Twyford Phil: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — Third ReadingText is incorporated into the Bound VolumeTwyford Phil: Taxation (KiwiSaver HomeStart and Remedial Matters) Bill — Third Reading[Sitting date: 26 March 2015. Volume:704;Page:2670. Text is incorporated into the Bound Volume.]PHIL TWYFORD (Labour—Te Atatū): That was 10 minutes we will never get back. You have got to love David Bennett—[Interruption]Mr DEPUTY SPEAKER: Order! I wonder whether I can encourage the member’s own colleagues not to banter bicker and barrage while he is making his speech.PHIL TWYFORD: Thank you Mr Deputy Speaker—quite right. You have got to love David Bennett. He is always good for a laugh—he is always good for a laugh. It is great to see a member of the National Party who is so proud of his own Government’s policies that he spent I do not know 10 percent of his speech talking about them.There is an approach to the housing crisis that is illustrated by this bill. It goes something like this. We have got a problem. National is generally reluctant to admit it is a crisis—although Alastair Scott did last night in the House—but there is a recognition that there is at least a problem if not a crisis and that something needs to be done about it. So let us do something—in fact let us do anything. Let us do anything no matter how small and inconsequential it may be. This policy is exactly that. It is what I call a Nick Smith special. It was announced in the heat of the election campaign when the Government was very sensitive that it was bleeding support on the housing issue. I say it is a Nick Smith special because it was announced with great fanfare it will be almost completely inconsequential and it actually risks making matters worse. But never mind the bill’s purpose is simply to convey the impression to the public that something is being done about the housing crisis. That is its sole purpose.So what does this bill do? The bill enables people to withdraw the Government contribution—often referred to as the member tax credit—from their KiwiSaver account in order to get a deposit together to take advantage of the Welcome Home Loan and the HomeStart subsidies. It is part of a broader policy package which will kick in on 1 April that does three main things. It increases the taxpayer subsidies available for the Welcome Home Loan it lifts the house price caps—thereby making more people eligible—and it allows people to crack open the Government contribution in their KiwiSaver scheme.Anyone listening to this debate will know by now that Labour is voting for this bill but they will have noticed that we are highly critical of it. I want to explain why. The reason that we are voting for it is that it is better than nothing but not by very much. It is benign at best. A number of contributors in the earlier stages of this debate have made the point that it falls woefully short of what is actually needed to make a difference to the housing crisis. It is completely inadequate for the scale of the problem that we have. I will go into a bit more detail about that. The second thing is that it risks making housing—particularly in the growth markets in Auckland and the upper North Island—even more unaffordable than it already is.So let us talk about the scale of the alleged benefit of this policy up against the scale of the problem. This bill could benefit a first-home buyer by a maximum of $521 a year. That is the maximum amount of the member tax credit: $521 a year. How much is that a week? About $10 a week—$10 a week. How much are house prices going up across New Zealand on average? By $1000 a week—100 times more. That is just house price inflation.Hon Jo Goodhew: Not across the whole of New Zealand.PHIL TWYFORD: Yes—yes house prices are going up $1000 a week on average across New Zealand because in Auckland it is $1700 a week. The average across New Zealand—even in the member’s electorate of Rangitata—across the whole country is $1000 a week. That is 100 times more than the benefit to first-home buyers of this pathetic bill that the Government has brought to the House. If you live in Auckland the house price inflation is 170 times more than the benefit a first-home buyer would get from this bill. So it is completely out of whack. House prices are out of control—particularly in Auckland but also in Christchurch—and people simply cannot save enough to keep up with house price inflation. So this scheme which at its worst is Nick Smith tinkering is completely inconsequential compared with the scale of the problem.The really bankrupt thing about this policy is that it actually risks making things worse. I want to read into Hansard some of the advice from Treasury about the effects of this policy. In fact the National Business Review which we have quoted a lot in the House today reported when the policy was announced that Treasury had damned this policy as being counter-productive. When it was announced Prime Minister John Key said that helping more people buy their own home will provide “stability for families strength for communities and security in retirement.” But Treasury said: “Those claims do not stack up.” That is a direct quote from the Government’s chief financial adviser—this policy does not stack up. Treasury made six main points about the expansion of subsidies under this policy. First it is likely to simply bring forward purchases that would otherwise happen anyway. Second the case for Government encouraging homeownership over renting is relatively weak. Third it is not well targeted to households who need it most. Fourth increasing demand in a supply constrained environment will simply increase prices undoing much of the benefit of the subsidy. Fifth it has not been tested against other competing ways to spend the money. Sixth it is not consistent with the Government’s own social housing and financial assistance policies which focus on targeting those most in need.That is a damning indictment of this policy by Treasury and the Reserve Bank and the Ministry of Business Innovation and Employment had similarly critical things to say as well as almost every commentator in town. They said that this policy risks as David Clark said pouring petrol on the fire increasing demand in a supply constrained market and actually making housing affordability worse. It is obvious to any observer that the housing crisis is a crisis of excess demand and inadequate supply. So logic would dictate that the solution lies in either or both subduing demand or increasing supply. This Government refuses to do anything about demand. It refused to tax speculators it refused to do anything about offshore speculators driving up property prices and it has been a complete failure at increasing supply.The special housing areas which is Nick Smith’s other great crowning glory have produced—you could count on two hands the number of new houses that people are living in that have been built in the special housing areas in the last 18 months. It has been a complete and utter failure and it has actually driven up house prices because many of the developers and the land bankers are sitting on land in those special housing areas watching the prices go up and not building. The National Government is currently presiding over a build rate in Auckland that is 40 percent less—40 percent less—than Labour was doing in 2003. In Auckland which needs 13000 houses just to keep up with inflation National is delivering only about 7500 a little over half of what is needed just to keep up with inflation—not to mention the fact that the Reserve Bank has said that Auckland has a deficit of 15000 to 20000 houses that the National Government’s policies even if it meets its targets will not even touch. Those 15000 to 20000 houses are the shortage in Auckland built up under this Government’s watch and that is one of the main drivers of the exponential rise in house prices.This policy is a classic Nick Smith special. It is just like the last Budget announcement where the Government took the anti-dumping duties off nails and varnish claiming that it would save homebuyers $3500. Its own officials have said it will save less than a third of that. Again that is a pathetic piece of window dressing designed to create the impression that the Government is actually doing something about the problem. Instead of setting minimum standards to keep rental properties warm and dry Nick Smith and Paula Bennett have got a pilot scheme of State houses. That is not where the problem is; the problem is in the private rental market but they refuse to do anything about it. The people of New Zealand deserve much better than this small inconsequential and irrelevant policy.