Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeQuestions for Oral Answer — Questions to Ministers[Sitting date: 20 May 2014. Volume:699;Page:18074. Text is incorporated into the Bound Volume.]Questions to MinistersBudget 2014—Economic Programme and Financial Support for Families1.PAUL GOLDSMITH (National) to theMinister of Finance: How will Budget 2014 continue to support a growing economy including jobs higher wages and delivery of better public services?Hon BILL ENGLISH (Minister of Finance): The 2014 Budget struck a good balance by returning the Government’s books to surplus next year—the first of a number of surpluses—and making important investments in families and public assets. The Budget signals that the Government has moved from managing recession and recovery to managing in a growing economy. This is reflected in the significant progress the economy has made with businesses investing wages rising faster than inflation 84000 new jobs in the last year and our exporters posting record results despite a high exchange rate and frequent disruptions in international markets. As the Prime Minister has said Budget 2014 was a confident Budget for a confident country.Paul Goldsmith: What specific measures did the Budget include to support children and families?Hon Ruth Dyson: Were you away on Thursday?Brendan Horan: I raise a point of order Mr Speaker. When I raised the point of order earlier it was to speak to the point of order that I took offence at the Hon Winston Peters’ comments.Mr SPEAKER: Order! We have moved well past that at this stage.Hon BILL ENGLISH: Some people just want to hear it all over again including that member I am sure. A $500 million package over 4 years supports children and families. It has five parts: a boost to the paid parental leave scheme a $42 million increase to the parental tax credit to provide free general practitioner visits and free prescriptions for children under 13 an extra $150 million to help early childhood education centres remain accessible and affordable and $33 million to help vulnerable children. The Government is able to provide this support in this Budget because of the hard work in previous Budgets to get spending under control and the better tools the Government now has for deciding where to spend now for a long-term pay-off.Paul Goldsmith: According to Budget forecasts what progress is the Government making in meeting its two key fiscal targets over the next few years?Hon BILL ENGLISH: The two important targets for the Government’s books were to achieve surplus in 2014-15 and to return Crown debt back to 20 percent of GDP by 2020. The Budget shows that we are on track to achieve both of these targets. It is important having run up debt over the last 5 or 6 years to fill the gap between our expenditure and revenue and to pay for the earthquake that now that times are better we take the opportunity to repay that debt so future Governments have the same tools available to them as this Government did.Paul Goldsmith: What steps does the Budget take to help ensure that interest rates remain lower for longer and do not reach the historically higher levels seen in 2008?Hon BILL ENGLISH: Interest rates reached over 10 percent in 2008 partly because of runaway Government expenditure and a drastically overheated housing market. The Government has confirmed that it will stick to its $1 billion operating allowance in this Budget and increase it to just $1.5 billion in Budget 2014 because we do not want to see a rapid rise in Government expenditure put pressure on interest ratesfor households which on average have relatively high levels of debt. These allowances are very modest by historical standards—in fact a bit more than half of what the new allowances used to be in the 5 years up to 2008. This represents significant support for homebuyers and people who have mortgages where the Government is tightening its own belt to assist them with lower interest rates where possible.Housing Affordable—OECD Ranking Issues and Government Policies2.Hon DAVID CUNLIFFE (Leader of the Opposition) to thePrime Minister: Does he stand by his statement “there’s no fundamental underlying reasons to believe there’s a problem in our housing market”?Rt Hon JOHN KEY (Prime Minister): Yes particularly when you compare the current situation with that over the 2000s when under Labour house prices doubled and mortgage rates went to 10.9 percent. A house price unit was set up in the Prime Minister’s department which said that the Government should work to increase the supply of land and lower the cost of construction. It was completely ignored. No wonder they are embarrassed—house prices doubled under their watch.Hon David Cunliffe: Why does the Prime Minister not believe that there is a problem in the housing market when New Zealand has the highest house prices in the OECD relative to rents the second-highest compared with income and the fastest-inflating prices in the OECD last year?Rt Hon JOHN KEY: Depending on which part of New Zealand you are talking about there is certainly work that can and should be done and this Government is undertaking that work. That is why for instance we have the special housing areas that we have agreed on and the housing accords in Auckland and Christchurch. That is why we suspended the duties and tariffs on imported building goods. That is why we have reformed the legislation to limit development contributions. That is why we made proposed changes to the Resource Management Act and that is why we trebled the number of Welcome Home Loans from 845 to 2500 to assist first-home buyers. That is why we increased the eligibility for KiwiSaver first home deposits and that is why we have been working very hard to help the Reserve Bank keep interest rates lower for longer.Hon David Cunliffe: I am glad the Prime Minister mentioned all that because I wonder whether he can confirm that his building materials tariff reduction will make less than a 1 percent difference to the cost of an average home and that his social and community housing initiative at the current rate of funding would mean it would take 455 years for National to meet its 20 percent social housing goal?Rt Hon JOHN KEY: The difference on duties and tariffs is I am advised about $3500 for a new home. This is a Government that is doing a series of things some big and some smaller all to make a difference. I can see why Mr Cunliffe thinks there is no point in doing it because Mr Cunliffe was part of a Government that thought there was no point in doing anything which was why house prices doubled under Labour. They went up 96 percent. I advise members to get used to hearing that because they are going to hear it on every radio station and every television debate for a long time to come.Hon David Cunliffe: Given that the Reserve Bank Governor said in recent weeks that house prices were overvalued on several measures why did he miss his last chance to do something significant for first-home buyers in the Budget when 76.4 percent of New Zealanders indicated that that was what New Zealand needed or did the printer just omit the housing chapter from the Budget document?Rt Hon JOHN KEY: Actually one of the most important things the Government did during the Budget was show economic leadership that would firstly keep interest rates lower for longer and secondly ensure that New Zealanders actually got jobs. Justbefore when I said that under Labour’s watch house prices doubled Annette King said under her breath: “Who cares?”. Well that is exactly the point.Hon Annette King: I raise a point of order Mr Speaker. [Interruption]Mr SPEAKER: Order! This is a point of order.Hon Annette King: The Prime Minister’s last comment is incorrect. I did not say it—Mr SPEAKER: Order!Hon Annette King: —and he needs to check his hearing.Mr SPEAKER: Order! And that is not the way to use a point of order.Hon David Cunliffe: Given that the Government’s most far-sighted attempt at economic leadership was the removal of cheque duty from cheque books does he have confidence in the Minister of Finance and the Minister of Housing given that he has allowed house prices to rise by over 40 percent in Auckland on his watch while 46 percent of New Zealanders did not get a pay rise in the last year?Rt Hon JOHN KEY: I reject the numbers and the assertion in the member’s question but if we want to put a bit of realism back into the housing debate let us go to the Roost home loan affordability index. As I am sure the member will know that measures someone who would have an 80 percent mortgage on the average house in that particular area and who earns the average income. That index which you have got to say is by any definition a pretty fair index shows that in fact houses were far more unaffordable—by about 30 percent actually—under Labour. In 2007 if you went to Auckland not only were they more unaffordable than they are today but when Maryan Street—you will remember her; she was your Minister of Labour—was asked the question: “Is this a crisis?” she said: “No it is not a crisis.” So when those members are in Opposition and when it is not as bad as it was when they were in Government it is a crisis but when they were in Government it is: “Nothing to see here. Nothing to do.” and that was the point. Nothing got done. As Annette would say “Who cares?”. [Interruption]Mr SPEAKER: Order!Hon David Cunliffe: I seek leave to table a copy of the labour cost index which confirms that 46 percent of New Zealanders did not get a pay rate increase last year.Mr SPEAKER: That document is freely available to all members.Hon David Cunliffe: I raise a point of order Mr Speaker.Mr SPEAKER: This is a further point of order?Hon David Cunliffe: The Prime Minister has disputed the matter and clearly does not have access—Mr SPEAKER: Order! No. The member is now trying to use the ability to table a document to continue a political debate. That is not the appropriate thing to do with the seeking of leave to table a document.Hon David Cunliffe: When will the Prime Minister stop playing politics with the Resource Management Act amendment bill and split it to allow the housing affordability measures to pass through the House on a bipartisan basis?Rt Hon JOHN KEY: I am happy to tell the member exactly the same thing that I told the press gallery on the way in which is if the member’s party wants to support the Resource Management Act amendment bill as the Government has been wanting to introduce it and send it off to the select committee for every New Zealander to have their say about what they think the Government would welcome that—and Mr Cunliffe should come up and have a nice glass of wine and we can celebrate that in my office tonight. See you at 10 o’clock.Hon David Cunliffe: I seek leave to table a bottle of good Pinot noir if he would like to meet to discuss the second part of the bill on housing affordability alone.Mr SPEAKER: Order! We do not use the seeking of leave to table a bottle of wine. If he wants to share—Hon David Cunliffe: To clarify I would be very happy to table a bottle of PM’s Pinot which apparently is in a blind trust that the PM does not know about.Mr SPEAKER: Order! And the member is now also—[Interruption] The member is abusing the system for seeking to table documents.Rt Hon JOHN KEY: Speaking to the point of order—Mr SPEAKER: I will hear—I am hoping that it is helpful to the House—from the right honourable Prime Minister.Rt Hon JOHN KEY: If the member is so keen to have a bottle of my PM’s Pinot—and I can understand why he would be—I will make sure his office has one delivered to him this afternoon. [Interruption]Mr SPEAKER: Order!Hon David Cunliffe: I raise a point of order Mr Speaker.Mr SPEAKER: This will be the last one.Hon David Cunliffe: I wonder whether you could make a considered ruling on whether it is possible for the Prime Minister to make an undertaking to the House to deliver a bottle of wine when he has no idea where it apparently comes from.Mr SPEAKER: Order! Now that members have had their fun we will get back to the serious business of questions for oral answer.Housing Affordable—Auckland Property Market and Alternative Policies3.METIRIA TUREI (Co-Leader—Green) to thePrime Minister: Does he stand by all his statements?Rt Hon JOHN KEY (Prime Minister): Yes.Metiria Turei: Why did he say that homes in Auckland are more affordable than homes in London New York Singapore Melbourne Sydney and Brisbane when according to the OECD they are actually much more expensive relative to income than almost anywhere in the developed world?Rt Hon JOHN KEY: I think the member is wrong in her facts.Metiria Turei: Is the Prime Minister saying to young Aucklanders that they are not locked out of the housing market when they know too well that they are locked out by rising rents high loan-to-value ratios $600000-plus median house prices and with student loans to pay off to boot?Rt Hon JOHN KEY: For a start off if the member wants to take a cursory look at TradeMe and refines her search to Auckland there are currently over 2000 properties listed under $400000. Most people can go to the bank and get a loan of 80 percent obviously subject to their mortgage but some people can actually get more than that because loan-to-value ratio restrictions overall are not in total. But the reality is that no one is arguing that Auckland is the cheapest place to buy a house. We are just arguing that the Government is taking a lot of steps to help address that with its special housing area and it was more unaffordable under Labour.Metiria Turei: Would the Prime Minister then be surprised to learn that on TradeMe yesterday excluding those properties without their own freehold land like removable homes and apartments there were actually just 11—just 11—three-bedroom homes or larger in Auckland City for sale below $300000 and just 36 for sale were below $400000?Rt Hon JOHN KEY: The member is putting all sorts of conditions around it but there are over 2000 properties under $400000 in Auckland. That is the very point as to why the Government has worked with the Auckland Council for there to be 39000 sections released. What is that member doing? I know—that member is standing in theway of the Resource Management Act which would help speed up the release of land. The member is doing what she always does—she is crying crocodile tears but is not actually prepared to do anything about it.Metiria Turei: Can the Prime Minister confirm that house prices in Auckland under National’s 5 years in Government have risen by the same dollar amount as they did in the previous 9 years under Labour about $187000 per home and when will he start taking responsibility for the housing crisis rather than denying it exists?Rt Hon JOHN KEY: What I can confirm is that under the Roost survey which is by far the best measure houses were more unaffordable under the previous Government than under ours. To run through it—this is the responsibility this Government is taking. We have organised the Auckland Housing Accord; 39000 consents will be issued over the next 3 years. We have suspended duties and tariffs on imported building materials. We have reformed legislation to limit development contributions. We have made some changes to the Resource Management Act and we would like to make more. We have increased the additions on Welcome Home Loans and KiwiSaver first-home deposit subsidies. We have built a strong and robust economy with the support of New Zealanders and their businesses to see them in jobs. What we do know is that no one will be able to afford a house if they lose their job which under a Labour-Greens Government many of them will.Metiria Turei: Does the answer to the housing crisis not include a major State house building programme so that those who need a house to rent or buy can get it and a capital gains tax to prevent investment driving up prices and ensure that those who are making money off property pay tax just like the rest of us helping to build a sustainable economy with real jobs?Rt Hon JOHN KEY: Given that a capital gains tax includes the majority of homes I can only make the assumption that—and the member might want to correct this—what the member is telling the New Zealand Parliament is that under the Green Party if it were part of the Government every home would have a capital gains tax on it. That is an interesting assertion.Metiria Turei: I raise a point of order Mr Speaker. You have previously ruled that it is not necessarily appropriate for parties to talk about other political parties’ policy. That is all the Prime Minister did. He did not address the question of whether a capital gains tax excluding the family home and a major State house building programme were part of the solution to the housing crisis.Mr SPEAKER: The difficulty is the member herself brought in effectively alternative politics in her supplementary question.Metiria Turei: Is the Prime Minister basing his assumptions about home affordability on his own personal experience of owning several properties offshore and does that not show how staggeringly out of touch he is with young Kiwi families trying to buy a modest three-bedroom home in Auckland—staggeringly out of touch?Rt Hon JOHN KEY: No but what it does show is the Greens whenever they start losing an argument get personal. I think Jan Logie is a very interesting person to reflect on her own comments in the decorum of this Parliament. Actually the Green Party used to say under the old leadership that it stood up for decent values. That has clearly now gone and all New Zealanders should understand that the Greens have turned into the nasty party.Hon David Cunliffe: I seek leave to table a transcript fromHansard of the Prime Minister—Mr SPEAKER: Order! The member will resume his seat. We do not use the tabling of documents process to then attempt to tableHansard.Tax System—GST Tax Cuts and Capital Gains Tax4.Hon DAVID PARKER (Deputy Leader—Labour) to theMinister of Finance: Does he agree with the reported statement last Friday from the Prime Minister who would not rule out an increase in GST?Hon BILL ENGLISH (Minister of Finance): I agree with the Prime Minister’s comment on radio last week when he said: “Our general view is GST at this current level is about the right setting.” I also agree with the Prime Minister’s comment that the Government has not decided whether to undertake a tax reduction programme let alone the design of it. However he has also made clear the question of whether GST would rise as part of any tax programme and the answer is no.Hon David Parker: Why should New Zealanders believe him when he says that he will not increase GST given that the Prime Minister promised in 2008 he would not increase GST but then did just that in 2010?Hon BILL ENGLISH: The member misrepresents the comments in 2008. The tax package including an increase in GST was put to the test in the 2011 election and as I recall the Government of the time won that election. There will not be any increases in GST.Hon David Parker: Did John Key check with him before the Prime Minister flew his kite about GST increases and tax cuts; if so why did he the Minister of Finance appear blindsided? Was it because the Prime Minister thought his budget so underwhelming he wanted to distract attention by flying his kite?Hon BILL ENGLISH: In answer to the second question the Prime Minister has been of the view that the Budget has been an overwhelming success and I too am expecting the donation of a bottle of wine to appear in my office to indicate a bit more gratitude.Hon David Parker: Is John Key the person he said bounces from cloud to cloud; if so is it time to remind him that 40 percent of his 2010 income tax cuts went to the top 10 percent of income earners which everyone paid for through an increase in GST?Hon BILL ENGLISH: Any comment I have made about the Prime Minister is much more flattering and supportive than almost anything the Labour caucus is saying about its leader. I am sure that pattern will persist through to the election. Secondly the member is simply wrong about the 2010 tax cuts. Analysis produced at the time showed they weredistributionally neutral—that is they had a similar impact on taxpayers of all income levels.Hon David Parker: In terms of distributional effects will he advise the Prime Minister that recent analysis by Westpac on the effect of Labour’s policy of 15 percent tax on capital gains for investment property shows it would take significant pressure off house prices?Mr SPEAKER: In so far as the Minister has responsibility the Hon Bill English.Hon BILL ENGLISH: As the member may be aware there is already a capital gains tax on anyone who trades property. I have not seen Westpac’s analysis that indicates that that has had the impact of a 15 percent reduction in prices. In Australia they have a capital gains tax on all commercial and investment property and they have house prices rising almost as fast as if not faster than they are in New Zealand.Tim Macindoe: How is the National-led Government’s 2010 tax package which reduced taxes on income and savings and increased GST helping families on low and middle incomes to get ahead?Hon BILL ENGLISH: Low and middle income families are still enjoying the benefits of the reduction in tax rates that were brought in then. The tax changes meant that someone on the average annual wage which was around $50000 in 2010 wasimmediately $15 a week better off and they still are. A family with two children on the average household income of $76000 was $25 a week better off. The tax system has become more progressive since 2010. Households earning less than $60000 a year are generally expected to pay less in percentage terms towards net tax in 2013-14 than they were paying 5 years ago. The income tax changes combined with the growth of the economy mean that higher-income New Zealanders are paying a greater share of the income tax burden.Justice Minister—Confidence5.Rt Hon WINSTON PETERS (Leader—NZ First) to thePrime Minister: Does he have confidence in the Minister of Justice; if so why?Rt Hon JOHN KEY (Prime Minister): Yes; because the Minister has made a significant contribution to the Government and to the people of New Zealand in the portfolios she either has held or holds.Rt Hon Winston Peters: Does he believe the Minister of Justice has provided him with all the information required to make his decision that she should remain as a Minister?Rt Hon JOHN KEY: I believe she has advised me of all the pertinent information.Rt Hon Winston Peters: Has the Minister of Justice given him all the details and information including the name of the Chinese border official who was at theOravida dinner?Rt Hon JOHN KEY: I cannot remember who gave me the name of the official but I certainly have the name. That was the very name the agency and the role that I took to the Cabinet Office.Question time interrupted.