The economics news has been dominated the past couple of weeks by Newshub insisting that the National Party's tax plan doesn't "add up". Here's the headline the outlet has been running, "National's foreign buyer tax costings likely have a roughly $530 million fiscal hole each year, according to several highly regarded economists. It's more bad news for the party which has faced constant questioning and criticism over its tax plan".
However, whilst Newshub is desperate to embarrass the Nats by endlessly scrutinizing their tax proposal, the same level of scrutiny doesn't seem to have been applied to Newshub's own sources. Let's be clear, the critique of National made by these "highly regarded economists" has not been peer-reviewed nor published in a journal and as such has no academic standing. In fact, estimating the effect of a policy change that has never been done before, like removing a foreign buyer ban & putting in a 15% tax on property sales over $2 million, is very hard because there's no precedent & so no data that can be used to show what has happened in the past when such a policy has been introduced.
The econometrics involved in my opinion requires a person to have completed a Masters degree with top honors, or PhD, in economics from a good university. So I looked up the qualifications of one of the folks who Newshub quote as their "highly regarded economist" source who critiqued the Nats proposals - his Linked-In profile says:
University of Otago, Bachelor of Commerce (BCom) in Marketing, 2001 - 2003
I'm happy to be corrected that this chap has done a high-level econ degree not mentioned on his Linked-In profile, but can Newshub please urgently clarify the background of its sources? After all, its' success at embarrassing National hinges on Newshub's sources being more credible than the Party's. On that note, the consulting firm called Castalia that checked over the Nat's numbers includes folks in their Auckland Office like Willem Crowhurst, who has a first class honors degree in economics from the University of Auckland.
Sources:
https://www.newshub.co.nz/home/politics/2023/09/election-2023-national-s-foreign-buyer-tax-plan-has-530-million-yearly-fiscal-hole-new-report-finds.html
https://nz.linkedin.com/in/nick-goodall-35897850
https://castalia-advisors.com/team_member/willem_crowhurst/
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi - where this article was sourced.
4 comments:
Economics isn't a pure science as it is underpinned by an ideology (e.g. socialist managed economy or market capitalist economy) which, like any ideology, goes way beyond observations and measurements no matter how precise. Paper qualifications tend to relate to the empirical side of things but a layman unhampered by ideological dictates may actually be a better 'economist' than a PhD in econometrics. There are highly qualified economists in Pyongyang too, you know!
While I agree, Robert, that the qualifications of the person mentioned is extremely thin for this type of analysis, one of the others is Michael Reddell, ex Reserve Bank who is eminently qualified to analyse the issue and make comment.
I am not saying he is correct, but just that he is very good at what he does.
In my view the issue is, in the grand scheme of things, a bit of a storm in tea cup and shows desperation from the left.
I would also point out that tax cuts tend to return to the tax office quite fast through economic expansion and consequent GST and tax, as such during the 90's the Nats gave a series of tax cuts that quickly recirculated back as revenue admittedly not all of it but a significant positive outcome.
Conversely a tax hike can yield a disappointing quantity of real revenue and can reduce economic activity.
National do seem to have been somewhat fanciful with the house taxes. Any bright child can do arithmetic which creates doubt. I suspect many of Luxon's very positive statements will come back to haunt him. But the news devoted to it was absurd. It filled RNZ news items for all of one day and much of others.
Far more fanciful promises are made by labour but draw little or no critical comment from Red Radio.
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