Category: Business

Source: Radio New Zealand

Central Wellington has the cheapest homes in the country, property data firm Cotality says, but Newmarket has had the biggest fall in values over the past five years.

It has released its end-of-year data, which it said showed a year of stagnation, with lower mortgage rates helping improve sales volumes but a sluggish economy and weak labour market keeping values down.

Chief property economist Kelvin Davidson said despite an extended “flat patch” for values, there had been activity happening.

“First-home buyers have remained very strong, hovering as high as 28 percent to 29 percent of overall purchasing activity, while 2025 has also seen a comeback by mortgaged multiple property owners.”

The data showed that Herne Bay remained the most expensive suburb in the country, with a median value of $2.6 million. It was followed by nearby Westmere and Ponsonby, at $2.2m, and Remuera at $2m.

Arrowtown and Tamahere, Waikato, were the only suburbs outside Auckland in the top 10 most expensive.

Greymouth had the biggest increase in prices over five years, up nearly 60 percent.

This was closely followed by Somerfield, Christchurch, and Hokitika, both experiencing increases of nearly 50 percent over the same five-year period.

Davidson said most of the places where prices had risen strongly were more affordable to start with, including rural locations, small towns, or lower-priced suburbs within larger main centres.

“There are two outliers, however, which are Jacks Point and Lake Hayes; both high-end suburbs in Queenstown, whose popularity among affluent buyers may have contributed to their stronger growth in 2025,” he said.

“Nowhere is booming but it’s all relative… Invercargill is a good example of that, too. Property has been moving quickly in Invercargill. There’s certainly a degree of resilience around Invercargill and that wider southern area.”

The biggest price fall in a year was in Oneroa, Auckland, down 7.9 percent in a year. It was followed by Omaha down 5.7 percent. Atawhai, Nelson was the only non-Auckland suburb in the top 10 lowest value movements.

Newmarket had the biggest fall in prices over five years, down 15.8 percent, followed by Te Aro down 15 percent and Petone down 13.2 percent.

Wellington central was the most affordable region this year, with a median value of $318,706, followed by $353,942 in Taumarunui, $365,347 in Westport and $365,657 in Auckland Central.

Davidson said Wellington central was affected by being an “apartment market”. “Apartments just carry lower values than standalone houses. I’d put most of it down to the composition of the market … but there is a role to play for the downturn in Wellington.

“Wellington central was priced a lot higher four or five years ago. Wellington, let’s face it, has been a pretty soft market.”

He said the only suburbs included were those with at least 1000 dwellings so there could be smaller parts of the country with lower values again.

He said Auckland was notable in that it had most of the highest-value suburbs but was also home to some of the weaker performing areas.

“There is still an affordability challenge in Auckland and the fact that housing is still a bit of a stretch. You’ve had a sluggish sort of economy and economic confidence around Auckland, as well as a decent supply pipeline still coming through.

“All those things are consistent with each other. So you can have high value real estate, but of course, the flip side of that is that affordability is still a challenge, and that’s been a handbrake on growth this year.”

He said the question now would be what happened next year.

“There seem to be those fundamentals coming together for a bit more growth in prices, but maybe not a fresh Covid-style boom.”

Rents had generally been soft through the year, he said.

“Given the continued decline in net migration, we’ve also seen rents have weakened this year. There have been outright falls in markets such as Auckland, Wellington, and Christchurch which don’t happen often, so it’s been a tricky period for any investor looking to boost their income. Of course, it’s been a more favourable period for tenants.”

Renters in Gladstone, Invercargill, had the biggest increase in rents in the year, up 18 percent, followed by 17.3 percent in Waipawa, and 16.9 percent in Timaru. Long Bay in Auckland had the biggest rent drop, down 17.1 percent, followed by Hilltop in Taupō down 13.8 percent and Ngaio in Wellington down 13 percent.

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Source: Radio New Zealand

The Financial Markets Authority (FMA) wants financial institutions to learn from each other when it comes to doing the best by their customers.

The FMA’s review of reviews provided by 10 deposit takers and 10 insurers was expected to be treated as an industry guide for continuous improvement, without creating any new legal obligations.

“When financial institutions proactively review products and services, they can identify and respond to consumer harms, and help promote improvements in the provision of financial services that meet the needs of consumers,” FMA executive director of licensing and conduct supervision Clare Bolingford said.

“There’s a developing area around action-tracking. So it’s great to have done the review, but are you following it up and are you making sure that you’re fixing any issues that you found?”

She said the insurance firm, Tower, was an example of a company that self-reported a mistake in overcharging customers more than $11 million, but then failed to fix the problem in a timely manner.

“It really hammers home how important these reviews are, not just in terms of conducting the reviews in a timely way and finding issues, but also making sure those issues are addressed quickly so that harms don’t occur in the future.”

The FMA ended up bringing a civil case against Tower over its failiure to fix the problems quickly, which resulted in it being fined $7m for misleading and overcharging 61,000 cusotmers.

“It’s important that firms get on top of these things quickly. We know mistakes happen. Errors are going to occur. It’s about how you fix and address them, and then communicate clearly with people that builds trust with the industry and to make sure that customers get a good deal.”

She said companies should also do more to settle disputes with consumer.

“We saw some good practice around the use of complaints and speaking with different stakeholders, but felt the dispute resolution services were overlooked as a source of insights as well.”

Bolingford said accountability and oversight was also something that needed attention.

“Strengthening governance and board reporting to ensure accountability and oversight is key, as is improving consumer communication strategies to build trust and transparency,” she said.

“And finally, companies should ensure they have established clear processes for tracking and implementing review outcomes, including post-review monitoring.”

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Source: Radio New Zealand

Wholesale rates are getting the blame for the fact that two weeks after the official cash rate was cut, one major bank has increased some of its fixed-term home loan rates.

Westpac said on Tuesday it was increasing its home loans over two- to five-year terms by 30 basis points.

That takes a two-year fix to 4.75 percent.

At the same time, it is reducing its six-month rate by 20 basis points, to 4.69 percent.

Before the latest OCR decision, wholesale markets had virtually priced in one more cut.

So when the Reserve Bank indicated it thought another cut might not be needed, wholesale rates ticked up.

Westpac said wholesale rates were 40 basis points higher than they were the day before the OCR announcement.

Infometrics chief executive Brad Olsen said there was a chance that the wholesale rate increase was a bit of an overreaction.

“You look before the Reserve Bank’s announcement in late November, you know, markets were keen on another cut. Not fully, but leaning in that direction. Then with the Reserve Bank’s nonchalant, through-the-middle view of ‘look there’s not probably a lot left in the system’, which is not too dissimilar to what they said before, markets have gone ‘oh it’s time to start thinking about the up’. It does seem like a bit of a reversal of position there. I do worry a bit that the markets have shifted pretty quickly from one to the other.”

He said people might be confused that the OCR had fallen while retail rates had risen, but there had never been a direct correlation. “We’re now at the turning point where you’re starting to see adjustments across the board.”

It would be interesting to see what other banks did, he said. “Does everyone follow because they’re facing the same sort of pressure but no one has moved yet? Or do you see a few banks go well actually maybe I have to make an adjustment but maybe not the full adjustment because then I drive a bit more of a wedge between me and other offers. It’s not clear what it means for the entire market yet.”

It had been noticeable that there were not major rate movements before the OCR, he said.

There may still be room for banks to absorb some increase on wholesale margins.

The main banks have a net interest margin of about 2.4 percent or 2.5 percent, roughly the same as they had a year ago but higher than the 2.1 percent KPMG reported them having in 2019.

Simplicity chief economist Shamubeel Eaqub said it could mean a “rubbish” Christmas for retailers if people were worried about rates rising again, and the Reserve Bank might have to cut again in February. He said other banks would probably follow. “The great mortgage war taught them not to compete on price – no changes in market share and a drop in profits.”

Commentators have been saying for some time that it could be worth considering a longer-term home loan fix because rates might be about as low as they would go.

Late last month, ANZ’s economists said it was too soon to say with confidence when rates might start increasing.

“The key point for now is that wholesale rates have stopped falling. Competition is clearly hotting up, with banks offering cash incentives to switch and that will be welcome news to borrowers,” they said.

“But when it comes to which term to select, our broad thinking remains as it was a month ago: we believe mortgage rates are likely at or near their lows, and that it is thus worth considering longer terms. With very little separating rates spanning from one to five years, borrowers with differing levels of risk appetite should be able to find a term that satisfies their own cost/certainty trade-off sensitivities.”

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Source: Radio New Zealand

• Insurance company Tower penalised $7m for misleading customers over discounts
• Multi-policy discounts not applied for about 61,000 customers, overcharging of $11m
• Tower agreed with regulator in 2017 to fix systems, but overcharging continued until 2025
• Deficient systems blamed for not applying discounts
• Tower paid close to $12m to affected customers

Insurance company Tower has become the latest financial services company to suffer a multi-million dollar penalty for misleading tens of thousands of customers and financially costing them.

The High Court has penalised the company $7 million for more than a decade of overcharging customers because it did not properly apply multi-policy discounts.

The civil case was brought by the Financial Markets Authority (FMA) as it continued mopping up historic breaches by insurance, finance, and insurance companies of misleading fair trading laws.

FMA head of enforcement Margot Gatland said Tower’s systems were deficient, despite an agreement with the Commerce Commission as far back as 2017 to fix them.

“Tower used the advertised MPDs (multi-policy discounts) to attract and retain customers, without having systems that could reliably deliver on the promised discount.”

Agreed to fix problems, but overcharging continued

Tower self-reported the breaches in 2021, but despite its previous undertakings the overcharging went on until early this year.

About 61,000 policy holders with more than 90,000 policies were overcharged, with Tower repaying more than $11.7m to affected consumers.

The judgment said Tower was justifiably critical that the previous settlement with the Commerce Commission was intended to ensure that Tower sufficiently invested in and maintained adequate systems and processes to ensure any MPD was applied correctly.

Gatland said the FMA would continue to promote “fair, efficient, and transparent financial markets”.

“Confident participation in New Zealand’s financial markets can only exist if an intrinsic level of market integrity exists. This is why we continue to respond to fair dealing breaches like this.”

Over the past five years the FMA has taken action against 10 banks and insurance companies for misleading and overcharging customers, resulting in penalties totalling tens of millions, repayments of more than $200m to about 1.5 m customers.

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Source: Radio New Zealand

Taranaki-based Egmont Honey is finding global success with its brand of manuka honey despite being late to the expanding market.

Egmont Honey, established in 2008 by Toby Annabell and his son and chief executive James Annabell, had 4000 hives producing product for sale in more than 40 countries, with stockists in North America, Europe, Asia and Australasia, including retail giants Costco, Walmart, and Aldi, and a private label business with China’s Huatai.

James Annabell recently took away the EY master entrepreneur award in recognition of Egmont’s global success.

“We’ve always done things a little bit different. Everybody told me I was a little bit late to the market, but that was a red rag to a bull,” he said.

“So, we’ve conquered many, many markets. We’ve cut out brokers, we’ve cut out distributors, we’ve gone direct to retailers. And it’s worked for us.

“We’re extremely profitable when a lot of our competition are not.”

Annabell said Egmont Honey’s story is a New Zealand story.

“I really love telling the New Zealand story, talking about our region, and taking what is a uniquely New Zealand product to the world.”

He said the company had plenty of growth potential.

“We’re going to keep going. I think we’re probably number two or three in the market right now. Our goal, of course, is to be number one. And you know, our mantra is manuka for all.”

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Source: Radio New Zealand

A new survey shows overwhelming support from New Zealanders for mandatory pay gap reporting.

The survey from STILLMindingTheGap.nz, an organisation campaigning for gender pay equality, spoke to more than 1,000 people, and found 74 percent thought medium and large employers should measure and publish their pay gaps

Yet many businesses were falling behind, with 40 percent never having analysed their gender pay gaps.

STILLMindingTheGap.nz said out of 95 percent of organisations that already held the data needed for pay gap reporting, only 43 percent had up-to-date pay gap calculations.

Organisation spokesperson Dr Jo Cribb told Morning Report the survey supported the campaign for government action to close gender and ethnic pay gaps.

“I don’t think I’ve seen a policy that has more universal support, if you include those who are neutral 84 percent of us are expecting that medium and large employers will be required to publish their pay gaps,” she said.

“Not surprisingly women are more concerned that men but interestingly if you dig into the detail for some reason Aucklanders are really keen and not again not unsurprisingly, younger workers are too.”

STILLMindingTheGap.nz had a members bill which would make it compulsory for businesses with more than 150 employees to report their gender pay gap.

“Should 61 MPs support it it will get its first reading,” Cribb said.

Cribb said when businesses are required to report their pay gaps publicly it drives change.

“There’s a huge groundswell out there for pay gap reporting, so that we know what our employers pay gaps are, we can make decisions, we can choose whether we buy from them we can choose whether we work with them,” she said.

“Also publishing the pay gaps has been done internationally, all of the EU nation states, 50 percent of the OECD have required medium to large businesses to publish their pay gaps and the gender pay gap as a result has dropped by 20 to 40 percent, so who wouldn’t want that.”

The gender pay gap was 5.2 percent in 2025 but was much worse for some ethnic groups – 12 percent for wāhine Māori, almost 16 percent for Pacific women and about 10 percent for Asian women,

STILLMindingTheGap.nz said.

It said the media and finance sectors had the worst record, each showing a 15 percent pay gap along with professional services. The female dominated healthcare and education sectors had

gaps of 14 percent and 13 percent respectively, while the male dominated wholesale industry also has a 14 percent gap.

Cribb said it was important to celebrate the businesses that had started publicly reporting their pay gaps.

“More than 100 businesses have voluntarily reported their pay gaps through the Mind the Gap registry and all members of Champions for Change – a collective of over 80 CEOs and Chairs from major organisations including Air New Zealand, NZ Post, NZ Rugby and Ports of Auckland – are required to publicly report their gender pay gaps.”

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Source: Radio New Zealand

– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand

Source: Radio New Zealand

Multinational food ingredients brand Langdon, is expanding in New Zealand with a more than $15-million development in Drury.

Langdon, which has a distribution presence in seven countries, commissioned industrial property and construction company, Calder Stewart, to build the 3,500-square-metre (sqm) facility on a 361 hectare site at South Auckland’s Drury South Crossing.

The warehouse would have more than double the capacity of the business’s previous site.

“Younger consumers are reshaping the country’s eating habits at an accelerating pace,” Langdon NZ country manager Kenny Pihema said.

He said the ingredient warehousing and distribution facility was responding to a surging New Zealand demand for third culture cuisine and Gen Z’s evolving interest in foods popularised on social media.

Third culture cuisine referred to dishes created by people raised between two or more cultures who blend their family heritage with the food traditions of the country they grew up in to produce entirely new flavour profiles.

Pihema said many young people come from multicultural households and want flavours that reflect their blended identities, which was driving demand for global spices, botanicals and natural powders.

“Gen Z are the first generation to discover new flavours online rather than at home. Many of them are trying chillies, spices and global cuisines for the very first time through TikTok, food challenges and multicultural friend groups.

“That discovery loop is completely different from older generations and it is rapidly reshaping what manufacturers need.”

He said fusion flavours were showing up in restaurants and ready to eat meals.

“New Zealand food manufacturers and exporters are among the world’s most innovative however, they need access to ingredients that simply were not part of the country’s pantry a decade ago. This expansion is a direct response to that,” he said.

Pihema said global heat challenges, spice tastings and cross-cultural food trends amplified through social media have pushed named chillies, heat profiles and new aromatics into the mainstream.

“Heat is exploding at the moment, Gen Z are driving the chilli culture and experimenting at a scale we have never seen.”

Langdon’s Australian pantry offered more than 2,500 ingredients.

“Thirty years ago when we first launched in New Zealand, we offered less than a handful of chilli varieties.

“Today we supply more than 30 different formats and varieties. The pace of diversification is extraordinary and it is being driven by consumers who want global flavour experiences.”

Calder Stewart North Island development manager Sam Smith said Drury offered clear commercial advantages for a project of this scale.

Langdon Ingredients had signed a long-term lease on the new 3,000 sqm warehouse and 500sqm office and canopy at Drury, with construction beginning in March and completion scheduled for November next year.

Smith said the building included a controlled aromatic zone and humidity management systems to prevent flavour contamination between spices, coffee, botanicals and other sensitive ingredients.

“When you are working with ingredients like chillies, spices and coffee you cannot risk aroma transferring into a dairy or bakery input. The separation zones and climate control ensure product integrity and support the kind of innovation manufacturers are now delivering,” Smith said.

Drury fast developing with strong demand

“A similar build in locations like Mangere, Wiri or East Tamaki would cost around 30 – 40 percent more in annual rent,” Smith said.

The Drury South Crossing precinct has become one of the country’s most active industrial zones, with Calder Stewart currently developing facilities for major occupiers Briscoes Group and Wesfarmers subsidiary, NZ Safety Blackwoods.

The Drury’s large format retail sites were 77 percent conditionally sold to big brand name retail stores including [https://www.rnz.co.nz/news/business/578602/auckland-to-get-a-second-costco-store

Costco Wholesale], Rebel Sport/Briscoes and Harvey Norman.

“The new site sits on a high-profile corner with access for distribution and room for future expansion,” Smith said.

“The facility’s higher stud height gives Langdon Ingredients significantly greater cubic capacity than its Mount Wellington site, aligning the local operation more closely with the company’s larger flagship Australian warehouse.”

Smith said there was strong demand for development on Calder Stewart’s land holdings in Drury, with about seven hectares of developable land remaining.

“We’re in discussions with a range of both long term tenants and owner occupiers, with requirements from 3,000 square metres to over 20,000 square metres. As interest rates ease and construction costs stabilise, we expect activity to lift even further,” he said.

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Source: Radio New Zealand

A Christchurch man has ditched his home insurance after his premiums went up by more than 30 percent a year – or by $1000 – based on new risk pricing.

Tower Insurance has taken into account the risk of sea surge and landslips for the Burwood home, as well as earthquakes and flooding.

But Trevor Taylor says his home is several kilometres from the sea, and he can not understand Tower’s sea surge assessment.

He has challenged that assessment, but said the insurer will not budge.

Taylor has asked to the see the evidence used to assesses his property, but Tower has refused to release specific information.

Taylor told Checkpoint he thought the odds of him being caught up in a sea surge were close to zero.

“They are doubling down and saying ‘no, I am at risk here’ and I just think it’s a load of rubbish.

“If you actually look at the journey where the water would have to go, it’s actually quite ridiculous.”

Taylor said he had done his own research into the journey the sea surge may take to get to his property.

He said it involved the water travelling up an estuary and a river, bursting through stop banks, and travelling uphill past houses before it reached his home.

While Tower had told him that its risk assessment was based off close to 200 million data points, Taylor was sure his own research negated some of the company’s findings.

“I’ve done a bit of my own research and according to the Ministry of Environment, storm surges rarely exceed 0.6 metres on open coasts around New Zealand.”

The Ministry of Environment noted that surges can be higher in some estuaries and harbours, with the largest recorded a 0.9 metre storm surge in Kawhia Harbour in May 2013.

Taylor said he thought Tower was overestimating the risks.

He said he had filed a Privacy Act request, asking for all the information Tower had on his property, but was refused based on the grounds it was commercially sensitive.

“I’d actually like someone from Tower to get out of their ivory tower in Auckland and come down and we’ll drive around and have a look and I can just show them how ridiculous it is.”

Taylor said he felt there was a disconnect between Environment Canterbury, the council and government agencies, as he struggled to find a uniform set of data to base the risks upon.

“I think risk pricing is fair, the thing is, I think they’re actually making up the risk.”

He said a government body should have a responsibility of investigating risk assessments by insurance companies if people felt they were wrong.

“The government or local councils can work together and then they could figure out ways to mitigate these hazards.”

Tower said in a statement that the high sea surge risk rating given to Taylor’s property reflected the likelihood of flooding through nearby water systems, including the Avon River, Travis Wetland Nature Heritage Park and Horseshoe Lake.

“If a storm coincides with high tides, water levels can rise, and waterways can carry water many kilometres inland, causing flooding during a sea surge event. Our assessment is consistent with the Christchurch City Council’s flood map which notes the property as being in the council’s flood hazard management area, with a one in 200-year flood risk.”

Tower said fewer than 10 percent of properties with higher sea surge or landslide risks would see an increase in the natural hazards portion of their premiums. A third of those would see a premium increase of less than $100 a year, and the majority would be less than $300 a year.

“For some customers with significantly higher risks, the natural hazards portion of the premium will increase by more.”

Tower would not release detailed data because “it would not help customers understand the risks”.

“For example our sea surge model considers a range of different historical and possible tidal heights within storm scenarios – sharing this detailed data would not help customers understand their risks. It is also commercially sensitive. Instead, we simplify this information into a risk rating, which represents our evaluation of the insurance risk for a property based on this data.”

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Source: Radio New Zealand

Happy birthday, GST. You probably pay it every day – 70c or so on a bottle of milk, $150 on an airfare.

But did you know the tax, which is applied to almost everything you buy, has turned 40?

This December marks 40 years since the law changed to allow Goods and Services Tax (GST) to be introduced in New Zealand. It took effect the following October.

Alan Bullot, a GST expert at Deloitte, said there was a lot to celebrate about the tax.

“New Zealand certainly wasn’t a trailblazer, but the GST legislation we brought in in New Zealand is seen universally as almost being best practice from a tax design point of view.

“It has a broad base that has very few exceptions and it just gets on with the business of what the tax is supposed to do, which is collect some money for the government to go off and do what the government needs to.”

He said when GST was first introduced in New Zealand, about 30 or 40 countries had a similar tax.

“Now, it’s the vast majority of countries other than America that have a national GST or VAT regime.

“Governments just love GST or VATs because they can forecast its collection a lot better because it functions over the whole economy. It’s a test of what the economy is doing.

“If you think about company tax, if I make a profit Inland Revenue can say ‘you made a $100 profit in the company and 28c is coming in’. That’s great, but if I’ve made a loss for two or three years, even if I made a profit of $100 this year the government might not get anything because I’ve got to go through my loss that’s in there.

“It’s much harder for the government to forecast exactly how much money will be coming in from income tax.”

More change coming?

Over the years, the rate has lifted from 10 percent to 12.5 percent to the 15 percent we now pay.

Bullot said it had also had to keep up with technology.

GST now applied to almost all international purchases imported into New Zealand.

“If you think about 1985, you might have heard of a CD. You may have seen a CD, that would be the pinnacle of music. You would have had a Walkman, you certainly weren’t able to download endless amounts of songs from overseas, you couldn’t download any movies.

“If you wanted to order anything online you couldn’t. If you wanted to order something from overseas that would have been pretty difficult… it was just so different in terms of the way that things would operate.

“The fundamentals of GST haven’t changed, but it has had to keep adapting to the economy it operates in.”

Every so often, there are calls for GST to be taken off things like public transport or food. Bullot said that was possible, but there would be drawbacks.

“Every time you do that, you add a bit of additional complications for businesses that are having to deal with it. And more to the point, if you’re not collecting it here, where are you collecting it?”

Bullot said Australia had more exemptions than New Zealand, but had been discussing whether to increase its coverage.

Treasury recently calculated that if nothing else were to change, GST might have to increase to 32 percent to cover the cost of an ageing population.

Bullot said another option would be not to have income tax but to charge a much higher rate of GST.

“Would people accept the doubling of GST?”

He said he could not see a future where GST was not a very significant part of the tax take.

“I think that it will stay that way. I think it is unlikely for it to increase from this rate from a practical political perspective. I think it is much more a case of we just need to keep making sure that it’s fit for purpose.”

He said Inland Revenue should change the rules if GST was not working as intended over time.

“I think Inland Revenue needs to be able to use that power perhaps a little more frequently sometimes rather than us going into sort of long technical debates… Sometimes we should just say what’s best for ‘New Zealand Inc’ and let’s move on.”

He said it was notable the level of GST tax debt had also increased recently and the government would need to continue to take action on it.

“I think it really needs to be a focus, because GST isn’t working if we’re getting information on returns but no cash. GST’s job is to collect large amounts of money in a consistent manner for the government, for the government to do the government’s programmes with the least amount of economic damage to the country in terms of compliance costs, uncertainty…

“Businesses can work around odd rules as long as they can see that they’re going to be there and they’re not going to flip and change.”

Is the tax regressive?

A major criticism of GST is that it is regressive because lower-earning households tend to spend more of their money, and spend more of it on things that attract GST.

Bullot said when the tax was introduced, benefits were increased to help cover the cost. He said the tax might not be as regressive as some people worried.

“When you look at what people in the lower incomes are spending their money on, a lot of it is residential rent, which is one of the big aspects that doesn’t have GST charged on it.

“Whereas if you are going out and you’re lucky enough to be in the financial position to buy a new house, for instance, when you’re buying that new house off the developer and say that was $500,000, you’re paying them $75,000 GST on top of that.”

Financial services and rent were some of the few things exempt from GST.

Could we introduce a tax like this now?

New taxes tend to be politically difficult. Bullot said the environment was different in 1985.

“It was coming in as part of a range of things… the floating of the New Zealand dollar, deregulation, we had a wage price freeze not many years before that, we’d had carless days and the GST coming through was just another one of those things.

“There was some pushback ,but not massive amounts, and there were significant cuts in the top rate of income tax.”

Good sales pitch

Infometrics chief forecaster Gareth Kiernan said it helped that the tax replaced other complicated sales taxes, and happened alongside income tax cuts.

He said income tax was almost 75 percent of the tax take in March 1986, and that had dropped to 69 percent in June this year as the share of GST lifted to 24.4 percent.

The top income tax rate dropped from 66 percent two years later.

“The pre-MMP political environment was such that large changes could be made relatively easily, whereas political policy now is often very much about compromise between the various parties in the governing coalition.

“Interestingly, the yearbook also notes reviews in 1967 and 1982, both of which recommended greater reliance on indirect taxes, with mention also being made of the need to reform existing indirect taxes – so it wasn’t like GST was something that came completely out of the blue.

“I can’t comment on the sales job that Labour did around introducing GST in the 1980s, but it must have been reasonably good, given that the party was re-elected in 1987.

“Perhaps an analogy can be drawn with the current (longstanding) debate about capital gains tax. From an economist’s point of view, a move to tax profits on property more fully is a positive, because it means that person who has lots of money and assets would then be taxed more fully than currently, compared to the low-asset wage-earner who doesn’t have the ability to tap into these tax-free gains.

“It seems to me that the problem is in the sales pitch, which for the last six years has been ‘here’s a new tax’, rather than ‘this tax change will enable us to reduce income tax for the 80 percent of the population who aren’t property investors’.

“But even with its recent announcement, Labour was finding new ways to spend money from the additional tax, rather than just looking to make the tax system fairer.”

Economist Shamubeel Eaqub said he thought it would be possible for a government to do something similar with a tax on capital.

“It will happen with the political calculus of bankrupting our grandchildren forces us to.”

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand