Close negative gearing tax loophole, spend money on insulation - Labour
Labour is promising to spend $1.2 billion making 600,000 homes "warm and dry".
Homeowners will be able to claim up to $2000 per dwelling to go toward insulation, a heating system or double-glazing of windows.
It will be available to 600,000 homes over 10 years and cost $1.2billion - which is the exact same figure the party estimates will come in from closing a tax loophole that favours property investors.
It aims to tackle negative gearing. Negative gearing is a process which investors make a loss on their property investments, and can offset that loss for a tax break on some of their income.
So in basic terms, if an investor pays $20,000 a year in interest on a mortgage, but only makes $10,000 in rental income on that property, they're making a loss of $10,000. They can then take that $10,000 loss and offset it against their total income - so if they make $90,000 a year, they only have to pay tax on $80,000 of it.
But Finance Minister Stephen Joyce says the promise just shows that Labour hasn't done its sums.
"It's [the] wrong policy, all it would do would put up rent and reduce the number of homes being built."
He says that housing isn't a weak point for the National Government, with house prices flattening out and even dropping.
Labour's plan is to ringfence property income so any losses can't be offset against other income.
"Labour will close the speculators loophole," Labour leader Andrew Little says. "This will create a level playing field for home buyers and help families get a fair shot at buying a place of their own."
According to Inland Revenue figures, investors used this mechanism to avoid paying $149m in tax in 2015.
Analysis of the data shows that 80 percent of those losses were claimed by those in the top three income brackets.
Labour says it will use the revenue collected by closing the loophole to invest in insulation grants for homes.
Andrew Little's full speech
Delegates, we have four-and-a-half months ahead of us, and a great opportunity to give this country a fresh approach:
- to make sure everyone has a decent place to live;
- for hospitals that can treat everyone who turns up for care;
- to give hope to young people looking for work;
- to make our rivers clean again and take real action on climate change and the environment.
Delegates, the next four and a half months are a fight for a better New Zealand, and for everyone in this magnificent country of ours.
Delegates, we can do this. We must do this.
Thank you for devoting this weekend to the cause of Labour and contributing so much to this year's election.
I acknowledge our President Nigel Haworth and our General Secretary and campaign manager Andrew Kirton. Thank you for the tremendous work you both do.
And, of course, I acknowledge my Deputy Leader Jacinda Ardern.
Jacinda, thank you for the support you give me. Thank you for your speech yesterday and the passion with which you advocate for our children and young people. Thank you for the policy you launched yesterday of health teams in all our schools, which is just one of the ways we'll bring a fresh approach to our neglected mental health services.
To all our MPs and candidates for Parliament – thank you; thank you for putting yourselves forward, either again or for the first time.
And – most important of all – to all of our dedicated activists and organisers who are going to sweep Labour to government on September 23rd. Thank you.
I also want to take a moment to thank the Labour MPs who are retiring from Parliament. All have served our party and our country with distinction.
To Phil Goff, David Shearer, David Cunliffe, Clayton Cosgrove, and Sue Moroney, thank you for your service to Labour and to New Zealand. We owe each of you an enormous debt.
I especially want to pay tribute to Annette King.
Thank you Annette, for everything you've done for everyone in this room, and for the people of New Zealand.
Annette has been our rock. She helped me lay the foundation for rebuilding the Party after the last election.
Thank you, Annette, for your lifetime of service to Labour. You are a titan of this great Labour movement.
Of course as current MPs retire, Labour has an impressive crop of new candidates ready to come to Parliament after the election. They'll be fantastic MPs.
I'm especially proud of two things:
We're going to bring at least nine new, amazingly talented women to Parliament as Labour MPs.
And, get this, after the election, at least 1 in 4 Labour MPs will be Māori.
We are going to have the largest representation of Māori MPs of any party, ever, in New Zealand politics.
You know, it was such a nice feeling to be introduced by Leigh before. She has sustained and supported me in challenging roles over many years, and I am hugely grateful.
I couldn't do this job without her.
Leigh and I have been together for nineteen wonderful years. She's my soulmate, and we have a son who is our pride and joy.
We've lived the typical Kiwi story in many ways.
Leigh and I met just after I started working. We settled down, bought a house, started a family, and got married – which is a very 21st century order in which to do things.
Many of you will have a similar kind of story to tell.
That first house we bought in 2000 cost us $315,000. That wasn't a small amount of money for us, but it was manageable.
It got us a nice, three-bedroom starter home, built on a hillside in Wellington.
And, like any good Wellington house, it was up about a thousand steps!
For Leigh and me, being able to buy that first house gave us a measure of financial security and certainty. More importantly, Ii It gave us a sense of our own place.
It was the house we brought our baby boy home to.
I remember that time vividly. Preparing the baby room. And putting this precious bundle of humanity in his cot for the first time. This tiny little thing, in this ocean of sheets.
Of course, Cam's nearly 6 foot tall now. He doesn't fit in the cot anymore!
The story of our first home is a story told by thousands of Kiwi families every day.
A place to call home.
A place to raise your children.
The Kiwi dream. It's the story Labour wants for every Kiwi family.
But let me tell you something. We bought that house in 2000 for $315,000. Now, it would cost around $830,000. It's gone up by half a million dollars in 17 years.
Its value has nearly tripled.
But here's the thing: Families' incomes haven't tripled since 2000. Nowhere near.
That's why housing is getting further and further out of reach.
New Zealand's housing crisis - yes, crisis - is not just about out of control prices. It's about the insurmountable barrier that many first home buyers now face. It's about the rapid increase in rent that tenants are seeing now.
It's about the disruption it is causing to the education of thousands of children.
It's about the fact that what is happening with housing is now the main cause of growing inequality and growing poverty in New Zealand today.
You know, I was out door knocking in Mt Roskill last year with Michael Wood. It was a typical Kiwi street, modest family homes - sports gear in the front lawns and washing lines out the back.
I knocked on one door, a typical house, and I realised very quickly there were three families living there. Not one family - three! It wasn't a big home; it was a modest home. I was gobsmacked by that.
Then, the next door I knocked on, on the same street, had the same thing. Multiple families crammed into a house designed for only one.
And it wasn't just one or two houses on the street, it was house after house, all with families packed in.
Delegates, that's not the New Zealand we want. We can do better.
As Jacinda and I travel the country doing public meetings, housing is the number one issue people raise with us, every single place we go.
You know, last Friday, I was in Hamilton with Nanaia Mahuta, Jamie Strange and Brooke Loader. I met a woman there called Shirley, and her daughter.
She lives on Jebson Place, an area that was once a thriving state house community. But, she told me, the current government has gradually emptied out all the other houses.
Her community is gone. She showed me what is left - a bunch of broken down buildings, a haven for crime.
Shirley couldn't understand it. Why have they left those houses empty and rotting in the middle of the housing crisis? She told me she just wants her community back. She had tears in her eyes.
So, I told her why I was there that day. I was announcing that Labour will tear down all those abandoned old buildings. And in their place we are going to build a community of 100 affordable KiwiBuild and state houses – a place for families, once again.
Well, you should have seen Shirley's face. She was beaming from ear to ear.
Security, community, hope. That's the difference we will make up and down this country by building those homes.
You know, that's why I do what I do. That's why I come to work every day. I do it because when I meet people like Shirley, or the people crammed into houses down that street in Mt Roskill, or even look at my own son, Cam and his mates, and wonder what the future holds for them, I know we can and must do better.
And I'm damned well determined to do something about it. New Zealand urgently needs some fresh thinking on housing.
Every Kiwi family should have a place that they can call home. And everyone should have a shot at owning their own place.
So here's what we're going to do. The first thing is we will build homes that families can afford to buy.
We will lead the largest house building programme since Michael Joseph Savage carried that dining table into 12 Fife Lane.
We'll use the money we get from selling the first bunch of houses at cost to build more homes and sell them. And we will keep on doing that - build, sell, build, sell - helping more and more and more families buy a place of their own.
But... building houses is just part of the answer. The other part is dealing with those things that jack up prices and put homes out of reach for so many.
If we want to make sure all Kiwi families get a fair shot – that when it comes to buying a home they have a level playing field – we've got to get the speculators out of the way.
We can't let our homes be gambling chips anymore.
So there are three things we're going to do to level the playing field:
First, we'll ban overseas speculators from buying existing houses. Simple as that. We'll do that in our first hundred days.
Second, we'll make speculators who flip houses within five years pay tax on their profits.
Third, today I'm announcing Labour will close the tax loophole that allows speculators to claim taxpayer subsidies for their property portfolio.
Right now, speculators can take losses from their rentals and offset that against their personal income. It allows them to avoid paying tax.
This loophole is effectively a hand-out from taxpayers to speculators. It gives them an unfair advantage over Kiwi families.
So I'll tell you.We will close the loophole. It is over.
Families don't deserve to have the odds stacked against them by their own government. They deserve a fair shot. With Labour that's what they'll have.
Now, let me be clear. This isn't about the mum and dad investor who has bought a rental as a long-term investment. The vast majority of them don't use this loophole. Those that do will have time to adjust.
This policy is about the big speculators who purchase property after property. It's about those big time speculators who are taking tens of thousands of dollars a year in taxpayer subsidies as they hoover up house after house.
I say to people who would defend these loopholes - how can we as a society possibly defend handing out subsidies to property speculators when most young couples can't afford to buy their first home.
You ask me whose side I'm on? It's families. It's first home buyers.
Removing the speculators' tax loophole will save taxpayers $150m a year once fully implemented.
Now, Grant, before you get too excited about Treasury getting that money - I've got plans for it!
Today, I'm also announcing Labour will invest those savings into grants for home insulation and heating.
Homeowners and landlords will be able to get up to $2,000 towards the cost of upgrading insulation to modern standards or installing heating.
Over a decade, we'll help make 600,000 Kiwi homes warmer, drier, and healthier.
This is a perfect complement to my Healthy Homes Guarantee Bill that requires all rentals to be up to a standard where they are fit to live in.
40,000 kids a year go into hospital in New Zealand for illnesses related to living in cold, damp, mouldy homes. We've got to change that. We can do better.
And Labour will.
That's the fresh, new approach we'll bring to housing.
We will build affordable homes.We will level the playing field.We'll make our homes healthy, warm and dry.
You know, National's had nine years to tackle the housing crisis. And they have failed at every step.
I'm telling you now, where they've failed, we will succeed.
Why have we made getting housing right such a priority? Because it is absolutely essential to New Zealanders' sense of security and stability.
Home is about "our place." It's a place of celebration; a place of refuge. A launching pad to face the day's adventures and challenges. It's our landing spot to rest and get ready for the next day. It's where life is lived. Where futures are dreamed.
Without a place to call your own, it's hard to have any of these things. To thrive, to prosper, to stand on our own two feet, every New Zealander needs to have a place they can call theirs.
It is Labour's mission to restore the foundation stone to strong families and strong communities – decent housing.
I've focused on housing so far today, but the same values that make housing such a priority underpin everything else Labour does.
We are putting people first.
That's why we'll fund our health system so people get the care they need, and not just the care they can afford.
That's why Labour is facing up to the crisis of neglect in mental health.
And that's why we're going to have an education system that has what it needs, and that prepares our young people for the future of work.
Labour has so many fresh ideas for New Zealand.
We'll ensure the Government buys Kiwi-made to keep work here and invest in regional infrastructure.
We'll get young people off the dole and into jobs improving their communities and the environment. I am committed to lifting wages and improving work rights, especially for lower income workers.
We'll make our rivers cleaner and tackle climate change.
Through all these policies and in every decision, Māori will be at the table. Māori aspiration sits at the core of Labour's vision for New Zealand.
Because we are a progressive party - we stand for a better future for each generation; we think ahead; we invest in the future.
We are a party of great passion - for our people, for ideas that make this a more perfect country.
You know, the election in September will be about who'll invest in New Zealand's future. It's not about the lolly scramble we're seeing in this year's Budget.
This election will be about who has the vision, the guts, and the plan to build a better New Zealand that puts people first.
The answer is: Labour does.
Only Labour will build the houses. Only Labour will reverse the health cuts and boost funding for GP visits and mental health.
And only Labour will make tertiary education and training fees free for three years.
In Labour, we have the vision, we have the guts, and the plan.
I'm here because I believe that all our people should have a fair shot at the Kiwi Dream.
I believe that, just as Norman Kirk said so memorably, we should all have "Someone to love, somewhere to live, somewhere to work and something to hope for".
I'm here because I believe that a government that puts people first is at the heart of making that vision a reality.
I'm here to help build a better New Zealand.
But, before we get that opportunity to help build that better New Zealand, we've had to build a better Labour Party.
We've had to build a party that is ready to win, to govern, to lead.
As I look out at this Congress, today, I know we have achieved that.
We've done it by working together. We have built a dynamic, modern party.
We have packed out halls and pubs around the country with ordinary Kiwis, keen to hear our vision. Keen to support our plan.
We have built a strong relationship with the Green Party to show that there is a stable alternative government, ready to go.
And because of all that, we've been winning. In the local elections. In Mount Roskill. In Mount Albert.
You know, by the time of the Mt Albert by-election, National had stopped even bothering to show up!
Our party is in amazing shape. We have a fantastic caucus, amazing new candidates, a huge army of volunteers, and hundreds of thousands of Kiwis signed up as supporters.
Labour is ready to win in 2017.
This election is ours to win. All over the country, people are telling me they're ready for a change.
To make that happen, we need much more than politicians on a stage.
Ours is a community movement. It's powered by people like you.
Mums and Dads. Students and teachers. Workers and families. You and me.
Our movement wins when we bring thousands of committed people with us.
I wouldn't want it any other way.
New Zealanders have a clear choice at this election.
We can choose a tired government that has run its course.
Or we can choose a new, positive vision for a better New Zealand.
This isn't going to be an easy fight. It's going to be close. It's going to be tough.
I've faced tough fights before, and this is one fight we simply have to win.
Here's my message to New Zealanders this year:
It's time for a fresh team with energy and passion.
It's time for new ideas on housing. It's time to give hope to our young people.
Vote for a better New Zealand. Vote Labour. Delegates, let's do it.