Complaint partly upheld against 'misleading' National attack ad

The Advertising Standards Authority has partly upheld a complaint against a National Party attack ad, and told the party not to use it again in its current form.

By Giles Dexter of RNZ

The complaint focused around National's criticisms of Labour's capital gains tax (CGT) policy.

A complainant told the ASA that in July they had received a flyer promoting Chris Bishop as the National Party candidate for Hutt South, as well as general National Party election campaign material.

A section called "Keeping Taxes Low", the complainant said, had a statement about what was at risk.

"Labour's capital gains tax would hit the family bach, rentals, small businesses and KiwiSaver," the flyer said.

Labour has maintained KiwiSaver is exempt from its CGT proposal, which is designed to cover commercial property and residential investment property only.

The family home (including lifestyle blocks), farms, inheritances, shares, businesses, and other commercial items are also exempt.

Small businesses wanting to sell and move into a bigger property would not have to pay the tax, and the vast majority of small businesses lease their buildings so are not subject to the tax.

The complainant was concerned it was misleading for National to claim the CGT would hit small businesses and KiwiSaver.

National's response to the ASA was that the CGT would affect businesses that owned the premises they operated from (such as salons, dairies, service stations, or corporate offices).

While small businesses selling their premises to buy a bigger one would not be taxed, small businesses selling commercial property for other reasons, and larger businesses selling commercial property for any reason, would be taxed.

Therefore, people whose KiwiSaver accounts invested in businesses which owned the commercial buildings would be impacted by the tax, National argued.

However, in a majority ruling, the ASA found the claim that KiwiSaver would be "hit" by the CGT to be in breach of the principle of truthful presentation, that advertisements must be truthful, balanced and not misleading.

The majority of the board found that the "consumer takeout" for most would be that their KiwiSaver funds would be subject to the CGT.

While the family bach, rental properties, and small businesses (when property was sold) would be affected by the CGT, linking KiwiSaver in the same sentence indicated it would be "hit" in a similar way, which the ASA said could mislead or confuse consumers.

"The majority said it was misleading to refer to KiwiSaver in the advertisement alongside the other assets, without a qualifier or clearer explanation of the impact," the ruling said.

A minority of the complaints board believed the statement was making a more "general claim" that KiwiSaver funds would be affected in some way, and that National's explanation was sufficient.

The claim about the impact on small businesses was not found to be in breach, as a majority of the complaints board believed it was unlikely to mislead or confuse most consumers.

"The Advertiser's example of a small business selling for reasons other than to buying larger premises was sufficient to support that some small businesses would be directly impacted by the capital gains tax," the ASA said.

The majority decision found the KiwiSaver claim to be in breach of the principle around truthful presentation, and the rules around truthful presentation and advocacy advertising.

The ASA told National not to use the advert again in its current form.

Ekant Veer, a professor of marketing at the University of Canterbury, told RNZ's Checkpoint the ASA's ruling was significant.

"To see our ASA saying 'no, you can't go out and confuse people receiving this advertising' is a good step forward," he said.

Veer said the ASA did not just look at what might be factually correct, but also what might potentially confuse or provide ambiguity.

"We want to be able to trust what we're reading out in the advertising, we want to have a clean, fair fight between the major parties, and we want to be able to see whether we can trust what is being put out there," he said.

"What we also know is that people who maybe are not as involved with politics, people who don't go and do the research themselves, are more likely to be swayed by messages like this. So we want to try and stop that. We want people to make decisions based on full and factual information. And in this case, the ASA says that's not happened."

The complainant Catherine Bindon told RNZ she complained as she was getting "entirely fed up with the amount of misinformation and disinformation I've seen in this campaign so far," which felt different to previous campaigns.

"I think once a seed is sown, it's very hard to change that perception of what's actually happening," she said.

Bindon said National's claims around KiwiSaver were "a blatant lie" and she was happy with the ASA's ruling.

"I would actually like to see the party make an apology. I think they really need to own it. I think they need to be honest, and I think they need to be accountable for for what they said."

Ffollowing the ruling, National's campaign chair Simeon Brown doubled-down, insisting many KiwiSaver funds invested in businesses that owned property, and so a CGT would have a flow-on effect.

"The Advertising Standards Authority has not said KiwiSaver wouldn't be affected by Labour's capital gains tax - it has only suggested that KiwiSaver may not be impacted to the same extent as rental properties, baches and businesses," he said.

"So, the fact remains that KiwiSaver will still be impacted and National will continue to make this point clear to New Zealanders."

Brown also said the ASA's ruling "confirmed that Labour's claim that small businesses are exempt from its capital gains tax is false," and said it was Labour that needed to update its advertising.

RNZ has approached Labour for comment.