Political & Regulatory Report for March 2012

[Maccachic]

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POLITICAL & REGULATORY REPORT for March 2012


HOUSING - Spokespersons
All of the major political parties have now announced their Housing spokespersons. They are as follows:

• National: Phil Heatley – Minister
• Labour: Annette King
• Greens: Holly Walker [Wellington-based and previously worked in Parliament as an advisor to the Green Party]
• NZ First: Denis O’Rourke [ex-lawyer and Christchurch City Councillor]

The Federation has a round of political briefings scheduled for early next month.

CAPITAL GAINS TAX 2014 – Labour confirms
In his first major speech for the year (15 March), Labour party leader David Shearer has indicated that any future Labour Government would keep a capital gains tax. The premise is that this would help direct capital away from property and into more productive sectors of the economy.

Shearer has described a capital gains tax as "pro-growth".

He said "It helps switch investment from sectors such as housing, to the productive sector where we desperately need more capital.

“Over time I can also see the revenue it raises being used to offset the tax you have to pay in other areas. So I can see a role for CGT in transforming our economy”.

A CGT of 15%, with the family home exempt, and other details will be provided closer to the 2014 general elections.

Of concern to the Federation, any new capital gains tax regime focused on residential rental property would seriously hamper investors and the industry.

HOUSING AFFORDABILITY REPORT – final
The Productivity Commission, tasked by the Government to investigate issues including the cost of building a home, the efficiency of taxes, levies and charges and the impact of regulations, presented its final report to the Finance Minister on 23 March.

In respect of issues relevant for the Federation it is expected that the report, when made public, will not deviate from its initial findings. Regarding tax settings, the Commission has said that it was not a key driver of the recent housing boom and that any tax-advantage for investors is not significant.

Importantly, the Federation is expecting the Commission to reiterate that it does not see a pressing need for changes to the taxation of housing.

Elsewhere, it will be recalled that the Government in its 2010 Budget removed property investors’ ability to claim depreciation on buildings and we understand that the government is still looking at whether to index interest rates for inflation, which may mean property investors would not be able to write off as much mortgage interest against other incomes.

The Productivity Commission report is now before for the Government and should be tabled in Parliament next month.

SUPER MINISTRY – Dept Building & Housing merger
The Prime Minister announced (15 March) that a new Ministry of Business, Innovation and Employment (to be led by Hon Steven Joyce) will be created integrating the work currently carried out by the economic development ministry, the department of labour, the science and innovation ministry and, the Department of Building and Housing (DBH).

Of interest to the Federation, the DBH which is responsible for tenancy services for landlords and tenants, may have it functions relocated to another Ministry following a review. The current Minister of DBH is Hon Maurice Williamson and Katrina Bach is the DBH Chief Executive – the latter is to be a casualty of the merger.

As part of the Government’s stakeholder consultation, the Federation is to meet with the State Services Commission, who are leading the merger arrangements, early in April.

WELFARE BILL - Direct rent payments
On 27 March the Social Security (Youth Support and Work Focus) Amendment Bill was debated by Parliament as part of the Government’s election commitment to reform the welfare system.

Of interest to the Federation the draft legislation proposes that “essential costs” such as rent would be paid, on behalf of young state beneficiaries, directly to “accommodation suppliers”. At this stage, it is unclear if this includes private sector landlords.

From the Federation perspective, the proposed change is a good first welfare reform step and provides a platform to advocate again for more flexibility in the direct crediting of rent to all landlords, including those from the private sector.

Submissions to the Social Services Select Committee close April 13.

ISSUES UNDER WATCH – Summary

• Social Security (Youth Support and Work Focus) Amendment Bill – public submissions closes April 13.

• Review of the law of trusts (especially family trusts) – Law Commission recommendations of possible reforms to trust law expected mid-2012
• Trustee Amendment Bill (clarifies functions, duties & rules for trustees) - Awaiting 2^nd 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

END

[Perry]

Seems Shearer/Labour are keen to shear all the sheople, perhaps
ensuring they stay in opposition for a long, long time?

An interesting historical quote:

The Economic Consequences Of Peace

"Inflation is a method of taxation which the government uses to secure
the command over real resources; resources just as real as those
obtained by ordinary taxation. What is raised by printing notes is
just as much taken from the public, as is an income tax. A government
can live by this means, when it can live by no other. It is the form
of taxation that the public finds hardest to evade, and even the
weakest government can enforce it when it can enforce no other.

"By a continuous process of inflation, government can confiscate
secretly and unobserved an important part of the wealth of their
citizens. By this method, they not only confiscate, they confiscate
arbitrarily, and while the confiscation impoverishes many, it enriches
some. Lenin was certainly right, 'There is no surer way of overturning
a society, than to debauch the currency.'The process engages all the
hidden forces of economic law on the side of destruction, and does so
in such a manner that only one man in a million is able to diagnose it."

[kapitibeanman]

Keynes sure nails it.

If most people don't see a problem, and most people vote,
we're going to get incompetent governance for sure.

Peoples memories are so short, and there's always heaps
of new voters coming on stream that have to learn.

Still, although there's always threats against the dreaded landlords,
none of them ever seem to result in the promised paradise.

[Eugene]

There will shearly be a lot of debate on the form any CGT takes, there might be an adjustment for inflation. Bring it on I say. There will be a lot of happy accountants.

[Perry]

I very much doubt an 'inflation adjustment,' nice as that sounds.
Government-driven inflation in numbers (not value) such as ever-
increasing compliance costs for new buildings, will pace upwards
the numerical price (not value) of the existing stock.

Those 'wooden coins' will be inflationary figures (not value). The
government will then tax that illusion of 'gain,' which will have to
be paid for in the purchasing power value of the dollar at the time
the tax is levied.

Read all about it.

By a continuous process of inflation, government can
confiscate secretly and unobserved an important part
of the wealth of their citizens.

How's about we peg parliamentarians stipends to inflation? I.e.
for every per cent increase in inflation, their pay goes down
by the same percentage.

[Perry]

Guess What This Will Do To Housing Costs, Messrs Productivity Commission?

Tradesmen Quick To Join Register
Jazial Crossley
09/04/2012

More than 23,000 people have signed up to be official licensed
building practitioners, netting the government more than $13.4 million
in licensing fees.

While it is optional for builders to be registered, it became
compulsory last month for anyone doing work critical to the integrity
of a building to hold a licence. There are various licences depending
on the work carried out - from bricklaying to roofing and external plastering.

[Perry]

Productivity Commission & Housing affordability

The Government has asked the Commission to evaluate the factors
influencing the affordability of housing (both rental and owner-occupied
housing) and examine potential opportunities to increase housing affordability.
Specifically the Government has asked the Commission to:

• identify and analyse all components of the cost and price of housing;
• identify mechanisms to improve the affordability of housing, with respect to both the demand and supply of housing and associated infrastructure; and
• identify any significant impediments to home ownership, and assess the feasibility and implications of reducing or removing such impediments.

These tasks can be synthesised into three questions:

• What are the key (demand and supply) components of housing affordability?
• How can the housing market work better to improve housing affordability?
• What can be done to remove impediments to home ownership?

In particular, the Government has asked the Commission to give particular attention to:

• factors influencing the supply of land and basic infrastructure for residential construction;
• factors influencing the cost of residential construction, including the effect of standards, specifications, approval and title requirements on the cost of new housing construction;
• the level and growth of productivity in the land development and residential construction industries, and the effect of government regulations on productivity in these industries;
• the efficiency of taxes, levies and charges imposed at all stages of the housing supply chain;
• the efficiency of the tax treatment of owner-occupied and rental housing;
• the influence of changing consumer housing preferences, willingness to pay, and financing costs on housing affordability; and
• the operation of the overall housing market, with specific reference to the availability of a range of public and private housing types, the demand for housing, and the efficiency of use of the existing residential housing stock.

[eri]

affordability is something Len and auck council can only give lip service too

the things that would actually reduce build prices

like; smaller sizes, lower spec, simpler repeated designs, less red tape, lower developer contributions + cheaper land

all go against his goal of making auckland the world's most "livable" city

so are simply non-starters

get used to it

the only thing that will half stop him

is him losing the job to the right, next local body election

[Perry]

Well, Who'd've Guessed It?

Land Not Tax Favoured To Cool Housing
Andrea Vance
11/04/2012

An immediate release of land for residential development - rather than
a capital gains tax - will ease soaring house prices, a new
Productivity Commission report says. "There is no need for our homes
to be expensive - we can construct quality, affordable homes. But, it
will take councils and developers to work together so that sections
can come to market quickly at a price that allows the building of
homes at an affordable price." The sluggish building consent process
and the enforcement of codes and regulations can also affect
affordability and the performance of authorities "can and should be lifted".

The Labour Party proposed a capital gains tax in the run-up to last
year's election, sparking debate about whether tax policies had
fuelled the boom. However, the report concluded that changing the
taxation of housing would not solve the crisis - and may have
unintended effects on the affordability. "The tax advantages attached
to housing are not as large as often claimed," the report said.

Instead, the commission suggested allowing the release of "significant
tracts" of greenfield land on the urban fringes on Auckland,
Christchurch, Hamilton and Tauranga to the market. It also advocated
more brownfield - abandoned or underused industrial - urban land being
redeveloped. Councils also need to speed up their regulatory
processes, the report said. Planning policies - like height controls,
boundary setbacks and minimum lot sizes are putting a "handbrake" on supply.

"Councils should also ensure they aren't putting up barriers to
development and should take a less constrained approach to urban
planning. There also needs to be a review of regulatory processes with
the aim of speeding up and simplifying consent processes," Sherwin said.

Seems it's not just the average kiwi that's a dreamer!

Anyone want to lay odds on nothing being done as a consequence of
"yet another study/report/quango regurgitation" stating the obvious?
And, I wonder what that stating-the-obvious report actually cost the
long-suffering taxpayer?

[Davo36]

Heresy! Releasing land so it can be built on!

Have these people never been to university? Town planning just isn't done this way!

Seriously though, no, nothing will change in a hurry. Wait for the councils such as Auckland to reply to this in the next wee whoe, stating why they believe it's the wrong way to go.

And yes, the resignation of Nick Smith who was about to sort out these dickheads will slow inks down a lot I reckon.