31-03-2012
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 Governmentto 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 23March.
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 lawexpected mid-2012
- Trustee Amendment Bill (clarifies functions, duties & rules for trustees) - Awaiting 2nd reading
- Energy Efficiency Conservation (Warm Healthy Rentals) Amendment Bill (to requireall 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