Shearer David: Questions for Oral Answer — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeShearer David: Questions for Oral Answer — Questions to Ministers Questions to Members[Sitting date: 02 July 2013. Volume:691;Page:11410. Text is incorporated into the Bound Volume.]2.DAVID SHEARER (Leader of the Opposition)to thePrime Minister: Does he stand by all his statements?Rt Hon JOHN KEY (Prime Minister):Yes particularly the one where I said: “Wow it’s going to be an interesting 61 days before September.”David Shearer: Does he stand by his statement that “this Government is successfully managing the economy to make sure that New Zealanders can afford to buy a home.”; if so can he guarantee that any of the 39000 homes to be built in Auckland will be affordable to first-home buyers?Rt Hon JOHN KEY: In answer to the first part of the question yes.David Shearer: Can he guarantee that any of the 39000 houses to be built in Auckland as part of that agreement will be affordable for first-home buyers?Rt Hon JOHN KEY: I am not responsible for the actual building of the homes but in answer to the question yes I am pretty sure they will be.David Shearer: What measures is he prepared to take to ensure first-home buyers are preferred over speculators in the 39000 new homes that are going to be built in Auckland?Rt Hon JOHN KEY: The first important step is to make sure that 39000 homes are built. Supply is one of the big issues because if we look at Auckland in recent times the number of new homes and dwellings that have been built has been roughly around 3500. The second thing of course is to make sure that New Zealanders have jobs and increasingly that is the case. The third thing is to make sure they have affordable interest rates. Well we know interest rates are about half what they were under a Labour Government. And making sure that consents can actually happen quickly is why there will be reform of the Resource Management Act under a National-led Government. I think the chances of a first-home buyer getting a home under a National Government are a lot greater than they would be under a Labour Government.David Shearer: Given his statement: “I don’t think it should be a tool that is used to write high LVR ratios for a bunch of rich people and lock out a whole lot of first-home buyers.” what action has he taken to ensure the Reserve Bank does not do exactly that?Rt Hon JOHN KEY: Well as the member will know the Reserve Bank is going through a period of consultation at the moment so the Government is talking to theReserve Bank. I would point out though that the preference of the Government would be that the Reserve Bank actually does use the other tools that it has in the tool box—in particular those macro-prudential tools that the member is talking about—as opposed to raising interest rates which of course is the alternative. So the Government will be working—Hon Members: Or a capital gains tax.Rt Hon JOHN KEY: —alongside the Reserve Bank. Well a capital gains tax actually will not work. It does not work anywhere in the world when it comes to that.David Shearer: In light of his last answer will he rewrite the agreement with the Reserve Bank to ensure that first-home buyers are preferred over speculators in the event that loan-to-value ratios are introduced?Rt Hon JOHN KEY: It is a bit early to go through any sort of rewriting. The Reserve Bank is going through a consultation process. The Government will participate as part of that consultation process. But if the member seriously thinks that a capital gains tax is going to solve the problems then he needs to think again. Show me any place in the world that has a capital gains tax and prove to me that it has not stopped a bubble. And as the member wells knows a capital gains tax is a realisation tax. All that people do is buy it and do not sell.David Shearer: Given that every OECD country bar the Netherlands has a capital gains tax on property why will he not introduce a capital gains tax here to dampen demand and give first-home buyers a first decent crack?Rt Hon JOHN KEY: Well it actually would not dampen demand and it has not dampened demand anywhere in the world where they have it. In fact what happens with the OECD and the IMF when they recommend a capital gains tax—Dr David Clark: Why is the OECD wrong? Why is the IMF wrong? Why is the Treasury wrong? Why is the Prime Minister the only person who believes this?Rt Hon JOHN KEY: —is that they want a comprehensive capital gains tax. You see the reason Mr Clark is trying to shout me out is a very good reason: he knows that privately within their caucus those members are talking about putting a capital gains tax on the first home. That is what Labour is going to do on the first home for New Zealanders.