8. Financial Systems—Stability and Housing MarketGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceFinancial Systems—Stability and Housing Market8. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Does he agree with the Reserve Bank Governor that concerns about the stability of the financial system are rising as a result of rising house prices in Auckland and other regions?Hon PAULA BENNETT (Associate Minister of Finance) on behalf of the Minister of Finance: I agree with the governor on many things. I agree with his comments made just last week that the domestic economy continues to be supported by strong net immigration construction and tourism. As the Government has said one of the consequences of limited housing supply is increased risk of a house-price correction. That is the overseas evidence and in the judgment of the Reserve Bank Governor that is a risk to system stability. That is why the Government is focused on improving supply by working with councils on a range of initiatives.Grant Robertson: I raise a point of order Mr Speaker. I respect your rulings about addressing the difference between addressing and answering a question. That was a question on notice. I do not believe the answer addressed whether or not the Minister agreed with the statement of the Reserve Bank Governor quoted in the question. She mentioned—Mr SPEAKER: Order! I agree with the member. I am no wiser now as to whether the Minister does agree with the Reserve Bank Governor or does not. It is a relatively specific question. Could the Minister address the question.Hon Gerry Brownlee: I raise a point of order Mr Speaker. The Minister on behalf of the Minister of Finance said: I generally agree with most statements made by the Reserve Bank Governor."Mr SPEAKER: I heard that but that makes us none the wiser as to—this is a very specific question. It was put down on notice. This is a question about whether the Minister agrees with the Governor of the Reserve Bank's statement that there is potential for some instability in the financial system because of rising house prices in Auckland and other regions. I know the Minister has said "We often agree with the Governor." but I am none the wiser and therefore I think Grant Robertson is right. I think to give it some coherence I am going to ask the member to repeat the question.Grant Robertson: Does he agree with the Reserve Bank Governor that concerns about the stability of the financial system are rising as a result of rising house prices in Auckland and other regions?Hon PAULA BENNETT: I agree with the governor on many things and I agree with his comments made just last week that the domestic economy continues to be supported by strong immigration construction and tourism. We certainly acknowledge that there are risks with rising house prices and people's debt to that and that there may be a correction. In the totality of what the Reserve Bank Governor has said he is entitled to make his opinions and we do not have to have an agreement on whether or not we agree.Andrew Little: Ha! Entitled to make his opinion!Hon PAULA BENNETT: It is called independence. [Interruption]Mr SPEAKER: Order! Listen I have helped the member in getting the question asked. On this occasion it was addressed to my satisfaction. The Minister said that there are risks—that answers the question—and those risks could occur if there was a correction. The question has definitely been addressed on the second occasion.Grant Robertson: Why does he think the four major banks would effectively ban lending to foreign speculators if they were not concerned about financial stability and there was a housing bubble that is fit to burst?Hon PAULA BENNETT: Those four banks are entitled to make any decisions they like on whom they lend to and they are fully responsible for that and that is not the business of Government.Grant Robertson: Is Martin Hawes correct that "Most Auckland property 'investors' at the moment are really speculators." and why has the Minister allowed speculation to be the dominant feature in the Auckland housing market?Hon PAULA BENNETT: I am not sure about those exact comments. Certainly I have seen the comments from the Reserve Bank Governor where 40 percent of homeowners in Auckland are investors and we see actually as a consequence of that that it does mean that there are rental properties available for those who need to rent as well which is important. [Interruption] Well it is. Part of it is that we actually need rental properties for those who need to rent as well. But I am not aware of those particular comments that he referred to.Grant Robertson: Can he deny that Auckland has met three of the four preconditions for a housing bubble outlined by Martin Hawes: (1) that asset prices lose touch with intrinsic value (2) that it attracts a lot of media attention and (3) that they inflate in times of easy credit and will he admit the increasing likelihood of the fourth condition which is that they always end in a crash?Mr SPEAKER: Either of those two supplementary questions the Hon Paula Bennett.Hon PAULA BENNETT: The Minister has expressed in just the last couple of weeks concerns around the level of debt that individuals are getting into and where they have looked—at the moment they look at their ability to pay that back on a weekly basis and not actually the debt. Those prices that go up often do go down and he has expressed concern about that in the past. Grant Robertson: Which of the following failures by his Government is most influential in allowing the housing bubble to develop: (a) refusing to build affordable homes at scale to increase the supply (b) repealing laws to promote affordable housing (c) refusing to put in place restrictions on offshore speculators or (d) encouraging first-home buyers to buy houses they cannot afford through deposit subsidies?Hon PAULA BENNETT: That would be (e) none of the above."