The Labour Party would like to recreate a New Zealand where more Kiwis owned their own home by controlling house prices through disincentives for property investment, and by allowing people to build up money for deposits through schemes like KiwiSaver, Phil Goff says.
The Labour leader acknowledged that the government’s changes to depreciation laws, where depreciation cannot be claimed on buildings with a usable life over 50 years, had already had some effect on controlling house prices.
Goff reiterated Labour’s ring-fencing policy of not allowing property investors to make losses on rental properties and claim that back against other income in order to minimise tax, as another disincentive for property investment that would help control prices.
Goff was following on from comments made by Labour finance spokesman David Cunliffe yesterday, who said Labour would work to put home ownership back within the reach of average income earners.
Cunliffe also said Labour would broaden New Zealand’s tax base if elected to government on November 26, and while Goff would not rule out a capital gains tax yesterday, his previous comments suggest he preferred the ring-fencing policy over a more comprehensive capital gains tax.
Back to the future
“The concern that Labour has is once upon a time 80% of New Zealanders could aspire to owning their own home, that was the Kiwi dream. Predictions are that that will now drop to 59%,” Goff told media in Parliament on Tuesday.
“That means that 40% of Kiwis can never hope to own their own home. That’s not satisfactory in terms of what our Kiwi dream is, so we need to assist with that,” he said.
“One of the ways is to keep house prices down, rather than have the inflationary housing boom. The other is through things like KiwiSaver, that we introduced, that give people the chance to get money as a deposit for a home.”
KiwiSaver members are allowed to access their funds after three years of being in the scheme to put the money towards a deposit on their first house. The only other way to access funds before age 65 is via a hardship allowance under certain circumstances of financial stress.
The Labour Party has attacked the government for signalling its intentions to cut government contributions to KiwiSaver in Thursday's budget, while requiring KiwiSavers and their employers to contribute more to the scheme.
Labour was looking at ways to control house prices in its broader policy platform, which had not yet been finalised, Goff said. Labour has already expressed support for allowing the Reserve Bank to be able to control maximum loan to value ratios, and use further supplementary prudential tools to help control asset price bubbles.
“The [cancellation of the] depreciation allowance has been one factor there, ring fencing would be another factor, for example,” Goff said.
“The real objective has got to be to try to get more Kiwis owning their own home, rather than being forced to rent if their real desire is to have home ownership,” he said.
“That’s the New Zealand that most of us grew up in, that’s the New Zealand that we’d like to recreate.”