Bennett David; Parker DavidHon DAVID BENNETT (National): Thank you Mr Chair. Just following on from the questions and the exemption that the Minister talked about there for new houses I just want to know what sort of advice he received around that exemption because the inference is that people that are in the business of—not in the business as in the sense that they would be taxable anyway. But somebody that may want to have a second or third rental property should now look at the new-housing market as their intent to buy rather than the existing-housing market and I think that's the inference that we've got from the policy decision we've seen today. I'd like to see what kind of research the Minister has around that because from my experience looking at somewhere like Hamilton which has got burgeoning new suburbs they're typically people that are in their second or third house. They go through a staged process to get to that new-house purchase because a new house in the northern suburbs of Hamilton is over $1 million and a new house in the new suburbs of Cambridge is around about that price as well and that takes into account that you've got land values of $550000 to $600000 for just the section and then you build on top of that. So it becomes a very high end of the market. The people that are actually going in there and buying those homes have probably gone through two sales to get there over their lifetime. They're not necessarily 25-year-olds straight out of university going in and buying those homes; they're probably someone who bought a home in a cheaper suburb of Hamilton maybe lived there for 10 or 15 years raised their children there paid off that house and then was able to then purchase a new home and enjoy that in their later years. So it doesn't make sense to me that you have the exemption there thinking that property investors will go into there because that's not actually their market. The market for those properties is actually probably second or third purchases that are actually then freeing up homes at the lower end of the market for new homebuyers to come in. So I don't know if your exemption is actually going to provide as much comfort as you think because you're actually restricting a market that actually assists in getting new people into the market. So any clarity that the Minister can give around what research they did to indicate that that was a sensible policy decision on his behalf would be great to hear and also what the necessary effect will be because the person that may be looking at that second or third home as a retirement-type investment and that's what this bill effectively captures. It doesn't capture the people that are necessarily in the business; it just captures ordinary New Zealanders that may be looking at a second or third home as an investment. They typically would do that at the lower end of the market therefore providing opportunities for people to have rental accommodation. They're going to be very difficult to find to be able to go into the top end of the market which would then create a situation which would be difficult for them to invest and provide those opportunities. So I think you might find that the new-house exemption actually works against the policy direction that you're wanting to achieve Minister. Hon DAVID PARKER (Minister of Revenue): Thank you for that question from the Hon David Bennett. In respect of the example that you give where someone throughout life has moved on from their old house and they've purchased another one as people naturally do as they save a bit more and can afford a more expensive house they will be exempt from this because that would be an owner-occupied house. Hon DAVID BENNETT (National): That wasn't the question. I understand they would be exempt and I was using that as the example of who is the new-house purchaser. The new-house purchaser that you're inferring should be under this policy should be the investor and that is simply not the person in that market. The person in that market is the person that is exempt because they're selling their property once or twice to get there. You're expecting a person to go into that market which they're not in now being the investor-type person with only one or two homes—you know they're not a full-blown businessperson in that regime—and you're expecting them to go into the high end of the market which is really not configured for them because it's configured for people that are exempt anyway and would go through a normal process of the life cycle of moving through suburbs as you do in a community. Hon DAVID PARKER (Minister of Revenue): We're not envisaging—have never envisaged—that the high end of new-house markets will be predominantly a rental market. Other parts of the new-house market are. There is some building for long-term rental and we are encouraging that by exempting that sort of long-term rental investment by investors from the brightline test which is under consideration here.