Parker DavidHon DAVID PARKER (Labour): Catherine Wedd in her contribution said this bill will improve the economy. No it won't. It will have the opposite effect. It will once again encourage over-investment by landlords in the residential property sector sucking out investment from the productive economy and driving up house prices so that it will no longer be affordable by people who just want one home to live in. The interest payment by a landlord on a mortgage has two parts. One part of it is compensating the landlord for inflation—it is not a real cost; it should not be tax deductible. There is an argument as to whether the other roughly half of the interest payment which isn't compensation for inflation should be deductible or not but that's arguable and that's handled in different countries in different ways. This $2.9 billion transfer of income over the forecast period to landlords will drive up house prices. It is capitalised by landlords into the price they can afford to pay. That's why before we made this change—and I was the Minister of Revenue at the time—the proportion of houses being sold to landlords was going up. I shouldn't have put my hand up like that. The proportion of houses being sold to people who wanted to live in them was going down. Immediately upon the change being made that changed and the proportion of houses—existing houses not new houses; existing houses—being sold to people who wanted to live them went up.People talk about the effect on new supply. This had no effect on new supply because the new supply was always exempt from the rule. We didn't want to disrupt people investing in new housing. We need more of it. In fact under the last Labour Government the number of houses being built in Auckland doubled because we got the settings right across both planning and other matters like infrastructure financing.We heard from the other side that this would benefit tenants because rents will go down. Every year every quarter since this change was made in 2021 inflation has been higher than the increase in rents. So rents didn't go up higher than inflation proving the point that rents are more determined by the marginal cost of new supply coming into the market which was not changed by these rules. This is appalling law. It shows the economic lunacy of the National Party that they will not only allow a landlord a tax deduction for a cost that is not real because at the end of the year the landlord in inflation adjusted terms owns less than they did at the start of the year. On the other end of the transaction when they sell they say Woah go for it. Fill your boots. You're going to get no tax whatsoever."The brightline test in New Zealand is a de facto capital gains tax. It is a good tax it is a fair tax and it is needed. And why doesn't National support that despite the OECD the IMF and all of the other international agencies saying we over-invest in property in New Zealand? And partly because the gains are tax free to the landlord despite the fact that they're wealthier and they earn more than the people who earn their wages and salaries. Despite the advice of the IMF the OECD the Treasury and the Reserve Bank the National Party—no they have a different view. They are serving the interests of the capital class who pay lower rates of tax than working New Zealanders once again—always have always will. Not only that—they're undermining the economy because the investment will charge back into residential.Now the Reserve Bank data shows that as well. Total lending to first-home buyers averaged 12 percent between 2014 and 2017 and 29 percent went to investors. Since the law was changed the share going to first-home buyers averaged 20 percent. In fact as of July 2023 the share was 25 percent and the share going to investors has gone to 17 percent. So where were investors putting their money? Somewhere else—somewhere else productive which grows jobs which grows exports. This law should not pass."