Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 27 August 2013. Volume:693;Page:12807. Text is incorporated into the Bound Volume.]10.Hon DAVID PARKER (Labour) to theMinister of Finance: Does he agree with the Prime Minister that “first-home buyers are a priority for the Government”; if so why are houses more unaffordable for young New Zealanders now than six months ago?Hon BILL ENGLISH (Minister of Finance): Yes I agree with the Prime Minister’s statement. That is why the Government announced some changes to the KiwiSaver first-home deposit subsidy and Welcome Home Loans to ensure that within the restrictions imposed by the Reserve Bank first-home buyers can get their foot in the door. Secondly we are working hard to ensure that there will be more houses built more quickly so that pressure will come off the housing market and so that first-home buyers like any other New Zealander who wants to buy a house will be dealing with a more affordable market. We look forward to the Opposition supporting the Government’s legislation on that.Hon David Parker: Why after he said that restrictions on high loan-to-value lending would avoid interest rate rises have two major banks ANZ and BNZ already increased fixed interest rates for most home buyers while ASB has begun offering a lower discriminatory rate for borrowers with deposits larger than 20 percent?Hon BILL ENGLISH: You would need to ask the banks about their interest rate policies. The Government has simply repeated the argument that has been made by the Governor of the Reserve Bank that these restrictions may enable some delay until he raises interest rates.Hon David Parker: Is he aware that ANZ is now saying “One outcome of [loan-to-value ratio changes] will be more rigorous application of low equity premiums” or in other words interest rate increases for first-home buyers with deposits under 20 percent; if so who is correct ANZ or the Minister in his earlier comments?Hon BILL ENGLISH: I do not think there was anything unpredictable about the fact that banks are adopting policies that are more discriminating about which interest rates they charge to which customers. That was part of the consultation the Reserve Bank went through with its loan-to-value ratios and we will get to see whether the loan-to-value ratio restrictions have some impact on the market or not. The Government though is focusing on its policy which is to improve the flexible supply of housing particularly in Auckland and Christchurch. In respect of Auckland there is an accord between the Government and the Auckland Council. There is legislation coming through the House which I hope the Opposition will support. The Auckland Plan should become operative in the next few months and that will provide the opportunity for a more significant expansion of the supply of houses in Auckland.Hon David Parker: When he said that the steps his Government is taking are good for first-home buyers did he realise that those steps would lead to almost 80 percent of the first-home buyers with deposits under 20 percent now seeing their homeownership dreams being crushed?Hon BILL ENGLISH: No I disagree with that. Again the Opposition is aiming to undermine if not remove the independence of the Reserve Bank. The Reserve Bank has powers under the Reserve Bank of New Zealand Act. It has exercised those powers in respect of the restrictions on high loan-to-value loans which the Opposition used to be in favour of—in fact it said that we were old-fashioned because it was not happening. Now it is. Of course the Government is focusing on increasing the supply of homes to the market. We are still dealing with the legacy of having a booming housing market under the previous Government when it did nothing about supply.Hon David Parker: Why is his Government so determined to protect the advantages of property investors and speculators over everyday New Zealanders who are being left unable to buy even one home?Hon BILL ENGLISH: I completely disagree with that statement. The Government has over 2 or 3 years brought together a range of policies that will increase the supply of houses to the market. That will I am sure upset the plans of speculators and investors who are relying on restricted supply and fast-rising prices and over the next 6 to 12 months we will get to see what difference that will make. But certainly an increase in the supply of housing will make a bigger difference than will the Reserve Bank restrictions on low-deposit loans.