Hague Kevin: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — First ReadingText is incorporated into the Bound VolumeHague Kevin: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — First Reading[Sitting date: 04 December 2014. Volume:702;Page:1185. Text is incorporated into the Bound Volume.]KEVIN HAGUE (Green):I am a little surprised to be speaking on this bill this afternoon having already given my season’s greetings to the House and to the Speaker’s team. Can I maybe begin by reiterating my earlier good cheer. I guess it reflects the fact that this is a bill that is moving rapidly through its process. That is a surprise in some ways because National did announce its HomeStart policy prior to the election so one would have thought that such a rushed process would not be necessary.Unfortunately that kind of poor process has become a bit of a hallmark of some of the Government’s legislation. I notice in particular the lack of consultation that has occurred to date on what is referred to euphemistically in the bill’s title as remedial matters which effectively of course amount to a cut to veterans pensions. At this point the external consultation on that part of the bill is non-existent. As a result we are very cautious about our approach to this bill. We are prepared to support it to the select committee and we are very interested to hear what submitters—I am thinking particularly of the RSA for example—are going to have to say about the bill and some of the social housing providers tenants organisations and so forth as well as other stakeholders in the housing sector.I am going to primarily in this contribution talk about some of the housing aspects. We think that although the net effect is extremely small the $1000 contribution will be a helpful contribution to at least some people. I was very interested to hear Grant Robertson’s analysis of Dr Smith’s statistics in relation to the number of people who are expected to be assisted. I tend to think Mr Robertson is probably closer to the mark.To begin with the critical thing to say is that the measure in relation to KiwiSaver in this bill essentially facilitates part of the Government’s HomeStart package. Like a number of other measures that the National Party announced in the weeks immediately prior to the general election this was a package that appeared to have been developed without a lot of consultation not only with external stakeholders but also with Government agencies. Indeed the response of commentators in the housing sector to the HomeStart package was at best underwhelming. It has all the appearance of policy that was made up pretty much on the hoof. It was a package that was essentially a political measure aimed at solving a political problem rather than dealing in any real way with the housing crisis. So we actually believe that on balance the HomeStart package will make the crisis worse rather than making it better.It was designed to—and arguably did—give National some cover-up in the run-up to the election but actually it does not deal with the fundamental issues of affordability and housing supply. The consensus of commentators I think it is fair to say was that HomeStart will actually fuel demand pushing up prices across the board and driving housing inflation in an already overheated market. So that is kind of the reverse of what we actually need to be occurring in the housing sector. As other speakers have mentioned it is a demand-side response to what is very largely a supply-side problem so actually fuelling demand is never going to deal with insufficient supply. I guess Dr Smith argues that down the line it is going to stimulate the private sector to build more houses. I think that is a very long bow indeed to draw.The advice from Treasury itself—and we have heard a little bit from Labour speakers already about some of Treasury’s analysis—in its own words was that “experience with home ownership grants in Australia”—a very similar kind of policy—“suggests that such programmes tend to push prices up in a supply constrained environment by supporting greater demand rather than improving affordability.” So we should not be holding out any hope that this policy is going to result in any kind of solution to the problem although the specific measure in this bill might be of some assistance to a small number of Kiwis. But I stress that it will be a small amount of assistance.In the years since National came to Government in 2008 the average house price in Auckland has increased by $200000—increased by $200000. So a nudge in the direction of some assistance of $1000 might be conceivably just that little bit extra that marginal improvement that a very small number might need to make the necessary difference but for the vast bulk of people it will actually go nowhere towards meeting that affordability gulf.So what we propose instead is that policy should instead focus on the real drivers of the problems that we are facing so it should focus on the untaxed income from capital gains that is fuelling speculation and fuelling land prices and indeed the cost of housing particularly in Auckland. How about dealing with the essentially unfettered offshore speculation in the residential property market—again particularly in Auckland? Again that is one of the fundamental drivers that is essentially untouched although we did hear today that actually after thinking about it for a bit the Government might finally be interested in looking at some solutions in that area too.The other critical area that is really untouched by Government policy is the fact that land values and the cost of building are driving up house prices both to buy and to rent and that prices fall well outside the budgets of an increasing number of people. What that suggests is that the problem of growing income inequality that we have in New Zealand sits actually at the heart of some of our issues along with those other drivers that I have mentioned. If we are seriously interested in dealing with the housing crisis that we face well those are the issues that we have got to address.So we have some solutions that would make some genuine progress. We advance our solution—and stick by it—of a capital gains tax excluding the family home. We will increase the supply of affordable houses by undertaking a programme of State house building along with assisting local government and other social housing providers to increase supply. We suggest that National would be smarter in fact to be building hundreds of houses rather than selling them off. We also support rent-to-own schemes both in the State part of the housing sector and also facilitated in other parts of the housing sector. We need stakeholders to get together to develop solutions rather than have this sort of sticking plaster approach that we see from National time and again. So we support this bill going to a select committee but we make no commitment after that.