Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — Third ReadingText is incorporated into the Bound VolumeTaxation (KiwiSaver HomeStart and Remedial Matters) Bill — Third Reading[Sitting date: 26 March 2015. Volume:704;Page:2664. Text is incorporated into the Bound Volume.]Taxation (KiwiSaver HomeStart and Remedial Matters) BillThird ReadingHon TODD McCLAY (Minister of Revenue): I move That the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill be now read a third time. The first part of this bill supports the Government’s $218 million HomeStart package for New Zealanders who are saving to buy their first home. KiwiSaver members who are purchasing their first home can withdraw the contributions that they and their employer have made to supplement a deposit on this first home. The bill proposes to allow them to withdraw their member tax credit as well giving these KiwiSaver members access to an extra $521 for each year that they have contributed to the scheme to be used towards their deposit. Members will not be able to withdraw the Government’s $1000 kick-start contribution to ensure that their KiwiSaver account remains open and active after the withdrawal of the eligible funds. Measures to extend and clarify KiwiSaver first-home withdrawal rules are also included in this bill. These measures ensure that members can make first-home withdrawals in order to purchase homes on Māori land and they clarify that withdrawals can be made only for the purchase of homes in New Zealand.The second part of the bill ensures that the income replacement payments made to New Zealand veterans are taxed correctly. The bill confirms that these payments are taxable income and will be taken into account for social policy calculations—for example when applying for Working for Families tax credits. The amendments clarify that KiwiSaver deductions can be made from veterans’ income replacement payments but that the KiwiSaver automatic enrolment rules and compulsory employer contributions will not apply to these payments in that case.In bringing the bill to its third reading I thank the policy officials and drafters who worked on the detail of this bill the organisations and the individuals who have made submissions on the proposals and the Finance and Expenditure Committee for its work in considering this bill in a timely fashion and for bringing forward recommendations that have helped to improve the bill. I also thank those members in the House who will be supporting the legislation as I believe it will help many more young New Zealanders on their way to first home ownership—an absolute priority for this Government. It gives me great pleasure to commend this bill the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill to the House and may all those who benefit from it move to homeownership quickly. Thank you.Dr DAVID CLARK (Labour—Dunedin North): Labour will support this bill through the House and that is largely because it is a benign bill. It does have an intention I think to try to get some more people into homes and it may be that the additional flexibility will help one or two people get into homes but it does very little to actually address the core issue in this area which is about supply.This Government has no answer to the supply-side problem of housing in New Zealand and the statistics back that up. We have—Jami-Lee Ross: Rubbish!Dr DAVID CLARK: The member opposite says “Rubbish!” but we now have the lowest homeownership rate in New Zealand in 60 years. That member should know because it is in his part of the country that there is enormous housing price inflation.The amount by which a house goes up each week in Auckland is more than many many people earn in a week so only those who are in the housing market are able to afford a house in Auckland. In many cases a house will go up by $1000 a week in value and how much would those New Zealanders who cannot afford to get into a house enjoy having $1000 more in their pockets per week? Then they might be able to afford to actually get into a home.What we see here is a weak attempt to try to do something about the housing issue brought about of course by an election campaign that exposed National’s lack of policy. Those members scurried around they tried to put something together and we know that they would not have adopted this policy if they were not on the back foot. Treasury said that it was a hopeless policy. Treasury thought that this policy would not have the intended effect.What it highlights I guess and what we saw in the campaign when it came out is that Labour is the party of first-home buyers. The KiwiBuild policy that Labour put up in the election which would have seen 100000 more Kiwis put into homes through houses that would have been built by the private sector but funded through cheaper Government borrowing would have seen New Zealanders actually be able to afford homes. Ordinary Kiwi families could have had that dream of owning their own home realised in a way that is currently impossible under this Government which spirals from one housing crisis to the next.What we see here is National the party of speculators doing a little bit to make it look like it is doing something but not really addressing the core issues in the housing sector. We know that the average house in Auckland last year earned more than the average worker—a rise of just under $90000 in the past year. I look forward to hearing what Jami-Lee Ross the member over there who said “Rubbish!” might have to say about this because I am not sure how he can justify those kinds of rises and say that the Government has a policy to tackle that housing problem in Auckland. We heard in question time of course of people living in garages and in cars and we hear a lot of bluff and bluster from the Government but no real solution to the housing problem.Of course the implication of not dealing with that goes right around the country. In my electorate the effect of the Reserve Bank’s measures—because it had no other tools to actually help deal with its issues—was that the loan-to-value ratio saw a significant drop in first-home buyer rates. That has been mirrored around the regions which are feeling neglected by this National Government. I have no doubt that the result will be exactly the same in Northland. Up there we have of course the Government trying to build bridges furiously as it tries to persuade local voters that it has not forgotten about people in the regions despite the houses the voters cannot afford despite housing that is cold and damp in many cases and despite high levels of unemployment in that area.Yet we see here a bill that in many ways is actually like pouring petrol on a fire. That is what it is doing. Through giving HomeStart subsidies we are giving more people a little bit more money in their hands and the house prices will go up more. So I am afraid that this bill has little to recommend it but we will be supporting it. The extra amount people can withdraw will at most be a couple of thousand dollars and it is unlikely to make any significant difference in their ability to buy a home particularly if those house prices keep going up and up and up. At the same time people are effectively robbing themselves of their retirement savings in order to take that money out. As I say for one or two people it might make sense but overall it does nothing—nothing at all—to address the major housing crisis in New Zealand which is affecting so many families.This is another illustration of the way in which this Government has lost touch after 3 years. It does not seem to have answers any more. It had New Zealand behind it. There is no doubt that at the start the Prime Minister was very popular but as time has gone on those ideas are no longer there. I suggest that Simon Bridges and this Government actually should take a lesson out of their own book. We heard him say during question time that we should quit while we are behind and it occurred to me that for once he should use his mirror to good effect and take his own advice—Phil Twyford: Do what Alice did—Alice in Wonderland.Dr DAVID CLARK: —Alice in Wonderland—because this Government really has run out of ideas. It is clear when we see policies like this which will not solve the housing crisis and which really tinker and make it appear like the Government might be trying to do something but do not get to the nub of the issue. That this is its big idea is really a tragedy for this Parliament.There are some technical amendments that went through at the Committee stage that will ensure that membership in a complying superannuation fund for 3 years may count towards qualifying for a first-home withdrawal and that will ensure that a first-home withdrawal can be used only for New Zealand homes. These are kind of sensible things that have been agreed on. Of course the changes to the veterans’ support payments are largely technical. It is good that we have sorted these things out as they have gone through the House. There is a bunch of other ones in terms of Māori land; first-home withdrawals being used to make payments including deposit agreements before the agreement for sale and purchase is unconditional—making sure the rules are right around that; ensuring that existing interests in Māori land do not preclude access to a first-home withdrawal; and so on. These are sensible matters. If you are going to put this bill through they should be got right. But as I said at the outset this bill does not address the fundamental supply-side problem.This Government is watching while Rome burns. It is watching the housing crisis spiral out of control. Its latest answer of course is to flog off State houses to more property speculators—Phil Twyford: That’s really going to help.Dr DAVID CLARK: —which will do absolutely nothing to help. That was dressed up with the fig leaf of support from the Salvation Army and that fig leaf I am afraid has been removed and there is something particularly ugly to show in its place.The Government of course is now squirming. We heard Bill English in the House today trying to defend that policy and trying to defend the indefensible. This Government will continue of course to say that it has one or two new ideas but those ideas do not have the currency to persuade the commentariat and they are not persuading New Zealanders any more. New Zealanders know from day to day that when they cannot afford a house and that when they can in fact less afford a house today than they could a couple of years ago things are not working.In supporting the bill we note that the Ministry of Business Innovation and Employment has said that it is a “tentatively positive” bill. That is the warmest praise it has got. Obviously with Treasury’s criticism and the “tentatively positive” stamp put on it we must wonder why we are here in Parliament spending a couple of million dollars’ worth of taxpayers’ money to get this bill through—I suspect it is that much in terms of the salaries of the people here the staff supporting this legislation going through the House to pass a “tentatively positive” bill—when in fact there are far greater solutions going begging. Of course the one I mentioned earlier is Labour’s KiwiBuild policy which would see 100000 New Zealanders helped into their first homes. It would ensure that there was warm dry housing for the next generation of children ensure that our country could invest in the next generation and ensure that we have people living healthily in warm houses not in garages or cars as we are seeing now.We will support this bill. It is a shame that this is the best the Government now has to offer. It is a tired Government that is looking to push one or two ideas through the House. I am looking forward to seeing how Mr Bennett justifies it when he rises to his feet in a minute. He must be embarrassed. He will know that Hamilton has got housing problems too.DAVID BENNETT (National—Hamilton East): It is always a pleasure to follow from that member David Clark although it is quite unusual that he is speaking first-off in a housing debate when Phil Twyford is the housing spokesperson for the Labour Party—Dr David Clark: It’s a taxation bill.DAVID BENNETT: It is a taxation bill but Labour has made it into a housing debate. That really is a signal I think for Phil that perhaps his position is under threat as well. Sue Moroney is chomping at your feet. The next housing spokesperson I am sure will be Sue Moroney and that will be a reflection of Phil’s great achievements in the area as housing spokesperson for the Labour Party.But on a more serious note the Labour Party members will talk about KiwiBuild and they will talk about it until they are blue in the face. KiwiBuild is their flagship policy. It is the only policy they have kept from the election that they have not thrown out. It is the only policy they still say they want to carry through.Dr Megan Woods: Tell the truth.DAVID BENNETT: Oh there are others are there? Capital gains tax—have you still kept that policy? I do not think so. Have you kept it? Maybe not. But I know they kept KiwiBuild. They believe in KiwiBuild. Let us think what KiwiBuild will look like. What will KiwiBuild actually look like? You will have streets named after Grant Robertson. There will be Robertson Avenue there will be Robertson Street there will be Robertson Crescent and if you are lucky you might actually get Robertson Drive—so all the streets will have the same name. Then all the houses will be the same. All these houses will look the same. They will all look the same. They will all be built the same way. They will all have the same colours. They will all have the same letterbox. In fact New Zealand First might need two letterboxes on some of those but they will have letterboxes that are the same. If you are lucky you might get a garage. But the Green Party will not let you have a garage because it thinks you should be on public transport so you will not need a garage.Under the Labour Party Green and New Zealand First housing policy it will be State run. The State knows best. There are 60 members in this room who have been elected—some of them have not actually even won a seat—and who know better than the rest of the New Zealand public. They know better than the New Zealand market they know better than all—[Interruption]Mr DEPUTY SPEAKER: Order! The member will resume his seat. I remind members on my left that when they are making interjections they should be—from their own party’s previous speaker—rare reasonable and if possible hopefully witty. To maintain a barrage against a member who has the call is not in keeping with good order in this House.DAVID BENNETT: That is a reflection of the great Deputy Speaker we have in the House today who understands that this is just a tactic from the members on the left who realise they have lost the debate and so try to barrage the speakers at this time.But let us go back to KiwiBuild. You are going to have the same house. Everybody is going to be the same. They might as well all have the same job. And that is the way the Labour Party operates because the State knows best. These people who are union-dominated know better than the individuals they know better than the market—Phil Twyford: It’s communism.DAVID BENNETT: It is communism and that is exactly what Phil Twyford wants. It is actually better than communism. Under the New Zealand First housing policy they would actually buy the land off the developers and then develop it so it is actually better than communism under the New Zealand First approach.Pita Paraone: But we wouldn’t have red lights.DAVID BENNETT: You will have red lights?Pita Paraone: No we wouldn’t.DAVID BENNETT: You would not have red lights.Pita Paraone: Because we don’t want you there.DAVID BENNETT: Oh no red lights under New Zealand First. This is the same party that does not want to build the Pūhoi to Wellsford road. I hope you mention that. They are the same party members who stood up in the election campaign and were not looking after the people in Northland.Phil Twyford: I raise a point of order Mr Speaker. We are all in favour of a broad-ranging debate but this member has not actually mentioned the bill and I think he is halfway through his speaking time.Mr DEPUTY SPEAKER: Well of course the Speaker is the judge of that and is monitoring closely as I am sure you are aware. Mr Bennett no doubt will take your point of order to heart as well. Please continue.DAVID BENNETT: Yes this is the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill and a big part of that is the ability for first home owners to be able to get those tax credits. That is why we have been talking about housing in this debate. That is a big part of the bill.But going back to that housing policy because this is the debate that Labour has made it into with KiwiBuild it is somehow going to find a way to build these 30000 houses in a very short period of time. Somehow on top of what the private market is doing—well there will be no private market under Labour policy—Phil Twyford: You didn’t keep that up for a very long time.DAVID BENNETT: Are you going to be out there Mr Twyford building a home? I would like to see that.Phil Twyford: I bet I could swing a hammer better than John Key.DAVID BENNETT: I am sure that “Mr Stoner” could swing a hammer better. But seriously the choice that you have in the market is that on one side there is the Labour Green and New Zealand First policy which is a State-dominated State-built State-delivered and State-failed policy around housing and on the other side we have a range of options available. We have our State houses and we have our private market. We encourage people to save and get ahead. We are creating an economy that enables New Zealanders to have the lowest interest rates they have had for 50 years: 6 percent interest rates compared with 11 percent interest rates. Even if you got a free house under the Labour Party policy it would still make you pay 11 percent interest rates because the economy would be in a shambles under that side. Under this side we have a strong economic base which enables New Zealanders to pay low interest rates to get on the homeownership ladder and to actually take advantage of their opportunities. That is a solid economic base from which to go forward.This bill is a small bill; there is no doubt about that. It is a small bill. But it has become a debate that is wider around housing policy. On one side the Labour Party has not given up its State-owned State-run State-built State-delivered housing policy. On the other side of the debate New Zealanders have a choice between an operation that is a mix of State is a mix of private is a mix of development and is a mix where New Zealanders have the ability to pay for their own housing which is what they want in the long term because that is all that New Zealanders have ever wanted—to be able to get ahead under their own steam and not have it given to them by somebody else.Dr David Clark: Lowest homeownership rate in 60 years under this Government.DAVID BENNETT: Did you say something?Dr David Clark: Lowest homeownership rate in 60 years under this Government.DAVID BENNETT: Lowest homeownership rate in 60 years. Well that member would like to see the interest rate under Labour which was 11 percent compared with 6 percent now and housing prices went up 96 percent under the 9 years of Labour. It was 96 percent in Auckland under Labour. They went up about 20-odd percent in the years to 2014 under National. It was 96 percent under Labour. Remember those figures.Dr David Clark: Remember when they were 11—those were the days of economic growth.DAVID BENNETT: Those were the days of economic growth. Oh that is right! Labour put us in recession before the rest of the world. Remember that? Remember those days?Dr David Clark: 25 percent real economic growth under the last Labour Government.DAVID BENNETT: Oh 25 percent real economic growth. No way—New Zealand was in recession before the rest of the world. That is the Labour Party because that is what happens when you do State-dominated State building State construction of State housing for everybody.The Labour Party members do not want to see New Zealanders succeed. They do not want to see people get ahead and buy their own home. They do not want to see New Zealanders pay off their own mortgages. They do not want to see New Zealanders be able to show the next generation of New Zealanders that you can actually make a go of it and you can actually deliver. That is what this bill has now become about: it has become a debate between housing policies. On one side you have got a housing policy that 60 people think they can deliver. On the other side you have got a housing policy that is a mix of the market a mix of the State and a mix of delivery. This bill enables New Zealanders to take their share in that process by giving them a tax credit so that they can use it for purchasing their first home.I know from my constituents in Hamilton that we are seeing a large amount of growth in new housing and that is a testament to the great investment in our city by this Government. It also shows the hard work and dedication our people have for wanting to get ahead. They understand what a low interest rate environment means they understand what it means to have a good job and they are getting that under this Government. They understand what it means to have strong economic management that enables them to take advantage of their opportunities to get on that homeownership ladder and to be successful.This is a bill that we anticipate will have support amongst members of the House but this has become a debate around housing supply and housing policy. It is very sad to see the Labour Party stick to its very strict communist ways of how to deliver that housing when everybody knows that those days are gone—well and truly gone and buried. Thank you.PHIL TWYFORD (Labour—Te Atatū): That was 10 minutes we will never get back. You have got to love David Bennett—[Interruption]Mr DEPUTY SPEAKER: Order! I wonder whether I can encourage the member’s own colleagues not to banter bicker and barrage while he is making his speech.PHIL TWYFORD: Thank you Mr Deputy Speaker—quite right. You have got to love David Bennett. He is always good for a laugh—he is always good for a laugh. It is great to see a member of the National Party who is so proud of his own Government’s policies that he spent I do not know 10 percent of his speech talking about them.There is an approach to the housing crisis that is illustrated by this bill. It goes something like this. We have got a problem. National is generally reluctant to admit it is a crisis—although Alastair Scott did last night in the House—but there is a recognition that there is at least a problem if not a crisis and that something needs to be done about it. So let us do something—in fact let us do anything. Let us do anything no matter how small and inconsequential it may be. This policy is exactly that. It is what I call a Nick Smith special. It was announced in the heat of the election campaign when the Government was very sensitive that it was bleeding support on the housing issue. I say it is a Nick Smith special because it was announced with great fanfare it will be almost completely inconsequential and it actually risks making matters worse. But never mind the bill’s purpose is simply to convey the impression to the public that something is being done about the housing crisis. That is its sole purpose.So what does this bill do? The bill enables people to withdraw the Government contribution—often referred to as the member tax credit—from their KiwiSaver account in order to get a deposit together to take advantage of the Welcome Home Loan and the HomeStart subsidies. It is part of a broader policy package which will kick in on 1 April that does three main things. It increases the taxpayer subsidies available for the Welcome Home Loan it lifts the house price caps—thereby making more people eligible—and it allows people to crack open the Government contribution in their KiwiSaver scheme.Anyone listening to this debate will know by now that Labour is voting for this bill but they will have noticed that we are highly critical of it. I want to explain why. The reason that we are voting for it is that it is better than nothing but not by very much. It is benign at best. A number of contributors in the earlier stages of this debate have made the point that it falls woefully short of what is actually needed to make a difference to the housing crisis. It is completely inadequate for the scale of the problem that we have. I will go into a bit more detail about that. The second thing is that it risks making housing—particularly in the growth markets in Auckland and the upper North Island—even more unaffordable than it already is.So let us talk about the scale of the alleged benefit of this policy up against the scale of the problem. This bill could benefit a first-home buyer by a maximum of $521 a year. That is the maximum amount of the member tax credit: $521 a year. How much is that a week? About $10 a week—$10 a week. How much are house prices going up across New Zealand on average? By $1000 a week—100 times more. That is just house price inflation.Hon Jo Goodhew: Not across the whole of New Zealand.PHIL TWYFORD: Yes—yes house prices are going up $1000 a week on average across New Zealand because in Auckland it is $1700 a week. The average across New Zealand—even in the member’s electorate of Rangitata—across the whole country is $1000 a week. That is 100 times more than the benefit to first-home buyers of this pathetic bill that the Government has brought to the House. If you live in Auckland the house price inflation is 170 times more than the benefit a first-home buyer would get from this bill. So it is completely out of whack. House prices are out of control—particularly in Auckland but also in Christchurch—and people simply cannot save enough to keep up with house price inflation. So this scheme which at its worst is Nick Smith tinkering is completely inconsequential compared with the scale of the problem.The really bankrupt thing about this policy is that it actually risks making things worse. I want to read into Hansard some of the advice from Treasury about the effects of this policy. In fact the National Business Review which we have quoted a lot in the House today reported when the policy was announced that Treasury had damned this policy as being counter-productive. When it was announced Prime Minister John Key said that helping more people buy their own home will provide “stability for families strength for communities and security in retirement.” But Treasury said: “Those claims do not stack up.” That is a direct quote from the Government’s chief financial adviser—this policy does not stack up. Treasury made six main points about the expansion of subsidies under this policy. First it is likely to simply bring forward purchases that would otherwise happen anyway. Second the case for Government encouraging homeownership over renting is relatively weak. Third it is not well targeted to households who need it most. Fourth increasing demand in a supply constrained environment will simply increase prices undoing much of the benefit of the subsidy. Fifth it has not been tested against other competing ways to spend the money. Sixth it is not consistent with the Government’s own social housing and financial assistance policies which focus on targeting those most in need.That is a damning indictment of this policy by Treasury and the Reserve Bank and the Ministry of Business Innovation and Employment had similarly critical things to say as well as almost every commentator in town. They said that this policy risks as David Clark said pouring petrol on the fire increasing demand in a supply constrained market and actually making housing affordability worse. It is obvious to any observer that the housing crisis is a crisis of excess demand and inadequate supply. So logic would dictate that the solution lies in either or both subduing demand or increasing supply. This Government refuses to do anything about demand. It refused to tax speculators it refused to do anything about offshore speculators driving up property prices and it has been a complete failure at increasing supply.The special housing areas which is Nick Smith’s other great crowning glory have produced—you could count on two hands the number of new houses that people are living in that have been built in the special housing areas in the last 18 months. It has been a complete and utter failure and it has actually driven up house prices because many of the developers and the land bankers are sitting on land in those special housing areas watching the prices go up and not building. The National Government is currently presiding over a build rate in Auckland that is 40 percent less—40 percent less—than Labour was doing in 2003. In Auckland which needs 13000 houses just to keep up with inflation National is delivering only about 7500 a little over half of what is needed just to keep up with inflation—not to mention the fact that the Reserve Bank has said that Auckland has a deficit of 15000 to 20000 houses that the National Government’s policies even if it meets its targets will not even touch. Those 15000 to 20000 houses are the shortage in Auckland built up under this Government’s watch and that is one of the main drivers of the exponential rise in house prices.This policy is a classic Nick Smith special. It is just like the last Budget announcement where the Government took the anti-dumping duties off nails and varnish claiming that it would save homebuyers $3500. Its own officials have said it will save less than a third of that. Again that is a pathetic piece of window dressing designed to create the impression that the Government is actually doing something about the problem. Instead of setting minimum standards to keep rental properties warm and dry Nick Smith and Paula Bennett have got a pilot scheme of State houses. That is not where the problem is; the problem is in the private rental market but they refuse to do anything about it. The people of New Zealand deserve much better than this small inconsequential and irrelevant policy.JAMI-LEE ROSS (National—Botany): We are now on the third day of debate on the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. It has been debated on Tuesday debated on Wednesday and here we are on Thursday for the third reading. I remain concerned and actually saddened by the condescending and insulting approach that the Labour Party has to the desire of young Kiwis to be able to bring together a deposit to be able to buy a home because that is exactly what the Government’s policy is with the HomeStart policy. It is exactly what this bill supports—the policy that will enable New Zealanders to get more of a deposit together—and the condescending and insulting approach from the Labour Party is rather saddening. Mr Twyford called the bill inconsequential. Well we estimate that over the next 5 years 90000 New Zealanders will benefit from the changes that we are putting in place. For a couple who are each earning $50000 a year and have been in KiwiSaver for 5 years they will be able to withdraw a significant amount of money—$35000. Add on to that the doubling of the grants that we are putting in place which would allow that same couple to have $20000 in grants over that 5-year period from the Government then it is a $55000 deposit.I challenge any member in this House to stand up and say that for first-home buyers young homebuyers wanting to buy their first home a $55000 deposit for their first home is inconsequential. That is insulting that is condescending and that is absolutely wrong. The 90000 New Zealanders who will benefit from this HomeStart scheme will be much better off than they would have been had we done nothing. Yes an argument can be made that this bill tackles only part of the HomeStart scheme but the legislation needed to be changed for only part of the HomeStart scheme. The wider changes we are putting in place around the doubling of the HomeStart grants are also important and can be done through other methods. But to say that the bill is inconsequential is absolutely insulting and I am saddened by that. I remember just as I am sure many other members in this House remember that when we all went to buy our first home getting that first deposit together was one of the most challenging things. Once you get on the ladder it is a whole lot easier but the Government changes that we are putting in place with HomeStart will help those people by a long way and they will be better off because of it.I do want to counter some of the arguments that the Opposition has been running this week not just today in the House around housing. Opposition members have a holier-than-thou approach to housing. They believe that they had all the solutions in the 2000s and we are doing it all wrong now. Well let us just remind New Zealanders listening today that when Labour was in office house prices doubled. House prices went up 96 percent in the 9 years that it was in office. Young New Zealanders wanting to buy homes were seeing house prices skyrocketing going through the roof when Labour was in office. In the time we have been in office average house prices have increased by 27 percent. Contrast that with Labour’s record. If Labour members want to come into the House and say they had all the solutions over their 9 years in Government when house prices doubled—they went up by 96 percent—I would like to know the solutions they believe they have now. If that is what they were doing when they were in office 9 years ago—doubling house prices—what on earth would they want to do to New Zealanders now?I do concur with many members of this House who talk about the fact that we have supply issues in New Zealand. That is absolutely what we are addressing with many of our solutions in the housing framework. Take for example the special housing areas. That policy has led to huge amounts of development taking off in parts of Auckland and in other parts of the country where the special housing areas are taking place. I challenge Mr Twyford and I challenge David Clark to come to the Botany electorate to come to the Hunua electorate and to come to the East Coast Bays electorate. Those are electorates where we are seeing development taking off through the special housing areas. You cannot drive down some streets very easily in my electorate because there are cones everywhere that development is taking place. When you stand on some of the hills in my electorate and look over the Flat Bush area all you can see past the initial house roofs is dirt where dirt is being converted into more housing. You can see thousands of houses being built in our electorate. We are getting houses built. Twenty-four thousand consents were issued last year for construction in Auckland. The number of consents is up by 20 percent. Houses are being built and that is absolutely what we need.But the concern I have around housing and supply is the types of policies pursued by the left in New Zealand—the types of policies advocated by the Labour parties and the Green parties of the world—where they would like to see what they would like to call smart growth take place. I am talking about the compact cities they like to envisage when they sit with their planning documents. One of the biggest problems we have with housing in New Zealand particularly in Auckland is that for year after year decade after decade local government assisted by left-wing planning ideology has seen land supply being constrained through the district planning process. There simply has not been enough land opened up for development so that those houses can be built. It is a simple supply and demand equation. We have demand up here where people are wanting to buy houses. We need to build 13000 a year. We simply have not been keeping up with that demand. One of the reasons is that the supply of land has not been opened up sufficiently. The special housing areas legislation was put in place to try to override some of those planning constraints and that is leading to more housing. But I remain concerned as many of my constituents remain concerned that some of the policies that are pursued by local government in the housing space when it comes to land supply will not necessarily lead to the solutions we need in Auckland. More land needs to be opened up and I am hoping that the proposed Auckland Unitary Plan process which is being followed by independent commissioners will lead to more land being opened up because that is what we need in Auckland.When that new land is opened up and the 90000 New Zealanders who will benefit from the HomeStart policy are able to go to the bank with their doubled grant from the Government through the KiwiSaver scheme and with their funds withdrawn from the KiwiSaver scheme—with their $55000 deposit which the Opposition calls inconsequential—and are able to purchase new homes that are being built we will see more New Zealanders getting access to housing. Young New Zealanders want to live the Kiwi dream. Many of the members in this House know what it is like to own property. It is important for New Zealanders. It is part of our Kiwi dream part of the psyche we have as New Zealanders. This bill is all about trying to make it easier for New Zealanders to get together the money to put a deposit on a house. Other policies we are pursuing will lead to more houses being built and we are seeing development and progress being made.I also remain fearful of some of the policies our friends in the Opposition wish to pursue. A capital gains tax will not lead to more development taking place. It will lead to less investment taking place which will lead to fewer houses being built. I also do not trust Labour if it was ever in Government to build the 100000 houses it was promising. It was promising houses would be built and sold for $300000 when the average cost of a section in Auckland was $325000. The mathematics simply did not add up and I can see why people like Mr David Clark are no longer on the Finance and Expenditure Committee—they simply did not have what it took to be able to put through housing policies that will benefit New Zealanders.This bill is only part of the solution we have for housing. It is important that we build more houses but we also have to help those young New Zealanders. That is what the HomeStart policy is about. It is the primary mechanism being put in place through this bill and as an Auckland member as a member of the National Party on this side of the House I am pleased to see it progressing through the House.JAN LOGIE (Green): I rise to speak on the third reading of the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill which the Green Party is supporting. We are supporting it because it might just be better than nothing. We are not quite sure but we are taking the chance that it might just be.Most reasonable-thinking New Zealanders recognise that we have a bit of a problem with housing affordability and quality and tenure in New Zealand. Many in fact call it a crisis. I have had concerns about this crisis raised with me personally everywhere from Invercargill to Whangarei. I happen to have heard some stories around Northland about concerns with housing as well. Of course we most often hear about the problems in Auckland and Christchurch.There is a crisis. In 1970 the average age for first-home purchase in New Zealand was just 25. In 2013 it is estimated to be either 34 or 36 years of age. We now have the lowest rates of homeownership in New Zealand since 1951 with more than 35 percent of people in this country renting. The median house price is over $380000 and significantly it is almost double that in Auckland. Yet the median family can afford to service a mortgage of only $250000 to $300000 and they are likely to have only a few thousand dollars in the bank. It is estimated that only 5 percent of the new builds the few of them that we have been hearing about are now affordable. This is compared with 35 percent of all new builds in 1960 being affordable houses. The average cost of a house in Auckland is now $621800 and the rate of housing inflation in Auckland is $1700 a week. To meet the loan-to-value ratio requirement of 20 percent deposit it is around $120000. It makes it unaffordable for many who would previously have bought a house only a few decades ago.Increasingly families are spending their lives paying someone else’s mortgage spending their money towards somebody else’s accrual of wealth. We know that the answer from this Government will do nothing to help this. It will do nothing to improve people’s ability to pay off their mortgage. It will do nothing to help people who cannot afford KiwiSaver contributions in the first place. It will not help housing affordability—in fact the views of some are that it will make it worse. It will not help people save for retirement.Hon Member: What’s your plan?JAN LOGIE: I will get to our plan. Treasury suggests that it will just enable people who are already likely to be able to buy to do it a bit quicker. It risks increasing demand in a supply-constrained market.We have heard huge amounts of hyperbole from this Government about how seriously it is taking this housing problem even though its Ministers cannot quite bring themselves to suggest it is a crisis—though I have heard perhaps more in-touch backbenchers from that side of the House acknowledge that it may be a crisis. I would just like to take this opportunity to contrast the Government’s policies that are contained within this bill which will allow people to use the $521 a year of tax credits in their KiwiSaver account towards a first-home deposit with our policy of progressive homeownership and to let the speaker and the public decide which policy would be more effective at addressing the housing crisis and low rates of homeownership.The Green Party recognises the housing crisis. Housing is central to our vision of a fair sustainable and prosperous society. Safe and securable sustainable housing is fundamental to the health and well-being of families and communities and our economy. All New Zealanders have a right to warm safe stable and healthy homes.We have a comprehensive policy to address all of those concerns but today I would specifically like to contrast the policy contained in this bill with our Progressive Ownership policy. Our Progressive Ownership programme will provide a pathway to homeownership for families who do not have a deposit or the income for a commercial mortgage. It will work by the Crown ideally along with partners in local government iwi and the community sector building affordable homes worth say around $300000 on average. We do understand that although land prices might be high the possibility of intensification enables us to leverage off that and bring the cost down. It would build to modern environmental standards and make efficient use of land with modern urban form well served by public transport. We have read the research that shows that building out on the fringes not connected to public transport has the highest rates of mortgagee sales because as petrol prices go up people become more vulnerable and cannot pay off their mortgages any more. So under our policy people could build healthy communities and cheaply and easily get around.Families will enter into contracts with the Crown for these houses. Under these agreements the Crown will initially own all the equity in the house. Families will pay a basic payment to cover the Crown’s cost of capital—say $200 a week on a $300000 house at the Government bond rate of 3.5 percent. Our Government has access to cheap loans in a way that the average individual through a bank does not. Then the people who are buying into the houses would be able to make additional variable purchases of equity in the property from the Crown at the value of the house when the agreement was signed. Basically that is just saying that when you have got a bit more money you pay a bit more and then you start to increase ownership of that house until you own it. The Government is no worse off. It has the money that it first invested into that house to put into another house to enable another family to purchase their own house. If that family starts to struggle and cannot meet those rates of repayment then it just pulls it back down to the $200 a week to cover the Crown’s capital investment.This policy recognises the reality of struggle for so many of our families and provides a solution whereby families can start to accrue wealth. If their situation starts to improve then they can actually take out the equity they have in that house and use it towards a more expensive house say in the private market. The Government is no worse off the Crown has the same investment that it had to begin with and that family is able to move ahead at their own pace. They are no longer feeding the wealth of the increasingly small number of investors who own an increasing number of the properties in this country.I really ask this House to consider the extra $521 a year that this bill which is in front of the House at the moment would provide to people who already have the money to put into KiwiSaver to be able to save for that first-home deposit. What will that really do to help people get into housing in Auckland or in other parts of the country where people are struggling compared with using the resources that we have as a State to build and help people pay off houses at a rate they can manage and that meets the fact that their situation may change? I really think that to put it bluntly it is a no-brainer. Nobody loses in this option and what we gain as a country is strong secure communities where children are able to go to the same school and improve their learning and we are all much better off. Sadly this bill does nothing.ANDREW BAYLY (National—Hunua): It is a pleasure to be speaking on this third reading of the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill.First of all it is great to be part of a Government that actually knows what it is doing that has actually got something to do and that has actually got a plan and we are actually implementing it. We are not holding talkfests and unlike some Opposition parties we are not relying on newspapers to dictate our strategy.Owning our own home is not only a cherished Kiwi dream but a fundamental right. All we have heard about from many of the Opposition parties is their desire for the Government to be a major player—in fact they think it is the only way of dealing with it—and for the Government to build thousands of new homes. That is as creative as they can get. Luckily for us we have been a little bit more thoughtful about it because what we have done is actually thought about it from both ends of the spectrum.This bill is essentially about helping 90000 lower and middle income New Zealanders get into their first homes. In essence it will allow KiwiSaver members to withdraw their member tax credits when purchasing their first homes. This bill drives at the heart of the issue for many first-time buyers—that is how do you gather sufficient money to be able to put down an adequate deposit? It supports the HomeStart package announced in last year’s election that comprises three changes which take effect in a few days’ time.These include introducing the KiwiSaver HomeStart grant. This doubles the support for buying a new home and increases the house price limits. Secondly it enables larger KiwiSaver first-home withdrawals of all the member tax credits other than the initial $1000 kick-start provided by the Government. Thirdly it expands the eligibility for the Welcome Home Loans by aligning the house price caps with the KiwiSaver Homestart grant. In total this adds up to $55000 provided that the person has been in KiwiSaver for 5 or more years. That is an important contribution to helping to get that initial deposit that I spoke of earlier. This together with the low-interest environment that we have created as a Government means that now those disciplined Kiwis who want to work hard and save have a far greater potential to get the necessary deposit to get their first home.I now just want to return to the issue of supply which continuously comes up. I have spoken about this before but I just really want to discuss it in detail. We have 100 special housing zones already in place around the country 80 of which are in Auckland. I have got two of them in my electorate one of which Wesley is the largest in the country. It will create between 4000 and 4500 homes. Another one just down the road is going to create another 700 homes. The Wesley one is due to start earthworks later this year and the Belmont development is not far away. They are significant projects in their own right.The Opposition’s claims that not enough houses are being built are simply false. It is very important when you just—Hon Phil Goff: Read the Treasury report.ANDREW BAYLY: By way of example if you go to my electorate—to the Opposition member who just sought to interrupt me it might just be worthwhile if next time he goes out there on his weekend jaunt to see his house for him to stop at Mission Heights and look at the avalanche of new homes coming on board. There is in fact one a day in my estimate; one a day—one completed house every day and I am probably being conservative—in that vast area of my electorate. It is a fast-growing new development. We are talking about real houses every day coming on to the market.If you go over the hill and I am sure you know where Beachlands and Maraetai are there is a vast majority—again the population is going to go from 8700 to about 17500 by 2021. Diggers the loaders—everyone is in there now. The issue there is how we deal with the water the wastewater connections and the roading infrastructure. But those sections can be observed and I welcome anyone to come with me and I will show you those areas.Then Clevedon which I know that the member opposite knows exceedingly well—in fact tomorrow I am off to meet a number of people a number of developers who are just so keen to tell me about the 700 or 800 homes they are about to commence work on as soon as possible in the Clevedon area. It is a fabulous area as the member opposite knows. Again I would be very happy to show anyone around that area.Then of course closer to Pukekohe apart from the two large social housing areas I have spoken of earlier we have got again huge amounts of development going on—to be very specific Anselmi Ridge and then on Valley Road. In fact every day people stop on Valley Road to see the extent of the development and the land excavation that is going on. We have got houses coming from everywhere across my electorate and the issue as I have said on a couple of occasions is actually how the council keeps pace with the level of development that is taking place.But from another perspective even if you do not believe me the consent numbers actually tell you what is happening. For the 2014 year there were just over 24000 building consents issued country-wide. In Auckland there were 11000 consents issued.I think that someone quoted yesterday that the transformation between consent through to a house is approximately 98 percent. So if consent occurs there is a very strong prospect that it will result in a section being offered for sale and ultimately a house being built on it. These strong consent figures carried on into January this year with about 1700 being issued in January 2015. These are all really good indicators of a strong and vibrant housing market which will of course ultimately lead to houses for everyone.These are all important contributions to actually dealing with the delivery of new houses notonly in Auckland but across the country. Even the Reserve Bank in its last report to the Finance and Expenditure Committee indicated that it thought the housing problem was probably going to top off at the end of this year. In regard to Christchurch the Reserve Bank had a view that a lot of the supply had already been dealt with.The other thing that I just want to touch on is that the Labour Opposition particularly seems to be myopically focused on the Government taking over the role of the building of new houses in New Zealand. The statistics are—and I quoted these yesterday—that 25 percent of all houses in New Zealand are built by the top 20 builders. One percent historically have been built by Government but by far the vast majority have been built by one two or three-person building companies and they account for roughly 74 percent of all houses in New Zealand. That is why this Government is absolutely focused on creating the right environment where those builders feel secure have the right financial incentives and have the right economic environment to be able to go ahead and build the vast majority of houses in New Zealand.I just want to close by saying that first home ownership is still high even under the new loan-to-value ratio arrangements. According to the Reserve Bank report that was given to the Finance and Expenditure Committee although the long-term average over the last 10 years is at 19 percent even with the new loan-to-value ratios that have come in place over the last 12 months or so we are still sitting at about 17 percent. So we are still seeing a lot of first-home buyers entering the market and the package that we have set out in this taxation bill is another step in that overall package of helping Kiwi families get into new homes.RICHARD PROSSER (NZ First): I rise on behalf of New Zealand First and my colleague Fletcher Tabuteau to take a very slightly belated call in this third reading of the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. New Zealand First supports this bill.This bill has become rather more exciting than the average run-of-the-mill remedial tax bill. Legislation intended to remedy faults or anomalies in taxation law have tended to be fairly dry and innocuous affairs and that is as it should be as a general rule. However this one appears to have become something of a bill of two parts both of which have been the cause of quite some interest and some not inconsiderable controversy. The two parts are of course the HomeStart provisions and the veterans’ support provisions. Indeed the commentary from the report of the Finance and Expenditure Committee in which I have been standing in for the Rt Hon Winston Peters these past few weeks while he has been preparing to become the next MP for Northland—and a great result for Northland and the whole of New Zealand that will be I might say—states: “The bill seeks to amend the KiwiSaver Act 2006 and the Income Tax Act 2007. It would allow KiwiSaver members to withdraw their member tax credits when purchasing their first home and would correct errors in the tax social policy and KiwiSaver treatment of income replacement payments made to veterans under the Veterans’ Support Act 2014.”With regard to the first issue might I say it is perhaps less contentious that the Government does take some steps to assist first-home buyers in making that first great leap on to the property ladder than it is that this bill or even KiwiSaver itself may be the best way to go about it. Once upon a time and not so long ago in fact New Zealand prided itself on being a property-owning democracy. Today that dream of homeownership is becoming increasingly difficult and distant for an ever-growing number of New Zealanders for reasons that it could be argued can be laid squarely at the feet of Government. So it is entirely appropriate in our view that the Government does take some steps towards making that goal a little more attainable as it was for previous generations including might I say many if not most of the members here who benefited from things as they were in the past when prevailing circumstances meant that houses were both easier to come by and easier to pay for.Nowadays of course thanks to the policies of successive Governments the goalposts have shifted and they continue to track further and further away for more and more would-be homeowners starting out. So it is right and proper for the Government to help out a little bit with that first big kick down the field. The apparent inability of Governments to grasp the need to build added value into the economy through stimulus packages for industry thereby raising incomes by creating better paying jobs has meant that people struggle to pay mortgages on what are all too often low wages by world standards. It is appropriate to use the taxation system to give those people a helping hand. The refusal of Governments to intervene in the operations of the Reserve Bank or in the artificially high value of the dollar leaving speculation-driven interest rates at the whim of world markets which we have no way of influencing has made homeownership more difficult for more people. It is appropriate therefore that the Government gives them a hand up through the tax system.The refusal of Governments to restrict the purchase of land and houses in New Zealand to citizens and permanent residents only coupled with open-door immigration policies and the ability of offshore buyers to source finance from foreign banks at what are effectively zero interest rates have created a demand for housing that far outstrips supply. It is only appropriate therefore that the Government should make changes to tax laws such as this one in order to assist those ordinary working New Zealanders too many of whom are struggling as a result of these polices. So this we applaud. It may be too little and too late but it is a step in the right direction and we support it. We encourage the Government to go further to address the causes of inaccessibility of housing that lie within its own policies but in the interim we support this initiative and this bill.It is perhaps worthy of note that because wages have historically been low in this land of plenty and the savings habits of New Zealanders therefore somewhat sparse and lean the appreciation over time of value in the family home has become the centrepiece in the average New Zealander’s investment savings and retirement portfolio such that they have. So in that context it is perhaps not inappropriate that a person starting out should be permitted to withdraw a portion of their KiwiSaver retirement savings in order to kick-start their journey towards the ownership of a home which in all likelihood they will have to sell in order to retire in some degree of comfort at the other end of their working life. It is not ideal but as I say it is a step in the right direction. A future New Zealand First - led Government or even a New Zealand First - influenced Government would address this pressing issue with some real urgency and some real priority.With regard to the second primary concern of this bill that being the financial lot of our veterans and returned service people this bill seeks to “correct errors” regarding how income replacement payments made to veterans are treated for tax purposes. Despite assurances from the Government which have not been assisted by the inability—or indeed the unwillingness—of Ministers to answer very valid questions from Opposition members during the Committee of the whole House New Zealand First remains unconvinced that the changes in this bill will not in fact leave some of our veterans worse off financially rather than better.This year marks the 100th anniversary of the Gallipoli landings. That baptism of fire is regarded by many New Zealanders as well as Australians as being a coming of age for both our nations and it would be fitting—if perhaps overdue—that this year could also mark the passing of legislation guaranteed to secure the financial future of those courageous men and women who put body and soul on the line so that all the rest of us may enjoy a better life in a free and democratic world. We are yet to be reassured that this bill will achieve this and we urge the Government to listen to our very genuine concerns to examine the potential downstream effects of this bill and to bring about amendments to it without delay if such are found to be necessary—and we will certainly support such a process.All that said we do support the passage of this legislation. It might not be perfect but we think it is better to have it than not have it and it is probably going to be quicker and easier to fix it in place rather than throw it out and start again. I will not go so far as to say that I commend the bill to the House but New Zealand First will be voting in favour of it. Thank you.The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call with the Hon Phil Goff—5 minutes.Hon PHIL GOFF (Labour—Mt Roskill): There are two aspects to this bill. One is a rather pathetic effort to try to deal with the housing crisis which is in Auckland in particular and it will not do much to help at all. The other is something that this Government has desperately tried to paper over which is a massive stuff-up in the Veterans’ Support Act last year which will result in this bill on the surface reducing veterans’ payments by 25 to 33 percent.Let me deal first of all with the housing issue. There is a minor change that is proposed. It is allowing people to use their member tax credits under their KiwiSaver scheme towards their first homes. It gives an individual $10 a week—$10 a week. I want to ask the members on the other side of the House how that helps people in my electorate or their electorates when they are faced with house prices in Auckland going up by $1700 a week? So there we are we get a tax credit worth $10 a week and the price of houses is going up 170 times faster than the aid that is given by this Government. It is pathetic—it is pathetic.They deny that there is a housing crisis yet homeownership in Auckland has decreased from three-quarters of the population—75 percent in the mid-1980s—to 61 percent today and it is falling. In Auckland 40 percent of the properties are being sold to property investors. They are making a killing out of the inflation and this Government is doing nothing to help the first-home buyer who increasingly is finding that that Kiwi dream of owning your own home is disappearing—it is out of their reach. How do you deal with house prices going up by $90000 a year in Auckland? What young family can actually keep pace with that? They cannot do it. That is why most young people today are being locked out of the home market where the National Party is more interested in its greedy property investor mates making a fortune. This bill is a sticking plaster over a gaping wound. It will do nothing substantial to help the real problem and that is a problem of a housing shortage.I hear all the time from the National Party what Treasury’s advice is and how it is following Treasury’s advice. What does Treasury say about this? It says that this will not make it better for homeowners; it will make it worse. Let me quote: “the Government will end up undermining affordability for first-home buyers.” When you add to the demand and you do not add to the supply as this bill does all you do is push home prices up further. The only real beneficiaries of this measure will be property investors.I want to talk about the other aspect because I proudly stood in this House and supported the Veterans’ Support Act that went through last year. What we are finding in this legislation—it is called remedial; it is remedial because the Government stuffed it up—is that somehow the Government put the payments for veterans at a gross level when it meant to put them at a net level. So this piece of legislation will reduce payments to veterans by 25 to 33 percent. I asked the Minister in the chair repeatedly during the Committee stage yesterday to provide an explanation—no explanation. The Minister would not get to her feet to say how the stuff-up happened would not get to her feet to apologise to the veterans for the mistake that was made and would not explain why the veterans had not been informed. That was a disgrace.I challenge the next National speaker to answer this question: how much has been paid over what should have been paid and to how many veterans? It is a very simple question. Veterans deserve to know that. The country needs to know that. Will this legislation be retrospective? Will the Government be clawing money back that it paid to the veterans that the veterans received in good faith—and now it is saying the veterans are not entitled to it? They are easy questions. The answer may be: none. If so why will not one National member get up in the House and say that? Why would the Minister repeatedly fail to answer questions? The Minister is paid $280000 a year to answer the questions and we had Ministers in the chair yesterday who would not get up and give an explanation to the country would not give an apology and would not give an answer.STUART NASH (Labour—Napier): I would like to pick up where Mr Goff left off. What this legislation does is it actually takes a lump-sum payment that was given to a veteran upon either his or her retirement or injury or incapacitation and says that it is income. Before this bill it was not counted as income but now it is. And Mr Goff this is retrospective legislation—this is retrospective—so what this means is that there may well be veterans out there now who have banked money who have paid off mortgages who have given money to grandkids or worse still—heaven forbid—who may have died and the Government is going to go to them and say: “Sorry we got it wrong. We are going to take money out of your bank account.” That is wrong. There are some very high barriers for implementing retrospective legislation.First and foremost it is about fairness and the irony that this is being implemented in the year of the 100th anniversary of Gallipoli has not escaped a number of members on this side. But to make it worse the one member on that side of the House who knows something about the armed services Colonel Andrew Bayly stood up in this House and said: “It’s minor it’s not important it doesn’t matter.”—this does not matter. Well I would love to be a fly on a flagpole when Colonel Bayly has to face his men and explain why this does not matter. There will no doubt be a number of veterans who are due to retire and have banked the money as a lump sum because the legislation says that you do not pay tax on this—and I do not think that is a bad idea. If you have served your country overseas if you have been a member of the armed services you are not doing it for the money; you are doing it because you love your country and you are prepared to die for your country. In fact it is probably the one job where you can put your hand on your heart and say: “I am prepared to lay down my life for my country.” We are now going to tax these guys on their superannuation lump-sum payments and I think that is an absolute travesty.As Mr Goff said the Minister in the chair would not even stand up and let us know how many veterans this affected. So we cannot go to our RSAs because Mr Goff consulted with the RSA and it did not even know about this. I remember at the select committee asking the Defence Force representative: “Are you going to consult? Has there been a level of consultation?” and she said: “Yes. We’re going to make sure that the people understand this.” Well how come Mr Goff can phone the RSA and it knows nothing about this? So where was the consultation? And the thing that gets to me a little bit is that this is called the Taxation (KiwiSaver HomeStart and—tacked on—Remedial Matters) Bill. I think that this Government has been a little bit disingenuous. I think that it has snuck this in under the radar hoping it would not get noticed and would then be able to go: “Phew it’s gone away.” Well it will not. It will not because you cannot screw our veterans in this way. The fact is that over 3 or 4 days we have been asking the same questions—how many veterans are going to be affected what sort of level of communication have you had with veterans’ organisations and does the RSA know about this—and not once has a Minister stood up and answered any of our questions. I think that is a little bit of dereliction of duty and it just makes my blood boil.The other thing of course is the stuff about the housing market and I have heard National member after National member stand up and say: “It’s about the market. Let the market decide.” In fact we had one member—a member who uses Maggie Thatcher as his idol—stand up and say: “Let the market decide.” Well I think every single Auckland MP knows that the market has failed. The market has failed in Auckland because the rate of homeownership has plummeted house prices have gone through the roof and the dream of homeownership for a whole generation of young Kiwis is fast disappearing because they simply cannot afford it. If Dr Nick Smith believes that somehow you can cobble $50000 together and buy a $500000 home and that is affordable then he needs to get in touch with reality because you need to have a household income of $175000.Just to sum up we will support this bill because Treasury said that it does no harm to anyone. But it does. It harms veterans and we have no idea of the magnitude. Thank you very much.ALASTAIR SCOTT (National—Wairarapa): Thank you for the opportunity to speak on this amendment bill. As I have said before this is part of a multi-pronged approach to support first-home buyers into their homes. Currently first-home buyers are eligible for a grant of $3000 after 3 years $4000 after 4 years and $5000 after 5 years. The HomeStart grant has doubled that amount to $6000 after 3 years $8000 after 4 years and $10000 after 5 years. This amendment gives access for those first-home buyers to an additional $521 per year for each year that they have participated in the KiwiSaver scheme.There is no silver bullet to solve giving access in order to getthose first-home buyers in. Part of it is the low interest rate environment that we have part of it is the growing economy that we have and part of it is the real wage growth that we have in this economy. This amendment affects the demand side. We are talking about the supply and the demand side and this affects the demand side. It does increase and support the demand side which relates to only the first-home buyers because they are the people whom we are wanting to support at this point in the cycle.The people on the other side have been talking about the core issue—the core issue being the supply—but they have totally disregarded the special housing areas that are being opened up. They have totally disregarded the fact that there is a housing boom on right now across the country. They have totally disregarded 23000 new consents in the last 12 months. They have totally disregarded them. If they choose to look around as they drive through various electorates like Botany Hunua and Waimakariri there is a lot of houses and a lot of development. You only need to jump into a car drive around and look for yourselves. Open your eyes—open your eyes.So I would like to also mention the town of Carterton. Just yesterday it was reported in the New Zealand Herald that Carterton is the North Island’s fastest-growing town—the North Island’s fastest-growing town.Hon Member: Is that right? Carterton?ALASTAIR SCOTT: Carterton. It has had a 16 percent increase in population in the last 6 years; an increase of 2.3 percent in the last 12 months. It is predicted that Carterton will run out of zoned land in about 15 years. That means that the council is thinking ahead. It is thinking about the infrastructure that is going to be required for the increased population. It is thinking about rezoning more land for more houses and that is a good thing. That is a good thing. The reason it is growing so fast is that there is a good connection to Wellington City. The key point here is that the average home there is a very affordable $270106. That is affordable. That is very affordable. It is well under the cap that this piece of legislation relates to for that town which is $350000. So things are working. Things are working as they should. People are attracted to growing towns growing economies and regional economies close to major cities where affordable housing is available.The other option of course is to have central planning—just build 100000 houses. What a great idea that is—not! Imagine that: all these houses planned and designed by the Labour Party planned and designed and built by the Labour Party. Imagine the slogan: “Open home Saturday afternoon 2 till 4 o’clock. Homes specially designed for you by the Labour Party”. How many people would turn up? How many people would turn up? None. None. The idea that you can go out there and build 100000 homes without affecting the market without affecting the supply—I mean where are you really going to find the land to build 100000 homes and who are you really going to buy it off? Who are you planning to buy it from? No answer. There is no answer to that question from that side. They have no idea where they are going to find the land. I do not know where they will find it. It is a ridiculous idea that is impractical and is only going to—actually it is quite sanctimonious is it not that these guys think they know best for the people of New Zealand. They know what is best for first-home buyers. They think they can plan a future a home for a first-home buyer by putting them where? Well Labour will decide. It is not for the individual to decide. You see that is the difference: we think that individuals the people of New Zealand have the right and the ability to decide for themselves where and when they would like to live whereas the other side wants to plan for the people of New Zealand. They want to decide where those people can choose to live. That is the difference between this side and the other side.The other side also suggests a capital gains tax being some sort of solution when it is really just a problem. It is only going to accentuate what is not yet a bubble in Auckland by the way. The Governor of the Reserve Bank has not described it as a bubble. There is not the indebtedness—that the Labour Party would like to think there is—that is the definition of a bubble. But I tell you what: you put a capital gains tax in as suggested by that party and the free capital that is available the capital that we need to invest in the regions in the real economy and into real jobs will be attracted to the Auckland housing market. That is what the capital gains tax will do. It was mentioned yesterday; it is known as the “mansion effect”. You will get as much money together as you possibly can to buy the largest the biggest the flashest house because of course the capital gain associated with your family home will be exemptunder that party’s policy. I mean why would you want to invest in something that is in the real economy for which you potentially have to be taxed by that party when you can simply go and buy your own family home and be exempt?The other idea from the Opposition from the Green Party today also was forgetting where the money comes from. The Green Party thinks it grows on trees.As you would expect it is not the solution.Hon Clayton Cosgrove: Talk about your own bill. You’re proud of your own bill—talk about it.ALASTAIR SCOTT: I am trying to illustrate that—Hon Clayton Cosgrove: You’re not trying very hard.ALASTAIR SCOTT: I am doing a very good job actually at illustrating how our multi-pronged approach is effective. It is working and the alternatives that you are trying to constructively put which are failing are just nonsense because money does not grow on trees. If you are going to centrally plan and have the Government build houses or invest in houses you are forgetting the taxpayer who is apparently going to fund or subsidise the building programme proposed by that party. I mean my voters in my electorate in the Wairarapa are not interested in subsidising a building programme proposed by the Greens to build more houses in Auckland. That just does not work. You have got to let the market do what it is allowed to do. You have to support the infrastructure and the process that allows people to make their own decisions on where and when and how they want to live. Thank you.Hon CLAYTON COSGROVE (Labour): I like the last speaker Alastair Scott. He is like a salmon that just jumps on your hook this guy. He is very good. You know salmon; you are out there—he just jumps on the hook every time. I was very complimentary to him yesterday. In the spirit of bipartisanship I am going to illustrate how honest this guy is. Yesterday he stood up in the House—I mean he made the best fist of it he could today. Maurice you have got to give him some happy pills. He was so enthusiastic about this! It was like watching paint dry listening to the speech. The propaganda from the National Party research unit almost had to be winched out of him like razor wire.Yesterday of course he said a couple of very honest things and his constituents should be proud of him. He confirmed yesterday that this policy this so-called big-hit housing policy will be the equivalent to—I will quote him because I wrote it down—“$10 per week”. It is $10 per week that people will be allowed to use as they withdraw a huge amount of their own money $521 of their own superannuation and they should be grateful to this Government for it. Ten dollars a week is what they will be able to use when Auckland house inflation is going up by $1700 per week. He used the words “10 bucks a week”. I commend him for his honesty but I say again he is like the political salmon that just impales himself on the hook.Then of course he used those infamous words. I am sure you will be interested in this: he used words that Gerry Brownlee would not use as Minister for Canterbury Earthquake Recovery that Nick Smith as housing Minister would not use that none of Cabinet—the Prime Minister the finance Minister would ever use. They would never use the words he did. He said that this policy would go some way to resolving the “housing crisis”. He admitted—and I commend him for it; he has probably been beaten within an inch of his life metaphorically by the whips last night for making that speech and being so honest—there is a housing crisis.Yet today he comes out and says that “it is not yet a housing bubble in Auckland”. Well I do not know what sort of jungle juice he brought up from the vineyard in the Wairarapa and laid out on the caucus room bar of the National Party last night and imbibed but there is either a housing crisis and a housing bubble or not—you cannot have it one way or another. Then he said last night that the other plank to the National Party’s great housing policy that would help—Alastair Scott: Try something original. Don’t quote me all the time.Hon CLAYTON COSGROVE: Oh no no no—plagiarism is the best compliment you can pay somebody mate. I want to repeat it and we want the Hansard printed off of your speech last night because we want to distribute it right around the country with you being the only honest man or woman in this debate around this mean-spirited bill.He went on to say that loan-to-value ratios would help first-home buyers. I do not know—I did as I said last night get through standard 4 economics and last time I checked when you are required to have a larger deposit in a loan-to-value ratio situation and your income stays roughly the same then that makes it tougher to get into a new home. But I suppose if you are out there in amongst the vines treading the grapes walking through the vines and pathways of that wonderful place Wairarapa you could maybe get a wee bit out of touch.I want to make a couple of other comments in respect of this bill. What is shocking in this bill is the way our veterans have been treated. Mr Goff made a very interesting point throughout this debate.Hon Members: Ha ha!Hon CLAYTON COSGROVE: They can laugh in the 100th anniversary of Gallipoli—they can laugh—yet this Government had the arrogance to not even ring up the RSA and say: “By the way we’ve made a mess. We had your pensions taxed gross. We’re going to have to retrospectively pull it back.” The chief executive officer of the RSA the national body did not know this bill was going through. I would have thought that out of respect the National Party would ring. Say take Chris Finlayson—a man who has done much for veterans in terms of the cultural and heritage portfolio a man who has respect for veterans—Hon Christopher Finlayson: My great park.Hon CLAYTON COSGROVE: Indeed his great park. It may be called in years to come the Finlayson Park—maybe. There may be a small plaque in the corner of the park honouring the Minister and I would support that. But at least he has shown those veterans respect. Throughout this debate no Minister has got up and even given an explanation as to why they did not even contact the RSA. No person in the department was instructed to ring the RSA and say: “Look we’ve made a mess-up.”—“we” being the Government—“We apologise for this and here are the statistics and the amount that we are going to have to claw back from our veterans.” That may indeed smack of arrogance.So what we have here is a pretty mean-spirited bill. It is Alastair Scott’s $10-a-week bill: $10 a week as house prices in Auckland go up by $1700 a week in terms of house price inflation which ironically equates to $90000. They talk about 90000 people who will be helped by this. I am sure those 90000 will be down on their bended knees thanking the Government for allowing them to use their own $10 a week that they were putting into their superannuation looking at it and going: “This isn’t a drop in the bucket. This isn’t even a bit of mist or steam over the bucket. This is basically nothing.”I say to all those other members including Mr Bennett and others—apart from Mr Scott who at least has treated the constituency with respect and been honest—that they should be honest take Mr Scott’s example with their constituencies and tell them how it is. Because people can add up—maybe not everybody on that side—but people in the communities can add up and they will work this out very quickly. They will work out that they are up against it and that $10 a week up against $1700 of price inflation in Auckland is going to do nothing for them except allow them to chew up a little bit of their own money in their own superannuation.There has been a bit of talk about our policies and all this sort of Polish shipyard nonsense that comes out from a couple of those newbies over there as if a Government is going to stand up and build have all the officials come out reconstruct the Ministry of Works and have them out there with—Hon David Parker: We certainly wouldn’t employ John Key on a hammer.Hon CLAYTON COSGROVE: Indeed. They would have them all out on the hammers building houses. No no; what the Government can do though is partner—Hon Maurice Williamson: You’re getting the Greens all excited now.Hon CLAYTON COSGROVE: Oh Maurice would be all right on a hammer; or a hacksaw I suspect is more Maurice’s weapon of choice.Hon Maurice Williamson: A hatchet. I’m better with a hatchet.Hon CLAYTON COSGROVE: A hatchet indeed. Yes well there is a bit of history there Mr Williamson as you know. But I would say that the simple equation is this. Governments can borrow money cheaper than anybody else. These guys have made an art form of it over the last 7 years. But you partner with the private sector you back the private sector and you get it to do what it does best—not the Government—to build those houses. But the actual Government has a part to play in assisting and backing the private sector. I am a free marketer but I do believe that where appropriate there needs to be some surgical interventions.Mr Scott got up and said the market must be allowed to do its thing and in general terms that is right. But you do not do it to an extreme where Mr Scott and his ilk are just quite happy to see tens of thousands of young—and not so young—Kiwis languish without any hope of getting on the first-home buyer ladder that he and I and others have had the privilege of getting on. His view is: “To hell with you.” His view is that the Government has no place even surgically intervening even partnering with the private sector as we have proposed to get it to de-risk some of these large housing projects so the private sector will do the work for us.Hon David Parker: And sell them.Hon CLAYTON COSGROVE: And sell them of course. And sell them and return the money back to the taxpayer as Mr Parker reminds me. What is wrong with that? But these geniuses over here as they try to bluff their way through this bill and try to hoodwink the public by saying how generous they are as a Government also bluff the public. As if a Government is going to go out and build 10000 Coronation Streets. I mean guys look give us a break. I will give you some advice. Lift your game. Come up with a better bit of propaganda than that because no one believes you. Sam Lotu-Iiga is grinning there. He is a sophisticated guy. You will not get him standing up with this piffle. He will be buried under the desk. He does not want to be associated with this.So I will give some advice to the new people there: lift your game. Maurice tell the National Party research unit to come up with a little bit better propaganda that is even just slightly believable. The numbers do not add up the propaganda is unworthy the research notes are pathetic and the speeches from that side show they are not even proud of their own legislation. There are a few bright guys over there but I think they have worked out that it is a mean-spirited bill that puts the boot into our veterans that has arrogantly—arrogantly—trod on our veterans and not even given them the courtesy of explaining why this happened. Ten bucks a week—it is pathetic it is piffle and no one believes it. I look forward to cyclostyling off Mr Scott’s speech and whipping around the odd vineyard and the odd house in Wairarapa and having a wee chat to the locals.TODD BARCLAY (National—Clutha-Southland): It is a privilege to speak on the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill in its third reading.Hon Maurice Williamson: That’s the one we’re on actually.TODD BARCLAY: Yes this is the bill we are talking about. As we all know this taxation bill introduces amendments to the KiwiSaver Act 2006 and the Income Tax Act 2007 that will allow KiwiSaver members to withdraw their member tax credits when purchasing their first home. It corrects the tax social policy and KiwiSaver treatment of veterans’ income placement payments as well.I have been listening since the start of today’s speeches on this bill and it has been quite interesting hearing the Labour Party and the Greens speak about their views on what should be happening in the housing market. Firstly it is quite interesting to hear that they think $521 in tax credits on top of the other contributions—including their own and the employer’s—that they can access to buy or build their first home is insufficient. I would have to say that for anyone in the category of first-home buyer anything is better than nothing and $521 on top of the other benefits that the Government has been introducing is sufficient. I think it would be welcomed by any homebuyer who had any sense.The Labour Party and the Green Party also think that first-home buyers should not get to choose where they live. As David Bennett pointed out that is just an absolutely communist point of view on the world. People should have the ability to decide where they want to live and where they want to bring up their children. They should have the choice to be able to do that wherever they want to do that.One point I probably would make—being of the younger generation and a couple of generations behind the previous speaker Clayton Cosgrove—is that perhaps people of my generation have quite high expectations around first home ownership. I think that many of my peers enter the housing market with an expectation that they can enter at the point at which their parents currently are. I think it is probably worth remembering that people of our parents’ generation and that age group have bought their way up the home-market ladder to the point they are at now. I think a point to make to first-home buyers—and I would be included—is that they maybe should lower their expectations where appropriate.Obviously the Auckland situation is a different kettle of fish from other areas in the country. Queenstown—in my area—is similar as well. But as we look around we can see that a significant amount of homes are being built and a lot of them are targeted at first-home buyers. Paula Bennett and Michael Woodhouse were down a couple of weeks ago and we looked at the work the Queenstown Lakes Community Housing Trust is doing to work with developers to secure a portion of new development land to be targeted towards first-home buyers. There are a number of schemes that are focused on that.The other point that the Labour Party made was that the changes in this bill are inconsequential. Well if anyone in their right mind thinks that the 90000 people who will benefit from this are inconsequential I am not too sure exactly what they are considering because 90000 people benefiting from the change that this Government is making is significant and it should not be brushed over. It is also probably worth reminding members of the public of Labour’s track record when it came to affordable housing. Over the 9 years that Labour was in Government house prices went up by 96 percent but in the 6 years that we have been in Government they have gone up only 27 percent which shows that we have got a greater handle on how to manage the economy and how to manage all the different levers that have an impact on the cost of housing.Another point around Labour members’ views on what we are doing with regard to affordable housing is “What exactly would they know?”. We had an election last year where the public clearly voted with their feet and backed our view on how we should be tackling the issue of housing affordability. The Labour Party thinks that a capital gains tax is the answer. The public rejected that. The Labour Party thinks the answer is building 100000 houses at a cost of $300000 on sections that will cost $325000 in Auckland. Anybody who has even considered any form of economics would know that that is economically illiterate.Hon David Parker: $325000 for a section under your Government—are you proud of that?TODD BARCLAY: It was actually that member over there who made up that policy. It was widely rejected by all members of the public.I will move on to what the Green members have been saying. They do not want people to own their own homes at all. In fact they want the Government to own their homes. They want around $300000 to build a home not taking into account how they will buy the land or account for the land and they think they will charge people $200 a week. I think the economics behind the Green Party policy are even looser than what is behind the Labour Party’s policy. And then they were talking about the intensification of housing. The Green Party thinks the intensification of housing is the answer. However intensification in every other respect is for the Greens not the answer so it is contradictory for them to say that we should intensify in this area but not intensify in other areas that are the more productive areas of the economy such as the use of farmland and the use of other productive assets in this country.Just while we are on the subject of the Green Party I have to say that we would not trust the economy in its hands anyway given its previous leadership candidates. Here is what they think the state of the economy is. Vernon Tava thought that the official cash rate—The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is not part of the bill.TODD BARCLAY: OK; sorry Mr Assistant Speaker. Talking about inflation then which is contributing towards—The ASSISTANT SPEAKER (Lindsay Tisch): No no.TODD BARCLAY: OK. We will go back on to this bill then. This bill as we know is about supporting first-home buyers and honouring our election pledge. As we know it is in relation to the HomeStart package which was announced during last year’s election and it comprises a number of components that will come into effect on 1 April this year. The first is replacing the KiwiSaver first-home deposit subsidy with a KiwiSaver HomeStart grant. That doubles the support for first-home buyers and increases the house price limits which is significant in many areas across the country including my own area.The second component of that is enabling larger KiwiSaver first-home withdrawals. This is being done by including a member’s tax credit which is included in this bill meaning that first-home buyers will now be able to draw on their KiwiSaver savings except for the $1000 kick-start. So the components that they can draw on are their contributions which they have put in over the years that they have been a member of the scheme and also their employer’s contributions.Thirdly we are expanding the eligibility for the Welcome Home Loan by aligning the house price caps with the new KiwiSaver HomeStart grants. So we are roughly doubling the number of people who are receiving Government grants to buy their first home from 10000 people a year to 20000 a year and it is doubling the Government’s grant that they are eligible for if they are buying or building their first home. Currently first-home buyers are eligible for a grant of $3000 after 3 years in KiwiSaver $4000 after 4 years and $5000 after 5 years. Under KiwiSaver HomeStart this grant will double to $6000 after 3 years $8000 after 4 years and $10000 after 5 years for purchasing a newly built home. So on the top of the $521 which is “insufficient and inconsequential” we have actually taken other steps to increase the facilities and the means for first-home buyers and first-home builders to access capital and make their first step on to the housing ladder.I just want to remind members of the public of what the Labour Party’s position is. I am not too sure whether I have got it clear yet given that quite a few conflicting views have been set out over the last week or so. I understand Labour’s position to be that we need large-scale urban developers backed by private sector developers and community housing organisations and such developments cannot happen without the Government playing a role—The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member is slightly unlucky in that I was in the House when my predecessor warned him about sticking with the bill and not talking about other parties’ positions. It was yet another party that he was warned about but I will warn him that if he continues down that line his speech will be terminated.TODD BARCLAY: I go back to the nature of this bill which is that first-home buyers are able to access their tax contributions for the purchase of their first home or more likely to go toward their mortgage. It is in the context as I was saying of a number of other changes that have been made by this Government including allowing first-home buyers to be able to access their contributions and their employers’ contributions to their KiwiSaver scheme. And we are sort of seeing the effects of that already as part of the wider implications which this bill will only help to advance. It has seen residential construction increase by 21 percent already in that more than 24000 building consents were issued the highest number since 2008.I want to touch on what was discussed in the Committee stage of this bill and where the amendments were made. They primarily focus on the KiwiSaver scheme rules relating to members’ withdrawals. One particular amendment was a move to ensure that membership in a complying superannuation fund for 3 years may count towards qualifying for a first home. Thank you. I commend this bill.Bill read a third time.