Twyford Phil: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeTwyford Phil: Questions for Oral Answer — Questions to Ministers[Sitting date: 04 September 2013. Volume:693;Page:13234. Text is incorporated into the Bound Volume.]4.PHIL TWYFORD (Labour—TeAtatū) to theMinister of Housing: Does he agree with theNew Zealand Herald that “the Government’s latest response to the problem of housing affordability is as ill-directed as it is insipid”?Hon Dr NICK SMITH (Minister of Housing): No—although that editorial on our KiwiSaver and Welcome Home Loan changes was entitled “no silver bullet” on housing—but I do agree that the changes to these schemes are a small part of what is required to address housing supply and affordability. That is why the Government has taken action including three major bills before this Parliament. In respect of the KiwiSaver changes more help was going to Southland and helping people there to get a home deposit than to Auckland despite the fact that Auckland has got 15 times the population and three times the average house price. Our change in the price caps and also in the income caps will reverse that. In respect of the Welcome Home Loan changes they will increase threefold the number of families that are able to get a first home.Phil Twyford: Does he think Kiwis will find it easier or harder to get a first home since the Government failed to secure an exemption for first-home buyers from loan-to-value ratio lending limits and since the ANZ the ASB the BNZ and Westpac have all put up their interest rates and their charges as a result of loan-to-value ratio lending limits?Hon Dr NICK SMITH: I do agree with the member that the level of interest rates is one of the most important factors that affect housing affordability. That is why I am so proud to be part of a Government that has the lowest interest rates in 50 years. I note that in the entire time I have been in Parliament interest rates have gone up under Labour Governments and come down under National Governments. In respect of the very specific question—whether the Reserve Bank charges have resulted in an exemption—indeed they have. The Reserve Bank has said that Welcome Home Loans will be exempted from the loan-to-value ratio limits and that is one of the reasons that the Government has trebled the number of Welcome Home Loans.Phil Twyford: Does he agree with the Minister of Finance who told the House that the lack of an exemption for first-home buyers was not the fault of the Government but was in fact the responsibility of the Reserve Bank; if so is he calling the Reserve Bank Governor a liar given that the governor said that the use of these tools by the Reserve Bank was recently agreed in a memorandum of understanding with the Minister of Finance? And if so does he think that the Minister of Finance is calling himself a liar when he said that the memorandum signed by the Government provides four new measures for the Reserve Bank including loan-to-value ratios?Hon Dr NICK SMITH: The member shows an ignorance of the Reserve Bank of New Zealand Act—an Act that was passed by the previous Government—that is the decisions of the Reserve Bank are independent of the Government and we respect that independence. In respect of what the Reserve Bank has said I would draw his attention to the fact that the single greatest factor that the Reserve Bank said we needed to move on in respect of housing was supply and particularly land supply. That is what the Government is doing. What the member and the members opposite are doing is actually trying to stop the Government from freeing up land supply and making houses more affordable.Phil Twyford: Is he concerned that low to middle income first-home buyers are going to be disadvantaged by loan-to-value lending limits given the reported comments of mortgage broker Sonya Reid who says that banks will cherry-pick clients with those on high incomes and professional occupations likely to be preferred?Hon Dr NICK SMITH: As occurs on so many issues we get contradictions between different Labour members. The first time—Hon Trevor Mallard: I raise a point of order Mr Speaker.Hon Dr NICK SMITH: —I heard it proposed that there should be loan-to-value ratio limits was—Mr SPEAKER: Order! I have a point of order from the Hon Trevor Mallard.Hon Trevor Mallard: Yesterday we traversed on some pretty regular occasions what responsibility that Minister has for Labour Party policy and we agreed there was none. Describing it is not his responsibility.Mr SPEAKER: I agree with the point of order that has been raised. I am going to ask Phil Twyford to ask the question again and then ask the Minister to answer it.Phil Twyford: Thank you. Is he concerned that low to middle income first-home buyers are going to be disadvantaged by loan-to-value lending limits given the reported comments of mortgage broker Sonya Reid who says that banks will cherry-pick clients with those on high incomes and professional occupations likely to be preferred?Hon Dr NICK SMITH: The most important thing for low and middle income buyers wanting to get into their first home is actually the level of interest rates. The level of interest rates was such that when Labour left office the average Kiwi household was paying $250 a week more in their interest payments. The steps that have been taken by the Reserve Bank and the steps that have been taken by this Government are to keep interest rates low for longer. That is the best way in which we can help both first home and other homeowners.Phil Twyford: What action will the Government take to help first-home buyers who have already paid a 10 percent deposit but will not be able to complete their purchase before the 6-month grace period for loan-to-value ratios ends meaning that they will have to stump up an extra $50000 or more within the next 6 months?Hon Dr NICK SMITH: The member is incorrect in two respects. The first is that the Reserve Bank has actually put a limit on and not prohibited the number of low-value deposits. The banks have said that they are going to give priority to first-home buyers. The second point in asking what the Government has done: the Government has trebled—trebled—the number of Welcome Home Loans that are exempted from those Reserve Bank limits. That means thousands more—thousands more—first-home buyers will have an opportunity to get into their first home.