McKelvie Ian; Williams PotoIAN McKELVIE (National—Rangitīkei): Thank you Madam Deputy Speaker. I was quite intrigued by the speech from the Minister for Water Bottling" a minute ago. I thought that—DEPUTY SPEAKER: Order! Order! [Interruption] Order! We will use proper names.IAN McKELVIE: Oh apologies Madam Deputy Speaker. I was—yes OK. I wanted to correct a couple of items that she mentioned. We didn't at any stage say it couldn't be done; what we said was it shouldn't be done and we still would have exactly the same stance now. I think that we were always of the view that this piece of legislation would be fraught and it most certainly is.I just wanted to correct a couple of other issues because we took significant action not to control or to get rid of foreign buyers—well certainly to control them I think and I just wanted to mention a couple of them because I think they're pretty relevant. We required all foreign buyers to be registered with the IRD and indicate that they are a foreign buyer; we introduced regular monitoring of foreign buyers; we introduced the brightline test which applied to foreign buyers and New Zealanders who do not live in the homes; and we introduced a number of other items which had an impact on the market—and of course that's proved since to be true.Today we've seen what I consider to be two of the worst pieces of legislation debated in this House in my time in Parliament and this is the second leg of the dreaded quinella. There can be no winners here and it's another example of the penchant this Government has for gambling with our economy and the lives of everyday New Zealanders in order to blatantly push their distorted view of overseas investment in New Zealand. We've already heard Minister Twyford today completely confused with his statement that he's happy to have offshore investment in new builds when we know this bill not only disincentivises foreign investment in many new builds because of the residential clause but also stops new builds in many other types of businesses such as vineyards farms and other places in New Zealand.Everyone wants a fair go in New Zealand and I support that in every way but to cut our noses off to spite our faces is plain stupid. The tragedy of this legislation is it will stifle development in the very area the Government is trying to grow the pie—and I'll say more on that later. I want to deal with three particular examples of why it's so bad—and despite overwhelming opposition from a majority of submitters the Government members on the Finance and Expenditure Committee pushed on blindly with this piece of legislation. First I want to talk about the exemption that was put in place for the Te Ārai development. We also heard the last speaker Eugenie Sage talk about high-value property in Queenstown and this exemption was put in place for what I'd consider very high - value property in Northland—I can't see the difference.Despite warnings from the Rt Hon David Carter the select committee chair belligerently and arrogantly ignored written advice from the Clerk's Office that it was not a fit and proper way to introduce legislation giving a private enterprise an exemption. Fortunately the integrity of the select committee has been saved by the very unusual action of the Speaker where he ordered the exemption be removed. In doing so he mooted that the Labour-led and dominated select committee had been motivated by a desire to assist and to be fair to the landowner. Well I wonder about that and I wonder why the many other affected landowners have not been considered. There would be many landowners throughout New Zealand affected by exactly the same issue as this and I don't think it matters who they are or where they reside. I'm not going to prosecute the reasons for this extraordinary decision; I'll leave that to others more knowledgable than I. They are—these challenges—not of course specific to iwi-owned land. This will affect many such developments throughout New Zealand and in many cases affect the financial viability of them. So I don't see any difference between that development and any other that might have been applicable under this bill.I would note that I too have sympathy for those parcels of land that have had their value affected by this unfortunate piece of legislation as many businesses and private homeowners will possibly be affected financially by this and that will depend on the market reaction to it—one which I imagine we'll see pretty soon after it has been implemented.There was a lot of discussion in the select committee around the apartment building projects and the potential for them to be stifled by actions taken by this piece of legislation. I think one of the real flaws in this is that work that has been undertaken allowing foreigners to own but not live in their properties. This is a great lurk in an escalating market but it's certainly not an attractive place to be in a market that's either static or dropping. The reason for this of course is that there's no potential for gain. No foreigner is going to put money into an investment in New Zealand for New Zealand's benefit that they get no benefit financially from; they need to have the potential to have a financial benefit from it. In fact in this environment you'd almost think they're probably going to lose especially given the statements of the Acting Prime Minister today who clearly wants to drive the price of houses down. If you're going to drive the price of houses down you're certainly not going to get investment in those properties to get them going.Stuart Smith: Did he turn up?IAN McKELVIE: Perhaps not. These investors are not stupid; they'll run a mile from this great opportunity and anyone who has experience in this type of market knows the danger of holding property awaiting capital gains. Then there's the mouth-watering incentive of being slapped by the capital gains tax—if in fact there is any gain to be had.Kieran McAnulty: Stop reading your speech.IAN McKELVIE: The difficulty for—it's beautifully written. The difficulty for property developers accessing capital is clearly the issue at stake here and that's been a long-time issue for property developers particularly where they're developing apartments. If they can't sell off the plan they can't get the bank to back them and they can't get funding to get going so consequently those property developments don't take place. This is the big challenge for this piece of legislation and it's the big challenge for the Government.The next thing I want to talk about is the forestry issue and I think this is quite a serious one and I think it's serious for some different reasons than have been raised earlier in the night. I think the real challenge here is that we're giving foreigners the right to buy forestry land to grow their own trees export them to their own mills in their own countries. So effectively we're giving away a section of New Zealand property—and not only a section of New Zealand property we're also giving away the jobs and the product from it and I think that's an extraordinary thing for a Government that pretends to be here for New Zealanders to be doing.It's highly likely also that these properties will be sold lock stock and barrel to foreign owners and they will then plant the property in its entirety. The issue with that is that if you do plant the property in its entirety you're planting a large proportion of class I II III and IV land and there's no way that that class of land should ever be taken out of food production. From a world perspective I think that's hugely serious.So it's extremely dangerous for Governments to interfere in a market. It always causes distortions and we've seen many instances of this throughout our history. I go back to the supplementary minimum prices in the farming sector in the days of Muldoon. I go back to the Dairy Industry Restructuring Act to the regional fuel tax and on it goes. So everything we do has the potential once we start interfering in markets to distort markets. That is a great tragedy I think.We've also seen—Hon Tracey Martin: The market will deliver—trickle-down trickle-down.IAN McKELVIE: It's like a parrot. We've also seen countries be exempted from this process—Hon Members: Ha ha!IAN McKELVIE: I can't imagine where it is. Up there? We've also seen countries exempted from this process which has now been extended to include Singapore. Who next we may well ask and we now see the Minister has the right to chop and change the legislation at will to suit what's going on at the time. Well I think that's fine but in fact if you'd left it to the market the market would have done that for the Minister so that's not really in my view of great value to us.The last topic I want to speak to as this second reading speech comes to an end for me and we dispatch this legislation to committee of the whole House and no doubt there'll be some wholesome debate in that area too—I want to talk about the cost of compliance that this piece of legislation is liable to bring about. It's going to be huge. Treasury predicted the applications in workload will increase from some 150 per year to 4700. Imagine the cost to investors and the bureaucracy in this. Every time we add a cost to the business of houses we add to the cost of the house.This is a poorly conceived piece of legislation. It will be poorly implemented and we'll be paying the price for it in my view for quite some time. I'm extremely pleased with the fact that this Opposition has put a minority report into this bill and I'm sure that minority report unfortunately will come to haunt us into the future. Thank you Madam Assistant Speaker.ASSISTANT SPEAKER (Poto Williams): I understand this is a split call—Anahila Kanongata'a-Suisuiki."