Change Tax Policy and Control Banks for Affordable Housing, says New Economics Party

January 31, 2013

Media Statement

To get affordable housing we need a tax policy which favours investment in productive enterprises not housing, says the New Economics Party.

“If we don’t control capital coming into New Zealand and then don’t stop it going into housing through our tax policy, it's no wonder we have a housing bubble in Auckland”, said Deirdre Kent, spokesperson for the New Economics Party. “And if we let the banks lend 100% on housing, we are asking for trouble.”

Freeing up land and changing the Resource Management Act is not working, she said.

“Banks are pushing money onto buyers and we effectively have a bubble which will eventually collapse. Wealthy Chinese are buying here to get their money out of China where they are clamping down on corruption. A lot goes into real estate."

No progress will be made towards affordable housing until land tenure is separated from buildings, according to the New Economics Party. Spokesperson Deirdre Kent said “Until we impose a full ground rent - which can replace income tax as a source of revenue for Government - we won’t get any progress."

She said that when homeowners just have to pay the price of the building, the price of the home is halved. “In Auckland where land is on average 60% of the property price, the price would drop even further if a full ground rent was imposed.”

“When property prices rise, it is almost solely because the price of land rises. Generally, the price of the house doesn’t rise. When the public captures the windfall from rising land prices instead of the banks and the private owners house prices will be finally contained,” she said.

She said some Auckland leasehold land fetched a ground rent of 5% of land value at auction and this money should really be public money because it is the public who has paid for the services to that land in roads, schools, sewers and businesses.

“Others have recently been proposing solutions to affordable housing but they are just tinkering around the edges.”


Hordur Torfason, democracy activist from Iceland to visit New Zealand

New Economics Newsletter Jan 26-2013
1.  Hordor Torfason is coming to New ZealandYes we know there is a permaculture hui in Taranaki 9-11 March and then there is WOMAD after it. But here is something really relevant to our policy we will support. Hordor Torfason is coming to New Zealand. Never heard of him? I hadn’t either. Well he led the protestors in Iceland and forced the whole government to resign. They nationalised the banks. They pushed the losses on to the bondholders not the public. Paul Krugman said “A funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver.”Not only did Paul Krugman approved but the IMF changed its tune and said the “decision not to make taxpayers liable for bank losses was right”.http://www.washingtonsblog.com/2012/08/top-economists-iceland-did-it-right-everyone-else-is-doing-it-wrong.html. Krugman also says: A funny thing happened on the way to economic Armageddon: Iceland’s very desperation made conventional behavior impossible, freeing the nation to break the rules. Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver. The size of the problem was huge. Banks had defaulted on $85 billion. They arrested nine bankers and the former Prime Minister. 200 criminal charges were laid on the bankers, many of whom had fled the country. Anyway here’s what you can do. Go to the Facebook page http://www.facebook.com/HordurTorfasonNzTour?fref=ts where you can link to all those sites, including to the pledgeme site where you can support his tour. He will be in Auckland on March 18 and 19, Wellington on March 20, Hawke’s Bay on March 21st, Golden Bay on March 23, Nelson on March 24th, Christchurch March 25-26 and Dunedin 27-28.Hordur Torfason, we understand, is primarily a democracy advocate. We are undertaking as a party to prepare two reports to brief him, one on democracy in NZ, and one on banking in NZ. If you would like to participate in preparing these briefs, or have ideas for people we must consult, please email Deirdre at deirdre.kent@gmail.com or phone 06 364 7779 or 021 728 852.Please also help in the publicity for this event through Facebook, twitter, google +1 etc. You can email lisa.er@the awareness party if you can think of an organisation which should be involved in publicity. Thanks!2.There is an Economics of Happiness conference between 15-17 March to be held in Byron Bay, 772 km north of Sydney. Cost $250 AUD plus accommodation. See http://www.theeconomicsofhappiness.org/3.If you would like to participate in developing policy you will need a special yammer email, which can be generated by Deck Hazen. Please email Deck.hazen@gmail.com to let him know you are interested. This is an excellent site.4.Permaculture in NZ Annual Hui in Taranaki March 9-11 2013 Taranaki is hosting this year's national Permaculture Hui, and they picked the March date so you can stay on after the hui to take in some of the post hui events. Get together with people of like mind and find out what is happening in the permaculture community. Accommodation includes cabins (limited), dormitories, marae-style, and BYO camping, with a maximum capacity of 250 people. There are other accommodation options nearby. The theme of the Hui is “Upskilling", with an emphasis on practical workshops. There will be a wide range of talks and activities, including a strong matauranga Maori presence. We aim to appeal to both the novice and the seasoned permaculture practitioner. There will also be lots of connecting with people, networking, and having fun!      
 
   

The challenge of sharing the use of the commons by tax policy

Recently a friend who was writing a document for an organisation who is planning a new New Zealand asked me for a brief contribution on the commons.  Here is what I sent him: Nature has provided the land we live on. This is the Commons we share by birth and everyone alive should have an equal right to access their share of the Commons. But everyone can’t occupy the same piece of land. Those, therefore, who use the best land should compensate the rest of us for the privilege they enjoy. Henry George, Pierre-Joseph Proudon, Silvio Gesell and even Winston Churchill argued that work should be untaxed and the monopoly use of land should be taxed. The rise in land value as a result of government built infrastructure, the arrival of shops and businesses and organisations should be publicly captured. This income should be shared by all levels of government and some redistributed as a Citizens Dividend. The tax on land value is simple and cannot be evaded as you can’t hide land. The problem these days is finding a politically acceptable method of doing this. Property owners already pay a mortgage and rates and won’t accept a third payment on their land. Moreover it is the banks who capture a significant part of the rise in land value. Yet we must face this political challenge. The gap between rich and poor will keep widenening when we have a tax policy which favours landowners who reap unearned profit. Other parts of the commons should also be shared. Private enterprise should not include private ownership of the elements of life. Everyone by right should have access to land, water, airwaves, fisheries, minerals, electromagnetic spectrum, any public utility such as a port, airport or the monopolistic rights to reticulate wires, pipes, roads and rails. The principle is that we should pay for what we hold or take but not for what we do or make.