either when selling in 40-plus years. I make a very good income from investments and rarely sell. When I have sold it has been to reinvest. If your accountant says to declare profit as taxable income, there will be a reason he/she thinks that. Perhaps you are living off profits? Definitely taxable. Trading frequently? Can be considered taxable income.

Each case can be different, but talk to the IRD - they're not as bad as often made out, and your intentions will be the over-riding consideration. Could I suggest if you want to be taken seriously when you challenge someone, you do not begin by asking what planet they are on.

That isn't strictly true - those who hold share investments have their income (dividends) taxed, and this doesn't really apply to the housing market.

Landlords also have their income (rent) taxed.

You shouldn't own a rental property if you can't factor in rogue tenants or missed rent or have to rely on an efficient tribunal process- your contingencies should be greater in this tough environment or simply sell your rental properties in what is now a sellers market!!!!!

You are on shallow ground- a rental agreement is just that , a contract, they get the use of the property and for that use they pay rent as per Tenancy Agreement. Even the tenancy tribunal are now coming down on those in arrears and not before time.

To suggest as you do that i have greater contingencies to cover tenants inadequacies misses an essential point. We provide places for people to live in, take all the risks and have lesser treatment than tenants in terms of serving notice.They can jst up and go or the better ones give obligatory 3 weeks notice. The owners have to give 90 plus 2 days and then pray that they will pay the rent and not trash the place.

There are many equivalent situations that other businesses have to face. I'm afraid I just can't get on board with property investors continually pleading a special case for themselves.

How often are tenants not contracted to a minimum term now? Seriously.

The Treaty of Waitangi and is separatist consequenses is a much bigger problem than any of the isses you have raised Mathew. The political party that has the courage to wind up the Tribunal will be the party to win an election.

Perhaps the above article is now redundant.Latest Fairfax poll gives Nats up where they belong.Greens down where they belong.Seems the voters panicked when they saw the idea of a gang of pretenders, taking over the Treasury benches.Lest we forget, i am almost sure the 2014 election is TWO years away.

Yeah I agree and second term polls never are favourable as governments start to implement their true polIcies as they feel they have a mandate.Anyway I thought governments normally start to sell favourable mainstream policy if things get out of hand.
Can't help but think the writer of this article is secretely a left winger at heart or is sensationalising a possible scenario for effect.
In any case a labour/green government would be just as ineffective as the current one.New Zealand needs clever savvy management more than anything else.

Au CGT was introduced in 1985.
Assets owned before CGT was introduced,are exempt when sold.
There is roll over relief for farms.
If CGT is introduced in NZ,it must include the family home,as John Key suggests.
Otherwise it will be flawed.

Why must it include the family home? Or are you (like Key) simply scaremongering?

What makes you so confident that family homes will be excluded. Only rich pricks own their own home.

This highlights half the problem with discourse in New Zealand.

Too many on either side of the spectrum seem to see the other side as either "bludgers" or "rich pr*cks".

My parents own their own home but they are not rich pr*cks. They worked very hard and paid it off over a long time.

Then why would they see it as being unreasonable to be subject to taxation on the incidental gains they made on it from an increase in capital value? AKA what they didn't work for.

Im afraid we have lost the real John Key to political posturing. He knows what has to be done for NZs future but he will not do it because of political ego.

We desperately need John Key the man to lead us, not the politician. NZ is lost to MMP and the continuous fight to retain power via the vote.

When do you say we had a left wing govt?
We haven't.
Greens are so blue and labour is national, what is so left about that.

#8 stop moaning that poor tenants can't pay you in some cases .

If you can't afford the mortgage you shouldn't have more than one house, they were your financial decisions creating stress when you cannot pay your mortgage. Don't blame the person that was giving you money every month for shelter in houses you have only to build your wealth.

"In two years, John Key will be looking for a new career "...

You're too naive, Mathhew. John Key has had a new career lined up for some time, having done considerably damage to the country during his lightweight tenure.

Key's defining chracteristic is his inflated sense of self-esteem, allied to a burning ambition. Winston Peter is right. NZ has long been merely an entry on John Key's CV. He said he had no intention of ever being in opposition, an dhe has been planning his career moves since he was 12,

We are very small beer to this individual, which is why on every issue where NZers overwhelmingly polled one way, and Key the other (e.g. the anti-smacking legislation, the Marine and Coastal Area Bill, sneaking Pita Sharples off to New York without even letting the country know, on a virtually constitutional matter! - and now on the ludicrous nonsense of gay "rights' to marriage- the country IS against this ) Key simply endorses what the anti-the West UN asks for.

This PM has been even worse value than Helen Clark...NZ has lost under them both.

What rubbish!!.
Another person who shouldn't be allowed to vote

As dumb as JK has been recently over KDC, etc, he would really have to pull out all the stops to be even half as economically destructive as Helen and her 'Rich Pr*ck Hater' sidekick Cullen.

So, do you mean we are Labour will empty the cupboard further than they did under Helen?
Even the left of left thinking people will realise spending more than is earnt has caused the melt down here and though out the world. It is not fixed and we in NZ would be crazy to contemplate anything but very prudent control of the state purse strings.
Further in regard to property prices, the government owns for example the Hobsonville land being developed at the closed down air base, section prices are circa 300k min for 400sqm, is Labour going to reduce those prices to 50k? I doubt it.
Affordable housing is a tent by todays measure.

Capital gains tax will go some way towards eliminating those defacto landlords, that shouldn't through investing ignorance, be involved in residential investment property anyway.

You know the ones. The ones sucked in by snake oil sales people, ill informed friends that know nothing about property, real estate agents and other professionals with a vested interest and often a hidden agenda and so on.

The serious property investor will in my humble opinion not be affected by a capital gains tax as evidenced by overseas investors.

Finally the rorts promoted by some to use negative gearing, buy on the basis of the well proven falsehood " that property never goes down " and other such rubbish by many so called property experts who spout on about property and know very little, will hopefully be put on a permanant hold.

Here is the solution when a property capital gains tax is introduced and it will be sooner than later.

You don't sell. Very simple. You buy on yield and start to treat property like any other investment.

With the cost of material and labour costs going up, in due course there has to be capital gain but used wisely such as leverage for future purchases it will a invaluable tool.

The day you buy your property is the day you make your money so to speak.

Over 40 years involved in property I have seen so many people invest in rental property that should never had done so as an investment.

They simply did not know what they were doing, did not understand the cycles of property, had high debt to equity ratios, took advice from market reporters and real estate agents that was built on hype and persons that had no experience or involvement in investment property etc.

When they got burnt they squealed like a stuck pig and looked for someone to blame other than themselves.

They weren't investors. They were oppotunists and poor ones at that.

Greedy dreamers and part of the quick rich mentality.. Others were hard working mums and dad types sucked in by the so called mongrels selling syndicates and residential property scans. ie Blue Chip.

Banks didn't help either.. They lent money like there was no tomorrow. You know what I mean. lend you a umbrella and on a fine day, but as soon as it stared to cloud over they screamed for it back.

Investment property will always be a good long term investment if the simple basics of sound investment strategies are in place. Purchased via the brain and not the heart and without emotion plus with a sound knowledge and research base .

Personally I don't think a capital gains tax will be a mayor obstacle to overcome. A slight hic -up maybe and neccesitate a change of tax planning perhaps? For the serious investor who doesn't have all his/her investments in the one basket it will business as usual..

Investment property can be both a asset and a liability. What category your investment property falls into is much decided when you first purchase and the structures in place.

Bank managers, well meaning friends, many professionals and residential real estate agents in the main from my experience, know twiddly dot about residential propery investment..

Not everyone is suitable for being a property investor. Know the difference between a trader and a investor.

The Public Notice section of the paper will usually in due course identify the traders......

Finally why would any investor seek advice those that have never owned a rental investment or even bothered to learn about the business.

ie real estate agent investment specialist were a common advertising publication.

You call the agent concerned only to learn that he has had 6 months in real estate, didn't own any property and yet held him/ herself out to be a specialist and even worse in many instances as a expert.

Thank goodness for some logical unbiased rational commercial sense from an independent professional property investor willing to identify himself.

I'd be very interested to know why the person who says they dislike Max Percy's comments would say why they dislike them please.

Max you make a lot of sense - thank you for a reasoned addition to the debate. As a non expert, my feeling is that the CGT will perhaps discourage many if not all of those who you say should never be in the rental property business anyway. If this happens, won't a natural reaction be for house prices to drop substantially, since they (the amateur investors) won't be outbidding new home buyers at auctions as they are now? And isn't that a good thing?

Keep nailing your fellow Kiwis and before long central city street names will be in Cantonese. You are simply making it easier with all your CGT talk for foreigner purchasers.

The idea of property as an "investment" is very much a recent (late 20th century) concept. For most of the 20th century house prices were not something talked about and not considered anything special. Price charts resemble a worm crawling along the ground.

In 1925 an average house for an average-sized family on a quarter-acre section in a city could be bought for about three times a man's annual salary (3x £300). By 1970 an average house sold for $9000-10,000 (3x $3000).

The change in sentiment started in the early 70s when a short, severe bout of inflation in 72-74 caused houses to double in price in the space of a year or two. Things settled down again but by 1980 prices began to decouple from the traditional ratio of two to three times the pre-tax income of the main income earner as more people began to see houses as something that only ever go up in price.

Since then, a whole group of people calling themselves "property investors" or BTL (buy to let) has appeared on the scene - a group that has created an artificial demand by taking a large chunk of properties off the market.

Since 1990 prices have gone parabolic. This is despite only a 30% increase in population since 1970, despite ever-smaller houses built on smaller and smaller sections and despite a flat, unproductive and low income agriculturally-based economy at the bottom of the Pacific Ocean far away from the major economies of the world. And also despite NZ's abundance of land, natural resources and house building materials (wood).

Houses are now also priced in terms of "household income" rather than that of the principal full-time income earner, which is misleading given the increasing casualisation and temporary nature of work, not to mention stagnation of wages.

We're in the last stage of a mania. Housing is a necessity, like electricity and water, and should never be allowed to be controlled by the few for their own benefit.

It is well documented that cgt does nothing to house prices. It actually stops people selling because it crystallises on sale, encouraging people to hold and borrow against the gains getting the gains out but deferring the tax. Think about the effect of that. As always you put a bunch of such school teachers in charge and you get good social policy and lunacy in the finance department.

The answer to the housing affordability issue is supply of land and getting council service to developers under control. I'm up in Memphis at present and land here is valueless. About 2% of the house value. In Auckland its 45%. NZ just can't contemplate it, but if you chop up ALL of the near by paddocks and make it cheap and easy for developers.... Land drops in price. Not rocket science. Think about that Labour or National.

One of the obstacles now HM is that Councils are a part of the problem. I hear that the developer's contribution to Auckland CC for the Hobsonville development is ~$80,000 per section! And the consents for developing and building are on top of that (probably another $30-40,000 at least). The cost of the bare land is not the biggest problem to deal with.

More land? How about more high rises? Who said everyone needs a 1/4 acre? If you add more land then you increase all the issues of over stretching the transport routes and council infrastructure to meet the new far away demand. When will people start building more appartments nearer the cities and public transport rather than bang on about more land. We are a Third World country with everyone trying to live a First World lifestyle.

Thank goodness for some logical unbiased rational commercial sense from an independent professional property investor willing to identify himself.

Max Percy: CGT will just grow big property investors. Do you really think big corporations pay it?
Hosing Man: Making it more profitable (chopping up land) for developers is not the answer either. We have an influx of foreign property buyers which has been bringing up the Auckland land and house values.

We are seeing the most polarised main parties ever (only a few of the smaller parties are not hard up against the right) fighting each other like animals for power and more money. Throwing off the red cape and not even pretending any more to have any interest in middle-class and working-class NZ.
Russel "Ozzie" Norman is John Key in a river wearing gumboots and a wig.

Great provocative article Mathew and provoked some healthy debate. Keep it up!

Comment #19 is in praise of Max Percy's comments above

Max Percy's expert comments are timely and sage. The NZ property investment market is relatively uninformed, driven by hype and because it is open to amateur 'mum and dad' investors, it is sadly populated by as many (if not more) losers than winners! The introduction of CGT simply follows what has been a successful revenue 'earner' for governments around the world, but as Max points out this will not be a high hurdle for the professional investor.

Clearly a declining NZ dollar would have a profound impact on building costs inflation-which has been subdued for more than 5 years-but whether that would in itself prove to be a 'boost;' to house prices across the board remains to be seen. Of course the QV valuers would then need to 'ratchet up' their replacement cost valuations so the 'feel good' impact would encourage more people to "invest up" in the market. Building costs inflation may not be a key issue today, but the risk is just around the corner as tradespeople (who are scarcer than they once were) will surf the rising market! Add to that the possibility of a lower kiwi $ effecting input costs and heh presto the inflation wheel (the developers' best friend) turns around.

Historically interest rate 'costs' have been the lever used to check housing inflation and while we are fortunate to enjoy low interest rate costs, this cannot continue ad infinitum. A sudden fall in the Kiwi dollar exchange rate (albeit an unlikely scenario) would bring with it a number of unwelcome and unpalatable short to medium term consequences for every property owner and householder.

As Max rightfully argues, the long term investor will have done sufficient risk analysis (and the spotting of opportunities) to be ahead of the 'mum and dad' investors.

And the pigs fly!!!!

If Labour is in government buy more houses. Look what happened during their 1999-2008 tenure, house prices more than doubled.

Of course they did because look at how many houses their cabinet ministers owned. No government is going to take steps to make housing affordable because it will hit MPs in the back pocket.

#25 has the truth that Hooton forgot -- increasing personal tax rates makes it spectacularly more attractive to hold (note I avoid the term invest :D) leveraged rental properties.

In 2008 I had the fortune to be part of a briefing from the westpac chief economist of the day which showed how over 85% of the housing boom in that period was mathematically (not even statistically) attributable to the tax bracket increase from 33 to 39%

If this all happens as you suggest, our family will pack up and leave this popsicle stand.

What you think is good or bad for New Zealand depends on how much money you have today and how old you are. Do we run NZ with a speculative consumption bias or a job creating export bias. It's a debate that must be had.

The facts are our young people are voting with their feet. Baby boomers can discuss all the implications in the world but our population is getting dangerously old and our equity in our country dangerously low as exporters continue to shut down or move away as a result of the high dollar. No simple fix here by the way.

Democracy says we all have an equal vote in the future but right now through demographics it is biased strongly to the needs and wants of boomers! That's okay but don't expect jobs for your grandkids here...except pouring tea for tourists.

There are options that require a total realignment of the economy and that's what Labour is trying to communicate. It stumbles on messaging but get under the hood and start understanding the linkages and you will seethey have grasped the key issues IMHO.

For the record Mr Hooten I am not a member of the Labour Party. Many of the policies I have been pushing for a decade have now become become Labour's polices so yes of course I now support them.

Cheers, Selwyn Pellett

What a load of nonsense. You don't make a job creating export economy by burdening a country with bureaucracy, tax and regulations. That is all Labour knows how to do.

Your grandchildren's jobs will be determined by what you have taught them, not by politicians. They must be free to take their skills where they wish, otherwise they will simply be prisoners of their political masters, which is what the Left aspire to be.

Well done, Mathew Hooton, you have at least provoked some debate. However, mostof the above coments have failled to see your tactic and raced into the detail. he message is people "that unless Jonkey and his team actually start to focus on dealing with the structural issues in the economy they are gone". The question they must ask themselves is: "Do we control Auckland house prices at the cost of a high dollar destroying the export sector - the current situation - or focus on a more comprehensive set of economic levers that deals with the Auckland issue in a different way that does not decimate exports"? Seemingly a step too far for them.

Mathew's message is (I believe) that unless Jonkey lifts his game and focuses on that issue we will have a Labour/Green govt as a matter of course - that is the message in the massarge here.

Remember, in this country oppositions do not win elections - incumbent governments lose and hand power to the other side.

Right now Jonkey is losing.

Matthew Hooten's article is clever and a possible scenario - electoral oblivion happens to all parties - but still avoidable. Fortunately, David Shearer is yet to show real strenth of leadership, especially as he will quite easily full prey to the left wing. The sanctimonious and self-serving comments by Selwyn Pellett are typical of actual or potential Labour party funders. A 'total realingment' of the economy means more public spending on welfare, more tax on individuals and trusts in higher brackets and a return to the gut-churning political and social correctness of Helen Clark and her peers. Is this what New Zealanders really want? National MPs will need to be planning the next election now, for the sake of the prosperity of all of us.

I would not be surprised at all to see Simon Power as Prime Minister for Christmas 2013.

You people are completely ridiculous, starting already that the Labour/Greens are going to completely screw this country into the ground. They spent nine years in government and the sky didn't fall in. I find it disturbing that you are all so frightened that you won't be able to continue your extravagant lifestyles and powerful positions of influence if anything but the right-wing agenda prevails.

Free trade and deregulation have caused serious issues for this country, especially where poor and disabled people are persecuted and neglected while bureaucrats and top earners are getting huge pay rises, mostly for doing a sh*t job. Look at what our national anthem says about dissension, envy and hate - look at our society and tell me 30 years of these reforms didn't create these feelings in our society.

You can bullsh*t all you want. I live in the private rental market as a very unwell casualty of rape and ACC/mental health (I lost my house due to my disability) and I have been forced to move four times because houses are being sold to make a profit. Since I have been rotting on welfare for the past 10 years, unable to get the healthcare I am entitled to so I can get back to work, your taxes have paid to make other people money, while I still have no secure home and spend my days fighting for my rights and to avoid even more persecution by the authorities your taxes pay for who tell you they are doing their jobs - YEAH ,RIGHT!

We're not shares to be traded
We're not pawns in a game
We're not doing OK
And we're not the ones to blame!

Idiots run this country, controlled by greedy, selfish, short-sighted, ignorant, rich, powerful, bigots. The view from where I am being sh*t on left, right and centre is far more realistic than where this commentator is coming from.

Good on you New Zealand for being more concerned about money than making sure sexually abused women and children are getting the ACC, health, disability and justice services they are entitled to under law. I am ashamed and disgusted at what our country has become.

#32 - I truly feel sorry for the situation you now find yourself in.

However, it's hardly the current government's fault and if you think nine years of Labour and Greens didn't set NZ up for a major fall you're completely delusional.

After nine years of Auntie and Cullen, with them leaving a $1 billion hole in the coffers - just as the GFC arrived - you really need to extract your head from the sand...

Because it was the combined, cumulative effect of there being no funds remaining to do "anything" with - the GFC, then things like Pike River and soon after the earthquakes...

I imagine it must be difficult to get away from the victim / entitlement mentality you so expose. But eventually you should try - like this woman did - at Free Fall Experiences (Google it).

The sky did fall in, or did you not notice. Nine of the best economic years globally and Labour ran the coffers dry. If that isn't the sky falling in then I don't know what is. You should take the blinkers off and be grateful we had a National Party that pretty much successfully shielded NZ from the global crisis. Or don't you read, either?

Our problem of having no money is simply fixed. Get rid of overheads - ie, goverment must rein in spending. Every day we hear of millions have been wasted in one form or another. The level has now been reached where we are selling assets just to pay the interest bill. It's only a matter of time before we run out of assets.

If you're paying tax you're making money ... do the very basic math here muppets!

Trouble is, it's only the "productive" sector that pays real tax.

The likes of teachers and anyone working for a government department don't actually contribute to the overall tax take. Yes, their wages are taxed at the same rate as everyone else's - but their gross income BEFORE tax can only come from the taxes already paid by the productive sector. Their wages are taken from this overall tax collected.

So here in NZ we get failed teachers, union organisers and social policy advisers - all of whom have most likely never raised a cent of productive earnings towards NZ's income tax - and they think that gives them some kind of mandate to form a political party to try and run the country ... when they can't even run their yearly conference?

Does the Labour Party actually have anyone who has contributed to NZ's overall tax income? Or have they all just suckled on her overly-generous teets?

You left out hairdressers, clowns, used car salesmen, everyone who works in a service industry, Burger King, McDonald's, the Warehouse, day traders, landlords, finance company directors, Banksie, etc.

Basically, anyone not in the primary or the rapidly diminishing manufacturing sectors, such as policy wonks, spin doctors and bloggers.

PS: When you say "failed teachers", surely that means no longer teaching.

"Steven Joyce discouraged campaigning against MMP in 2011......His short-term calculation was almost certainly right."

Good old Mathew, still fighting the rearguard action against proportionality in the vote.

So his latest memo is 'see, this is what happens ... come the next election we'll see the most left-wing government since the last one I said was the most left wing since the last.'

'What the public doesn't understand and why their will should always be mitigated via electoral dampeners is that Government should be run on sound business principles and, as everyone knows, a business is not a democracy.'

The biggest overhead that we must get rid of is bailing out finance houses and banks and other failed private 'enterprises'.

A lot of the housing stock in NZ is quite old and few would disagree that most houses are obsolete in terms of energy consumption, design and changing demographics. Let these house hoarders have them. We need to be building simple, warm, energy-efficient apartments, upwards rather than outwards and with rooms that are suitable for small families, couples, singles and low-income earners (NZ is, infamously, a low-wage country, after all) and an increasingly mobile and casual workforce. Most of these apartment blocks would be owned by companies and rented out at reasonable rates - ie, not more than 25% of median pre-tax monthly income. It works well overseas. Can't see why it wouldn't work in NZ.