﻿Mr SPEAKER: Question No 2, Andrew Little.
ANDREW LITTLE (Leader of the Opposition)
to the PM: Does he stand by his statement that there is
no housing crisis in Auckland in light of the fact the average
Auckland house price has risen by $100,000 in the past year
and the Reserve Bank says this is “increasing the risk
"of financial instability”?
Rt Hon JOHN KEY (PM): Yes, because over the last few years
I have heard many overstated claims of a crisis in various
parts of the economy. The previous one was apparently in manufacturing.
The Government and the Reserve Bank have both acknowledged
that we need more houses built in Auckland and we need
to make that happen faster. That is why the Government
has taken significant action to increase supply
and speed up land development.
Andrew Little: Why has he introduced a measure
that looks like a capital gains tax, but which he says
is not one, to fight an Auckland property market
that is in crisis, but which he says is not?
Rt Hon JOHN KEY: Just to quote Mr Little, he said
the policy is “not a capital gains tax”. What we have done
is said that for anyone who is an investor in a 2-year period,
we will take the ambiguity out of the current situation
because we believe that that is reasonable.
And for foreigners whom we do not have good records on in NZ—
yes, they will be forced to pay their fair share of tax.
Andrew Little: In light of his finance Minister’s comment
that it is “a bit unclear” what impact his new measures will have,
by how much does he say the new brightline test
will slow the growth of Auckland house prices;
and if he does not know, why not?
Rt Hon JOHN KEY: Well, we have not modelled that,
but what I can say is that, of the additional money
we are putting into inspectors— which is $29 million in this Budget
and $33 million from Budget 2013, which is yet to be spent;
that is $62 million—the expectation is that we will get
$420 million. The reason we are likely to get at least
$420 million, if not more, is that the ambiguity is removed.
I will say, though, that the intention test has been around
for a very long period of time.
Funnily enough, and I have not actually bothered to go
and look at it, if one was to go back and look at all
the advice that the previous Labour Government got
when house prices doubled under its watch, one would
probably look at this issue as an issue that was raised back then.
But guess what? Labour did nothing; National acts.
Andrew Little: How many property speculators
who are not already caught by the intention test will be caught
by the brightline test; and if he does not know, why not?
Rt Hon JOHN KEY: The analysis of the Ministry of Business,
Innovation and Employment suggests that between 17% and 18% of Auckland’s
housing transactions currently involve houses being bought
and sold within 2 years. I would be pretty surprised if all
of those owners are paying tax on that, and I would strongly suggest
that quite a few more will as a result of the brightline test.
[MEMBERS INTERJECT]
Andrew Little: Why has he announced a tax policy
when he does not know how well it will work, whom it will catch,
or what the rules even are?
Rt Hon JOHN KEY: I know whom it will catch, and they are people
who buy and sell an investment property within 2 years.
They are foreigners who are currently non - resident
income taxpayers who are not paying their fair share of tax.
Yes, the Government takes a careful and cautious approach
in this regard, but that is the right thing to do
because, in the end, taxpayers are entitled to have some clarity
in what they are doing. But I do think, and the Government
has thought this for quite a long period of time,
that the intention test needs reflecting upon,
and that was the very reason why we asked Inland Revenue
to look at this very issue back in 2010. The officials
in 2010 said they did not think we should move on it;
in 2015 they changed their minds.
Andrew Little: Why will he not just be straight with NZers
and admit that his new policies will not fix
the Auckland housing crisis, and that he is just doing
the bare minimum and hoping the problem will go away
because he does not have a clue what to do?
Rt Hon JOHN KEY: Under this Government we have special
housing areas of which there are about 90 in Auckland.
Under this Government we have reduced the duty
on imported materials. Under this Government we have reformed
the Resource Management Act, and we are looking to do more.
Under this Government we have introduced a new brightline test
for those who buy and sell investment properties.
We have done a lot in the housing area. I know that
Labour members do not like it, but house prices doubled
under their watch. Actually, Auckland house prices went up
by 79% under the previous Labour Government.
When they asked Andrew Little last week what—[Interruption]
Mr SPEAKER: Order! [Interruption] Order!
The PM will resume his seat.
Question No 3.
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