McAnulty Kieran; Leary Ingrid; Watts SimonHon KIERAN McANULTY (Labour): Thank you very much Mr Chair. I have a question specific to the proposed offshore gambling duty in clause 89G—a series of questions quite a few actually but I'll ask three very quick questions now and my subsequent contributions will be determined by what the answer is.CHAIRPERSON (Teanau Tuiono): Apologies to the member; that's not this part.Hon KIERAN McANULTY: Then I'll hold off—but I'm talking about the Amendment Paper which refers to this part.INGRID LEARY (Labour—Taieri): Thank you Mr Chair. I would like to just pick up on where my colleague Arena Williams left off to ask the Minister about really what are the policy objectives of the interest deductibility changes and the changes to the brightline test? There could be a number of policy objectives depending on who the stakeholders are.Perhaps it's about warm dry and affordable homes. This is an issue that has plagued New Zealand for a really long time and it was a perennial question over previous decades and actually got to the point where the housing market was just so overcooked that at one point the Government and Opposition when we were on different sides of the House not the current sides had agreed to come together to say this was a really wicked problem—it was something that was fundamental to all New Zealanders. It was around health it was around housing—Hon Member: Is this to do with Part 2?INGRID LEARY: Yes absolutely it's around Part 2. And it's great to see the member interjecting and participating in the debate because I do have a number of questions and so do my colleagues. But that could be one of the things: is it about warm dry affordable houses?Is it about supporting sustainable house prices? And I say this in reference to the fact that the Reserve Bank's mandate has had that stripped away. So previously that might have been something that was embedded in legislation; now I don't know if that's in his thinking and I'm really keen to know that because having stable house prices is fundamental to economic stability. Is it about having a housing market that responds to these market pressures? Is it about giving tax breaks to landlords? And that is a genuine question because I have heard in this House a statement from the leader of the Government the Prime Minister to say that this is actually about putting downward pressure on rents.When we think about what is happening here landlords will be able to claim 80 percent of the interest that they will be able to deduct off their tax bills by the year ending 2025. It will be 100 percent by the end of the year 2026. And when I look at the regulatory impact statement (RIS)—the RIS that was produced by Treasury at the end of 2023—it actually said that we needed to look at options between the brightline test being five years right up to 20 years. And it looked at what would happen if we reduced interest deductibility and the brightline test and it said actually it could put upward pressure on rents.So that flies directly against what the Prime Minister has been saying multiple times in question time in the House about what the reason for doing this is. And if we look at our house prices in New Zealand relative to the OECD they are very high. The Treasury RIS in 2023 said that tax settings are not the primary driver of housing affordability; current tax settings incentivise investment in housing. And it also went on to say in the context of constrained supply lightly taxing housing relative to other forms of income would lead to higher property prices than would otherwise be expected.So my question to the Minister is: when we look at what the purpose of this is what is the policy objective? I want to know which stakeholders he has considered and which stakeholders he has consulted with. Those stakeholders could be people who own houses already. Perhaps they are mum and dad investors. But perhaps they are large multinational investors which we've heard about from my colleagues. Perhaps they are renters and so if they are renters does he honestly think that the trickledown theory of economics is going to put downward pressure on rent? Because if so I'd really like to hear his explanation of how that is going to work when all the evidence and all the commentary that is coming out through the media through academia through people who work in the market is that this does not work.When he's looking at the stakeholders is he thinking about financial stability? Is he thinking about regulators like the banking sector especially now that the dual mandate has been taken off the Reserve Bank? What thought has he given to economic stability and the kind of impact that this type of policy and this type of setting will have on them? Has he thought about the NGO sector who are commentating on this market? These are all stakeholders and so when I look at that—[Time expired]Hon SIMON WATTS (Minister of Revenue): Thank you very much Mr Chair. Well quite simply the answer to the question in regards to what stakeholders were consulted in regards to this is in effect the New Zealand public because we actually campaigned on this as part of the election process. So I'm pretty confident that the New Zealand public are and were aware around this and this was something that we spoke about a lot and for quite a long period of time.The reality of what we're doing here is returning the ability to claim a deduction in regards to interest paid back to the rules where that was allowable. Obviously the previous Government changed it and that's the discretion they had as a Government. This coalition Government has decided that that is not what we want to do. We want to in effect reduce the upward pressure on rents and by making these changes which we clearly signalled going into the election the ability to deduct also ensures that we've got consistency in terms of the ability to take a deduction with other aspects of business and within the tax system. So there is a simplification a consistency element to it—well consulted well discussed well signalled—and the reality is in regards to the overall impact around the rents it is our view that when we reduce cost burden out of the system that will reduce upward pressure on rents.Obviously there are a number of factors that go into the rent aspect. Obviously the supply of housing is another key component and we have been clear to say that there isn't a single lever or single correlation factor that is at play but we do believe it is a factor that will reduce that pressure as part of the overall mix of initiatives that we're undertaking as a coalition.