Lees-Galloway IainIAIN LEES-GALLOWAY (Labour—Palmerston North): This new Part 4 proposed by Phil Twyford—it is important that the Committee adopts this measure because it actually gives effect to the purpose of this bill. The purpose of the bill is to support the wider Government programme of work to increase the supply and affordability of housing. I am prepared to accept that Part 1 goes some way to increasing the supply of housing but where this bill overall is deficient is in increasing the affordability of housing. That is why new Part 4 which extends the brightline test from 2 years to 5 years is important as part of a suite of measures to actually tackle the issue of affordability. The purpose of this bill is sound: to deal with both supply and affordability. As I say it goes some way—a small way we would argue on this side—towards dealing with supply but does not do very much about affordability. There is no doubt that one of the drivers of the increasing levels of unaffordability—particularly in the Auckland housing market—is speculation where people are purchasing houses for the sole purpose of onselling them at a profit. Stepping back and looking at things through a purely economic lens that makes quite a lot of sense. The housing market is in the Minister for Building and Housing's own words out of control". House price inflation in Auckland is rampant there is capital gain to be made and actually 2 years is not a terribly long time to wait. You can put some tenants in there. You may not even bother putting tenants in there because the potential gains are so significant that a lot of landlords would actually say: "Look I'm not going to risk putting people into the property. They may damage the property. I'm not going to risk putting people into the property. I'm just going to sit on it for 2 years and then I'll get my tax-free gain after that period of time." So it is actually necessary—and my colleagues have discussed some of the advice that was given to the Government on this—to extend this brightline test out to a period when it is actually going to influence behaviour. At the moment we are not seeing any influence on behaviour. In fact the Minister of Revenue just came to the Chamber and said that it was never intended to influence behaviour. That is a surprising and astonishing admission from the Government that its current brightline test is not having an impact on the affordability of housing. We need to make this move. If the Government is serious about improving the supply and affordability of housing then we have to extend this brightline test to a period that is actually going to change landlord behaviour and is actually going to encourage people to tenant their houses make them available for people and hold on to them for a long period of time not just flick them for capital gain. That should then go some way to having an impact on the overall levels of speculation in the Auckland housing market and in other markets around the country and have an impact on affordability. No one is saying that speculation is the only driver of housing inaffordability. It is not the only driver of house price inflation but as part of a suite of measures—and members on this side have already attempted to introduce one measure through new Part 3 and I know that other measures are on the Table. As part of that comprehensive package of measures this change to the brightline test will have some impact on speculation and having some impact on speculation will have some impact on housing affordability. That is what is missing from this bill. There is actually nothing in the legislation for special housing areas that puts a caveat on what you do with a house in a special housing area once you have bought it. So actually right now someone could buy a house in a special housing area flick it after 2 years and get tax-free capital gain. We actually need this measure to make special housing areas work. It is entirely appropriate that it be included in this piece of legislation. If the Government was serious then it would get on board with this. It agreed with having a brightline test. The Government introduced it. It set it at 2 years. Why not make that measure do what it is intended to do—set it at 5 years and have an impact on affordability."