Oral Questions to Ministers

Asked by: DAVID MacLEOD, Answered by: Hon NICOLA WILLIS

to the Minister of Finance: Does the Government intend to introduce a capital gains tax?

No. In some circumstances, gains on sale are considered income for tax purposes, and that has long been the case. However, the Government has no intention of introducing a specific capital gains tax.

💬 David MacLeod: Why is the Government not considering this?

Well, a capital gains tax would increase taxes on savings, investment, and entrepreneurship, loading more costs on to households and businesses—the complete opposite of what the economy needs—and capital gains taxes around the world are always very complex. Compared to other types of tax, compliance costs are high. These costs apply not just to wealthy people and big companies but to ordinary taxpayers, who, in many cases, will need specialised advice when buying and selling property or when running a small business. The biggest beneficiaries of a capital gains tax would be valuers, accountants, and lawyers.

💬 David MacLeod: Would a capital gains tax make people pay tax on inflation?

Well, it does depend on how the tax was designed, but if there was no allowance for inflation, a capital gains tax on long-held assets would be grossly unfair. Over 25 years, for example, a property might go up 75 percent in value because of inflation alone, and not through any underlying increase in real value. A household or business selling that property would have to pay capital gains tax when they are no better off. With no allowance for inflation, people would end up with large tax bills on what are only paper gains.

💬 David MacLeod: Has a capital gains tax previously been considered for New Zealand?

There have been several major reviews of New Zealand’s tax system over the past 25 years. Those reviews have had a range of opinions on a capital gains tax, but no Government in that time has decided to go ahead with one. Case in point, a previous Prime Minister said quite emphatically, “I’m confirming today that under a Government I lead, there will be no wealth or capital gains tax after the election. End of story.” That was Chris Hipkins in 2023.

💬 SPEAKER: Yep, good. Can’t use a question like that. The Hon David Seymour.

💬 Rt Hon Chris Hipkins: Here comes the cavalry.

💬 SPEAKER: Yeah, just leave it. The Hon David Seymour and no one else.

💬 Hon David Seymour: I’ll do the jokes.

💬 Hon Members: Ha, ha!

💬 Hon David Seymour: Will the Government need to—[Interruption]

💬 SPEAKER: No, no, no. Wait, wait, wait. In spite of everything, we’ll just have the question asked with no other commentary around it.

💬 Hon David Seymour: Will the Government need to save money in order to balance the books with no new taxes; and if so, what plans does the Government have to do that?

Yes. In order to ensure that their taxes can remain low and that new taxes don’t need to be introduced, the Government will have to remain very fiscally disciplined. This will require prioritising new spending towards its most important priorities, continuing to eliminate wasteful programmes, and ensuring that we get maximum bang for every taxpayer buck. Thank you to my knight, the Deputy Prime Minister.

💬 Hon David Seymour: Is it possible that the Government can get better outcomes for people while spending less money, or is spending the only kind of aroha that a Government can show?

Well, no Government should be simply judged on the size of the cheques it writes on others’ behalf. The question is what impact and outcome you get for the dollars that you invest, because, after all, those dollars initially belonged to hard-working Kiwis, who always have a good use for their own money.

Prime Minister

Question No. 2

Asked by: Rt Hon CHRIS HIPKINS, Answered by: Rt Hon CHRISTOPHER LUXON

to the Prime Minister: Does he stand by all of his Government’s statements and actions?

Yes, and I just want to reassure the member that we will not be introducing a capital gains tax that taxes inflation, and that this Government is focused on more things than roaming charges.

💬 Rt Hon Chris Hipkins: Does he accept that the average worker’s pay has fallen in real terms under his Government, with New Zealand having the lowest real-terms wage recovery in the OECD?

Well, that’s why this Government is working incredibly hard to make sure we control spending, we bring inflation and interest rates down, we get the economy growing, and also we get people into work. I just want to assure the member that the forecasts are that in the next four years, we’ll have 220,000 new jobs added to this economy; the economy will be growing at 2.7 percent, on average, per year; and, most importantly, wages will be growing faster than inflation and prices.

💬 Rt Hon Chris Hipkins: How will freezing the minimum wage for three years help Kiwis get ahead, given minimum wage workers have already had a real-terms pay cut for three years in a row under his leadership—yet another reason working New Zealanders cannot afford three more years of this Government?

I’ll just say working New Zealanders can’t afford more taxes, because that takes money out of their back pockets, and that’s not a good thing. But I reject the characterisation of the question, because that’s not what we’re doing.

💬 Rt Hon Chris Hipkins: How does he expect Kiwi families to pay 20 percent more for their electricity when their wages have been going backwards in real terms under his leadership while the electricity companies have been gouging them for billions of dollars in profits?

Well, the way you do it is you don’t pass a bed tax that two-thirds will be paid for by Kiwis who might be going to visit a friend or a motel. You don’t add in a capital gains tax that’s going to be paid for by businesses in tax inflation. You don’t actually just keep adding taxes and taxes and taking money off working New Zealanders. Frankly, if the member actually cared about it, instead of petty point-scoring, and wanted to problem solve something, what he would have done if he cared about working New Zealanders is actually support tax relief for working New Zealanders—first time in 14 years.

💬 Rt Hon Chris Hipkins: Supplementary question.

💬 SPEAKER: Just wait. Just remember that there are reasonably strong rules about how questions should be asked but also answered, and both sides were outside those in that last exchange.

💬 Rt Hon Chris Hipkins: How does he expect Kiwis to pay for their groceries, like mince, which is up 30 percent; butter, which is up 40 percent; and bread, which is up 67 percent, when their wages are going backwards while the supermarkets make millions of dollars in excess profits?

Well, look, I just want to say to the member—I would like to reassure him that tomatoes are down 29 percent in the last year, eggs are down 16 percent, lettuce is down 15 percent, tinned spaghetti is down 6, chicken’s down 4, butter’s down 2, and I just—[Interruption]

💬 SPEAKER: Sorry, we’re going to have a repeat of yesterday if that sort of barrage continues. Ask a question; expect an answer.

So can I close it up? I’d just say to the member when he visits his bach, he’s more than welcome to make some nice cheesy chicken omelettes or maybe some chicken parmigiana—it’s going to be cheaper.

💬 Rt Hon Chris Hipkins: Supplementary question, Mr Speaker.

💬 SPEAKER: Just wait—just wait.

💬 Rt Hon Chris Hipkins: Why should New Zealanders believe him when he says he’s going to do another review of supermarkets to maybe consider breaking up the supermarkets, given his own Government received advice saying they could have saved shoppers $2.9 billion, yet they sat on that until the eve of an election, while the supermarkets continue to gouge them for millions of dollars in excess profits?

Sorry, I may have missed something, but I haven’t seen a policy to help solve a problem from that member around supermarkets. He had six years; he did absolutely nothing apart from some market studies. We are determined to make sure we get change in the supermarket sector—structural change. You had your go; you didn’t do it.

💬 Rt Hon Chris Hipkins: Was the Deputy Prime Minister, David Seymour, wrong when he told media today that the National Party doesn’t actually believe in breaking up the supermarkets, which is why they’ve announced another review—so that they don’t actually have to do it?

The Deputy Prime Minister, with all respect, doesn’t speak for the National Party.

💬 Rt Hon Chris Hipkins: When real wages have fallen, power prices have gone up, insurance prices have gone up, rates have gone up, insurance has gone up—all by more than 20 percent, under his leadership, in just the last two years—will he now admit that the cost of living crisis is not only not over; it’s getting worse under his leadership?

What I’d say, again—you know, cry me a river. But I’d say if that member was serious about supporting people, why didn’t you support tax relief for the first time for working New Zealanders? Why don’t you come out and support a council rates cap? Why don’t you come out and support structural separation for supermarkets? No idea. [Interruption]

💬 Hon Kieran McAnulty: Three question times left—that’s all he’s got.

💬 SPEAKER: Let’s just—

💬 Hon Kieran McAnulty: Absolute novice.

💬 SPEAKER: If you don’t mind?

💬 Hon Kieran McAnulty: No, I—

💬 SPEAKER: Beg your pardon? You what?

💬 Hon Kieran McAnulty: Well, you gave me an option, if I don’t mind—

💬 SPEAKER: No, no, no. It was actually more of an instruction than a question, but I’m not surprised there was no understanding in that. Just a general sort of, I suppose, observation that we are very close to the end of this Parliament, close to the election itself. Naturally, there’s going to be heightened tension, but just a little bit of decorum would be good.

Prime Minister

Question No. 3

💬 Hon MARAMA DAVIDSON: Kei te Pirīmia, comrade. E tautoko ana ia—

💬 SPEAKER: Whoa, whoa! Hang on—sorry. Just ask the question.

Asked by: Hon MARAMA DAVIDSON, Answered by: Rt Hon CHRISTOPHER LUXON

to the Prime Minister: E tautoko ana ia i ngā kōrero me ngā mahi katoa a tōna Kāwanatanga?

[Does he stand by all of his Government’s statements and actions?]

Yes, and I just want to reassure that member that we won’t be lifting the income tax rate to 45 percent for those earning $160,000 or more, but I do want to commend the member for at least having some ideas. I don’t agree with them on supermarkets, but that’s better than what we’ve seen from the Labour Party.

💬 Rt Hon Chris Hipkins: Point of order, Mr Speaker. How is that question possibly in order, other than just to reflect the Prime Minister’s absolute desperation at this point?

💬 SPEAKER: Well, two things: firstly, before I can even make a decision about that, you were on your feet to take the point of order and I’ve obliged you by hearing it. In making your point of order, you’ve also made your point.

💬 Hon Marama Davidson: Did his Government weaken the Natural Environment Bill’s protection of the environment following discussions with industry?

No, we met with industry groups and we also met with the environmental NGOs, as we’ve discussed yesterday.

💬 Hon Marama Davidson: Whose words got put into the bill?

💬 Hon Chris Bishop: PCO’s.

Well, actually, the Parliamentary Counsel Office (PCO), who drafted the bill, as you well know, but I’d just say to the member that on this side of the House, we engage with many stakeholders. We want to hear the perspectives of as many New Zealanders as possible. We don’t just take our advice from officials and box-tick it through.

💬 Hon Marama Davidson: Supplementary. [Interruption]

💬 SPEAKER: Just give yourself a moment while everyone composes, so that we hear your question without any other interference.

💬 Hon Marama Davidson: What message does he think it tells New Zealanders when he allows the agricultural industry privileged access to Government, while at the same time coalition parties have taken over $1.143 million in political donations from agribusiness-linked donors since 2022 and hundreds of thousands of donations from mining—

💬 SPEAKER: OK. Well, look, the member is making a point, but it’s well outside the provisions of the Standing Orders. Ask a question without the dress up.

💬 Hon Marama Davidson: Whose words from which groups that his Ministers met with were finally put into the Natural Environment Bill?

As the member understands, PCO drafts legislation that comes before this House, but, of course, as a great Government, we’re interested in the interests of all New Zealanders. We take advice from officials, we take advice from—in this case—industry groups, and also the environmental NGOs. [Interruption]

💬 SPEAKER: Well, when everyone is quiet, I’ll the Hon David Seymour.

💬 Hon David Seymour: Does this Government have a habit of listening to people affected by laws that it’s making—

💬 Hon Priyanca Radhakrishnan: No.

💬 Hon David Seymour: —and, if so, how long has this been going on?

💬 SPEAKER: Wait—whoa. Sorry, would whoever was interrupting there like to just apologise to the House for not being able to constrain themselves.

💬 Hon Priyanca Radhakrishnan: I withdraw and apologise.

💬 SPEAKER: Thank you. It was very generous of you—you were surrounded by people who were equally guilty. We’ll have the question from the Hon David Seymour, with no one making any comments.

💬 Hon David Seymour: Does this Government have a habit of listening to people affected by the laws it’s making, and, if so, how long has this been going on?

It’s a bit of a surprise to me to hear from the other side that this is not normal practice but that you actually engage and listen to lots of stakeholders and everybody across the community.

💬 Hon Chris Bishop: Can the Prime Minister confirm—[Interruption]

💬 SPEAKER: Whoa, just a minute. Is it necessary?

💬 Hon Chris Bishop: Can the Prime Minister confirm that the following well-known friends of the National Party have had secret closed-door meetings with the Minister Responsible for RMA Reform: Lan Pham, Julie Anne Genter, the Hon Rachel Brooking, and Greenpeace?

I can, and I just commend the Minister for his very open interest in understanding the perspectives of everybody.

💬 Hon Marama Davidson: Supplementary. [Interruption]

💬 SPEAKER: The Hon Marama Davidson, and no one else.

💬 Hon Marama Davidson: What feedback from other groups that his Ministers met with, including the Parliamentary Commissioner for the Environment, local and regional council, iwi and hapū groups, and environmental groups, made it into the actual drafting of their bill?

Well, I don’t know how to make myself any clearer: PCO draft the bill and the legislation that comes before the House here. Again, we engage, when we’re developing policy, with many people across the whole of the New Zealand, as we should, as a good representative Government.

💬 Hon Marama Davidson: Why should New Zealanders trust that this Government is going to protect nature when he allows the industries who pollute land and water the most to write the rules?

Well, I reject the characterisation of that question because this Government in this last quarter has had the lowest level of emissions in this economy since records began in 2010. This Government in the last quarter has had record high renewable energy consumption, at 96.4 percent. We can do both things, but we are going to grow this economy, and we make no apologies about that.

Housing

Question No. 4

Asked by: KATIE NIMON, Answered by: Hon CHRIS BISHOP

to the Minister of Housing: Is the Government considering removing interest deductibility on residential property?

No.

💬 Katie Nimon: Is the Government considering limiting, rather than removing, interest deductibility on residential property?

💬 Hon Member: Great question.

That is a good question; thank you for that compliment. Also no. The Government is emphatically not leaving the door open to removing or limiting interest deductibility. We are not considering a half ban—for example, where 50 percent of interest can’t be deducted. If someone provides a rental earning $30,000 in rent and pays $25,000 in interest, their profit is $5,000. With deductibility, tax at 33 percent is about $1,650. Under a half ban, tax is about $5,775 on a property that only made $5,000 profit. This is a great way to disincentivise people from renting out their property or punish people who’ve had to reluctantly rent out their property after a change in personal circumstances. Halfway to unfair is still unfair.

💬 Katie Nimon: What reports has he seen on interest deductibility for residential property?

I’m still making my way through the Inland Revenue Department’s (IRD’s) 2021 and 2023 regulatory impact statements. They are riveting—or I could be a slow reader; could be both. Page 17 of the 2021 paper is very clear about who ends up paying the price of removing interest deductibility. It says: “upward pressure on rents” from this policy are “more likely to disproportionately impact low-income households, young people, Māori, and Pacific peoples”—the New Zealanders least likely to own their home. It notes, “around 43 percent of [New Zealand] children are living in rental accommodation”, and that “upward pressure on rents could have negative impacts on child wellbeing and child poverty.” The same page warned that higher rents may mean more “spending on the accommodation supplement and temporary additional support.”

💬 Katie Nimon: What do the reports he has seen say about the rationale for removing interest deductibility?

The 2021 regulatory impact statement outlines that the key policy problem was housing affordability. The problem definition section noted there were concerns about rental affordability and maintaining an adequate supply of new housing stock. However, the same regulatory impact statement went on to describe in detail how removing interest deductibility was unlikely to fix the first problem and would make the other two worse. IRD said additional taxes on rental housing are unlikely to be an effective way of boosting housing affordability; they said it would put upward pressure on rents and may reduce the supply of new housing developments in the longer term. The rationale for removing interest deductibility is a shameless tax grab.

Finance

Question No. 5

Asked by: Hon BARBARA EDMONDS, Answered by: Hon NICOLA WILLIS

to the Minister of Finance: Does she stand by all her statements and actions?

In context, yes—particularly my statement that imposing vast additional new taxes on the economy would put it at risk.

💬 Hon Barbara Edmonds: Is partially privatising a State-owned asset an asset sale?

Well, the member would have to elaborate on exactly what she’s talking about.

💬 Hon Barbara Edmonds: Is partially privatising Kiwibank an asset sale?

Well, it would depend on what the proposal is that the member is referring to.

💬 Hon Barbara Edmonds: Is asset recycling an asset sale?

It would depend on the proposal that the member is referring to. Does she have any?

💬 Hon Barbara Edmonds: Will she rule out partially privatising Kiwibank?

Well, what I’ll rule out is that member ever coming up with a useful idea for the New Zealand economy.

💬 Hon Barbara Edmonds: Point of order, Mr Speaker. [Interruption]

💬 SPEAKER: Just a moment. Everyone, calm down.

💬 Hon Barbara Edmonds: I know it’s a very difficult time for some members on the other side of the House and we are close to an election. However, the Minister’s comments—

💬 Hon Chris Bishop: It’s not as tricky as it is for you. How’s your fiscal plan going?

💬 Hon Barbara Edmonds: —were a revelation to this side of the House, and particularly to me.

💬 SPEAKER: Hang on. Look, someone is talking and could leave the House right now—Mr Brown. One of you was talking—was it you, Mr Goldsmith? Away you go.

💬 Hon Chris Bishop: It was me—it’s me.

💬 SPEAKER: Oh well, OK—thank you for the honesty. Off you go. Sorry, I can’t warn all the time and nothing happens. Mr Bishop is leaving the House by volunteering to.

Question 5 interrupted.