Swarbrick Chlöe; Willis NicolaCHLÖE SWARBRICK (Co-Leader—Green): E te Māngai tēnā koe tēnā koutou e te Whare. There's a number of points that I'd like to speak to in this annual review debate. Just to outline them for the Minister and foreshadow them they will be primarily on productivity and as that relates to the settings in our tax system and also on the issue of climate change.So just firstly to that issue of productivity and those who are following along at home will find handily in comments from the Minister under the Financial Statements of the Government of New Zealand for the year ended 30 June 2023 page 5 it says here and I quote The Minister said that the question that needs to be asked when taking on debt is whether it is used to enhance productive capacity and grow the economy. Our comments with regard to productivity in general continue to filter throughout and are reflected by comments from Treasury in particular. The Treasury" here on page 9 and I quote "has identified slow productivity growth as one of New Zealand's long-term economic performance challenges." Here we turn to the meat of the sandwich and that is on page 10 where I quote "We discussed a capital gains tax and the possible effects on productivity. The Treasury said its position on a capital gains tax has been on the record for some time. We think that there would be merit in introducing one for a range of reasons but we acknowledge that successive Governments have determined that there isn't public appetite for it at this stage." It said "The lack of capital gains tax has affected the distribution of investment in the economy and that can only be negative for productivity. It said "A capital gains would lead to a different distribution of capital in the economy and lower house prices."To that effect one of my many questions for the Minister if we are able to engage in this back and forth—noticing that ahead of the May Budget we have already seen that $2.9 billion tax cut for landlords or those tax deductibility changes—is: what consideration was made if any with reference particularly to that weight of importance on productivity what kind of official work or otherwise was undertaken to ascertain what productivity gains may or may not be made as a result of that $2.9 billion policy decision?Hon NICOLA WILLIS (Minister of Finance): Well the member may be of the view that it is proper for Ministers to engage in extensive policy analysis on policies that they have explicitly ruled out delivering on in explicit contravention of the mandate they've been given by the New Zealand people but on our side of the House we don't think that's OK. So you should not be surprised to learn that we haven't engaged in extensive analysis or research about the prospect of a capital gains tax. It's long been our position that you don't tax your way to prosperity.When it comes to the question of productivity I am delighted by the member's new-found love of Treasury analysis and I look forward to her similarly embracing the need for more competitive settings for firms for better consenting and permitting processes for the delivery of infrastructure to more flexible labour markets to more competitive delivery of public services to the role that the private sector can play in all of those because these are also topics that Treasury through the years has commented on.When it comes to the question of taxation of property there has long been a tax principle adhered to by successive Governments in New Zealand that people are taxed not on their revenue but on their profit and that has meant for many many years including during Governments which that member's party supported the interest costs are deducted from profitability before taxation is applied and our Government is returning to that norm.CHLÖE SWARBRICK (Co-Leader—Green): With all due respect to the Minister I appreciate the kind of verbiage as the case may be on the issue of tax and productivity but that respectfully was not my question. My question was about what work if any had been undertaken on the productivity gains that may be made as a result of the $2.9 billion package to return those tax deductibility rules to where they were prior to the decisions of the former Government.So I agree with the Minister that there are always going to be trade-offs when we're making decisions inside of the economy—that is absolutely true—but the point that we're trying to get to here is how do we get the most productive economy possible? We have it on the record consistently from Treasury from her advisers that a capital gains tax would result not only in a more productive economy but also in lower house prices. So my question for the Minister is what work if any was undertaken to deliver on her election promise of that $2.9 billion restoration of tax deductibility for landlords—what work was undertaken to showcase that that $2.9 billion policy was going to result in a more productive economy?Hon NICOLA WILLIS (Minister of Finance): I was about to say that I'd be forgiven for having missed the question because it was buried so deeply in the other stuff but I think that I'm about to do it again because it was similarly buried this time. I think the member's question is: did I consider dumping a core election commitment that was also replicated in our coalition agreements? And the answer to that is no that wasn't considered.I think the second part of the question is do we overlay every single piece of policy decision-making with a view as to exactly what contribution it will make to productivity and again the answer is no. When we determined how much cost pressure funding we will give to the health system or how much funding we will give to early childhood centres we don't decide how much that is based on a pure productivity lens. Productivity is a useful concept to consider because ultimately it is about the efficiency by which we convert labour and capital into products and services and it is important that we create an economy in which we can enhance productivity. There are a number of factors that contribute to that.I'd suggest that the member should be very interested in the fast-track consenting regime that this side of the House is establishing which will significantly increase productivity. We should also be considering education and skills. So the member should be very interested in the charter schools that we're establishing to lift educational achievement. She should be very interested in the cellphone ban in the hour a day of reading writing and maths and in our attempts to get people attending school more. There are a number of initiatives across Government which we are taking. I'm conscious Mr Chair as I'm taking this call that I know that my Associate Ministers of Finance are here and I'm sure that if the member continues in this regard asking great questions about productivity they too will want to make a contribution.CHLÖE SWARBRICK (Co-Leader—Green): I'm glad that we have it on the record that the Minister of Finance undertook no work whatsoever as to ascertain the productivity gains which she said is one of the core kind of things that she wants to get out of the office for our economy when it comes to delivering on an election promise solely for the sake of delivering on that election promise.So I guess we're kind of back to that core question that I'm asking the Minister here: what role does she think that the tax system has when it comes to getting more productivity out of our economy?Hon NICOLA WILLIS (Minister of Finance): Well this reminds me a little bit—no I'm not going to go there. But the member has clearly found a new word and she's excited by it. So let me talk about productivity. I think it is a drag on productivity when New Zealand workers know that year after year their Government is prepared to increase the tax they pay on their income by stealth by allowing inflation to push them into ever higher tax brackets so that every hour they work they are having to give away more of their money to the Government. There is very clear analysis that says that where marginal tax rates are too high that is productivity-sapping. So I am proud to be part of a Government that is committed to lowering the tax burden on working people and I invite the member to join me in that particular crusade.When it comes to the question of interest deductibility for households we on our side of the House have a real concern about the extraordinary growth that has occurred in rents in recent years. While we acknowledge that there are a number of factors that have contributed to this and we are taking steps to address many of them including making it much easier and cheaper to build homes in this country we also think that having a situation which places an ever higher cost burden on landlords only increases the upward pressure on rents. And the ultimate people to pay the price for that are tenants. A war on landlords has the collateral damage of everyday tenants who end up paying higher rent than would otherwise be the case. So we are proud to have put our policy settings back on a much more sensible track."