11. Question No. 11—FinanceHon JULIE ANNE GENTER (Green) to the Minister of FinanceQuestion No. 11—Finance11. Hon JULIE ANNE GENTER (Green) to the Minister of Finance: Can he confirm that the Treasury advised him that the use of unconventional monetary policy can raise asset prices more directly than conventional monetary policy creating wealth inequality"?Hon GRANT ROBERTSON (Minister of Finance): As I said yesterday the advice that we received in the January 2020 report that the member is quoting was based on the scenario that was hypothetical and that also stated that there was not a case for using unconventional monetary policy in New Zealand in the near future. The COVID-19 pandemic upended that expectation and the Government and the Reserve Bank acted quickly and decisively to counter the devastating health and economic consequences. This included the Reserve Bank adopting unconventional monetary policy. At this point the forecasts of both the Reserve Bank and the Treasury changed and they foresaw significant drops in asset prices.Hon Julie Anne Genter: Can he confirm the average house in Auckland Tauranga Wellington Kāpiti Coast and Queenstown earned more in untaxed capital gains over the final three months of 2020 than the average New Zealander earned in pre-tax income over the entire year?Hon GRANT ROBERTSON: I can't confirm that specific number but I can obviously confirm we have seen rampant house price inflation in the last part of 2020. That is the very reason why the Government is now undertaking the work we are around both the demand and the supply side of the housing market.Hon Julie Anne Genter: So does he agree that it's now time to respond with bold fiscal policy including taxation to mitigate the current wealth inequality impacts of this unconventional monetary policy?Hon GRANT ROBERTSON: In the speech I gave yesterday releasing the Budget Policy Statement I indeed used the word "bold" in that. We are looking very closely at a range of policies in both the supply and demand side and we'll be releasing those very shortly.Hon Julie Anne Genter: Will he respond to the wealth inequality that is being exacerbated by this unconventional monetary policy through taxing wealth or capital gains?Hon GRANT ROBERTSON: The Government's laid out the parameters for what we are prepared to consider. We have ruled out a comprehensive capital gains tax. What we asked the Treasury and the Reserve Bank to do late last year was look at our existing policy settings to see if they could be enhanced and to provide us advice on anything that they would consider would deal with the issues that the member's raising. We've received that advice. Cabinet will consider it very shortly.Hon Julie Anne Genter: But don't these exceptional circumstances merit revisiting things that have previously been ruled out if they're the best way to address the problem and reduce wealth inequality?Hon GRANT ROBERTSON: If the member is referring by that to a comprehensive capital gains tax no; we're not revisiting that position. What we are doing is looking at our existing settings to see if they're working as they are intended and any other options. We are prepared to look at a wide range of options to address what has clearly been an outcome that was not foreseen by any economist in the middle of last year. All of them were saying that house prices would go down significantly. The opposite occurred. We are responding to that.Hon Julie Anne Genter: Does he agree that fiscal policy can help address long-term challenges in New Zealand like child poverty while stimulating the economy without causing or exacerbating wealth inequality as unconventional monetary policy has done?Hon GRANT ROBERTSON: I absolutely believe in the power of fiscal policy to address those issues and it's in fact the record of this Government in the last term and our proposal in this term to use fiscal policy to address those longstanding issues."