Twyford Phil: Budget DebateText is incorporated into the Bound VolumeTwyford Phil: Budget Debate[Sitting date: 20 May 2014. Volume:699;Page:18095. Text is incorporated into the Bound Volume.]PHIL TWYFORD (Labour—TeAtatū): I want to talk about housing in the Budget. It is the missing chapter. But first I think we have to just pause for a moment and reflect on the events of the last 24 hours. Apparently the Prime Minister thinks that there is not a housing crisis. I have three words for the Prime Minister: out of touch. He is out of touch. Clearly the Prime Minister thinks that denial is a river that runs through Egypt. This is the view from “Planet Key”—golf courses as far as the eye can see but you cannot buy a house for love nor money. Let us just recall what the OECD said in the report that came out in the last few days. New Zealand in the last 12 months had the highest rate of house price inflation of all of the 34 member nations of the OECD—the highest rate of house price inflation. The OECD also said that based on one of the two indicators that it uses—that is the ratio of house prices to incomes—New Zealand has the highest valued or most overvalued house prices in the Western World but apparently according to the Prime Minister and Nick Smith we do not have a housing crisis.Put the OECD data together with the fact that we have the lowest rates of homeownership in 50 years; first-home buyers locked out of the housing market by loan-to-value ratio lending restrictions; and in Canterbury 3½ years after the earthquakes the slow pace of the residential rebuild borders on the criminal. Something like 60 percent of the above-cap—that is the more expensive—home repairs still have not been done and people are living in totally unacceptable living conditions because of the failure of this Government to expedite the rebuild. On top of that at the low end of the market you have got the Government agencies routinely referring people to live in campgrounds. If you put all of that together I argue that that is the picture of a housing crisis but according to the Prime Minister we are simply victims of our own success.I met a young professional couple few weeks back who had moved from Auckland to get away from the high house prices so that they could buy their own home. They were a young family with both parents working and a good salary. They moved there a week before loan-to-value ratio lending restrictions came in and they said to me that it would take them 5 years to save the $100000 deposit they need to get into their home. There is a family who came into my electorate office last week: mum dad three kids and another one on the way. Dad is working but they are homeless. They are homeless because they cannot get into a private rental. There is nothing available for them and they are not eligible for a State house under Nick Smith’s eligibility policies. That is ridiculous. Dad is in work there are three kids and another on the way and the family is homeless under this National Government’s housing policies.Let us talk about the Budget. What did the Budget do for the housing crisis? Last Friday morning the Fairfax papers published a poll that said that 76 percent of those polled wanted to see the Budget more than anything else deal with the housing crisis and help first-home buyers. So what did National do? It has taken the tariffs and anti-dumping duties off varnish nails andGib board. Nick Smith estimates with no analysis no evidence to back it up and on the back of an envelope that that is going to knock $3500 off the cost of a new home with no reassurance and no confidence that that saving—if it in fact happens—will be passed on to first-home buyers. It is more than likely in the current market that that will be pocketed by the builders and developers.What else did National announce in the Budget? There is $30 million for social housing which is a drastic cut to the funding of social housing in the middle of a housing crisis. Two Budgets ago social housing got over $100 million. Now it is getting $10 million a year over 3 years. That does not even kick in until 2015. Nick Smith has been going around talking up what the Government is going to do for social housing for the last year and a half. The NGOs—the Salvation ArmyVisionWest Community Trust and all the others—are waiting for capital grants to help them get going so that they can build houses and what does the National Government offer them? It offers them only enough to build 100 houses. That is pathetic Minister after you have been going around bragging about what you are going to do for the social housing sector and how you are going to build all these great new houses. Over 3 years you have put on the table only enough to build 100 extra houses.What else did the Budget announce? It announced $80 million to pay the Ministry of Social Development to do the eligibility assessment work that Housing New Zealand was doing out of its baseline until recently. Nick Smith is putting more than double the amount that he has given to the social housing sector and is paying a cash grant to Ministry of Social Development bureaucrats to do the eligibility assessment work that Housing New Zealand used to do out of its baseline. How unbelievable. On top of that there is $16 million—again not to build houses not to help first-home buyers—to pay the Ministry of Social Development to kick pensioners and disabled people out of their State houses. That is the National Party to a T. One of the big announcements of its Budget housing policy is to pay Ministry of Social Development $16 million to kick people out of their State homes because they have committed the crime of earning enough as a household to afford a market rent. That says it all about housing policy under Nick Smith.But this Budget should not surprise us. It is just the latest cop-out from a Government that has done nothing of substance to tackle the housing crisis. All it has got is a lame Auckland Housing Accord with Auckland Council that will deliver on its own numbers through the special housing areas which is the centrepiece of this so-called housing accord 5500 houses over the next 3 years—5500 houses in the housingaccord over the next 3 years. Yet what Auckland needs is 39000 houses over 3 years. It needs 13000 a year just to catch up on the backlog and to meet projected demand. In the face of surging inward migration it is going to be virtually impossible to meet that demand and yet that is all the Government has: a lame housing accord. The market alone is almost meeting the unambitious targets that Nick Smith set for the Auckland Housing Accord.What else has the Government got? I do not know. It is very very hard to put your finger on. The Minister of Housing is bringing a bill back to the House this week about development contributions which basically consists of telling councils they cannot ask developers who are building a new residential subdivision to contribute to community facilities that will be needed in those new communities like swimming pool like halls and like community centres. And under this Minister his idea of trying to reduce development contributions is forcing ratepayers to pick up the tab and subsidise new developments. That is as creative and bold as this Government gets when it comes to housing affordability.Labour’s agenda is to build 100000 affordable homes for first-home buyers. We will use the resources of Government to intervene in what is a case of market failure. The housing market is market failure. Labour will intervene. We will address that market failure and we will stand up for first-home buyers by building 10000 affordable starter homes every year. Our monetary policy upgrade will lower interest rates unlike what is happening under this Government. It is going up over 2 percent according to the Reserve Bank over the current period—2 percent. It will add thousands of dollars to the mortgage repayments of struggling Kiwi households. We will set minimum standards for healthy homes. We will make it a requirement that all private rental properties are warm and dry.Our capital gains tax—supported by almost every mainstream economist in New Zealand now but not by this National Government—will take the steam the speculative heat out of the market. According to an economist in theNew Zealand Heraldtoday Dominick Stephens from Westpac Labour’s capital gains tax will reduce the value of a rental property for an investor vis-à-vis an owner-occupied property by 23 percent. That is substantial and the Minister has nothing to say to that. We will put a stop to foreign buyers and offshore speculators bidding up the price of houses out of reach of Kiwi first-home buyers. There is a problem in the housing market whether the Prime Minister wants to believe it or not. This is a housing crisis and Labour has a plan to fix it.