Twyford Phil: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeTwyford Phil: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — Second Reading[Sitting date: 24 March 2015. Volume:704;Page:2519. Text is incorporated into the Bound Volume.]PHIL TWYFORD (Labour—Te Atatū): This bill is a triumph of politics and spin over reason. But for any discussion of the bill we have to understand the political context of it and to do that we have to go back to the dying weeks of the last election campaign. What was going on? National was bleeding support on housing. It was in trouble on housing. Nick Smith the Minister of Housing at the time was staggering from scandal to fiasco. Labour’s KiwiBuild policy was extremely popular with the public and the public could not understand what National was trying to do. They could not understand Nick Smith’s housing policy. He kept talking about the Resource Management Act and how we are going to change the planning rules but all people wanted was for the Government—someone—to build more houses. But National for some reason refused to do that.So what emerged from the vortex that is David Farrar the National Party pollster; Steven Joyce the National Party campaign manager; and Nick Smith the hapless Minister of Housing was this policy. The policy is called the HomeStart subsidies. What this bill does is enable aspiring homeowners to withdraw the Government contributions to their KiwiSaver retirement savings and use that as the deposit for their Welcome Home Loan. But the HomeStart policy was opposed by Bill English. He did not like it. His officials did not like it. Treasury did not like it. The Reserve Bank did not like it. The Ministry of Business Innovation and Employment officials did not like it. But craven cynical politics carried the day and this policy was adopted. It was announced during the National Party election campaign because you see this National Party never saw a political problem that it thought could not be fixed by throwing truckloads of taxpayer cash at it. We have seen very graphic examples of that inclination that the National Party has in the last couple of weeks during the Northland by-election campaign with the bridges of National Party significance and the Government throwing tens of millions of dollars at them without even looking at the cost-benefit analysis.I think this bill is a perfect example of procrastination. We all know what it is like to suffer from procrastination: you have to do something you have got to do it but suddenly you find yourself compelled to do everything else—every other task—other than the thing that you have to do. In a strange way that is what is going on I think with National’s housing policy. The one thing that it should be doing is building houses. We have a housing shortage. What it should do is build more houses. That is obvious to everybody on this side of the House and it is obvious to the public but what does National do instead? It blames councils; it blames the Resource Management Act. The centrepiece of last year’s Budget announcement was the lifting of anti-dumping duties on nails. I think that is going to save about $1000 for property developers; certainly it is not going to save any money for homeowners. The National Government wants to sell a few thousand State houses. It has set up special housing areas where I could count on two hands the number of houses that have actually been built in a year and a half in those special housing areas. It has been a total failure as a policy. The crowning glory of this National Government’s housing policy is a policy that throws taxpayer subsidies into a market that is already supply-constrained.Hon Clayton Cosgrove: But doesn’t David Bennett say he knows all about the market?PHIL TWYFORD: Yes David Bennett is apparently an expert in market economics and he says it is OK so I guess we should all be reassured. So the one thing that it should be doing is building houses and yet there is a long list of policies that either are not working or are going to make the situation worse. The showpiece of this fiasco called the National Government housing policy is the HomeStart policy which has been criticised by Ministry of Business Innovation and Employment officials by Treasury officials by the Reserve Bank and by any credible commentator.In spite of all this and as Grant Robertson said we are going to vote for the bill because the bill itself is relatively benign. The main thing it does is enable people to access the contributions that have been made to their KiwiSaver accounts for a home loan subsidy. So we are going to vote for that but let us just look at what the officials said. Here is a summary of the officials’ advice to the Finance and Expenditure Committee. The overall impression was negative. The officials said that increasing deposit subsidies is likely to stimulate demand and thus increase prices in supply-constrained markets therefore undermining housing affordability. Hello National members—officials say that this is going to undermine housing affordability. What are you doing housing Minister Nick Smith? You are actually making the situation worse.This policy was discredited in New Zealand in the early 1990s—the very same policy. It was discredited more recently in Australia and the Australian state and federal Governments acknowledged that this same policy made matters worse. The officials said that the likely cost of HomeStart—$100 million—could be better spent elsewhere. It is poor value for money. The officials also said that the higher income caps shift the Government support from low to medium income households to virtually all households. It reduces its targeting at the people who need it most. It actually makes the existing set of policies and subsidies less effective at helping the people who need it most. Officials also noted that half of the eligible sales of new homes last year were in areas where housing affordability is not an acute issue. It is a poorly targeted policy.As Grant Robertson pointed out the officials told the select committee that at best it might lead to the building of a couple of hundred extra homes—a couple of hundred. Well if the members opposite need reminding—they should not but in case they do—according to the Reserve Bank Auckland has a deficit that was accumulated on this National Government’s watch of between 15000 and 20000 homes. That is the shortage that is driving prices sky high in Auckland as we speak. Under the very same Resource Management Act that saw the building of 40 percent more new homes every yearunder the Labour Government—40 percent more than this current Government is achieving—in Auckland the current build rate is only a little over half what Auckland needs just to stand still. That is just to keep up with population growth never mind the 15000 to 20000 structural deficit of houses in Auckland that has built up under this National Government. How the mighty have fallen. Two years ago Nick Smith was the newly minted Minister of Housing—Hon Clayton Cosgrove: That’s after he was sacked.PHIL TWYFORD: Yes after he came back from his time in purgatory. He claimed in an interview with the Nelson Mail that he was going to restore the Kiwi dream of affordable homeownership. How the mighty have fallen.That Minister has presided over one scandal after another and one fiasco after another and what characterises his tenure as the Minister—actually at least he does something more than old Phil Heatley used to do. Phil basically used to do nothing. At least Nick Smith does something—he does photo opportunities. He has a continual procession of announcements and press releases and photo opportunities that are designed to make it look like he is actually doing something about the housing crisis but he is a classic tinkerer. He never does anything that makes a significant difference. Look at last year’s Budget announcement of lifting the tariffs and anti-dumping duties on building materials. He claimed that it was going to save $3500 per house—nothing of the sort. This measure this HomeStart subsidy is likely to actually make matters worse.