Awkward Albo moment says it all about CGT as NZ PM describes controversial new tax as ‘wrecking ball’
Anthony Albanese was put in an awkward spot as New Zealand’s prime minister explained why his country had taken a different approach to tax.
An awkward moment between Anthony Albanese and New Zealand’s prime minister has reignited the debate over capital gains tax on both sides of the Tasman.
The Labor government controversially removed the 50 per cent CGT discount for almost all assets in the federal budget.
Aussies who sell shares, businesses or farmland will now be slapped with a minimum 30 per cent tax on their indexed capital gain, or their marginal tax rate of up to 47 per cent.
Nicola Willis, the finance minister in New Zealand — which doesn’t have CGT — waded into the backlash last month, telling Australians, “Where the bloody hell are you? Come over.”
“This is a government that isn’t planning to raid you with more taxes,” Ms Willis, a member of the country’s National-led coalition government, said.
On Saturday, the Minister’s cheeky message was raised at a press conference given by New Zealand Prime Minister Christopher Luxon and Mr Albanese in Noosa, where the pair are meeting for annual talks.
In fact, it was the first question put to the two leaders.
A reporter asked if Mr Luxon supported the call from his Finance Minister, and also wanted to know what Mr Albanese thought about it.
Christopher Luxon said a CGT would be a ‘wrecking ball’ to the recovering New Zealand economy. Picture: Supplied/RNZ
Anthony Albanese made light of the question, referencing the Warriors NRL team. Picture: Supplied/RNZ
“Well I might jump in first here,” Australia’s PM replied.
“What next? The (Warriors) signing another Jackson Ford? I mean, we have a relationship which is often a bit tongue-in-cheek. That’s the truth of the matter.”
He pointed out that there were 638,000 New Zealanders living in Australia.
“It’s a good relationship. Occasionally there’s a bit of cheekiness to the relationship — long may that continue.”
Mr Luxon then gave a somewhat more direct response, saying there had been a “long-running debate” about CGT in New Zealand.
“We don’t feel that’s appropriate for New Zealand, and we feel pretty strongly about it,” Mr Luxon said.
“We’ve got a recovery underway and we just think a CGT being introduced to New Zealand now would be a wrecking ball for our economy.”
The viral moment led to heated commentary from Aussies and Kiwis alike about the merits of CGT, or lack thereof.
Critics argued New Zealand’s more favourable tax conditions had hardly made it an investment or tech powerhouse.
“The Australian economy is many times stronger than NZ — as evidenced by the large number of New Zealanders who move here for a better quality of life,” one said.
Others pointed out that New Zealand was still mounting a fragile recovery after the pandemic and it was “definitely not a country to look to for pointers on how to manage wealth or an economy”.
“If anyone has put a wrecking ball through an economy it’s Luxon and National,” another wrote.
But Mr Albanese copped criticism too, described as “defensive, rattled, (and) passive aggressive” during the press conference.
The Prime Minister was accused of “trying to deflect the question to sport” and “treating serious economic questions as interruptions to be swatted away”.
“Literally no one listens to that deflection with anything other than second-hand embarrassment,” one Aussie wrote.
Employment Minister Amanda Rishworth defended Mr Albanese’s new tax regime on Sunday when Sky News put Mr Luxon’s comments to her.
“We’ve got two different countries with two different tax systems,” Ms Rishworth said.
“Let’s be really clear: New Zealand has a different tax system to our tax system. Capital gains tax has existed in our country, as we’ve been discussing, for a very long time.
“There’s been changes along the way, and we are looking at capital gains and changing that to rebalance it and make it fairer.”
The minister added that evaluating the tax systems between Australia and New Zealand was like comparing “apples with oranges”, and she didn’t believe Mr Luxon’s comment was a “shot across the bow”.
What’s the difference?
Assets sold in New Zealand aren’t subject to CGT, apart from the “bright-line test,” which applies to investment properties sold within two years of purchase.
The country’s Labour opposition has said it will campaign on a 28 per cent CGT, exempting the family home and farms, in the November election.
Australia has lower GST (10 per cent versus 15 per cent) and a tax-free income bracket (the first $18,200 you earn).
New Zealand taxes income from the first dollar earned but has a lower top income tax rate: 39 per cent versus Australia’s 45 per cent, excluding the Medicare levy.
