Brownlee Gerry; Parker DavidHon GERRY BROWNLEE (National): Madam Chair thank you and I just want to before I talk about Minister Parker's response to my question before just make it very clear that the brightline test was brought in in 2015 for the very purpose of clarifying that intention which had been in the law for a long time and never enforced. It was also in response to a growing concern throughout the country about what were effectively foreign buyers coming in and the belief that foreign buyers were putting upward pressure on house price. Well we've seen that largely decline. We've seen new laws come in that pretty much make that a no-goer but it has not had anywhere near the dampening effect on house price in the last couple of years. The only thing that is driving house price at the moment is supply—nothing surer than that. It's worth noting that while the Government wants to say Well if you invest in a brand new house you won't get caught by the 10 years you'll only get caught by the five years." on the basis they want to encourage more new house building I think more new house building's obviously a good thing but don't forget that on the current new house price the Government takes in GST alone around about $100000 inside that price paid by the end buyer. Of course all the way along there's a massive amount of tax paid by all the tradespeople who work on it all the trades companies who provide services and of course the developers and construction companies as well. So there is a big factor of cost inside a new house price of which the Government is quite a significant beneficiary. The Minister said in answer to my question quite simply that officials didn't know whether this would make any difference to rents and didn't know whether it would make any difference to rising house prices. Well I would suggest that they simply have a look at this history of the last three years and see what's happened as I said earlier: a $250000 average capital gain on an average house price in New Zealand in three years and a brightline test that will only take $70000 from them. I'm not making a case for more tax by the way. All I'm saying is that you cannot use the tax system to solve a problem of supply and the thing that is really very very irritating listening to speeches today from the Prime Minister from Mr Robertson and from others who have made comment in the media is the complete denial of the supply problem. The idea that you can put up three hundred and something million for pipes and roads and goodness knows what else and then that's going to solve it all is utter rubbish because unless there is consented land then there is no further supply and where there is consented land there is no shortage of capital for its development. I heard today interestingly—particularly after a conversation I recently had with her—the Hon Megan Woods talking about what was done in the 1950s and 1960s when a lot of houses were built on parcels of land that were allocated well ahead of final survey well ahead of any infrastructure that was put in well ahead of often roads that were even put in. But it met a need and it met it fast and it delivered for people at a reasonable cost because it took loads of costs out of the system. This bill puts loads of costs back into the system. No one is going to look at their extra on average $120 a week costs that they can no longer put down as a deduction—effectively the $40 a week deduction or numbers around that depending on the circumstance—and say "Oh well I'll just take it on the chin." This is a recipe for rising rents at a rapid rate. We already know that there's pressure in the rental market. Look here in Wellington where people have to queue up for hours just to get a look at a rental property and then they go through a process where we're hearing stories all the time where they've got to answer different questions and all the rest of it. But one way to drop those queues is to put the price up and there'll still be someone there in a tight market a supply constrained market to take up that property. So this is simply a recipe for increasing the price of rents and increasing the upward price on houses. I'll bet that before we're here too much longer—maybe one more Budget cycle—the Government will be scratching its head and saying "Oh well that didn't work too well did it?" Meantime what's that done for people in this country that have aspirations to own a house? Very very little.Hon DAVID PARKER (Minister of Revenue): This bill puts no extra costs into a new build because they are exempt. The member said that the key to supply is more houses; I agree. Hon Gerry Brownlee: No I said land—I said land. Hon DAVID PARKER: More land is part of more supply and this bill does not increase the costs of that because new builds are exempt."