Housing Legislation Amendment Bill

The next important policy that we need to discuss as part of this debate about housing affordability is set out in proposed new Part 5 of this Housing Legislation Amendment Bill. What this part does is it amends the Overseas Investment Act to ban non-resident foreign buyers from buying existing homes.

💬 Hon Michael Woodhouse: I raise a point of order, Mr Chairperson. I apologise to the member on his feet. I draw the same Standing Order to you—Standing Order 302(2)—and suggest to you that the Overseas Investment Act’s purpose is nothing to do with housing affordability. In particular, the references to sensitive land, which generally is farming land and outstanding landscape areas—that is very unlikely to ever have houses built on it and therefore is out of the scope of this bill.

💬 Chris Hipkins: First of all, and I think this is perhaps the most substantive issue here, these amendments have been ruled in order by you, Mr Chairperson, and by the Office of the Clerk. You are the sole determinant of relevance in these matters, and being bullied by Ministers should not change your ruling. You have already ruled on these matters and they have been ruled in order, and the challenging of your ruling by Ministers is unacceptable.

The CHAIRPERSON (Hon Chester Borrows): To be clear, I have not given any ruling on this yet, although I accept that it has been through the Clerk’s process. I certainly do not feel bullied by my parliamentary colleague the Hon Mike Woodhouse. [Interruption] Well, I am going to take some time to consider this matter momentarily.

As I was saying, the Government is clearly in denial on this issue, as it is on so many aspects of the housing crisis. It refuses to acknowledge what every New Zealander knows, and that is that non-resident foreign buyers are a significant force in the housing market, and, unquestionably, as marginal buyers they are having the effect of driving up house prices.

A Cabinet Minister was interviewed on Radio New Zealand a few weeks ago on this issue, and she was asked by Guyon Espiner, the co-presenter of Morning Report, what the good bit is about even one home being sold to a non-resident foreign buyer. The Minister could not answer. She had no answer because there is no answer. There is no benefit to New Zealand or New Zealanders in allowing people who are not residents or citizens of this country to sit on the other side of the world and buy and sell our homes for capital gain. There is simply no benefit in that.

So many countries have recognised that it is the duty of the Government to look after its citizens and that it is the responsibility of the Government to ensure that markets are allowed to work properly and deliver the benefits that are expected from them. Australia has the policy of banning non-resident foreign buyers from buying existing homes. That policy has effectively channelled $30 billion of foreign direct investment into the construction of new properties—new homes—in Australia in the last 12 months. Singapore, Hong Kong, Malaysia—all have restrictions on non-resident foreign buyers buying residential property in their countries. In China it is not possible for non-residents to buy dwellings in Shanghai or Beijing, because the Chinese Government is protecting the interests of local residents in those communities against instability in the housing market denying citizens and residents in those cities from actually being able to access affordable housing.

Most recently, Justin Trudeau, the Prime Minister of Canada, said that there was no doubt in his mind that foreign buyers were driving up house prices in Vancouver and Toronto, and shortly afterwards the provincial government of British Columbia implemented a 15 percent stamp duty—a 15 percent stamp duty in British Columbia—to try to deal with the massive influx of overseas money that has destabilised the Vancouver housing market and made it, like Auckland, one of the most unaffordable housing markets in the world.

The other interesting development on this issue happened a few weeks ago, when every one of the major trading banks in this country announced that they were ceasing lending to non-resident foreign buyers of residential property—every single one of the banks. Their parent banks in Australia have done exactly the same thing. Would the banks, which have billions and billions of dollars of skin in the game, which lend tens of billions of dollars to homebuyers in New Zealand every year, do that if foreign buyers were not a significant presence? Of course they would not. It was the final blow to the credibility of this National Government and its denial that foreign buyers are a problem in the residential property market.

What proposed new Part 5 does is it amends the Overseas Investment Act and it inserts a new category of property: overseas investment in residential property. What it does is that it applies the same definitions that exist in the Overseas Investment Act that determine whether a person or a company or a trust is to be regarded as foreign—that is, if they have 25 percent or more ownership or control that is not by New Zealand citizens or New Zealand residents—to investors in residential property. Then it makes it clear that an overseas entity cannot buy an existing property, but it could build a new one. That is the policy that we have here. That is the policy of the Australian Federal Government, and we think it makes a lot of sense. We believe—the most overused phrase in the housing debate—that this is not a silver bullet, but it is something that will make a significant difference to what is an extremely overheated housing market that has a tendency to a housing bubble. Thank you.

Members, I am going to give a ruling in respect of the point of order raised by the Hon Mike Woodhouse. I accept that the reason behind this particular legislation, which is seeking to amend the Overseas Investment Act 2005, seems to have apparently two distinct philosophical reasons as to why it is there. One of them is to limit the ownership of land in New Zealand by foreign buyers; the other is that it would have an effect on affordability by removing foreign buyers from the market. The test as to whether or not it is in scope is the debating point as to whether or not, if this part was to be accepted and to go on and be in the bill, it could have a dampening effect or the effect of making more affordable houses available in the market. So, by reason of that, having taken and listened to the points of order and having taken advice from the Clerk’s Office, I am going to rule it in scope.

I raise a point of order, Mr Chairperson. Thank you for your considered judgment. I certainly do not intend to labour this point but I will ask for one point of clarification, which I did not raise earlier. In an omnibus bill, by and large, more than one bill is being amended and a Supplementary Order Paper (SOP), by and large, is designed to amend the bill being debated. What we now appear to have is a ruling that because two bills are being debated and amended in a single piece of legislation, any other piece of legislation could now be proposed for amendment, because we now have the Income Tax Act, the Overseas Investment Act, and the Resource Management Act all, effectively, within scope here notwithstanding that they have nothing to do with the bill being debated. I just want to clarify that the point now is that it is open slather on SOPs. [Interruption]

The members who are choosing this particular time to give us the pearls of their wisdom have chosen to do so during the taking of a point of order, and they should not do that. I hear the member’s point of order. I do not agree for a moment that it is open slather. Matters will have to be on point. Unfortunately—or fortunately, depending on which side of the Chamber you sit—the terms of this bill were very broad. If somebody wants to seek a clarification or seek a further ruling, then that is open to them. I have given my ruling and I am prepared to stand by that. I accept that there are other heads in the game. If the member wishes to take that and seek a review of my ruling, then I am quite happy for that to happen.

I want to carry on from where my colleague Phil Twyford left off, making the link between foreign buyers and affordability in the New Zealand housing market. The Labour Party position is that if you have got the right to live here, you have got the right to buy here. That is true, whether you are a migrant who has arrived just a month ago with permanent residency or you are someone who has lived here for ever. If you do not have the right to live here we do not think you should have the right to buy here, because we think that is having an effect on the price of housing.

The experience around the Pacific Rim, and in London and other places that are safe havens for capital in a turbulent world, is that with the free flow of capital, unconstrained by local rules relating to homeownership, those flows of capital pump up the price of housing beyond the price that locals can afford to pay. So the effect of not having a control on foreign buyers of New Zealand land with houses on it is that the housing starts to be priced not according to the means of New Zealanders to buy housing but according to the deep pockets of those who are from overseas.

There can be a debate as to how much the effect from foreign buyers is on prices, but there cannot be a reasoned debate that there is none. As to how much the effect of foreign buyers is—countries around the world are concluding that it is a material and substantial effect. Australia has moved to stop it. Canada has moved to stop it. Hong Kong has moved to stop it. China has moved to stop it. There are huge controversies in London and the United Kingdom. One of the reasons behind Brexit was that people cannot afford housing in those large centres.

In New Zealand the evidence is pretty clear. You know, there are billboards that are put up periodically in Ponsonby Road—some of the most expensive billboard space in New Zealand—advertising real estate agents to list your properties with, who are selling directly into China. They are selling directly into China. They advertise their websites. Those billboards—we cannot afford them in the Labour Party. It costs many thousands of dollars each week to hire that billboard space for an advertisement. There is a lot of money being made on the sales of New Zealand houses to overseas interests.

Another example—we know that some of the people who, if you like, win the prizes for being the most successful real estate agents in Auckland are those who are servicing those markets. We have got instances of buyers from overseas coming to New Zealand and not buying one house but actually buying many houses on the same day, some of them sight unseen. I make the point again that this is not somehow anti-Chinese or, as it used to be, anti-Japanese or anti any other ethnic group. You know, I have been accused of those things previously when, in respect of rural land, I criticised American purchases, Swiss purchases, and French purchases. And when I criticised Chinese purchases in respect of Shanghai Pengxin’s purchase of the Crafer farms, it was then that I was accused of racism or xenophobia, when I was making the same point every time, and that is that the market for New Zealand land assets—and, in this case, housing assets—should be a New Zealand market, not an overseas market.

Why do we need this law? Why do we have to make this clear, that the Government has not got the discretion to allow our houses to be sold overseas? Well, we know that the Government has traded away our rights to put in place a control such as that under the Korean free-trade agreement. Korea retains the right to stop New Zealanders buying their houses, but, under the Korean free-trade agreement, the Government agreed that we would never ban the sale of New Zealand houses to Korean people, notwithstanding that in the free-trade agreement that had been agreed to within the last year or two with Australia, South Korea agreed that Australia could stop Koreans buying Australian houses.

So, of course, the even bigger effect of that is the flow-on effect into other trade agreements, because under trade agreements they have the most favoured nation clause, which, effectively, says that if you do a better deal in a later trade agreement than in your original trade agreement, it flows through to the benefit of the earlier trade agreement.

The Labour Government of which I was part negotiated the free-trade agreement with China. I was in Cabinet and I remember sitting in a policy committee—because I had been worried about these land issues for a long time—and I asked the question: “Have we retained the ability to control whom we sell our houses to and change those rules?”. Annette King is nodding her head. She was probably in the same policy committee. I can remember Helen Clark saying: “We’d better check that.” The officials could not answer it on the day, and so we asked the officials to go away and check that under the Chinese free-trade agreement we were retaining the right to change which asset classes we restricted Chinese people buying into in New Zealand. The answer was “Well, China is retaining the right to ban New Zealand buyers of their houses.”, and, under the Chinese free-trade agreement, New Zealand retained the right to ban Chinese purchases of New Zealand houses.

How did that change? Because of the most favoured nation clause, which is in just about all of our trade agreements, because the National Government gave away—it sold New Zealanders down the drain, under the South Korean free-trade agreement. That provision flows through, under the most favoured nation clause, to China. That can be fixed—because I am sure the South Korean agreement could be fixed if we had a Government that wanted to—as evidenced by the fact that South Korea has retained the right in South Korea to ban New Zealand buyers of homes in its country, and Australia got the same thing. So it is an absolutely ideological selling out of New Zealanders’ interests, trying to curb the rights of a future Government.

But it gets worse. What is the biggest trade agreement in the world? The Trans-Pacific Partnership (TPP). What did this Government do in the TPP? Notwithstanding the lesson that we thought we had taught the Government and notwithstanding the fact that, actually, Labour is a pro-trade party, National went further and, in the investment protocols under the TPP, said that New Zealand would not introduce new areas of screening—i.e., we would not ban the overseas sales of New Zealand houses to Americans or Japanese or anyone else in the TPP. That is why we need this amendment, because this amendment amends the Overseas Investment Act to make it clear that the Minister cannot just wash his hands of the effect of putting the best of our houses out of reach of New Zealanders and lifting the price of houses in a way that is unaffordable in New Zealand.

If passed, this amendment closes that glaring hole in New Zealand’s law and says that if you have got the right to live here, you have got the right to buy here, that it should be a New Zealand market, and that we should not have people from overseas who are the “1 percenters” of the world—and sometimes coming through with dirty money, which we have seen through the Panama Papers. Those sorts of people cannot come here, with some of it being stolen money or whatever else—they cannot come here and outbid New Zealanders for our houses.

Houses are to live in. The people whose interests we should be serving most are New Zealanders. They are the people whom the New Zealand Government should be acting to protect, not foreign buyers who want to speculate, who want to move money to a safe jurisdiction, who want to have another investment class, and who want to price New Zealanders out of our own homes.

This Government, in this area, most plainly prefers the interests of overseas people over New Zealanders. That is why this provision is so essential if we are going to get the housing crisis in Auckland under control, because most of that purchase pressure is in Auckland. The Korean free-trade agreement, the Chinese free-trade agreement, the Trans-Pacific Partnership agreement—what more proof do you need that you need change in the underlying legislation? This Parliament should be telling the executive that in respect of these things, New Zealanders do not want to sell down the river the right of future Governments to control who buys their houses.

We have got the ability, in this vote, today, to put that into law, and I bet you that the Government will try to block it. It has already even tried to close down debate on the issue, through Minister Woodhouse—

The Green Party is supporting this amendment, proposed Part 5, from the Labour Party. As the two previous speakers very well explained, it is vital that we address the issue of foreign capital in our housing market. It is very simple. The Green Party believes that every New Zealander should be able to live in a warm, healthy, safe, secure home, and they should not have to spend more than 30 or 40 percent of their income to access that. That is a fundamental human right. That is good for our society. If the Government wants to achieve that outcome, it has to be realistic about the many various challenges that are impacting on our housing market, and it is not realistic for the National Government to avoid this part of the debate and claim that anyone who raises the reality of foreign capital pouring fuel on the housing fire that is happening in Auckland—it is just denying reality; it is a basic economic fact.

I heard some of the members last night, like David Seymour and some of the Government members, talking about housing markets and how they should work, and one of the key things that they did not address is that housing is not a commodity. It is not like cars or bicycles or dishware or glasses or pens. It is not like that because real estate is fixed, and so if we have a lot of money coming in for a fixed amount of land and number of houses, then of course it is going to increase the price of that and it is going make it harder for people to access housing.

The reality is that every home that is sold to an overseas investor is a home that a local family cannot buy. We do not have a capital gains tax, we do not have a warrant of fitness, and we do not have really adequate renters’ protections, and so we have got these foreign speculators. There is nothing wrong with being foreign. It is just, you know, they are not invested in New Zealand, they have got no requirement to look after their tenants, and they are able to make tax-free capital gains on the appreciation of property prices. That is not good for New Zealand and that is not good for our economy, and let us just be realistic about that.

The Green Party policy is a little more ambitious than this amendment. Actually, this amendment does not ban all foreign buyers, at all. It just requires people buying residential property to be New Zealand citizens: either people who normally live here or people intending to live here indefinitely. It even allows for people temporarily coming to New Zealand and intending to sell their property when they leave, to buy property, and people buying bare land with the intention of building new houses or homes, or buying existing dwellings with the intention of upgrading them into a greater number of dwellings—they are all able, under this amendment, to buy land and property. So it is actually quite a reasonable approach, and I cannot understand why the Government would not consider such a reasonable, well-researched proposal that will definitely have an impact on house prices in Auckland and make homes more accessible to New Zealanders who live here and do need a place to stay.

The Green Party message is very simple. Our longstanding policy has been to limit sales of property to residents and citizens. I am an immigrant. There is nothing xenophobic about saying that you have to have the intention of living here or be a citizen if you are going to buy property, because that keeps the market domestic and accessible for the people who need to live here. It is a simple message: if you want to make New Zealand your home, you are welcome to buy a home here. If you want to become a permanent resident or citizen, you are welcome. If you want to come and do those things and buy a house please, please—that is absolutely available. Right?

But if people are going to sit in offices in Sydney, or Singapore, or San Diego and play games with our property market to make a buck without actually putting in any real investment here in New Zealand, then that is not welcome. I think most New Zealanders would agree with that. It is really unfortunate that the Government is not willing to debate the issue, and that it just claims that anyone who raises the issue is racist or xenophobic when it actually has nothing to do with racism or xenophobia or not wanting people to come to New Zealand. It is about protecting homes in New Zealand for those people who do live here and making sure that they are accessible to all people in New Zealand.

I will call Grant Robertson, but before I do so I just want to indicate to the Committee that there are more amendments on the Table. There were two amendments, which sought to insert a new Part 7. I am ruling that Metiria Turei’s, which was the first, will be new Part 7 and, I think, Mr Twyford’s one, which was the other one, will be new Part 8.

Thank you very much, Mr Chair, and I look forward in the course of the coming days to debating new Parts 7 and 8 of this bill.

On new Part 5, I want to make a couple of significant points. The first is the question around whether or not new Part 5 contributes to the purpose of improving the affordability of housing. I do want to note that the Government, in its tinkering, timid kind of way when it comes to housing, did realise that this was an area that could contribute to improving the affordability of housing. In the Budget 2015 speech when Bill English introduced the brightline measure that we discussed earlier in new Part 4, he also introduced the foreign buyer register, which I am going to come to in a moment, and in doing so, when he introduced that in Budget 2015, he actually used the phrase that this was part of a number of measures that would take pressure off the Auckland housing market. That is what he said. So the Government was quite clear that an initiative that started to address the impact of foreign buyers on the New Zealand housing market was a measure not just about taxation, not just about land, but actually about easing the pressure on the Auckland housing market, which today the Minister for Building and Housing has confirmed for New Zealanders is out of control—and it most definitely is.

The second thing I want to raise in that regard is the question of the disproportionate impact of foreign buyers or speculators on the New Zealand housing market. The kinds of people who are involved in this level of speculation are prepared to pay well over the odds for housing, which pushes the prices up overall and has the effect of pushing first-home buyers out of the market. I want to give an example from here in Wellington from somebody who I know had been living in a rented house in a northern Wellington suburb and had to leave the house because it was sold from under them and the rent was put up. The reason the rent was put up was that the house was sold to an offshore buyer for some $500,000 over the Government valuation that it had.

💬 Hon Annette King: Sight unseen?

Sight unseen. In fact, talking to the real estate agent responsible for that sale, he said that within an hour of that property going up on their website, 13 offers had come in, 12 of them from offshore speculators—12 of the 13 offers came in from offshore speculators—and someone at the end of the day was prepared to pay $1.2 million for a house worth about $700,000. That is the disproportionate impact of an offshore speculator on the New Zealand housing market. Often, with capital accessed at a much lower rate or capital that they want to shift quickly out of the country that they are resident in, the New Zealand housing market represents an opportunity for speculation, and it is that speculation that is driving up property prices and is pushing first-home buyers out of the market.

So this new Part 5 is a measure to improve the affordability of New Zealand housing. The question does remain: what is the extent to which it will improve the affordability of housing? This is obviously a very live debate, because the Government, as I said, in Budget 2015 decided that it would announce, as part of its desperate attempt to look like it was doing something in the housing area, a foreign buyer data register. We have now seen a couple of releases of information from that register, but they do not give the full picture. The Government likes to tell us that foreign buyers, according to its data, represent 2 or 3 percent of the buyers in the market, but a closer analysis of the statistics reveals that there is a giant fudge going on here by the Government. In the last data that was released, the Government told us that of the sales of houses in the last year, 2,300 of them went to non-residents—people who, as has been described to us today, are not people who come here. These are people who do not have a right to live here, who do not live here, and who have no intention of living here—except that is not quite what the Government has done, because, in addition to those 2,300 non-residents, another 5,700 properties were purchased by—[Bell rung] Mr Chair?

The CHAIRPERSON (Hon Trevor Mallard): Grant Robertson.

That is very good—nice. Ha, ha! Thank you very much, Mr Chair. That means another 5,700 were—I am good with people stretching their legs without saying anything. It is excellent—good work. So a further 5,700 were bought by people on temporary visas, including students. These are people who do not have the right to stay and live in New Zealand on a permanent basis. So if we add together the 2,300 that were bought by non-residents, as defined by the Government, to the 5,700 that were bought by people on temporary visas, that actually amounts to 13 percent of the total sales—well in excess of what the Government is admitting and quite clearly having a major impact on the housing market and the price and affordability of housing.

So what is the Government’s response to the fact that it brought in a foreign buyer data register, that there was pressure on it about this? Its response is twofold. It is to put out dodgy numbers and to call anyone who raises the spectre of this, as an issue, xenophobic. That is ridiculous. It is typical of this Government putting its head in the sand about housing issues rather than facing up to the impact of them. So when we have a situation where yesterday the average house price in Auckland hit a million dollars, and the Government says that the housing market is out of control but it has got no plans to change it, that is not on. It is a Government in denial now pushing housing further and further out of the hands of New Zealanders.

If you want to know the impact of foreign buyers, of speculators in the housing market, and of the lack of supply from the Government, Bill Rosenberg from the New Zealand Council of Trade Unions has calculated that if average wages had increased at the same rate as house prices in the last few years, the average wage would now be $69 per hour instead of $29 per hour—if the rate of wage increases had kept up with the rate of house price increases. It is out of control, and it is being fuelled by people from overseas who look at the opportunity for a speculative gain in the New Zealand housing market.

💬 Phil Twyford: And why wouldn’t they?

Exactly—and why wouldn’t they, in an environment where there are few rules around them and where all around the Pacific area and all around the world countries have said their priority is to make sure the people who are resident there have the first chance to get themselves into housing. That is the priority. Australia does it. Other countries within the Trans-Pacific Partnership have carved out the right to do this. Vietnam and Malaysia have got it, China has got it, but New Zealand does not, and that is a failure on behalf of this Government, because it has simply decided to wish the problem away.

New Part 5 of this bill offers the opportunity for this Government, quite clearly, to take on board a policy that will improve the affordability of housing. In my time remaining I want to make one thing very clear, and that is that this is about—and this is important for us on this side of the Chamber—the purchase of existing housing. We do need to add to the supply of housing in New Zealand, and we do know that some of the good, positive developments in housing that have been taking place in Auckland have actually been funded by money from offshore, but that is new housing—that is adding to the stock. It is helping to solve the problem. Speculating on existing housing, driving up the prices, does nothing to solve the problem. It makes the problem worse. That is what new Part 5 of this bill aims to address: people with no interest in moving here, people with interest only in speculation. So I want to make it clear: that is covered here within new Part 5, the new section 17A(c)(iii) within new Part 5. It covers off the fact that if people are going to add to the housing stock and create new housing, that is a good thing, and can be managed within the regime that we have, but if all they are interested in is speculating, driving up housing prices, and pushing young New Zealanders out of buying their first homes, then that has got no place.

This is one aspect of a comprehensive plan for housing, along with building affordable housing, along with increasing the stock of State housing, and along with fixing the homelessness crisis. We have the comprehensive plan over here. Here is one part of it. Here is a chance for National: step up, vote for this, and do something instead of sitting on your hands.

New Part 5 of this bill is a fascinating part, and I want to concentrate on clause 15. But, before I do that, I would like to just pay tribute that we are into the 13th hour of this debate, and it feels a little Telethon-like, because when you are doing something for the benefit of the whole country it feels like fun, and I think, at the end of the day, everyone will benefit, especially if Part 5 becomes part of this legislation.

Part 5, clause 15, looks to insert new sections 17A and 17B into the Overseas Investment Act. Section 17 in the said Act is titled “Factors for assessing benefit of overseas investments in sensitive land”. There is in clause 17A, which we would like to insert into that Act, some criteria for approval of overseas investments in residential property. I do not want to dwell too long on clause 17A, but I think it is relevant for me to pass through them quickly, just so people get a flavour of what kinds of criteria there will be.

Clause 17A(1)(a) is a good character test. Clause 17A(1)(b) is, essentially, an immigration test to make sure that the people who could potentially invest in residential property would meet Immigration Act criteria. But the interesting thing with clause 17A(1)(c)(iii) is that “the overseas investment will, or is likely to, increase the supply of housing in New Zealand, as determined by the relevant Minister under section 17B.” Before I get to section 17B, I do want to point out what that says: “increase the supply of housing in New Zealand”.

Pointing to some of the concerns of the Hon Michael Woodhouse around the relevance of Part 5 to this piece of legislation, I think it is quite simple to say that if you are increasing the stock of housing in New Zealand, if you are an overseas investor and you are looking after that in a systemic way, then you are helping housing affordability. So that is why I think section 17B is quite fascinating, and should be something that any Government that wanted to have a comprehensive housing plan should have in place, because 17B does, again, set out criteria for overseas investors in residential supply, in terms of increasing the housing supply.

One of those criteria for investment, in clause 17B(2)(a)(i), is that “the overseas investment is in vacant land and the relevant overseas [person] is committed to building premises used or intended for occupation by any person as a place of residence:”. In plain English, that is an empty plot of land on which that person who is investing in that from overseas is going to build houses for people to live in, whether it be themselves or someone else, or both of those, that would increase the housing stock here in New Zealand, which would be a good thing for housing affordability. If the Hon Michael Woodhouse cannot see the sense of that—

The CHAIRPERSON (Hon Trevor Mallard): Order! There was a point of order on which there was a considered ruling, and the member—I should have pulled him up earlier—cannot go back to relitigating that area.

Thank you. But if the Government cannot see how that would be good for increasing the supply of housing for housing affordability, then I think it may need to rethink its plan.

The second one, in clause 17B(2)(a)(ii), is that the overseas investment is in premises already existing and “[the relevant overseas person] is committed to redeveloping that site to contain a greater number of places of residence:”. Again, in English, that might be that someone might buy a property that is a singular house, they may invest in that, and they may turn that into five or six flats or subdivide that area and build more houses, therefore increasing the supply of housing, which, again, is good for housing affordability.

The third criteria, under clause 17B(2)(a)(iii), is that the overseas investor is investing in “existing premises used or intended for occupation by any person as a place of residence that is not currently suitable for habitation and the relevant overseas person is committed to redeveloping that site to make it fit for habitation;”.

Overseas purchasers do have a big effect on the New Zealand housing market. The Government has never admitted that, and in questions at question time over some years now this has been challenged. The Government has constantly said “No, they don’t have much effect—no, they don’t have much effect.” and has brought up spurious data to try to prove that. But the reality is that they do have a big effect. They have a big effect because they tend to buy land purely for capital-gain farming purposes only. They tend to land bank land, they tend to speculate, and they tend to buy homes and sit on them and not rent them out because that is an inconvenience. They are interested only in the capital gain. As I have said, what they are really doing is just capital-gain farming.

You can understand why—now that the average price of Auckland houses has reached a million dollars. When you look at the unbelievable capital gain that has occurred, even over the last year, you will see why the overseas purchasers with plenty of money are very keen on buying New Zealand homes. Therefore you see, in various parts of the world, advertisements—even by New Zealand real estate companies—encouraging overseas purchasers to buy in New Zealand. At various times New Zealand First has produced such advertisements sourced from China and sourced from Singapore. No doubt they occur in other places, as well.

Other nations have moved in the way that is proposed in this amendment, proposed Part 5, and they have placed severe restrictions on overseas purchases of residential land, either just through absolute prohibitions—which New Zealand First favours—or through the taxation system. This Government has done nothing. Why has it done nothing? Nobody really understands, because overseas purchases for capital-gain farming purposes confer no benefit on New Zealand whatsoever, and, indeed, they do significant damage.

I want to move on to the particular provisions in this amendment, which New Zealand First would like to be able to support. New section 17A, inserted by proposed new clause 15, is the crux of them, and they provide the criteria. Apart from good character and the ability to get a visa under normal rules, the important part, I think, is section 17A(1)(c), which requires one of a number of criteria to be met. The first we agree with—that the person has to be a New Zealand citizen, ordinarily resident in New Zealand, or intending to reside here indefinitely. We agree with the second—that the relevant overseas person intends to reside in New Zealand temporarily, but with an agreement to sell their New Zealand property if they then leave. That, of course, must be properly evidenced and guaranteed.

The third one is the one that we disagree with. I have moved an amendment to proposed new Part 5 to remove section 17A(1)(c)(iii), which is the one that allows overseas investment if it is likely to increase the supply of New Zealand housing, and, consequentially, I have moved the deletion of new section 17B as well. The reason for that is very simple. That is that we do not believe that it would be possible to properly police that subparagraph (iii) relating to the increase of supply of housing in New Zealand. How that could be properly evidenced? I know that there is section 17B there, which tries to achieve that, but I do not think it can. I think it makes the policy far too weak—there are too many let-offs in it. We could not support it. We just want a simple prohibition of purchasing residential land in New Zealand; we do not see any need for that exception.

If my amendment is not passed, we will be unable, unfortunately, to vote for this amendment inserting new Part 5, because it is such an important issue for us. We think that it is absolutely vital that overseas purchasers of residential land in New Zealand should be people who actually live here, or who are citizens, wherever they reside, or people who want to come here and reside permanently in the country. We do not want any other let-out as far as overseas purchases are concerned. So we cannot support section 17A(1)(c)(iii), and we hope that the other parties in the Committee will look at my amendment and pass that to amend this amendment, so that New Zealand First will be in a position to support it as well.

I am very pleased to take a call on proposed new Part 5 of the Housing Legislation Amendment Bill, inserted by Phil Twyford’s amendment, and before I begin my comments on the specific provisions of this, I do want to acknowledge the growing levels of frustration on the benches opposite. I want to say that the power to end this debate is entirely in the Government’s hands. If the Government is willing to send Part 2 of this bill to a select committee, so that the confiscation of property rights can be adequately considered, then the debate will be all over. But if it is not willing to do that, then the debate will continue. The power to end this debate is entirely in the Government’s hands—I suggest those members have a conversation about that.

I move to new Part 5, which amends the Overseas Investment Act to consider, basically, a housing interest test when overseas buyers are buying New Zealand housing. The question that we should always ask about overseas investment—and I stand here as someone who supports overseas investment in New Zealand—is what the benefit is to New Zealanders. What extra benefits are we getting from the overseas investment? If they are buying a business we have good tests around what the extra investment would mean for New Zealand. If they are buying sensitive land we have a test that asks what extra benefits New Zealanders get from this purchase. Why do we not have similar criteria around overseas investment in our housing market? Surely the question we should be asking is what we are getting.

If we are allowing somebody who is not resident in New Zealand to come to buy housing, what is the benefit to New Zealanders? At the moment no such test exists, and this provision inserts that. By doing so, it would prevent an overseas investor from simply buying up residential properties for the sake of raking in profits, which are then removed from New Zealand, which then pushes up the price of rental accommodation and excludes New Zealand buyers from the housing market, and it would ensure that those houses would otherwise be available to New Zealand purchasers—first-home buyers, potentially, or other New Zealand - based resident investors. So why do we allow unrestricted overseas investment in New Zealand housing at the moment? There really is not any good justification, because if we go back to that very first test around what value that delivers to New Zealand, it arguably does not deliver any.

So I want to turn, particularly, to new section 17B, in new Part 5, which talks about assessing the value of overseas investment in New Zealand housing, and I want to talk, particularly, about subsection (2)(a)(iii), which is where an overseas buyer is purchasing “existing premises used or intended for occupation by any person as a place of residence that is not currently suitable for habitation and the relevant overseas person is committed to redeveloping that site to make it fit for habitation;”. We have got a number of buildings throughout New Zealand that at the moment do not meet code. Many of them are owned by local authorities, but some of them are privately owned—some of those old Housing New Zealand Corporation blocks, for example, that need significant improvement in them, that are now privately owned or no longer owned by the Housing New Zealand Corporation. They need significant improvement in their present form. Although some of them, regrettably, are currently tenanted, they are not suitable for human habitation, and it is an indictment on our current housing policies that we have actually got people living in housing that is currently not fit for human habitation.

If an overseas investor were to buy those properties that are so badly run down that they cannot be occupied without significant investment, and there is nobody else domestically—that is the other test that has to be applied—who would be willing to make that investment, then they are going to be increasing the supply of housing for New Zealanders. There could be a case to be made for the overseas investor to be allowed to buy that, because those dwellings are otherwise unoccupiable, and without that overseas investment they would not be occupiable. So there could be a case made for that. This bill introduces that, and it allows for that to happen. I actually think that the threshold would have to be reasonably high because, as I have indicated before, the second test has to be whether there would be someone in New Zealand who would be willing to do that, and make that investment. If there is, then there is no justification for the overseas investment.

So it is not just a question of “Does the opportunity exist?”. The test, then, also has to be “And is there nobody else who could take up that opportunity, or who would be willing to take up that opportunity, or who would have the capital available to take up that opportunity?”. New Zealand housing should be for the benefit of New Zealanders. We, as a Parliament, should certainly be making sure that New Zealanders are the first in the queue.

Let us go back—well, not back; it is still around—to that amazing game of Monopoly, where we sit around looking at a board, we move properties around, and we throw our money in the middle. Basically, we should be able to have the desire to prevent New Zealand being played around with in this way. You can sit around in a room—today it is probably on the internet—have a look at what is available in that country over there, and have a little bit of a play around: “We’ve got spare money, we’ve got spare cash—I’ll take that. I’ve never been there, I perhaps never will; I’ll take that, and I’ll take that.”

Other countries have decided that they cannot live with that—plenty of other countries. For example, in Vancouver there is a new 15 percent stamp duty tax on overseas buyers. Other countries have had the courage to do what is right. Australia, as we keep hearing, does not sell land to foreign investors unless they are going to build a new house on it. So other countries have been as appalled as we should all be, and have put in place rules to ensure that all of our New Zealanders first have a fair go at being able to buy our own houses and land. All of our New Zealand residents—our Chinese New Zealand residents, our Japanese New Zealand residents, our Mexican New Zealand residents, all of our New Zealand residents—should have a go first at being able to buy our houses and our land. To live here, to be part of the community, to contribute back, to be able to contribute to your local schools and your local jobs—all of these are the things that happen when you are invested in your community and your surroundings, when you are genuinely connected to what is going on around you, and you are willing to invest your money into your own community. So why, Government, would we not want to fight for that? I do not understand—well, perhaps I do, but I might not be able to share the language on that in this Chamber.

So why would we not want to fight for that—and at least know about it? Hey, at least, why would we not want to know what is going on with numbers? How about that, at least? For example, in Ōtara, and my colleague Jenny Salesa often points this out, sales of homes are now 80 percent to investors. This is up from 62 percent in 2010. We should at least be able to know very clearly who of those are not residents here in Aotearoa New Zealand. In Manurewa, where I live and rent my home, sales to investors are 68 percent. Bear in mind these two percentage points of sales to investors are higher than the country’s percentage rate of sales to investors. Again, we want to stick up for the communities that are being most hampered. We want to find out for those communities, my community and Jenny’s community, what is happening with sales there, at the very least. But mostly we do want to put a ban, which is why the Greens are supporting this amendment to this part of the bill. We do absolutely want to put a ban, and see how that goes. See how it impacts. At least do that.

I wanted to take just a short call, but one of the other points I wanted to raise is that for tangata whenua this has an even yuckier taste: when we are feeling on our whenua that we are tenants in our own whenua. Again, why would we not want to fight for that? Tangata whenua, our indigenous people, our mana motuhake people—why would we not want to fight to understand who is buying our homes and our lands, how we can find that out, and also to let us put up a ban? Let us see how this is going to impact on our country, because we do stand by our own residents, all of our own Aotearoa residents. Kia ora.

I move, That the question be now put.

The member might have got it if he had asked for it properly.

A very good choice. I wanted to make some comments on what Chris Hipkins said because I think it is very important that we clarify this a little. The issue is with regard to proposed new section 17A(1)(c)(iii), to be inserted into the Overseas Investment Act by proposed new clause 15. That is the section that would allow overseas purchasers to purchase land if “the overseas investment will, or is likely to, increase the supply of housing in New Zealand, as determined by the relevant Minister …”. I do not think that the comments made by Chris Hipkins were realistic. He particularly referred to do-ups. I think those would be an excuse for overseas purchasers to buy valuable property, on the basis that they wanted to invest in them and make them more valuable. I do not accept that Kiwis could not do that just as well, or that there would not be a very long list of Kiwis wanting to do this, if only they could afford the property.

In addition to that, I think there is a lot of merit in simplicity. Proposed new section 17A(1)(c)(iii) and the whole of section 17B are far from simple, and would therefore create a wide opportunity for overseas purchasers to drive fleets of buses through this particular amendment. They would find ways through that of being able to purchase land in New Zealand without much restriction. The reason I say that is if you look at section 17B(1) you will see that “the relevant Ministers must determine whether the requirements [set out below] are fulfilled.” There may be some Ministers whom I would have faith in to do that well, and to do it genuinely. But I can tell you right now that if the current Minister were in that position, there is no way that I would have any confidence at all that the policies set out in section 17B would actually be followed with any genuine purpose whatsoever. So there is a huge problem with such wide ministerial discretion.

The second point is this. Look at section 17B(2)(a)(i), (ii), and (iii). In every one of those—in fact, in four places—the words “committed to” are used. What on earth does “committed to” actually mean? Nobody has said. Perhaps one of the Labour people could stand up and tell us, with precision, what they mean in each and every one of those four places where the words “committed to” are used. I do not think that is clear at all, and that is why I say that with this particular proposal a fleet of buses could be driven through it without notice. It is therefore going to compromise the whole piece of this proposal. That is a great shame, because New Zealand First desperately wants to stop overseas purchasers from buying New Zealand residential land.

That particular proposal, the one in section 17A(1)(c)(iii) that I read out, is the only one that compromises this otherwise very good proposal. I would very much encourage other members of the Committee to vote in favour of my amendment to the amendment, which would simply delete that. It would simply delete section 17A(1)(c)(iii) and, consequentially, the very complex and meaningless section 17B, and make this a piece of legislation that New Zealand First could support. It would then be a clean and simple and effective method of stopping overseas purchasers from buying New Zealand land, stopping the speculation that they indulge in, stopping the land banking, and stopping all the negatives that they do.

This is such a let-out that that particular provision really does have to be removed. I do not think Chris Hipkins was at all convincing in his attempt to justify it. I would again say that if people in this Chamber actually do want, in an effective way, to stop overseas purchases of New Zealand residential land, then please, remove that particular provision from this part. There is no good reason for it. It would achieve nothing, and the rest of it could then be effective, without being compromised in any way whatsoever.

I move, That the question be now put.

In the last half an hour, I have not heard any new argument other than that from Mr O’Rourke. I think that members should be in a position now to be able to make up their minds on this.