Nash StuartHon STUART NASH (Minister of Revenue): Thank you very much Madam Chair. There are two things I would like to say. First of all it's somewhat surprising that the former revenue Minister and the current revenue spokesperson don't actually know the rules around the two-year brightline test let alone the five-year brightline test. What I would say is that the rules aren't changing at all. Under the two-year brightline test that was brought in by your Government the losses were ring-fenced. That remains and I'm sure the former Minister does know that. So just to answer your question: no they are ring-fenced as they always were. In fact this is the interesting thing about the brightline test. Nothing changes. The exemptions still exist. Everything is there except under the two-year test.I would say that the current revenue spokesperson the Hon Paul Goldsmith made a very very good point. What he said is that under this people will take into account tax considerations when buying property. The problem we have Mr Goldsmith is that that is what they're doing at the moment. People are saying I don't have to pay a capital gains tax if I buy a house and hold it for after two years." Therefore they are making a decision based on tax implications as opposed to say for example a balanced portfolio.What we want to do is say "If you are buying a property that's all very well and we'll encourage that. That's fantastic. However if you flip that house within five years you will have pay tax on the gains you make." I think that is incredibly fair because with salary and wages with shares—as the former Minister talked about—you pay tax on these. Why shouldn't you pay tax on a house if you are not buying it for a rental yield but if you are just buying it for a capital gain?The former Minister the Hon Judith Collins actually brought up a very good point. What she did say and I'll quote her is "The property market goes in cycles." She said "It normally goes in seven-year cycles." And she is dead right. If you've held your property for over seven years—in fact if you've held it for over five years—under this rule you're not paying tax on that. So this is how this works.So we are not after the people who were buying properties for rental yield which is exactly the argument the former Minister made. So if you hold your property for seven years if you hold it for 14 years if you hold it for 21 years and you go through those market fluctuations you're an investor; you're not a speculator. This is differentiating between the investors who do hold their houses who are after rental yield who are after providing social houses rental houses for people in our communities; it's not the speculators who are flipping houses and paying no tax.The other point I would like to make which the Hon Paul Goldsmith brought up is about rental accommodation. The former Minister is right only under the assumption that the housing stock remains static. So if in fact we weren't building any more houses and someone was buying a house as a first-home buyer as opposed to a renter then in fact what we have done is we've moved someone who was renting into a house. So they're no longer renting. They own their own home which is not a bad thing.But what this Government is doing is actually building 100000 more houses over 10 years. We are substantially increasing the level of housing stock in this country. So again I don't think there is anything wrong in someone moving out of a rental because another couple another family another person has bought it to get into that housing market. We'll encourage that. But Mr Goldsmith I just would like to say to you that this is not about punishing the ma and pa investors. This is not about punishing someone who has bought a house and is holding it as their retirement nest egg. By the very virtue of holding this for their retirement nest egg—I'm the first to admit I've done that myself. I bought some rental property six years ago—[Interruption] No I'm an investor. I bought it for my retirement. It's a nest egg. But I'll tell you what. If I was a property trader if anyone is a property trader—if they're buying houses and they're flipping them if they're a property speculator not a trader if they're a speculator and they think they can get away with not paying tax they can't.So I will go back to one of my original points. This is not about punishing anyone at all. This is about the integrity of our tax system. This is about saying "If you are a speculator as a society as a community we expect you to pay tax on your capital gains.""