Woodhouse MichaelHon MICHAEL WOODHOUSE (National): Thank you Madam Chair and I thank the Minister for that reply. I must apologise because my query was a little bit vague because at the time I couldn't find the specific example that was used in the commentary on the proposed amendments which I now have. I wonder if officials may have given him an answer to a different question so I'll point through the officials to the examples table on page 13. It's the fourth row down which talks about the purchaser submitting an offer as part of a tender process that closes on 16 March. The offer cannot be withdrawn until 22 March which was yesterday but the purchaser does not withdraw the offer and the seller does not accept the offer until 27 March. So the Minister's answer referred to a slightly different scenario of the development of land where they may have been inevitable delays and the offer is—I think he said—irrevocable. But effectively in the tendering scenario in that example through no fault of the purchaser's actions—in fact the purchaser doesn't even know that they're successful so they submit the envelope on 16 March and 11 days later their tax liability has effectively doubled in its term: their liability to pay a capital gains tax goes from five years to 10 years. So there may be a little bit more on that. It was the specific one.I want to touch on the issues that my colleague Mr Smith was talking about in respect of the impact of these changes on residential rentals. I think he's right although I think the biggest impact on residential rentals is going to be if the Government does carry out its plan to remove interest deductibility which is not subject to this—although I note similar to the 15-year and 20-year options the regulatory impact statement does refer to what would happen. In fact Treasury said on page 60 Treasury does not recommend progressing the interest deductibility proposal without further analysis." So that begs the question of similar to the 15-year and 20-year options—and I appreciate the Minister's candour that Cabinet did consider longer terms: did it also consider in this basket of changes doing interest deductibility this week and did it ask Treasury for advice and did it decide on balance not to do them because there were risks and benefits that were not clearly understood? My third point is around the impact of residential rental increases potentially as a consequence of what we are changing. I draw the House's attention to page 61 of the regulatory impact assessment. It goes to some detail to highlight what Treasury believes are serious risks on the rental market and the cost inflation potential for extending the brightline. In the third paragraph of the middle section "Where do the costs fall?" it says "To the extent that rents are higher than otherwise the costs would fall on renters who do not purchase a home. This would disproportionately affect low-income households younger people Māori and Pacific peoples. Extending the bright-line could decrease the supply of rentals over the long-term … This means the impact an extension will have on rents is difficult to quantify but there is a risk that there could be upward pressure." I don't believe there are risks—that while they might be difficult to quantify there is no doubt that risk is real and I believe it will come to pass before even the interest deductibility issues are considered by this House. And it's on the people who are most vulnerable: Māori Pacific peoples younger people low-income households. So this impact—the impact of these changes—is going to lead to one or both of two things happening: either renters get out of the market and so they sell their properties to first-home buyers—tick that's positive—but those first-home buyers aren't necessarily in these categories. Therefore there will be a lower supply of residential rental properties for the very people who are being subjected to dramatically increasing rentals and that will be exacerbated. Or alternatively landlords hold on to their properties for longer and therefore seek other means to gain the rates of return that they were seeking in which case that could also have upward pressure on rentals. It's basically the status quo continuing. I think the Government does want renters to sell to first-home buyers. That's the reaction that Treasury warned is going to have the greatest risk of residential rental inflation."