By Alex Tarrant
Labour is sticking to its guns on demand-side housing policy, with plans to end negative gearing and extend the bright line test making it through the coalition negotiations.
Meanwhile, another issue that came up during election season – ending taxation of the NZ Super Fund – doesn’t look like it’ll get a hearing any time soon.
New Zealand First leader Winston Peters as recently as 28 September called for the Super Fund to not have to pay tax on its earnings. But although a move to resume contributions to the Fund has been affirmed, there was no steer on the tax angle in the coalition document between the parties.
A Labour spokesperson confirmed: “The Coalition government will be ensuring that contributions to the fund recommence after nine years. The tax treatment of the Superannuation Fund has remained the same since its inception – the government has no plans to change this at this time.”
Negative gearing, bright line test
Labour campaigned on policies to end allowance for negative gearing by property investors, and also that it would extend the bright line test – a no-excuses capital gains tax – for non-owner-occupied property from two years to five.
But when its coalition agreement with New Zealand First was revealed – and its confidence & supply document with the Greens – there was no mention of either policy.
Interest.co.nz was told that, if there was no mention of a Labour Party election policy in either document (ie that it would or wouldn’t go ahead), then the inference is that the policy would go ahead.
For example, Labour’s bid to roll back National’s tax cuts and introduce its own family transfers package isn’t mentioned, but has been confirmed as what the new government will do; The documents with NZ First and the Greens don’t represent the full policy prescription for the next three years.
Asked specifically about whether the negative gearing and bright line test policies would go ahead, the Labour spokesperson simply said: “Yes” to both queries.
A lot of interest
The negative gearing issue in particular garnered much interest when Labour announced it. In May, then-leader Andrew Little announced the practice would be phased out over five years, with loss deductibility reducing 20% a year over that timeframe.
Expected savings from the move of $150 million a year would go towards a government insulation subsidy scheme.
Reaction at the time flowed thick and fast, with critics saying the policy would cause landlords to push up rents, and warn that house building would fall. Little responded by saying rents were at present being pushed up by speculators, who were raising them to cover ever-increasing house prices.
While at the time Little stuck to the line that Labour wanted its housing demand and supply policies to stabilise the market, his successor, Jacinda Ardern, on Saturday made the nearest acknowledgement that prices could continue to fall on increased housing supply. The comment was made in relation to Labour’s 10,000 a year house-building plan, dubbed KiwiBuild.
Ardern on Thursday said there had also been movement on Labour’s policy to ban non-resident foreign buyers of existing housing stock, saying work was already underway on the plans. She’s set to travel to the APEC forum in early November to try and convince trading partners to accept the policy, which goes against a number of New Zealand’s free trade agreements.