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Source: New Zealand Parliament – Hansard

Question No. 5—Finance

5. Hon JULIE ANNE GENTER (Green) to the Minister of Finance: Does he stand by his statement about the Government’s economic response to the COVID-19 shock that “we must also not allow inequality to take hold in our recovery”?

Hon GRANT ROBERTSON (Minister of Finance): Yes, I do. I stand by the full quote which is underpinning all of this, as the Prime Minister said yesterday, “we must not allow inequality to take hold in our recovery. In fact we need to take this opportunity to improve the prospects of all New Zealanders and tackle those long-standing divisions”.

Hon Julie Anne Genter: Are rapidly increasing house prices in New Zealand almost unprecedented during a time of recession and growing unemployment causing wealth inequality to get worse?

Hon GRANT ROBERTSON: Well, the very reason why we have asked officials to do work for us on what other options exist in terms of demand in housing is because we are concerned about those rapidly escalating prices. Equally, Minister Woods, as the Minister of Housing, is leading a work programme on how to further address the supply side.

Hon Julie Anne Genter: Does he agree with Governor of the Reserve Bank Adrian Orr who last week said in relation to controlling house prices that “monetary policy is a blunt tool” and that the Government needs to consider its fiscal levers, including tax?

Hon GRANT ROBERTSON: I certainly agree with the fact that monetary and fiscal policy both have a role to play when it comes to the housing market.

Hon Julie Anne Genter: Will introducing a new top income tax rate without an accompanying tax on capital gains or property wealth help or hurt attempts to get the housing market under control?

Hon GRANT ROBERTSON: I think that the increase in the top tax rate is something that has been welcomed by a lot of New Zealanders because it will mean those on the highest incomes are paying a little more to help with the COVID recovery and make sure that we do continue to get debt under control. In terms of its overall relationship to the housing market, there are many, many factors at play there. I wouldn’t pick that one out.

Hon Julie Anne Genter: Why is his Government focusing on taxing income and not asset values when the ratio of house values to income has risen from 6.2 to 6.8 in the last year?

Hon GRANT ROBERTSON: What we believe is that we need to take a range of measures. There is no one silver bullet here when it comes to housing and how we manage house prices. It is a matter of increasing supply. We have been doing that. It is a matter of controlling demand. We have been doing that with the likes of the brightline extension that we did. The ban on foreign buyers—

Chris Bishop: How’s that going?

Hon GRANT ROBERTSON: The ban on foreign buyers is going well, Mr Bishop. It’s a very popular policy and also the ring-fencing of rental losses. The reason we have asked officials for more advice is so we can see what other levers exist.

Hon Julie Anne Genter: Does he acknowledge that there is significant risk that inequality will continue to worsen if the Government only focuses on taxing work and not taxing property wealth?

Hon GRANT ROBERTSON: We have a range of measures to help lift incomes that revolves around both our social development policy, our housing policy, the work we’re doing to improve productivity in the wider economy. What I would say to the member is that this has to be a comprehensive package of initiatives that deals right across the board. We are taking further advice on those matters at the moment.