Federated Farmers said the Government's decision to back down on capital gains tax showed it was willing to "put well-reasoned and practical considerations in front of ideology".

"It's clear the coalition partners have listened to widespread concerns that a capital gains tax has too many downsides, including massive administration costs and the potential to put the handbrake on the progress of small and medium businesses vital to our economy," the Feds economics spokesperson Andrew Hoggard said.

"It seems to us that New Zealand First has been pivotal in this decision, and we appreciate their pragmatism," he said in a statement.

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Prime Minister Jacinda Ardern spoke about new measures to tackle land banking and land speculation, which had a much better chance of tackling housing affordability issues rather than capital gains tax.

Hoggard said Federated Farmers was also pleased with the assurance that there would be no resource rental for water or fertiliser tax - at least in this term of Government.