National leader Judith Collins and ACT leader David Seymour have hit out at the Greens following their persistent calls for the Government to introduce a capital gains tax.
The Greens welcomed Finance Minister Grant Robertson's letter to the Reserve Bank requesting it to help control soaring house prices, but they want the Government to go further by taxing gains on assets to discourage property investment.
"We are glad that Government is exploring options to address the housing crisis, but it is disappointing that they've dug their heels in on measures that could help fix the problem," said Green Party co-leader Marama Davidson.
"It is a disservice to New Zealanders not to use all of the tools in the toolbox to fix this runaway housing crisis, and that includes taxing wealth or capital."
Prime Minister Jacinda Ardern ruled out introducing a capital gains tax under her leadership after she was unable to get the policy across the line in 2019. But Green Party finance spokesperson Julie Anne Genter says times have changed.
"When the Government ruled out a capital gains tax, we weren't in the midst of a global pandemic with an economic downturn and skyrocketing house prices," Genter says.
"Other options we will put forward outside of critical tax reform could be doing more to take pressure off monetary policy, for example by stimulating the economy through raising benefits and building more quality, affordable, public and community housing."
Seymour questioned whether the Greens had read the Tax Working Group's 2018 report on the prospect of introducing a capital gains tax.
It found that "there is no evidence of a general rise in rents or a fall in prices following the implementation of capital gains taxes" when looking at other countries where similar changes were implemented in Canada, Australia and South Africa.
"Have Green MPs actually read the Tax Working Group's report? A capital gains tax won't solve the housing crisis," Seymour wrote on Twitter.
The Tax Working Group did recommend introducing a capital gains tax however, and suggested it not include the family home like in Australia.
Seymour fears the Government will introduce a capital gains tax by "stealth".
According to a report by POLITIK, the Finance Minister has asked Treasury to investigate a range of tax options, including extending the brightline test beyond five years.
The brightline test is a variation of a capital gains tax which already exists in New Zealand. It requires income tax to be paid on any gains from residential property sold within five years of being purchased.
"For the past three years, Labour has taken the easy, populist route - banning foreign buyers and extending the brightline test to five years, neither of which has worked," Seymour said. "KiwiBuild was a complete failure."
To help get more houses built, the Government intends to repeal the Resource Management Act (RMA), the complex piece of planning law blamed for holding up new developments.
Genter said blaming the RMA is a "tired excuse".
"No doubt the RMA needs fixing, but it's only one factor. It won't fix property speculation or land-banking. It is time to courageously put the case for measures that will help end growing inequality in this country."
Land banking is when you buy a piece of land for its potential future sale or development into subdivisions. You keep hold of the land until market conditions are favourable, and then divide it into subdivisions to sell for a profit.
Collins told reporters: "None of the Green Party's responses would actually build one house."
She argued that RMA reform is the most important way of getting house prices down because at the moment first-home buyers are competing against property investors for limited stock.
"It is really clear that before we had the RMA Act house prices were about three times the average salary and now they're about eight, nine, 10 times."
Collins is a fan of a law passed earlier this year which allows some infrastructure projects to largely bypass the RMA and instead be referred to expert panels that will set the conditions for approval.
The new law will have a 'sunset clause', meaning it will be repealed two years from enactment. The Greens voted against it over concerns that it reduces public participation and narrows environmental considerations.
Low-interest rates, combined with property investors and first-home buyers competing for limited housing stock, have caused house prices to soar by 20 percent on the same time last year, defying predictions of a COVID-19 crash.
The Finance Minister wrote to the Reserve Bank Governor seeking advice on how it could support the Government by taking house price inflation into consideration when formulating its monetary policy.
Collins says she respects the Reserve Bank's independence but fears the record low interest rates are making the housing crisis worse.
"They encourage people to buy existing houses rather than to have money put in the bank, for instance. We're used to people wanting to save for retirement. Now it's like why would you bother when the interest rates are so low," she said.
"I don't think we can continue to spend and spend and spend without any thought for what happens to that money and at some stage it needs to be repaid or dealt with in some way. These are short-term stimulus responses which are useful but it's not a long-term strategy."
