- Date published:
9:41 am, November 1st, 2017 - 192 comments
Categories: david parker, housing, International, labour, overseas investment - Tags:
This has been Labour policy for a while, and now that Labour is in power they are getting on with the job of preventing foreigners from buying residential property. From Radio New Zealand:
The new government says the plan to ban foreigners from being able to buy existing houses in New Zealand has to happen now, before the TPP is signed off.
But the opposition said Labour’s housing ban lacks detail.
Prime Minister Jacinda Ardern yesterday announced Labour would make changes to the Overseas Investment Act to classify residential housing as “sensitive”.
It stops non-residents and non-citizens from being able to purchase existing houses, although they can still buy land to build on. Australians would be exempt.
Ms Ardern told media at her first post-cabinet news conference yesterday that both New Zealand First and the Greens backed the law change.
The plan to ban foreigners from buying existing home in New Zealand has been dismissed by real estate agents as unlikely to change much.
Trade Minister David Parker told Morning Report today that the new government did not expect the move to have a huge impact on the current housing market.
He said the issue was more of a problem two years ago when a housing price bubble around the world saw a large flow of capital into the NZ market, but the foreign buyer ban had to happen now.
“If you don’t do it now, you can never do it. Because if TPP is entered into, New Zealand will have lost the policy space to protect the New Zealand housing market for New Zealanders.”
The change will be effected by a change to the definition of “sensitive land” in the Overseas Investment Act 2005. The change is an easy one to make. It does not of itself stop any sale from occurring, because an application to the OIO I presume will still be possible, but I can’t imagine anyone going to the bother of applying to buy a residential property.
The talk about TPP11 is a worry. If it is just a trade deal without investor state dispute settlement procedures or changes to intellectual property law then perhaps it could be considered. But if it is similar to TPP12 then things are going to get interesting …
Hard to understand what is going on here tbh. Yes Labour are under time pressure because of the TPPA and have found a work around for this particular issue, but is it really the best mechanism? Are we now using hacks to run the country because we are beholden to the TPPA-11 and we haven’t agreed to it yet?
I’m a little unclear on why Labour want to ban residential housing? Is it general principles around sovereignty or it is simply a tool for managing the housing market long term?
I’m also concerned about what’s going to happen to rural land. Is the TPPA-11 going to prevent future legislation around that? Will it affect Labour’s ability to direct the OIO or make further changes to the OIA?
And how does this work with the other two parties in government who have more protective policies?
Equally concerning is that we’re two weeks out from the APEC meeting and we’re still having to ask these questions.
Sorry, but this is an abysmal start for the Labour-led govt. It’s such a hugely important issue, and I’m sorry for Labour about the timing, but maybe it’s better to get this ideological conflict visible upfront.
Well said Weka
This announcement coupled with the confusing position they are taking on TPP is very concerning given the rhetoric from the past 2 years.
The statement is here:
The bill will go to Parliament in December, so you should expect it to come out for public scrutiny at the end of November, and to select committee. It will be fast.
This is promising:
Should be simple. ISDS = no signing.
But the TPPA-11 without the ISDS is still a shitty thing for NZ to sign. Unless we are saying we can sign it and then reneg on the bits we don’t like later because no-one is going to sue us.
Agree. ISDS is just one reason to oppose but not the whole reason. And doing their “utmost” can mean “we tried” but didn’t want to miss out so…
Sounds like softening us up by saying no ISDS in “future trade deals”… This will be the equivalent of 10 at once? Beginning to sound like TPP is a done deal under labour and NZF.
Since when did ISDS become the only problem with TPP. Aren’t there 5 bottom lines according to the previous Labour opposition that staunchly opposed this silly idea ?
ISDS isn’t the only problem, but it is the one that locks in all the others. If we get TPP with a reasonable ISDS or none, then it can be worked on in the future. If we get it with this ISDS, we’re basically screwed.
I agree to the extent that ISDS works as a deterrent/threat for governments to move policy a BIG corp doesn’t want AND as a mechanism for a BIG corp to sue. It is double-edged.
It’s definitely a double-edged sword, that’s why it has to clearly have an exception for laws in the public interest, be adjudicated by impartial judges in a third country that isn’t a home court for the investor or the state being sued, and why provisions that aren’t around trade barriers shouldn’t be enforceable via the ISDS. It should also allow for the judge or state to choose between simply mandating the barrier be lowered and/or allowing some degree of damages, rather than being purely about lost profits, because ideally the outcome of an ISDS is that you solve the trade barrier.
That said, it is a double-edged sword that can be necessary to make trade agreements work with countries that don’t have the kind of democratic or capitalistic norms that New Zealand has. The idea of an ISDS at all to NZers looks like overkill because our reaction is “what, of course you have to follow the law!” That’s not always the natural reaction of every state. I assume it’s part of what will get some of the bigger players to accept some of the smaller asian countries being trusted to be in the agreement, so I expect selling “here is a less punitive ISDS that lets us all retain more of our sovereignty while still giving confidence to businesses operating between our countries” will be much easier than saying “no ISDS, ever, not allowed!” (and while I’d be happy to have the agreement die, Labour’s clearly not, so we need to sell them a position that can actually work when asking them to renegotiate it)
That is my view as well. The way that the ISDS has been operating in things like the NAFTA agreement is that it makes the legal process rigid and unable to change. That is because the cases tend to not focus on current law, but instead on procedures and practices from decades in the past.
Societies change and often will change quite fast. This kind of ‘law’ with no rights of appeal and little appears to have little to do with a dynamic society. Which is why we get stupid cases like the plain paper packaging case in Aussie.
Even simpler: Listen to what the people want and don’t at all no matter what.
We’re supposed to be a democracy after all.
“We are determined to sprinkle the very best glitter on this turd.”
Yes, very fast and at a time of year when people are working toward end of year deadlines in business/work. IF Nats were rushing something through we would be questioning it.
This is the simplest approach to arrest speculation from outside of New Zealand, so it’s not entirely worthless.
Speculation inside New Zealand will likely require a new tax regime to arrest, which they have ruled out this term, so they absolutely need to cut off the flow of overseas capital, as at least they can look to ways to regulate the speculation situation inside NZ that don’t rely on tax in the meantime for these three years.
It sounds like this measure is just for residential property, so yeah, this wouldn’t prevent buyups of land for multinational/corporate farm ownership or other similar uses of rural land by overseas interests.
This is exactly what I expect from a Labour government when it’s not being guided by the Greens- it’s a halfway measure that’s not radical enough and doesn’t fix all the problems because they’re worried about being seen as too scary.
You are really telling us that the Greens are a part of the government but have no effect? Surely they aren’t that weak?
What you should expect from this government is policy and legislation supported by all three parties who make up that government. Because that is the nature of being a government.
If the Greens want to put up amendments in the House about it, let them.
“You are really telling us that the Greens are a part of the government but have no effect? Surely they aren’t that weak?”
Forgotten how MMP works already Ad?
You clearly don’t understand being in a government.
If the Greens can’t make an effect inside government, they should leave. Stop making excuses for them.
You’re the only one saying the Greens can’t make an effect inside govt. Matthew certainly didn’t say it. To me it looks like you can’t address the issues raised and so just attack the Greens. Which increasingly seems to be your default position.
I’d restate what the issue is that I raised and Matt responded to, but thus far you are showing no genuine interest in that debate.
What we need to avoid is inconsequential petualant whining like this:
“This is exactly what I expect from a Labour government when it’s not being guided by the Greens-”
Which is clearly what I was responding to. The greens are in power. They are the government. This is their time to shine, and they either show they have what it takes to influence government, right now, or they don’t.
Weka you need to relax a little and wait for the actual clause to come out.
You need to be less patronising and an apologist for actions, which if done by Nats would have your panties in a wad. But you won’t, so why should weka?
FFS: Perhaps it is that you simply don’t understand what a confidence and supply agreement is and what it implies in terms of being “inside government” ?
Try looking at what the Greens signed up to rather than trying to redefine their role to something that simply doesn’t exist.
The Greens can’t pass anything that isn’t agreed to be EITHER:
a) Both Labour and NZF.
So yes, they are pretty constrained. They absolutely will put up amendments, and we’ll see how Labour reacts to them. My point is not about that, and if you’d stop being obstinate for a moment you’d see that. My point is about Labour’s initial inclinations on any given issue being reflexively middle-of-the-road.
“This is exactly what I expect from a Labour government when it’s not being guided by the Greens- it’s a halfway measure that’s not radical enough and doesn’t fix all the problems because they’re worried about being seen as too scary.”
Now you can show how the Greens have not had an influence. Even though they are in government. With very similar policies to the two other coalition partners.
Why not just breathe outwards and wait for the amendment?
Why not let the people that don’t trust Labour like you do keep debating the issues?
Ad. Stop telling me what to do, and take your own advice, and breathe slowly for a moment before you post your next reply that’s simply not constructive. Cheers.
They’re not in government but have a C&S agreement with ministers Outside Cabinet.
they will have an effect because Labour is going to have to negotiate a compromise position that the Greens and NZ1st can agree to. Hopefully that compromise position will be more restrictive than what Labour are offering.
And more addressed to the middle classes, rather than including a strong address to the low income and precarious classes.
“This is the simplest approach to arrest speculation from outside of New Zealand, so it’s not entirely worthless.”
True, so shall we assume that Labour has no problem per se with overseas ownership, just as it affects how this one part of the economy run?
“It sounds like this measure is just for residential property, so yeah, this wouldn’t prevent buyups of land for multinational/corporate farm ownership or other similar uses of rural land by overseas interests.”
Yes, but my point was more that is this one thing about residential housing the only bit that Labour will address, and thus in the TPPA-11 negotiations it no longer is protecting NZ on land ownership? Are they about to sign something that will prevent rural land from being protected in the future?
Potentially, yes. Depends whether they negotiate to reform the ISDS and whether they’re willing to walk away if they don’t get adequate movement on it, but it sounds from comments like Labour is much more impressed by the TPP as-is than it should be.
They’re bending over backwards in fact.
Even with the ISDS issue resolved, it’s still possible to have a clause in the agreement whereby NZ agrees to not restrict rural land sales right? I have no idea if there is such a clause, because Labour don’t appear to give a shit about the rural land issue*. Otherwise it would be being explained to us.
*although I thought they had in the past.
Unless they’re intending to include rural land in this amendment, no, I don’t expect they’ll be negotiating for it. They’ve said they realistically think they can renegotiate one major issue for TPP11 without scuttling the deal. (personally, I think they should go for a good deal and simply risk scuttling the one on the table, because as-is it’s actively harmful to us and the economy)
“They’ve said they realistically think they can renegotiate one major issue for TPP11 without scuttling the deal. ”
Wow, I hadn’t heard that.
Presumably that’s the ISDS, and then we can assume we’re going to lose on all the other issues.
That’s what I read into the “not having to negotiate on the housing issue gives us more space to deal with the ISDS” comments. YMMV.
The rural land issue is already covered by the Overseas investment Act – it’s just that the OIO need to actually enforce it. They’ve been riding very lightly on this because the Nats saw no problem with selling up rural property.
yes. Which means that next time National are in, they can reset things back to how they are now. I’m saying I’m concerned that the TPPA will prevent say a second term L/G govt putting in actual protections around rural land.
What’s fucking me off right now is that so much energy has been put in by activists over the years on this, and here we are with a supposedly centre let govt and we’ve still got all these unanswered questions.
Yep. Meanwhile, lives can be damaged.
the 5 year bright line test is quite strong….speculators hate to be stuck with assets for 5 years…the Nats 2 year blt (no not the one that comes with a flat white) was pathetic
LOL the five year bright-line test is not exactly “strong,” it merely means that speculators need to wait five years to avoid being taxed. It is at least stronger than the two-year test. But all either does is slow down the speculative market, when you’ve got cash that will be taxed if you don’t invest it, you’re perfectly willing to buy an investment property that you won’t be able to sell for five years and just rent it in the meantime. We need a solution that doesn’t time out, and that likely means properly taxing capital gains on realization.
What this bill does at least is cut off the direct inflow of surplus cash from overseas, which will make laundering money through property investment a bit harder as they’ll need an NZ citizen as an intermediary, and it will be easier to spot because they’ll likely have a shortage of willing intermediaries to launder money through property purchase. It’s not a silver bullet, but it will greatly hamper one of the bigger causative issues of the huge housing bubble we’re sitting on.
Yes – it is just one smallish weapon in the armoury. It’s an easy first one to deploy politically as it is pointed at someone else (foreigners).
I’ll judge Labour on what other weapons they choose to use or not use in addition to this one.
Big question is whether they have the courage to wean the domestic middle classes off their appetite for unearned and untaxed capital gain from owning rental properties by making it financially unattractive.
Doesn’t hurt foreigners who actually want to live in houses they’d buy, or build new ones, though. Just ones who want to buy existing houses without living here.
All they have to do there is to introduce WOFs and an annual cost for inspection, and that will make quite a few of the lords and ladies of Middleclass think further about their growing estate. They need a few reminder prods to get them to limit their possibly insecure investments in real estate portfolios.
And there should be a retraining exercise for retiring real estate agents who would otherwise be unemployed. They have good skills usually, they could have opportunities to drum up business overseas for other NZ products than milk. Also they need to have a diploma to operate I think, but is there a cost to the employing company each year for each agent, and a limit of how many? Tighten the market for the house pushers and things will start to deflate slowly but surely.
Given that speculators are already taxed under NZ law at full income tax rates what extra taxes do you expect for speculation?
No they’re not. The brightline test is evadable and other capital gains on property aren’t taxed. Being a speculator doesn’t necessarily mean you’re aiming for a short-term profit, it simply means you’re buying because you anticipate out-sized profits on sale, and anyone who’s willing to speculate on a five-year delay will still be able to until we get a proper solution to domestic speculation in place.
Yes – fundamentally ‘investors’ are speculators . To suggest that you are not a speculator because you are working to a longer time horizon than 2 or 5 years is just sleight of hand.
Not necessarily. If I were to go and buy a house for the rental income stream, intending to never sell it and my will specifies it goes to a charity, that would make me a rentier investor, and definitely not a speculator. Nothing stopping an investor being both a speculator and a rentier, of course.
Well I really do hope something is done about tax on amateur speculators (which is what Matthew seems to be talking about) as it will level the playing field.
You can be a professional speculator and willing to accept a 5-year wait to avoid the brightline test, David, it just means you have to be confident that market conditions will be improved over the five-year period. It’s certainly a much harder ask, but it’s honestly not impossible, especially if you have a large amount of cash you want to turn into appreciating assets and no immediate need to increase liquidity. Personally I see the 3-year extension as a way to hold off NZ and Australian speculators until a proper capital tax covering housing is introduced in term 2.
If you speculate you pay tax, no ifs buts or maybes. If you purchased to sell it again intending to make a profit on that sale the profit is taxable.
Anything else is a compliance issue and should be chased hard.
Labour will never ever bring in a proper CGT. Its electoral suicide.
That’s the theory, sure. But how well is it enforced? All it takes is some semi-plausible fairy-tale about intent at time of purchase and voila, no tax liability.
Its not a theory its the law.
If people are not paying tax then spend more on enforcement.
You are wrong and you need to accept that the bright-line test does not, in practice, catch all speculation. The law may say that speculators should pay tax if they intend to be speculators, but the only method for actually proving speculation is the bright-line test, which in practice means that they can wait out the five years and then have a plausible story about needing to sell suddenly.
No amount of tax enforcement can creep into the mind of people waiting out a brightline test to examine the intent in their heads. This is the whole reason that National was forced to implement the brightline test in the first place, because even they realised that a limited capital tax on short-term speculation was necessary. All they need is something that can factually hold up, and that’s even if they’re questioned on it.
“New Zealanders of European descent were the wealthiest, with an individual median net worth of $114,000.” That includes home equity.
And for none European New Zealanders the individual medium net worth was less than “$33,000.” That excludes home equity. #rediculous
Everyone keeps saying that. Doesn’t make it true.
Polls say different. And those who oppose a CGT are unlikely to ever vote for Labour/Greens.
A majority of voters think the rich should pay taxes on wealth and rent/capital gains, and speculators should pay their way also.
“It sounds like this measure is just for residential property, so yeah, this wouldn’t prevent buyups of land for multinational/corporate farm ownership or other similar uses of rural land by overseas interests.”
Looks to me like the measure brings residential property under the same umbrella of OIO scrutiny and approval of farms, businesses etc that already exists.
So it would definitely need to be accompanied by getting the OIO to be a lot more demanding and selective about what it approves, and enforcing any agreements conditional to the approval.
@weka +1 “maybe it’s better to get this ideological conflict visible upfront”.
This ‘hack’ as you call it is a workaround for a number of different agreements, not just the upcoming TPP11. An outright ban, rather than a ‘sensitive’ label, would potentially breach agreements with Korea, Singapore, Taiwan and by extension China. But since these countries accept our OIO scheme, agreements with them allow for the branding of land as sensitive. So hard to see how they’d adopt something other than this ‘hack’ without renegotiating parts of these agreements.
And why are we carving out Australians when they’re our biggest foreign land owners? And why granny flats in the city, but not undeveloped lands on the fringes of our cities? So foreigners can become land bankers but not landlords? Seems a bit topsy turvy.
It appears Labour does not mind land being bought… and built on (whatever that turns out to mean). Land prices are the problem in Auckland, not so much the cost of building.
Parker needs to be clearer about what it is this move is addressing. It is also becoming clearer the TPP is not something Labour is really going to fight.
Funny how the wild opposition from Joyce, Hoskings and the Real Estate condemns on one hand and yet says there will be little difference as the number foreign buyers is so minimal.
That’s exactly what I was thinking. Two years ago they were telling us we were fantasising about foreign buyers having any impact at all on the NZ housing market.
Now they’re trying to spin the line that the new law will make no difference at all because all the offshore speculators left the market two years ago.
Since there’s no way for both of these scenarios to be true, I’m calling bullshit.
Perhaps there weren’t many of them but they bought at the very high end of the market 😉
I’m unclear as to whether the ban is on residential housing, or it’s actually restrictions on “sensitive land”, or whether residential housing (but not the land) is going to be deemed to be “sensitive” – so then not really a “ban”?
It is really the land that is the target of many property speculators. Will there be any measures to stop overseas buyers land banking?
And what weka said about the TPP-11.
Why are Australians permitted to speculate on our property market?
Because the ability is reciprocal under the NZ-Australia CER. In other words NZers can buy property in Australia and Australians can buy property in NZ.
With Australian investment being high in NZ, Labour should have opted for an economic deterrent.
Therefore, still allowing them to purchase (meeting our reciprocal agreement) yet deterring them from doing so.
Perhaps it could have still been used as leverage to push Aussie Govt back on some f its retrograde attitudes to kiwis?
Enough…because NZers are able to buy Australian residential property. So it is reciprocal. Australia passed a ban on foreign buying several years ago.
Then its not a ban on Foreigners is it? Just some.
It’s a ban on people without a right to live in NZ buying residential property.
And because New Zealanders are have complete access to Australia’s labour market and can reside there as long they want (albeit with some reduced benefits compared to Australian citizens). No other country allows NZ citizens those rights.
I’m going to have to search this out, but I’m pretty sure I made the argument a long time ago that the government could pass legislation banning individuals from buying residential property (basically because they’d have no recourse to redress via ISDS), and that doing so would not affect the TPPA because market access for companies would remain.
As I wrote in response to Weka in yesterday’s “Daily Review” this move by Labour is a nothing.
Maybe Labour believe they found a magician with a magic hat and a rabbit yesterday, but then, maybe someone should have pointed out that yesterday was Halloween and some folks would be in fancy dress.
Or should we talk of smoke and mirrors in relation to yesterday being all about tricks or treats?
We don’t know what the wording will say in the OIA amendment. So it’s possible that will include companies (the OIO already has to deal with non-individuals). But yes, another thing we just don’t know.
Here’s the list of sensitive land at the moment:
In summary it’s:
– non-urban land
– land on islands outside the main two islands
– foreshore and seabed
– bed of lake
– Conservation land
– reserve or park land
– land under heritage order under the RMA
– a historically listed place
A simple couple of amendments to that table would be a start.
It will work. The system kicks in at the title transferring time. It will be difficult almost impossible to get around although the use of proxies is hard to stop.
Will the Act ban residential sales to overseas people, or simply mean that if they want to buy it they have to go through a process like they do now with rural land?
If the system kicks in at title transferring time, how does it work when it is a company being sold with properties being the assets in a company?
There would be no transfer of title in that case, just a sale of shares.
Exactly for tax purposes the company is still a New Zealand resident
Aye. It’ll work by way of preventing private individuals from buying houses/property. That’s a given.
But it won’t work by way of preventing foreign financial interests that are not individuals. I’d suggest an ISDS hearing beckons if the government seeks to apply it to institutions.
I’d like to hear a journalist ask Parker or whoever what they reckon the effect of propose changes will have on institutions seeking to buy property (in light of FTAs) and where they are getting that advice from.
“But it won’t work by way of preventing foreign financial interests that are not individuals.”
Possibly, but I’m not seeing the evidence for that. We already know that the rules apply to corporations, businesses etc with rural land.
The “rules” currently in place do not hamper market access to an extent that would cause concern to any TPP signatory.
And we’ve been told the “rules” are to be changed to stop individuals accessing the housing market.
We know the changes refer to individuals because Parker very clearly set out the bar of residence and citizenship.
Neither residency nor citizenship apply to corporate or business entities.
So the changes, being that they apply to individuals, will have no effect on any market access provisions contained in the TPP. Any OIO provisions or anything else that limited or governed corporate or business entities in relation to the TPP remains and will continue having the same effect as before.
It’s like Parker’s stated he’s hitting the chippie for tea and your saying you’ve seen no evidence to suggest he’s not having homemade pie and tatties.
“Neither residency nor citizenship apply to corporate or business entities.”
So how is the OIO/OIA restricting rural land sales to corporations currently?
I do not know. But they are (yes?), and the TPP was ratified with all of whatever in place.
All I’m saying is that Parker hasn’t indicated any change to any of that, and so the effects of the TPP will remain and they haven’t been ameliorated by the changes he’s announced.
My understanding is that classifying residential property as sensitive applies to corporates, too, or am I misreading this:
And ignoring more holes than a Swizz cheese (an honorary directorship or two anyone?), let’s step back and look at an ISDS off the back of changing domestic law after ratification and a claim for compensation over loss of profit or potential profit.
Best of it being, in the future, we wouldn’t even necessarily know if any such cases had been brought or what the results had been.
The only holes I see there are that they have to have the company owned (beneficially or otherwise) 75% by kiwis, which isn’t an unreasonable out to allow New Zealanders to bring on a minority of overseas capital while still buying NZ assets. As I understand it being an honourary director of a company would give you no capacity to benefit from or control its assets. Like I said, I’m open to having missed something, however.
Yes, I agree that the ISDS is incredibly problematic as-written and either needs to go, or should be completely rewritten into something that only deals with laws or regulations that have no other purpose than as trade barriers, not those that break any provision of the agreement. But that doesn’t mean that this step isn’t a good move whether or not TPP11 happens. (and personally, I am on team “Renegotiate it radically or walk away,” because I don’t even think scrapping the ISDS is enough to make it worthwhile, even though it arguably might boost GDP to pass it after solving the ISDS issues)
What stops foreign individuals working through a NZ company to purchase land?
75% of the benefits of the company need to go to kiwis to avoid being subject to the Overseas Investment Act, so it would essentially have to be a company that is legitimately making money for kiwi owners as well, making it pretty useless for the worst-case scenarios like money laundering, but I guess it could happen, it’d just be pretty difficult to set up.
Despite your apparent view that Parker is as big a dimwit as Steven Joyce, he isn’t. I’m sure he’s given consideration to these concerns and will provide a suitable solution to them. If people already have to provide their IRD numbers when they purchase property, require them to show they hold NZ citizenship or Permanent Residency and are living here. If property is being purchased via a company or trust, then the purchaser must prove that the beneficiaries are NZ citizens or Permanent Residents. Otherwise, no sale.
As others have already pointed out, the way to avoid the law being flouted is to put the onus for compliance on real estate agents and conveyancing lawyers and to apply extremely punitive penalties to those who break it. Making it law that any person or entity who purchases a property illegally automatically forfeits it to the Crown would be a strong deterrent.
I hope you are right which is why this announcement’s paucity of such detail to allay these questions is irksome.
Great to see a really simple mechanism being used to fix a massive problem.
Well overdue that we kept New Zealand housing for New Zealanders alone.
And since they are in to the OIO, there will be the inevitable question about rural land as well. No doubt Winston will put an amendment up in Select Committee and in the House. Let’s see who backs it. Select Committee is the right place to refine this.
Fantastic start in the first week of government being sworn in.
“Well overdue that we kept New Zealand housing for New Zealanders alone”
Except when they are Australians
I really don’t mind that. After all I would like an apartment in Melbourne in fairly short order, as do a lot of New Zealanders already.
And I would like an apartment in London.
We are either keeping New Zealand housing for “New Zealanders alone”, or we are not.
It appears we are not.
Are you suggesting that because Australians are exempt under CER we should exempt everyone else also, regardless of reciprocal rights or lack thereof?
No – I am saying we should find a way of ensuring that all foreigners are kept out of our housing market.
Would a 100% stamp duty breach CER?
I love principles.
But then, if Australia felt like retaliating against all the kiwis in Australia who own apartments, you would find an even bigger crisis of expatriates being mistreated than you see now across multiple policy levels.
We are two of the most highly integrated societies and economies in the world. i think continuing to allow New Zealanders and Australians to continue to buy and sell each others’ apartments is a simple facing of reality.
But how can you say in one breath that New Zealand housing should be kept for New Zealanders alone, then flip your own argument by saying its fine for Australians to enter our market.
Just so rich Kiwis can get a holiday house on the GC?….come on
So we can continue to operate as the integrated Australasian society and economy that we really are.
OK I understand where you are coming from. It just doesn’t really reconcile with your opening statement that I questioned.
Because as Ad says … Aus and NZ are really the two most integrated countries in the world, economically and socially. The business links are deep and enduring, and there can be scarcely any families either side of the Tasman who don’t have some connection to the other side.
It’s only in a political sense that we maintain the illusion that we are separate countries. And personally I’ve long argued NZ would be better off joining the Federation like we should have in 1903 (or thereabouts). Realise this is a tangent to the thread OP, so I’m just saying it as my own opinion. Others feel free to vary 🙂
I am not questioning that.
I am questioning why Ad made a statement that he evidently does not agree with.
Not just politically… deportation policies, tertiary student policies, citizenship policies, some health cover issues….
I would think a lot of Kiwi owned properties in Australia would be lived in by those working and living there. It would be interesting to find out how that ownership is made up in terms of ex-pats, holiday homes and investors.
Why would they retaliate? We haven’t retaliated over student’s treated as Internationals, deportations, health cover….
I would like all sorts of stuff. What I do not like is paying $750k for a grungy, poorly-constructed 2-bedroom fibrolite piece of junk in Birkdale.
Exactly – That’s why we need this be broader than simply redefining sensitive land and exempting Aussies
Correct, we are not. And neither should we. You can purchase an apartment in London if you wish. And Melbourne. And in numerous other countries. Labour’s ban is a token gesture that might make some feel good, but doesn’t actually achieve anything.
the point is nobody knows what impact it will have as National refused to measure it….either way it needs to be done now to enable future protection….and tellingly if it is not an issue why are so many vested interests so vocal in their opposition?
“…either way it needs to be done now to enable future protection….”
No, it doesn’t. Labour inherit a housing market that is already responding. (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11939448) Labour’ plan is pure tokenism.
Yes, another policy on which Labour are ‘modifying’ their pre election stance.
perhaps…perhaps not….it may not yet be agreed by sufficient parties…however at least the coalition appear to be at least moderately forward looking and precautionary unlike the previous admin.
Returning industrial relations to 1970’s style?
Taking away parents ability to measure their children’s progress against National Standards to protect teacher unions?
Favouring criminals by removing the 3 strikes rule.
On and on and on. Forward looking?
As I replied to you at 4.1 above, “Because the ability to buy and sell property is reciprocal under the NZ-Australia CER. In other words NZers can buy property in Australia and Australians can buy property in NZ.”
Om top of the TPP-11 situation and any number of other factors vis a vis the NZ and Australia relationship, renegotiation of the CER right now would be madness.
As a result we are essentially one operating economy and society .
essentially… except in tertiary study, health cover, deportation policy and rights to citizenship/residency etc
And I responded to you.
I think it has been a very informative interchange. Is here any way to get these integrated australians to not trade in NZ dwellings? If they buy and sell too fast can we get them on speculation tax as we are told NZs can be hit? It is true that Australians have captured us and while they have unwound the pretty ribbons in the ties that bind, we aren’t free to float away.
But are they free to do business with our houses and not suffer any comeback from us as in speculation tax?
We can’t do what we like because they are NO. 1 trading partner for us and we need them, more than the other way. Also they have three of our big banks which are good profit makers and they own a major media company in NZ, etc. And we have citizens over there who are likely always to have NZ nationality because of the barriers to getting residency, and the further step to changing nationality. But they may end up victims if the Australians decide to retaliate sharply against any moves from us. We are handy to apply force to while we remain a foreign country
We have such trouble getting our head around their dominance. Would it simplify our situation if we asked to join their Federation? It seems that NZs have little sense of our own unique culture and don’t much care about our own unique environment. But Maori would have poor status if any, over there and so would be mad to let us make any moves to join up.
Given the house tourism industry which has grown in Aussie for investment into NZ, I doubt there will be the will given we are very much the under-partner in CER
It is but Labour’s not doing that.
Can you give more detail and data to explain the “massive problem” this simple mechanism solves?
Thing is, that’s not what they’re doing. This is what they’re doing:
Foreigners would still be able to buy housing. The general populace actually wants a complete ban on foreign ownership. So, this is another case of Labour and other parties not listening.
Then don’t sign on to the TPP – just like the majority of NZers actually want.
And, while your at it – have a look into removing ourselves from other FTAs that remove our ability to do what’s best for us.
How does this impact Land Banking?
What about the farms, other assets, commercial and new development property? Ok for foreigners to own them?
Sounds like a drop in the ocean considering much of NZ residential property is already in the hands of new residents and offshore individuals, corporations or trusts. So I guess NZ taxpayers now are going to help offshore developers develop more land for which foreign buyers can buy as it’s not exisiting?
Sounds. a bit Mickey Mouse. But I guess neoliberalism doesn’t really make any sense for the many not the few.
I’m pleased (sarcasm) my tax payers dollars go towards corporate welfare and enriching other county’s individuals and my kids will be left with future government debt for the privilege so that offshore developers can build here to keep the Ponzi scheme going.
There’s a reason NZ’s 2nd biggest export (if not now the biggest) is profits. Overtaking dairy and forestry. We are turning ourselves into a penniless 3rd world country owned by others.
Save NZ …. Read what Ad has posted from the Act above about definitions of “sensitive land”. It clearly says ” non -urban land”.
But, if you think about it at all, all land should be considered strategic and not for sale to offshore owners at all.
I couldn’t care less about farms, tbh, and it seems the OIO as all over that already (or at least they should be).
A case can be made that foreign investment in commercial property, businesses, and new developments is mutually beneficial (the kind of ‘good’ investment Fran O’Sullivan bangs on about). But the same can’t be said of speculation in existing residential property. This is unsustainable, it’s fake growth, and interferes with a basic fundamental right – that of access to secure shelter.
This is also the area which is causing direct harm to ordinary New Zealand families and to the vulnerable unable to meet the increasing costs associated with an over inflated house market. The others you list are not.
Overseas money is bumping up rural land sales and making rural land unaffordable for NZers. If you think it doesn’t matter if NZers can afford to farm or otherwise buy rural land, then that doesn’t matter. But really it does.
Now you’re an expert on rural land sales.
Why not insert a fact or two amidst all your panicked arm-waving.
Try a graph on rural land sales.
I see you still can’t debate the issues raised Ad and instead have to resort to undermining the person raising them.
The mechanism is there, it just needs to be enforced. No such mechanism exists for residential housing. It is literally a free for all at the moment.
What will the impact of the TPPA be on enforcing the mechanism?
What happens when National is next in power?
Weka. He’s the new government using the existing mechanism on a different setting to slow the effects you are concerned about.
– David Parker
My argument is there was no similar mechanism around residential housing. Now there is.
While it’s good long overdue improvements are going to be made, doesn’t the TPP aim to increase the valuation thresholds before land sales are required to be considered by the OIO?
My arguments are largely around sovereignty. The property market ones are secondary. So I see the OIO as neoliberal sop to the idea that being a nation means something. Neoliberals hate that idea, which is why we’re all angsting over land sales while Labour treat this as an economic management tool.
It’s simple. Write law that means to own land in NZ you have to have legal rights to live here. If you must, write in some caveats around special circumstances about overseas investors in the case of the NZ economy being in such dire straights that we can’t attract investment any other ways. But start from a position of sovereignty and work your way out.
So yes, what Parker is doing is an improvement, but it’s risky and we still have no idea what the TPP implications are.
Maybe remove Ministerial discretion entirely and put in criteria for Public Servants to enforce unfettered, or without the sceptre of a Minister over ruling or being upset hanging above them? Cos you still have to have the ability to help donors (sarc).
People would still have Judicial review if unhappy with an OIO decision.
The OIO is going to need to be far better resourced and get far more assertive.
They take far too long as it is, and like a lot of Departments will probably need a clearout as well as new finding if it is to cope with degree of policy and operational scrutiny.
Today might have been a good day to announce the extra resources and directives?
I don’t think that case can be made actually. A foreign company comes in, buys up a business, shifts the IP offshore and then closes down the local business.
Sure, doesn’t happen al the time but it certainly happens far too often.
You do realise that the same applies to the farms don’t you? It removes our ability to feed ourselves. Although, we’re seeing that now as the private owners of farms sell offshore for the higher profits.
Seems to be a general failure of privatisation and the profit drive.
Parker and Sage have moved on this already.
@ Muttonbird “I couldn’t care less about farms” – maybe you should because already Kiwi’s can’t afford to eat our own grown food because it is exported elsewhere. If you have that on mass then soon you get a banana republic. That’s what business are so desperate for TPPA, it’s for when yokel countries wake up and realise previous governments have sold all the countries assets and they no longer own or control their own countries assets and TPPA is there to ensure it stays that way with no come back to the businesses. It’s already happening in NZ, our exports of profits, prove it as does the inequality and lowering of basic standards of living and increasing rates of crime and imprisionment.
Except plenty of farmers have had great retirements selling their land to overseas buyers, so I suspect even the farming community is mixed on this.
Most of the farming community want to be able sell offshore- farming is all capital gain and everyone wants to retire to tauranga and queenstown. An occasional older farmer or young farmer thinks otherwise.
So much for patriotism and farmers as the “backbone” of the country.
Well, they are humans just like the greedy city folks who keep voting for their personal gain in the property market.
Seriously. Bring back farmers markets and get them involved in the community again.
Helen Clark floated the idea of having some sort of travel ban on food items transported over 250ks iirc. Maybe if that was couple with a grocers licence similar to how the old Waitakere District Council used to allocate liquor licenses by restricting alcohol sales to approved license holders. It took the Pak&Sav on Lincoln road years (decades before they where able to prove they would be a responsible license holder) nothing much to do with how the Lincoln Green Hotel just up the road stitched them up for so long.
Maybe Farmers could instead stick up the big food chains instead of trying to stick up every one else. Mean time big food chains are ripping the Farmer and every one else.
So nothing to stop overseas people buying land, subdividing it, and then on-selling it? How is that not speculation?
Why don’t you just hold your breath until the clauses are put to the Select Committee and the public can see them.
Because I think it’s reasonable in a democracy such as ours for the public to know what is going on. The ‘trust us we know what we are doing’ approach isn’t good enough.
For instance, I don’t understand the implications of the TPPA-11 being locked in before the process you are talking about. Wanting to understand those things is normal.
” The ‘trust us we know what we are doing’ approach” – that’s how the current Government was formed – why bitch about it? Unintended consequences begone!
No it wasn’t which would make what you said a lie.
But, hey, you’re a confirmed RWNJ and lying does seem to come naturally to such types.
The Greens don’t generally take that approach beyond where it’s pragmatically necessary. ie. their ideology is based in democracy not top down rule.
That’s why the last government was replaced FIFY
It’s an ingeniously simple scheme. We will have to wait to see whether it achieves its intended result, without causing unexpected problems.
Dampening the next surge and ensuring Kiwi families get a fair crack in the future is the intended result.
The previous government didn’t this time round and damaged a sizeable community.
The intended result is preventing non-resident foreigners from buying houses in NZ. We’ll see whether it achieves that or not.
No, that’s the means by which to achieve the result – a fairer New Zealand.
Like most people opposed to fairness you use the detail of measures to promote it to argue against it.
> Like most people opposed to fairness you use the detail of measures to promote it to argue against it.
I’m not arguing against it. SImply saying that I don’t know whether it will be successful in its (narrowly defined) aim or not. I don’t think anyone should truly be certain at this point that it will work. But we should see in the months/years to come.
We’ll probably never know whether it achieves its ultimate aim (a fairer NZ) or not. House prices will do what they do and we can argue about the causes as much as we like. However, that’s not a reason not to do it.
Well, I’m glad you at least accept not knowing whether something will be successful is a reason not to do it!
But I think it will be a sore blow to this Government if the proposed measure is never implemented, doesn’t work, or causes international disputes.
(I would have thought that ratifying the TPP would also be a large self-inflicted wound but What do I know.)
“never implemented, doesn’t work, or causes international disputes” which will apply to every single thing they ever do.
That’s a bit harsh!! Why would you think that?
But Antoine is careful to qualify her remark by saying we will never know if this measure was the reason for any potential fixing of the problem it is intended to solve?
Is Antoine a lady? In French, Antoinette is the female. Antoine is male.
Indeed, we will not know. Thats life unfortunately
“Thats” should be “That’s”. Incontrovertible proof that Antoine is an over-confident bullish male. It always shows.
Quite correct, a veritable he-man.
No, that is the mechanism being used to achieve a level playing field for kiwis. Unless there is something else Ad thinks we should wait and see in the december window for submissions.
I am trusting Labour and Ms Ardern to do the best with this one. It seems to me they have worked very hard to ban foreign speculators buying residential property and I trust what was said by them, that they had to find the right mechanism to do this (and fast). Job has been done now. And as David P said, this won’t do much now as foreign speculation slowed, however in another property cycle will count for a lot……
National have again been caught lying about stamp duty and it strikes me they are either lazy, incompetent or in the pocket of foreign investors (all three likely)on this one when they said a ban on foreign buyers could only be done via stamp duty…………..
As for IDIS Labour remains committed to removing it. You don’t expect them to come out before the negotiations and say if this isn’t done, we are not signing it? FFS nobody lets everyone know their bottom lines or issues ultimatums before they sit down at the table. I am glad to say they are not that stupid.
I may lived to be proved wrong on this, but so far, so good. Foreign speculators in essence, will not longer be able to buy residential properties . For me that is a big tick.
I’d trust them more if they said that they wanted to ban foreign ownership altogether and would work toward that.
Actually, on that one, yes I do.
Fair enough Draco. No problem with that.
> It seems to me they have worked very hard to ban foreign speculators buying residential property and I trust what was said by them, that they had to find the right mechanism to do this (and fast). Job has been done now.
It has not!
They have had an idea, which so far seems promising, and are working towards implementation.
Sure Antonine. They have to draft the amendment and get it through Parliament.
Unless you mean something else?
If not I think they have moved with great haste.
Labour appears very committed to doing their best to negotiate the ISDS out but simultaneously are going to legislate this measure to avoid the consequence of failing to do so… or, as we like to call it “a bob each way”.
There is a place for making public statements pre closed door negotiations (Nats did a bit of this between Sept 23 and Coalition announcement day). I am sure the same people you think such an announcement would scare have also noted this move to legislate today? The IP provisions bother me. Alot.
yes. Copyright and patent clauses in the original TPP could impact very negatively on a lot of NZ people and enterprises.
Fair enough Draco. No problem with that.
Growing biofuels from fish-farming wastewater as part of the treatment process…
this is terrible how will investors close off there positions and repay debt if they can only sell to new zealanders who cant pay enough ?
I”m assuming the law won’t apply retroactively.
Frankly it would not bother me if it did. Risk when you buy into a democratic society that has changes of government. A change of government can bring a change of investing environment. Buyer beware and all that.
Rent them or Air B&B to the fucken recuse you cheese nub
Regarding the Foreign ban on buying homes in NZ;
Newshub & the real-estate indusry and some banks are now saying the chinese buying market has dried up now?????
They would say this wouldn’t they.
Truth is Chinese buying is being spured on by their own Government supplying Chinese nationals with the funds to buy our homes!!!!!!
So expect another resugence of Chinese buying after the issue fades away (they hope).
Therefore Labour is right to swiftly pass this bill ASAP.
All it will do. Or. All it should do. This foreign buyers ban thing. Is force people to trade property in NZD. Instead of foreign currency swaps where they can get discounts on the exchange rate. Foreigners already get discounts on our exports, and get rich marking them up in other currencies. Only to use that profit to then buy NZ property.
So swapping $0.70USD for $1.00NZD effectively gives you a 30% discount on stuff bought in NZ by foreigners. Now those million dollar price tags don’t look so bad. And this is a problem for lawyers who have to sign off on property deals. And having to learn a whole new deciplin. Because they’re the ones who are going to have to put signature to deed saying the owner isn’t a foreigner.
And making sure no one palms a quid on the side. I mean we actually want foreigners to bring some of that profit back to NZ because pricing exports low, so we can sell more stuff is dragging wages down. So if foreigners are able to convert some of those profits by borrowing our money (NZD) to purchase our houses, braking the currency manipulation. Then we’ll be able to balance wages a bit better. And raise the minimum wage by a dollar or what ever Grant Roberston intends to do. And all this was signalled during the campaign so I don’t know why Newshub and the real-estate industry are in WTF mode.
I mean I do know. Because they are liars pushing a totally discredited economic thesis and know it. It was all over the Hosks face.
But the banning of speculative housing is the least of it. I’ve checked and am pretty sure the “policy space” that NZ has reserved in water management in the TPPA does not even include the export of bottled water – one of the most contentious issues of recent years.
As things stand I think that legislation would need to be passed as well prior the TPPA coming into force. In fact much of the government’s policy platform (preferences for giving preference to local firms in tendering is a clear case in point) could go west if the TPPA comes into force because overseas investors could claim to be disadvantaged.
Reserved legislation ie that was not already compliant or has already been changed by the last government to bring NZ into compliance can only be weakened, never strengthened. Issues that are not part of the reserved legislation – bio-engineering, robotics, internet of things uses – can only be legislated for under restricted criteria such as “for a legitimate public purpose” or “to least extent necessary” cutting policy options.
In the longer term the TPPA would make it next to impossible to bring early childhood education or the aged residential and care “industry” back to into public ownership or to stop fossil fuel exploration and use. That hardly creates a policy space to operate in – its allows corporates to pre-determine the policy space based on their interests.
My dearest hope is that the Labour Party understand this and will show willing but eventually withdraw on the basis that it is infeasible and detrimental to proceed. Their trade policy is after all very strong on this.