Goldsmith PaulHon PAUL GOLDSMITH (National): Thank you Madam Chair and that's a very excellent question posed by my colleague Judith Collins that I'd be very keen to hear the Minister respond to: if we were going to insist upon a brightline test and property values fall what happens?This is a piece of legislation introduced by the previous Government which does a number of quite technical things that will help improve the experience of taxpayers particularly business managers who are trying to engage efficiently and effectively with the tax system. So there's been a huge investment made particularly and continuing to be a big investment made in the technology platform which Inland Revenue works on so that it will be easier and faster for people to do business and to get the information across in real time so that there is less hassle in the way the tax is paid.So we support all of that. What we don't support is the Supplementary Order Paper that's been introduced by the Minister extending the brightline test from two years to five years in the manner in which he's done it in the sense that as we've said in the previous discussion there hasn't been the opportunity for the industry and the people of New Zealand and the Parliament to have some detailed thinking about the consequences of that to ensure that that is a sensible thing to do.There are three sorts of areas that are of concern. One is potential overreach that it'll capture not just speculators but also normal investors and people who have bought holiday homes for example. A lot can happen in five years and they are being treated as speculators. A lot of people might be shocked to find that somehow they are treated as speculators and will have to pay tax on a second home a holiday home or a rental home that they have bought not in any sense just to milk capital gains but circumstances have changed.So extending that out to five years will have an impact on behaviour and what impact that is is something that we're not clear on. The officials have talked about the potential lock-in effect which is the economic consequences of this. People will now make their decisions not around the most sensible thing for them and their family but they will make their decisions around tax—whether they sell; they'll hold on to it for five years in order to avoid the tax and hold on to properties that it wouldn't make sense for them to hold on to for any other economic reason. The consequence of that is the lowering of efficiency of our housing stock which anybody who's concerned about that right now will wonder why we would want to be doing that. The third thing is we do need to be careful about the impact that it could have on rental properties. So I'm looking at the revised regulatory impact statement from the officials in relation to this and they do make the point that the extension of the brightline test may reduce the supply of rental accommodation if tax discourages speculators from investing and investors from investing in the rental market. Well for goodness' sake anybody who's tried to get rental accommodation in this city in Wellington at the moment or Auckland or many parts around the country might be shocked to find that this Government right here right now is bringing in a Supplementary Order Paper (SOP) to change legislation which their own officials tell them may have the consequence of reducing the supply of rental accommodation. And that's what we're seeing here. Why on earth would they be doing that? The Minister might have an explanation. I'd be surprised if he does. But why would we be doing things that may reduce the supply of rental accommodation? It is not compulsory in this country to go out and provide rental accommodation for other people. Anybody who is a renter or who is a landlord and knows landlords will realise that there are a lot of expectations on landlords now.There are all sorts of difficulties associated with renting. It's not compulsory for the people who do it. They might just stop. Why would I deal with the hassle? As a result of that the rental market is squeezed. There are fewer properties available and we are seeing the market responding with higher prices in many cities around this country. So this bill—the Government's officials are telling them that introducing the extension of the brightline test may reduce the supply of rental accommodation. That's why we need to take more time to consider just why we are opposing this SOP.