Robertson Grant: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeRobertson Grant: Oral Questions — Questions to Ministers[Sitting date: 10 March 2016. Volume:711;Page:9595. Text is incorporated into the Bound Volume.]1.GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he stand by all his statements?Hon BILL ENGLISH (Minister of Finance): Yes in the context in which they were made and I think the member probably knows that.Grant Robertson: How does he reconcile his statement that the debt problem with the dairy industry is confined to a small group of farmers with dairy consultant Peter Fraser’s view that a quarter of dairy farmers are vulnerable to going under?Hon BILL ENGLISH: I suppose in both cases—as the member is doing himself—we are making forecasts about what might or might not happen. I think there is a bit of a tendency at the moment to generalise that there are wide-ranging and severe debt problems in the dairy industry; I think it is yet to be tested. We have yet to see the extent to which farmers can adjust and the extent to which the banks continue to support farmers—which might be more than people expect—because of their long-term confidence in the industry.Grant Robertson: Does he consider dairy consultant Peter Fraser’s view to be unrealistic that a quarter of dairy farmers are vulnerable to going under?Hon BILL ENGLISH: It would depend on what he means. I mean Peter is a—Hon Members: Ha ha!Hon BILL ENGLISH: Well when he says “vulnerable to going under” he is not saying that they are actually going under and even if he said that they would certainly go under we have yet to see whether that is what is actually happening. So we can have a contest of forecasts of doom here—and I am sure that there are worse ones than his—but we have confidence that with a resilient sector and a supportive banking industry they can see their way through some pretty tough times.Grant Robertson: How does he reconcile his statement about the impact of the loss of 40 percent of land value for farmers “It looks like farmers will get through.” with the statement of Paul Glass of Devon Funds Management: “Unless we have a strong recovery in dairy prices I think … it is heading towards a bit of a car crash.”?Hon BILL ENGLISH: I do not think there is much doubt that there is going to be a decline in dairy land prices but we need to keep in mind that that is against a background of very considerable increases in land prices over the last 10 years or so. So all of these things are possible but in our view the dairy farmers are pretty resilient and the banks will be supportive. There will certainly be some casualties. I do not think there is any doubt that farmers with high debt levels and high cost structures are going to find themselves under some real pressure.Grant Robertson: Will he make good on his statement that he has the flexibility to use fiscal policy to stimulate the economy and play his part now that the Reserve Bank Governor has lowered interest rates?Hon BILL ENGLISH: The Reserve Bank Governor as he outlined today sees the economy growing by 2.5 to 3 percent for the next 2 to 3 years which is not the circumstances in which the Government would try to fine-tune fiscal policy to support the economy. There will be a Budget on 26 May and it will outline the Government’s plans and the member will have the opportunity to comment on them.Grant Robertson: Why is he outsourcing to the Reserve Bank addressing the housing crisis in Auckland and stimulating a sluggish and vulnerable economy or will he step up on 26 May and play his part to lift real per capita growth and create a sustainable housing market in Auckland?Hon BILL ENGLISH: The Government is doing what the member says. We have the extensive programme of the Business Growth Agenda—the microeconomic reform that goes with that—which right at the moment is aimed for instance at more infrastructure in Auckland and reregulating its housing market so that we have sensible housing prices in Auckland. These are tasks that the Reserve Bank cannot carry out. It does its bit on inflation; we do our bit on policy.Chris Bishop: What is the Reserve Bank’s outlook for economic growth?Hon BILL ENGLISH: The Reserve Bank forecasts take into account both lower interest rates—because the Reserve Bank Governor has lowered the rate today—and also lower dairy prices and they see economic growth averaging 2.8 percent over the next 3 years. So it is an unusual situation. We have an outlook of very low inflation but a relatively strong outlook for economic growth.Julie Anne Genter: Does he agree with Treasury which says there is a current tax advantage towards housing?Hon BILL ENGLISH: No not particularly. There are some aspects where its argument is stronger than others.Julie Anne Genter: Does he not agree with Treasury that there is a current tax advantage towards housing and that the ideal tax reform to fix this problem would be a comprehensive capital gains tax excluding the family home?Hon BILL ENGLISH: Either Treasury or the Inland Revenue Department has given that sort of advice for the last 20 or 30 years. When it has come to it we have also had official advice that the implementation of a comprehensive capital gains tax would be complex without much benefit. I note that other countries that do have them such as Australia have even more inflation in house prices than New Zealand has had.Julie Anne Genter: Is it not the case that house price inflation in Auckland has outstripped Australia and why will he not act to help the Reserve Bank Governor lower the risks to the New Zealand economy of an overheated housing market by enacting a comprehensive capital gains tax excluding the family home?Hon BILL ENGLISH: The Government has acted. As I think the House knows it is not the policy of this Government to bring in a comprehensive capital gains tax but we have had a couple of significant moves. One was abolishing depreciation on commercially operated buildings including houses and the other last year was bringing in a brightline test where if people turn the house over within 2 years they do pay a tax on the gains.James Shaw: I raise a point of order Mr Speaker. Part of the supplementary question asked whether he knew that Australia’s housing market was booming less than Auckland’s.Mr SPEAKER: The problem was that there were two legs to the question. One was indeed as the member has just described but the second part of the question was more about whether a capital gains tax would actually solve that problem. The Minister certainly addressed the second part of the question. A supplementary question that contains two legs like that one did will often have only one answered.