from Brooke van Velden — ACT Deputy Leader and Housing spokesperson.
In Budget documents released yesterday, Treasury told the Finance Minister, ‘…had the interest deducibility denial been fully implemented in 2018/19, and current interest rates prevailed, it may have potentially generated tax revenue in the order of $800 million higher.’
Now we know the real reason for Labour’s interest deductibility change. Rather than solving the housing crisis, it was intended to line government coffers at the expense of Mum and Dad investors, most of whom own just one extra property.
Labour’s housing tax changes are divisive and unfair. They’re about blaming investors and they’ll do nothing to improve housing affordability.
The change to interest deductibility will reduce the number of rentals, push rents up, and make it harder for Kiwis to save for their first home.
Treasury officials also agree that the Government’s housing package will fail to solve the housing crisis:
‘Despite the sizable investment this package proposes, we think it is highly likely that housing outcomes for non-homeowning New Zealanders, among whom Māori and Pacific peoples are heavily overrepresented, will continue to deteriorate.’
They also point out that the housing crisis is not a tax issue:
‘The underlying driver of housing unaffordability is the lack of responsive and affordable housing supply.’
Treasury’s predicted slowdown in house price inflation hasn’t occurred. House prices have reached levels it predicted in three years after just three months. The average value of a home is now $922,421. That price wasn’t expected by Treasury until March 2025.
ACT has put forward a package that would solve the underlying problem in housing: the shortage of urban land. We need new ways to fund and build infrastructure, new coordination between central and local government, new rules for consenting land, and new ways of accessing building materials.
We have proposed a GST-sharing scheme, we’d remove barriers to finance for build-to-rent schemes and we’d introduce a Public-Private Partnership Agency – the Nation-Building Agency.
The Government should be asking ‘how do we create an environment for investment and development?’ Instead, this Government has targeted Mum and Dad landlords and investors with new housing taxes. By failing to ask the right question, it has failed to deliver on the very thing New Zealand needs it to – meaningful change so New Zealanders can build more homes.
ACT will continue to oppose this divisive change.