Parker David: Estimates Debate — In CommitteeText is incorporated into the Bound VolumeParker David: Estimates Debate — In Committee[Sitting date: 30 July 2013. Volume:692;Page:12048. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Labour):Treasury and the Minister of Finance are funded through Vote Finance and it is Treasury and the Minister of Finance who control the shape of the New Zealand economy. I want to talk about two sides of that same coin which are both related—the demise of manufacturing in New Zealand and the increase in speculative investment in the non-productive part of the economy which is so hurting Aucklanders especially who are paying ever higher housing prices.This Government came to power promising to rebalance the economy. In the last year primary product exports dropped by 2.5 percent and processed primary products dropped by 3.7 percent. Worse still manufactured goods in other parts of the economy went down another 5.5 percent. Simply transformed manufactures have gone down 17 percent in real terms since this Government took office and elaborately transformed manufactures have gone down 18 percent since it took office.You would think that in response to that the Government would be trying to reshape the economy by getting the investment signal right by universalising KiwiSaver to get deeper capital markets and by introducing a capital gains tax to stop people investing so much in speculative residential land investments. It will not so the consequences of that are being borne by first-home buyers.Let us look at what is happening in Auckland. Totally inept management by the Government over the last 5 years in respect of housing has led to double-digit house price inflation not enough houses being built and no response from the Government on either the supply side or the demand side. [Interruption ] Let the Minister in the chair the Minister for Social Development take a call on this. I bet she will not have anything meaningful to contribute on this because the reality is that the Government is opposed to supply initiatives.The Government is now saying that the Auckland Plan should be given effect to by legislation after its earlier Resource Management Act reforms being the reason why the transitional plans of any council—including the Auckland City Council—were not given effect to during the transitional period. Labour has been saying that yes land supply is important and so are rules inside the city boundary.Hon Dr Nick Smith: What did you do for 9 years?Hon DAVID PARKER: Actually we reformed Auckland City and it was this current bunch of incompetents on the National side who stopped Auckland City’s plans to increase land supply from having effect. We have also introduced a plan to introduce a capital gains tax so that instead of pinging first-home buyers we would ping speculators. If you want to address demand pressures you should take out some of the demand drivers like a tax bias that drives investment into a speculative second house instead of the productive parts of the economy—Hon Dr Nick Smith: Speculators pay tax now.Hon DAVID PARKER: —that grow such as manufacturers and exporters. Nick Smith still thinks that the public is so stupid that it believes we have a capital gains taxwhen we do not. We have a trading tax for traders but not many traders are caught and most people who own second third and fourth houses do not pay tax on their capital gains. That is why the OECD and the IMF said that it is probably the most important economic reform that a Government could bring forward. It would help first-home buyers because we in Labour would be backing first-home buyers not speculators.The second part of our remedy of course is to build some affordable houses. Not enough houses are being built in Auckland full stop and of the houses that are being built not enough of them are the smaller affordable houses that are suitable for first-home buyers and people at the lower end of the market. National does not care about that. That is why it feeds these pressures for more speculative housing does not introduce a capital gains tax and gives 40 percent of its income tax cuts to the top 10 percent of income earners feeding those demand pressures while it does nothing about supply.Now National members are coming along and saying: “Look you know Australia might be wise in introducing a ban on the sale of houses to foreigners but it would be silly for us to do it in New Zealand.” Well Labour is willing to back New Zealand home buyers over foreign buyers of New Zealand homes so we have said that we will ban the sale of New Zealand houses to overseas people but not if they are here on a work permit not if they are coming here to be a resident and not if they are a citizen.Hon Dr Nick Smith: That’s most of them.Hon DAVID PARKER: “It is most of them.” says Nick Smith. He does not get it. You actually have to deal with things in a range of ways. You have to deal with supply and you have to deal with demand pressures. What this Government does is nothing—nothing—and that is why we have double-digit house price inflation at a time when our manufacturing—