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Should Aotearoa have an independent body review economic policy?

28 September, 2023

Interview by Rosetta Stone, adapted by Ashley-Rose Redstone

The National Party’s recently proposed foreign buyer tax plan has led to calls for an unbiased, independent body to evaluate economic policy ahead of elections.

Economic experts are calling for Aotearoa to adopt an independent body for fact-checking political parties' economic policy.

This comes as the National Party’s proposed foreign buyers tax — which the party claims will make Aotearoa up to $740 million a year, has been criticised by several independent economists, for potentially overstating the amount it will bring in.

Since 2018, prospective foreign buyers have been unable to purchase residential homes, without approval from the Overseas Investment Office. National’s policy would allow foreign buyers to purchase any home that costs $2 million or above, with a 15% tax.

Head of Research at CoreLogic, one of the country's largest property data firms, Nick Goodall, told 95bFM’s The Wire, they expect the policy to generate at most $213 million a year — over $500 million short of the National Party’s pledge. 

National has refused to disclose its modelling for its tax plan, which is crucial for the party to be able to afford its promised tax cuts aimed at middle income earners. 

Goodall said that despite National’s claim their calculations are fully costed and reviewed by a third party, based on the 2600 homes over $2 million sold to foreign buyers last year, he believes the tax could raise as little as $50 million a year – less than 7% of National’s estimate.

“Every way you look at it, it is difficult to see how they got those numbers. It seems like a rough estimation and expectation of behavioural change.”

“There's obviously a few underlying assumptions that we just cannot see as being plausible situations.”

Goodall highlighted that similar policies in cities in Canada were only able to raise an additional $20 million to $50 million New Zealand dollars a year.

Professor of Experimental Economics at the University of Auckland, Ananish Chaudhuri, told The Wire, that an independent body to evaluate the reliability of economic policies released before an election could improve accessibility to understanding policy and hold parties to a high standard of economic accuracy. 

“We really need someone, or a group of people, with solid credentials, to say, yes, this stacks up, or no, this doesn't seem to stack up at all. Then we don't have to argue over faulty numbers.”

Chaudhuri suggested the body could be modelled after the US Congressional Budget Office, which provides impartial budget and economic information to Congress.

He said while there is a possibility for bias within the body,  ensuring advisors are listed as contributors involved in the work would help ensure accountability.

“Every government might try to fit bodies like this with their own preference, but it is clearly possible.”

Listen to the full interview with Head of Research at CoreLogic Nick Goodall

Listen to the full interview with University of Auckland Professor of Experimental Economics Ananish Chaudhuri

Public Interest Journalism funded through NZ On Air