Taxation (KiwiSaver HomeStart and Remedial Matters) Bill

on behalf of the Minister of Revenue: I move, That the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill be now read a second time. As the title of the bill suggests, there are two parts to this tax bill. The first part supports the Government’s HomeStart package for New Zealanders who are saving to buy their first home by extending the current KiwiSaver withdrawals for first-home buyers from 1 April 2015. Currently, KiwiSaver members who are purchasing their first home can withdraw the contributions that they and their employer have made in order to supplement their deposit on a first home. What this bill does is allow them to also withdraw their member tax credits. This will give those KiwiSaver members who have been in the scheme for 5 years access to an extra $2,500 or an extra $521 per year to pull together that deposit. They will not, however, be able to withdraw the Government’s $1,000 kick-start contribution. This is to ensure that the member’s KiwiSaver account remains open and active after the withdrawal of the eligible funds for their first-home deposit.

These proposals are part of the Government’s broader programme for assisting New Zealanders to pull together that all-important deposit for a home, and they are also about incentivising the land development sector to produce more homes within an affordable range. This is the most generous support that the Government has provided for people wanting to own their own homes since the days of the State Advances loans, and since the time when people were able to capitalise their family benefit. If you take, for instance, a typical couple in Auckland earning the average wage, after a period of 5 years they will now have access to $35,000 out of their KiwiSaver, and adding to that the $20,000 grant from the Government, they will now have, with no other savings, access to $55,000 to put a deposit on a new home. When you add these schemes together with the Welcome Home Loan, which enables an exemption from the Reserve Bank’s loan-to-value ratios, it would mean that that person would now be in the market place to be able to afford a home in Auckland of up to $550,000.

That is a real step forward for Kiwi families that are having that challenge of being able to own their first home. But this package also needs to be seen to be aligned with the real challenge we have, which was identified by the Productivity Commission. What it said was that over the last 30 years, because of difficulties in getting land subdivisions through the Resource Management Act, there has been a real switch to new homes—

💬 Grant Robertson: Ugh!

—meeting only the very high end of the market. Well, I will give Mr Twyford the numbers. In the 1970s, 37 percent of the new homes that were built were below the median price. That figure recently got down to just 5 percent. So the Government is saying that we need to reform the Resource Management Act to make it easier for the development sector to produce more affordable homes, but we also want to feed the demand element and actually provide an incentive for that sector to produce homes within these price ranges: under $550,000 in Auckland, $450,000 in places like Christchurch, and $350,000 in centres like Southland.

This is a very good programme, and I was intrigued during the election campaign, when members opposite said that they opposed this bill. They spoke—in one of those sorts of vox pop opportunities—to a young person who said that they really liked this policy because it empowers young people to go and buy the home they want, rather than having to get a home that was, in Labour’s view, to be built by the State. We are a party that believes that people should have the choice and that the market should be able to have the incentives to produce—whether it be a townhouse, whether it be an apartment, whether it be a quarter-acre section—what New Zealanders actually want, and our policy provides for that flexibility. I have received letters and I have met with hundreds of young New Zealanders who will welcome the introduction of these incentives on 1 April—which is, as I have said, the strongest support that a Government has provided for first-home buyers in more than a quarter of a century.

The second part of the bill focuses on making sure that tax rules are applied consistently and fairly—in this case, in relation to new rules applying to veterans’ entitlement schemes contained in the Veterans’ Support Act 2014. To ensure that the income replacement payments made to New Zealand veterans are taxed correctly, the bill introduces several amendments to the Income Tax Act 2007 and the KiwiSaver Act 2006. The proposed changes will make it clear that veteran income replacement payments will be treated in the same way as ACC income compensation for taxation, for social policy, and for KiwiSaver purposes. The amendments also clarify that KiwiSaver deductions can be made from veteran income replacement payments, but that the KiwiSaver automatic enrolment rules and compulsory employer contributions will not apply to these payments. These proposed changes will take effect from the date of enactment, with the exception of the corrections to the retirement lump sum supports, which will apply from the date of the enactment of the Veterans’ Support Act 2014. The amendments are important to give veterans who are receiving income replacement payments clarity on the correct tax treatment of those payments, and to do it in an equitable way so that they are not disadvantaged.

These are the main two proposals in the bill. In addition, I wish to advise that I shall be introducing amendments to the bill by way of a Supplementary Order Paper in the Committee of the whole House. The reason for these amendments is to further enhance access to the KiwiSaver first-home withdrawals with some technical corrections to the drafting. The issue there, which will be dealt with in an Supplementary Order Paper, is that the Government is very much wanting to provide the incentives for new homes, and one of the practical difficulties for a KiwiSaver member who is withdrawing their money is that the current law does not give them access to the money to put down a deposit on a new home construction. That Supplementary Order Paper will make that easier, and that will enable us to be able to use the KiwiSaver scheme and these withdrawal tools to be able to support the construction of new homes.

Can I conclude by thanking the Finance and Expenditure Committee for its consideration of the bill and for the recommendations that it has made on the basis of those submissions. I commend this Taxation (KiwiSaver HomeStart and Remedial Matters) Bill to the House.

There is a certain appropriateness that the Minister the Hon Nick Smith, who delivered that speech on behalf of the Minister responsible for the bill, was the person speaking about it—the “Minister for Blather and Excuses on Housing”, because that is what he is. He is like a man in a dinghy facing a tidal wave, desperately paddling round in circles, going absolutely nowhere as the housing crisis overwhelms him. Of all the things that we could be debating today about what to do about the housing crisis in New Zealand, about how we could make sure that young New Zealanders can achieve their dream of owning a home, about how we can make sure that there is something to stem the out-of-control housing prices in Auckland, about how we can actually increase supply in housing, and about how we could manage demand in housing—of all of the things that we could be doing today, the Government brings to us this bill.

And its officials gave it a ringing endorsement in the committee!

💬 Hon Clayton Cosgrove: What was it?

They came to us and they said that they had looked at all of the information, they had looked at all of the background, and they were “tentatively positive” about it—

💬 Hon Clayton Cosgrove: Is that a direct quote?

—tentatively positive. Not positive but tentatively positive. That is a direct quote, Mr Cosgrove. That is exactly what the officials said. They said that they—

💬 Hon Dr Nick Smith: They were negative about your policy.

Dr Smith says they were negative about our policy. At least, Dr Smith, our policy builds some houses. At least we are about trying to make sure that New Zealanders have some houses built.

💬 Hon Dr Nick Smith: That’s right, we are—24,000 in the last year. Double the rate.

No, do not talk to us about consents, Dr Smith—actual houses. Things that people can live in. After 7 years of this Government, it still has not got a decent housebuilding programme going. And what it came to the Finance and Expenditure Committee with and what it comes to the Parliament today with is a bill about which the best thing officials—its own officials—can say about it is that they are tentatively positive about it. In the end they basically said it would do no harm. That was as good as they got to—that it would not do any harm. Well, that is good news, is it not? The Government has introduced a piece of legislation that is not going to harm people. That is fantastic news from the Government.

The officials were asked a number of quite simple questions about this. Will it improve homeownership? No, was the answer to that question. They expect the impact on the proportion of owner-occupiers to be small, as most recipients of a KiwiSaver HomeStart grant would have purchased their home eventually anyway. Although the grant will make a contribution to the ability to raise a deposit, as Dr Smith has told us, a quote from the officials is that “… the grant makes no difference to the cost of servicing a mortgage.” That is the reality: the overall price of housing, particularly in the Auckland region is now so out of control that this is actually just tinkering around at the edges. So the officials told us, no, it will not make a big difference to homeownership.

Will the changes benefit supply, the officials were asked; answer, no, it will not benefit supply. Advice to the Government noted there was already substantial demand for homes at the lower end but it was simply not profitable enough from a developer’s point of view. At best, officials told us, they indicated that the subsidy may have an impact on—get this—a couple of hundred homes; a couple of hundred homes. There is a shortage in Auckland right now of 18,000 homes. That is just to get ourselves up to where we need to be, let alone the building of an additional 10,000 on an annual basis. For this piece of legislation, the best that the Government’s own officials could say was that it might mean a couple of hundred extra homes. It is the very definition of tinkering around at the edges of a significant and major problem for this Government.

On this side of the House, when we introduced the KiwiSaver scheme, it was always designed with the idea that it could be used by people buying their first home, to be able to use that money for a deposit on a house. We do not have a problem with that. In principle, this idea is one that potentially could have some merit, but in the end, it simply does not address the core issues. What it really does not do—in a supply-constrained environment, this really is the equivalent of trying to put out a fire by putting petrol on it. Yes, we will open up the possibility of some people, perhaps a few hundred, to be able to take some benefit from this, but the reality is—and different from when we first introduced the KiwiSaver scheme—we are now existing in a very supply-constrained environment, and this is what the Government thinks is the most pressing and important thing that it can bring before the House.

We had some interesting exchanges in the select committee with the officials who came to see us, and we learnt a lot during that about sartorial issues for members of the officials who came in and saw us. It was quite clear from the officials who came from the Ministry of Business, Innovation and Employment to brief us that this was simply something that the Government had proposed during the election campaign. It was a desperate bid, when Labour’s KiwiBuild policy was out there and the Government had nowhere to go, and it went for a policy that it thought would be popular. It was and is essentially a gimmick. It does not change very much at all, and yet this is what the Government would have us believe is the answer to housing problems in New Zealand.

It is quite clear, when we are looking at average house prices in Auckland of around $750,000, with increases in the prices month on month—we hear 3 percent one month, we hear 5 percent another month—that we know all of those things are adding up to a pressure cooker housing market. So it is all very well to have a policy like KiwiSaver HomeStart, but with the loan-to-value ratios and their impact, and, fundamentally, the failure to build affordable housing, this simply goes nowhere.

It is interesting that on a day in this House when the first three questions on the Order Paper during question time were to the Government around its absolutely failed social housing experiment, which nobody wants a bar of in the third sector, this is the bill we are now debating. It is quite clear to us on this side of the House that the housing market is in failure, the housing market is in crisis, and it requires significant Government intervention to deal with that. The Government’s response is to sell the houses that it owns. That is the Government’s response to this. This is not the time to sell houses; this is the time to build houses. This is the time to use the power of the Government to build more houses, to use the fact that the Government can borrow more cheaply than the average homeowner, to use the fact that the Government is the controller of more land, and to use the fact that the Government can do things on a scale that no other developer can to actually correct the failure that is in the market right now.

We want to be very clear on this side of the House that this is a question about both supply and demand within the housing market. We heard Bill English say the other day that he did not want to do anything at all to meddle in the demand side of the equation. Well, failing to meddle in either side of the equation is the problem for Bill English at the moment. The housing market is a broad thing. If we are not building enough affordable houses, it puts pressure on the rental market. If there is pressure on the rental market, that pushes up rents, and that puts more people towards the need for social housing. The response of the Government is to sell off that social housing. The fact that it does not understand the connection between all of these things in the housing market represents an absolute and total failure of this Government to have a proper, coordinated, and connected housing policy. When we come to a piece of legislation that the Government’s own officials can bring themselves to only tentative positivity for, for one that they say will not do any harm—

💬 Hon Clayton Cosgrove: Not a lot of good.

—but not much good at all, Mr Cosgrove—that is a failure of this Government.

The Labour Party will support this piece of legislation because it does something. It allows the KiwiSaver HomeStart policy to be put into practice. We will support that. We think that is something that should happen, but be under no illusion—this does not solve the problem. This will not build more houses. This will not see more New Zealanders able to fulfil that Kiwi dream, any more than any tinkering that this Government would bring to the House would. What we need in housing is a large-scale building programme of affordable housing and we need to ensure that the rental market is kept under control. What we must not do is sell off the social housing that underpins the housing ecosystem in New Zealand. This tinkering legislation is emblematic of a Government that has no idea how to deal with the housing crisis and is failing New Zealanders.

Are we not lucky to have an academic from Wellington who tells us how the housing market works? That member would have no idea what a house even looks like, let alone how to build one, and then he wants to be in control of the market.

The whole of the speeches of the Labour Party members have been about a large-scale Government building programme. Let us go back to communism, let us go back to the 1950s, let us go back to the Soviet era, and let us have a 5-year plan. Let us make it a 10-year plan. Let us see how they build those houses. I bet you they will be lovely looking houses—will they not—that will all look the same. They will all be on streets named after Grant Robertson or somebody else, and they will all have the same number. They might put A, B, C, and D, just to make it different, so that you can actually put mailboxes on them. With New Zealand First, they would need three mailboxes per house. Under the Labour Party the houses would all be the same colour, because you cannot have anyone having a different colour. You might be able to paint the garage roof if you are lucky. The houses will all be pointing the same way. They will all have the same car out the front. Everybody will be in the same job and will be doing the same things, day by day. That is what the Labour Party’s vision of housing solutions is. That is what it believes in.

The Labour members—the 30 members, is it, of the Labour Party left—who are sitting in this House actually believe that they can determine what the future of the New Zealand economy and the New Zealand housing market will look like. I thought there was one line from Grant Robertson—well, there were a couple—where he really showed his true colours. He said that the National Party does not understand the market. That is what he said—that we do not understand the market. Well, that may be the case—that may be the case.

But one of his other lines was that the Government is the controller of more land that can be released. Well, I have never seen a Government development of land like that. Land is developed by the developers. It is not developed by the Government. If anything is in between the developer and the Government, it is called a council. And the council has the ability, then, to dictate how land will be developed. It is not developed by the Government.

So we get someone like Grant Robertson, who has some amazing plan to build these 30,000 houses, not telling you where you are going to get the people to build them, not telling you where you are going to get the infrastructure to put around them, not telling you where you are actually going to get the materials to build them, and not telling you where they are actually going to be built. But then, he is the controller of the release of land, is Grant Robertson. That is great to see, because that is not how the market works.

Let us look at how a market actually works.

💬 Hon Clayton Cosgrove: You tell us.

Yeah, I will, and you might learn something. In a market there are individuals called purchasers, and one of the things that they look for is the interest rates that they have on their house. In New Zealand, interest rates are now at 6 percent. Compare that with when the Labour Party was last in Government: interest rates were 10.9 percent. The biggest thing that determines the growth of the New Zealand property market is interest rates, because it is your ability to repay that banks look at. They will lend you the money, if you can repay. Even if you do not have the equity, they will lend you the money if you have the income. Nobody in the Labour Party would understand this, because nobody in the Labour Party has actually ever run a business. But if you ever ran a business, you would understand that your income-earning ability is the key thing. It is not necessarily the assets you hold; it is your ability to earn income, because that is the ability to service debt. Under National, the biggest cost for New Zealand households is now 6 percent, compared with 9 percent on that side.

💬 Stuart Nash: What’s it in Australia?

What is it in Australia? The member wants to know what the interest rates are in Australia. They are a little bit less than New Zealand’s interest rates, but that does not matter. We are not dealing with the Australian market, are we? That member over there may think he is in the Australian market, but he is not; he is in the New Zealand market.

If you look at house prices, though—house prices under the Labour Government went up 96 percent in 9 years. They went up 96 percent in 9 years under that Government. After the Budget in 2014 they had gone up only 28 percent under National—28 percent compared with 96 percent; 28 percent compared with 96 percent. Those are the numbers.

💬 Stuart Nash: That just proves that property’s in the doldrums, and Auckland’s housing market’s going through the roof.

The member over there is telling us his economic policy now. It is slightly different from Grant Robertson’s. That was: “We will build 30,000 houses.” But then that member is not really part of the Labour Party front bench. I ask the Labour Party members: if they want to see 30,000 more houses built in New Zealand, why do they not support the Resource Management Act reforms? Why do they not actually support things in this House that will enable that to happen? They do not, because they do not care. The only thing they have got is some whimsical promise that they can pluck 30,000 houses out of the air, in some Stalinist approach of economic management that Grant Robertson thought up on Kelburn Parade. He did not actually go to Auckland—none of them have actually been there and seen the market and what you have to do. This is the KiwiBuild of the Labour Party, which I am sure would be the flop of the Labour Party, as we all know.

This bill is a small bill. Nobody is going to deny that. It is a small bill. It does not make a huge amount of change.

💬 Denis O’Rourke: It doesn’t do anything, either. It doesn’t do anything.

Does it not do anything? It does do something. The member tax credit is what homebuyers under the KiwiSaver programme can now access. It does not enable them to withdraw their $1,000 kick-start contribution, but it does enable them to get the member tax credit.

💬 Denis O’Rourke: Where’s the Government’s contribution?

Where is the Government’s contribution? Well, it would be interesting to see where the Government’s contribution is when you consider New Zealand First, a party that does not support the road from Pūhoi to Wellsford, a party whose leader, in his speech last year in the election campaign, said no to that road—said no to the one thing needed in Northland.

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. You might be able to assist me. I do not believe there is any reference in this bill to a by-election, or the Pūhoi road, or anything else.

The ASSISTANT SPEAKER (Lindsay Tisch): No; you are exactly right. This is about KiwiSaver, and that is what we should be focusing on.

Yes, thank you, Mr Assistant Speaker. It has been quite a wide-ranging debate. I notice the Labour Party members never spoke about the bill. They just spoke about Labour’s KiwiBuild programme, which has nothing to do with this bill and will have nothing to do with anything that will provide a solution to New Zealand’s housing issues.

This bill does support first-home buyers, and it honours an election pledge that was made at that time. The HomeStart package that was debated during the election campaign comprised three changes, and one of these changes is in regard to helping New Zealanders through their being able to withdraw this tax credit, so that new homebuyers can get access to it. There are also some other changes in the legislation that are more subsidiary and relate to other—

💬 Hon Clayton Cosgrove: Subsidiary?

Subsidiary—that means secondary, for the member over there. He would not know what secondary is because he lost his electorate, but that is what it means in practical terms for you, Mr Cosgrove. In those terms, there is that part of the bill as well that deals with issues to do with veterans pensions. It is tidying up some effects that we have seen in the previous legislation in that area.

This is a bill that we will have support for from the other parties in this House, which is good to see. It is a bill that enables our New Zealand homeowners to access that part of the KiwiSaver HomeStart programme, through the ability to get that tax credit back. It is a bill that will be in the best interests of all New Zealanders. It is not a bill that is trying to create some kind of solution to a property market that is not possible, under what the Labour Party has said—building 30,000 houses through some grand Government programme that would make our housing estates look very one-dimensional and not be effective at all in providing opportunities for New Zealanders to get into their first home, or other home. So this is a good bill. It helps New Zealanders on that path. It is practical. It is real. It will work. It is not a dream, it is not a fantasy, and it is not some vision of the past that will never happen. Thank you.

This bill is a triumph of politics and spin over reason. But for any discussion of the bill, we have to understand the political context of it, and to do that we have to go back to the dying weeks of the last election campaign. What was going on? National was bleeding support on housing. It was in trouble on housing. Nick Smith, the Minister of Housing at the time, was staggering from scandal to fiasco. Labour’s KiwiBuild policy was extremely popular with the public, and the public could not understand what National was trying to do. They could not understand Nick Smith’s housing policy. He kept talking about the Resource Management Act and how we are going to change the planning rules, but all people wanted was for the Government—someone—to build more houses. But National, for some reason, refused to do that.

So what emerged from the vortex that is David Farrar, the National Party pollster; Steven Joyce, the National Party campaign manager; and Nick Smith, the hapless Minister of Housing, was this policy. The policy is called the HomeStart subsidies. What this bill does is enable aspiring homeowners to withdraw the Government contributions to their KiwiSaver retirement savings and use that as the deposit for their Welcome Home Loan. But the HomeStart policy was opposed by Bill English. He did not like it. His officials did not like it. Treasury did not like it. The Reserve Bank did not like it. The Ministry of Business, Innovation and Employment officials did not like it. But craven, cynical politics carried the day, and this policy was adopted. It was announced during the National Party election campaign because, you see, this National Party never saw a political problem that it thought could not be fixed by throwing truckloads of taxpayer cash at it. We have seen very graphic examples of that inclination that the National Party has in the last couple of weeks during the Northland by-election campaign, with the bridges of National Party significance and the Government throwing tens of millions of dollars at them without even looking at the cost-benefit analysis.

I think this bill is a perfect example of procrastination. We all know what it is like to suffer from procrastination: you have to do something, you have got to do it, but suddenly you find yourself compelled to do everything else—every other task—other than the thing that you have to do. In a strange way that is what is going on, I think, with National’s housing policy. The one thing that it should be doing is building houses. We have a housing shortage. What it should do is build more houses. That is obvious to everybody on this side of the House and it is obvious to the public, but what does National do instead? It blames councils; it blames the Resource Management Act. The centrepiece of last year’s Budget announcement was the lifting of anti-dumping duties on nails. I think that is going to save about $1,000 for property developers; certainly it is not going to save any money for homeowners. The National Government wants to sell a few thousand State houses. It has set up special housing areas where I could count on two hands the number of houses that have actually been built in a year and a half in those special housing areas. It has been a total failure as a policy. The crowning glory of this National Government’s housing policy is a policy that throws taxpayer subsidies into a market that is already supply-constrained.

💬 Hon Clayton Cosgrove: But doesn’t David Bennett say he knows all about the market?

Yes, David Bennett is apparently an expert in market economics and he says it is OK, so I guess we should all be reassured. So the one thing that it should be doing is building houses, and yet there is a long list of policies that either are not working or are going to make the situation worse. The showpiece of this fiasco called the National Government housing policy is the HomeStart policy, which has been criticised by Ministry of Business, Innovation and Employment officials, by Treasury officials, by the Reserve Bank, and by any credible commentator.

In spite of all this, and as Grant Robertson said, we are going to vote for the bill because the bill itself is relatively benign. The main thing it does is enable people to access the contributions that have been made to their KiwiSaver accounts for a home loan subsidy. So we are going to vote for that, but let us just look at what the officials said. Here is a summary of the officials’ advice to the Finance and Expenditure Committee. The overall impression was negative. The officials said that increasing deposit subsidies is likely to stimulate demand and thus increase prices in supply-constrained markets, therefore undermining housing affordability. Hello, National members—officials say that this is going to undermine housing affordability. What are you doing, housing Minister Nick Smith? You are actually making the situation worse.

This policy was discredited in New Zealand in the early 1990s—the very same policy. It was discredited more recently in Australia, and the Australian state and federal Governments acknowledged that this same policy made matters worse. The officials said that the likely cost of HomeStart—$100 million—could be better spent elsewhere. It is poor value for money. The officials also said that the higher income caps shift the Government support from low to medium income households to virtually all households. It reduces its targeting at the people who need it most. It actually makes the existing set of policies and subsidies less effective at helping the people who need it most. Officials also noted that half of the eligible sales of new homes last year were in areas where housing affordability is not an acute issue. It is a poorly targeted policy.

As Grant Robertson pointed out, the officials told the select committee that at best it might lead to the building of a couple of hundred extra homes—a couple of hundred. Well, if the members opposite need reminding—they should not, but in case they do—according to the Reserve Bank, Auckland has a deficit that was accumulated on this National Government’s watch of between 15,000 and 20,000 homes. That is the shortage that is driving prices sky high in Auckland as we speak. Under the very same Resource Management Act that saw the building of 40 percent more new homes every year under the Labour Government—40 percent more than this current Government is achieving—in Auckland the current build rate is only a little over half what Auckland needs just to stand still. That is just to keep up with population growth, never mind the 15,000 to 20,000 structural deficit of houses in Auckland that has built up under this National Government. How the mighty have fallen. Two years ago Nick Smith was the newly minted Minister of Housing—

💬 Hon Clayton Cosgrove: That’s after he was sacked.

Yes, after he came back from his time in purgatory. He claimed in an interview with the Nelson Mail that he was going to restore the Kiwi dream of affordable homeownership. How the mighty have fallen.

That Minister has presided over one scandal after another and one fiasco after another, and what characterises his tenure as the Minister—actually, at least he does something more than old Phil Heatley used to do. Phil, basically, used to do nothing. At least Nick Smith does something—he does photo opportunities. He has a continual procession of announcements and press releases and photo opportunities that are designed to make it look like he is actually doing something about the housing crisis, but he is a classic tinkerer. He never does anything that makes a significant difference. Look at last year’s Budget announcement of lifting the tariffs and anti-dumping duties on building materials. He claimed that it was going to save $3,500 per house—nothing of the sort. This measure, this HomeStart subsidy, is likely to actually make matters worse.

To the 90,000 people who will benefit from the changes that this Government is making to KiwiSaver, they heard it here today from the Labour Party. Labour thinks that having 90,000 people benefit from the Government’s changes to KiwiSaver is simply a gimmick. That is what Grant Robertson described this measure as this afternoon. He said that it was simply a gimmick. Well, to those 90,000 people who over the next 5 years will be benefiting from the ability to withdraw more money from KiwiSaver to use as a deposit to get themselves into a home, I say that this Government cares about homeownership in this country and that the Labour Party does not.

The Labour Party thinks that trying to help first-home buyers is a gimmick. The Labour Party thinks that this bill will do nothing to help them. Yet again, it is absolutely wrong. We have heard the speeches from Mr Robertson; we have heard the speeches from Mr Twyford. They do not support first-home buyers, like this Government does. I am pleased to be speaking on this bill. I am pleased to be speaking on a bill that will actually enable more people to access homes at an affordable rate.

There is a large number of challenges that we face when it comes to housing—particularly in Auckland, but it is also a nationwide issue—and I believe that this Government has a set of policies that is going a long way towards helping those who wish to get a house. Let us talk first about the fact that we need to have more houses built in New Zealand. I have been listening to speeches from the Labour Party members—it happens week after week—where they downplay and do not acknowledge the significant increase in construction that is taking place in this country.

If you want to get more people into houses and more people owning houses in this country, we simply have to be building more houses. But the building of new houses does not take place overnight, and the building of new houses is not something that I would ever trust any Government—particularly a Labour Government—to be involved in and to be doing for itself. The best way for houses to be built in this country is to have them built by the private sector. The role for the Government to play is to put in place the policies that enable the private sector to get on and build. The policy that the Government also has to be involved in is ensuring that there is the ability for people to access capital in order to access deposits so that they can borrow to build more homes.

I get sick and tired, just like every member of the House does, of hearing the Labour Party members talking about housing affordability. I remember going to the banks and asking for a mortgage in the mid to late-2000s when Labour was in office. I remember the mortgage rates being close to 11 percent. When I was purchasing a house in 2008 the mortgage rate offered by banks, under economic settings by that party, was almost 11 percent. Interest rates are considerably lower right now because of the economic policies that we are pursuing.

If Labour members want to talk about housing affordability, then I would like them to address the fact that under their economic settings, under their watch, homeowners were paying almost twice the amount that they are for borrowing. First-home buyers are the ones who are impacted the most when it comes to interest rates.

Another part of housing affordability that we need to consider in this House is the compliance costs that are put on those wishing to purchase houses and those wishing to develop houses. I heard some sounds coming from the New Zealand First corner. New Zealand First members are out there at the moment, trying to convince New Zealanders that they supposedly have had an epiphany and they now support Resource Management Act reform. We do not believe it. They do not believe it, either. They do not support Resource Management Act reform. That would be meaningful and that would lead to—

💬 Tracey Martin: I raise a point of order, Mr Speaker. Is the Resource Management Act in this bill?

The ASSISTANT SPEAKER (Lindsay Tisch): No, look, this is a debate where the Resource Management Act has been mentioned before. So long as the member does not concentrate on it and make an issue out of it, I am allowing it to happen.

I am sorry, Mrs Martin. I know that these issues are a bit sensitive for New Zealand First. I know they cannot handle some of the truth sometimes, but the fact of the matter is that along with a number of changes that we have in housing, including KiwiSaver changes, including special housing areas—

💬 Denis O’Rourke: National will not pass the Resource Management Act amendments because it will not win the Northland by-election.

Look, Denis, just go back to supporting marijuana. Go back to supporting marijuana, Denis. I know that is what the party’s new policy is.

💬 Denis O’Rourke: I raise a point of order, Mr Speaker. There are actually two points. First of all, the member cannot refer to me or any member by just a Christian name. Secondly, I take offence at being told that I support the legalisation of marijuana when I have never ever said any such thing.

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I hear what the member says. I ask the member to withdraw that comment and then proceed with the debate.

Sorry, what am I withdrawing?

The ASSISTANT SPEAKER (Lindsay Tisch): Withdraw the comment relating to marijuana.

I withdraw. I will refer to Denis O’Rourke—the list member of Parliament from Christchurch, with two letterboxes—by the correct name if he wishes. But the fact that I referred to something he did not like I think is something we should consider, because their leader has been out there saying some things on the hustings.

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. It is a Standing Order that members cannot challenge your ruling. You have ruled; he has withdrawn, and he is now referring to it.

The ASSISTANT SPEAKER (Lindsay Tisch): No, no, he has not mentioned the word again. I would ask that the debate comes back into focus here. But, no, he has not mentioned the word that I asked him to withdraw, so that is in order. Jami-Lee Ross, just focus in the last 4 minutes on what the bill is about.

Thank you, Mr Assistant Speaker. I am sorry that I get the members of the Opposition so excited. They get so excited because they do not like hearing about the strident steps that we are taking as a Government to address housing affordability in New Zealand. This bill addresses one of a number of steps we are taking.

I now would like to talk a bit more about housing and the fact that we need to build more houses. Whenever we hear the Labour Party members talk about bills like this, whenever they talk about housing, they do not acknowledge the fact that building is on the increase in this country. Residential construction is up 21 percent in the last year. In the last year 24,000 consents were issued—the highest number since 2008. If Labour members really want to support first-home buyers, if they really want to support building more houses, then they should get on board with the Government’s programme. They should be supporting the moves we are taking to build more houses, because it is having an impact.

If Phil Twyford ever wants to see the impacts of the residential construction and policies we are pursuing, I invite him to come out to the Botany electorate. If one wants to see residential construction taking off in a particular part of Auckland, the Botany electorate as it merges into the Hunua electorate is one place where construction is absolutely booming. I am looking forward to the Deputy Prime Minister coming to my electorate next month to help do another sod turning on some more development in my electorate. It is going ahead; it is happening fast.

The special housing area policies that we have put in place are leading to more construction. In my electorate the Flat Bush strategic area is going to be home to almost 5,000 new houses under that policy.

💬 Hon Clayton Cosgrove: How many now?

Clayton Cosgrove does not like the sound of it. Phil Twyford does not like the sound of it. But more Kiwis are getting access to homes under this Government because we are pursuing policies that will lead to more houses being built, will lead to more Kiwis getting access to lower mortgage lending rates, and will lead to more Kiwis getting deposits together so they can afford more houses. Overall, New Zealanders are going to be better off.

This Government does not shirk away from the important decisions that need to be made around housing. This Government supports Resource Management Act reform. This Government supports policies that allow developers to get out and build. This Government supports New Zealanders to get into homes. Mr Denis O’Rourke—the list member of Parliament from Christchurch, with two letterboxes—come on board with Resource Management Act reform. You know you want to—you know you want to. His leader is selling a song out there, up north, but they do not actually believe it is going to happen.

Let us all just calmly remember that the people who will benefit from this are young New Zealanders. This is not a gimmick. This is not something that goes nowhere. Grant Robertson was wrong when he used those terms. In fact, I think he was rather insulting to people in saying that the Government changing policies to allow more New Zealanders to access their own funds, to be able to put them into a deposit, so they can live that Kiwi dream of owning a home—to denigrate something like that, as Mr Robertson did, was appalling.

New Zealanders want to own their own homes. We are putting in place policies to help them to do that. I suggest to the Labour Party members that they start to realise what Kiwis want—that they start to realise that the Government building homes is not the way to do it. It is actually done by supporting the community, supporting New Zealanders, and supporting residential construction developers out there to be able to do it. We are putting in place those policies. I am proud to stand on this side of the House to say we are helping young New Zealanders. We are helping first-home buyers. They will see the results long term. They will be better off because of the settings and the economic policies we are pursuing. I do commend this bill to the House.

David Bennett in his contribution to this debate referred to this bill as a small bill, and I think that was generous on his behalf. As officials pointed out to the Finance and Expenditure Committee, this bill in fact achieves almost nothing. None the less, the small amount that it does contribute possibly is worth supporting, and we will vote for it in this second reading debate.

The Prime Minister said last week that there was no housing crisis. It feels very much like it is a housing crisis to those people who are increasingly shut out of homeownership. New Zealand has the lowest rate of homeownership that we have experienced since 1951—the lowest rate since 1951. Why is that a problem? It is a problem because New Zealand made a choice. Countries generally made a policy choice between comprehensive superannuation programmes or, alternatively, policies that supported comprehensive homeownership. New Zealand chose the latter of those. Our policy settings were designed to encourage almost universal homeownership because we were not going to provide comprehensive superannuation. So when we have our rates of near universal homeownership from the past actually declining to their lowest rate since 1951, that is a crisis, and it is a crisis because more and more New Zealanders are shut out.

We have particularly declining rates of homeownership amongst Māori and Pasifika New Zealanders and, indeed, from the increasing group of poor New Zealanders who are likely to see that they will never have the opportunity to own a home in their lifetime. That is a problem not only for them but for all of us, as increasing inequality has been shown to be. Inequality is a problem not only for those at the bottom at the heap but for the whole society. The whole society carries the costs of increasing inequality.

The consequence of that decreasing rate of homeownership is to throw more and more people on the mercy of the appalling rental market in New Zealand, which delivers extremely poor-quality housing in general. It delivers a very poor standard of rental security, which still exposes New Zealanders to increasing rental costs, right now at a 6.5 percent increase, year on year. And, as I say, there are those major consequences down the track for the retirement savings and incomes for New Zealanders. So the problem is not just theirs; it is also ours.

This is particularly a problem for young people, which is where this bill comes in. When speaking in the House last week I pointed out that for New Zealanders aged 20 to 39—a group of New Zealanders we would expect to be moving into homeownership, establishing families, and setting the foundation for their productive years as adults and for their retirement savings and incomes—homeownership declined from 61.4 percent in the 1986 census to 26.8 percent in 2013. It more than halved.

We have a plummeting rate of homeownership by younger New Zealanders—those aged 20 to 39. It is not only for the very young New Zealanders who may only just be moving into the age where we expect homeownership to be occurring; it is for that whole group. For New Zealanders aged 20 to 34, homeownership in the Auckland region declined in 2013 to 17.2 percent, and it is not much better in other large cities. So young people, I am sure, will have been thrilled to hear the National Party, in its election campaign just weeks before the general election last year, talking in terms of providing a handout or a hand up for those young New Zealanders and talking about how it understood the plight that young New Zealanders faced in trying to afford their own homes. It seemed like we had a National Party that cared about the plight of young New Zealanders.

However, I suspect that not many of those young New Zealanders looked at the detail of the policy that National was offering them. Nick Smith referred to young New Zealanders in his contribution earlier in this debate, when he said that they really welcomed what the Government was doing and had looked at the numbers, but I do not imagine that Nick Smith pointed out what those numbers were to those young New Zealanders.

The total contribution that this makes is $521 per person per year, and even that contribution will be at the expense of the person’s own retirement savings. This contrasts with a median house price in Auckland just now of $621,800, while the average median household income for New Zealanders aged between 20 and 34 is just $48,600. That $521 per person per year will go almost nowhere in adding to the affordability of housing for that group of young New Zealanders.

Steven Joyce in the House last week said he could not understand why it was relevant to compare median house prices with the median household incomes of young New Zealanders, but I can assure Mr Joyce that those young people understand. The overlap between their incomes and house prices is becoming smaller and smaller. It is drifting further and further apart. Homeownership is becoming an unaffordable dream for more and more young people in this country, and this bill does almost nothing to fix that problem.

That group of young people is the same group who is also saddled with high rates of unemployment. It is saddled very often with high and unaffordable student debt. Those young people are facing a situation where their own health and welfare is being put at risk by that financial situation, by the unaffordability of both buying houses and renting houses. But, also, this intergenerational inequity that the Government is feeding by its policies across the board not only affects those people now but will also affect them in the future when they come to retire, and it will affect the situation that their children will inherit.

There is a structural inequality that the Government is building into the New Zealand economy that will saddle this country with debt and with deep, and deeper, problems for generations to come. Against that picture what this bill does is essentially nothing. It is a demand-side stimulant, at a time when what we need to do is deflate the speculative market in housing, increase supply, and reduce demand. What the Government needs to do instead is tackle the root causes of the problem. We would suggest a five-point plan: a capital gains tax; restriction on homeownership and landownership by non-resident foreign citizens; accelerated intensification of building housing, particularly around Auckland’s public transport corridors; a regional development strategy to divert demand away to places that are supply rich in housing but currently job poor; and, potentially, different macro-prudential tools targeting the mark-to-market nature of valuation and its relationship to lending. That would be a package of measures that might actually start to address that problem.

There is nothing offensive enough about this bill to require us to vote against it. But what is offensive and deeply disappointing is a Government whose housing programme is based on unfettered ideology and a Government that seems to be bereft of ideas when it comes to actually ensuring that everybody in New Zealand is well housed. Thank you.

With this rather pathetic bill, National is doing just little things, just for show—things that do not go far enough to do any real good. In fact, this bill will go nowhere close to solving the housing crisis—and there is a housing crisis, despite what the Prime Minister tries to tell people. There is a housing crisis simply because first-home buyers have no hope in this country of being able to buy a new home unless they have a rich uncle or some other source of finance that most people actually cannot access.

National members opposite have tried to say that New Zealand First opposes Resource Management Act reform. Well, they cannot have listened to speeches given by New Zealand First members. We have never opposed Resource Management Act reform. In fact, I myself have given speeches in this House saying that the Resource Management Act does need reform especially as far as processes go. We acknowledge that it takes far too long and costs far too much money and that there are other barriers to sensible development in this country, and we do want to see sensible—sensible—practical housing for New Zealanders. We do not want to see the Resource Management Act amended as far as sections 5, 6, and 7 go. We have definitely got problems there and we will be talking about that when those Resource Management Act reforms come up for debate. But never let it be said that New Zealand First opposes sensible Resource Management Act reform for the purpose of assisting the provision of homes for New Zealanders.

This bill does recognise that first-home buyers cannot find the finance needed for a home these days. It is the one good thing it does do: it recognises a problem. What it does not do is actually do much about it. Simply giving people access to their own savings is a very low-level attempt to assist. They need much, much more help than that. This is a derisory method of assisting first-home buyers to buy a new home. It is only allowing access to their own money, and that is hardly ever likely to make the difference between a young couple getting the money they need for a deposit for a new home or not—hardly ever going to make the difference. For a few it might do—a very few. Worse still, even those who do make use of this facility will have to do so at the expense of their own retirement savings, and that is a very, very bad idea. And it actually should not be necessary for people to have to dip into those savings if the Government had the wit to put forward policies and facilities for people to be able to afford to buy a new home, and that fundamentally means raising a deposit and getting a reasonable bank loan.

If this Government was serious about assisting first-home buyers, it would provide a fund to do just that, or it would adopt the New Zealand First policy to assist first-home buyers to purchase a section for a new home on easy terms by paying back a loan for a section over 25 years at very concessionary interest rates and other policies that we have to support those objectives as well. The Government should just take a look at our policy, do that, and then it would be doing something sensible—something this bill does not get close to, because this Government is simply too mean, or is in fact too uninterested in the realities of the issue to do that. In fact, it is a bit like throwing a thimbleful of water at a bonfire. That is about the magnitude and worth of this particular bill.

Looking at the bill, the levels set out for the purchase of new homes in Auckland are just too low. The assumption is about purchasing homes around the half-million-dollar mark, when new homes at at least the $600,000 mark—and probably much closer to $800,000—is the reality of the situation. The Minister of Building and Housing obviously did not know that, because I heard him speak and he talked about this bill providing sufficient assistance for people to be able to purchase a home of $550,000. Well, it will not. It will not get there; it will not be enough. In fact, this Minister is nothing more than a master of spin. He builds facades, a bit like Juan Perón—building facades for people to look at, but there is actually nothing behind them. This Minister is a little bit like that. Builders and property developers these days are more interested in building premium homes where they get a much better return, not in building homes that ordinary people can afford.

So what does the Government really think it is doing to achieve anything with this bill? It will achieve something for very few people—very few—when there are literally hundreds of thousands of young couples in this country looking for much more assistance than that. This Government is simply not trying hard enough. Furthermore, the rate of increase in house price inflation is still much higher than the rise in people’s household incomes. Homes are getting further and further away for those people every day, and the Government is really not doing much about it except to tell people they can use their retirement savings. Well, that really is not enough—not enough to make any real difference. It does not address the real issues of assisting first-home buyers to obtain the finance they need.

Another problem is that there is growing unease that, actually, the Auckland housing market is a bubble, and a dangerously growing bubble fuelled to a significant degree by immigration numbers—a 30,000 increase in Auckland alone in the last year. Do not tell me that does not make any difference; everyone with half a brain knows that it does. It makes a big difference.

Beyond immigration, there is speculative foreign investment in the local market, which adds further fuel to the fire. The Government is not doing anything about that either. At some time that bubble is likely to pop with potentially huge damage to Kiwi families and massive social problems to follow. Where does it leave people whose retirement money could have been growing exponentially over that time but who have instead diverted it to housing? It leaves them in a position where their retirement savings are going to be degraded, and they should not have to do that. They should be able to save for their retirement and afford to buy a home in this country. We can do that, other parties seem to know how to do that, but National clearly does not have the wit to do anything about it.

This is short-term, band-aid thinking. It is a bill that is unobjectionable and New Zealand First will vote for it, but we know, as the people out there know, that a lot more than this bill needs to be done about the housing crisis—a very real housing crisis—in this country. In fact, this bill is probably actually fuelling fires, is probably actually counter-productive, and will certainly damage retirement savings. It is really a bill that is hardly worth having at all. It is doing next to nothing, but it is some possible help for a very few, so New Zealand First will vote for it on that basis. But we expect a lot better, and so do the young people of this country.

It is a pleasure to be talking on the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. As we all know, owning our own family home is not only a cherished Kiwi dream but actually a fundamental right of all New Zealanders. This bill is about helping 90,000 lower and middle income first-home buyers get on the rung of the ladder towards getting their first home. Housing has been a significant issue that this Government has been focused on. We have approached it at both ends in terms of trying to address the problem—namely, towards assisting couples to find the deposit for their first home and also trying to increase the supply of new homes, particularly in Auckland and Christchurch.

With regard to the second issue, the supply of housing, it is one of the most longstanding issues and many Governments have previously ignored or chosen not to deal with this issue. When the Prime Minister made a statement on 28 January this year on social housing he was committing this Government to actually doing something about it. It is great to see the new special housing areas coming into action, with 100 across the country and 80 in Auckland. In my own electorate of Hunua we have one of the largest special housing zones, Wesley, which will create between 4,000 and 4,500 new homes over the coming years, as well as Belmont, also in Pukekohe, which will bring in an additional 700 homes.

I have listened to some of the earlier speakers, including Mr Grant Robertson from Wellington. My suggestion to Mr Robertson is that he needs to get out and about. In my own electorate of Hunua I can talk to you about the number of new developments that are already under way. For example, if he chose to get in a car from the Auckland Airport and drive out to Beachlands and Maraetai—probably a 50-minute drive—he would observe that there is a population of roughly 8,500 people. By the year 2021 there will be 17,500 people in that area alone. When he drove around that area for the first time, no doubt he would observe great areas that have already been bulldozed and site works well advanced. The sections will be on the market in some areas already and other sections will be coming to the market over the next few months. There is a staggering amount of new developments there.

If Mr Grant Robertson then continued in his hired car and drove a matter of about 20 minutes, he would come across a place called Clevedon, one of the great places of my electorate. There he would observe, if he stopped for long enough, an area that will create 700 new homes over the next couple of years. If he travelled south to Pukekohe, he would then observe those two large social housing areas that will be an addition of 5,500 homes. If he also drove along to Pukekohe East, he would observe the diggers, the loaders, and the trucks undertaking significant earthworks that will create thousands of additional homes in my area. In fact, in my electorate, one of the biggest issues I have got is that there is going to be an avalanche of homes, and to get the council to support that with infrastructure is one of the major issues. But, in terms of the number of new homes coming on market, it is substantial, it is real, and you can see the new homes if you actually choose to get out and about.

What most people do not realise—just going back to the issue of social housing designations—is that the key requirement of those is that for developers, and I know that for some that sounds a very dreadful word, a crucial requirement is that they need to build amongst those groups of housing an element of affordable homes, and Pukekohe is going to be the better for it. Both of these two large social housing areas in my area will be important contributors towards addressing the issue of supply, which for too long has been stifled. I just want to quote some statistics because, again, there is no factual basis to a number of the presentations tonight. In Auckland, in the first year of addressing this issue of supply, just over 11,000 new sections and dwellings were achieved—20 percent above the target of 9,000. Overall, for 2014 nearly 25,000 building consents were issued across the country, and in January this continued with 1,700 consents issued—the strongest start to any year since 2008.

I just want to move on to some of the other announcements the Government has made towards addressing housing issues. We have previously noted that, firstly, we are going to be increasing the social housing budget by $40 million per annum, which will mean that by 2017-18 around 65,000 people or families will be able to benefit from increased income-related rent subsidies. Secondly, we are putting additional funds into the emergency housing sector and introducing an emergency housing database in Auckland. It is interesting. Yesterday I had the pleasure of visiting my Work and Income office in Pukekohe, and I spoke to a social housing adviser, who took me through the great work the office is doing in finding emergency houses for those people most in need. We are addressing this issue. Essentially, we want to help people move out of Government-provided housing into private rentals or, preferably, into homeownership if and when their circumstances improve. For people on a low income, this Government is providing a total of nearly $2 billion in subsidies. Around $1.2 billion of the accommodation supplement helps people with the costs of private rentals and sometimes mortgage payments. The other $700 million is for income-related rent subsidies, which support low-income people with the greatest housing needs.

As noted before, this bill is specifically about assisting our Kiwi families to enter the housing market. It will allow KiwiSaver members to withdraw their member tax credit when purchasing their first homes. The bill drives at the heart of the issue for many first-time buyers—namely, how to save a sufficient deposit to be able to put down an adequate deposit. It supports the HomeStart package announced during last year’s election campaign, which comprises three changes, which take effect in 8 days’ time. These include, firstly, introducing the KiwiSaver HomeStart grant. This doubles the support for buying a new home and increasing the house price limits. Secondly, it enables KiwiSaver first-home withdrawals by also including the member tax credit, which, in effect, means that someone who has been in KiwiSaver can withdraw all their KiwiSaver contributions, other than the $1,000 initially provided by the Government as a kick-start. And, thirdly, it expands the eligibility for the Welcome Home Loan by aligning the house price cap with the KiwiSaver HomeStart grant.

The new price caps—just to reiterate; I have heard people mentioning them—will be $550,000 in Auckland, and, by the way, you can buy a house for $550,000 in Pukekohe; $450,000 in the key centres, such as Hamilton, Tauranga, and Christchurch; and $350,000 in the rest of New Zealand. The KiwiSaver first-home withdrawal gives eligibility to those members buying a first home who have been contributing for at least 3 years. Additional criteria for the KiwiSaver HomeStart grant and Welcome Home Loan are having an income below $80,000 for a single person or $120,000 for a couple. The property being purchased must, obviously, fall below those price limits I spoke of.

This Government supports and favours those young New Zealanders who are disciplined and ambitious and who want to save up and put a deposit on a house. This bill will show people that if they can join KiwiSaver and continue to save, they can rapidly put together a deposit for their first home. As the Minister for the Environment noted earlier, these arrangements offer the capacity to provide up to $55,000 towards the deposit. It is a welcome addition, and these provisions, together with the low-interest environment that we have helped to bring about in this country, mean that our first home owners have a better opportunity to acquire their new home. Thank you very much.

I understand that the next call is a split call. Jan Logie—5 minutes.

The Green Party feels compelled to support this bill, the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill, not because we think this bill is adequate, or even, necessarily, sensible—but we do feel compelled to support it because things are just so bad that even token measures seem necessary and the least we can do. This bill will enable people who are currently eligible to use their KiwiSaver savings towards a deposit for their first home to also use the $521 member tax credit for each year they have contributed to the scheme. I will mostly speak about that, but I also do want to mention the other aspect of this bill, which, and I will quote the commentary on the bill, “would correct errors in the tax, social policy, and KiwiSaver treatment of income replacement payments made to veterans under the Veterans’ Support Act 2014.”—correct errors from 2014. To be honest, I am losing count of the number of times I have been in this House speaking on legislation that seems to be fixing recent mistakes. Government, your masquerade of competence is slipping, and I am sure that members of the public in New Zealand are increasingly seeing the incompetence that underlies it.

But to get back to the main aspects of this bill, last week, as my colleague has said, the Minister said there is no housing crisis in New Zealand. It does seem reminiscent of that Blam Blam Blam song “There is No Depression in New Zealand” to be hearing that—

💬 Catherine Delahunty: No sheep.

There are no sheep in this country, yes. No cows. We have no housing crisis, although we have the lowest rates of homeownership since 1951, and although the average median house sale price in Auckland last year was $621,800—$621,800 for the average median house price last year in Auckland—the median household income for Aucklanders aged 20 to 34 was just $48,600.

I think it is important to focus particularly on young people in this debate, because it has been pointed out, I think, many times in the public arena that we are now facing the first generation post-colonisation who are likely to be worse off than their parents. So much for aspiration. So much for the drive for people to provide something more for their children. What successive Governments have provided for the young people of this country is less opportunity, more debt, and more struggle. And while we are looking at a 20 percent deposit on that average house price in Auckland, requiring $124,360 as a deposit in Auckland on a salary of $48,600 as the household income, we realise just how out of reach it has become. What will this bill provide with that extra $521? Assuming a young person has been a member of KiwiSaver from its inception in 2007, the most they are likely to have by the time this bill comes in is an extra $4,168 towards that deposit of $124,360. Come on. Is this really the best we can do as a country?

Sitting suspended from 6 p.m. to 7.30 p.m.

As I was saying, what this will do, at the very best, is give people maybe $4,000, more likely $2,000 or less, towards, in Auckland, an average deposit of over $120,000. Last night I was speaking to a caregiver who is working full-time doing hard, intimate, and life-holding work, and after her rent she has less than $200 a week to pay for her food, the care for her child, her transport, and her daily needs. Tell me: how is that person going to pay for the extra $114,000-plus towards a deposit for a house? She is not going to be able to. This bill, although we support it, is absolutely pitifully inadequate for addressing the needs of the people in most need in this country.

There are times when the Green Party and I have disagreed on some things, but I have got to say that that last contribution summed up, I think, the piffle that this bill is.

This is the National Party’s big hit—this is the big hit from the National Party. The National Party, effectively, is telling voters—typical of the National Party, to give with one hand and take with the other—in this bill that out of the generosity of its heart people can unleash, or will be able to withdraw, their retirement savings to use as a deposit on a home loan. But in return for sacrificing their retirement savings, the extra amount that people could withdraw as a result of this bill would be equivalent to less than 1 month of Auckland house-price inflation. That is how generous these guys are: the $521, which the Green colleague was talking about, is worth less than 1 month of Auckland house-price inflation. So when Government members talk about the 90,000 people who are supposed to sort of go down on their knees and thank the National Government for its great generosity—it is equivalent to less than 1 month of Auckland house-price inflation.

You have got to say that as a Minister—Nick Smith has been in and out of the Cabinet half a dozen times, and I have been a Cabinet Minister—what you look for from official advice is some sort of affirmation. You turn to officials in your ministry, who are the specialists, the people with skills, and you say to them: “Look, is what I am about to propose going to work?”. Well, he did that, and their words will hang around his neck as a political epitaph. When we asked the Ministry of Business, Innovation and Employment officials, as other colleagues have said, in the select committee “How good is this going to be?”, the best they could do was call it “tentatively positive”. Well, that is a ringing endorsement! Maybe the official who answered had calculated that if he unlocked his KiwiSaver, he would have the equivalent of less than 1 month’s housing inflation towards a deposit. No wonder he was “tentatively positive”. That was the official advice.

But, worse than that, when you look at the overall advice by the various Government agencies, the cracker for me is where they say: “Increasing deposit subsidies is likely to stimulate demand and thus increase prices in supply-constrained markets, thereby undermining housing affordability.” We had a great lecture on what a market does from that genius from the Government David Bennett, and he explained to us, in his own fifth form economics type of way, what a market does. The problem for poor old David Bennett is that he did not read the advice from specialist economists advising him and his own Minister that this is a dud. Then the advice goes on: “The higher income caps shift the government’s support from low to medium-income households to virtually all households.” And it goes on to say: “Half of the eligible sales last year were in areas where housing affordability is not an acute issue.”

So these guys have come up with an absolute cracker. Their gift to those people who want to get on the housing ladder is less than 1 month’s Auckland housing inflation—$500 and some—and they expect the people of New Zealand to go down on bended knee and be grateful for that. This is the big hit, we are told. They talk about 90,000 people. Well, at best you might get 90,000 people who get 500 bucks a month per year towards a deposit, as the Green colleague said, of over $100,000. How generous is that?

So I say to the National members, as Andrew Little said to your leader, “Cut the crap.”—cut the crap.” I think I know which turkey is going to call for the early Christmas—the speaker who is going to be next. I would like him to get up and address and rebut the official advice from his own Government’s agencies that says that this bill is a dunger. We will support the bill because I suppose 520 bucks once a year is better than no bucks once a year. But let us not dress it up. This is mutton dressed up as mutton from the National Party; nothing more, nothing less. The ashen-faced performances of such enthusiasm by people like Jami-Lee Ross and that economic genius David Bennett, the man who knows everything about markets, do not alter the fact that this bill is a dunger. It is $521—[Interruption] Mr Ross can laugh. I ask him to get up and take a call and tell us how 1 month’s—

💬 Jami-Lee Ross: I have taken a call today.

Have another one, mate; have another one. We will do you slowly. How is less than 1 month of Auckland housing inflation going to help the average New Zealander get into a home? The bill is a dud and it is a con.

It gives me pleasure to speak to the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. I am encouraged to hear from across the House general support for this bill, despite the comments made by Opposition members. Despite the criticism, the moaning, the whingeing, and the whining, they are willing to support it. I guess they are saying it is “tentatively positive”. Those would be their words. I guess they are tentatively positively supporting this bill at this stage, which is a good start.

The environment for housing could not be better. There is a building boom on right now in Auckland and right across the country. There have been 23,000 new housing consents issued. We have had descriptions of the Hunua electorate where you can drive endlessly to see new building sites. New subdivisions have opened up, including Hunua and Botany, which were used as examples today. This bill means that more than 90,000 low and middle income Kiwis who are first-home buyers are eligible to a doubling of support. That is a good thing because it gives young Kiwis, first-home buyers, a greater chance of getting into their homes.

This bill is not a silver bullet. There is no silver bullet, as Mr Cosgrove was suggesting. This is part of a considered package of economic development that drives our economy and has driven interest rates down to as low as they have ever been, giving first-home buyers an even greater chance to access their first homes. The interest rate is the most important cost to a first-home buyer’s budget. We know that, as has been said earlier, it was 11 percent 6 years ago. It is half that rate today.

Although there is general support I also heard a lot of criticism of the policies of this Government. As we know, we have talked about demand and we have talked about supply, but can I just reiterate that the supply of housing has been increased dramatically. The special housing areas will make a difference. They are making a difference, and they will continue to make a difference. As we know, you cannot get consent through the Resource Management Act overnight to build a house, which is a completely different subject, of course, but that leads us on to Resource Management Act reform, which is so essential to getting these houses built in a timely manner.

It was a little bit concerning to hear the Labour Party’s option of solving the housing problem, which was to build their own. A Labour Government would build houses. That is its solution—its silver bullet. I am not sure where Labour would build them, but I assume in Auckland. I am not sure whom it would buy the land off, but I assume the owner of the property would see it coming, because that is what happens when a Government agency comes in with its cheque book. I would assume that Labour would do its best to pick the best place, the most appropriate place, for the people of Auckland to live in. That is just totally patronising. It is none of the Government’s business to tell the population where they should build their homes and where they should live. Building houses under the design of Mr Grant Robertson would be frightening—it would be frightening. I am not sure what he would have in his house but it would be different from mine.

Then we had the solutions—the silver bullets, if you like—from the Greens. They talked about five points, and I managed to write down only four because I was giggling in my shoes at their suggestion of a capital gains tax, for a start. A capital gains tax is exactly what you do not want when you are trying to solve a housing problem, particularly if, I am assuming, a household would be exempt. If you have got a capital gains tax and you exempt your house, it drives people, obviously, to jump through the loophole and buy the biggest, the flashest, and the most expensive home that they can possibly afford. That simply drives up the price of homes. That is what will happen, given the proposal of a capital gains tax with a household as an exemption.

The second point raised was about restricting foreigners. We have heard before about the registration of foreigners—they are coming in with their money, and we do not want their money, of course, because money from offshore is a bad thing. That is, unfortunately, a very naive assertion coming from the Greens. We know that New Zealand as a country is short of capital. We are screaming out for capital. We are trying to attract capital to our regions. So restricting foreigners would not only drive capital away from New Zealand but drive it away from our regions in particular, which is exactly where we would like some investment to be made by foreigners, even those Asian foreigners—the foreigners whom the Opposition would like to put on a register. A register of foreign owners is only going to turn them away. It is only going to encourage them to invest elsewhere. It is only going to encourage them to go to Australia. What also happens—[Interruption]

💬 Mr DEPUTY SPEAKER: Order! Can the member take his seat. I encourage the member Tracey Martin to take a breath. Interjections are supposed to be rare, reasonable, and witty if possible, not a constant barrage.

Thank you, Mr Deputy Speaker. I was talking about this registration of foreign owners, which is only going to turn capital away from New Zealand and from our regions. Of course, when you create rules you also create loopholes. That register would only create loopholes. So when a foreigner comes in to buy something that I might own, like some shares in Chorus, and I go and choose to buy a home in Auckland, would I be registered on the Opposition’s register? Such are the loopholes that you suggest and that people would take advantage of. The fourth silver bullet, if you like, from the Greens—

💬 Stuart Nash: I raise a point of order, Mr Speaker. I heard what you said about Tracey Martin, but the member has spoken for about 6 minutes on things that are completely unrelated to this bill whatsoever. I think what Tracey Martin was doing was highlighting the fact that she wants to know what is actually in this bill and how it is going to benefit Kiwis.

💬 Jami-Lee Ross: The debate so far has been very wide ranging on housing. This deals specifically with housing solutions, and I think that is why the member has been focusing on housing.

💬 Mr DEPUTY SPEAKER: I thank the members. I take the points. I will continue to listen closely. I do acknowledge that the debate I have heard so far has been wide ranging, from both sides. Please continue.

Thank you, Mr Deputy Speaker. I was talking about the Greens’ proposal, which was mentioned in this debate, regarding the regional development project of targeting regions to build houses in. So you build houses in a certain place—but who is going to go there? You have got to create jobs. You have got to invest capital in the regions. You cannot just build houses where a Labour Party policy or a Green policy might choose to centrally control and dictate. You have got to leave it to the market to decide.

What this bill does—coming back to the bill—is it allows first-home buyers to choose where they buy their home, where they invest. They can come to Masterton or they can go to Wellington or to Auckland. This bill enables, and—as we are talking about demand—it does increase the demand for houses. That is absolutely right. It does that, but only in a very narrow section of the buyer market and that is the first-home buyer. Combined with the loan-to-value ratios, which exempt new homes, this is one of many policies—there are no silver bullets—that contribute to new families and young families getting into their first home. Thank you.

I am standing in support of the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. One of the reasons we are supporting this bill is that the officials said that this would have no impact. So it is not negative, but it is just not going to do anything. I suppose one of the things that has been interesting in this debate for me is not so much what is in this bill but the attitude of Government members to housing, and to this bill in particular. But I just want to start off by saying that this bill is shoddy legislation. It is all about style over substance. There are not 90,000 Kiwis who are going to benefit from this. The officials said there were going to be a couple of hundred. But this is one of those bills that are out there and it is trumpeted that 90,000 Kiwis will benefit. That is not the reality.

Let me give you a couple of examples. Nick Smith stood up in the first reading and said that what this will allow Kiwis to do if they are coming home is they can get the HomeStart package, they can get their KiwiSaver stuff, and they can get access to about $50,000. That example was actually a little disingenuous because if you have been away for 6 or 7 years, the odds of you putting money into KiwiSaver are remote, but let us say that Nick Smith is right.

Let us say that you have come home to buy your first house and you have got $50,000 in your back pocket because of this piece of legislation and because of the Welcome Home Loan, and this sort of carry on. Mr Smith said that it will allow Kiwis to get into houses in Auckland. He said that it will allow Kiwis to be able to afford a $500,000 house. Well, to be able to afford a $500,000 house you have to have a deposit of $50,000, so you have got to pay off $450,000 worth of debt. To do that at today’s rates, it is $743 a week that you are going to be paying off—$743 a week—and the banks like to have a ratio of around about 30 percent of your disposal income going towards paying off your mortgage. They allow for a little bit higher, but that is the ratio they are really comfortable with. Well, to do that, you have got to have a household income of $173,000 to be able to afford a mortgage of $450,000.

Nick Smith has the audacity to say: “This is going to be great for Kiwis who are just coming home. They can buy this house.”—and they have got a household income of $173,000? I do not think that is particularly realistic at all. In fact, they are more than likely, on the average wage, to be able to afford something that has around about a $175,000 mortgage if they are on the average wage of about $60,000. So the arguments over there just show how much this Government is out of touch.

I do not want to throw numbers around, because people get confused, but there are a couple of points that Jami-Lee Ross made that are just astounding. Jami-Lee Ross, an Auckland MP, actually said: “I am sick to death of hearing about the housing market. I am sick to death of hearing about our high-priced housing market.” Well, I would suggest that a whole lot of people who live in the city he purports to represent, let alone all over the country, are sick to death of not being able to even come close to affording a house.

For a whole lot of Kiwis now—a generation of Kiwis—the dream of homeownership has gone. Homeownership is not available. So, Jami-Lee Ross, what I say to you is, instead of saying to people who come to you: “I don’t want to hear about the housing market.”, how about having a little bit of sympathy? How about having a little bit of sympathy and saying: “I hear where you’re coming from. How about we sit down and work out a solution.”?

The thing for me is that Jami-Lee Ross said—and this is a man who in his maiden speech said that Maggie Thatcher was his political idol—that the market has a solution, and that highlights the absolute philosophical difference between Labour and National. National believes that the market has the solution; Labour believes that the markets are imperfect a lot of the time and that in a country the size of New Zealand, the Government has a role to protect the interests and the identities and the well-being of good, hard-working Kiwis. That is the difference.

I would argue that in Auckland the market has failed, and the reason I say that is that house prices have gone up at such a rate that homeownership is now unaffordable for a lot of Kiwis. In fact, Mr Bennett inadvertently played right into our hands because he said that under Labour house prices had gone up by 96 percent in 9 years but that under National it had gone up by 28 percent. Well, you know the reason why that is. It is that, under Labour, for 9 years the provinces boomed, and so what you had was house inflation over the whole country because people had jobs in the provinces, there were opportunities in the provinces, and people bought houses and they moved there. Well, I know—and you probably know yourself, Mr Deputy Speaker—that in the provinces—

💬 Mr DEPUTY SPEAKER: Do not bring the Speaker into the debate.

—there has not been house inflation; there has been house deflation.

This is a Government that has actually forgotten the provinces, and Alastair Scott got it dead right. He said that in order to have people go to the provinces, you have got to create jobs and opportunities, and that is exactly what Labour believes—exactly what Labour believes. But what has happened is that even the president of Local Government New Zealand, who was a National supporter—he is no longer a National member—said before the last election that this Government did not have a plan for the regions, and that is a damning indictment. But it makes me smile when I hear these guys say: “It’s the market—it’s the market.” The market has failed.

In Australia they introduced something like this. What they did for first-home buyers was to give them $20,000. It sounds fantastic, does it not? The immediate thing that happened was that house prices increased by $20,000. The market prices this sort of stuff in, and that is what the officials said. In fact, when we asked the officials: “Have you done any modelling on this?”, they looked a little sheepish and they said: “No we haven’t.” We said: “Well, what do you mean, you haven’t done any modelling?”—Mr Scott will back me up on this—and they said: “Well, we haven’t done any modelling.” And Mr Cosgrove said: “Well, have you talked to the different agencies? Do you know the benefit?”, and they said: “Well, tentatively positive.” “Tentatively positive” will, I think, be the quote that goes down in Finance and Expenditure Committee—

💬 Kris Faafoi: Absolutely tentatively positive.

Absolutely tentatively positive. For me, if we are going to do something like this, then it has to be a little bit more than “tentatively positive”; it has got to be absolutely stunning because this is about substance, and this is what Kiwis want to see. They want to see solutions. They want to see solutions, not window dressing, and I think that this measure is absolutely window dressing.

There were a couple of things that Mr Scott said. He talked about whether a capital gains tax would come in. You know, there are arguments for and against a capital gains tax, but he said that if a capital gains tax came in, it would force people to buy bigger houses. It is called the mansion effect and it has been completely discounted—I just wanted to put that on the table.

We do want to see a register of foreign buyers. I just thought I had better address that. I just think that all Kiwis deserve the right to know who is investing in their country, and I back that 110 percent and I would love to see this happen. That is not saying that we do not allow foreign investment in at all, because Labour believes that foreign investment is absolutely vital to growing a strong economy, but what we do want to know is who is investing and where they are investing—that is all. It is about to go ahead in Australia and in a lot of other countries.

But there is something else I would like to mention that has not been talked about—[Bell rung]; just for the last 2 minutes—and this is the veteran income replacement payments. This bill is not just about getting your money out of KiwiSaver and buying a house. There is some stuff here about veterans. There was a member of the Defence Force who was in the select committee the whole time. We tended to concentrate on the KiwiSaver stuff, but this was just as important as well.

What I would urge RSAs and veterans’ representatives to do is to understand the bill and to go out and consult. I did ask a question of one of the Defence Force staff when I read this part, and I said: “Hmm, hold on a second here. This isn’t as clear as it seems.”, and what this particular woman did say was: “Oh well, what we have in RSA is veterans’ advisers, who are very good at consulting and letting veterans know about changes in legislation.” But this is not quite clear-cut because what this is about is that there are changes being made to payments under the Veterans’ Support Act, and they have now got to be treated in the same way as ACC earnings - related compensation. What that means is that this has implications for veterans who have student loans and child support payments. It is going to increase those obligations, but it is also going to decrease the Working for Families entitlements for veterans.

So what I would urge every representative from every RSA around the country to do is to understand the legislation and put it down in plain English in all your newsletters that go out to veterans, and I would urge veterans to sit down and understand the implications of this. It is not quite as clear as I initially thought when the bill was going through the select committee. It was not until we actually sat down that I said: “Oh, I now see.” So I urge all veterans and veterans’ affairs people to understand the bill and communicate that well to their constituents. Thank you very much.

Thank you for the opportunity to speak on the second reading of this Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. I stand in support of this bill. This National-led Government has been working towards improving the lifestyles of New Zealanders. We remain committed to providing support and security to those who are most vulnerable. There are many young New Zealanders who are looking towards buying their first home. Let me clarify that there is no silver bullet that can fix the long-outstanding problem of housing. We in the Government understand the challenges faced by prospective buyers. The Labour policy to build 10,000 houses per annum was totally rejected at the last election. We want to reduce the pressure on first-home buyers of accumulating a heavy deposit. To reduce the pressure faced by first-home buyers we have introduced this legislation.

This bill will allow members of KiwiSaver to withdraw all their KiwiSaver savings except the $1,000 kick-start contribution by the Government. This means that more and more New Zealanders will be motivated to buy their first home, as, in addition to withdrawing their own and employers’ contributions, they will now be allowed to withdraw their member’s tax credit from their KiwiSaver account. Under this policy the KiwiSaver first-home deposit subsidy will be renamed KiwiSaver HomeStart, where determined and hard-working homebuyers will be able to access their savings. An eligible couple would now be able to access up to a maximum of a $20,000 deposit for their newly built home, in addition to their savings.

Apart from assisting prospective buyers with money to buy their first home, this National-led Government has been working towards increasing the supply of housing as well, particularly in Auckland. We all know that the supply of affordable housing for people living in Auckland has been a pressing issue. We are currently trying to increase the supply of both new and affordable housing in this area. Under the National-led Government we have been able to achieve the highest number of consents in Auckland last month, which showed an increase of 11 percent from January 2014. Without doubt it is, indeed, tremendous growth. However, I doubt whether the naysayers in the Opposition feel the same way.

Each of us is faced by a set of challenges. Some are small, some are not too small. It is what we do about these challenges that defines us as a human being. As an example, our hard work and determination has ensured the transformation of the South Island’s most valued city of Christchurch. The public-private partnership can now build new homes on council and Government-owned lands, as we have passed housing accords from Auckland, Tauranga, Wellington, and Western Bay of Plenty to Christchurch and Queenstown. It is also positive to note that the house price limit for HomeStart and Welcome Home Loans will be $550,000 in Auckland, $450,000 in Wellington, and $350,000 for the rest of the country. National is also aiming to reduce the number of people waiting for social housing, and wants to lead Kiwi families to the path of success. Apart from assisting families to get their first home, the Government has also set up a number of other initiatives. With these words, I commend this bill to the House.

I call Todd Barclay—5 minutes; a split call for National.

It is a privilege to speak on the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill in its second reading because of this Government’s proposal to address the issues of housing affordability around allowing first-home buyers to choose where they live. I am going to touch on what our policies are in a second.

I just want to acknowledge another party’s policies in this regard. The reason I want to acknowledge those is that, in National’s approach, we are putting the saying “Actions speak louder than words.” into practice. I just want to reflect on the New Zealand First policy, which is being driven by Denis O’Rourke. Whereas we are focused on New Zealanders building more houses, Mr O’Rourke is focused on building more letterboxes for the same number of houses. While we are wanting to build more houses for more people, the New Zealand First Party is building more letterboxes for the same number of houses and the same number of people.

I want to get back on to the Taxation (KiwiSaver HomeStart and Remedial Matters) Bill. What we are doing is doubling the support for first-home buyers—in the same way that Mr O’Rourke is doubling the number of letterboxes for his property—to tens of thousands of first-home buyers who will benefit from this, and getting more young Kiwis into homeownership and building more affordable houses.

I want to use a Queenstown example—from my own area. If you drive between Frankton and Arrowtown, for the 20-minute drive, everywhere you look on the right-hand side of the road there are new houses and subdivisions being built. There are hundreds, if not thousands, of new houses being built over the next couple of years. During the election campaign, as we were talking about these policy proposals with a group of local developers and the council, Phil Twyford came down and enunciated the Labour Party’s policies. He was almost laughed out of the room, if not laughed out of town, because the developers agreed with the National Party’s approach, which is around allowing flexibility for developers and homeowners to build where they want to build and to live where they want to live. So it was a bit of a wasted trip for Mr Twyford given that he was almost laughed out of town.

Getting back to this bill, we propose to allow first-home buyers to withdraw their KiwiSaver membership tax credits when purchasing their first home, up to a value of $521 per year. This is in addition to their and their employer’s contribution to the KiwiSaver scheme. Although some members have previously mentioned that $500 per year is not very much, I can assure you that for any first-home buyer $500 is better than nothing. It is a lot better than having a Government trying to tell you where you should live and where you should build your home, if you are in a position to be building. That is why it is confusing at times, as well.

I am not too sure exactly what Mr Twyford’s position is on this bill, and whether it is in support of the Government’s policy or in support of his own party’s policy, given he has been reported as saying recently that we need larger-scale urban development—check; that is exactly what we are doing. He said that the Labour Party backs private sector developers—check; that is exactly what we are doing, as well. He wants community housing organisations to be involved—check; that is exactly what we are doing. So I am not entirely sure exactly whether Mr Twyford was coming down to Queenstown to talk about what was happening in the Labour Party’s policies, or coming down to endorse what the National Party’s policies are doing in this space.

We are roughly doubling the number of people who are receiving Government grants to buy their first homes from 10,000 up to 20,000 people. We are doubling the Government grant they are eligible to receive when they are buying newly built homes. The price limits for the KiwiSaver HomeStart grants and Welcome Home Loans will be, as we know, $550,000 in Auckland, $450,000 in a number of cities, including Hamilton, Wellington, and Queenstown—in my electorate—and $350,000 for the rest of the country, which includes Gore, Balclutha, Dipton, and Ōwaka. I can assure you that you can get a very, very stylish house for $350,000 in Gore. In fact, you could probably get a couple.

These schemes here are helping people get into their first homes and ensuring that they have the choice to decide where they want to live and how they want to bring up their families—if it is the case that they have new families—and how they want to succeed in life. By the sound of Mr Twyford’s glowing endorsement of our party’s policies, he thinks so too, and we thank Labour for its support. Thank you.

Bill read a second time.