Clark David: Taxation (Bright-line Test for Residential Land) Bill — First ReadingText is incorporated into the Bound VolumeClark David: Taxation (Bright-line Test for Residential Land) Bill — First Reading[Sitting date: 08 September 2015. Volume:708;Page:6328. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North): I think it is deeply symbolic the way in which this bill has come to the House and the way in which it has landed here unsure of its heritage and unclear on its passage. The Minister of Revenue has delivered some rhetoric around the need for change. We all know well the problem of housing speculation in New Zealand and certainly anyone buying a house in Auckland is well aware of the challenges of getting on to the property ladder for someone on a median income.The bill is a political measure and I have to say somewhat cynically timed with a 2-year run-in that ends about the time of the next election. The Government if it passes this measure will be able to say that it believes that it is working but will not know for sure until after the next election. It can say that it has acted but the evidence will not yet be collected on whether or not it is in any way effective.We on this side of the House see it as a rushed and ill-conceived measure. Forty-one percent of sales are to property investors worth billions of dollars and the Minister of Finance has admitted that he does not even know what effect it will have. That is what we are coming to expect from this Government—a Government that we see more and more often not being straight with New Zealanders. It is a Government that says one thing when New Zealanders know the situation is different. We saw earlier today my colleague Grant Robertson hold up a graph from ANZ about the economy which saw a deep trough at the end as the graph headed downward—in fact the member has it here with us today—The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!Dr DAVID CLARK: He speculated that perhaps the Minister was looking at it upside down because Mr Key had said it was a positive result for New Zealand. So that lack of clarity that desire to be seen to be doing something when in fact very little is happening is what we are seeing again in this bill. It is designed to look like it is doing something about the rampant property speculation that we are experiencing as a country and about the issue of offshore buyers. It is designed to look like it is doing something when in fact it will do very little at all.The bill sets up an incentive for property speculators to hold on to a property for 2 years and 1 day and to then onsell if they wish. It may postpone the effect but it will not affect land bankers and it will not affect those who are holding land for the purpose of speculative gain over time. It will affect only a small group of people and it is designed to affect only a small group of people. It is designed to look like it is doing something without doing very much at all. It invites property speculators to hold on to their properties and to flick them on after 2 years and 1 day.Labour’s policy is very clear on this measure. We would require a person to live here or to build a new home so that the supply issue is addressed. In Auckland we know that there are thousands and thousands of families who do not have a home. There are people living in cars and garages and this Government has cynically allowed that situation to continue creating misery by not addressing the issues of homelessness and the lack of supply of affordable housing and here is a measure designed to make it look like it is doing something without really having very much effect at all.We want this Government to be straight with New Zealanders. I think that New Zealanders are growing tired of rhetoric that is not matched by action. We know that it will not deter the land bankers. We know that it will capture only a small number of “buy and flick on” property speculators. And the test in this has been made even weaker by Cabinet agreeing to exempt New Zealand residents from providing their IRD numbers when buying or selling a house which opens huge loopholes for people to avoid ever being subject to the tax. It is a bill that is being rushed it is a bill that the Minister of Finance says he does not know the effect of and it is a bill designed to look like it is doing something from a Government that is no longer being straight with New Zealanders. It is a Government that is increasingly out of touch if it thinks that New Zealanders will swallow this hook line and sinker and if it thinks that New Zealanders will believe that this is going to stop the problem of rampant housing speculation and foreign buyers particularly in the Auckland market.Treasury documents show that this measure this test is likely to raise only $5 million per year and the reason it is likely to raise only $5 million per year is because of the high level of avoidance that is anticipated. That is what Treasury says. Treasury says it would otherwise gather something like $30 million or $40 million a year were it not for the high levels of avoidance that are anticipated. That is because of a deliberate Cabinet decision and that is the kind of thing we have discovered from this Government. It is a Government that deliberately opens up loopholes to protect the interests that it has always protected and will continue to protect. It is a Government that wants to be seen to be doing something but wants to make sure that it preserves entrenched interests.It is so out of touch with middle New Zealand it is not funny anymore. The Government ruled out in fact a more comprehensive 3-year test purely on the basis that it could be interpreted as a capital gains tax with an arbitrary cut-off period. It did not want to actually do anything. It was explicit about the fact that it did not want to do anything. This is a cynical Government. It is a Government that is out of touch and arrogant enough—arrogant enough—to even spell out the desire to do nothing and think that New Zealanders will not notice or will not care. Well the tide is turning. New Zealanders are growing sick of this arrogant out of touch Government that brings bills to the House dressed up as action when they are cynically designed—designed in the Treasury comments—not to capture what they are set out to do. Loopholes are opened up so that ordinary New Zealanders are captured but those who are speculators can walk right through the loopholes.The Government’s consultation measure was a farce. The regulatory impact statement showed only 14 submissions were received—three opposing and three supporting. Look that is probably three phone calls that were made in a rush saying: “We need some submissions in. We need to be seen to be consulting on this.” That is how cynical this Government has become. This is an issue that will affect thousands and thousands of Kiwi families who will be without a house who will be living in cars and garages and that is how many submissions the Government received. That was a rushed measure and a farce of a consultation.Of course we know that the bill will be retrospective as a consequence of the Government rushing it through. We know that by the time it has finally passed through the House it will be retrospective because it comes into play on 1 October—as I said about 2 years before the next election; a period long enough for the Government to be able to say it is doing something without evidence yet being collected to assess whether the measure is effective in any way whatsoever.We know of course that overseas countries have measures in place to stop property speculation. We know that in China you cannot buy land at all as someone who is not resident. We know that in Singapore there are taxation measures to ensure that overseas people cannot buy without paying an additional sum of money. We know that in parts of Australia there is the policy that the Labour Party has that you must be resident or build a new house rather than purchase an existing one and deprive a resident family of a house in a constrained supply environment.We in Labour will support this bill going to the select committee. It is a half measure. We believe it could be improved in the select committee and we will seek to do that. We will seek to work constructively because these are serious issues that need to be addressed. New Zealanders are sick of a Government that is arrogant enough to bring legislation to the House with such big loopholes with rhetoric wrapped around it. But we know that the issue is serious enough that it needs to be looked at properly in the select committee—addressed improved and hopefully brought through this Parliament in a way that actually has an effect and starts to address the problems in New Zealand that we have because of the housing crisis that this Government in 7 long years has done nothing to address.