Uffindell Sam; Parker DavidSAM UFFINDELL (National—Tauranga): Thank you Madam Chair. I noted the Minister in the chair there talking about distortions and how the changes by this Government has made it easier for owner-occupiers to get into housing. But I'd just like to test a little bit around that. We heard interest deductibility come up as well. I remember at the time your officials Minister were saying that that would be passed on to the renter and we saw some stats out today saying that rents are up $175 a week since Labour came into power. So you've got your aspiring person out there wanting to get into the housing market to become an owner-occupier; it is more than likely they are renting. They are now facing $175 a week more in rental costs. What distortions have you seen or has your ministry seen about how that is potentially keeping these renters from entering a housing market to become owner-occupiers given that it is now so much harder for them to save up a deposit?Hon DAVID PARKER (Minister of Revenue): A market that is growing generally clears at the marginal price of the increment to supply—it's a pretty common economic principle. So the increment to supply in housing is a new house on land that didn't previously have a house on it generally. So if you want to have a more affordable house market going forward relative to incomes you need to ensure that the supply of land and new houses on the land is efficient and competitive. The answer to that does not lie primarily in tax policy; the answer to that lies mainly in the planning system. I think it's interesting that in this House there's widespread agreement—across both sides of the House actually—that one of the reasons why house prices went so high in New Zealand in the last decade or so was that land prices went so high and there were many reasons for that including a drop in interest rates and the advantages that landlords had competing against a first-home buyer. But one of the other ingredients—and it was overly strict rules that prevented people subdividing their land within an existing city boundary or subdividing land on the edge of a city and that drove up land prices which flowed through not just to the cost of the new house which was of course more expensive because there were so few opportunities just to build a new house; land prices went up really high for the new house—that flowed through to the price of all other housing because the market price was set by the marginal cost of the new increment to supply that was held falsely high and that flowed through to existing house prices as well.So I'm actually very pleased that as a country we're in the process of overcoming that. I think this Parliament's been quite brave in respect of some of those planning decisions and we've reached across the political divide and we've actually freed up the rules that were so constraining the building opportunities both to intensify in existing cities—we've removed a lot of the rules or are in the process of removing a lot of the rules that stopped people doing what they wanted to do. We're not forcing anyone to do it; we're just removing some of the inhibitions that stop them doing it. As a consequence I think that over the decades to come you're going to see land prices slowly readjust backwards to where they were.Now the cost of building a house in general tracks inflation. As the cost of building goes up the house content of a new house increases. But we're also doing things to try and remove some of the competitive constraints there—for example some of the work that again the Minister of Housing has done to enable competitive products to be imported to compete against Gib products which have been in short supply and prices have been driven up there. So all of these ingredients flow into house prices and I think it's simplistic to say that tax is the primary driver.