Not an unintended consequence

Remember how Labour was elected on a promise to ban foreign speculators from the NZ housing market, then set legislation that was far far broader than that?

Stuff's Susan Edmunds reports on one of the inevitable consequences of that legislation:
A UK-born New Zealand permanent resident says he's been cut out of the property market by restrictions on foreign buyers, because his job requires him to spend time overseas.

Residential land can now only be sold to people who are citizens or permanent residents, with exceptions for Australians and Singaporeans.

But people with a residence visa need to meet conditions. They must have a residence-class visa, must have lived in New Zealand for the past 12 months, have been present in New Zealand for at least 183 days of the past 12 months, and be a tax resident.

Richard Moore moved to New Zealand to serve with the police in Northland as a strategic intelligence analyst in 2005, and bought a house in Whangarei.

He has since taken roles with the United Nations, and is current serving as a security analyst in the department of safety and security in Austria. He has also been posted to Nigeria, Cambodia and Lebanon.

Moore sold his Whangarei house in 2016 with the plan to buy land further north to build a home for his retirement,

But in May this year he found that his job might make that hard to do.

"In May this year I flew back to New Zealand - the UN classifies this as my place of origin and they give me a return flight every two years -  to examine a list of plots up in the Far North. Deciding on one I obtained a lim report and instructed my lawyers to check out the property, I also contacted my bank  in regards to a possible mortgage, it was then the bank told me I may be ineligible to buy the property. Checking with my lawyers they confirmed this state of affairs.

"Basically since the introduction of the Overseas Investment Amendment Act 2018, I am no longer considered an ordinary resident, having been outside New Zealand for six months in the last 12 months and thus ineligible to purchase property or land. I could apply for special dispensation, which would cost $2600 non-refundable but I would still be required to sign an undertaking I interned to return to New Zealand in the next three  months and live there for the next 12 months uninterrupted. Working for the UN this was not going to happen.

"This really is an insult to those who dedicate their lives to serving in the international community and represent New Zealand while they do so."

I'm quoted later in the piece. Susan asked me whether this were an unintended consequence of the legislation. It is not an unintended consequence of the legislation. This is the legislation working exactly as designed. It was designed to cast far too broad a net, and it has cast far too broad a net.

Foreign buyers again

I was a bit surprised that Labour thinks that the latest Statistics New Zealand release on foreign home buyers is evidence in favour of their ban. 

Bernard Hickey writes:

Yesterday Statistics New Zealand reported that 8.0 percent of buyers across New Zealand were either not citizens or held only temporary visas, while 19 percent of buyers in the old Auckland City Council area (now known as the Waitemata local board) were not citizens. See chart above. Across Auckland, the percentage of foreign buyers was 7.3 percent, while it was 9.7 percent in the Queenstown Lakes District.

The figures are significantly higher than LINZ's figures, which focused on tax residency rather than whether buyers were citizens.

Economic Development Minister David Parker said the figures vindicated the Government's looming ban on foreign buyers of residential properties.

"I think it's clear that these statistics back up our decision to ban overseas buyers of existing New Zealand homes. We've no doubt that buyers are having an affect on New Zealand housing market," Clark told RNZ.

"How significant that price is no one really knows but in those suburbs where there's an 18 percent participation by foreign buyers buying that number of houses it must be having a significant effect I would have thought."

I'd had a look through these numbers when they were released yesterday.

First up, a trivial bit: I'm pretty sure that Bernard's transposed the wrong figure. Table 1 of the release has 8.0% of home transfers in which at least one NZ resident visa holder (but no citizens) are buyers, but 3.3% of buyers being neither citizens nor residents. So when Susan and I sold our place in Christchurch, and bought our place in Wellington, we'd have been in the "At least one NZ resident visa (but no citizens)" category* because we have permanent residence but have not yet applied for citizenship. I'm pretty sure that Hickey's 8% is an error that substantially overstates the extent of foreign buying - and that I hope doesn't get repeated elsewhere.

But here are the more substantial takeaways.

First up, I remember there being a big deal made about the "affiliation unknown" category last year and how that could be skewing things. In December quarter 2016, when they started collecting these stats, that category was very large: multiples of the figure for which they had citizenship data. Some folks suspected that the unknowns were disproportionately hiding foreigners.

The quarterly number of "affiliation unknown" buyers dropped from 36,237 in December 2016 to 4,287 in March 2017, to 450 in June 2017, and ratcheted down to 39 in the current March 2018 quarter. So the 'unknowns' problem was largely solved by September 2017.

Over that period, the proportion of "No NZ citizens or resident visas" among those buyers for whom affiliation is known went from 2%, to 2.1%, to 2.4%, to 2.3%, to 2.9%, and is now 3.3%. The biggest jump was from September 2017's 2.3% to the current quarter's 3.3%. But by September 2017, they'd basically identified all the buyers' affiliations.

So either there was never any substantial hidden foreign buyer contingent in the "affiliation unknown" category, or there was and many of them exited the market. The increase in the proportion of foreign buyers was really after they'd sorted out identifying foreign buyers.

Next up, the recent surge. I expect this is best explained by folks rushing to get ahead of the ban. Anybody who is here on a work visa and is trying to sort out residence, or who hopes to renew their visa, and has any ability to buy a house, will want to get that sorted absolutely immediately before they're banned from buying anything. The growth in sales by foreigners has not seen the same recent surge - although that might yet come if living here becomes sufficiently uncomfortable for foreigners.

It's also worth having a very good sense of proportion here. That 3.3% of buyers, across the country as a whole, in the March 2018 quarter, represented 1,083 house purchases. In the same quarter, non-citizen non-residents sold 501 houses. So, on net, in March 2018, "foreigners" (which will include people living here on non-resident visas, whose residence visas may be in progress) on net acquired five hundred and eighty-two houses in that quarter.

If we include all sales over the year to March 2018, we have 3,834 home purchases, across the whole country, by non-citizen, non-residents - and 1,899 home sales. So, on net, foreigners owned 1,935 more houses in New Zealand at the end of the year March 2018 than they did at the start of it.

Labour has implemented a ban on all house sales to foreigners on the basis of this. Just under two-thousand houses - some of which could have been new builds financed by foreign buyers in the first place.

Sales to foreigners are relatively concentrated in two places: Auckland and Queenstown.

In Auckland, in the year ended March 2018, 2,307 purchases (5.7% of purchases)** were by non-citizen non-resident buyers. That category also sold 1,050 homes (2.6% of sales). So net foreign ownership in Auckland, for the whole year, increased by 1,257 homes. In a city of 1.5 million people.

As a proportion, some of the figures can look bigger. If you look for the place with the biggest proportion of non-citizen, non-resident buyers in the year to March 2018, it's Auckland's Waitemata. 12.9% involved non-citizen, non-resident buyers. That's 573 houses. Non-citizen, non-residents there also sold 384 homes (8.7%).

Now if you think effects in Waitemata are particularly important, then maybe Labour could just have banned foreigners from buying houses and apartments in Waitemata. Now that would be silly because it would just encourage people to shift outside of that boundary line - but that also reveals the problem in asserting stuff like "Well, those horrible foreigners must have had a big effect in Waitemata! Look at their proportion there!" Auckland's market is bigger than that. An increase in demand in Waitemata will have some folks with weaker locational preferences pick spots outside of Waitemata. So any effect would be spread across the Auckland region.

In Queenstown-Lakes, foreigners made 7% of purchases (129 homes for the whole year) and 5.1% of sales (93 homes for the whole year).

Can foreigners on net acquiring thirty-six more houses in Queenstown and 1,257 more houses in Auckland in a single year really blow up the the housing market in those cities? If it does, shouldn't we be terrified of the financial stability risks inherent in Auckland? It should not be possible to break the housing market in a city of 1.5 million people by buying a couple thousand houses. If it is possible, then how many mortgages would rapidly be underwater if demand dropped by 3,000 houses in a year for some reason?

It all suggests to me that we don't need a ban on foreign buyers but rather reform to the supply side to unfreeze that blade of the supply-and-demand scissors so that quantity can start adjusting.

During the election campaign, Labour liked to note restrictions on sales to foreigners in other countries, and then Labour turned that into a justification for a ban. But foreign examples are almost never a ban. Denmark has something close to a ban on sales to non-EU citizens, and Austria will make you get permission from local government. But look at the US, the UK, Canada - heck Portugal will give you a residence visa if you buy a house there. Like, pick your favorite model country, and check whether a Kiwi could buy a house here. This site seems as good as any for checking that, though it might be missing some recent changes.

I guess I just have trouble seeing how it makes sense to ban sales to foreigners, across the whole country, to prevent 2,307 sales to foreigners in Auckland in a year whose figures will be somewhat inflated by folks rushing to get in ahead of the ban. And remember that the ban isn't costless to locals either.

Update: Hickey's Monday newsletter, at the very bottom, after his collection of interesting links, notes that the correct figure is not 8%. 

* Or we would have been had those stats then been collected.

** Note that I am here figures from Table 3. They differ from the Table 2 figures that Bernard Hickey is using. I am not sure why they differ, but I am using Table 3 because it provides the absolute figures rather than just the proportions, and because it includes the better regional breakdown - Table 2 does not have a separate breakdown for Queenstown-Lakes, for example. Since all of this is small number stuff, small changes in small numbers can make for bigger looking differences in proportions.

More problems with the stupid foreign buyer ban

I had missed the ADLS submission on the foreign buyer ban. It's another one of those "This is obvious when it's pointed out" things.

This bill is just so ridiculously bad.

Here's the ADLS's section 6.7.

A further serious consequence of the Bill would involve inheritance laws and the drafting of wills. Existing owners, whether they are New Zealand citizens, or considered as an overseas owner as per the definition in the Bill, if they bequeath part of their estate which includes residential or lifestyle land to a spouse, child or other person who would be considered an overseas person would need to take into consideration the hurdles that the Bill will put in their way. This may include overseas beneficiaries of a New Zealand family trust. We suggest that beneficiaries of a trust who are overseas persons must make a commitment to rent the property out or to divest themselves of the property within a given time frame. A couple may name their three children as executors of their will however one may be an overseas person. Would OIO consent be needed to transfer estate property to executors in this instance?

This gets messy for migrants living here with their kids, but where the rest of the family is back in the old country.

And here's 6.6

There could be unintended consequences of narrowing this wording, and even of including residential land as sensitive land in the Bill. Under section 10(1) of the current Act, a transaction requires consent for a transaction which will result in an overseas investment in sensitive land. Under section 12, an overseas investment in sensitive land is one where an overseas person or an associate of an overseas person acquires an interest in any land that is included in the Part 1 Schedule 1 list of sensitive land. This raises questions about the position of a married couple where one spouse is either a New Zealand citizen (and therefore is not captured by the Bill) or holds a permanent resident visa, and the other spouse holds a resident class visa but does not yet have a permanent resident visa. The second spouse would be captured by the Bill and would need to go through the onerous hoops of gaining consent before the couple could purchase a home. This could have serious consequences for property ownership within a relationship, the structuring of relationship property agreements, and divorce proceedings.

It will be interesting to see how much of this mess gets fixed in committee, and how much of it was intentional. Things that don't get fixed we might reasonably view as intentional. And a lot of what's in there, if it was intentional, is evil.

Banning 'foreign' buyers

David Parker tries to defend his government's ban on foreign buyers:

The Government has hit back at International Monetary Fund claims that New Zealand's foreign buyer ban is "discriminatory", saying Kiwi homes should not be traded on the global market.

IMF officials, in New Zealand this week, called the Overseas Investment Amendment Bill "discriminatory" and hinted that banning foreign investment in housing was an over-reaction to a problem that might not even exist.

"Foreign buyers seem to have played a minor role in New Zealand's residential real estate market recently," IMF division chief for Asia and Pacific Thomas Helbling said on Tuesday. He added that there were other ways for the Government to respond if large volumes of unwanted foreign money suddenly flowed into New Zealand's property market.

Associate Finance Minister David Parker said the Government disagreed with the IMF.

"It's a matter of values," he said yesterday. "We believe New Zealand homes should not be traded on an international market."

Except his government's bill does more than that. It hits a lot of people who live in New Zealand - not just 'overseas' speculators. And it makes it hard for developers to build new housing. If the developer is considered an overseas entity because it has more than 25% foreign shareholding - which happens easily if you're publicly listed - then there's more hurdles in front of your next project. If your planned apartment tower is going to be partially financed by off-the-plans sales to foreigners who'd rent the apartment out to Kiwis, and if there aren't locals who'll pay the same price off-the-plan, then you're going to have a harder time financing that apartment building.

And there are a whole host of other problems too. Very few of the problems were caught in Treasury's Regulatory Impact Assessment, or more likely Treasury knew about it and chose not to say anything to avoid picking a fight with the Minister about the very obvious adverse consequences in the bill.

I covered some of those off in a couple of pieces at The Spinoff last week. The first one went through how we wound up with a dumb ban on foreign buyers, and the second one went through a lot of the problems with the legislation as written. And I summarized in this past week's Insights newsletter.

And it is darned depressing if Treasury pulled its punches in laying out the likely consequences of the bill in the Regulatory Impact Assessment for fear of getting offsides with the Minister.

There is very little evidence that New Zealand homes are really traded on an international market. Banning people who live here from buying houses and banning people who would help get more housing built from doing so seem very bad ways of addressing the housing shortage. The former does nothing to alleviate any shortage because people who live here still would have demand for housing - they'd just shift from owning to renting. The latter makes it harder to get new stuff built.

The only real way that foreign speculators contribute to a shortage of housing is if they buy a place and leave it empty. The housing shortage is the difference between the number of dwellings being built and the growth in demand for dwellings that accumulates over time. Empty houses can contribute to the problem. But there's no evidence that there's a growing problem in houses being held vacant, and no evidence that any vacant dwellings are disproportionately foreign-owned. And if there were a problem with vacant housing, you find a way of dealing with vacant housing rather than banning foreign buyers. Or, even better, just ease up the rules and make it easier to build so it doesn't matter if somebody keeps a house vacant for a bit.

Twitter and Facebook comments on my Spinoff pieces lead me to believe that a lot of Kiwis think they'd be banned from buying houses abroad, or would face big hurdles in doing so - and especially in places where there are housing shortages.

Let's take a spin. Please tell me if I have any of these wrong.

Here's Experts for Expats on the rules on buying property in the UK - London included. London is crazy expensive. What are the rules? You might have trouble getting a mortgage if you're based abroad, but that's about it. A Kiwi can buy a house in London. A Brit won't be able to buy a house in Dunedin.

San Francisco. That's the classic crazy one, right? Huge housing shortages. Could a Kiwi buy a house there without living there - and even maybe leave it vacant? Yes. Or I can't find any evidence there being any rules against it. Here's one real estate adviser website on it. Expect a few hassles around anti-money laundering stuff, but that's it. It'll just be proof-of-identity stuff. And that's the same for the whole rest of the US. A Kiwi can buy a house anywhere in the USA, regardless of whether there's a housing shortage in that city. An American won't be able to buy a house in Kapiti.

The only place in Canada that has any kind of restrictions thus far is a tax on foreign home buyers in Vancouver. You can go and buy a house or apartment in Montreal or Winnipeg the same way that I could - by paying the owner of it. But a Canadian wouldn't be able to buy a house in Nelson.

Heck, it will be easier for a Kiwi to go and buy a chateau in France than it would be for someone in Paris to buy a house Haast. And selling a house in Auckland could pretty easily let you afford a French chateau too.

This isn't just making things even with other places that put restrictions on Kiwis. Other places don't do that. Or at least not other reasonable places like the US, the UK and Canada. The Labour government is putting more restrictions on a foreigner buying a house in New Zealand than even Trump has put in on foreigners buying a house in America.

Labour seems to get a bit tetchy about being compared to Trump. On this one, they have out-xenophobed Trump by miles. The parts of the left that used to get mad about xenophobia have gone kinda quiet because their team's in office. If you think this bill is targeted at 'foreign speculators', you're deluded. The bill isn't written that way. It blocks people who live here from buying property. And since it does nothing to increase the number of houses available, and arguably reduces construction, it sure isn't a housing proposal. It's an anti-immigrant proposal.

And if your answer is "Why should foreigners be allowed to buy houses in the first place?", your whole morality is backwards. The presumption should be that voluntary transactions among consenting adults should be allowed, not the other way round. Banning people from doing things requires evidence of real harms to others. And nobody has provided any on the foreign buyer ban.

Thursday roundup

The closing of the browser tabs brings these gems.

• Nikki Mandow at Newsroom has an excellent summary of just how bad the foreign buyer ban is.
• Sydney is no fit place for young people to live. 
• Fast food outlet density doesn't cause obesity.
• I am torn between my hatred of Easter trading bans and my abhorrence of everything involved in this article. 
• If you're using Stata to run lots of levels of fixed effects, this could be useful.
• A blockchain trade-tech solution for shipping the data along with a product and smoothing international trade. 

My column in this week's Insights newsletter will be out today instead of Friday because of Easter. It'll be up here after lunch today; find it there if you haven't already subscribed (the subscription link is waaay at the bottom of that page).

I there suggest that, just as we celebrate the Queen's birthday on a date that makes a convenient fixed long weekend, we should have the statutory celebration of Easter on a fixed date rather than letting it move around all the time and mess up school calendars. It's in our third spot in the newsletter, which is generally reserved for more lighthearted takes on things. This one's written up fun, but I would totally push the button to implement a policy that would simultaneously:

• Make Easter Sunday a statutory holiday on a fixed date (it currently isn't a stat);
• Fix the dates of Easter Friday and Easter Monday to the same fixed Easter Sunday date;
• Abolish the trading bans around Easter;
• Let people take their regular annual leave if they don't want to work on whatever day the Pope and Archbishop of Canterbury say is Easter or Good Friday this year, in the same way that we currently let people use annual leave if they follow the Eastern Orthodox calendar for Easter which diverges from the Roman one a lot of the time - and in the same way that we let hard core royalists take the day off on whatever day is the Queen's actual birthday if they don't think the stat holiday is quite good enough.

NZIER on the foreign buyer ban

Richard Harman's Politik newsletter points to NZIER's rather scathing submission on Labour's proposed ban on overseas buyers. NZIER's submission is here. There are some very good bits. 

We understand why this Bill has been introduced. We understand why Treasury has written a Regulatory Impact Statement (RIS) that contains very little evidence. We too would like it to be easier for first home buyers to get into their own home.

But none of these things detracts from the fact that, from an economic perspective, this Bill is a poorly-designed solution to a poorly-defined problem. As a result, NZIER opposes the Bill.

We recommend the Select Committee considers the scope for exemptions from the sweeping provisions of the Bill in terms of investment in certain regions or in certain types of residential development that would add to New Zealand’s housing supply and are less likely to be thought of as sensitive.

Given the lack of empirical evidence and poor data quality around overseas investment in existing houses or residential land, we recommend a timely and well-publicised monitoring and evaluation process to ensure the Bill does not have unintended consequences.

...

We have a great deal of sympathy for Treasury – it was effectively railroaded into delivering a RIS to implement a proposed legislative change with which it likely disagrees, and it would have been very difficult from a relationship perspective for Treasury to develop a RIS that explicitly advised against the new government’s proposal.

What’s the economic problem, exactly?

In a RIS, the problem definition should clearly identify the market or policy failure that needs to be addressed, what is causing the problem, and – ideally – how material the problem is. The problem definition is the foundation on which any RIS should be built, because it clearly explains why change is required at all.

The problem definition in Treasury’s OIA Bill RIS falls well short of best practice. In fact, it is almost non-existent. It contains almost no information or empirical content. It merely states that the new government has a stated policy commitment to “ban overseas speculators from buying existing houses” and the RIS is all about how to implement the political proposal.

This is effectively Treasury waving the white flag from a policy analysis perspective. It seems clear that Treasury were not asked to analyse whether the proposal makes any economic sense based on first principles.

An evidential void 

Obvious questions that have not been considered are:

• What empirical evidence is there that overseas speculators are pushing up house prices in New Zealand? Which countries’ speculators are having the greatest influence?
• In the absence of empirical evidence, recognising the limitations of existing LINZ data sets, how reliable is the anecdotal evidence on the role of overseas speculators in artificially inflating house prices?
• How significant is this inflationary effect, compared to other potential drivers of house price inflation, such as supply-side constraints and land availability?
• Why is home ownership ‘better’ for Kiwis than renting? (i.e. what is the welfare loss to Kiwis attributed to the current legislative framework?)
• What does the desired ‘future state’ look like, and how likely is the proposal to contribute to this state?

Without at least initial answers to these questions, it is very difficult to judge whether the proposal will make any material difference to home affordability for Kiwis at all. 

I like NZIER's heading questions too:

• "Will the OIO have the capacity to deal with 3,000% more screening applications?"
• "Is this really how we want to be regarded in trade negotiations?"
• Coming to New Zealand - we welcome skilled migrants (but only if you don't buy an existing house)

I'll also recommend Bryce Wilkinson's submission on behalf of the Initiative on it. And Matthew Cockram's submission.  And the Nelson Council and Queenstown Lakes Council submissions. 

Heck, you've even got telecom providers like 2 Degrees submitting on how the Bill will screw up getting telecom infrastructure in. Why? Because three of the big ones are classed as overseas persons and their infrastructure often winds up being situated on residential land. So it'll push back timelines on getting 5G through because they'd have to jump through OIO hoops. Stupid stupid stupid legislation. And it'll screw up power infrastructure in Wellington because the Wellington lines company is foreign-owned.

The legislation is terrible. Aren't there cheaper ways for Labour to pander to xenophobic nationalists? Free flags or something?

I wonder how bad legislation would have to be for Treasury to produce a more honest and thorough RIS. 

Racist donuts?

I've been looking forward to Krispy Kreme opening in New Zealand since, well, since I moved here. 

But what the fresh hell is this?

Anti-foreigner rules at Krispy Kreme have left a bitter taste in one doughnut enthusiast's mouth - prompting a burning response from the Philippine Embassy.

A Hamilton man has been left hurt and angry after his Filipina girlfriend was not allowed to attend the grand opening of New Zealand's first Krispy Kreme outlet because she was not a Kiwi.

The multinational company admits the woman was likely turned away because of a "tired and over-zealous" security guard.

The company had a promotion for the first hundred customers and wanted to restrict that to Kiwis rather than American tourists - fair enough. And random-draw stupid security contractor - I doubt we should blame Krispy Kreme for that.

But how have we gotten to a spot where a dumb-ass security guard's baseline expectation around foreigners is "when in doubt, boot them out"?

Is this legacy of the Labour/Green/NZ First racist election campaigning around the evils of foreigners, or part of what drove the success of racist campaigning in the first place, or both?

I know politicians respond to incentives and when racism wins votes, they'll pander to it. Might as well blame the sharks for eating people. It's just in their nature. But it isn't right.

Soak the tourists?

Gareth Morgan argues that New Zealand needs to do a better job in extracting all the surplus from tourists.

He first argues that foreigners buying property here would pay a fairer tax share under comprehensive capital income taxation on the value of their purchased property.

A lot here would hinge on relative elasticities.

Suppose that foreign demand for NZ property is completely elastic (there are close substitute countries where rich people might go instead) and that domestic property supply is completely inelastic. Under those assumptions, we would see a one-off drop in property values equivalent to the present discounted value of the future tax flow. Some money currently being paid by foreign investors to Kiwi owners would instead go to the government. If demand for NZ property is more elastic than the supply of NZ property, which seems likely, then the proposal mostly transfers money from current owners to the government. And the more elastic the demand for NZ property among foreigners, the more foreign buyers are deterred by the regime.

He goes on to worry about costs imposed by tourists. In some cases, he's right - but in those cases it points to a problem that's broader than tourists. He points to costs imposed by tourists when they have car accidents; if tourists do have disproportionately more accidents, then ACC car registration levies on cars run by car rental agencies should be higher than those on residents' cars - the problem is one of inadequate premium sensitivity to realised risk than one of tourists per se. And while he's right that the system should charge tourists when they wind up needing costly rescue operations from mountaintops or ravines, the system really should charge whenever there's recklessness - whether from tourists or locals.

Morgan continues:

But we could and should go even further. This season the Great Walks are enjoying record numbers of tourists. Again these are taxpayer-funded facilities so why shouldn’t the taxpayer get a direct return on that investment, at least to cover the track maintenance? We already charge for hut beds so clearly are not allergic to the user-pays ethos, but extending this to foreigners having the right to use of National Parks again seems a no-brainer. Again that levy could be collected at the airport as part of a bundled “taxpayer-provided services levy”.

And it shouldn’t stop here. In instances where there are direct charges for the services provided by central- or local-government funded or part-funded amenities, we could simply have a separate and higher charge for foreigners. Zoos for example could levy that – as the example in the photo illustrates at Darjeeling zoo, foreigners pay 2.5 the entrance fee that locals do.

We already do this at the Waitangi Treaty Grounds, presumably because there is value in New Zealanders visiting this historical site. Why not extend this approach to other sites – such as Te Papa, Zealandia, and the plethora of other Zoos and Museums that receive taxpayer and ratepayer subsidies?

On the other hand, tourists pay 15% GST on everything they buy here and only can reclaim GST on those goods they bring home with them - if they can be bothered to fill in the paperwork. Further, tourists already pay more for facilities like zoos where locals can often profit by purchasing annual passes that pay for themselves after two or three visits.

And where tourists are cost sensitive, tourist-soaking levies on some facilities will reduce the amount tourists spend elsewhere.

Bigger picture, cities like Wellington do pretty well out of tourists. Sure, they can be a bit annoying for locals when Lambton Quay is jammed if two cruise ships are in port at the same time, but we're able to support a better variety of restaurants and bars than we could without them.

Finally, in a world where public facilities are directed to soak tourists, they need a way of identifying locals. That means we'd all need to show our driver's licence for entry to these facilities. But why stop there? Councils fund a lot of art galleries; you might need to bring your power bill or some other proof of local residence to get discounted admission: a driver's licence wouldn't be enough. Or maybe Councils would start issuing special residents' cards. People who sound local would likely not be bothered to pull out their IDs when entering facilities, but folks like me who still have a Canadian accent after being here for more than a decade would have to stump up every time.

It's that last bit that sounds particularly unappealing. I know Morgan's framing this as being an anti-Winston-Peters thing, but I'd reckon that Morgan's soak-the-tourists proposals have a lot better chance of passing in a world in which New Zealand First has the balance of Parliamentary Power than one in which they don't.

I'd hit on related topics in last week's NZ Initiative "Insights" newsletter.