Budget Measures (Miscellaneous Fiscal Matters) Bill

on behalf of the Minister of Finance: I move, That the Budget Measures (Miscellaneous Fiscal Matters) Bill be now read a second time. Part 1 of this bill repeals cheque duty from 1 July 2014. Cheque duty no longer raises substantial revenue, largely due to the decline in popularity of cheques as a method of payment. Cheque duty raised about $17 million in 1991-92 and about $10 million in 2001-02, but now raises only about $4 million per annum. Cheque duty is a relic of a previous age and the bill proposes to consign it to history.

Part 2 of the bill corrects an unintended consequence in the operation of the New Zealand emissions trading scheme. The bill limits participants to surrendering New Zealand Units only when they are deregistering an area of forest from the emissions trading scheme. Participants can still use Kyoto units for emissions from deforesting or harvesting to repay overallocation, and they can still sell Kyoto units on either domestic or international markets. The bill will come into force on 16 May 2014 and the amendments will not affect deregistration applications received by the Ministry for Primary Industries on or before 15 May 2014.

Part 3 of this bill suspends for 3 years the application of anti-dumping duties to residential building materials. This means that the anti-dumping duties currently in place on standard plasterboard from Thailand, on reinforcing steel bar and coil from Thailand, and on wire nails from China will be suspended for 3 years from 1 June 2014. It also means that no new anti-dumping duties can be imposed on a wide range of residential materials over the 3-year suspension period.

The purpose of suspending anti-dumping duties is to reduce the cost of constructing houses and is intended particularly to benefit the Christchurch rebuild but also increased house construction in Auckland and other parts of the country. For the purpose of determining the types of residential building materials covered by the suspension, the bill broadly defines building material and residential building material. It also includes a range of specific building materials that fall within these definitions.

For clarity, the bill lists some items that do not fall within the core market for residential construction material and are therefore excluded from the scope of the suspension. The 3-year period over which the anti-dumping duties are suspended is defined as the period from 1 June 2014 to 31 May 2017.

The bill also provides that any decision by the responsible Minister to impose an anti-dumping duty on residential building material or to reassess the rate of anti-dumping duties on a residential building material will not take effect until 1 June 2017. This means that New Zealand manufacturers can still apply for a dumping investigation into residential building material. Any decision to impose a new anti-dumping duty on a residential building material would, however, not take effect until the end of the suspension period on 31 May 2017, and would apply only after that date.

New Zealand manufacturers also retain the right to apply for a review of a suspended duty to determine whether it should remain in place for a further 5 years. If a review finds that the duty should remain in place, it would continue to be suspended until the end of the suspension period on 31 May 2017, and would be reapplied only after that date.

The bill also contains some minor technical provisions relating to the definitions of “ministry”, “Minister”, and “secretary”, to bring these definitions into conformity with current drafting practice. I believe that the combined effect of these measures will, in the longer term, have a significant impact on housing affordability and allow more New Zealanders to own their own home. Although the combined effect of these measures will have a significant impact on housing affordability in the longer term, the suspension of anti-dumping duties as proposed in this bill will provide an immediate benefit by reducing the cost of building materials, which will particularly benefit the Christchurch rebuild. I commend the bill to the House and move that it now be read a second time.

The second reading is the stage of the bill at which we would normally be reflecting upon what people might have said when the bill went to the select committee. That is when members of the public have their opportunity to assess a bill in terms of its value to the country. And what might those members of the public have said had they had the chance to have a look at this legislation, the Budget Measures (Miscellaneous Fiscal Matters) Bill? I suspect we would have heard words like “piecemeal”, “fragmented”, “timid”, and “hopeless”, because that is actually what this bill is. This is meant to be, under urgency, the big moment of the National Government’s Budget, revealing the transformational changes to our economy that will drive higher wages and better jobs—and it is not here.

What is here is cheque duty. The 1980s have been caught up with by the National Government. It has worked out that people are not writing out as many cheques, although I am a little confused, I have to confess, about what the Government is trying to achieve with the repeal of cheque duty. Is it meant to be the return of the cheque? Is it the idea that we take the duty off and we will all be out there writing out our cheques? Perhaps that is what it is. Or is it saving New Zealanders that massive 35c a year? Is that what it is? Is it about the dividend? Finally, after all these years of austerity, New Zealanders get the dividend, the 35c mixture at the dairy. That is it. That is what they are going to get. If people were making submissions on this bill, I suspect what they would say is: “Where is the vision? Where’s the plan?”. New Zealand is facing some serious economic and social problems, and the Government’s response is removing cheque duty. That is the brighter future, ladies and gentlemen, that you were promised by the National Government.

What we do not see in here is the way that we will lift wages and get better jobs. We have to diversify our economy. We have to add value. It is not just about volume any longer. It has to be about adding value to products in New Zealand to help create those jobs, and that is absent from this bill. Perhaps submitters might have gone looking in the bill for how to reduce inequality and how to see that New Zealand becomes a fairer place. Surely, that is the goal of any Budget, but people come looking to the Budget legislation passed under urgency and they find nothing. The reason for that is that there is nothing in the Budget that will truly do that. The lowest-income New Zealanders, the most vulnerable New Zealanders, have been left out of the Budget in the measures that are there, so those hoping to make submissions on that will not be able to find that either.

💬 John Hayes: Stop telling porkies.

I say to Mr Hayes, a man who spent his life in the Foreign Service before he came here, that maybe New Zealanders would go looking for how the export sector was going to be supported, and how regional economies were going to be able to drive products that would be exported. They might have wanted to submit on that in the Budget legislation, and they would find nothing. They would actually find a cut to the Regional and Industry Development Fund in the Budget, so they would find none of that.

What they would find when they were submitting on this legislation would be a confused response to a problem created by the Government within climate change legislation, designed, it would appear, to annoy the forestry sector and iwi, and not respond, in fact, to the major challenges that are there in climate change. They would also find a very odd bill on removing some tariffs and changing some anti-dumping legislation. I do note, and we will come to this in the Committee stage, that the Government’s belief that the housing crisis will be solved by plasterboard, varnish, and nails being a little bit more affordable is somewhat remarkable from this Government.

So in this second reading debate, really, on this side of the House we are deeply underwhelmed by what the Government has brought before us. We strongly believe that as a country New Zealand needs to address the economic and social difficulties that we have: the housing crisis, the inequality crisis, the absence of a plan to lift wages, and the absence of a plan to create better jobs. None of that is solved by pieces of threadbare, piecemeal, fragmented legislation that the Government has brought before the House. It is a deeply disappointing piece of legislation.

That was a somewhat underwhelming speech from the other side here for the second reading of the Budget Measures (Miscellaneous Fiscal Matters) Bill. Mr Robinson asked—

💬 Hon Clayton Cosgrove: It’s Robertson, not Robinson.

Sorry. Mr Robertson said: “Where is the plan?”. Again, I think the problem is that members opposite do not like steady, sensible, predictable Government policy that everybody can understand in terms of where the Government is coming from and that is built up in lots of little steps that together bring the economy in the right direction. Theirs is the politics of the grand gesture, where somehow you are going to wave your wand in a transformational way.

If you overturn monetary policy and start changing the very foundations of what has been part of the successful New Zealand economy, if you suddenly upturn the tax system and bring in a capital gains tax, or if you overturn the electricity sector and start nationalising it—all those radical things Labour members are opposing, but I do not quite understand what basis there is for this when we have a strong, successful economy that is so much stronger than so many other parts of the developing world today.

We are looking at the books being back in surplus well ahead of many other countries, we are seeing growth at 4 percent, and we are seeing wages rising faster than inflation, and more money being made available in this Budget for families, for businesses, and for the most vulnerable. That seems to me to be a plan that is working, a plan that is working very well, and a plan that we are all proud of on this side of the House.

Again, I do want to remind the House of the whopper by David Cunliffe in his Budget debate speech. He said that Labour produced nine surpluses in a row. Well, that is rubbish. The final one ended up being a deficit of $3.9 billion, because Labour had increased spending by 12 percent in 1 year, and it was 50 percent over the last 5 years of Government. That is how a Labour Government works.

Yes, it is true. To give Labour its merit, it was reasonably disciplined in the first two terms of the Labour Government under Clark, but the third term was a runaway train. Spending went out of control and it left us with an economy pregnant with a decade of deficits.

This Government has had the fortitude to get us back to where we are today, after 6 hard years and the hard work of New Zealanders—New Zealand businesses and New Zealand people all around the country, from the top to the bottom, bringing us back to surplus today. And that is something we can celebrate. This bill is about some specific details, but we should not lose sight of the broader picture, and the broader picture is the very successful one.

I do want to talk just briefly about what we mentioned on the temporary suspension of dumping duties. Again, that was mocked on the other side by Mr Robertson, who said that it was just a small thing and that having cheaper nails is a terrible thing. But this is all about a plan that brings together a whole number of issues that help bring about affordability of housing.

Who would have thought—I did not think it was imaginable—that we would be able to work so successfully with the Auckland Council in terms of bringing the special housing accords together and seeing upwards of 30,000 houses planned to be built in Auckland over the next little while, which will produce so much more supply, which is what we need. It will have a much better result than any sudden introduction of a capital gains tax. All the small businesses in the country, all the farmers, and everybody you can name who has risked their money in an entrepreneurial venture is suddenly going to be hit by a capital gains tax. Somehow that is going to make housing in Auckland more affordable, just as it has in Australia and elsewhere in the world. It seems it is a hard one to follow.

Our policy of focusing on a whole range of issues on housing affordability, starting with getting greater access to land and more supply in housing and then working our way through the specific issues, is hard and detailed work, but the cost of building is an important part of what makes housing expensive in New Zealand. When the Productivity Commission did its thorough review of housing, it pointed out that New Zealand materials were more expensive than those in Australia, so we are doing what every good Government should do by drilling down into the details. This legislation removing duties and tariffs on building products will increase competition and reduce costs in the industry, saving Kiwis around $3,500—

💬 Hon Clayton Cosgrove: Wow!

—to build a standard New Zealand home. The member opposite mocks. I do not know about you, but I would prefer to have $3,500 in my pockets than not.

💬 Hon Clayton Cosgrove: Do you know how much a house costs to build?

Yes, I am very familiar with the general costs of housing, but I will not go into that detail. On that basis—

💬 Hon Clayton Cosgrove: It wouldn’t even cover the heat pump.

—heat pumps are a lot cheaper than that, actually; you just have to shop around—what we will find is that this Government has made a great contribution to housing affordability with this temporary suspension of dumping duties. On that basis, I commend this bill to the House.

Let us just be clear what the Budget Measures (Miscellaneous Fiscal Matters) Bill actually does. We had a very grandiose speech from Mr Goldsmith, but very little of it was based in reality. This bill will save people 35c a year on cheque duty.

💬 Sue Moroney: How much?

That is the first thing—35c a year savings by abolishing cheque duty.

💬 Sue Moroney: That will fix inequality!

That is what this bill does. That will fix inequality; that is quite right! When it comes to affordable housing, there will be $3,500 that the Government cannot even guarantee that will be passed on to the people who are building houses. There is no guarantee that the ticket will not be clipped on the way through and that homeowners will actually see the benefit of that, but my colleague Phil Twyford will talk more about that in his speech.

Let us just put the facts on the table about the last Labour Government. There were nine surpluses in 9 years—nine surpluses in 9 years—and zero net debt. We paid the debt off while National was screaming at us to give tax cuts, and we did not. We paid the debt down because we knew that when a rainy day like the global financial crisis came, we would need to be prepared. We were incredibly exposed, and the only reason we have come through the global financial crisis as well as we have has been the last Labour Government’s economic management. There was the lowest unemployment in the OECD. Labour has committed to getting us back to below 4 percent unemployment; National says that it cannot be done. Guess what? Over 5 years, Labour averaged below 4 percent. It can be done if you want to do it, if you care enough to do it, and if you take economic development and unemployment seriously.

But I want to talk about Part 2 of this bill, because, as my colleague Grant Robertson has said, this bill should have gone to a select committee. Had it gone to a select committee, it would have given the forestry sector the opportunity to appear before the committee to say: “Why do you hate us so much? Why do you continue the sustained attack on our industry?”. What looks like a very innocuous piece of legislation is actually a vicious attack, once again, on the forestry sector. It is the only sector in this country that has been doing the heavy lifting on greenhouse gas emissions reduction. The whole reason that we came out of the first commitment period of the Kyoto Protocol in the black was not because of Government policy. In fact, as we know, Government policy will result in only a 0.4 percent reduction of emissions compared with doing absolutely nothing at all. So we are basically doing absolutely nothing at all. We are doing 0.4 percent better than absolutely nothing. The only reason we came out net positive was forestry, so why does the Government keep attacking and undermining the forestry sector?

The forestry sector earns New Zealand Units when it plants trees, but the Government is stopping the sector from using cheap international units in place of New Zealand Units and then basically pocketing the difference when it deregisters or harvests the trees. Of course, we do not want that to happen, but the reason it is happening is that there is such a big price differential between the Kyoto unit and the New Zealand Unit. That is the actual problem here, and this Government has done absolutely nothing about it for 5 years. It voted against amendments that Labour put up to stop that by restricting cheap international units across the board to everyone, which would have helped fix the problem. The Government opposed that, but when it comes to the forestry sector, it is going to say that that sector does not get access to those cheap units.

But guess who does get access to them: National’s big, heavy-emitting, industry mates. Its mates get access to those cheap units to meet their obligations. They are given a free allocation of New Zealand Units to help transition them into the emissions trading scheme—90 percent. They get New Zealand Units, and they can then use these cheap units to meet their pollution obligations and pocket the difference. So it OK for the mates of National to engage in what is called arbitrage, but God forbid that forestry should do it, the one sector that is actually doing something about reducing emissions.

The Minister for the Environment is in the House. I would like to know why this does not apply to everyone. She is desperately pretending to be reading something. Why does this not apply to all people in the emissions trading scheme? Why pick on forestry, Minister?

💬 Sue Moroney: She doesn’t know.

She does not know. She does not care. We know why: it is because the Government hates forestry and it loves big industry. These are its mates. It is Rio Tinto. It has already given them a big taxpayer subsidy. We should not be at all surprised that the Government is also prepared to let big industry continue to speculate on these emissions units when it is clamping down on forestry.

The Minister of Commerce said that this is an unintended consequence of the emissions trading scheme. What a load of garbage. This is not unintended; this is deliberate. It has deliberately let the carbon price collapse, it has deliberately let these cheap Kyoto units flood into the country, and it has deliberately not stopped that from happening, so to say that it is an unintended consequence is deeply, deeply misleading, and I am being polite when I say that.

One of the reasons talked about by members opposite is the fiscal risk to the Crown in not clamping down on this arbitrage, and that is true. The Government estimates it as being from about $11 million to $66 million. But when you look at the arbitrage that is being carried out by the other sectors that hold New Zealand Units, what is the fiscal risk for that? The fiscal risk for that is $107 million. That is $107 million of fiscal risk from the New Zealand Units held by the Government’s mates versus between $11 million to $66 million of fiscal risk from forestry. Which one of those are we clamping down on today? Is it the $107 million or the $11 million? No, we are clamping down on the $11 million so that the Government’s cronies can continue to engage in arbitrage and it will not do anything about it, although it is quite happy to once again take a whack at the forestry industry, which is crucial to our battle in avoiding the worst—

💬 Sue Moroney: Are they not in the Cabinet club?

Apparently the forestry industry is not in the Cabinet club—clearly—because if it was, we would not be passing this legislation.

Another reason we are doing this is the reputation risk to the emissions trading scheme—that is, the risk of the reputation of our emissions trading scheme being defiled by the forestry sector engaging in speculation on New Zealand Units. The biggest reputation risk to the emissions trading scheme is that lot sitting over there. Our emissions trading scheme has no reputation now. It has no credibility, it has been completely undermined, and it is nothing more than a fig leaf. The emissions trading scheme’s reputation went out the door long ago when this National Government was elected. For the Government to say that it is going to clamp down on one small industry—an industry that is doing very, very positive things in terms of climate change—and think that that will somehow restore the reputation of the emissions trading scheme is laughable. It is absolutely laughable.

Our emissions trading scheme is designed to put a price on carbon. If it is not going to do that, then, quite frankly, why have it? I bet you that it is costing us more to run than it is actually achieving. The thing is that when the emissions trading scheme was first introduced by the last Labour Government, it had a price on carbon of around $20 to $25. That was what sparked off the wind industry in New Zealand. The price on carbon gave it the advantage it needed to really take off. That is entirely what the emissions trading scheme was designed to do. It is not doing that now, because this Government has allowed the price of carbon to be completely suppressed. The reason the Government says that it is not prepared to act on that is that it wants to reduce costs to struggling businesses and households. It says that if you have a proper price on carbon, that is going to feed through to electricity and fuel bills. What it does not tell you is that consumers are being charged carbon prices well in excess of the actual carbon price by fuel companies and energy companies.

And the Government has done nothing about that. It is quite happy to let the fuel companies and energy companies price gouge consumers. What we know is that the price of carbon is currently about 35c, but from what we have heard—and this all comes from anecdotal evidence that we have heard from people—consumers are currently being charged between $15 and $25 for a tonne of carbon at the petrol pump and through their power bills, despite the fact that the emissions that they surrendering are 35c. So, in fact, any benefits from a collapsed price on carbon are not being passed on to struggling businesses and households at all. Again, what has it done about that? Absolutely nothing. So what looked like an innocuous piece of legislation is actually the exact opposite. What makes it even worse is here is a sustainable forestry bulletin from the Ministry for Primary Industries telling people how to register and deregister their forests. So the very thing that we are clamping down on today is the same thing that the Ministry for Primary Industries has been promoting as early as February this year.

I can understand why the foresters are angry. I can understand why they might have had reason to believe that the Government was OK with them doing this, given that Government literature tells them how to do it and gives them tips on things to consider when removing and reregistering. I understand why they are probably a little bit shocked that under urgency this is going through with no select committee process and with no consideration about what the impact might be on the very sector that we are still hugely reliant on to reduce our greenhouse gas emissions, because this Government is doing absolutely nothing else.

In this second reading I want to pick up on the concern expressed by Grant Robertson about the lack of due democratic process in the passage of this bill, the Budget Measures (Miscellaneous Fiscal Matters) Bill, particularly as it relates, as Moana Mackey has said, to something as important as Part 2 of the bill and the proposal to eliminate the arbitrage against post-1989 foresters.

Given that the public of New Zealand are not going to have any possible input into the passage of this legislation, let us speak on their behalf as faithfully as we can. Rather than presume to input their views, let us ask some questions that simply hang in the air because of the import of this draft legislation. The questions have to be asked. I think there would be five questions the people of New Zealand would wish to have answered. Given that neither the Prime Minister nor the Minister of Finance are here but the Minister for the Environment, Amy Adams, is here, let us ask Minister Adams, or her colleague who happens to wander into the Chamber and sit down in the chair, to address these questions in Committee. Let us see what the answers are to these five questions.

The first question to the Minister, the Hon Amy Adams, is: do you think that climate change is just another economic problem or is it a qualitatively new, unprecedented threat to human society? If it is (a) just another problem, where can we find it in your four Budget priorities, which are: responsibly managing the Government’s finances; building a more productive and competitive economy—it cannot be either delivering better public services or rebuilding Christchurch, so it has to be one of the first two. Do we find climate change in the responsible financial management of New Zealand’s economy or do we find it in a better, productive, and competitive economy? Actually, the 195 states that are party to the United Nations Framework Convention on Climate Change, competing among themselves and punching above their weight, will fail, Minister, to solve the global problem. If it is the other—if it is an unprecedented threat to human society, which 99 percent of humanity thinks it is—why are you and your Government not calling attention to this and calling for a national debate in the forthcoming election? That is question one.

Question two is: the United Nations has concluded that to prevent dangerous climate change, the developed countries must reduce emissions below 1990 levels, within the range of 25 to 40 percent by 2020. If the Minister continues to look down, she can pretend the questions are not here, possibly. That 25 to 40 percent is designed to meet a threshold of a 2-degree temperature rise, or 450 parts per million volume of carbon atmospheric concentration. That 450 parts per million was actually signed off by your Government, Minister, in—I think it was—August 2009.

Given that there is a range of 25 to 40 percent, how can you justify any of the developed countries, including New Zealand, being outside that range and below the 25 percent? Can you explain the Treasury paper to Cabinet that says that it does not follow that every country has to be within this range, when the scientists make it clear that they have taken into account all the common but differentiated responsibilities—all the differences in national circumstances—when they give a range of 25 to 40 percent? If, in fact, you insist on being below 25 percent, which you do with your 5 percent unconditional target, Minister, will you wish to nominate another developed country to make up the shortfall? And will you or your Prime Minister address that issue to that developed country, explain the reasons, apologise for New Zealand, and then nominate the country and help them, perhaps, to make up the shortfall?

Question three—are you confident that New Zealand is doing its fair share when we set a 5 percent reduction? Are you aware, Minister, that global emissions at the moment are projected to produce an increase of anything between 2.6 degrees and 4 degrees Celsius? Are you equally aware, Minister, that New Zealand’s projected increases go above that range of 2.6 to 4 degrees Celsius and are more on track, if emulated by every other country, to go closer to a temperature increase of 5 to 6 degrees Celsius, which, in the case the World Bank has described, is not dangerous but catastrophic climate change for your children and mine?

Question four: are you—or perhaps your colleague, the Minister of Finance—able to name and identify the global least cost of carbon as of mid-May 2014? And is it sufficient to avert dangerous climate change of a 2-degree threshold?

Finally, question five, which has been asked repeatedly in this House today, and no doubt you or your colleagues will have a chance to answer it in the Committee: why is this Government discriminating against post-1989 foresters in eliminating the arbitrage, which in itself is a good thing but is iniquitous in relative terms of equity compared with the other sectors that you and your Government are deliberately and somewhat cynically protecting? They are the five questions, Minister. We are waiting for those answers.

Although I might not be the Minister for the Environment, I think the answer to those five supposed questions is that we do not believe in the politics of fear. We do not believe in the politics of fear wrapped in sanctimony, and we do not believe in them wrapped in pseudo science.

💬 John Hayes: Or pomposity.

Or pomposity—that is a very good word. I find it is very interesting with the Greens because, of course, there is a lot of science around climate change, but what I find fascinating with the Greens, of course, is that when it comes to the science of drug use, they are not interested in that. The science around fluoride—they are not really interested in that. The copious amounts of science around genetic engineering—oh, the Greens do not want that, but they are happy to pick elements around climate change, which is quite real, but then turn it into the politics of fear. Counterbalance that with National, which is moving forward in a balanced and prudent way that embraces, of course, the environment—and we are seeing that through one part of this Budget Measures (Miscellaneous Fiscal Matters) Bill as it approaches arbitrage in our forests—but also the economy as a whole.

We look at something like cheque duties—about $4 million of revenue to the Crown a year. That is being removed because it is an unbalanced tax now. We use eftpos and other mechanisms, and they are not taxed per transaction. So the Government looks at this and asks: “How do we make things more efficient? How do we reduce regulation? How do we reduce those things that get in the way of us as human beings being able to live a balanced, prudent life without fear?” We want to be able to run our businesses, love our families, walk in the bush, swim in the lakes, engage with the world in a multicultural society, and be pleased with that. That is what this bill is ultimately about.

This is a Budget measures bill. It is the second one of such bills we are putting forward here. I look forward to discussing this more in the Committee stage and, of course, in the third reading. It is, as I said, a prudent, balanced approach to four important areas for the Government.

I take a call on behalf of New Zealand First on this omnibus bill, the Budget Measures (Miscellaneous Fiscal Matters) Bill, which covers the cheque duty, climate change, and the building supplies bills. It was very interesting to hear Mr Paul Goldsmith of National giving his checklist of all the positive things in this Budget and what people were getting out of it. He could have equally put up a checklist of what was coming out of the Budget as well, on the counter-side, which he did not do. He seemed to show only the glossy side.

He could have said that $18.5 million is coming out of output expenses for the Department of Corrections. He could have said that $22.5 million is coming out of the courts. He could have said that $2.2 million is coming out of the Customs Service. He could have said that $1 million is coming out of economic development. He could have said that $53 million is coming out of education outputs. Further, with his checklist that he was so proud to show us, he could have gone on to say that internal affairs is being chopped by $25 million, that justice is being chopped by $14 million, that labour is being chopped by $31 million, and that the Police is being chopped by $42 million. In total, when you add up what is being chopped out of the Budget, Mr Goldsmith, the checklist shows that $284 million is being chopped out of operating output expenses of Government departments this year. That is nothing to be proud of. In a population that is expanding, and we have heard that 42,000 more people are going to come into this country—the size of Wanganui, or Whanganui, depending on whether you put an “h” in it—in the coming year, $284 million is chopped out of the operating expenses of Government departments to come up with the contrived figure of a $372 million surplus. That is not anything to be proud of.

At the same time, today we hear about the building supplies bill and how this is going to save $3,500 per house built at a time when in Auckland house prices have gone up by 51.9 percent in the last 3 years. That has been the increase in house prices. We are talking many, many tens of thousands of dollars, if not hundreds of thousands of dollars, not just an average over the whole country of $3,500. And that $3,500 is coming about not because of the cost of building itself but because of the cost of competition to buy houses.

Today I received from one of our constituents this real estate paper from Auckland, and, lo and behold, it is all in Chinese. I guess the members from—

💬 John Hayes: Are you racist?

No, no, not at all. I guess the member from Wairarapa or the member from Waimakariri or the member from Taupō would be quite surprised if in their own town there was a 50-page newspaper, all in a foreign language, selling properties in your home town. I think, Mr Hayes, you would be surprised. You would—I am sure you would—because it does not happen anywhere else in New Zealand apart from in Auckland.

💬 John Hayes: You’re a xenophobe.

No, I am not.

💬 Melissa Lee: You’re a xenophobe.

No, not at all, Ms Lee. I have three children aged 20, 25, and 28, who are saying they will struggle to get a home in Auckland because the people their age, in their 20s, Ms Lee, are unable to afford even a deposit on a home in Auckland any more, because they have been driven out of the market. I have many real estate people in Auckland say to me that people are walking in the door and offering up to $200,000 or $300,000 more than what a property is estimated to be worth—offering cash. It has nothing to do with loan-to-value ratios or with going to the bank and lending or anything else. They have got the cash, they are walking in, and they are paying serious money, over the odds. So, Ms Lee, do not give me a lecture about that. I know what is happening—I know what is happening.

We are seeing auctions for houses on the North Shore that are sold to cash buyers who are literally on the other ends of agents’ mobile phones, back in foreign parts, and they are buying properties left, right, and centre, pushing up the prices. So the problem here is not tinkering around the edges, cutting out the costs of a few nails, cutting down the cost of a bit of plasterboard, and cutting out a few of the costs of materials. The problem we have here, which is the big elephant in the room, is that the Auckland market—and the Auckland market drives the rest of New Zealand—is currently seeing a huge amount of property being bought from interests abroad, and that is pushing up the price of the market.

Ms Lee, next to my property in Auckland, there recently was a 550 square metre piece of land carved off the next-door neighbour’s back lawn. What would a 550 square metre piece of land go for in the Wairarapa, Mr Hayes? Probably—I do not know—$50,000, $60,000, $70,000, or $80,000. At that particular auction, that small pocket of land the size of a handkerchief in Auckland went for $1 million—$1 million—and it did not go to a New Zealand buyer. It did not go to a New Zealand buyer. It did not.

💬 Melissa Lee: How do you know they’re not New Zealanders, for God’s sake?

It did not go to a New Zealand buyer. Furthermore, the second and the third bidders on the property were not New Zealand buyers either. They were not. And all the people in our neighbourhood asked “How on earth will our own children and our own families ever be able to stay in our own suburb?”. We have lived there for 30 years, Ms Lee, and our friends in the neighbourhood who have lived there for 30 years all asked how our families are going to be able to afford to stay living in our own suburb. How are they going to stay living in our own suburbs? The answer, Ms Lee—

💬 Melissa Lee: Xenophobic racist.

No, I am not. The answer is to stop selling our houses and our land to foreigners. Put a stop on it. New Zealand First is going to do it. New Zealand First is going to bring a halt to selling land if you are not a resident here or you are not a citizen here. We do not want you coming here and buying our houses. We do not want you coming and buying our houses, because what that is doing is making New Zealanders tenants in their own country.

At the same time, it is interesting that this building supplies bill is going to have an effect on local manufacturers. It is going to cause concern for some of our manufacturers of goods. It is also going to have questions about whether inferior products, building materials of inferior quality, will start to replace New Zealand - manufactured products. Questions are already being asked by some manufacturers about whether those products will come with the same level of warranties, guarantees, and longevity of product, and the source of those materials. Today on the stock exchange Fletcher Building, the largest company in this area in New Zealand, dropped 11c. Its shares are down 11c today. It has gone down 1.2 percent in capitalisation. That is about $75 million knocked off the Fletcher Building capitalisation. That is the first effect of this—Fletcher Building. If that is one indication, then I am sure that many of the other businesses involved in construction and that sort of thing in New Zealand will equally be going down.

So the effect of this is a trifling $3,500. It is a fictitious, contrived figure on a saving on a house that cannot be quantified. It is probably another one of the back-of-the-cigarette-packet formulas that the Government has worked out—$3,500. The Government should really get stuck in and say: “We’re going to have a land register in this country. We’re going to work out who owns the property, who owns the land. We’re going to work out how we can control it. We’re going to take the heat out of the housing market, and we’re going to help good Kiwi New Zealanders get back into houses.” The Government has done nothing, absolutely nothing, in this Budget for first-home buyers. It has done nothing for young working families—nothing at all—in terms of helping them get into houses, and the Government’s answer to it is to try to knock off the price of a few nails and a bit of gib board. Well, New Zealand First will not be going along with that.

It gives me great pleasure to rise and support this non - race-based piece of legislation, the Budget Measures (Miscellaneous Fiscal Matters) Bill. It is an omnibus bill that amends four other pieces of legislation. I support it at its second reading and look forward to its Committee of the whole House stage.

I am glad to have the opportunity to make a few more comments about the Budget Measures (Miscellaneous Fiscal Matters) Bill, which is the most insignificant contribution that could possibly have been designed. If the Government had set out to trivialise the issue of housing affordability in this country—if it had set out to disappoint New Zealanders who were looking for the Budget to actually make some meaningful contribution—it could not have designed a measure better designed to let people down and disappoint them.

I want to respond to some of the comments that were made by the member Andrew Williams about the issue of offshore speculators and how they are bidding up the price of houses in Auckland, and I want to respond also to a number of the comments and interjections that were made from the National benches. The National Government refuses to acknowledge that offshore speculators are bidding up the price of houses in Auckland and it is denying young Kiwi first-home buyers the opportunity to buy their own home.

I do not know why it is in denial. It refuses to recognise that this is going on. Everybody in Auckland knows that this is a reality. It is happening every day in real estate auction rooms all around Auckland. Young Kiwi first-home buyers are being outbid by offshore speculators bidding on the end of a phone. It is a reality, it is happening, but the National Government, for some reason, is in denial. We had Nick Smith in the House earlier this week trumpeting Inland Revenue Department figures that he purported to claim said that only 1 percent of properties were owned by foreign buyers. Well, he was misrepresenting the data. He was being far too cute, as Nick Smith is wont to be. Although the data is limited and not comprehensive, I think it is pretty clear to most observers that at least several percent of the houses that are being bought in the real estate market are going to offshore speculators.

Every time we raise this issue in the House, members on the National Party benches accuse members of this House of being racist and xenophobic. Well, I ask members of this House when it has been racist or xenophobic for a Government to stand up for its own citizens. That is all we are asking, but National is in such denial that it refuses to even collect the data. Nick Smith, on the one hand, says: “This is not a problem”—and that offshore speculators are not bidding up the price of houses in Auckland—“but the data is rubbish, and I refuse to even collect the data.” That is complete intellectual dishonesty, and it shows that this Government is running scared because it knows that New Zealanders care about this problem. In fact, all of the polls on this issue indicate that by a ratio of 2:1, New Zealanders want restrictions on offshore speculators.

Nick Smith has also been going around saying that it would cost a packet—in fact, he said that it would cost mega-millions—to even collect the data on offshore speculators.

💬 Hon Clayton Cosgrove: They’ve got a department of statistics.

Yes, the Government does have Statistics New Zealand, but even so, there are cost-effective and reasonable ways to go about solving this problem. It would be as simple as requiring the conveyancing solicitor to certify on the sale and purchase agreement whether or not the purchaser was a New Zealand citizen or a New Zealand resident. In the case of companies and trusts, you simply apply the Overseas Investment Act criterion, which means that if there is a beneficial interest or a foreign shareholding of 25 percent or more, then you regard the entity as a foreign entity. It is as simple as that. It would cost hardly a thing. The Government could have done this months ago, and it could have settled this debate once and for all.

I think this is a great Budget. The Budget Measures (Miscellaneous Fiscal Matters) Bill is a superb piece of legislation. I support it. Thank you.

Clayton Cosgrove—a 5-minute call.

That was an outstanding contribution from the member for Wairarapa. I think the shorter his speeches, the more outstanding they get. The Budget Measures (Miscellaneous Fiscal Matters) Bill is an interesting bill in that it is sort of one of the big hits, one of the big platforms, for the National Government. I will leave it to my learned colleague Moana Mackey to deal with the climate change issues, but I am intrigued by the two other propositions contained within this bill.

These include, namely, the cheque duty, which, in some sort of spin, the National Government promoted as a big sort of tax saving and cost saving hit for the populace. I am assuming that Mr Foss, the Minister of Commerce, being, as he is, a Minister who covers all the details and knows everything that is happening in his portfolio, would have canvassed the Bankers’ Association, and it told him that people now write out, on average, seven cheques per year, and that this would give an absolute net saving of 35c a year—35c a year. I know that Mr Hayes would be astounded by this. You know, he would be going back to the people of Wairarapa and going around every outlet that he could. He would be standing outside every bank branch, handing out his business card and saying: “I have delivered to you, the people of Wairarapa, 35c per year. You should be grateful.” If he was standing again, they should vote for him again—that is what he would be saying. He will be telling the new candidate to go around and do that. I am sure that he will produce a pamphlet, and the pamphlet may well cost more than 35c to produce, but he will hand it out, saying: “Be grateful. The National Government has provided you with a huge benefit.”—that is, 35c a year.

Then we come to the great sort of housing policy. I did note that when Mr Foss talked in his address about this wonderful $3,500 that he would save New Zealanders on the construction of their new homes, he used the words “might”, “could’, and “maybe save it”. He did not tell us how he actually calculated the $3,500 saving that would be made in construction costs. He did not tell us that because, I suspect, there is no analysis. He did not tell us that, at all. He said: “It might save three and a half grand. It could save three and a half grand. Maybe, if we are lucky and people believe us, they might get a few shekels back.” I note that the measures are temporary. They are for only 3 years. It begs the question: has any work been done as to the impact, positive or negative, in respect of the industry? I suspect not, and that is why the Government has put it in for 3 years. If it was sure of itself, it would be a permanent disposal.

But then you look at the list. You look at things like varnish. I am a bit old-fashioned, and I call it shellac, and there is plenty of political shellac in this legislation. If you look at the conveyancing cost and perhaps the consenting cost of a new home, the $3,500 would not cover even that expense. So somehow New Zealanders are going to be so grateful to the National Government for the fact that, allegedly, they are going to save, in building cost, $3,500, when we know that last month alone the cost of construction in Auckland in 1 month went up in excess of $6,000. So this will give people a couple of weeks’ break—temporarily—and then it will be superseded by probably 200 percent or more, if those figures are consistent increases, month to month, and people will save absolutely nothing. So it is smoke and mirrors. It is worse than smoke and mirrors—it is political shellac.

So on the one hand, if you are out there in cheque-writing land, brace yourself because you are going to get 35c a year back, and according to the National Government, you should be damned well grateful for it—

💬 Phil Twyford: Happy days.

—happy days are here again—and if you are a homeowner in Auckland or in other places, you might have sat back last night, read the paper, and said: “This is not too bad. Maybe it is a heat pump, or half a heat pump.” You know, mum and dad might have sat back and said: “This is not a bad start.”, until they realised that a 200 percent increase last month would have left them in negative territory. So I say to Mr Foss that it is not good work; not good detail. I will look forward to the Committee stage, when you tell us how you get to $3.5k and what the impact will be, in that detailed analysis that you and your department have embarked upon, so that you can actually tell New Zealanders and they can be confident that you are telling the absolute, detailed truth and you are guaranteeing them $3,500 a year in savings.

Bill read a second time.

In Committee