Money Talks: Labour’s Barbara Edmonds hints at need to discourage property investment

Barbara Edmonds says people don't want much: "Just someone to love, somewhere to live, somewhere to work and something to hope for." Photo / Mark Mitchell

While the Labour Party is still working on future tax policy plans and won’t say whether a wealth tax or capital gains tax is in the mix, its new finance spokesperson Barbara Edmonds has made it clear she sees New Zealand’s obsession with housing investment as one of the key issues which need to be addressed.

“We need to remove this incentive that the tax system provides for Kiwis to invest in property,” Edmonds told the Money Talks podcast.

“The tax system does incentivise that,” she said. ”A salaried wage earner who’s a cleaner, say, gets every dollar of what they’ve earned taxed, but a person that [earns] through capital doesn’t get the capital tax. There has to be a balance there.”

“You want to have a tax-neutral system, but the way the New Zealand tax system is, I’m quite clear: it does incentivise particular behaviours.”

A capital gains tax proposal put forward by Sir Michael Cullen’s Tax Working Group was ruled out by Labour leader and then-Prime Minister Dame Jacinda Ardern in 2019.

But after the election last year, new Labour leader Chris Hipkins said all tax options were back on the policy table, indicating the party could be in for a major rethink of a wealth and/or capital gains tax ahead of the 2026 election.

Edmonds told Money Talks she felt housing was the biggest driver of inequality in New Zealand right now.

“It takes up most of the proportion of a person’s income,” she said.

The former tax lawyer wasn’t prepared to go further while policy plans were still being formulated.

But she did talk about the kind of economies New Zealand might want to emulate.

“I think we are very much at that crossroads - does New Zealand want to be a Singapore? Or do we want to be a Nordic country? And clearly, because I’m centre-left and [with] Labour, we would want to be the Nordic country.”

“At the same time, we have to have that conversation with Kiwis, and if Kiwis don’t sign up to it, then we are just not in government.”

Edmonds was reluctant to put a label on her economic views but emphasised her commitment to government involvement in things like infrastructure.

“I do know that to build more housing, you’ve got to have the infrastructure,” she said. “You know, and if you don’t have the infrastructure, which is something that basically governments and councils have deferred for so long, you get to a point where you’ve reached the capacity of the limits of your city and you aren’t able to build more.

“I know that’s not really answering the question around ‘what sort of economic theory’. But it’s something that I believe, that when the market does fail, the Government does have to intervene.”

“So the Affordable Water Reforms or Three Waters needs to be done. Whatever label you want to put on it, whatever entity or however you want to frame it, we can’t build more without that water infrastructure being fixed.”

Listen to the full episode to hear more from Edmonds about her journey from humble beginnings to a prominent position in Parliament.

Money Talks is a podcast run by the NZ Herald. It isn’t about personal finance and isn’t about economics - it’s just well-known New Zealanders talking about money and sharing some stories about the impact it’s had on their lives and how it has shaped them.

The series is hosted by Liam Dann, business editor-at-large for the Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.

Money Talks is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts.