It was hardly a dream debut for Labour’s long-awaited, much-argued-over tax package for Aotearoa New Zealand.

What was meant to be a carefully choreographed reveal of a capital gains tax (CGT) later this week instead arrived early — leaked to RNZ over the long weekend and hastily confirmed by Chris Hipkins this morning.

In his media conference at Parliament, Labour’s leader downplayed the premature release, saying the details had been circulated widely and could have come from anywhere.

He delivered a stern warning to any leaker, but also said he was not interested in pursuing any sort of investigation.

That is sensible. History shows such hunts usually end badly. Just ask National about Jami-Lee Ross.

Still, the leak will be of some concern to Hipkins.

The party’s internal debate over whether to pursue a wealth tax or CGT has been long and bruising, with strong feelings on both sides.

RNZ understands the caucus vote for a CGT plan was near unanimous – but not quite. And the party’s ruling council and policy council were more divided again.

Hipkins needs those proponents of a wealth tax to now fall in behind the selected proposal.

Unity will be crucial if Labour is to sell yet another version of a policy it has repeatedly failed to convince voters to support.

Containing the risk
Labour knows the political peril of talking tax. It’s been burned before — in 2011, 2014, and 2017.

This time, the party has chosen the smallest possible target: a cautious CGT applying only to property sales, excluding the family home and farms.

The rate would be set at 28 percent, in line with company tax, and would apply to profits made after 1 July 2027.

National disputes the description of “narrow” but compared to the other options on offer, it meets the definition. This does not cover shares, KiwiSaver, inheritances, or personal assets, like classic cars or artwork.

In many respects, it’s little more than an expanded bright-line test — closely resembling the minority view of the 2019 Tax Working Group.

The strategy is clear: keep it simple and sellable.

Labour believes a modest CGT will be more palatable to the public than the more novel and ambitious wealth tax. Capital gains taxes are familiar overseas and no longer as frightening a concept as they once were.

Definition complications
But even the narrowest design can have complications. For example, look to the definition of “family home”.

Labour is using the definition used currently by the brightline test which requires a person to be currently living in that house “most of the time”.

It means that a person who owns just one house, but lives in a rental property elsewhere, would still be taxed if they sold that property.

Keeping the scope tight also limits revenue.

Labour’s own policy paper concedes the returns will be “small relative to GDP and total tax revenue” – roughly $700 million a year.

And almost all of that will go straight into Labour’s accompanying health policy.

The sweetener: A ‘Medicard’ for GP visits
In a bid to soften any political blow, Labour has paired the tax with a tangible benefit — a “Medicard” giving every New Zealander three free GP visits a year.

By tying its CGT to the health system, Labour hopes to frame it not so much as punishment for property owners, but more as a pragmatic way to fund something people actually want.

It’s no mistake that the policy touches the two issues named most important by voters in polling: the cost-of-living and healthcare.

Labour has also intentionally made the entitlement universal to ensure the widest possible appeal — even if critics argue the money would be better targeted to those most in need.

Speaking of the critics, government MPs were practically salivating today, having eagerly awaited this announcement as a potential turning point in the polls.

Labour’s rise in popularity has come despite having little in the way of a policy platform and the coalition hopes the tide will turn as voters look more sceptically at the alternative.

Finance Minister Nicola Willis branded the proposal a “terrible idea”, warning it would hit small businesses that own property.

‘Tall-poppy politics’
Act’s David Seymour called it divisive “tall-poppy politics”, while New Zealand First declared the rollout “a trainwreck”.

NZ First’s post on social media included a noteworthy kicker, describing the CGT as merely “a foot in the door” for the Greens and Te Pāti Māori.

Hipkins today tried to shut down that attack, claiming that Labour’s tax plan would be the next government’s tax plan.

But he received no assistance from his purported partners, with the Greens insisting they would not be relinquishing their advocacy for a wealth tax.

Expect more heat on that front as the election approaches.

RNZ’s latest Reid Research poll shows the task ahead for Labour: 43 percent in support of a CGT, 36 percent opposed, and 22 percent undecided.

That’s not exactly a decisive mandate – but it’s not dismal either.

After months of indecision, Labour is finally in the policy game.

This may not be how it had hoped to roll out its flagship policy, but the real test will be how well it can sell it over the coming months.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

Papua New Guinea’s Prime Minister James Marape is still confident of delivering the PNG-US Defence Cooperation Agreement despite the cancellation of US President Joe Biden’s visit, and the leaking of a draft copy of the confidential document on Tuesday.

He said PNG’s national interest was at the heart of the agreement, which was still expected to be signed on Monday in Port Moresby between himself and the US government leader or official who would step in for Biden.

Marape said yesterday the agreement that was leaked on Tuesday was still in draft format, and he would announce the finer details today following a cabinet meeting yesterday

By yesterday afternoon, the White House was still yet to confirm who would step in for Biden to visit Papua New Guinea.

Copies of the leaked agreement were circulated to PNG and regional media on Tuesday, with Radio New Zealand carrying it on its website the same afternoon.

Marape said the agreement would greatly boost PNG’s defence capabilities and provide key infrastructure in strategic air and sea ports.

“There is a lot of misinformation in the news release. I will announce to the country the upsides of these agreements on Thursday [today],” Marape said told the Post-Courier.

Still in draft form
“The agreement was still in draft form and we will discuss it fully at our cabinet meeting later today [Wednesday].

“I want to inform all that PNG’s national interest is the reason why we [are] elevating our traditional military relationship with USA to a higher and better level, including addressing the needs of our military, to upgrade and sea and airspace border protection.”

Speaking to the Post-Courier separately on Tuesday, and without making any particular reference to the US-PNG Defence Cooperation Agreement, Chief of the PNG Defence Force Major-General Mark Goina said budget support to the military over the years had been unsatisfactory.

“Such agreements with our bilateral partners are crucial in helping plug the gaps,” he said.

“We have devised plans where we have a budget put in place, in accordance to our needs, and based on that, we have identified where the gaps are, and that is where our partners are brought in, partners like Australia, New Zealand, US, China, India, UK and other partners we have relationships with.

“So they come and cover those gaps for us,” General Goina said.

“That’s how we have been addressing our budget shortfalls.

“And this will continue until such time, when we are able to meet our own needs satisfactorily.”

Pact yet to be finaiised
The 14-page agreement, a copy of which was also seen by the Post-Courier, will be finalised by the end of this week for signing on Monday in Port Moresby.

When signed, the agreement will work in line with all previous defence agreements between the two countries.

The draft agreement, titled “Agreement on Defence Cooperation Between the Government of the United States of America And the government of the Independent State of Papua New Guinea’, contains a total of 22 specific sections or articles, which deal with a broad range of issues.

The articles range from issues such as:

• the status of US personnel who will pass through or be based in PNG military facilities;
• access to and use of agreed facilities and areas covered in the agreement;
• pre-positioning and storage of equipment, supplies and materials;
• property ownership, security; entry and exit;
• movement of aircraft, vehicles and vessels; importation, exportation and taxes;
• driving and professional licenses;
• contracting;
• logistics support; medical and mortuary affairs, postal and recreational facilities and communications services; and
• utilities and communications; and o

Strategic specifics
The specific areas and facilities covered under the agreement include the strategically-valuable Nadzab airport and Lae wharf, the Lombrum naval base and Momote airport in Manus, and the Port Moresby seaport and Jackson’s International Airport.

Access to these strategic areas and facilities are covered in article five of the agreement, which states, in part, that: “The parties shall cooperate to facilitate the required approvals to enable unimpeded access to and use of the agreed facilities and areas to US Forces and US contractors as mutually agreed.”

“Such agreed facilities and areas may be used for mutually agreed activities including visits, training, exercises, manoeuvres, transit, support and related activities, refueling of aircraft . .” and others.

There were fears that the agreement would undermine PNG’s sovereignty, even though many similar agreements exist between the US and its allies around the world and the Indo-Pacific region — countries which still enjoy their freedoms and sovereignty.

Lawrence Fong and Gorethy Kenneth are PNG Post-Courier reporters. Republished with permission.

Article by AsiaPacificReport.nz