Norman Russel: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeNorman Russel: Questions for Oral Answer — Questions to Ministers[Sitting date: 19 March 2014. Volume:697;Page:16811. Text is incorporated into the Bound Volume.]4.Dr RUSSEL NORMAN (Co-Leader—Green)to the Minister of Finance: Will the Government propose any measures to restrict the sale of New Zealand farmland or residential land to foreign companies or persons?Hon BILL ENGLISH (Minister of Finance):We are certainly not going to restrict Australians from buying homes after they migrate to New Zealand. The Government has already restricted overseas investment in sensitive land and residential land. We made changes to the regulations in 2010 which were reflected in a directive letter to the Overseas Investment Office. We believe these changes struck the appropriate balance between ministerial flexibility to consider a wider range of issues when assessing overseas investment and at the same time providing clarity and certainty for potential investors. I would note that under this Government the amount of sensitive land approved for sale to overseas buyers has been less than half what it was in the last 5 years of the previous Labour-Greens Government. I would also note that the OECD assesses our overseas investment regime as now one of the more restrictive in the developed world.Dr Russel Norman: Does he consider that China has any lessons to teach New Zealand regarding foreign ownership given that China protects its economic interests through restricting land sales to foreign buyers?Hon BILL ENGLISH: The member may be more familiar than I am with the tenets of communism but in China private individuals did not own land until recently—only the Government did—so even the Chinese could not buy land in China. But I am a bit surprised to find that the Greens only ever get this excited about foreign ownership when it involves the Chinese who happen to have a much lower number of consents than Australia the UK Germany Switzerland and I think Sweden.Dr Russel Norman: Does he have any concern that more than one in 10 homes in Auckland is purchased offshore and that according to BNZ economist Tony Alexander this figure is set to only increase?Hon BILL ENGLISH: I know that the member has been conducting his own investigation into these issues by visiting the home of Kim Dotcom a well-known foreign investor in Auckland real estate. I cannot confirm the member’s one in 10 number. The BNZ survey that I saw said that about six houses in every 100 are foreign-purchased and about a quarter of those are being purchased by the Chinese which means that 1.5 houses in every 100 might be being purchased by people whom real estate agents think are residents of China.Dr Russel Norman: When will he and his Government consider there is a problem—will it be when one in five homes is purchased by offshore buyers or will it be when one in four homes is purchased by offshore buyers? At what point will he acknowledge that there is a problem?Hon BILL ENGLISH: We do not have the same problem about buyers being foreign as the Greens do. What we have a problem with is the very high cost of housing in New Zealand for New Zealanders. And all the analysis shows that the fundamental driver of the high cost of housing is not the Greens’ friends from China; it is the Greens’ friends in the planning departments of our city councils who insist on blocking new development of new housing. So the Greens are a much bigger enemy of the affordability of housing in New Zealand than the Chinese have ever been.Dr Russel Norman: Does he consider that an increase in interest from offshore buyers in purchasing residential property in Auckland is increasing the price of housing for New Zealand homebuyers or does he think that this big increase in demand from offshore is having no effect—that it is a special kind of market where a big increase in demand has no effect on prices?Hon BILL ENGLISH: It is not obvious that there is a big increase in demand from offshore buyers. There is some anecdotal evidence that that is the case and I know that that is certainly believed by some people but it is yet to be established. The fundamental driver of the increase in housing is restrictive planning policy which means that when there is more demand—whether it is foreign or in this case New Zealanders who have stopped migrating and are staying home and more people who are arriving in New Zealand as migrants—and those factors of demand are rising the supply cannot react to it. All around the world restrictive planning laws mean higher prices and more volatile prices and the Greens back that kind of policy. They should be backing the Government on getting rid of that sort of policy if they are really concerned about low and middle income New Zealanders being locked out of the housing market.Dr Russel Norman: Does he agree with Auckland house auctioneer Adam Wang that our ambiguous laws around capital gains tax are assisting the boom in the foreign buy-up of our housing stock and does he have any plans to deal with the fact that the capital gains tax exemption in New Zealand is part of the problem driving up house prices?Hon BILL ENGLISH: All of those issues have been looked at by various inquiries by the Productivity Commission and by policy advisers and it is possible that any one of them has some influence on the price. This Government though has focused on the biggest influence and the most pervasive one and that is restriction of supply. It is hard to understand why the Greens support housing planning policies that have the effect of driving up the wealth of the leafy suburbs at the expense of middle-income and low-income New Zealanders. I think that if the Greens were really concerned about equity in New Zealand and affordability of housing they would be supporting the Government’s policies not the Labour Party’s policies.