Overseas Investment (Protection of New Zealand Homebuyers) Amendment Bill

I move, That the Overseas Investment (Protection of New Zealand Homebuyers) Amendment Bill be now read a first time. I nominate the Government Administration Committee to consider the bill. I want to start by addressing the problem that this bill is designed to fix. I want to draw the House’s attention to a story that has been running on the New Zealand Herald website today about a house flip in the Auckland suburb of Beach Haven in which the house jumped $180,000 in price in just 2 months. The Barfoot and Thompson agent who sold the house said that it went over the phone to a buyer last Thursday. “The house is empty.”, he has told the New Zealand Herald, “It was telephone bidding. There’s been nothing done to it between the sales. Similar things happen all the time.” A neighbour, I think, who spoke to the New Zealand Herald said: “Auckland has become speculator’s paradise…[when] a Beach Haven house sells for $180,000 more in just 2.5 months.”

This bill amends the Overseas Investment Act 2005. It applies new restrictions on non-resident purchasers of New Zealand’s residential property in order to protect New Zealand homebuyers. We have seen in this country a housing crisis, the results of which have been all over the TV screens, the radio, and the newspapers now for several years, but it seems to have particularly worked itself up into a crescendo over the last few days and weeks. At the heart of that problem are a number of drivers that have seen Auckland house prices become amongst the most unaffordable in the world relative to incomes. Labour believes that out-of-control property speculation is one of those key drivers.

Under the provisions of this bill non-residents will be granted permission to purchase a residential property only if they intend to live here permanently or their purchase adds to the existing stock of housing. So, for example, a non-resident wishing to purchase vacant land with a commitment to begin building a dwelling within 12 months is likely to have their application granted. Students, skilled migrants, and other persons who are temporarily resident in New Zealand will be granted approval to purchase a house on the condition that it is sold if they subsequently leave the country. Any non-resident person found to have purchased a residential property without the approval of the Overseas Investment Office could be forced to sell the property, which may cause them a loss, and they may have to wear a fine.

This has been one of the most intensely debated and discussed issues in relation to New Zealand’s housing crisis. This bill reflects the Labour Party’s policy to ban non-resident foreigners from buying existing homes and to say to them: “If you are a non-resident foreigner, you live on the other side of the world and you want to buy a house in New Zealand, build a new one.” That is the Australian policy and it has been working successfully there because in the last 12 months it has channelled nearly $30 billion of foreign direct investment into the building of new homes. This policy is supported by an overwhelming majority of New Zealanders. The last 3 News/Reid Research poll on this found that 61 percent of New Zealanders supported this policy, including a majority of National Party voters. In that poll of 1,000 people 54 percent of National Party voters said that they supported the ban that is Labour’s policy.

It is common knowledge—everybody knows in Auckland—that non-resident foreign speculators are bidding up the price of housing just as it was reported in the New Zealand Herald today that a phone bidder from offshore snapped up that house at $180,000 more than it was sold for only 2 months before. Some very disturbing data came out recently that showed that speculators—foreign and domestic—are hoovering up the more affordable suburbs in Auckland. In the last 12 months 80 percent of property transactions in the south Auckland suburb of Ōtara were made by investors, or speculators, depending on which way you want to describe them. And it should be no surprise to this House that it is the suburb of Ōtara, which has that very high level of speculator activity, that has the most rapidly falling level of homeownership—more than four times the national average. That is the reality in John Key’s New Zealand today. That is the consequence of the housing crisis that this National Government has allowed to spiral out of control. Right across Auckland now, particularly in the more affordable suburbs in south and west Auckland, entire streets of homes are owned by absentee foreign landlords who are never seen in that neighbourhood—they are never seen. This is destroying communities and neighbourhoods right across our country’s largest city.

John Key has painted himself into a corner on this policy. The proof of this was seen recently when we saw the National Government selectively and manipulatively releasing data that had been gathered over the last 6 months by Land Information New Zealand. Poor old Louise Upston was left with the job of having to release this shonky data, and the Government tried to claim that the data showed foreign buyers amounted to only 3 percent of the buyers in the market.

💬 Hon Steven Joyce: That’s correct. That’s correct, Mr Twyford.

If Steven Joyce’s maths is so bad that he is willing to interject in this House to say that that data suggested it is only 3 percent, then economic development in this country is in very, very bad hands. Even the most cursory analysis of that Land Information data showed that up to 48 percent—48 percent—of the transactions could have been offshore buyers—[Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am going to ask the member to sit and I am going to ask Dr Coleman to stand, withdraw, and apologise.

💬 Hon Dr Jonathan Coleman: I withdraw and apologise.

—because 45 percent of the transactions in that Land Information data had been excluded from the final calculation of the presence of foreign buyers. Forty-five percent of the transactions were excluded, including trusts, businesses, companies, people on student visas, and people on temporary work visas. The data was shot through with holes. It has no credibility at all. The only thing that data shows is that this Government was so desperate to try to support a political point, that foreign buyers do not have significant presence in the Auckland market, and that it was prepared to embarrass itself by releasing such selective and manipulative data in such a cynical and dishonest way. One of the things that—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Now, now. The member will stand and withdraw. He cannot accuse Ministers of being dishonest.

I stand, withdraw, and apologise.

The ASSISTANT SPEAKER (Hon Trevor Mallard): And apologise—thank you.

I meant to say that the release of the data was cynical. I certainly did not mean to say it was dishonest.

The thing that really upsets people in Auckland is that there are an estimated 15,000 ghost houses in Auckland that are sitting empty. The census data identified 22,000. When you do the calculations and remove the ones that are in between tenancies or in the process of being sold, there are approximately 15,000 properties deliberately left empty by their absentee landlords who are happy to make 25 percent a year of capital gains, as they did last year, and cannot be bothered renting the house out to tenants. This is one of the symbols of the National Government’s housing crisis. It has got to change, it has got to stop, and Labour says that there is no benefit to New Zealand or New Zealanders in allowing non-resident foreigners to sit on the other side of the world and bid up the price of housing, disenfranchising young Kiwi first-home buyers in the process.

It was the Prime Minister who said he did not want New Zealanders to be tenants in their own land. Well, that is exactly what is happening, because homeownership rates are falling so rapidly—so rapidly. In Auckland, a majority of people are renters. A majority are renters. We have the lowest homeownership rates in 64 years thanks to the negligent housing policies of this National Government.

I want to point out that a number of commentators—BNZ Chief Economist, Tony Alexander said that there is merit in this bill, noting that we are becoming one of the few residential markets left around the world that is completely open to foreign buyers. The New Zealand economist and investment broker Rodney Jones, based in Beijing, has supported action like this bill by saying: “Look, the foreign buyers go to New Zealand or Australia or Canada. They can buy freehold property that’s theirs for ever. That’s a very powerful allure, and that’s not going to go away.”

This is not a silver bullet, but it will make a major contribution to fixing the housing crisis.

Tēnā koe e Te Mana Whakawā. It actually makes my stomach turn to hear a speech that, although dressed up in language about protecting New Zealand home buyers, is, at the heart of it, round two of the Labour Party’s attack on people with Chinese-sounding surnames. We are a country that, for a long time, has welcomed people from overseas. For a long time this country has welcomed our forebears, whether they be my forebears who came here on a waka 900 years ago or whether it be those who came on a sailing ship from Scotland 100 years ago. We have been a country built up by the people who have come here, worked hard, and contributed to our society, and that is why this bill is a revolting piece of dog whistle politics, once again, from a member who one would have thought would know a little bit better than this.

This bill, by amending the Overseas Investment Act 2005, applies a new level of restrictions on all non-resident purchasers of New Zealand residential properties. It does beg the question of whether this will also apply to non-resident New Zealanders who have chosen to go offshore. We know that a significant proportion of the 3 percent nationwide—or 4 percent in Auckland—of non - New Zealand tax resident purchasers of property are actually New Zealanders who are working overseas, perhaps in Australia, perhaps in the UK, perhaps in Asia. There is a growing class of New Zealand entrepreneurs and business people who are choosing to go to China and do business in that burgeoning developing market for us. Will these measures apply to New Zealand citizens who, for reasons of business or marriage, perhaps, are choosing to go and live offshore?

Under the provisions of this bill, non-residents will be granted permission to purchase a residential property only if they intend to live here permanently or if they are going to add to the housing stock. The motivation for this bill is based on absolutely shonky data. Frankly, I find it terrifying that the main Opposition party—the largest, at least, Opposition party in the New Zealand Parliament; although we have learnt in recent weeks it is not necessarily the largest Opposition party by party membership—the alternative Government of New Zealand, is suggesting, I think, such a retrograde and dog-whistling measure.

So even if you were a student coming to New Zealand here on a student visa, you would be required to sell your house within 12 months if you were going to leave New Zealand, perhaps to do a post-doctoral qualification after having graduated here with a PhD or a valuable post-graduate qualification. We know that for people studying at that level it is actually very usual, normal practice to go and do a period of time, perhaps, at an overseas university or to do a post-doctoral qualification, maybe at a research laboratory. These people will often come back to New Zealand and make a huge contribution.

We can look at a number of the great achievers, the people who have made significant scientific advances. I look to someone like Dr Swee Tan, who has contributed enormously to the alleviation of strawberry birthmarks among New Zealand infants and toddlers who suffered from that debilitating and disfiguring condition. He has contributed hugely to the research that allowed those young people to be cured of that condition without the hugely traumatic intervention of surgery, which was previously the case. So someone like Dr Swee Tan is for me an example of a very fine New Zealander, someone who makes a huge contribution but is the sort of talented person who after having perhaps completed post-graduate study here in New Zealand might rightly and properly go overseas to do work in a laboratory and will hopefully return to New Zealand. We want to make it as easy as possible for those sorts of people to come back to New Zealand, not place barriers in the way, as this bill would do.

There is absolutely no need for this bill, given the statistics. The shonky statistics come from the Labour Party. They are not the neutral figures that were published by our neutral Public Service—from Land Information.

💬 Phil Twyford: Highly selective and manipulative figures.

They are not at all manipulated, as the member claims. What I would say is manipulated is his statistic of 15,000 ghost houses. One can only presume Mr Twyford’s 15,000 ghost houses are a little bit like the missing million Labour Party voters who did not show up at the last election. It is completely fictional.

I think this is an absolutely hopeless bill. It shows the xenophobic underbelly of the modern Labour Party. It would disgust previous fine Labour Ministers and Prime Ministers. The founding fathers of the Labour Party would no doubt be turning in their graves at this sort of measure. It is revolting, and I will be voting against it.

Taking a lecture from Paul Foster-Bell about the founding fathers of the Labour Party is a bit rich. Mr Foster-Bell told us that he was terrified of this legislation. Well, that makes him terrified of Malcolm Turnbull, because this is the current policy of the Australian Government. If Paul Foster-Bell is terrified of a policy like this, he needs to get on a plane, get himself across to Canberra, and talk to his mates in the Australian Liberal Party, because this is what they support.

Mr Foster-Bell and the other National Party members need to calm down a little bit and actually read what this bill is about. In the end, as Tony Alexander, I think, has pointed out, New Zealand is, in fact, the outlier now. We are the outliers when it comes to this kind of legislation. We are the ones who do not have mechanisms in place to support new first-home buyers in New Zealand to get access to the housing market. We have talked a lot on this side of the House about the importance of increasing supply in the housing market. There is absolutely no doubt that building more homes is critical to us solving the housing crisis, getting more New Zealanders into being able to buy their first home, and dealing with the social housing issues that we have got.

But we cannot leave the demand side of the equation out. That is what this bill attempts to do. It is the nature of a member’s bill that it is only one step, because that is how members’ bills get written, and I congratulate my colleague Phil Twyford on putting it forward. It is not a silver bullet but it is a step towards giving New Zealanders the chance to do something that is so important to our way of life in New Zealand—buying their own home. Buying your own home is not just about shelter. It is not just about the ability to have bricks and mortar around you. It is how we establish communities and neighbourhoods in New Zealand. More and more in New Zealand, people are becoming isolated from their communities and neighbourhoods because they move around so much.

Phil Twyford talked about the number of renters exceeding the number of homebuyers in Auckland now. We need New Zealanders to be able to buy into the housing market, so that they can put down roots and create those strong communities that are the bedrock of giving New Zealanders a decent life. That is what this is about. It is about the communities that have served New Zealand so well in the past, when we have had higher levels of homeownership. This bill, quite simply, sets in place the rules that, as we say, are already in place in Australia, which say that somebody who is not a resident of New Zealand, who does not intend to live in New Zealand, gets to buy into our property market only if they are creating new houses. That is fair. That is what other countries do.

Paul Foster-Bell threw a whole lot of irrelevant information on to the table when he started talking about his pride in migrants who have helped to create this country. I absolutely agree with him, and this bill gives those exact people the ability to buy a house. In fact, what it does for somebody who is here on a skilled migrant visa, which is not even a permanent resident visa, is it gives them the ability to buy a house. So none of that diversionary nonsense that we heard from Paul Foster-Bell is even contained in this bill. It provides the facility for people who are here, who want to live in New Zealand, who want to stay and make a commitment, to purchase an existing home, and it provides for those from offshore, if they do want to come, to be able to build and invest here.

The question I put to National Party members is: what is the value to New Zealand of allowing offshore speculators to speculate in our property market? What do we gain from that? We lose so much more than any gains that Mr Seymour might want to stand up and talk about in a few moments. What we lose is the ability of New Zealanders to be able to get on to the property ladder, to be able to help create those good environments, to raise families, and to be able to build strong communities.

The Labour Party has had this policy for some time. Mr Twyford has had the bill in the ballot for some time, and he had it drawn out. It is our great concern that the Government, knowing that, failed in the Trans-Pacific Partnership negotiations to protect the right of a future Government to put this policy in place. In fact, it deliberately moved to make sure that a future Government could not do that. That is a true shame, because a bill like this, passed through this Parliament, would put us in line with other signatories to that agreement. [Interruption] Sorry?

The ASSISTANT SPEAKER (Hon Trevor Mallard): I am indicating the number of seconds.

That is excellent—seconds. I did not hear a bell ring.

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, it is a 5-minute speech.

This bill is a contribution to giving New Zealanders a chance to get on to the property ladder, to treat them fairly. It is in line with legislation around the world, and it should be supported across the House.

As a Chinese person, I have to say I was simply astonished by the author of the bill. Obviously, he still believes his Chinese-sounding names approach is more scientific than the data collected by Land Information New Zealand. From that initial data, published by Land Information New Zealand, only 3 percent of New Zealand’s property transactions were made by people from overseas—by non-resident buyers. But Mr Twyford believes that this is not scientific enough—that his Chinese-sounding names approach is more scientific and that, according to that approach, about 40 percent of Auckland properties were bought by people from China. That is astonishing. So we have this data. Although it is initial data, still we believe it is more scientific and more reliable than what he believes.

So this is Labour’s problem: either it is unable to see the real causes of various issues or it is basically too lazy to find the real causes of various issues. In the housing area, it believes that the Chinese-sounding name approach would be the solution and, largely, this is because of its intention to play some political game. Of course it failed. This bill is just a continuation of this Chinese-sounding name approach. There is no need for it, based on what we have received from Land Information New Zealand. It is the wrong approach, basically.

We believe that the real issue here is housing supply, so increasing supply and reducing the cost of construction is the way to go forward. How do we do that? Actually, this housing issue has been an issue for many years. Under Labour it was an issue, but because the issue was too great and too hard to resolve, Labour basically left it alone. The National Government has been trying to address the issue head-on. We have initiated a wide range of programmes to try to increase the supply and to reduce the cost. One programme is to try to free up more land faster. For that reason we have established 202 special housing areas. In these areas, central government and local government work together to fast track housing development. Talking to developers in these areas you will find that they are full of praise for this kind of programme, although more work needs to be done.

Also, interestingly, that member recently proposed that we should abolish the super-city boundary. That is an interesting change of mind, and we believe that this is more rational than the Chinese-sounding name approach. We believe that this is the right direction, so we would like to work with Labour in trying to move forward the reforms of the Resource Management Act (RMA). So this second-phase RMA reform will be, hopefully, moving forward. In this second phase we would like to prioritise housing affordability, so we look forward to Labour’s support for the second phase of the RMA reforms. Also, much of the building costs has to do with paperwork and efficient council work, so it is important for us to make sure that RMA reforms will increase efficiency of council work.

Finally, I would say that the National Government has been working very hard to make sure that our New Zealand families are able to afford houses, because homeownership is important to our families, to our communities, and also to each New Zealander. So we have been working very hard, and I have to say that this Government has been achieving a lot in providing housing supply and also in reducing the cost. Thank you.

Before I call Julie Anne Genter, I will remind people of the topic of the bill. I think the member who has just spoken made a passing reference to it at the beginning of his speech—maybe for about 30 seconds—and then went into a general housing debate. This is not a general housing debate; it is on this bill.

The Green Party supports the bill, which is pretty non-controversial and is in line with longstanding Green Party policy to restrict the sale of property and land to residents and citizens. I would just like to start by saying, very generally, that this would be only one part of solving the housing affordability problem. There are a number of issues on both the demand side and the supply side that affect house prices. But, that said, there is no question that this would do no harm.

I think it is really important to address some of the objections to this bill that have been raised by the Government—the National Party and the ACT Party—because rather than engaging with the substantive issue, which is whether foreign capital impacts the value of property prices in New Zealand, it says that to raise this question is xenophobic and racist. Of course that does not logically follow. That is not a logical argument; in fact, it defies all economic logic.

Any economist will tell you that foreign capital flows do have an impact on property prices. In fact, I have pulled up a paper here that was published at one of the conferences at the London School of Economics. This paper was written by a professor of economics from the University of Auckland and co-authored by a professor from the University of California, San Diego. It is all about global capital markets and housing prices. I will just read the first few lines of the introduction, for the benefit of the House: “The experience of the past decade has demonstrated the challenges that international capital flows can pose for financial stability. [Indeed] the build-up of global imbalances … was one of the preconditions for the recent financial crisis.”

Deficit countries such as the United States, Spain, the United Kingdom, Ireland, Iceland, Poland, Greece, Estonia, New Zealand, and Australia, attracted lots of foreign capital, and exhibited large run-ups in house prices, while surplus countries, such as Germany, Switzerland, China, and Austria, exported capital, and they, in fact, experienced flat or slow house price growth. So it is just a distraction on the part of the Government not to address the fundamental economic issue with foreign capital inflows, which do not, in fact, benefit New Zealand’s productive economy. If we have a fairly limited supply of dwellings, the inflows of foreign capital lead to large run-ups in prices. This is a consequence of global financialisation and deregulation and inequality. I mean, really, it is the growth in global inequality that is leading to the ability of people who have captured a large portion of the surplus in some of these surplus countries to bid up house prices all around the world. If we look at the cities that have the most unaffordable housing in the world, it is no accident that most of them are Pacific Rim cities. So it is Hong Kong, Sydney, Melbourne, Auckland—

💬 Phil Twyford: Vancouver.

—Vancouver. They are all Pacific Rim countries.

It would not be surprising, given the huge amount of capital outflows coming from China, that that was having an impact on New Zealand’s property market. Of course, it is not just China, and there is nothing racist about saying that that is happening, because that is a fact. But there is also money coming into New Zealand from Australia, from the United States, and from other countries where you have vast amounts of income inequality and wealth inequality, and that, of course, bids up house prices. It is no surprise that the second-most unaffordable city in New Zealand is Queenstown. Why do you think that is? Is there a lot of foreign ownership of property in Queenstown? Yes, there is.

💬 Chris Bishop: Neo-liberalism! I blame neo-liberalism.

I just have to point out that the Government is trying to distract New Zealanders from the real issues. Why will its members not debate the merits of their policy? If they really think there is no problem with it, why do they distract with accusations that people are racist?

I am an immigrant and the Green Party supports immigration. We also support providing more houses. The State should be building more State houses. The Government should be more involved in the provision of housing in New Zealand, and there is a lot it could do on the demand side, because there is no question that investors are having a disproportionate impact on house prices in New Zealand. That, fundamentally, is not good for our economy, and it is not good for our people. The National Party is being incredibly misleading by not addressing the actual economics of the issue and by distracting in order to try to get votes.

I rise in opposition to this Overseas Investment (Protection of New Zealand Homebuyers) Amendment Bill. As my colleague Mr Yang has pointed out, this is a cynical bill from the Opposition member seeking to perpetuate his fundamental approach, as was evidenced just a few months ago, that he believes that public policy in New Zealand should be driven by the sound of people’s surnames. It is an absolute disgrace for New Zealand. It is certainly a disgrace for the history of the party that he is a member of.

But I would like to set that aside. He made a lot in his contribution this evening about his measure being all about stopping foreign speculators from distorting the New Zealand market, but then he refuses to accept—perhaps because it is an inconvenient truth—the reality of the data that illustrates that non - tax-paying resident foreigners were not a major purchasing driver of homes in New Zealand, and particularly in Auckland, in the last 6 months. You see, what that data shows us is very clear. Mr Twyford points out a very large amount that is—[Interruption] Why? Because it is not speculation; it is primary residences. And who is the largest group? Tax residents—tax residents.

So the member now has an issue with people paying tax in New Zealand to fund our infrastructure, to fund our schools, to fund our roads, to fund our essential services—they should not be allowed houses as primary residences. When you look at that data, if the member was following his own contribution, the area of concern for him, and which his bill should address, is that of non - tax-paying residents—people who are not contributing to the infrastructure and public services of this country, non - tax-paying residents buying a second property, third property, or more.

The data on that is absolutely crystal clear: that across New Zealand non - tax-paying residents making investment property decisions make up less than 3 percent. In Auckland, where the member would have us believe it is something like 40 percent or more, it is actually 4 percent.

💬 Phil Twyford: Why did you exclude company trusts?

I will tell the member what was excluded—primary residences and tax residents. Why? Because we value people paying tax in New Zealand, and funding our infrastructure and funding our public services.

💬 Phil Twyford: Why did you exclude overseas companies and trusts?

If people who are contributing to New Zealand in taxation, Mr Twyford, wish to buy a property here, that is perfectly fine. Instead, what we have is, as Mr Yang has pointed out, a mere continuation of an anti-foreigner approach trying to frame a small group as responsible for the ills of the country—so much so that he would have, under his approach to public policy, Ms Lee unable to buy a house because, of course, she is Chinese. She tells me she is from the province of China called South Korea—they do not like being referred to as Chinese.

The public could be excused for actually wondering, with a bill such as this, which is targeting a group that the data shows is not actually a distorting factor and that is a continuation of informing public policy by the sound of a surname, whether perhaps Mr Twyford is making a play for the leadership of the New Zealand First Party. It certainly is not the sort of thinking that should inform good public policy in this country. It is not the sort of thinking that should inform a good member’s bill. All he would really do, if we were to permit this to pass, is address a tiny, tiny percentage of the current property purchases.

We are a Government that welcomes migrants and welcomes foreign investment. People are going to come and form company structures. If they are going to undertake taxable activity in New Zealand—whether they are paying PAYE, or whether they are coming here with foreign direct investment helping to fuel growth in New Zealand—if they are going to pay tax in New Zealand, and if they are resident here for taxation purposes, they are paying for the essential infrastructure and services that benefit all New Zealanders, and we do not mind where their country of origin is.

In fact, New Zealand is a far better place for the diversity that has grown in this country over the decades, and it is so obvious today in any major metropolitan centre. That is the sort of thing that we on this side applaud and welcome. We do not believe that we should be setting public policy on the basis that we do not like someone’s surname. We do not believe we should be a New Zealand that is trying to exclude people and exclude diversity. We oppose this bill, and we call on all parties to oppose it.

Seventy-six percent of New Zealand people will be very disappointed by what they hear the members on the other side of the House saying. Seventy-six percent of people will be very dissatisfied by what they have heard from members on the other side of the House because they want something done about the problem of overseas speculators buying up New Zealand homes in competition with New Zealand people. It is as simple as that, and that is the one thing that those members opposite have not addressed. They are on the wrong side of this issue. They will be punished for it, and they deeply deserve it. New Zealand First will support this bill because we support—clearly and unequivocally—restrictions on overseas buyers competing for, and buying up, New Zealand homes in competition with, especially, young New Zealand people seeking to buy their first home.

There are too many speculators in the market and too many of them are overseas speculators. We know because I have seen many examples of advertisements in overseas newspapers by overseas real estate agents imploring people in overseas countries to invest in New Zealand houses because they can make a killing on them. That much is beyond doubt. The damage that does to the New Zealand housing market is perfectly clear to everybody except those dead-head members opposite who do not understand the reality of what is going on. That clearly means that there will be a contribution to rapidly increasing and hugely increasing house prices in New Zealand, and especially in Auckland.

Nothing that an overseas speculator does in the New Zealand market can ever be of any value to the New Zealand economy or to New Zealand people. So it is a no-gain situation as far as overseas speculators are concerned. Of course, we in New Zealand First are also concerned about immigration and the effect of excessive immigration on house prices as well. That is another issue for another time because that is not covered in this bill, but it is still a significant issue.

Although New Zealand First will support this bill we do have some issues that we would like to discuss, especially at the select committee stage, because it actually does not go far enough. In other words, it is too conditional as far as New Zealand First is concerned. The first of these issues relates to the provisions of the bill in which it says that “non-residents will be granted permission to purchase a residential property only if they intend to live here permanently or their purchase adds to our existing housing stock.” We have some issues with that.

First of all, we are not sure about how it could be properly shown whether a person intends to live here permanently or not, so we would need to investigate whether that is actually a practical proposal. In addition to that, purchasing new housing stock can also be problematical, because what it could simply mean is that somebody buys a house that was already going to be built by a developer anyway, and that actually does not mean that there would really be any increase in the housing stock as a result of that. So that, again, seems to me to be a practical obstacle to the proposal.

What New Zealand First says is that there should be a much more simple proposal than that, and that would be to simply make sure that if a person does not have permanent residence in New Zealand or does not have citizenship, then they simply cannot buy property in New Zealand. You can see other countries in the world, especially China and many others, where that is the situation. New Zealand’s housing crisis is so extreme now that such a proposal should be the one that is adopted, and that is the one that we would prefer to see. So we are not too keen about the conditions that are attached to this bill. We would like to see a simpler and more straightforward regime altogether. The other issue that I mention is this. The bill—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! [Interruption]

—talks about “Students, skilled migrants”—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat.

—“and other persons”—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat. David Seymour will stand, withdraw, and apologise.

💬 David Seymour: I stand, withdraw, and apologise.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Denis O’Rourke, completing his speech.

Thank you, Mr Assistant Speaker. I was saying that the other parts of the bill that we have some concerns about are those parts that refer to—and I am reading here—“Students, skilled migrants, and other persons temporarily resident in New Zealand for 12 months or longer will be granted approval to purchase a house”—

Order! The member’s time has expired.

I rise on behalf of the ACT Party in opposition to the Overseas Investment (Protection of New Zealand Homebuyers) Amendment Bill. I would like some time to set out the reasons for that, but the time is very short, so I would like to focus on one particular provision in the bill that I think exposes, I guess, the misadventure in this whole enterprise of Mr Twyford’s. It is that, under this bill, overseas investors can purchase housing despite not being tax residents if, as the bill says, they are adding to the level of housing stock. The reason that this is such a misadventure is that the price level of housing in New Zealand is ultimately set by the price of producing new homes in each particular market. The reason why housing is so expensive in New Zealand is that people who weigh up buying a new home and who weigh up buying an existing home as an alternative are driven by what is, ultimately, the price of expanding the overall supply and building new homes. So if it costs $800,000 or $900,000 for a serviced section in Auckland, and if it costs another $200,000 to $500,000 to build the types of houses that people are building, well, that is why you have houses going for over $1 million.

Of course, this bill says that so long as a purchaser is bidding in the market of new homes, then the bill does not apply to them. They are allowed to purchase those homes despite being non-resident buyers. Well, if we are going to concentrate this rush and inflow of foreign speculative capital into the New Zealand housing market on the precise area of the market—that is, new homes—that actually sets the price for the market right across the city, be it Auckland or any other city, then we are not going to have any net effect on price levels. All we are going to do is put more and more pressure on the new-build sector and, therefore, raise the price of housing across the city. That is due to a fundamental misdiagnosis of what is really happening in the housing market. We have heard earlier that the real proportion of foreign investors buying homes in New Zealand could be as low as 3 percent, but let us say that that is a low-ball estimate and it is actually somewhat higher—maybe it is three times that, at 9 percent, or maybe it is a bit higher; maybe it is 10 or 12 percent. But the fact of the matter is that the real problem in the housing market, and particularly in Auckland, is that it is so difficult to build new homes.

Debate interrupted.

The House adjourned at 10 p.m.