Bill English tells election conference NZ has chosen to have an expensive residential property market.

The Productivity Commission has been sent back into the minefield of housing costs, tasked this time with looking into how to improve the way local authorities regulate the availability of land for housing.

The commission's influential 2012 inquiry identified constraints on the supply of land as a major driver of New Zealand's housing affordability problems.

"This new inquiry will delve deeper into how councils take decisions about making land available, as well as decisions about increasing the capacity for housing in existing urban areas through rules around such things as subdivision and intensive development," said commission chairman Murray Sherwin.

"Capacity for more housing is not the single answer for housing affordability, but it is an essential component of a policy response, especially where demand for housing is outstripping supply."


At a Deloitte-Business New Zealand election conference on Monday National's finance spokesman, Bill English, said New Zealand had chosen to have an expensive housing market.

It was not inevitable and the Government was heavily exposed to it, spending $1 billion a year on accommodation supplements and subsidising 40 per cent of all rentals.

"In Auckland it is basically illegal to build anything for less than $500,000," he said. "The only reason we now have special housing areas is that we told the councils that if they didn't agree we would take that power off them."

Act leader Jamie Whyte said the problem was restrictions on the use of land for residential development. Provide more supply and the price would fall. He did not like demand-side meddling.

Labour's finance spokesman, David Parker, favours having a national policy statement under the Resource Management Act which might say, as in Vancouver, that if people wanted to build a second dwelling on an existing section, they could.

"That could unlock a lot of additional supply, using existing land and services."

Whyte said it was essential people know in advance what they were and were not allowed to do with their own property. Many of the notions in the RMA were just too vague, he said.

Parker agreed the RMA court process was too slow and arcane.


But tongue in cheek he said, "We have promised the people of Epsom an RMA-free zone. Let's see how long it is before they want it back, when high-rises start appearing."

English said people still wanted to be able to have local arguments about development, pointing to the backlash in Auckland over densification.

The question was how to reduce the time and cost of that process. The legislation would always have discretion in it, but at the moment it often seemed to be used just to stop stuff, he said.

Greens co-leader Russel Norman: "In Auckland in particular we see densifying as the only way the city is going to work."

A denser city was more efficient in terms of energy and transport while sprawl had to be heavily subsidised with motorways. "We have got to treat it like a city and not a sprawling country town. That will drive prices down," he said.

"What if local people don't want it densified?" English asked.

"It depends on how you do it," Norman said.

The four finance spokesmen were also asked if they would change Working for Families, which cost $2.6 billion in the year just past.

"We won't be changing it," English said - but he added that it was projected that by 2019 it would be costing roughly what it did in 2009.

"Like other transfers it is flattening off."

Whyte said: "We want to eliminate it altogether. It makes ordinary New Zealanders into welfare beneficiaries."

That would be part of more radical changes to the tax system.

Norman said the Greens would keep Working for Families the same. "But by raising the minimum wage there would be less need to subsidise the working poor," he said.

Parker said: "Working for Families is necessary when wages are dragged down because of globalisation and we need to get more money into families with kids."

They were asked if they would cut the business tax rate within the next three years.

"No," said English. "It is not a final tax and we have higher priorities - reducing public debt and modest income tax cuts."

Whyte said cutting the corporate tax rate was Act's major business-related policy. By eliminating about $1.4 billion of corporate welfare and scrapping the $1.5 billion operating allowance, a provision of new money per Budget, it could reduce the rate to 20 per cent next year and 12.5 per cent by 2020.

Norman said recycling the proceeds of the Greens' carbon tax would enable the company tax rate to be cut from 28c to 27c in the dollar, as well as giving business more certainty over the carbon price.

Parker said Labour would not cut the headline rate but the reintroduction of R&D tax credits and accelerated depreciation in selected industries would lower the tax burden on business overall.

Asked if they would pledge to keep the core central government spending below 30 per cent of GDP, Whyte's answer was a crisp "yes".

English pointed out the latest Treasury forecasts have the ratio remaining about 30 per cent over the next four years.

The numbers could move around, he said, but the key to smaller government was better government, hence National's "investment" approach aimed at reducing welfare dependency, recidivism in the criminal justice system, remedial teaching to repair shortcomings in the education of younger children and so on.

Norman said the Greens' fiscal numbers had government spending at 30.3 per cent by the end of the projection period.

Parker was not willing to make such a pledge on government spending but Labour did pledge to get net debt (including NZ Superannuation) below 3 per cent of GDP by 2020, he said.

The spokesmen were asked if they would change the interest-free student loan policy, which is costing $600 million a year.

English said no.

"It is now locked into middle class budgets," he said.

He noted that it had been introduced at a time of rapid house price inflation.

"It is no coincidence that when house prices are going up rapidly there is much more pressure on governments to supply transfers. So we are working on the complex task of reducing house price inflation."

Whyte said Act would eliminate interest-free student loans, which he described as a particularly crass election bribe.

Norman said that over time the Greens would like to increase student allowances. "But we can't afford it yet."

Parker said: "Kids still pay for more of the cost of their education than earlier generations did."

Finally they were asked whether they would pass a Regulatory Responsibility Act, to help get fewer and better laws.

Whyte said Act had attempted to get such a bill passed.

It hadn't passed because asking politicians to limit their ability to make bad regulations had a turkeys and Christmas element to it, he said.