Twyford PhilNew Part 5 Amendments to Overseas Investment Act 2005PHIL TWYFORD (Labour—Te Atatū): The next important policy that we need to discuss as part of this debate about housing affordability is set out in proposed new Part 5 of this Housing Legislation Amendment Bill. What this part does is it amends the Overseas Investment Act to ban non-resident foreign buyers from buying existing homes.Hon Michael Woodhouse: I raise a point of order Mr Chairperson. I apologise to the member on his feet. I draw the same Standing Order to you—Standing Order 302(2)—and suggest to you that the Overseas Investment Act's purpose is nothing to do with housing affordability. In particular the references to sensitive land which generally is farming land and outstanding landscape areas—that is very unlikely to ever have houses built on it and therefore is out of the scope of this bill.Chris Hipkins: First of all and I think this is perhaps the most substantive issue here these amendments have been ruled in order by you Mr Chairperson and by the Office of the Clerk. You are the sole determinant of relevance in these matters and being bullied by Ministers should not change your ruling. You have already ruled on these matters and they have been ruled in order and the challenging of your ruling by Ministers is unacceptable.The CHAIRPERSON (Hon Chester Borrows): To be clear I have not given any ruling on this yet although I accept that it has been through the Clerk's process. I certainly do not feel bullied by my parliamentary colleague the Hon Mike Woodhouse. [Interruption] Well I am going to take some time to consider this matter momentarily.PHIL TWYFORD: As I was saying the Government is clearly in denial on this issue as it is on so many aspects of the housing crisis. It refuses to acknowledge what every New Zealander knows and that is that non-resident foreign buyers are a significant force in the housing market and unquestionably as marginal buyers they are having the effect of driving up house prices. A Cabinet Minister was interviewed on Radio New Zealand a few weeks ago on this issue and she was asked by Guyon Espiner the co-presenter of Morning Report what the good bit is about even one home being sold to a non-resident foreign buyer. The Minister could not answer. She had no answer because there is no answer. There is no benefit to New Zealand or New Zealanders in allowing people who are not residents or citizens of this country to sit on the other side of the world and buy and sell our homes for capital gain. There is simply no benefit in that. So many countries have recognised that it is the duty of the Government to look after its citizens and that it is the responsibility of the Government to ensure that markets are allowed to work properly and deliver the benefits that are expected from them. Australia has the policy of banning non-resident foreign buyers from buying existing homes. That policy has effectively channelled $30 billion of foreign direct investment into the construction of new properties—new homes—in Australia in the last 12 months. Singapore Hong Kong Malaysia—all have restrictions on non-resident foreign buyers buying residential property in their countries. In China it is not possible for non-residents to buy dwellings in Shanghai or Beijing because the Chinese Government is protecting the interests of local residents in those communities against instability in the housing market denying citizens and residents in those cities from actually being able to access affordable housing. Most recently Justin Trudeau the Prime Minister of Canada said that there was no doubt in his mind that foreign buyers were driving up house prices in Vancouver and Toronto and shortly afterwards the provincial government of British Columbia implemented a 15 percent stamp duty—a 15 percent stamp duty in British Columbia—to try to deal with the massive influx of overseas money that has destabilised the Vancouver housing market and made it like Auckland one of the most unaffordable housing markets in the world. The other interesting development on this issue happened a few weeks ago when every one of the major trading banks in this country announced that they were ceasing lending to non-resident foreign buyers of residential property—every single one of the banks. Their parent banks in Australia have done exactly the same thing. Would the banks which have billions and billions of dollars of skin in the game which lend tens of billions of dollars to homebuyers in New Zealand every year do that if foreign buyers were not a significant presence? Of course they would not. It was the final blow to the credibility of this National Government and its denial that foreign buyers are a problem in the residential property market. What proposed new Part 5 does is it amends the Overseas Investment Act and it inserts a new category of property: overseas investment in residential property. What it does is that it applies the same definitions that exist in the Overseas Investment Act that determine whether a person or a company or a trust is to be regarded as foreign—that is if they have 25 percent or more ownership or control that is not by New Zealand citizens or New Zealand residents—to investors in residential property. Then it makes it clear that an overseas entity cannot buy an existing property but it could build a new one. That is the policy that we have here. That is the policy of the Australian Federal Government and we think it makes a lot of sense. We believe—the most overused phrase in the housing debate—that this is not a silver bullet but it is something that will make a significant difference to what is an extremely overheated housing market that has a tendency to a housing bubble. Thank you.