Future Proofing & Educating Ourselves: Are We Really Serious About the Housing Crisis Part 4

Last week I looked at Capital Gains Tax and Comprehensive Capital Income Tax. This week I look more longer term with the importance of financial education.

Kiwisaver has been going for nearly nine years. 2.5 million of us are enrolled, with $28.5 billion in assets *. Truly it has been a success and of huge benefit to the country. But, despite this, we are still very financially illiterate as a nation. Not many people would be able to differentiate between a share and a bond. We are buying up homes like they are going out of fashion, and are very happy to put ourselves heavily into debt to do so.

Why this push towards houses? I believe it is for two reasons. One, a house is very tangible. You can see it, touch it. It’s like sticking your stake in the ground, declaring to the world, “this is mine!” The second reason is that we just don’t know about other investments while we continue to fool ourselves into thinking that because we live in a home we understand the property market. We are deluding ourselves.

But it doesn’t have to be like this. Simply saying “uncle Bob invested money in a finance company and lost everything, therefore I won’t trust the sharemarket” shows how much we don’t understand things financial. It is possible to learn about financial investments and not be afraid of them. We just have to spend a little time to do so and Kiwisaver is a fantastic way of doing this. In fact I believe that a non negotiable in signing up to Kiwisaver should be to participate in a four part course on investing basics, the sharemarket and the importance of diversification. If at the end of this course you decide to opt out of Kiwisaver that is fine but at least you have learnt about investing and long term financial planning.

I’ll share my story to explain. When I was enrolled into Kiwisaver I knew nothing about investing and the sharemarket. I was nervous about it, even a bit fearful. Growing up in the eighties I had memories of the 87 stockmarket crash. I let that fear dictate how I looked at Kiwisaver for three years. But one day I looked at my Kiwisaver balance in the default scheme I was in and I decided that I had to do something about it. The first (and probably best) thing I did was read. The most comprehensive and helpful book for me was Mary Holm’s The Complete Kiwisaver. Then I heeded her advise and researched the schemes available, deciding on one I felt would be the best fit for me. But I didn’t stop there. The scheme I moved my Kiwisaver into allows me to select what funds and companies I invest my money into. So I decided to use my Kiwisaver as a platform for learning about the sharemarket. I took a four part investor basics course my provider runs. I learnt how to read market research. I keep an eye on how my Kiwisaver is going. I have regular reviews with the advisor my scheme provides for me. I don’t regret doing any of this at all. And I don’t share this to say look at me. I share this to say if I can do it, so can you. It isn’t hard but it is worth it.

I still have a lot to learn about investing and the sharemarket. But I’m not afraid of it as I once was. I don’t see that the only way to get ahead financially is to buy property. In fact I am so relaxed about the sharemarket that now, with housing prices in Auckland so ridiculously over-inflated (around nine times the average wage), I am very comfortable with the idea of not purchasing a house and instead directing that money into the sharemarket and other investments. And that is where this links into housing crisis. Too many of us throw money into property simply because we believe it is the only way to get ahead. With so many of us doing that it over-inflates the housing bubble. It will pop one day. It won’t stretch on forever. Now is the time to re-educate ourselves and get rid of our fear of the sharemarket and non-property investments.

* The stats used are from the FMA (Financial Market Authority) released Kiwisaver Annual Report 2015
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This is part 4 of a 6 part series. See Are We Really Serious About the Housing Crisis for the summary. Next week, the desperate need of building more homes before I complete this series with why I believe we should be focusing more on going up rather than out, particularly in Auckland.

Not the Silver Bullet But a Start: Are We Really Serious About the Housing Crisis Part 3

Last week I looked at misdirected investment. This week it is that dreaded term that has been bandied around as both a miracle cure and a poison that will slowly destroy and unduly punish Kiwi investment. Yes, it’s Capital Gains Tax.

If there has been one thing that has got New Zealander’s collective backs up over the housing crisis it would have to be a Capital Gains Tax. Labour campaigned on it last election and failed. John Key is adamant that it will not benefit the nation. However, as Duncan Garner pointed out quite clearly in two blogs last year, politicians from across the floor have a vested interest in not introducing some type of tax on property. That vested interest is that many of them own more than one property. Why own more than one? Because we as a nation don’t treat property the same as any other asset or capital. Therefore, in order to pay as little tax as possible, people invest in property. This helps fuel the housing price bubble, particularly in Auckland and isn’t the best thing for the country.

And this isn’t about revenue gathering. It is about trying to bring balance and fairness into our current tax system. At the moment it is heavily sloped towards investing in property and the ones who end up paying the most tax proportionally are salary and wage earners. We need to bring some balance back to the field. In researching for this particular blog I discovered that perhaps one of the fairest and balanced ways of correcting the faults in our tax system is something that the Morgan Foundation propose - a Comprehensive Capital Income Tax. It brings balance to our tax system and would see less money invested in property and more money invested elsewhere (This would help solve the issue I raised last week of misdirected investments).

Whichever way we go, the point is we can’t keep doing the same thing as we will always get the same results. No tax on property = heavy investment in property. Introducing a fair tax on all income (basically introducing tax where there isn’t tax currently) = a balanced investment in property and shares and local businesses (in other words, diversification).

And whilst a change in the way we collect tax isn’t the silver bullet, having it as part of a raft of ideas would cool the housing balloon without it going pop. It would bring balance and generate tax revenue that could be used for the benefit of all New Zealanders in areas like health, education, the environment (increasing what DOC gets would be a great start there) and even a reduction in the income tax people pay.

It’s a win win for the nation. We just need our politicians to stop serve their own and their mate’s interests and do more to look after the interests of we the people who voted them in and have the power to vote them out again. 

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This is part 3 of a 6 part series. See Are We Really Serious About the Housing Crisis for the summary. Next week, the importance of Financial Education and why we all benefit through learning even the basics of investment. In later blogs I'll look at  increasing the current housing stock and finally why I believe we should be focusing more on going up rather than out, particularly in Auckland.

43 Years of Silence, 43 Years Too Long.

43 years ago today this was the view from on board HMNZS Otago. It was sent there officially to be a physical presence of the New Zealand protest against French nuclear testing on Mururoa Atoll. Prior to the Otago leaving, Prime Minister Norman Kirk said that its presence (and HMNZS Canterbury's when it relieved the Otago) would be "a silent accusing witness with the power to bring alive the conscience of the world".

Since then the men who went on Big Norm's Mystery Tour have been silently suffering and a nation whose proud anti-nuclear stance was built on the success of that 1973 protest has stayed silent in its appreciation and gratitude to those men who did their duty and served their country when called upon. Shame on us as a nation that we have forgotten these men who made the world aware of what the French were doing. Their mere presence meant that minutes after the nuclear test, word was sent to Wellington and then to the world of the detonation, sparking what former NZPA correspondent David Barber referred to as ‘a barrage of international protests that prompted New Zealand's Prime Minister Norman Kirk to say, "Never before has world opinion on nuclear testing been so stirred.”’ It was groundbreaking. One small nation in the South Pacific had boldly confronted another over nuclear testing and won. It was a major victory. 1973 was the last time the French undertook atmospheric nuclear testing.

Yet how many Kiwis know about what happened? How many of us are aware of the efforts of those brave men on board two of our Navy frigates? How many are aware that far too many of them have died in the following years of cancers and leukemias? How many of us know of the suffering that those sailors who are still alive have had to endure? Continual cancer treatment, often for rare forms of the disease. The psychological effects of watching your former shipmates dying and knowing the high probability that you could be the next one to contract cancer or leukemias. The effects on the wives, partners, children and now grandchildren as their husband / dad / granddad suffered.

This has got to end. New Zealand must acknowledge these national heroes and do the right thing by them. On the day of the Otago’s department, Norman Kirk said that a grateful nation would not forget the men and would look after them if something happened. Something did happen, and continues to happen to the sailors and men on board those frigates. It is time our nation stayed true to those words spoken by Mr Kirk 43 years ago. Lest we forget.

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DISCLAIMER: I sit on the executive committee of the Mururoa Nuclear Veterans Group Inc as the co vice-president as well as the Media Officer. The group is made up of former sailors on the HMNZS Otago and Canterbury and the HMAS Supply, wives, partners and children of those sailors who served on the 1973 Tour. 

Misdirected Investments: Are We Really Serious About the Housing Crisis Part 2

Last week I mentioned 7 ways I thought could be implemented to help solve the housing crisis. This week I want to turn to the idea of foreign and local investments.

Let me state at the outset that I am not against foreign investments. As we are part of the global economy they play an important role in the New Zealand economy. However, unlike some of the rhetoric that has come from the right about investments and the housing crisis, I do not believe that foreigners buying up our housing stock can be called foreign investment. The problem is that buying up land and houses directly contributes to our housing crisis and adds little or no value to the economy. The house is purchased, and the investor sits on it until they are ready to move their money on. Under our current tax regime, that is an easy thing to do with no consequences. Any profit can be taken out of the country without any tax being paid. How does that help New Zealand? Not only does it push up house prices and reduce the housing stock available, it also denies money flowing into our small and medium sized businesses which are an important and significant part of our economy.

What would be better is to discourage foreigners who want to invest in New Zealand from purchasing our housing stock. One way this could be achieved is by some form of capital gains tax and a tax on money leaving the country. Not only would this be fair, it would also bring us in line with other countries around the world. In addition, it is important to incentivize investing in New Zealand businesses, thus encouraging money out of our housing stock and into the business sector, thus growing businesses and growing our economy. Whilst I am not sure how this could be achieved, some ideas could be a rebate on money invested in small and medium business, or a reduced tax rate. The point though is that with proper investment, our small and medium sized businesses, which are significant contributors to our economy, could grow resulting in more people employed, exports increasing and more money brought into our economy. We would all benefit. With the current situation, the only ones who benefit are the speculators buying up the housing stock.

In the same way, we can also incentivize Kiwis to put their money into small and medium sized businesses. We as a nation seem to be allergic to investments outside of property but we need to turn this around so our economy can grow and strengthen. It would also help make our economy more resilient as money flows into more diverse sectors. Like with foreign investments we could incentivize by offering rebates or reduced tax on investments in our small and medium business sector.

The one thing we can’t do is nothing. We can no longer keep putting our collective heads in the sand, denying the existence of a problem. That will only result in the housing balloon expanding until it pops.

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This is part 2 of a 4-6 part series. See Are We Really Serious About the Housing Crisis for the summary. Next week, Capital Gains Tax - Not the Silver Bullet but a start. In later blogs I'll look at  Financial Education, increasing the current housing stock and finally why I believe we should be focusing more on going up rather than out, particularly in Auckland.

Are We Really Serious About the Housing Crisis?

This past weekend Labour celebrated 100 years of existence. As part of that centenary they announced a Housing policy they would enact if they became the next government. Despite what the right say, it is clever politicking by Labour for two reasons; 1. it’s an attempt to address a growing issue and 2. it harks back to the 1930s era of Labour governance where state housing originates from. Meanwhile, yesterday National announced that it didn't expect a dividend from Housing New Zealand which will, in theory, allow HNZ to invest in building more state houses.

This crisis has been an ongoing issue for years yet has been ignored by the politicians until now. With both main parties deeply rooted in neoliberal economic policy there has been an unwillingness to interfere with the market, choosing instead to believe the market will right itself. There has also been a push to emphasise one issue or another. We’ve heard that not enough houses are being built, too many foreigners buying up our houses, it’s Kiwi investors, it’s councils not releasing enough land. What we haven’t heard is a concerted combined attempt at solving this growing problem.

I have decided that instead of complaining, I would have a go at offering a combined solution to the problem. Admittedly I am no economist, or finance advisor, nor do I claim expertise in this area. But as a lay person I think some of these ideas, as part of a wider ranging policy, have merit and should be openly discussed.

1. Discourage foreigners purchasing housing stock. 

This is often seen as being “anti-foreign investment”. I believe that’s a false label used to dismiss this idea but this idea needs an alternative offered in conjunction.

2. ENCOURAGE foreign investment into local businesses. 

This is that alternative. The problem isn’t foreign investment. The problem is where that investment is going. Housing stock doesn't generate wealth for our country. Foreign investment in our small and medium sized businesses does. These first two ideas have to go hand in hand.

3. ENCOURAGE local investment into local businesses. 

Likewise, local investment shouldn’t be sunk into multiple homes. Local businesses generate wealth, employ people and return money back into regional economies.

4. Capital Gains / Property Tax. 

People hate this idea but the reality is that currently there is little to no tax on property investment. A graduated tax based on the number of properties one owns seems to be a fair way of taxing. If you want to make your money in property go ahead, but you will be taxed just like any other investment.

5. Education on Investments. 

Too many Kiwis have no idea about how the sharemarket works, what a share is, what a bond is. We fear the sharemarket because we don’t understand it. As a nation we need to financially school ourselves up and get over our fear. 

6. Build More Houses. 

It is a no brainer but the population is growing, particularly in Auckland. Not enough housing is being built to cover the growth. 

7. Build Up, Not Out. 

Building more suburbs in our major cities, particularly Auckland will not solve the issue but will simply create more complex problems. We need to have a long term plan to make compact people-friendly cities. Sprawling metropolises like we have now are car-friendly, use up valuable farmland and don’t work. The desired quarter acre section with a white picket fence is an idea best left in the 1950s where it belongs.

So seven ideas. Not rocket science but at the same time if done properly can help to solve the housing crisis. Some of the ideas won’t see immediate effects but are necessary to stop the speculation and correct the craziness that currently inhabits our property market. I’d love to see all of these ideas implemented. I’d love to see politicians with the guts to actually work together to solve the crisis. But I fear that that won’t happen. I fear personal interests will trump what’s best for the nation and that the housing crisis will only get worse until something snaps, plummeting us into the abyss of fiscal depression.

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This will form the start of a 4-6 part series. I will attempt to expand on some of these ideas over the coming weeks. Next week, redirecting investment away from housing and into Kiwi businesses (this will attempt to expand points 1-3). That will be followed by a look at Capital Gains Tax, Financial Education, Increasing the current housing stock and finally why I believe we should be focusing more on going up rather than out, particularly in Auckland.

The Forgotten Heroes

Yesterday was Anzac Day. A wonderful day where we as a nation remember the soldiers (including sailors and airmen) fallen or who are no longer with us who fought to make our nation safe. Special services allow us to remember them. We hear the Last Post, see the flags at half-mast, recite the Ode of Remembrance. And with it being a hundred years since the folly that was the Gallipoli campaign, we hear a lot about what our men endured during the horrendous campaign. And rightly so. After all, it was a key time in our history as a nation. But, with such an emphasis on those who have passed, we run the danger of neglecting those who are still with us and the suffering they are enduring currently. 

There have been many conflicts and war zones that our servicemen and women have entered that we know little or nothing about. Examples of those include the Malay Peninsula, Mururoa, East Timor, the first Gulf War, the second Gulf War, Afghanistan. What is life like for those men and women and their families? Are they suffering in silence? How has their service for country affected them and their lives? 

Recently we had two challenging news reports on these oft forgotten veterans. Newshub reported on young veterans and the mental illness they deal with as they return from conflict zones. Stuff reported on the increased number of former military personnel who are now living on the streets. Both were good reminders that we would do well to remember and appreciate our silent veterans - those still with us who are suffering. Not just that, but also offer help where and when appropriate. 

But there is one group that is silently suffering and dying who most of us give no regard to whatsoever. They are the Navy veterans who we as a nation sent to Mururoa in 1973. We sent them there as a visible force officially “protesting” the French testing of nuclear bombs on that remote Pacific atoll. Up until that time, despite small protests from concerned citizens, the world didn’t listen until HMNZS Otago and then her sister ship Canterbury with the support of HMAS Supply went to Mururoa. It went hand in hand with a international court case that the New Zealand government took against France regarding the nuclear tests. The 500 odd men on those frigates did their duty and despite Prime Minister of the time, Norman Kirk swearing to the men that the nation would never forget them, we turned around and did just that. We forgot them. 

Now, 43 years on, many of those sailors have passed, often suffering from rare forms of cancer and leukemia. Their families suffer in silence along with their men. The men are now entitled to their own medal but how many of us know their stories? Sadly all too few. These men, who were involved in the foundation of this country’s nuclear free stance have been forgotten and marginalised for too long. This needs to end. We need to remember them and offer them our heartfelt thanks. We need to support their families who have had to watch those veterans slowly lose their fight with cancer or leukemia and have now passed away leaving a vacuum in their family’s lives. 

Yes we need to remember those who fought and died for us in years gone by but we also need to remember those who served and who are now suffering. After all, Anzac Day is not just about Gallipoli, it is our day to remember all of our military personnel, past and present, who gave their lives that we may live in relative peace and safety. 


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DISCLAIMER: I am part of the Junior Executive for the Mururoa Nuclear Veterans Group Inc, a group set up to raise awareness of what the veterans went through, support Mururoa veterans and to call the government to recognise the veterans as nuclear testing victims. My father served on HMNZS Otago when it was sent to Mururoa.

That's a Fine Looking High Horse

Why do Christians feel that they have the right to judge people, including their fellow believers? It is something that has perplexed me for years, but a few things I have observed lately has prompted this post.

A number of years back I read Philip Yancey's book "What's So Amazing About Grace?" Not one to mince words, Yancey opens his book by recounting a story of a prostitute who has hit rock bottom and had started renting out her two year old daughter for sex so she could pay for her own drug habit. It is a short story but those few lines often produces two reactions - one of sadness at the depth of desperation this woman must have felt; or one of judgement, looking down at the woman and dismissing her as a deadbeat who shouldn't have kids in the first place. It was this second reaction that was the crux of the story. Yancey tells how this woman was asked if she had ever thought of going to a church for help. Her response should hit all Christians like the knockout blow of a heavyweight boxing bout. '"Church!" she cried. "Why would I ever go to there? I was already feeling terrible about myself. They'd just make me feel worse."' They'd just make me feel worse. Ouch! What an indictment. Yet, nearly twenty years since Yancey penned that book, things are no different. The people of God who should be the very instruments of grace in the world are often the tools of judgement.

I realised this in a personal way over the course of the past eighteen months as my marriage broke up. People who said they were friends and would stick by me no matter what stopped communicating with me. Some even refused to have me in their homes because they had heard stories about me which they said concerned them. And people who I would call acquaintances felt they could confront me about my marriage break-up, one via text and the other via Facebook messenger. I only just found this last confrontation a year later and it shocked me. Shocked that a fellow believer felt they had the right to do this. Not to come alongside and support or pray or offer help or assistance in any way, but to judge. Without going into too much detail, they suggested I reconsider the next steps due to the heritage they believed I was leaving for my children. They also brought up my deceased father as part of their argument - "What would your father want you to do? If he were here what would his challenge to you be? Would he want to see you tear their (my children) lives apart?" Now I hardly know this person. They don't really know me either. What had happened in my marriage was private and not known to many people. This person was going on rumour and hearsay but still felt they were within their right to send me this message.

And that is the problem. When did some Christians feel it was their duty to judge? After all, Jesus told His followers not to judge (see Matthew 7:1, Luke 6:37, Luke 6:41 to name a few), as did Paul, one of the fathers of the early Christian faith (see Romans 2:1, Romans 14:10, 1 Corinthians 4:5). It's as if those of us who profess Christian faith have put ourselves up on a high horse and in the process, elevated ourselves into the place that should only be the domain of God.

Christians are to be the salt and light in the world, and as Eugene Petersen puts so beautifully, bring out the God flavours and God colours. Not to be judges of it. Judging creates an "us and them" mentality. It is divisive. It is hurtful and it is unnecessary. When the Pharisees brought a woman caught in adultery before of Jesus (and seeing as the law stated anyone caught in adultery, where was the guy?) did He condemn her? No. He instead looked at the Pharisees and said "he who is sinless can cast the first stone". Not one stone was thrown. The Pharisees were after judgement, justice and punishment. Jesus was all about restoration. As people who claim to follow Jesus, those of us who call ourselves Christians should be all about restoration too.

"But what about the laws of God?" I hear you ask. "What about what is right and just?" "Surely purity and faithfulness are important to God and we should defend that?" Good questions. But in an attempt to answer them let me take a leaf out of Christ's book and ask some questions of my own: "Is God all-powerful, all-knowing and everywhere? Is God just? Can God, through the work of restoration in someone, bring them to a level of faithfulness and purity that He is happy with?" If God is all about restoring people to Himself, it isn't up to us to decide whether people should be judged or not. That is God's prerogative. Not ours. After all, everyone has fallen short of the glory of God. No-one is exempt. We all stuff up and make mistakes. Some of those mistakes can be bigger than others. We are all fallen. It is only through God that we can be restored to God.

It is also important not to judge for the sake of others. Nineteenth century Christian evangelist Dwight L. Moody once said, “Of one hundred men, one will read the Bible; the ninety-nine will read the Christian.” Too often our judgemental attitudes turn people off. The word hypocrisy often is spoken when describing Christians. How can people know God's love if you don't first show love for them? If we who are Christians are called to be salt and light, and being God's instruments of grace in the process, we should be embarrassed that the world around us doesn't see grace as being present in the church. I like the words of the singer Hozier: "... That's a fine looking high horse, What you got in the stable?, We've a lot of starving faithful ..." Perhaps I'm taking it a bit out of context, but for me it describes how the church is seen from the outside all too well. A fine looking high horse. Time to get off it and down with others, walking alongside them and helping them in their struggles. What's in the stable? we've got faithful who are hungry. It's almost like we have kept Jesus in the stable and people hungry for love and grace are being denied. That is what judging does - it hides away grace and denies it to a world in desperate need of it.

Judging has no place in our churches. It gets in the way of God and His grace flowing into people's lives. For too long we as Christians have turned people off church and off God with our judgemental attitudes (despite sometimes having well meaning intentions of preserving the idea of holiness for God). It's time we dropped our judging and picked up grace, not just for ourselves but for all around us. As Yancey says, “Jesus declared that we should have one distinguishing mark: not political correctness or moral superiority, but love.”