National's proposed foreign buyers tax received much attention in Thursday night's finance debate, with Grant Robertson taking several opportunities to fire potshots at Nicola Willis over mounting criticism of what is a key ingredient in the party's plan to offer tax relief.
On several occasions throughout the night, the Labour finance spokesperson asked his National counterpart where the detail was in her tax policy document.
The crowd at the ASB Great debate in Queenstown also clearly didn't buy some of Willis' claims, with the audience making a large noise of disapproval when she suggested her party's policy wouldn't lead to house price growth in the region.
National is proposing a 15 percent tax on the purchase of properties worth more than $2 million by foreign buyers to help pay for several tax cut initiatives, like shifting income tax brackets to account for inflation.
It was put to her by moderator Jack Tame that the average house price in Queenstown is about $1.7 million, so property owners there looking to sell may increase their asking price above $2 million in order to attract foreign buyers, therefore bringing the region's prices up.
"We don't think it will affect them," Willis replied to groans in audience. "We are going to be asking them to pay a 15 percent tax which will deter speculation… the most important thing we can do for housing affordability in Queenstown is get more houses built here."
Treasury advice from 2019 obtained by Newshub shows officials believe foreign activity even in the top-end of the market "displaces New Zealanders from being able to purchase these homes and so places further demand pressures in other segments".
The event - which also featured ACT leader David Seymour and Greens co-leader James Shaw - was held just hours after three leading independent economists released a report alleging a possible $2 billion hole in National's tax policy.
Their modelling showed National's proposal would bring in only roughly $210 million per year, about $530 million less than what National's costings show. Over four forecast years, that adds up to a more than $2 billion shortfall.
Willis, as well as National leader Christopher Luxon, are disputing that modelling. They say that different economists have different opinions and they have received their own advice which shows National's idea would bring in enough revenue to fund its tax cuts.
Robertson used every opportunity he could on Thursday night to bring up the questions hanging over National's tax policy.
Early on in the debate, Willis attacked Robertson's record of high spending - which the Finance Minister has defended by pointing to the Government's responses to COVID-19 and the weather events.
"Show us the costings"
"At least I have got a plan Nicola," Robertson yelled out. "Where's your costings for your plan? Where's your costings? Show us the costings."
Willis responded by saying: "I have put out a 30-page document Grant, and do you know what it has got at the heart of it? New Zealanders getting to keep more of their own money because they are the sick of the way you spend it."
Robertson interjected at another point, saying Willis' "numbers don't add up".
Later, Tame asked Willis how she could make any claim of economic credibility given the most recent criticism of National's tax plan.
She replied by saying National had published its methodology - the economists on Thursday said there were still questions to be answered about this - as well as some legal advice.
"I will tell you about economists, you get six of them in a room and there will be seven different opinions. I respect the fact that economists have different opinions, but I stand by our costings," she said.
"What they require is for us to sell less than half as many homes as sold to foreigners before the foreign buyer ban was placed on. That's actually pretty conservative."
Willis said National had taken into account the fact that not all of the homes sold to foreigners prior to the ban were worth more than $2 million and believed the number of transactions there'd be under National's policy would be more than the economists found.
"I have spoken to real estate agents who are in this room, who have told me, there is huge demand from people who want to buy expensive, luxury homes in New Zealand. And they are going to come back and I am going to tax them."
That money would go to tax relief, Willis said.
"That is a priority for National. It may not be a priority for Labour, but it is for us."
Robertson jumped in to say the pages of National's tax plan Willis had referenced didn't contain any calculations.
"Show us the details. If you are so confident, where are the actual costings. Release the costings," he said.
Willis went on to explain the methodology published in the tax plan, including that National had got to its estimated sales number by looking at the number of pre-ban transactions and then accounting for house growth, the impacts of the tax and the $2 million threshold.
ACT's Seymour said it was astonishing National wanted to tax more, while Labour was proposing to not tax more, something that received a loud round of applause from the audience.
He went on to say he didn't think it mattered whether National's tax plan was credible, leading Robertson to say that was because National would have to submit to ACT's policy in any post-election governing arrangement.
Shaw, the Greens' co-leader, said he didn't believe National's numbers added up, but he also didn't believe people cared as they "just want a tax cut".
That's supported by a Newshub-Reid Research poll this week that found 51 percent of respondents believed it was the right time for income tax cuts, while 36.1 percent said it wasn't. Another poll result revealed Kiwis supported National's foreign buyers tax.
Shaw said "one of the great ironies" was not just that National was proposing more tax than Labour, but that the Greens' tax package includes "more income tax cuts than the National Party".
The Greens are offering a tax-free threshold and shifts to the income tax brackets paid for by a wealth tax, a trust tax, and an increase to the corporate income tax rate.
Labour's policy of cutting GST off fresh and frozen fruit and vegetables was also raised, with Tame noting Robertson had once opposed such an idea - something he's since said he had a "road to damascus" moment about. The policy has also been widely criticised by economists.
Sacrificing economic credibility
Tame asked if Labour was sacrificing economic credibility to win an election.
Robertson denied that was the case before speaking about credit ratings agencies recently giving the Government's economic management the thumbs up.
He also said the GST policy was also just one component of Labour's cost of living policy. It also included removing prescription co-payments, reducing public transport fares for some and extending free early childhood education.
"This is one thing we can do to address the thing that gets raised often with us as politicians and that is the price of food. I acknowledge it is not the be all and end all but it is doable, it is done in other parts of the world, and we can do it here."
At one point, Willis also said she didn't know how her party's policy of restoring interest deductibility and pulling down the brightline test would impact house prices.
She said she didn't believe interest deductibility change would be a big influence on house prices. The constraint on that currently was zoning and infrastructure rules holding back the development of housing.
"When you take away landlord taxes, you reduce pressure on rents," Willis claimed.
However, Shaw called that "absolute rubbish" and argued rent prices go up regardless of whether there are taxes on landlords or not.
Seymour also jumped in to call for an end to the "war on landlords".
"Landlords and tenants have a symbiotic relationship. Punishing landlords is the stupiedist way of helping tenants ever invented in the history of public policy. As tenants, we actually want more people renting out houses, we want it easier to be a landlord to ensure more supply and more choice."
Willis later told reporters National didn't think the interest deductibility changes would affect house prices. She wouldn't say if National got any advice on whether it would impact house prices.
During the debate, Seymour was asked about ACT's proposed cuts to government spending. He said that didn't include any frontline spending, but was focused on back room expenditure.
Pushed on the "human cost" of those cuts, Seymour said ACT wanted the number of full-time workers to fall by 15,000 as fast as possible.
