Capital gains tax not 'panacea' for housing crisis, Labour admits

Labour and the Green Party have admitted a capital gains tax would not be a 'panacea' for New Zealand's housing crisis. Photo / Doug Sherring

Labour and the Green Party have conceded that a capital gains tax would not be a "panacea" for New Zealand's unaffordable housing crisis.

The two parties seemed initially flummoxed when a questioner at an otherwise friendly election forum organised by the Public Health Association in Auckland this morning noted that having capital gains taxes had not stopped housing price booms in Australia, the US and Britain.

"I don't know why they haven't worked in those countries," said Green health spokesman Kevin Hague.

Labour health spokeswoman Annette King said Labour's proposed capital gains tax was aimed at changing the whole pattern of investment, not just at the housing market.

"It's not just on housing. You have farmland that is no longer affordable for young New Zealanders because you farm for the capital gains," she said.

"So we say the capital gains tax will change the investment pattern in New Zealand, as well as reducing the housing bubble in this country. We are not saying it's the panacea."

Act's Upper Harbour candidate Stephen Berry, who came third in last year's Auckland mayoral race on an "Affordable Auckland" ticket, told the forum that houses in Sydney and Melbourne were seven to eight times average incomes in those cities - the same ratio as in Auckland, even though Australia has a capital gains tax.

"House prices rise in Auckland as a result of the metropolitan urban limit. When you restrict the supply, the price goes up. That's simple economics," he said.

National North Shore MP Maggie Barry said Labour proposed so many exemptions in its capital gains tax that it would be ineffective.

"Perhaps that's why it's been ineffective in other countries," she said.

But she also warned that, once a capital gains tax was installed, Labour would eventually remove some of those exemptions.

"How long will it be before you put it on family homes?" she asked Mrs King.

Internet-Mana Auckland Central candidate Miriam Pierard said the Internet Party did not have a housing policy but had adopted Mana's policy, including 30,000 new state houses in three years and a capital gains tax.

"The fact that New Zealanders are not taxed on investment properties is part of the problem," she said. "It's not the silver bullet."

Rangi McLean, the Maori Party candidate to succeed Dr Pita Sharples in the Tamaki Makaurau seat, said: "If you were to ask whanau on the benefit about a capital gains tax, they will say, 'What capital gains tax?' When you talk about capital gains tax you have to put it in language that people can understand."

The Maori Party's election policy does not include a capital gains tax.