O'Connor SimonSIMON O'CONNOR (National—Tāmaki): Madam Deputy Speaker I'm delighted to stand and take a call in the second reading of the Residential Tenancies (Prohibiting Letting Fees) Amendment Bill. I haven't sat on the committee but I hold two portfolios within National for associate social development and associate social housing. So I'm pleased to talk to this but naturally not pleased about the bill. I'm concerned at the last speaker's claims if you will around our knowledge of the economy on this side. And there were three things I thought were rather odd. First and foremost the member who resumed his seat was talking about letting fees as being arbitrary. Letting fees are not arbitrary. They are applied to the person who takes over the tenancy. Arbitrary" implies that they're just being sort of thrown around; that you know someone walking through I don't know Carterton all of a sudden finds himself with a coffee a doughnut and a letting fee. It doesn't quite work that way. They're not arbitrary. They're quite specific. Secondly there was a lot of talk about well what is that letting fee covering? It seems exorbitant I suppose was the suggestion from the member. What was odd is that he was first and foremost mocking perhaps the process—that it's only a page-and-a-bit from the select committee. Yep that's true. Granted the select committee is a majority of Government members so if there's any lack in terms of the documentation it's the lack of those members there. The second element is that he was mocking that National only had two paragraphs. Granted that's about a quarter of the entire commentary but he was questioning and even suggesting that hey maybe it's a good thing if we had a better understanding of what letting fees were about. And what is really interesting had he not actually mocked but read the National Party commentary is that it says in the last paragraph "an alternative is to make letting fees more transparent so that an actual fee for service could be charged". I for one support that strangely enough—it's the National Party minority report. But if the concern is why people are being charged so much well then let's look at opening it up and some transparency. The third part and it just shows that the other side—the Labour-led Government—don't really understand what they're talking about is that they were saying in the previous speeches that there's no basis for the amount that's being charged in letting fees; it doesn't matter if the house is urban or rural or if it's run-down in poor condition or in a bad neighbourhood. Well actually there is a mechanism. It's called the market. And if your house that you're trying to rent out is better than the house next door strangely enough you'll be charging more for it and consequently your letting fee which is based on one week's rent will be more. So it's attached to the market. It's just a small example if you will that the other side's bluster doesn't have much substance. And that's unfortunate. Look fundamentally this is about costs. There is a cost to let one's house apartment or rental in the broader sense. There are costs. [Interruption] Sorry I'd better hear what that interjection was?Hon Clare Curran: Spell out the costs.SIMON O'CONNOR: Spell out the costs? Spell? Well the first contradiction here—it's very hard to spell out numbers. But actually we can spell out some of the costs. There are actually advertising costs when you're looking for people. You have to interview people make phone calls and ask them to provide references. Actually you've got to spend time—because those of us who work you know you have to take some time off work to take people through. And if you're in I don't know probably the most popular electorate in the country—I don't know Tāmaki? People are really keen to want to—[Interruption] Who was laughing behind me there? But people want to come through. There are costs but actually the very fact that the other side are going "What are the costs?"—their heads completely in the sand. There is a cost and that cost will not go away. That cost will go from the letting fees and that will go into the weekly rent. One of the facts is that New Zealanders by and large do rent for a long time. Yep we've got the horror stories that different groups put out. They are terrible. Most people most Kiwis who rent in fact like myself up to years back you rent for two three five years. What's going to happen is that these costs—and the Labour Party's already admitted to it in its early speeches. They just want to take that initial one week's letting fee and just say well it will just be spread out. If it's going to happen it's just going to be spread out. Well that's fine if you may be there for a year or two but what about those people who are there for five 10 15 years where the landlord will quite reasonably add more costs? They will end up paying a lot lot more. Fundamentally it's something that the left in particular and certainly the progressive left have never understood: that people cannot magic away costs. If that were the case I would love to magic away my tax bill if the Labour Party could sort that next week. I'd love to magic away all the problems with I don't know transport in Auckland. Just pass a bill Labour; just magic it all away. That's not the way that it operates. In fact though we could suggest—I mean we have seen today that the Prime Minister can on the hoof just come up with a whole new policy. Maybe tomorrow the Prime Minister will come to this House and just magic away this problem that's about to hit tenants.Hon Member: Fuel taxes gone.SIMON O'CONNOR: I live in hope. Policy on the hoof doesn't work well. We'd only just have to look at Australian Prime Ministers to see how that works out for them and there I think they call them "captain's calls".But fundamentally what we've got here is increased costs and it's going to be on the back of two other issues. We have a whole lot of work being done by—"work" is probably generous—ideology being run by the Labour-led Government to change the residential requirements around rentals. The long and the short they're looking at everything from the drainage to ventilation and so forth. Actually in concept it's good. In fact National before we lost the Treasury benches passed a lot of changes in that regard making sure there is adequate insulation. In fact we worked with the Green Party of all things about nine years ago on that ventilation and so forth. But where Minister Twyford is taking this now with some of the suggestions about heat pumps in every room extractors and so forth we should be under no illusion. That will increase costs. Landlords will not act altruistically OK? Some will try to weather the costs but that's just not going to be feasible so they're going to be hit by all these extra costs to upgrade and maintain their properties. They're going to be hit by letting fees and/or the cost of having to let the properties themselves. The real kicker I think is also that there are suggestions of legislation coming to secure tenure beyond what is potentially reasonable. It's a discussion worth having but some of the suggestions are almost that a person will not be able to leave their rental. That's not a matter then of whether they are good or bad tenants but how do you as a landlord set the rate if someone arguably is going to be there for 10 20 years. If the left is not sure about how this looks go to San Francisco. Go to San Francisco where actually they had set rents and locked them in from years and years ago. So some people living around the likes of Union Square are paying basically peanuts because they started renting 20 or 30 years ago and can never be moved on. But what happens now is when those people move on or pass on the rentals go absolutely through the roof. These are the perversities which get entered into the system and extra costs that will be passed on. I repeat again: you cannot magic away the costs.We've already seen in the last quarter—sorry rather since Labour came into office we've gone through four quarters. That's almost depressing to think about. But through a whole year rents have gone up an average of $25. We're seeing across the country and I've certainly seen it in Auckland that actually landlords are leaving the market. They're not leaving as in selling up because I could imagine or anticipate one of the counter-arguments is "That's fine. Landlords get out sell up. That provides an opportunity for homebuyers." That's not what they're doing. Landlords are just exiting the market. They are either handing the property over to their family or they're just shutting it up. So now we have a house sitting idle and empty picking up the capital gains which has been lauded and derided at the same time—a little bit confusing if not schizophrenic from the other side. Very very strange. Well it's evidenced if you will Madam Deputy Speaker in the fact that the social housing list has gone through the roof—9300 now. It's over 9300 people. I've always said as the social housing spokesperson that we were seeing the growth but it has gone almost exponential under this Government. We're seeing some crazy times and crazy activities. Yes they'll point to Scotland and they'll talk about Shelter I think it is who lobbied very strongly—a lobby group—for the removal of these letting fees. But the Labour Government here will point to the evidence that it's working. I'm always a great believer in tracking down the evidence. The evidence that the rental income sorry; the rental costs—I'd better be clear—in Scotland have not increased since Shelter the organisation that is lobbied for the change came from Shelter itself. Now I don't know the quality or otherwise of that organisation but you have to dig much much deeper. It is very clear from other studies that actually costs do go up. So fundamentally Madam Deputy Speaker this is a poor bill poorly thought-out and we cannot support it."