Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 05 June 2013. Volume:690;Page:10717. Text is incorporated into the Bound Volume.]3.Hon DAVID PARKER (Labour) to theMinister of Finance: Has he read the OECD advice that introduction of a capital gains tax would “make the tax system more conducive to both growth and equity”; and that “the lack of a capital gains tax in New Zealand exacerbates inequality”; and “reinforces a bias toward speculative housing investments and undermines housing affordability”?Hon BILL ENGLISH (Minister of Finance): Yes I have read the report and I disagree with it. In the first place the member has left out its recommendation that the capital gains tax should tax all homes and not exempt the family home and secondly that the revenue should be used to cut income taxes. In respect of inequality we have decided to approach the problem from the cause of inequality. One of the causes of it is planning laws that limit the supply of housing which favours existing and higher-value home owners over poorer New Zealanders who want access to the housing market. I am pleased the Labour Party is supporting our legislation to achieve that.Hon David Parker: Well is he surprised to learn then that of the 30 countries in the OECD that have a capital gains tax only Switzerland has no exemption for the family home?Hon BILL ENGLISH: No I am not surprised. That is the weakness of capital gains taxes all around the world. If you say a capital gains tax is going to bring the housing market under control but then you exempt most of the housing market it is unlikely towork and it has not worked as a method of controlling housing markets anywhere in the world.Maggie Barry: What measures has the Government taken in recent years to ensure property investors pay their fair share of tax?Hon BILL ENGLISH: Well of course we do have a capital gains tax on people who trade property. The Government has moved in recent years to give the Inland Revenue Department the resources to ensure that those people who trade in property and are subject to capital gains tax actually pay their tax. We have also abolished depreciation on investment property. This is expected to raise $3 billion in tax revenue over 4 years much more than any proposal we have seen for a capital gains tax that excludes most houses so we are collecting more revenue from the property sector than would any proposal for a capital gains tax we have seen.Hon David Parker: Why does he continue to refuse to adopt a capital gains tax excluding the family home when it is clear it would reduce inequality it is clear it would take the pressure off house prices and it is clear some people would pay their fair share of tax and at the same time it would improve the economy?Hon BILL ENGLISH: If a capital gains tax had all those magical powers then you would not see a whole lot of developed country economies on their knees because of excessive housing markets. We have not implemented it for a couple of reasons. One is that we believe the other tax measures we have taken which are collecting $3 billion in tax revenue over 4 years are more effective and secondly we believe that changing the planning laws to allow more supply of houses will have a much bigger impact on fixing wealth inequality than a capital gains tax.Rt Hon John Key: Has he seen any reports about a period of time between 1999 and 2008 when there was a substantial increase in the housing market in New Zealand and when there was a major amount of work done to extent that half of the work of the Department of the Prime Minister and Cabinet was about the housing market and by the way was there a recommendation for a capital gains tax that was adopted in that period of time?Hon BILL ENGLISH: It is funny you should mention that. Some of the things the last Labour Government did were sensible. In 2001 it commissioned a tax review—a comprehensive review of New Zealand’s tax system. That review concluded that a capital gains tax that exempted the family home would not be effective. Faced with the fastest-rising housing market in New Zealand’s history through the mid-2000s the previous Labour Government in which most of the Opposition’s current front bench served did not implement a capital gains tax.Hon David Parker: Is the lack of a capital gains tax not one of the reasons why fewer young New Zealanders can afford to buy a home especially in Auckland?Hon BILL ENGLISH: No the main reason young New Zealanders cannot afford to buy houses in Auckland is that the supply is unreasonably limited and that has pushed the prices up to unreasonable levels. We have been negotiating intensively with the Auckland Council to fix that problem and we are pleased that the Labour Party is supporting the Government’s legislation to increase the supply of housing and reduce the asset inequality that is generated in New Zealand from restrictive planning laws.Hon Peter Dunne: Can the Minister confirm that the last official organisation in New Zealand to recommend a capital gains tax was in fact the Brash committee chaired by Dr Don Brash in 1989 that the Labour Government of the time rejected that report and that subsequent Governments have also rejected that report?Hon BILL ENGLISH: I believe that the member is right that the last time a review of the New Zealand tax system recommended a capital gains tax was in the late 1980sunder Dr Don Brash and since then every single review of our tax system has rejected a capital gains tax and every Government has taken that advice.Hon David Parker: Is the truth of the matter not that Mr English and his colleagues stopped the Savings Working Group and others looking at a capital gains tax by putting it out of their ambit and is it not the reality that National’s refusal to introduce a capital gains tax is because it does not suit the vested interests of its backers?Hon BILL ENGLISH: Well with I think 47 percent of New Zealanders voting for the National Government in the last election we are very pleased to represent a very broad range of backers—in fact a much broader range of New Zealanders than the Opposition Labour Party which claims to represent everybody. No the reason we have not implemented a capital gains tax is that when you exempt most of the housing market it becomes a tax purely on successful profitable businesses and that would be bad for growth. We are addressing the problem of rising house prices by addressing the real issue of the lack of supply particularly in Auckland.Hon Trevor Mallard: I raise a point of order Mr Speaker. I have just pulled out the 50th Parliament allocation of supplementary questions for oral answer and I see on that that there is no allocation for Mr Dunne. I just wanted to check that as with Opposition members the rules are being applied evenly and that Mr Dunne was allocated questions and you were told in advance before the session started of the change of allocation towards Mr Dunne who of course even before he becomes an independent does not have a supplementary question.Mr SPEAKER: I am advised that there has been an arrangement made with the ability for the United Future member to take one question a day if he so wishes and that arrangement is formally with the National Party.Hon Trevor Mallard: I raise a point of order Mr Speaker. Does that mean that if other parties wish to enter into agreements whereby they take a supplementary question up to one a day without notifying you they can enter into that sort of arrangement? If that is the case the allocation becomes stupid.Mr SPEAKER: Order! It does not mean that.Hon Gerry Brownlee: I raise a point of order Mr Speaker. I do not think it is reasonable for Mr Mallard to start trying to put some sort of a formulaic arrangement over this. We would welcome for example the Labour Party giving Mr Harawira a question a day; that would be most entertaining for the House. The point of order is simply this: each party has its allocation but each party has the ability within its own agreement to transfer those allocations. We have an arrangement with Mr Dunne which is notified to the Speaker so that there are no surprises for the Speaker should that question be asked.Rt Hon Winston Peters: Again Mr Brownlee seriously—Mr SPEAKER: Order! Just address the point of order.Rt Hon Winston Peters: Well I am addressing the argument that he put and showing why it is defective because as you well know such an arrangement is not discouraged but it requires prior notice to you which is a point you made. Mr Brownlee is about to invite you to depart from a well-laid-out procedure.Mr SPEAKER: Order! I may not have made it clear enough. There is a permanent arrangement of which I am aware for United Future to take a question from the National allocation and that is permanently based. The very significant point here is that the Opposition every day very effectively utilises its allocation of questions. On most days this side—the National side of the House—does not.Hon Trevor Mallard: I raise a point of order Mr Speaker. Can I just get this absolutely clear. It is OK for the National Party to enter into a permanent arrangementwith another party for the transfer of questions but it is not an option available to the Labour Party.Mr SPEAKER: No no. I am sorry. If the Labour Party wants to approach me with a permanent arrangement of a permanent transfer on that basis I am very happy to consider it. I see no reason why that should not be granted. But to the best of my knowledge the Labour Party attempts to very effectively use every one of its supplementary questions and in fact on occasions uses some others that are allocated to other parties.Rt Hon Winston Peters: I raise a point of order Mr Speaker. Can I ask you this question: is the arrangement that you say you have already been made aware of an arrangement that as you said was made with United Future or was it made with now Mr Peter Dunne? Because frankly you are well aware of the circumstances whereby he ceases to be by law the leader of United Future.Mr SPEAKER: I addressed that matter earlier. The arrangement was made with United Future. As to the other matter that has arisen over the last few days I have adequately addressed that at this stage.Brendan Horan: I raise a point of order Mr Speaker. If National would give me those questions I would use them.Mr SPEAKER: Order! I am not sure what that point of order is.Rt Hon Winston Peters: I raise a point of order Mr Speaker. I cannot believe what I just heard.Mr SPEAKER: Order!Rt Hon Winston Peters: Mr Speaker—[Interruption] Mr Speaker—Mr SPEAKER: Order! [Interruption] Order! Would the member please come to his point of order immediately and would there be no further interjections.Rt Hon Winston Peters: The problem with the circumstances that you have laid out is that you were going to invite—and you had invited—Mr Dunne to communicate with you. If he does not communicate with you this month next month or any time soon then how can that actually be a ruling that now binds you?Mr SPEAKER: Because as I have said earlier I have written to the member and I have invited him to—I want to know the scale of the problem and until I receive a response to that I do not intend to take the matter further.Hon Trevor Mallard: I raise a point of order Mr Speaker. I think you might have just made it quite seriously worse because you indicated that you wanted to know the scale of the problem.Mr SPEAKER: That is right.Hon Trevor Mallard: The party is either registered or it is not. The fact that it is not registered—Mr SPEAKER: Order! I have addressed the matter. I am aware from the media that the party is now no longer registered but I am unsure as to when it might possibly be re-registered.Hon Trevor Mallard: No no but it is gone. If it is gone it is gone.Mr SPEAKER: I know that. I am aware of that. I have written to Mr Dunne. I am seeking an explanation from Mr Dunne and I will not take the matter further until I have received that response from Mr Dunne.