Genter Julie Anne: Taxation (Land Information and Offshore Persons Information) Bill — Second ReadingText is incorporated into the Bound VolumeGenter Julie Anne: Taxation (Land Information and Offshore Persons Information) Bill — Second Reading[Sitting date: 08 September 2015. Volume:708;Page:6315. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green): The Taxation (Land Information and Offshore Persons Information) Bill is one part of the Government’s “not a capital gains tax” tax that was announced around the time of the Budget. The Green Party is supporting that whole policy package if you will because it is taking a step in the right direction but we do not believe that this bill really is as good as it could have been unfortunately. What the bill does is it starts the very first steps towards getting information on what is actually happening in the housing market. This has been a very long time coming. It has made it very difficult for us to assess what exactly is causing the underlying inflation in house prices in Auckland because we simply do not have enough information.I remember asking the Governor of the Reserve Bank a year and a half ago—maybe 2 years ago—when he came before the Finance and Expenditure Committee whether the Reserve Bank had information on what proportion of sales were to overseas buyers and that was just to understand how much foreign capital is coming into the market because that can be one of the factors in price inflation. It is really important to have an understanding of whether or not that is making a difference and we simply did not have the data at all so we did not know to what extent house price inflation was caused by supply problems or whether it was caused by demand-side problems like the influence of speculators or a whole heap of foreign capital coming in and bidding up our market. The Reserve Bank at that time said it did not have that information it would very much like to have that information and that it required action from the Government in order for it to collect that information. Finally a year and a half later we have a bill that is going to start collecting that information and it is very useful and that is why the Green Party will be supporting this bill.Why is it important to understand this? It is because there are multiple factors at play in housing affordability. Everybody I think agrees that it is incredibly important for every person in New Zealand to have a warm safe secure dry place to call home. That is fundamental. It is important that people are not prevented from having this because of not having enough money to pay the rent or to pay the mortgage. It is also important that we do not have an overvalued bubble in Auckland because the amount of debt tied up in housing in Auckland becomes a liability for the whole economy and that is certainly something the Governor of the Reserve Bank has been worried about for quite a while now and we are finally seeing some very small steps in the right direction by this Government but it has failed to take action for a significant number of years.Back in 2010 Treasury was lobbying the Government to implement a capital gains tax which it failed to do and of course that would have had an impact on demand in the Auckland housing market and might have limited the bubble more. Obviously it is not a silver bullet and it is not the only solution but we do know for very understandable economic reasons that when you do not have a tax loophole on housing—as we currently have had and continue to have to a certain extent—then there is a perverse incentive to put more money into houses rather than into productive sectors of the economy and there is a perverse incentive for people to own more houses. When you do not have protection for renters there is also a perverse incentive for people to become landlords and not look after their properties and to make a loss on the rent because they are anticipating future capital gains that will not be subject to tax. It is simply not right that people who go to work in a hospital or at an engineering firm or whatever else they are doing have to pay tax on their salary but people who sit back and make a hundred grand simply by flipping houses in Auckland over a period of a few months pay no tax on that income. It is not right it is a distortion and it is something that we could fix and that we clearly understand how to fix.The relevant information that is going to be collected because of the changes in this bill has to do with understanding how much money is coming in from overseas. That is important to understand exactly what proportion of the house price inflation is being driven by that incoming capital. Lots of other comparable jurisdictions have already started to impose things like a stamp duty or a limit on foreign buyers in order to protect their own housing markets and that is something that we have failed to do in New Zealand. The previous speaker Mr Bishop insinuated I think that Opposition parties bringing this up are just simply politicking and they are playing on racism and fear of migrants. As a migrant myself I can say that that is certainly not why the Green Party has a policy that would limit sales of property to citizens and residents. It is not because we are afraid of migrants—we have been lobbying for an increase to the refugee quota and we have a very open and tolerant immigration policy—but it is important for the sovereignty of New Zealand that the people who are buying property here have a stake in the future of the country. It is for that reason that we would say it is important to be a resident or a citizen and it is entirely possible for many people to become a resident and a citizen even if they were not born in New Zealand.So it has nothing to do with racism and the fact is that we know that in comparable cities all over the world like Sydney Vancouver London and Hong Kong—places where house price inflation has been equally as high or higher than in Auckland—house price inflation is driven to a certain extent by capital coming out of China because it is a very big country and it is a very big market. There is nothing specifically against the Chinese it is just acknowledging the fact that there is a lot of capital coming out of China looking for a safe haven and looking for safe investments and given the tax-free status on housing in New Zealand it is certainly a very safe place for them to invest money. The issue for us is that actually it starts to impact the ability of New Zealanders to have a safe warm dry secure place to live. So it is important that we understand the problem and in order to understand the problem we have to have the information. That is what the Governor of the Reserve Bank had asked for a year and a half ago and that is what the Green Party asked for.This bill starts to do that so we are going to support it but I have to say that it really is not perfect. I think the single biggest problem with the bill is this main home exemption. What we heard from officials and other submitters is that making an exception for a person’s main home adds complexity to the rules—why would you want to add complexity to the rules—and limits the amount of information that is available about property transactions. So for that reason most of the Opposition MPs on the Finance and Expenditure Committee argued against the main home exemption and we have put that in our minority view. When it comes to tax and regulations simpler is better. Putting in exemptions just creates unnecessary complexity and loopholes which can then be gamed.The previous speaker Mr Bishop said that there was no point in collecting data because people for whom the property was their main home would be exempt from the brightline tax but that does not mean there is no point in collecting the information. It is certainly not onerous to collect the information. I would say that more information is better and I do not think it is credible to say that people are going to be terribly worried that they may have to pay a tax simply because they have to provide their IRD number. It is just not credible. It is not a big deal and it is certainly not a reason for making more complex legislation which is going to be more difficult to enforce and is going to leave us with less information that we could then use to analyse what is going on in the property market. So for that reason the Greens are not happy with the bill as drafted and we put it to the Government that a simpler regulation is better. More information is better. People are not going to be terrified by the fact that they have to provide their IRD number and given that they are not going to be taxed it does not make sense that we would say to them: “You don’t need to provide your IRD number. We’re not going to collect this data because we’re afraid that you might be scared that you have to pay a tax you do not have to pay.” That is just ridiculous. That is in summary the Green Party’s view on this bill. Thank you.