Super Fund housing
How is it that the Cullen fund, designed to improve the quality of life in later years, does not have investments in housing? The fund added over 10 billion to its investments last year.
New Zealand is in desperate need of affordable housing. Around 50 per cent of retirees
do not own their home - a serious gap in the quality of retirement.
The Government and the Super Fund should facilitate the construction of many permanent accommodation blocks of around 100 units each around New Zealand.
As well as satisfying a desperate shortage of housing in general, on completion some of these units could also be made available to investors and social housing groups to purchase with or without the land which could be leased long term at realistic rentals.
New Zealand's housing would be greatly improved by including this type of accommodation in the housing stock.
James Lawry, Rotorua.
House gains
Neville Cameron (NZ Herald, January 24) may think successive governments have failed by not imposing a Capital Gains Tax. That this Government sensibly decided it wasn't practical, speaks volumes.
The rise in house prices isn't as simple as buying a house 30 years ago for $200,000 and selling it today for $1,000,000. It isn't a straight gain of $800k.
A simple play with the figures suggests that if the purchaser put down a deposit of $50k and borrowed the balance over a 30 year term, that house at an average interest paid of just under 10 per cent, would have cost the buyer nearer $400k. If our own house is anything to go by, add expenditure on maintenance and improvements totalling about another $200k (out of tax paid income and paying the government GST) then factor in the inflation at about 100 per cent, another $200k, and that real gain isn't that big at all.
It is difficult to buy a house, it always has been, but there are multiple factors that have pushed up the prices. The current one is increasing costs of raw materials and labour, which also affects the costs of older properties, as unlike cars, they don't depreciate.
Ray Green, Birkenhead.
Bright line
Several correspondents have written over the last little while that we don't have a capital gains tax.
We do, on dwellings that are not your primary home. It is not called a capital gains tax, rather income tax on any capital gain which is made under the "Bright Line" test. At the highest point, 39 per cent, it is the highest effective capital gains tax in the Western world.
This tax has an unintended consequence in that it adds considerably to house price inflation. If a vendor can see that they face a tax of, say, $78k if they sell a secondary dwelling for $1.2m ($0.2m profit) then they will list it at $1.28m or more, and wait.
Geoff Levick, Kumeū.
Coffers sparse
The inevitable outbreak of the highly contagious Omicron variant has thrown a major spanner into the Government's economic coffers. The budgetary allocation to support the initial Covid support and recovery plan was a massive $69.1 billion.
Finance Minister Grant Robertson has reported that only $4b remains in the fund to fight the ongoing economic damage of Omicron, which could over time be comparable to the $65b already spent.
The fact is that there was never a fund but rather a budgetary allocation that has effectively been funded from increased overseas debt.
With increasing signs of a slowing economy, embedded out of control inflation and the need to increase interest rates, the Minister of Finance has good reason to have lost his gloss as the economic reality sets in.
We should all brace for a very rough ride.
Bruce Eliott, St Heliers.
Competency noted
Congratulations must be due to Matthew Hooton. He has finally written a column that doesn't contain the words, "this incompetent Government" (NZ Herald, January 21). Rather, he praises the Prime Minister's key decisions over the last two years as helping us get through this virus better than most other countries.
Just wow.
If Matthew Hooton can say that, then Jacinda Ardern must be doing something right.
An elderly friend, a long-standing political pundit, said to me that most people with any sense can see that our Prime Minister is working harder than any other prime minister in our recent history, and that her Government is doing what all responsible governments should be doing - protecting the people.
Paul Judge, Hamilton.
