Just a quick reaction to Labour’s CGT announcement from me borrowing from a few economists social media commentary. Super rushed so excuse typos.
Labour’s post-long-weekend promise lands with a familiar thud… a shiny new tax to fund a shiny new entitlement. Chris Hipkins announced Labour would introduce a narrow capital gains tax (CGT) on profits from investment and commercial properties sold after July 2027. The money, he says, will fund a “Medicard” providing three free GP visits per year.
Source: 1News
It looks like perfect political formula; take from a few, give to the many. But it has the same problems that dog every Labour tax-and-spend scheme: complexity, bureaucracy, and a refusal to confront the real structural issues in our economy.
As RNZ reported, “family homes, farms, small businesses, KiwiSaver, and other investments” are all excluded from Labour’s proposed CGT. The party insists this will “make the system fairer,” but these exclusions of the biggest reservoirs of wealth render the concept a bit pointless.
Economist Tony Burton put it bluntly on Linkedin:
“Nothing wrong, and a lot right, with a CGT in principle. The important words in that last sentence were ‘in principle’. The devil is very much in the detail.
The big economic/fiscal and equity benefits of a CGT would come from taxing family homes and farms. People with money/wealth put a lot of it in their family home like everyone else.
The scheme and its implementation described here sound a lot like the one proposed in the Cullen Report. They estimated it would take 5 to 10 years before government revenue increases became significant. That’s a lot of time for political pain before there is revenue gain.”
He’s right. If you leave out the family home and farms, you leave out most of the wealth. And if it takes up to a decade before the policy generates meaningful revenue, then the “free doctor visits” will need to be funded via other means. So how does Hipkins mean to fund them?
The health sweetener at the centre of this plan of three free GP visits per year sounds generous, but it’s largely symbolic. Under 18s already get free doctor visits, so the change only applies to adults. For many, that’s one or two visits more than they’d make anyway.
My GP charges $74 for an appointment which appears to be about average. Under Labour’s scheme I would save up to $222 per year in exchange for them introducing a new tax. That is up to $4.27 per week.
Meanwhile, the cost of setting up and administering this new Medicard system will be enormous. New IT infrastructure, integration with GP billing systems, eligibility verification, and the creation of yet another layer of government bureaucracy.
This is classic political arithmetic; announce a simple “benefit” for voters, bury the complexity in the fine print, and hope no one notices the administrative costs eating the supposed revenue gains.
Economist Eric Crampton nailed it in his X post reacting to Labour’s announcement:
“There’s a defensible but debatable case for a clean CGT.
But one riddled with exemptions?
And aimed at expanding government services rather than dealing with the giant looming fiscal-demographic problems in the 2030s and 2040s?”
New Zealand’s real fiscal challenge isn’t a shortage of taxes. It’s the looming cost of an ageing population, health spending, and superannuation. A tax riddled with carve-outs won’t fix that. It just props up more short-term spending while ignoring the structural reform needed to prepare for the decades ahead.
If Labour truly believes in a capital gains tax, they should make the case for a clean, broad-based version, not one riddled with exemptions and political calculations. If they truly believe in health equity, they should propose ways to strengthen the system’s capacity, not hand out gimmick cards.
Instead, what we’ve been given is another tax-and-spend placebo in exchange for a saving that wouldn’t buy us a coffee a week. A policy that looks compassionate, sounds alright, and does almost nothing to fix what’s actually broken.
New Zealand doesn’t need a Medicard. It needs a government willing to stop confusing motion with progress and to face the hard fiscal truths waiting in the decades ahead.
Ani O'Brien comes from a digital marketing background, she has been heavily involved in women's rights advocacy and is a founding council member of the Free Speech Union. This article was originally published on Ani's Substack Site and is published here with kind permission.
2 comments:
Tax the maori economy at the same rates all 'others' are taxed!!
Well done Ani.
Here’s my take:
Doctor’s Orders: How The Post Tried to Talk Labour’s CGT Plan Back to Life
Ani didn’t need many words to expose Labour’s new tax-for-treatment scheme. Three “free” GP visits a year, funded by a capital-gains tax (CGT) on investment and commercial property, works out at about $4.27 a week — the fiscal equivalent of tipping your doctor’s receptionist.
Her analysis is brisk, clear and rooted in arithmetic. She quoted economists Tony Burton and Eric Crampton to show that Labour’s proposal — full of carve-outs, contradictions and heroic assumptions — is more placebo than policy. It will take years to generate revenue, won’t touch the biggest reservoirs of wealth, and risks creating yet another administrative swamp for taxpayers to wade through.
Then came Luke Malpass’s column in The Post: “Will a capital gains tax be what the doctor ordered for Labour?”
It reads like a triage report from a friendly consultant: the patient may be weak, but with careful management and a bit of luck, it might yet pull through.
Malpass’s tone is managerial, not analytical. He calls the CGT “broader than most people picked” and the Medicard “an effective political device” — as though Labour’s pre-dawn leak, the panicked launch, and the glaring lack of detail were just teething troubles in a well-run clinic.
This isn’t journalism that asks whether the treatment works. It’s journalism that checks the patient’s bedside manner.
In his hands, Labour’s CGT plan becomes a respectable experiment in “political economy,” a phrase beloved of commentators who prefer abstraction to arithmetic. He nods toward the obvious — that a CGT won’t fix house prices and will enrich tax lawyers — but then reaches for comfort: perhaps this is “the time to give it a go.”
That’s not analysis. That’s mood management.
What Malpass never asks is the one question Ani O’Brien’s readers asked immediately: if five million New Zealanders are suddenly entitled to three free GP visits a year, who’s going to see them?
People already wait up to two weeks for an appointment if they’re lucky. The health system isn’t under-funded so much as under-staffed, over-bureaucratised, and drowning in middle management. Adding more patients without more doctors is like offering free ferry rides without buying a boat.
Malpass also tries to reframe the Medicard as a symbol of “universalism in health access,” even citing Anthony Albanese’s use of Medicare in Australia. But that’s marketing, not governance. Medicare works because it’s backed by a functioning health workforce and a clear funding structure. Labour’s proposal offers neither — just another card, another database, and another promise that depends on a shrinking pool of doctors and a growing mountain of debt.
The real function of the Medicard isn’t medical. It’s political. It gives Labour something to wave in front of voters while the real problems — workforce, productivity, infrastructure — remain untouched. It’s a hologram of compassion projected over a crumbling system.
After the bungles by Ardern, Robertson and Hipkins, most Kiwis know government programmes should be judged by results, not intentions. By that test, Ardern’s government flunked spectacularly: KiwiBuild collapsed, the wellbeing budget’s billions sank without a trace, and the fabled Auckland bridge to nowhere became a monument to policy delusion. Now Chris Hipkins is reaching for the same playbook — another big promise, another shiny card, another policy designed for the press release, not the patient.
Malpass ends his piece with the usual Beltway caution — that this will be “an election issue” and a “test of Luxon’s political acumen.” Translation: the analyst retreats into neutrality just as the facts start to bite.
But the public can tell the difference between treatment and theatre. A tax that won’t raise money for years, tied to a health scheme that can’t be delivered now, is neither sound economics nor sound medicine. It’s a prescription for disappointment — and even Luke Malpass can’t write that up as a recovery.
— PB
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