Analysis: Battle lines are once more being drawn in the seemingly never-ending debate over the capital gains tax (CGT). But what the public might not realise is that a number of participants have a vested interest in that debate. The annual register of MPs’ pecuniary and other interests reveals that a number of politicians who oppose the tax could be personally affected if the CGT were implemented.
National leader Simon Bridges has been a fierce critic of a possible CGT, warning last year that it would increase property prices and was “bad for our country”. He’s promised to repeal the CGT if passed, and called it a “tax on small business owners and entrepreneurs”.
One of those business-owners appears to be Bridges’ wife, Natalie Bridges, who is the director of EHJ Property Limited, a property investment firm focused on commercial real estate. The parliamentary register lists a commercial property in central Tauranga as one of Bridges’ interests, which it notes is owned by the company.
EHJ was incorporated on September 29, 2017, just under a week following that year’s election, and only a few months before the race to replace Bill English as National leader began. Bridges and his wife own 50 percent – or 600 shares – each in the company.
Bridges has further financial interests in property through his one-man, private superannuation scheme, St Catherines. Through it, he owns an apartment in central Wellington and another in Parnell, one of Auckland’s most expensive suburbs, along with his family home in Tauranga.
As with Simon Bridges, Amy Adams appears to be the very kind of business-owner and investor she fears would be hurt by the tax.
Equally scathing about the CGT has been National Party finance spokeswoman Amy Adams, who has argued that it makes “no sense” and would be “complicated and expensive”. She has charged that a CGT would lead to rent rises and drive businesses out of the country, that it “will hurt small business-owners and mum and dad investors”, and most recently cited it as part of a package of “anti-growth policies” by the Government.
As with Bridges, Adams appears to be the very kind of business-owner and investor she fears would be hurt by the tax. Adams is a trustee and beneficiary of two trusts which own residential properties in three different localities. Adams and her husband, Don, are also directors of Amdon Investments Ltd, listed, like EHJ, as a commercial real estate investment company.
One of the CGT’s harsher critics has been National’s agriculture spokesman Nathan Guy, who cast it as part of a “crusade against New Zealand farmers” by former Labour finance minister Michael Cullen. Late last year, Guy slammed state-owned Landcorp for writing what he called a “sneaky submission” to the Tax Working Group, professing it didn’t oppose a CGT.
Guy sticks out among other MPs for the extent of his real estate interests. Through his “Roof Above Head” superannuation scheme — like Bridges, a private, one-person scheme — Guy has interests in 15 commercial properties in the North Island via shares owned in five different commercial property investment companies. Through several trusts, he also owns a house in the Wellington suburb of Thorndon, a rental in nearby Waikanae Beach, and farmland, buildings and four dwellings north of Levin.
Another critic is Judith Collins, who has charged that a CGT would mean “more cost t [sic] the most vulnerable” and called the idea that it would create a fairer tax system by targeting the wealthy “economic illiteracy”. Collins, through her Holly superannuation scheme, owns property in Nelson and both commercial and residential real estate in Wellington, as well as her family home in east Auckland.
Less prominent voices weighing in against the CGT have similar interests. Scott Simpson urged voters in a tweet to “be worried … be very worried…” about the CGT and other potential taxes. In a September 2017 editorial for the Bay of Plenty Times he presented that month’s election as a choice: “Increasing family incomes or decreasing family incomes. Lower taxes or a capital gains tax, land tax, water tax and regional fuel taxes.”
Through various trusts, Simpson owns two family homes, a Thorndon apartment, land in the Coromandel and a rental property in Remuera, one of the most expensive suburbs in Auckland. He also owns a 25 percent stake, or 250 shares, in Amare Properties NZ Limited, a firm that deals in commercial rental properties.
It’s a frequent pattern. Waitaki MP Jacqui Dean has said the CGT would hurt small and medium-sized business owners; she has interests in five properties, including her family home. Waimakariri MP Matt Doocey has pledged to repeal any CGT; he owns three properties and is the director and sole shareholder of rental property company EastLondon Limited. Taranaki-King Country MP Barbara Kuriger has charged that new taxes, including the CGT, would “stall our economy and punish hardworking New Zealanders”; she has interests in or owns six properties through trusts and companies, including two dairy farms in Ōpunake. New Plymouth MP Jonathan Young has said the CGT wouldn’t fix income inequality because you can’t “lift the bottom up, by pulling the top down”; he owns three rental properties through a trust.
National not alone on property ladder
It’s not only the National Party. New Zealand First leader Winston Peters has long been a foe of the tax, since at least his years as a National government cabinet minister in the 1990s, when he spurned a call by Don Brash — then the Reserve Bank governor and later to become National leader — to institute the CGT. Peters said in 2017 that it “doesn’t work” and was “off the table”. Peters is viewed as the decisive factor for the CGT’s fate within the coalition.
Peters also happens to be a beneficiary of the Rawhiti Land Trust, and owns three properties: land and a house in Whananaki South, and a house in St Mary’s Bay. The latter is Auckland’s second-most expensive suburb, with the median house price there now listed at well over $2 million.
There are exceptions of course. ACT leader David Seymour is an ardent foe of the CGT, most recently calling it an “envy tax.” But he owns no property, according to the parliamentary register.
Meanwhile, some Labour MPs who have spoken positively about the CGT have extensive real estate holdings. Immigration Minister Iain Lees-Galloway has been talking the tax up to voters since at least 2011, penning an editorial one year later in the Manawatu Standard calling for a CGT as part of a reform to “support and promote growth”. Yet he owns three properties — two family homes and a rental — and is co-director and majority shareholder of Alva Glen Limited (listed as a rental property company) and investment firm Elmbank Limited, all of which would be impacted by a theoretical capital gains tax.
At the party level, it breaks down like this: three quarters of National MPs have interests in two or more properties, while just over two-thirds of Labour MPs and a little over half of NZ First MPs do.
A number of other MPs supportive of the tax, including Trevor Mallard and Stuart Nash, own rental properties. Labour MPs Adrian Rurawhe and Meka Whaitiri, while silent on the tax, have interests in 41 Māori land blocks and beneficial land interests in four towns, respectively, and would presumably back the party’s push for a CGT. Likewise for Raymond Huo, who has interests in nine investment properties through his 99 percent stake in Vivafields Limited.
Taken in total, of the 76 MPs listed in 2018 as owning, part-owning and/or having interests in two or more properties, 55 percent are from National, 37 percent are from Labour and 7 percent are from NZ First. Only one Green MP, Eugenie Sage, owns two or more properties: Meanwhile, of the 23 MPs listed as directors or controlling stakeholders for investment and real estate-related firms, 68 percent are from National and 26 percent are from Labour. (As this is based on the 2018 register, when Jami-Lee Ross was still a National MP and Jonathan Coleman and Bill English were still in Parliament, these numbers will be slightly different this year).
At the party level, it breaks down like this: three quarters of National MPs have interests in two or more properties, while just over two-thirds of Labour MPs and a little over half of NZ First MPs do. If we look at the parties’ front benches, of the 15 Labour MPs in Cabinet, seven have interests in two properties or more, and three are directors or shareholders of companies involved in real estate or investment more generally; of the 15 top ranked National MPs, those numbers are 13 and four, respectively.
Predictably, it was a narrative Bridges and Adams resisted when speaking to media at Parliament on Tuesday morning and previewing the release of the Tax Working Group’s report.
Bridges said the impact of any CGT on him would be relatively small compared to the wider impact on the country at a time of “real uncertainty in the economy”.
“This is not about my properties – I don’t have a policy on capital gains tax because of me, I do it because it’s wrong for New Zealand.”
Adams said her concerns about a CGT were not related to property, but on the shares, small businesses and farms which would be covered by a comprehensive tax.
“We’re very clear about what we own and what MPs have, that’s why we have our pecuniary interests and it’s important that’s all in front of the public, but to suggest that somehow we therefore can’t have a view on the right policy for New Zealand is wrong.”
While it’s more than just personal investments that determine the policies MPs will support or oppose…all of these statistics together suggest there’s at least some correlation between a party’s stance on the CGT and how closely its MPs’ wealth is tied up in real estate.
But while it’s more than just personal investments that determine the policies MPs will support or oppose — such as the interests and mood of the party’s base, the dictates of party leadership or a party’s ideology more generally — all of these statistics together suggest there’s at least some correlation between a party’s stance on the CGT and how closely its MPs’ wealth is tied up in real estate.
We can see a similar pattern among media commentators, too. Mark Richardson, who owns property in the affluent, high-priced suburb of Epsom, openly opposed the building of state housing in the area for fear it would lower the value of his house; he also opposes the CGT, calling it a “Robin Hood tax”. Mike Hosking, who has called the CGT a “threat” to New Zealand’s economy and runs segments critical of the idea, recently sold his Remuera home for $4.1 million worth of tax-free capital gains. Duncan Garner, who has called his New Windsor home “the best investment I ever made” after it nearly doubled in value over four years, has also labelled the CGT “political suicide” that would “target mum and dad investors”, and was a case of “the green-eyed monster want[ing] a lick of their hard slog”.
There have been warnings for years that New Zealand’s housing crisis was helping create class stratification in the country on the basis of property ownership. Stats NZ revealed in December that disparities in property ownership were helping drive the increase in New Zealand’s wealth inequality. According to the Government’s Tax Working Group, the majority of the CGT would be paid by the country’s wealthiest.
The scale of MPs’ real estate holdings suggest not just that the financial interests of politicians and commentators may be influencing the ongoing CGT debate; it also suggests New Zealand’s particular form of wealth inequality is increasingly colouring our politics.
