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Mainfreight's Plested gives recipe for NZ including capital gains tax, performance pay for teachers

Friday 29th July 2016

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Mainfreight executive chairman Bruce Plested has advocated a capital gains tax to take the steam out of an overheated housing market and urged the government to treat teachers as "true professionals" paid on the basis of performance.

The transport group chair used his address to shareholders at their annual meeting in Auckland yesterday to give his recipe for lifting New Zealand's economic and social game by tackling issues such as education and housing affordability. In doing so he invoked NBR Rich Lister Stephen Jennings, who has warned that failure to fix New Zealand's social ills could lead to some sort of voter or civil unrest.

Plested says education is "the potential solver of almost all our problems" and he called on New Zealand  to aspire to "the highest educational standards". Getting there required lifting the teaching profession "to the highest level as with other professionals" including "variable pay based on pupil success" and "measurable experiments with education, such as charter schools."

"The educated have choices through their lives," he told Mainfreight's shareholders. "They can become engineers, teachers, doctors, scientists or IT professionals. They can work and live in other countries – where they are welcomed and can compete on the same level as the locals."

By contrast, the uneducated "do not have choice".

"They are limited to doing what is regarded as menial, unskilled and consequently lower-paid work," he said. "A much greater number of them than the educated will become net takers from society and New Zealand, and only a few will battle their way through to create businesses and value for their community."

Both performance pay for teachers and charter schools are opposed by teacher unions.  The PPTA has referred to them as "dud" policies, saying there's no evidence that linking pay to student data contributes to learning "but plenty to suggest that it’s profoundly demotivating and that it widens the gender pay gap," PPTA president Angela Roberts has said. By contrast, the ACT party argues that educational outcomes would be improved if educators faced more competition, on the basis that such forces produce the best outcomes for other goods and services.

Plested said the price of housing in New Zealand "is another glaring problem", with the average house in Auckland now costing 10 times the average household income, which is above the ratio of three-to-five times average income that is the globally accepted norm.

Unprecedented immigration, low interest rates and a trend for the well-off and those nearing retirement to return to invest in the Auckland housing market had resulted in Auckland being one of the world's most expensive housing markets. Profit expectations were driven by "the perception and reality ... that upon sale, the gains made would be capital gains non-taxable," he said.

"Not taxing capital gains on the sale of assets causes distortion in buying and investment decisions," he said. "There is no reason that New Zealand should be different from Australia, UK or the US in taxing capital gains on housing. If this tax needs to be introduced progressively over say a two-year period, it will alter buyers’ and sellers’ behavior and perhaps pave the way to solving New Zealand’s housing problems."

Plested also took aim at New Zealand's polluted rivers and over-fishing in the Hauraki Gulf.

"Let’s consider the pollution which we continue to allow to our rivers and streams and in particular the Hauraki Gulf," he said. "The gulf has been massacred with over-fishing and poor fishing methods, and land run-off from storm water, sewage and building sites. We need the gulf free of commercial fishers, and a publicity campaign followed up with fines for contaminating streams and the sea with chemicals, animal effluent and builders’ run-off"

In closing, he urged shareholders to remember to vote in their local body elections.

Mainfreight posted a record profit in the year ended March 31. Its shares last traded at $17.10 and have climbed 24 percent in the past 12 months, outpacing a 13 percent gain in the S&P/NZX 50 Index. The stock is rated a 'buy' based on the consensus of six analysts polled by Reuters.

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