Goff Phil: Taxation (Bright-line Test for Residential Land) Bill — Second ReadingText is incorporated into the Bound VolumeGoff Phil: Taxation (Bright-line Test for Residential Land) Bill — Second Reading[Sitting date: 03 November 2015. Volume:709;Page:7611. Text is incorporated into the Bound Volume.]Hon PHIL GOFF (Labour—Mt Roskill): I agree with the initial comment by Andrew Bayly that the source of the massive housing crisis we have in Auckland at the moment lies back in the aftermath of the global financial crisis. By 2010 this country was building 3000 houses a year when at the start of the 21st century it was building 12000 houses a year. This Government should have been putting in place a counter-cyclical programme so that the construction industry was not crushed did not lay off its apprentices and did not run down its materials and its supply of land. We should have gradually been building up and Andrew Bayly is right about that. To deal with the supply side problem this Government after the global financial crisis should have been acting in a counter-cyclical way.But the fact of the matter is that we have before us tonight a bill that will barely touch the housing crisis in the Auckland region at the moment.Hon Maggie Barry: Much like that mayoral candidate.Hon PHIL GOFF: Houses prices since 2009 Maggie Barry have gone up by 83 percent but in the last 3 or 4 years what was major inflation has become massive inflation. House prices in Auckland Maggie Barry went up by $150000 in the last year—$150000. That is $3000 a week. What does that mean to the hard-working couple trying to save to get a home of their own? It means that they are not even earning as much as the amount that house prices go up by each week.Because this Government has dealt with neither the demand problem nor the supply problem we have a massive deficit of housing that has seen rents going up at three or four times the rate of overall inflation and we have seen house prices go through the roof. The fact of the matter is that Auckland today is one of the top 10 least affordable cities in the world in which to buy a house—one of the top 10 least affordable cities in the world. We now have the lowest rate of homeownership in the lifetime of anyone in this House. It is the lowest in 64 years and people have given up on the Kiwi dream of being able to buy their own home.What have we got now? We finally have a bill that does one thing. It admits that there is a problem with speculation. After 6 years of denying that the problem of speculation had anything to do with the housing crisis finally we have a bill that says: “My God! There are people speculating on housing and it’s pushing up the cost to the hard-working family.” But the bill then does not act in the way that it needs to act. This bill does not solve the housing crisis in New Zealand. It scarcely makes a difference. It is half-hearted.Hon Maggie Barry: Much like that member.Hon PHIL GOFF: It is half-hearted Maggie Barry because National has as part of its core support speculators in property and they are whom you stand for. The people on this side of the House stand for the couples the families and the individuals who are working hard to buy a home—not to speculate on it and then not pay tax on it but to actually be able to live in it as a home. Those are the people whom we stand up for in this country—the people who want a house to call their home.What does this bill do? I will tell you what it does. It makes an admission that the Income Tax Act 2007 is not working in requiring speculators to pay tax on their speculation. I pay tax on every dollar I earn my kids pay tax on every dollar they earn and speculators can make more than most members of Parliament make in a year in the sale of one of their properties and not pay tax on it—that is what this bill says.The regulatory impact statement says that the current test is that you pay tax only if you buy the property with the intention to sell it. So you could say: “Oh I bought this property cheap. It’s gone up. It’s doubled in value in the last 2 years. I wasn’t intending to sell it but I am going to now and that is not income. I won’t pay tax on it.” Tell that to the cleaners who work hard cleaning your offices tonight and who pay tax and can barely live on the income they have got. They are paying tax and the multimillion-dollar speculators are not. This bill does not solve that problem.In fact the submitters the people who were praised by Jami-Lee Ross I think it was for putting the work in—what did they say about this bill? They said that it is ill-planned and it is ill-considered. It left one of the tax experts “professionally confused”. Treasury said it will not work and it will not be effective. The brightline test is quite a good test compared with section CB 6 I think it is of the Income Tax Act because it is objective. But the bill says that you have the brightline test for 2 years and all the speculator has got to do is hold on to that property for 2 years and 1 day and then they are off the hook.If we wanted this legislation to be effective we would do what they do in other countries and make it last for a reasonable period of time. If you look at Italy and Japan the threshold is 5 years. If you look at Finland Germany or Korea it is 10 years. In France and Austria it is over 30 years. If you want to deal with speculation and if you are genuine about it then you make sure that that brightline test lasts for a much longer period. Then I would be convinced that this bill was a genuine effort by the Government to stop speculators making a fortune while families have their dreams crushed. This bill will not do that because the Government has decided not to do that and there are a lot of other things that need to be done as well.I was waiting to hear one member of the Government say why it benefits New Zealand to have people who do not live in this country and who never intend to live in this country buy up land here and speculate on it. How does that help the homebuyer in New Zealand? Why is it that Australia banned people who have never lived in Australia and who do not intend to from buying up existing residential property? Because a conservative Government in Australia recognised that that did not help the ordinary Australian. It will stand up for the ordinary Australian in a way this Government will not stand up for the ordinary Kiwi.Why is it that Hong Kong and Singapore put a hefty stamp duty tax on foreign investment? If you did not want to ban it put a 40 percent stamp duty on and that would kick the speculators out. That would be one factor in keeping the prices down for the New Zealand purchaser. But this bill does not do that.This bill does not address the supply side. When I go around the major residential builders in Auckland and ask “What can we do to get up the level of building so that we can actually make the supply meet the demand so people can afford to buy their own homes again?” do you know what they say? They do not talk about the Resource Management Act. They do not talk about anything that Nick Smith is spending his time on. They say: “Give our industry confidence and give it certainty.”If you were to do the partnership that Labour Governments have done in the past to solve the housing crises then we would gear up. Then we would build and we would resolve it. [Interruption] Those members can scoff as much as they like. I live in an electorate where the houses were built with a partnership of a Labour Government and the building industry so that people had warm dry stable homes and a generation of New Zealanders benefited from that. Why not do that again? If it is market failure as Andrew Bayly rightly said why not make sure that the State works in partnership with the private sector to address that market failure? Then you would resolve it.At the moment the situation facing homebuyers in Auckland has never been worse—never been worse. The best this Government can do is to come in with a pathetic little admission that speculators are part of the problem and then implement a measure that its own Treasury officials say is ineffectual will not work and should be for 5 years and that every submitter bar one to the select committee from the law firms and the accountancy firms said was ill-considered and ill-conceived and was more in answer to the focus groups than a genuine effort to solve the problems of this country.