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- Date published:
8:08 am, November 11th, 2025 - 36 comments
Categories: capital gains, economy, labour -
Tags: cgt
Labour’s capital gains tax isn’t the end of the debate — it’s the beginning of a reckoning. The left’s real problem isn’t its policy. It’s the cult of reasonableness that’s made conviction sound impolite.
Labour’s capital gains tax isn’t enough. Not even close. But it matters.
After decades of pretending that taxing wealth was somehow un-Kiwi, the political class has finally admitted what everyone under forty-five already knew: the system is rigged. The rich get richer because the rules were written that way.
Leaks and timing aside, this small step matters because it breaks a long silence. It suggests that maybe, just maybe, there’s still political oxygen left for fairness.
But the debate around it exposes a deeper rot. It runs on two axes. The first is pragmatism versus progressivism: the endless tug of war between what’s “politically saleable” and what’s morally right. The second is framing: the way we’ve come to talk about tax, the economy, and ourselves.
For forty years, New Zealand’s political class has treated tax as a technical problem rather than a moral one. “Affordability.” “Fiscal responsibility.” “Prudence.” These words roll off the tongue of every finance minister like a rosary. But behind them sits a theology, not a theory. The worship of the balanced budget. The fetish of the surplus.
We’ve built a politics where the worst sin isn’t greed or dishonesty. It’s being unreasonable.
Our leaders and pundits bow to this cult every day, treating compromise as courage and cowardice as maturity.
We all know the type. The middle-aged man in a blue suit, red tie if Labour, blue tie if National, standing behind a podium and sighing, “We have to be reasonable. We simply can’t afford to pay for X.” The “X” changes every decade: housing, healthcare, climate, infrastructure. But the sermon never does.
And yes, our current Minister of Finance is a woman. Funnily enough, our two worst ones have been. Which only proves the point: this isn’t about gender or personality. It’s about an ideology so deep in our political bloodstream that even good people end up preaching the same sermon. The uniform changes; the script doesn’t.
They call it responsibility. We call it what it is: looting.
Economist Paul Krugman had a name for these people: the Very Serious People. They talk in calm, confident tones about the need for restraint, the importance of discipline, the dangers of populism. They’re always wrong, but never in doubt.
In New Zealand, the VSP class thrives. They write opinion columns, front think tanks, and fill Treasury briefings. They tell us not to get emotional about inequality or housing, as though poverty were just a rounding error. They’ve mistaken detachment for wisdom and smugness for intellect.
Serious people acknowledge when they’re wrong and move on. Our VSPs double down, defending a failed experiment as “rational” or “reasonable,” as if saying it calmly enough makes it true.
But conviction alone isn’t enough either.
For the left, building something better will require the one thing we often struggle with: a willingness to compromise, just a little, in the service of a greater truth. Not the hollow, triangulated kind of compromise that trades ideals for power, but the kind that builds coalitions; that lets us win the argument slowly, by expanding who feels included in it.
The biggest threat to a fairer tax system isn’t National’s attack lines. They’ll say what they always say. The real danger is infighting on the left. T e traditional circular firing squad that forms whenever principle meets pragmatism. We mistake disagreement for betrayal, and in doing so, hand victory to those who want nothing to change.
I say this as someone who’s spent years bristling at the idea of compromise. My instincts are always to fight, to call things what they are.
But the older I get, the clearer it becomes: narrative eats policy for breakfast. The side that controls the story controls the outcome. If we want to win, not just the debate, but the future, we need to build a story people can believe in, not just a policy they can tolerate.
If we want to reshape the economy of this country, to move from managed decline to shared prosperity, we’ll need both clarity and patience. The courage to hold the line on values, but flexibility in how we get there.
The project isn’t purity. It’s reconstruction.
Those of us who came of age after the 1990s aren’t fooled. We’re smart and well-educated enough (thanks, Helen Clark, for the loans) to understand just how fucked we are. But we’re too economically precarious to do anything about it (thanks, John Key, for the everything).
We are angry, yes. But our anger isn’t chaotic or naïve. It’s forensic. We’ve looked at the balance sheet of a nation and found the numbers don’t add up. Not because of waste, but because of theft.
Maybe ours is the first truly silent generation. Not because we don’t care, but because we’ve run out of breath. We’ve seen 9/11, the GFC, and COVID-19 before turning forty. We’ve done everything right; studied, worked, saved. And still can’t buy homes our parents purchased on one salary.
And this isn’t about blaming older generations. Many of them fought for a fairer country too, and they’re just as frustrated at what’s been lost. It’s about admitting how much harder that fight has become, and how much more deliberate we’ll need to be to win it again.
We don’t hate the system because it’s complex. We hate it because it’s stupid. Because the people running it still pretend that endless growth and asset inflation are clever economic management rather than slow-motion cannibalism.
Labour’s capital gains tax, modest as it is, should be the start of a new story. One that speaks moral truth in plain language.
Policy doesn’t win arguments. Narrative does. The story the right tells is simple: discipline, order, reward for effort. The story the left tells, when it dares to, is equally simple: fairness, solidarity, shared prosperity.
But somewhere along the way, the left stopped telling that story and started managing spreadsheets. We tried to sound calm, responsible, grown-up. And in doing so, we handed the language of conviction to those who least deserve it.
So maybe it’s time we stopped apologising for wanting better. Time to stop letting the VSPs define what’s possible. Time to stop calling looting “prudence.”
The left doesn’t need to be angrier for the sake of it. It needs to be angrier for a reason. Angry realism means saying the quiet part out loud, but calmly enough that it sticks.
New Zealand isn’t broke. It’s being robbed.
We don’t need to agree on every detail. We just need to agree that the story we’re living under, that endless restraint equals responsibility, is a lie.
Because if we don’t tell a better story about who we are, the vandals will keep writing it for us.
The hard left is in ruins world wide including New Zealand. But you're pretending we have the liberative freedom of 1975. It's left MAGA.
The reasonable left you bemoan are the only ones still in existence. Canada. Australia. Germany. Nordics. UK. All in different ways no longer generously liberal. And even the countries with the strongest labour protections like France, the hard right rises and the socialists are utterly spent.
If Hipkins loses in 2026 it will be on tax policy. After losing the economic argument in 2008, 2011, 2014, and 2023, that will be the final time we ever hear of it.
I used to love the idea of grand narratives, while being taught Ricoeur and Adorno. Grand narratives only become grand if they can narrate the social imaginary itself. Outside of civic emergency state – and the Green bubbles around Wellington and Dunedin – that's no longer possible here.
Do you wear a blue suit Ad? Because the argument you are making is the one that says people like me (and others here) should live in poverty for the rest of our lives. Just want to make sure we don't get lost in the rhetoric.
Many things are necessary to avert fascism and to have any chance of preventing climate collapse, and all of them depend on the stories we tell right now. Your story seems to be one of 'only the meek centrists have any chance' or something. Maybe you are right, but that story at best staves off climate collapse and fascism. Again, just want to make that clear.
There are other stories that aren't even about grand narratives, but about being real and holding to ideas that most people have about fairness and community.
I take back the question about the blue suit, because while you seem to support the Very Serious People, you're not one of the reasonable ones (that's not an insult). It's perplexing.
Max Rashbrooke has written thoughtfully on the framing and narratives that shape our economic debates:
One reason the left keeps losing economic arguments | The Spinoff
As for Hipkins, I’m not convinced Labour’s next election result will hinge on any single policy. Apart from 2005’s interest-free student loans, New Zealand elections rarely turn on one killer idea.
What matters is the alignment of message, messenger, and method. The right story, told by the right person, backed by credible policy and disciplined strategy.
That’s the real takeaway from the US elections last week.
Policy only matters in how effectively you weave it into the story you’re trying to tell. Get that right, and even the most progressive ideas can be framed as both practical and popular.
Too often we blame policy for what is really a communications failure: an inability, or perhaps an unwillingness, to decide on a coherent narrative.
And yet a socialist has just been elected Mayor of the largest city in the US of A.
So it's not all doom and gloom for the 'hard left' – pockets of resistance will persist, there and here. In time they may even grow – who knows.
https://thestandard.nz/mamdani/
More than a century since Shaw issued his perception that all progress comes from the unreasonable man, so we must include the unreasonable woman in that prescription.
For Labour, that means an unreasonable woman must provide a positive alternative to Sepuloni; no sign of any such zeitgeist yet, but bring it on!
FWIW, I like your Post as well as many of your comments here on TS.
I agree that narrative is key because it creates perception, and perception is reality (mostly).
Labour has made a cautious start with a new narrative with its three new policies (i.e., NZ Future Fund, Free Doctor’s Visits, and CGT) that each on their own are underwhelming and largely ineffectual (both in perception and in practice), but together they may be the first chapters of a new story that we could be weaving. The numbers ($$) are not terribly important – they’re soft anyway – but the narrative is.
New narratives will always meet ridicule and resistance. Ridicule from tawdry politicians and resistance from the system itself and the generations that have been soaked in and by it. To counter those I’d say that simple clear language is crucial together with humour (satire) and down-to-earth honesty, but never patronising and dismissive arrogance.
This is a learning curve!
I am in favour of a capital gains tax if it is fair and actually works. Here is the bottom lines I would have for a capital gains tax.
Every CGT in the world (AFAIK) exempts the "family home" or "principal residence" or whatever you want to call it. That's enough for me.
The inflation one is a bit harderr. Capital gain is income. We don't inflation-index income tax – or GST for that matter. But here's another thought – I buy an asset for $500k and in 10 years time it sells for $800k. This "asset class" thing is a bit of a can of worms – should I use the inflation figure from Kaitangat or Auckland? Perhaps have a set of regional values for different property classes …. tricky stuff.
Bearing in mind that the gain will be taxed all in one year, much of it is going to end up in the 39% bracket so some sort of discount seems reasonable to reflect what the rate might have been if it had been taxed on an accrual basis (which we all know is just too hard).
And there's another issue. In a bookkeeping sense the gain accrues each year, but the tax is levied when the asset is sold. You have had the use of the accrued tax at zero interest. It would not seem unreasonable to tot up the interest (at IRD's normal rates without any penalties). AFAIK noone does this FWIW.
So – using the same KISS logic applied to GST – levy tax at a discounted rate (Canada and Oz use about 20%) on the $$ gain.
"Every CGT in the world (AFAIK) exempts the family home…"
You might be correct. But that doesn't mean it is right. Both individuals and companies pay tax on their income now. So, being consistent, why shouldn't they also pay it on capital gains on property family owned or not? The answer to me seems to be a complete lack of political courage to do the right thing.
"The inflation one is a bit harder…."
Not that much harder. I think I was a little inaccurate talking about asset classes. I think the simple way is just to consider the sale price of a house compared to its purchase or build cost. If that has increased faster than the rate of inflation over that time, then the difference should be taxed. That doesn't seem too difficult to do.
You've sold me on a CGT that doesn't exempt the family home. Can't wait for NAct1 to show political courage, get some guts, grow a spine, and implement this tax 🙂
Yeah, I think you will be waiting for a long time for that lol. Just because I am right wing doesn't mean I agree with everything.
Though a lot of business people would probably agree with the capital gains concept if it diverts money away from houses towards business investment.
If it was universal, it would not do that.
"If it was universal, it would not do that."
I disagree. If people are getting taxed on capital gains generally, thus reducing their return on capital, they are more likely to lend money to businesses to earn money on interest. That is also taxable of course. But, then capital gains and income from interest are on the same footing.
No. Interest is little more than inflation and yet all of it is taxed.
That's entirely the point of a CGT.
The revenue gain is great and all. But its chief benefit is eliminating the tax advantages of investing our national capital in property over actual businesses that employ actual people.
Houses don't pay tax. Businesses do. People do.
1.Because home ownership is not an investment for CG.
2.Housing is a necessity.
3.It would discourage labour mobility.
4.A CG would reduce equity in the replacement property (and make paying off a home by time of retirement more difficult).
Other nations do not have such a CG but 2/3rd of the OCED have a CGT and an estate tax – the accumulated CG made by home ownership, if large enough, will be above the threshold for an estate tax.
I think that 3 is a very week argument.
Labour mobility isn't very likely to be discouraged by a CGT on the family home.
People who are shifting cities have the freedom to rent out their current home, and rent in the new city (and often do, in order to determine whether they like the new city, and which suburb they want to live in).
People who are hyper-mobile (shifting every couple of years), generally don't buy at all (or don't buy to live in) – they rent wherever they go.
Your other arguments are strong enough, without relying on this one.
However, I do think that there should be some method of discouraging house-flipping: the people who do-up family homes and sell them, repeatedly. This is a driver of house-price increases – and gentrification (which also drives out lower income home owners)
CPI is generally consistent across the country. House inflation however varies massively from region to region. Even suburb to suburb you see huge differences at times.
So I don't really think that is workable.
See my reply above. The asset class doesn't really matter. Just the price a given asset sells for compared to its cost.
Great post Res.
I am in the group that thought the cgt didn't go far enough. But you are right it is a potential foot in the door. My real concern is the lack of sufficient courage to go further.
And yes the left does need to drop purity politics, look past details and see a bigger picture.
My guess is that many in Labour would like to go further.
Including the author of this post.:D
Still, as past-me just argued, there’s something to be said for clarity over velocity.
Well here's a bit of false narrative………you know…..flogging off the country's assets is good economic sense….yeah right…………..
In the past year, the economy has shrunk by 1.1%.
On Monday, Luxon indicated asset sales could be included in National’s manifesto for the 2026 election.
His comments followed the release of Treasury’s Investment Statement 2025, which said Government debt was a major issue and the economy was not growing fast enough to pay down that debt. It suggested asset sales as a way to reduce liabilities.
If the dividends derived from an asset are higher than the cost of debt, Treasury advice is unsound.
If the asset is rising in value at a higher rate than the cost of debt, Treasury advice is unsound.
If both the dividend derived and the rising value of the assets are higher than the cost of debt, Treasury advice would have their financial advisor status called into question.
Most landlords hold assets because net debt falls because of both earnings received and asset valuation gains.
QFT.
Only yesterday I heard Luxon make the following statement:
He said it with earnest conviction, as if this is a new concept.
It would have come from his regular Monday Press conference.
It was an absurd bit of political theatre. We've been talking about Asset Sales for the past 40 years when R. Douglas and R. Prebble sold off Telecom, followed by R, Richardson et al who was followed by J. Key et al. These scoundrels are trying to steal what's left of what we own… under the guise it is something new and exciting.
Where's Labour? Hipkins et al should have been on to that con job immediately after Luxon said it.
Press release yesterday from Labour:
Thanks for that Karolyn IS.
I watched TV1 news last night and don't recall any item about that. Mind you, I can only stomach 15 mins. of news due to the shallowness of most of it, so maybe it came later.
The media doesn't seem that interested in Labour's views on asset sales.
There was a brief mention of a Labour comment on asset sales yesterday on RNZ in an article about Willis's statements about Chorus.
I like your propostion Republica re gaining control of the narrative.
Peters is an expert. He knows that many disagree with Asset Sales so he grabs the narrative today in his strong colourful style. It boxes the pallid Luxon into a damp sulky slump.
Exactly!
Peters’ old man yells at cloud act works because he’s a credible messenger, knows exactly which voters he’s talking to, and, crucially, been consistent on this since 1997.
The substance of his policies is almost irrelevant. What matters is his instinct for the sell and his precision in telling his audience exactly what they need to hear.
. There’s a lesson there for everyone. If we can get past the partisan reflexes.
The point about how much harder things have become is important. It alludes indirectly to the way Capital has asserted a new level of global control (and disdain for liberal democracy and its national and international traditions) which feeds, and feeds off, the new populist authoritarianism of Trump et al.. The harder the circumstances, the less likely that some reassertion of liberal democracy will be possible. How the Left interprets that challenge matters.
Decades of political participation have brought me to the same frustrating conclusion; a confident story about the immediate benefits of snake oil is much more effective than a detailed, evidence-based argument against snake oil. But it's precisely the need to win narrative battles that drives the unambitious cult of faux-reasonableness you quite rightly criticise. How to escape this bind?
The left don't have the resources to do large-scale narrative-building that the corporate lobby does for the hard right, or that would-be aristocrats fund for the far right. So maybe the solution is to stop trying to speak to "the public" in one voice. For all its flaws, FPP focused election campaigns on local races, between local candidates. Maybe there's something left parties can learn from that?
Local branches know their communities, and what they do and don't care about or find convincing. Maybe we need to abandon the model of central committees of beltway apparatchiks pushing out party-wide communications strategies, and give local party structures more autonomy to communicate in a way they think will work. If nothing else, it would provide a lot of experimental data on what does and doesn't work.
Designing an optimum communications strategy given those constraints is tricky, I’ll give you that.
My own thinking is that it doesn’t have to be an either/or between central narrative discipline and local autonomy. What we need is a high–low mix: use the Parliamentary Party’s visibility and access to national media to signal broad narratives and values, while giving local branches the tools, materials, and trust to translate those stories into language that works around the coffee table, the BBQ, or the family dinner.
That means shifting the role of the “centre” from message policing to capacity building: helping local members learn what works, providing data and training, then feeding their experience back up into the national story.
The coherence comes from shared purpose, not identical phrasing. Because you’re right, local people know their own communities best, and they’re best placed to translate policy into language that resonates.
Yes : Anat Shenker-Osorio is also good on this
People may like to read this again about George Lakhoff and Don't think of an Elephant.
https://commonslibrary.org/frame-the-debate-insights-from-dont-think-of-an-elephant/
In my time in the movement I learned early on that telling people they are wrong doesn't work (even though I still do it often!) – you have to start from where people are at and what they are concerned about. I would be interested in views about how this pertains to the social media world we now live in where every day, I am flooded with awful graphics from the CoC. I am not convinced about "communications strategies" if they involve the same kind of thing, or relying on MSM to pick the stories. There has to be person to person conversations – starting with my neighbours, who on one side will think the CGT means they will be taxed more, or on the other side, a woman who is on the bones of her arse, on a benefit and has nothing to tax anyway.