Smith Damien; Parker DavidDAMIEN SMITH (ACT): Thank you. Just to recap from 9 o'clock this morning when the announcements were made 2 o'clock at question time and now tonight near 9 o'clock which is a matter of hours where this capital gains tax by stealth is being brought in I still haven't got answers to my questions. As the advisers are here I'd just like to recap again what I think's important and then get an answer because it's not in here [Holds up bill] it never will be in here and the law will be passed before it actually happens. I have some sympathy for the Minister because he's taken the heat for what is an overall strategy by the Minister of Finance and the Prime Minister to wrap several concepts together in one bundle which has implications for our tax system which nobody's actually proven yet. So I'll start with number one.Treasury's been reported commenting that they've not formed a view on whether a 10-year brightline test is preferable to the status quo and according to Stuff rated worse than the status quo in advice. So the question is: what factors were given to the Minister and why was this chosen option potentially similar to or potentially worse than the status quo? I think I asked that question earlier but I didn't get the answer. The second question is: the Prime Minister made the point that the package attempts to balance supply and demand measures. The Minister did partially address this. But what I want to know is what impacts if any due to the extension of the brightline test would not be a result of simply increasing supply like the Government claims happens as part of the housing policy announced today? My third question is that house prices have risen rapidly since the extension of the brightline test and have risen more rapidly following the extension of the test to five years. Now it's going to 10 years. I asked that question earlier. What impacts did the previous changes have on housing demand and why will this now be different? What specific differences accrue at 10 years that do not happen at five years? The Real Estate Institute of New Zealand has come out tonight categorically saying that landlords will hold and this will cause another $100 to $175 on top of the $120 that has already been added to rental prices.Hon Members: How much?DAMIEN SMITH: Between $100 and $175. So one of the big problems in the housing sector that we haven't addressed is just that there's simply not enough housing. The risk we have at the moment is we're meddling on the demand side and then we're seeing higher prices on the sale of properties and people are going to have to pass that on to people renting. So the final question I've got apart from the fact that I'd like to see no more taxes from this Government as promised and to get a commitment to that is: has the Minister received or requested any advice relating to the impact that the brightline test may have on rental prices? And the second part of that question is: has the Minister received or requested any advice relating to the impact the brightline test may have on house prices and therefore we can put the economic and tax package in the context that New Zealanders can understand? So I'd like to seek those answers to those questions please.Hon DAVID PARKER (Minister of Revenue): I believe I have addressed most of those questions already but I will re-address them. In respect of the period as the member will have heard in the debate and probably seen in the papers Treasury recommended consideration of an extension to the brightline test of up to 20 years. We thought that was going too far. We did think that something has to be done on the supply side. I am struck by the fact that the Opposition seem to think the only thing that ever works is supply side measures and that demand side measures never have a part to play. We disagree on the Government side. We think we have to do both.In respect of what will be the effect of the difference between five and 10 years well we can't be absolutely certain as to what will be the proportion of properties that will now be affected because we're not sure what change of behaviour we'll see. But as the regulatory impact statement shows in table 1 the holding period for properties held two years or less is 18 percent; five years or less 42 percent; 10 years or less 64 percent; 15 years or less 83 percent; 20 years or less 91 percent. So that gives members some idea as to the extra properties that will be affected by this assuming there is no change of behaviour. There could be a change of behaviour; some people may choose to keep some of their property longer.In respect of rents the reason why the Treasury and the IRD or we in Government aren't able to give an accurate prediction of that is because it is the combination of demand side and supply side measures operating together. It may well be that over time that combination of measures means that we see a move back towards a higher proportion of the homes that are sold in New Zealand being sold to the people who live in them rather than being purchased by investors.