POLITICAL & REGULATORY REPORT for December 2011
POLITICAL & REGULATORY REPORT for December 2011
PRODUCTIVITY COMMISSION – Housing affordability report
The Productivity Commission released its draft report into housing affordability on 16 December.
The Commission examined the demand and supply factors influencing housing affordability, such as land supply, infrastructure, building costs, government regulations, taxes and levies. In other words, why is housing is expensive.
Of particular interest to the Federation the Commission found that tax was not a key driver of the recent housing boom and that any tax-advantage for investors is much smaller than often suggested.
The report said GST applies to both rental and owner-occupied housing purchases; local body rates are also a tax; and capital gains on housing are already taxed when those buying and selling houses are “in trade”.
And the Commission recommended no changes, to ring-fencing of losses on residential rental investments.
Overall, the Commission said that it does not see a pressing need for changes to the taxation of housing.
Finally, it is pleasing to note that the report drew on significant quotes from the Federation’s written submission and engagement input and picked up on or endorsed relevant Federation recommendations.
The draft report is open to public comment until 10 February 2012 with a final report, to be submitted to each of the Ministers of Finance, Environment, Housing, Building and Construction, and Regulatory Reform by 16 March 2012.
POLITICS – Cabinet
The election result has now been finally settled and John Key has announced his full Cabinet and Ministerial line-up. Of interest to the Federation is the return of Phil Heatley as Minister of Housing and the new appointment of Tariana Turia as Associate Minister of Housing. Other relevant Ministers and portfolios include:
· Maurice Williamson - Building and Construction
· Peter Dunne - Revenue (responsible for IRD investigations)
· Chester Borrows – Courts (responsible for additional court sitting days to address tenancy tribunal waiting times)
POLITICS – Parliament
The first meeting of the new Parliament will be held on 20 December.
One key event will be the Governor-General delivering the Speech from the Throne, which sets out the Government’s three-year legislative program.
Rental property issues and property tax changes are not expected to feature in the Government’s workplan for 2012. However, the Government’s agenda will include plans to insulate more state houses and privately owned homes.
Parliament will resume from the summer recess in early February 2012.
POLITICS – TAX
The new leader of the Labour Party is David Shearer.
During the election campaign the party presented as policy its intention to introduce a Capital Gains Tax.
That regulatory risk remains high especially given the new leader’s position on a CGT. In answer to a TV interview question (4 December TV1 “Q&A”) as to whether he believed that capital gains tax is a 'must do' Shearer said:
“Yes, I agree with capital gains tax, but I think we still need to go back on everything - and I'm not just saying it about capital gains tax - on everything and take a look at it”.
For rental property owners the National-led Government has categorically ruled out Labour's and the Green Party’s idea for a capital gains tax.
Notwithstanding the above, the Green Party continues to argue that the single largest remaining tax loophole should be closed by introducing a capital gains tax (see Appendix A, item #3)
POLITICS – Spokesperson responsibilities
The Labour Party has announced that Annette King takes over from Moana Mackey as its Housing spokesperson.
Elsewhere, the Green Party announced that Holly Walker is their housing issues spokesperson. Walker will also be the sponsor of the Green Party’s “Energy Efficiency Conservation (Warm Healthy Rentals) Amendment Bill” which would to require all rental properties to have minimum standards for warmth and insulation by 2018.
ISSUES UNDER WATCH
- Review of the law of trusts (especially family trusts) – Written submissions to the 4th issues paper closed 31 August 2011
· New Zealand Productivity Commission Inquiry into Housing Affordability – Public submissions on draft report closes Feb 2012. Final report due Mar 2012.
- Trustee Amendment Bill (clarifies functions, duties & rules for trustees) - Awaiting 2nd reading
· Energy Efficiency Conservation (Warm Healthy Rentals) Amendment Bill (to require all rental properties to have minimum standards for warmth and insulation by 2018) - Awaiting a ballot selection for parliamentary debate
· Amendment to the Land Transfer Act 1952 – modernisation of the law to reflect the current use of electronic conveyancing and other technical improvements be made - pending