Turei Metiria: Taxation (Bright-line Test for Residential Land) Bill — Third ReadingText is incorporated into the Bound VolumeTurei Metiria: Taxation (Bright-line Test for Residential Land) Bill — Third Reading[Sitting date: 12 November 2015. Volume:710;Page:8003. Text is incorporated into the Bound Volume.]METIRIA TUREI (Co-Leader—Green): This is yet another one of those examples where there is a major serious policy hole in New Zealand that is causing New Zealand families enormous amounts of economic and social pressure. Thousands of New Zealand families especially young families are completely unable to access the housing market because of massively increasing house prices particularly in areas like Auckland. This is a major crisis for those families and this Government instead of actually making a policy contribution that will help young New Zealand families get their foot into the front door of their first own home is providing a meagre piece of legislation that does nothing to address the problem but has all the spin wrapped around it that it wants to get out.This Government has done this a million times in New Zealand. It is one of the reasons why we are continuing to have major problems in the housing market and why so many New Zealanders remain locked out of purchasing their own home. This bill will not make a huge difference to that. We are supporting this legislation at least because it opens a crack where we can perhaps improve the situation after 2017 when these guys are thrown out. They are clearly incapable of running the country and governing the country in the best interests of young New Zealand families. It is a too little too late attempt to try to curb what we all know is rampant house price inflation in Auckland and elsewhere in the country.I want to be clear about this for New Zealanders who may be hearing this debate for the first time. There is already a theoretical law in place that if you buy a property with the intention of selling it on for a profit you are technically a speculator and you are subject to paying tax on the profit. But this is a test of your intention—what you intend to do with that house. It is highly subjective and virtually impossible to enforce. Very rarely is there tax gathered on the profit that a speculator would be making on these homes. This supposed brightline test that the Government is talking about is meant to support lean up against and buttress that intention test. It is a requirement along with other requirements. The brightline test this legislation says that if you buy an investment property—not your main home or not necessarily a home—and sell it within 2 years you are subject to income tax on the profits that you make from that sale. That is what this law does. The previous law has an intention test. This new law is supposed to provide a 2-year requirement—if you sell in that time you will need to pay tax on the profits.There is increasing evidence that the New Zealand housing market is being driven up by speculation. Just this week the IMF and the Reserve Bank have both identified increases in housing unaffordability as a serious risk to the New Zealand economy let alone to the stability and well-being of New Zealand families. The Reserve Bank in its Financial Stability Report talked about rampant house price inflation fuelled by property speculation all putting the economy at risk. It said: “Rising investor activity has been an important driver of price developments and”—it went on—“international evidence suggests that investor loans have a higher tendency to default in the event of a major downturn in the housing market.” So this increasing speculation particularly from foreign buyers puts the whole economic situation particularly in Auckland and elsewhere at real risk of a downturn and that means people losing money on their houses if things go bad. That is the kind of risk that National is putting New Zealanders under with miserable policy like this that does not go far enough to actually fix the problem.The IMF report which was called “New Zealand:Staff Concluding Statement of the 2015 Article IV Mission” was quite explicit that New Zealand urgently needs to build more houses in Auckland in particular and that given the time frame that is needed to make that happen—and you know it takes a while for that to happen—we therefore need tax incentives for housing speculators to be removed. One of the tax incentives is that if you buy a property and then sell it on you do not have to pay any tax on the profit that you make. You can gain an income without any kind of tax. So even the IMF is saying there is a real need to remove the tax incentives.A capital gains tax is pretty common. It exists in virtually every OECD country around the world but it has not been that politically palatable in New Zealanduntil recently. The Green Party has long held a policy of a capital gains tax. Rod Donald was talking about it in 2005 I have done work on it since 2010 and other Green MPs will continue to advocate for a capital gains tax because it is one of the tools—not the only tool; it is not going to solve the problem—that we need to help dampen the housing market that is causing so many problems. I do note with some disappointment that Labour has decided not to proceed with a capital gains tax given all of the evidence that shows that it is a one of the necessary tools that needs to be put in place so that young families can have a chance of buying their own home.National ever anti-tax as it is has never had the courage to campaign on a policy that would be objectively good for the economy as a whole.The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume her seat. Members cannot accuse members either individually or collectively of lacking courage. It is against the rules so the member will withdraw that comment.METIRIA TUREI: My apologies. I withdraw Mr Assistant Speaker. A capital gains tax would close a critical tax loophole that we have on New Zealand property. It would reduce speculation and it would provide an incentive to invest in the productive sector of the economy as opposed to housing. These are all parts of the puzzle that need to fit together.One of the other reasons why the Green Party is committed to a capital gains tax and a good policy as opposed to this miserable one is that it also goes towards helping reduce wealth inequality. This is one of the issues that arise when you have a big gap between those who own wealth in this country and those who do not. Max Rashbrooke in his new book Wealth and New Zealand makes a very strong argument that it is not just about income inequality or income measures. He argues for equitable measures to assist New Zealanders so that everyone has access to an asset base. One of those measures actually the Green Party proposed earlier this year before the Budget. This was a kids’ KiwiSaver. This was at a time before the Government kicked the guts out of the KiwiSaver scheme by removing the Government contribution. But if it were committed to sensible policy that would help deal with wealth inequality the kids’ KiwiSaver would mean a small contribution from the Government from birth and a small contribution from the family so that at the time a child reached 18 years of age they would have a small asset base of well over $10000 that they could use to buy a house or to invest in their education.That is one way of dealing with wealth inequality; a capital gains tax is another one of those measures to help deal with that. The fact is in this country that 10 percent of New Zealanders—just 10 percent of New Zealanders—own 52 percent of the country’s wealth. Ten percent of this country owns more than 50 percent of the wealth in this country. On the other hand you have half of the country—half of all New Zealanders—and how much wealth do you think they might own? Half of the New Zealand population owns just 5 percent of the nation’s wealth—the nation’s assets. The gap in wealth inequality is massive and housing is part of that gap. It can be a solution to bringing New Zealanders together and closing the wealth gap. Otherwise if we continue with miserable piecemeal measures as National keeps providing and a complete failure by National to really understand the issues for New Zealand families that wealth gap is simply going to grow.A capital gains tax is one of the tools that we can use to help close that wealth gap so that there is greater equity in New Zealand so that there is greater equity between families—and we all know why that is important for our kids and for their future: so that young families have access to purchasing their own home for the security and stability that that provides and that when you have a stable community with a strong housing base and with a strong asset base then everybody is doing better. We know that a capital gains tax is essential; it is a great shame that National simply does not know or care about that. This is at least is a small—very small—step towards making some progress. Thank you.