Source: New Zealand Parliament – Hansard
Question No. 8—Prime Minister
8. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: Does she stand by her statement, “between 1991 and 2019, New Zealand house prices had the highest real growth in the OECD at 266 percent”; if so, will the policies announced today reduce real house price growth?
Rt Hon JACINDA ARDERN (Prime Minister): Yes. The policies announced today are one part of a range of programmes the Government is undertaking to address a housing crisis that has been decades in the making and to which there’s no quick fix. These include funding the $3.8 billion of vital infrastructure required in order to build new homes, incentivising investment in the construction of new homes, requiring councils to zone more housing and remove the barriers to intensification, repealing and replacing the Resource Management Act, making it easier for first-home buyers to get into a property, making sure we have the skilled workforce we need to build more homes, and delivering 18,350 more public and transitional homes by 2024 in the largest State building programme since the 1970s. Cumulatively, we expect these programmes to place downward pressure on house price growth and increase the supply of new homes.
David Seymour: Who’s most to blame for the current state of the housing market out of the previous Government, the present Government, property investors, or even coronavirus as the Minister of Finance alluded this morning?
Rt Hon JACINDA ARDERN: I think, actually, on this side of the House, we’ve been very open over the fact that this has been an issue that has grown over a number of decades, and so rather than get into a situation of poring over which individual action has had the greatest impact, our view is that our job is to get on with the solutions.
David Seymour: If this crisis has grown up over decades, why has this Government waited four years to do anything effective, if indeed it has now?
Rt Hon JACINDA ARDERN: I reject the premise of that question. Of course, some of what I’ve read out on that list, including, for instance, the national policy statement that’s putting an expectation on councils to make sure that they are freeing up land and that they are seeing more intensification, is something that we worked on in the last term. The groundwork—the foundation work—around the Resource Management Act occurred in the last term. Our significant housing build programme for public housing occurred in the last term. What we are doing is acknowledging that we need to keep going, and in particular, in the last year we’ve seen significant house price growth. That tells us there are more levers we need to pull, and we have.
Nicola Willis: Does her promise, announced today, to build 80,000 houses over 20 years override her previous promise to build 100,000 houses over 10 years?
Rt Hon JACINDA ARDERN: The member completely misunderstands the acceleration fund. What I could recommend is that if the member looks at, for instance, the $1 billion infrastructure fund put forward by her party when last in office, the $3.8 billion we’ve put forward is in line with providing infrastructure in the same way, but the most material difference being that this is not a loan, it is a grant and, therefore, we expect wider uptake—and, of course, it is much larger. But we are, of course, expecting that it will be the private sector that is broadly involved in developing the houses on the land. And that is vastly different than a Government house build programme.
Nicola Willis: A point of order, Mr Speaker.
SPEAKER: Well, if the member wants a point of order, she’s got to stay standing up.
Nicola Willis: Sure. The question was quite specific. It was about whether one promise overrode the other; I didn’t hear the Prime Minister address that.
SPEAKER: Well, the member has been round here a very long time and she knows that point of order is disorderly.
David Seymour: How would the Prime Minister describe the effects of today’s surprise announcement that mortgage interest will not be tax deductible for existing property investors in four years’ time on renters?
Rt Hon JACINDA ARDERN: Well, first of all, I would not describe it as a surprise. I mean, what we did say is that we have seen significant house price growth. We asked for advice on how to address that most successfully, and when you look at the evidence around particularly the proportion of the market and lending that has been taken up by investors in the market, it points to us pulling levers in that area. I would also just highlight again for the member that one of the issues, of course, that causes potential increases in rent is simply a lack of supply, which is why we’re encouraging investors to invest in new builds. That is where we really would like their support and we’re encouraging their support.
David Seymour: Is the Prime Minister seriously telling the House it was widely known and expected in the property investment community that her Government would make mortgage interest non-deductible today?
Rt Hon JACINDA ARDERN: No, that is not what I’m saying. What I’m saying is that if you are looking at initiatives that will make a difference to tilting the balance for first-home buyers—as we long flagged we would—and if you’re seeking advice to do something about the increasing impact of speculative demand in the market, then, of course, we would look at a suite of initiatives in this space. I fully acknowledge that not everyone has anticipated that we would do that.
David Seymour: Why should anyone believe that the effects of the proposed Housing Infrastructure Fund will be better than those of the 2016 Housing Infrastructure Fund?
Rt Hon JACINDA ARDERN: Look, the member is, you know, right to ask the question. I think we’ve looked at the lessons learnt from that, and one of the points that councils have made is that, actually, this is one of their biggest barriers to seeing new development in areas of high demand, but they do not have the space on their balance sheets to take on extra debt, which is what the fund in 2016 asked them to do.
David Seymour: What does it say about this Government’s priorities that the supply-side changes will happen at some undetermined time in the future, but the tax changes to target property investors are being rammed through Parliament today under urgency?
Rt Hon JACINDA ARDERN: If we could build—physically build—houses at a greater pace than we are, of course, we would be doing that. It is a reality of the fact that supply-side measures take time. It would be wrong to say that this is the extent of them. Of course, we have already invested heavily in Kāinga Ora and large-scale build projects in public housing, in transitional housing, and that is why when we came in office, we saw roughly 300 houses being built; we now have more than 3,000. That is because we have already moved very quickly, but unfortunately supply-side takes time
David Seymour: Point of order. It’s a technical point, but the question was about the legislative priorities. The Prime Minister has given us a commentary on how long it takes for those priorities to take effect, but she didn’t address the question of why they’ve decided to legislate a particular type of response today, which is actually a different question she didn’t address.
SPEAKER: I appreciate the member’s point of order. I think, though, if he thinks about the full extent of his question, it was a little bit more than just the legislative priority. I think the member said, “versus building houses.” At that point, he did open it up for the Prime Minister to give a more extensive answer to his supplementary. My advice to the House, generally, is that the tighter the question, the more support the member will get in having it addressed in a tight manner.
David Seymour: Why should anyone believe that a 10-year brightline test will be more effective than a five-year brightline test when the latter failed to be more effective than a two-year brightline test?
Rt Hon JACINDA ARDERN: I don’t know that it’s fair to make that judgment at this point. What I would say, though, is, of course, New Zealand had a pre-existing regime around intent. It had no time frame on it. What I think was right for at least the National Party of the day to have done was to say it would remove the ambiguity. They put a number on it, a year, but there was an intention test that previously had no end point on it. What we’ve been advised is that increasing will meet the reality of the market. Obviously, the recommendation had been to go to 15 or 20. Our view was that 10 would meet the reality of the market.