The Reserve Bank has once again thrown the gauntlet down to the Government over taxing housing speculators.
Challenged at the Finance Select Committee today by Green Co-Leader Russel Norman over comments made a fortnight ago by the bank’s deputy Governor, its Governor, Graeme Wheeler said that tax policy was very much a matter for the Government.
But Mr Wheeler agreed with Mr Norman that it would be fair to characterise the Bank’s position as wanting to see fresh consideration of some tax policy measures.
“If you think about the tax preference that is given to housing as an asset class then you look at investor housing, particularly highly leveraged investor housing,” he said.
“Then you get into issues like interest deductibility, the treatment of capital gains, whether there are issues around stamp duty that might be appropriate in respect of foreign buyers and things like that.”
LABOUR BELIEVES GOVERNMENT SHOULD ACT
Outside the Committee, Labour’s Finance spokesperson, Grant Robertson, said that the Reserve Bank should not be where all housing policy was made.
He accused the Government of “outsourcing” its housing policy to the Reserve Bank.
“What we are saying is that there is still an issue here.
Whether a fully-fledged capital gains tax is the way to do that is what we are now reviewing.
“But we believe there are a range of measures available.”
Plainly Labour though they may be reluctant to persevere with their capital gains tax proposals still believe that the housing market needs a tax disincentive to stop speculation.
The review Mr Robertson was referring to is a move by the Labour Party and the Caucus to review over 130 policies that the Party went into the last election with.
BUT LABOUR HAS NO POLICIES YET
The problem the review causes Labour was dramatically illustrated yesterday morning when Leader, Andrew Little, made a pre-budget address to a Wellington Chamber of Commerce breakfast.
He made a wide ranging critique of Government economic policy.
He said that over the past seven years the Government hadn’t announced a single imitative which tacked the structural imbalances in the economy.
“They haven’t tackled our over reliance on dairy or on housing speculation,” he said.
“They have done little to encourage innovation.”
He did say what he believed it should have done — it should have diversified the economy; it should have used the economic growth of the last four years to increase investment in innovation; it should have levelled the investment playing field with housing; it should have revitalised the country’s regions and it should have reformed tertiary education.
But there was no detail, no specific policies.
Instead he said Labour’s Future of Work Commission led by Finance spokesperson Grant Robertson was a two year commitment “where we listen more than we talk and where we come to pragmatic solutions that will guide our policy in the decades ahead.”
“The Commission is a model of the way we’ll approach all the big issues.
“We’ll listen, we’ll deliberate and when we act we’ll make a real difference.”
Mr Little’s approach will be welcomed by many who have previously found Labour’s policy making process to not involve too much listening — but a two year time frame is a very long time in politics.