A reader writes in:

I think your discussion of why CGT is double tax is missing the key element, David Seymour has some good articles on it, as does Eric Crampton.
 
You’ve used the logic of retained earnings.  That is one good reason that CGT is double taxation, but it treats a business as having static value – so the value of the business is basically just retained earnings.  That’s not usually true, unless the value of the business is purely the disposal values (assets plus money at bank).
 
The other end is that the value you’ll pay when buying a business is the discounted present value of future profits.  In other words, if I’m buying a business I’ll pay as much as it’s worth to me in future profits.
 
Those future profits are all taxed.  That taxation reduces the value of the business to me, and therefore reduces how much I’ll pay to buy the business.  Double taxation.
 
Consider an example, a business that is created by a mortgage on your house for $300,000, buying assets and equipment.  It has a projection of $100,000 in profits over the next ten years.  For simplicity I’ll ignore the actual discount rate, and assume that after 10 years the business has no residual value (the government is going to ban the business area it works in – perhaps it’s a fossil fuel business).  The real calculation would need to discount all future profits and assume some growth rate of the business into the future.

What we can see in this simplified example is:
The capital gain in the business is already reduced by the amount of income tax – so income tax is also effectively a tax on the capital gain associated with productive assets
The capital gains tax is hitting inflation as well, which is totally unfair
 
The problem is that this is a complex economic argument that some people don’t follow well – it’s not intuitive that income tax also impacts the capital value of income producing assets.
 
The reality is that the only elements of capital gain that are not currently taxed are those that don’t arise from the future income stream of the asset, i.e. those returning to speculation.  The areas of asset ownership that increase in value through speculation and are untaxed are those of valuable items – art, vintage cars, jewellery, family home (but not rental homes).  The government’s proposed capital gains tax is taxing exactly the wrong asset classes.
 
I think this argument needs to be combined with your discussion of retained capital, to give a full picture of what’s really going on.  I think between double tax on retained capital, double tax on future profits, and taxation on inflation, the real picture of the taxation impact of the CGT is quite different than that the working group gave.

A guest post by David White:

In response to kiwiblog request for kiwibuild photos, I took a trip up to visit Lakeside Te Kauwhata (TK). I was also personally interested in this development as it has got a lot of media / PR time in the North Waikato, so was interested to see what the fuss was about. 

Background on Te Kauwhata (TK) TK is equidistant between Auckland and Hamilton. An hour without traffic gets you into Auckland central and an hour south would get you to any part of Hamilton. It has managed to project itself as a desirable community, with a village feel. It was the location of NZ’s first wine research station, and capitalizes on this history to create a atmosphere of higher class than the riff raff of Mercer and Huntly the townships north and south of TK respectively. The view from the roadside traveling into TK is one of lifestyle blocks, grapes and climbing roses on the fence. Very picturesque. 

One of the issues that rankled Huntly residents was in the Waikato District Council long term plan, was that TK got hundreds of millions ($260 million if my memory serves me correctly) for infrastructure upgrades including upgrading the sewage treatment plant. TK has approximately 1500 homes in it. Where as Huntly which has many more homes, got a mizerly $0.6 million in capital upgrades. We will come back to this below. 

The company Winton sure knows how to market itself. They have massive signs, including one on South Bound out of Auckland (Dury I think). Closer to TK, they have a massive sign next  to the roundabout next to the TK expressway off ramp system. 

And once you hit TK, there is a community noticeboard area, which winton have also added to since I was last here. 

Traveling down the road to the development, it is clear that part of the condition of the development was to upgrade the road. Since roadworks started way before the development was visible. 

And at the development site more signage and earthworks. The lake is just visible in the distance. However they are also creating a lake on site that can be used for recreational activities. The reality is that Lake Waikare is a shallow peat like, and like most of the Waikato Peat Lakes it has issues with nutrient run off, Koi carp (in the Northern Waikato) and is toxic for months of the year. Thus they are using the road runoff and stormwater to create a healthy lake for the residents.

This being the entrance to the site: 

As luck would have it, there was actually an open home on! So given my brother qualifies for the kiwibuild program, decided to pay a visit to the show homes and see what he could be able t purchase. At this point there was a sign requesting no photography, so thought that it was ethical not to take more photos. But couldn’t resist one from the site office looking towards the lake showing further earthworks and where the houses would be located for the first role out. 

The show homes were four or five homes, on fully landscaped sections (included in the price), displaying a selection of the homes on offer and the site office had large maps showing the full extent and plan for the development. 

The development was for 1600 (or 1500?) homes. This will approximately double the size of TK. So hence the hundreds of millions for infrastructure upgrade. As clearly doubling the town population is going to have an impact on services! It was also interesting that Waikato District Council was able to access the interest free loans from the previous government to fund these upgrades. So this development has clearly been in the pipeline for some time. 

As one would expect from a development this size, there is commercial and retail space allocated, and it will no doubt take some years before all the development wraps up. It is only recently that sections have become available for purchase and this is the first release of sections. Below is a shot of some of the materials,  

With a close up of the map, as you can see there has been quite a few sections sold. The kiwibuild sections are the ones in light green. Have circled them to make them more obvious.They have all sort ou on the A2 release plan, but further properties are available so if you have approval for a kiwibuild package you are still able to purchase one. 

The numbers. The kiwibuild packages are $480k and for this you get a 2 bedroom, 1 bathroom and 1 onsite car park. The floor area is 68 – 73 square meters and section sizes are 150 – 285 square meter range. 

How does this compare to the entry level homes that are no in kiwibuild. These prices start at $499k and from what I can determine you get the equivalent end product. 

So to summarize, this appears to be a high quality development that has been in the pipeline for some time and kiwibuild has purchased home and land packages from the developer, and have discounted them by $19k (or ~5%). 

I am not a developer, so cannot give a timeframe between what you current see on the ground and folks moving into their homes, but I am sure winton developments would be happy to discuss when you might be able to move in. Maybe any developers who read the blog might like to comment. 

Critique of kiwibuild decision. When Kiwibuild announced they were securing home and land in TK, I was flabbergasted.This is because you pay a high premium for wanting to live in this community which projects its exclusivity and upper class, compared to the surrounding communities. 

I have lived in Huntly and found it does have street and pockets on both sides of the river that meet the stereotype of Huntly being a low socio-economic area and all the ills that go with this. However there are areas that are very suburban, areas of lifestyle blocks and areas of high quality housing. 

We moved to Huntly because it was where we could afford to purchase our first home, since living in Hamilton meant we were unable to get onto the housing ladder. What was envisioned to be temporarily has become permanent since we enjoy the relaxed atmosphere and it provides all the services you would expect for a large town (physio, supermarket, doctors, etc). 

Land is very much cheaper in Huntly, for example trademe currently lists sections starting at $179k for 518 square meters in a part of town I would be happy to live in, and ex state houses starting at $189, in reality the more acceptable homes start in the $250-300k range. In ignoring these homes, kiwibuild are able to offer (a) less homes (b) spend more money (c) reduce the total price by 5% instead of 10% (d) enable people who can only afford $250k, instead of $480k to get into the property market.  So from an investment point of view, the government would get more bang for their buck by purchasing homes (or land) in Huntly instead of TK 

It also did my head in a bit to have Bayleys being the exclusive agents for this development. My image of bayleys is the top end real estate market, and I am sure Winton wants to project this image. But to me, kiwibuild isn’t about top end, but about helping folks get into the market that otherwise would not be able to. 

Julius Probst at BBC gives seven reasons the world is improving:

1. Life expectancy continues to rise: up from 29 to 71
2. Child mortality continues to fall: down from 22% to 4.5%
3. Fertility rates are falling: from around 5 per woman to 2 meaning global population will stabilise
4. GDP growth has accelerated in developed countries: real incomes double every 36 years
5. Global income inequality has gone down: hundreds of millions have been lifted out of poverty and for first time in 200+ years over half the world are now “middle class”
6. More people are living in democracies: gone from 0.9% to 53%
7. Conflicts are on the decline: there has been no war between great powers since Vietnam

A guest post by Sir Cullen’s Sidekick:

With the CoL going strong and Winston and James Shaw surrendering at the feet of Jacinda and selling their soul for a measly dollar, the odds are heavily stacked against National in the 2020 election.  Before I analyse National’s chances, let us focus for a moment about who will lead National in 2020 election. It will either be Simon Bridges, or he will be rolled sometime this year and Judith Collins will take over. My guess is whoever takes over National will not be winning the 2020 election.

Before you all down tick me, here are my reasons:

1. National will not have any partners for forming a collation. With ACT’s one seat National will be at least 2 seats short of a majority
2. NZ First won’t make it back to the parliament. So, the long shot of National – NZ First government is ruled out
3. Only four parties will make it back to the parliament – National, Labour, Greens and ACT
4. Labour and Greens will together poll around 47% while National could end up in the 45%-46% range. With all wasted votes, Labour-Greens will end up with a one or two seat majority
5. People will give CoL at least another term despite economic downturn and hardship. No government has been thrown out after just one term

How can National increase their chance of winning in 2020? Obviously a leadership change can help galvanise more votes for National. With or without a leadership change, National needs a partner. This can happen only if a party that is sympathetic to National can secure enough votes to cross the 5% threshold. This is NOT going to happen. Another option is for ACT to have 4-5 MPs. This means ACT needs to increase their vote share from their current measly 0.5%. None of the other parties can win an electorate seat. So where does this leave National with the coalition partner situation? It will end up with just one extra seat from ACT like in 2017.

However, this situation can improve dramatically if ACT, TOP and Maori party can form an alliance with a Common Minimum Programme (CMP). They can all agree on their own key policies that will be their bottom line – for example, ACT’s charter schools, TOP’s Smarter immigration and Maori Party’s home and education policy etc. Their combined vote share based on 2017 election results will be 4.1%. Assuming they can improve this a little bit in 2020, they could get between 4.5% to 5%. Based on ACT’s Epsom seat this alliance can have 6 seats. Their list can have candidates from ACT, TOP, MAORI PARTY in that order and with 4.5% to 5% can easily secure 2 MPs from each party into parliament. This will provide a National a strong partner to form a government. The alliance can opt to sit out and support National on confidence and supply matters or be part of a formal coalition.

While this is a theoretical possibility and a sure chance to get rid of CoL, this requires long term vision and sacrifice from the leaders of ACT, TOP and Maori party. I am not sure whether they have the courage to embark on such a bold move. Their globe sized egos will prevent the common good from happening.

There is another possibility. Winston retiring before 2020 election and Shane Jones get to lead NZ First in 2020. With Shane Jones at the helm, NZ First could get back into parliament. This is assuming Labour is not going to cut a deal with NZ First by not standing a candidate against them in Northland or Whangarei. I suspect that Winston will cut a secret deal with Labour to get into the parliament in 2020 as NZ First won’t cross the 5% threshold due to the betrayal of its core voters in issues like Oil & Gas ban in Taranaki, UN immigration pact signing, ditching National in preference to Labour etc. In summary unless Winston goes completely rogue and throws the toys out, National must wait at least until 2023 to be government again. That is why I feel, Judith Collins shouldn’t make any move this term and wait until after the 2020 election to take over (if she is really interested). Meanwhile, National should remain united, focus on policy, listen to the people and attract good quality candidates who can make a difference.

The Herald reports:

More than 400,000 lifestyle blocks could be affected by the proposed capital gains tax.
Figures from Land Information released to the National Party show there are 403,883 freehold properties around New Zealand that are greater than 4500 square metres.

And the proposed CGT will hit each and every one of them.

National Party leader Simon Bridges said the 403,883 figure included about 50,000 farms.
But it did not include those who ran a business from home, or who had flatmates.
“They would also be subjected to a CGT.

Yep. This proposed CGT won’t just hit people with second homes. It will affect hundreds and thousands of people who have just one home.

Stuff reports:

Options being investigated by the Government for a tax or royalty on bottled water include a charge on water sold in New Zealand and overseas, possibly of one or two cents a litre.
The issue of water exports blew up before the last election, and a large protest in Christchurch on Saturday shows it is still a matter of concern for many people. In the Christchurch protest at least 2000 people showed their opposition to a company shipping billions of litres of water overseas.
On Monday, Trade and Export Growth Minister David Parker said water bottling companies should be paying something.

Apart from company tax and GST?

There should be charges for water, but not just on bottled water exports which is selective stupidity.

The best market mechanism for water is regional tradeable rights. Overall there is no shortage of water in NZ. We have 500 trillion litres of water a year, of which only 2% is extracted.

But in some areas of New Zealand there can be greater demand for water than there is supply. In those areas it makes sense to have some sort of charge for water. But rather than a tax, tradeable rights would be best as it would have a flexible price.

So a flat tax all over New Zealand on just one use of extracted water is a very bad way to do things. Sadly probably what the Government will do.

Hamish Rutherford reports:

After declaring a conflict of interest in a proposed Northland cultural centre, Shane Jones sat through a meeting when ministerial colleagues decided on its multi-million dollar funding application, even giving reassurance about its governance.

If you are conflicted on a grant, you should remove yourself entirely from the process, not use your special position to turn up to the decision making meeting of Ministers and advocate for it.

Manea, Footprints of Kupe was among the first group of projects to be awarded cash from the Provincial Growth Fund, a $1 billion a year fund secured in coalition negotiations between Labour and NZ First, which is coming under increasing criticism.
On February 23, 2018, Tourism Minister Kelvin Davis announced the fund would provide up to $4.6 million, for a “cultural tourism experience” in Opononi.

Almost $5 million for a tourist centre.

An all weather centre to teach the legend of Kupe, proponents claim it will attract visitors to an largely overlooked by tourists and create around 17 full-time jobs.

You really think tourists will go all the way to Opononi just for a centre about Kupe? They must be kidding. It’s four hours from Auckland Airport. Giving Northland decent roads would be much more likely to get people up there.

He has repeatedly said he stepped back from having involvement in the project and denied advocating for it.
But documents quietly posted on the website of the Ministry of Business, Innovation and Employment (MBIE) showed that Jones attended what appears to be the single ministerial meeting to determine the application.
“Minister [of Finance Grant] Robertson raised his concerns about the broader management and commercial operations of the project,” MBIE official Mark Patterson wrote.
“Minister Jones provided reassurance that as the project has Far North Holding Ltd, the commercial arm of the Far North District Council, involved in its governance structures, he was comfortable their presence would alleviate any concerns on the issue.”

So Jones turned up to the ministerial meeting, and advocated for it, despite explicitly claiming he was not advocating for it.

During an interview in April 2017, Jones said “as far as I’m aware” he was not lined up to be a director of any entities related to Manea.
On Friday morning his office said he only learned that day that proponents of Manea had previously expected him to have a governance role.
Stuff has obtained a series of documents which claimed that in 2014, Jones was named as the proposed chairman of Manea Kupe Ltd, as it attempted to win funding from the now defunct Tourism Growth Partnership, a fund set up by the former National Government and administered by MBIE.

The second lie – denying he was to be involved in it, when he was the proposed Chairman.

Seymour said the documents suggested Jones “was decisive” in seeing the funding go ahead to an organisation he had a prior association with.
“He actually provided reassurance to his colleagues, which is at stark odds with  his repeated assurances in Parliamentary questions that he’d recused himself from any role,” Seymour said, claiming Jones had breached the Cabinet manual.
“I don’t see how you can continue to be a minister when something as simple as a conflict of interest, you can’t manage.”
On Sunday morning, Seymour, called for Prime Minister Jacinda Ardern to sack Jones.
“Shane Jones not only involved himself in an application in relation to which he had a conflict of interest, he also concealed this key meeting in answer to a written parliamentary question,” Seymour said.

Of course she’ll do nothing.

Newshub reports:

The Government is now considering allowing China expert Anne-Marie Brady to make a submission on foreign interference after previously blocking her.
The Canterbury University professor wanted to make a submission to the Justice Select Committee regarding its inquiry into foreign interference in the 2017 general election and 2016 local elections.
The select committee is evenly split between National Party MPs and Labour Party MPs. And while the National members supported Ms Brady making a submission, the Labour members voted against it, on the grounds her request was late. 

“As Committee Chair, I am satisfied that the correct procedure has been followed and that the agencies will keep the committee well informed about any issues of foreign interference that may arise,” Labour MP Raymond Huo said on Friday morning.
But the Prime Minister’s Office now says the professor may be invited to speak. It’s understood the select committee chair, Mr Huo, will appeal to his colleagues next week to allow Ms Brady to submit. 

A real own goal by Huo and Labour MPs. They have ensured that now when Brady does testify he testimony will get far far more prominence that otherwise would have been the case.

Newshub reports:

Mark Taylor, known as the ‘Kiwi Jihadi’, feels genuinely surprised he wasn’t able to voice his freedom of speech while living under the Islamic State (IS).

He really does seem to be a moron. A dangerous moron, but still a moron.

If he makes his way to our embassy in Turkey, then we’re obliged to allow him home. The PM has hinted he’ll face charges if he does get home.

I have a good idea which may encourage him to stay away. Rather than just hint at what may happen if he returns home, be explicit about it.

The Solicitor-General should announce that charges under S13(1) of the Terrorism Suppression Act have been laid against Mark Taylor for participating in a group that is a designated terrorist entity.

This carries a maximum sentence of 14 years jail.

The thought of up to 14 years in jail could be a strong deterrent to Taylor to not try and come home.

Graham Adams writes in The Listener:

As the debate over the introduction of a comprehensive capital gains tax rages in the media, it has mostly been reduced to arguing about its effect on the housing market and who would be stung by it and who wouldn’t. But one thing most commentators agree on is that it wouldn’t dent house prices significantly.
The Michael Cullen-chaired Tax Working Group said it would put only a small “downward pressure” on house prices and even Finance Minister Grant Robertson admits it would have a minor impact on affordability. 
In fact, the government’s general exclusion of the family home from any CGT regime could have the opposite effect in some suburbs if homeowners poured money into extending their houses, to bolster an investment beyond the taxman’s reach. In Australia, where family homes are generally exempt, this phenomenon is dubbed the “mansion effect”.
Interviewed on The Nation over the weekend, Jacinda Ardern seemed unaware of these inconvenient truths. Asked about a capital gains tax, she said: “There is a large group of New Zealanders — particularly young New Zealanders now — who, if their aspiration has been homeownership, [it] has just become harder and harder.”

It is extraordinary that the Prime Minister — whose “captain’s call” for a capital gains tax backfired on her so spectacularly in the 2017 election campaign — still doesn’t appear to understand the negligible effect it would have on housing affordability and is continuing to use it as a selling point.

At best there is a very small downward pressure on house prices, if any. And an upward pressure on rental prices.

Hamish Rutherford writes:

His role as working group chairman continues, delivering presentations to interest groups and now, attacking claims made by the Government’s opponents.
On Monday evening, at 8.11pm, Cullen, who served nine terms as a Labour MP, issued a statement knocking back a claim by the National Party four days earlier. …

But the fact is, Cullen is only commenting on the statements made by National. Although he was happy to name examples of stories on the impact of CGT as “silly”, Cullen’s only official response to any commentary on the report has been to attack a claim made by the Opposition leader, with a response which is also questionable.

Cullen is acting as a de facto Labour MP, not as a Working Group Chair.

While he is a man of ability, it was a huge mistake for Labour to appoint him as TWG Chair. Many NZers still despise him as the smarmy Finance Minister who hated rich pricks.

The TWG is seen as all about Cullen, rather than an expert group of tax professionals.

I guess Labour appointed him Chair to make sure they got the right outcome, but they would have been better to appoint someone who is not a former partisan, or in this case a current partisan.

Stuff reports:

A bill which would guarantee Ngāi Tahu two seats on future Environment Canterbury (ECan) councils is struggling to gain support in Parliament.
Labour says it is doing the numbers this week to see if it can get the apparently faltering Canterbury Regional Council (Ngāi Tahu Representation) Bill across the line for its first reading in the House.
However, the local bill will not get NZ First backing. 

This is interesting.

Labour have spent six years saying it is an outrage that some of the Ecan Councillors are appointed. They vowed to immediately go back to a 100% elected model.

But then the moment they’re in, they say they do want some appointed Crs to remains – but only from Ngai Tahu.

Stuff reports:

NZ First leader Winston Peters has said the party would not support tax changes that resulted in an “explosion of the valuation and accounting professions”.

If we took Winston at his word, then the entire report of the Tax Working Group should be ruled out.

But it is very dangerous to take what Winston says at face value. He might negotiate a couple of minor changes and declare them to be hugely significant.

Peters was not explicit about what NZ First might support but said “tax policy needs to be simple and we will keep it that way”.
“The scaremongering about houses, boats, art works and exemptions for Maori, and the myriad other fake trails thrown up by our desperate opponents doesn’t divert New Zealand First from two key points about the report.
“First, we want to hear from New Zealanders their views on tax reform. Second, having listened to the public, we will work with our coalition partner to fashion simple tax policies that will work,” he said.

You have to note that Winston has given no firm commitment on anything.

Stuff reports:

Māori risk losing an electorate seat and more than 20 new iwi won’t be properly counted due to problematic Census 2018 data.
Results from the beleaguered national survey, which failed to count one in 10 New Zealanders, have been repeatedly delayed, with a release date not known one year on from census day. 
The population data is vital for Māori, and academics hold fears vulnerable communities and small iwi will be adversely affected. 
Dr Tahu Kukutai and Donna Cormack, in a paper published on Thursday, said Māori census response rate would be well below 90 per cent, possibly as low as 80 or 70 per cent in the likes of Northland and the East Coast.

This is true that a 90% average response rate will probably see a rate as low as 70% in some areas. It reinforces why the 2018 census can not be used to redraw electoral boundaries.

A poll has now come out taken after the revelations from the former Attorney-General. They show:

• Liberals 31% (-3%)
• Conservatives 40% (+4%)
• NDP 20% (+3%)
• Bloc 4% (-2%)
• Greens 4% (-2%)

The poll also found 51% believe Justin Trudeau should resign as Prime Minister.

Stuff reports:

KiwiBuild homes for sale in Huapai, West Auckland, had previously been listed – and did not sell – on the open market.
Construction firm Mike Greer has partnered with KiwiBuild to provide more than 100 homes for the scheme in West Auckland and Christchurch.
But the Huapai development, where six two-bedroom properties are currently listed for sale through KiwiBuild for $600,000 each, is a 12-unit development that was initially offered pre-construction entirely to private buyers.

So what does this mean?

Gareth Kiernan, chief forecaster at Infometrics, said whether bringing properties that had not otherwise sold into the KiwiSaver scheme rendered it redundant depended on its aims.
“If the aim is to increase the supply of housing because we’re not building fast enough and that’s contributing to the affordability programme, then Phil Twyford’s modus operandi to date of walking down the street, finding a house that’s already being built, and slapping a KiwiBuild sticker on is patently stupid and nothing more than window dressing,” he said.

So patently stupid and window dressing.

“However, if the aim of the programme is to effectively provide a taxpayer subsidy to help a select and lucky few people into their first home, then selling at a discounted rate to first-home buyers fits the objective.

So at best Kiwibuild helps a few well off people get a home a bit cheaper.

Stuff reports:

Finance Minister Grant Robertson is defending the ongoing role of Sir Michael Cullen over tax reform, saying it was only fair he continued to be paid.

Why? His job is done. Why should he get paid to attack National MPs?

Robertson said that when National initiated a tax review back in 2010, the working group’s chair, Victoria University of Wellington professor Bob Buckle, commented extensively after the report.
Robertson said he had “no idea” whether Buckle was paid.
Contacted in response to the comments by Robertson, Buckle said he took part in the 2010 review on a voluntary basis, and he believed other members of the working group did too.
This included both the development of the report, and comments made afterwards.

Buckle wasn’t paid, and he certainly didn’t act in a partisan fashion.

If the Government was concerned about the debate, Adams said, it should have also retained the members of the working group who offered a dissenting view.
Act leader David Seymour said the extension of Cullen’s contract was “a vote of no confidence” in the ability of Robertson to articulate and defend the Government’s plan for the tax system.
“The Tax Working Group has delivered its report. For taxpayers to continue to pick up Cullen’s $1062-a-day fee after being appointed more than 14 months ago is outrageous.”

It is outraegous.

The Herald reports:

Labour MPs on the justice select committee have voted against allowing China politics expert Anne-Marie Brady to make a submission on foreign interference in elections.
National MPs supported Brady, a professor at Canterbury University, giving her view on the issue which is a focus of the committee’s inquiry into the 2017 general election and 2016 local elections.
The eight-strong committee is evenly split between National and Labour MPs and today’s vote against means Brady cannot appear.
National MP Nick Smith, who is a member of the committee, said it was concerning that Labour blocked Brady from making a submission on the critical issue of protecting New Zealand from foreign interference in its democracy.

Even if one doesn’t agree with everything Brady says, she absolutely should be heard by a select committee inquiring into an area she has extensively published on.

Justice committee chairman Labour MP Raymond Huo said the decision to decline Brady’s late request was purely procedural.

There is no way it is purely procedural. Labour MPs would have been instructed by the Government to vote against. Presumably Labour is worried that allowing Brady to testify would upset the Chinese Government.