Watching the past week's debate over Chinese buyers of Auckland property was like watching a bomb go off inside the politics of our economy.
We all knew this issue was ready to go off and hoped it would be a controlled explosion debated with good data and an exchange of considered views that built a measured policy.
Instead, Labour lit the fuse on a jury-rigged device and threw it into a shopping mall of opinions, with sadly predictable results.
The thrower lost a few fingers as party members resigned and supporters understandably accused it of racial profiling and half-baked analysis. The wider damage to race and trade relations with China could be significant.
But it needn't have been this way. The Government's refusal to acknowledge the weight of non-resident capital flooding into Auckland or try to measure it is at least partly to blame for the furore.
It created a vacuum into which first anecdote and now information that is barely more than "anecdata" has been sucked.
But Labour at least started a badly needed discussion. So let's come up with some sensible policy options.
First is Australian-style restrictions that would force non-residents to buy new homes or apartments and townhouses off the plan, but not existing homes.
It's financing apartment building booms in Sydney and Melbourne, with 25 per cent of all new homes bought off the plan by non-residents in the past year.
But such a nuanced ban may prove difficult to enforce alongside our trade agreements.
They specify that New Zealand has to treat all foreign investors the same, but our CER deal with Australia means Australians must be allowed to invest freely, which would mean they were preferred over other non-residents.
Another simpler option used in Singapore and Hong Kong is a stamp duty on non-resident buying of homes.
This would include Australians and doesn't seem to cramp the free-trading style of Singapore and Hong Kong, which have massive trade and investment links with China.
Beijing-based macroeconomic adviser Rodney Jones this week suggested a 20 per cent stamp duty, although keeping it in line with the 15 per cent used in Hong Kong and Singapore would seem sensible.
Another option is an "Auckland Investor Levy" as proposed by Treasury in its frenzy of policy suggestions before the Budget. It would see a 1 per cent levy imposed on the capital values of rental properties, worth $1.25 billion a year at QV's valuation of Auckland rental properties of $125b. It would also be colour blind.
Treasury suggested it could be collected by Auckland Council, which could retain some tax to invest in infrastructure for new housing. That would at least stun two birds with one stone.
Such a tax would also suck air out of the rampant demand pushing into a market that the Productivity Commission has estimated will be under-supplied to the tune of 60,000 houses by 2020.
An Auckland investor levy and/or a non-resident stamp duty are conventional policy options that no one could accuse of being racist or radical.
If only the Government had started collecting real data three years ago this debate would have been much less painful.
Debate on this article is now closed.