Parker David: Questions for Oral Answer — Questions to Ministers Questions to MembersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers Questions to Members[Sitting date: 06 August 2013. Volume:692;Page:12309. Text is incorporated into the Bound Volume.]8.Hon DAVID PARKER (Labour)to theMinister of Finance: Does he agree with the Reserve Bank that house price inflation in our largest city Auckland is “rapid”; if so what is the Government doing to deal with the demand and price pressures caused by speculators?Hon BILL ENGLISH (Minister of Finance):Yes I do agree with the Reserve Bank but I do not agree with the member’s habit of calling everyone who wants to buy a house a speculator; many buyers if not most are not. Of course speculators who buy and sell houses with the aim of making a profit are already required to pay tax on any capital gains. In addition the Government has significantly tightened tax rules for property owners and investors and provided the Inland Revenue Department with extra resources to enforce those tax rules. These moves are expected to raise $700 million to $800 million of extra tax on property investment every year which is far in excess of any estimates of capital gains tax. The Government is focusing though as a top priority on the supply of houses. As outlined by the Productivity Commission regulatory restrictions on the supply of new housing and new land in the Christchurch and Auckland markets is a significant driver of the increases in prices. The Government is also focusing on reducing the delays and costs of Resource Management Act processes improving the timely provision of infrastructure and working with the construction sector to lift its low levels of productivity.Hon David Parker: Would a capital gains tax excluding the family home dampen demand from the owners of multiple numbers of houses—if you do not like the word “speculators”—given that 40 percent of Auckland homes are no longer owner-occupied?Hon BILL ENGLISH: The “owners of multiple homes” would refer to a significant number of New Zealanders and many of them would not regard themselves as speculators.Hon Judith Collins: David Shearer?Hon BILL ENGLISH: Well David Shearer—Mr SPEAKER: Order!Hon BILL ENGLISH: —and maybe others. Australia has that kind of capital gains tax and it has made no difference. Australia also has restrictions on foreign buyers and it has a less affordable housing market than New Zealand. That is why we are focusing on mechanisms such as the housing accord with Auckland Council targeting the construction of 39000 new houses in Auckland over the next 3 years. We are also about to pass legislation—hopefully with the support of Labour—giving the Government the capacity to speed up consenting so that we can get more houses on the ground faster in Auckland.Hon David Parker: Did he make representations to the Reserve Bank to exempt Kiwi first-home buyers from loan-to-value ratio restrictions; if so why did he not include such an exemption as a condition of loan-to-value ratios when he gave the Reserve Bank the power to use them?Hon BILL ENGLISH: The Reserve Bank in the end will make the decisions about loan-to-value ratios. The Government has been consulted and has put the point of view that was articulated by the Prime Minister publicly several weeks ago. I would say this: in the same way that the member speaks of having a capital gains tax that exempts most houses the Reserve Bank has raised the issue of the challenge of having restrictions on low-deposit loans which might exclude most people with a low deposit. The question for the Reserve Bank is how to make that kind of intervention effective.Hon David Parker: Why does the Government think it is fair to give preference to overseas house buyers over Kiwi first-home buyers by shutting first-home buyers out via loan-to-value ratios while leaving overseas property speculators free rein to buy and make tax-free capital gains?Hon BILL ENGLISH: I simply do not agree with the member’s premises. In any case whatever happens with loan-to-value ratios the real driver of house prices is restriction of supply of houses. Auckland needs 13000 houses a year and it is getting 4000. It does not really matter whether people are first-home buyers long-term investors in housing or owners of family homes; all their interests will be served by more houses on the ground faster and lower interest rates than would otherwise be the case.