The BFD | Collins’ Comments

Hon Judith Collins
judithcollins.national.org.nz

Petition to Open the Trans-Tasman Bubble

I am overwhelmed by the wonderful response I have had from people contacting me in support of our National Opposition petition to get a travel bubble opened between Australia and New Zealand as soon as possible. By March 22, 2021 we had 42,000 signatures.

We need to help families to be reunited with their loved ones either here or in Australia without the need for lengthy isolation at either end.

Australia has been taking visitors from New Zealand for a few months now with no reported sickness from Covid-19 or any other ill effects. So surely we can do the same for Australians who want to visit family and friends here?

For the sake of our Tourism Industry we need to open the bubble to get Australian tourists back into places that are really suffering like Queenstown, the West Coast and Rotorua. Our tourism industry and our hospitality industry urgently need more visitors following the terrible year that they have endured since our first lockdown in 2020.

I am afraid that Australia will open a bubble with Singapore before we can secure one and we might miss out on the Pacific Islands bubble too, if the government doesn’t act quickly.

The Prime Minister has announced that there will be an announcement on 6 April about the timeline for opening up our borders to Australia. But that gives no clue as to what the tourism and hospitality sectors can expect, so they cannot make plans to be ready for the welcome return of business.

I will be continuing to press for answers as to why the trans Tasman bubble is delayed especially as we now have the ability to vaccinate people against Covid-19. Although it seems the programme has slowed following the vaccination of frontline and border employees as well as some medical staff. We need to be updated on the timeline, the progress and systems for administering a New Zealand wide vaccination programme.

Housing

This government certainly knows how to surprise us with the completely different look of the policies that they are pushing through now but didn’t give details of, before the Election in 2020.

In September last year, the Minister of Finance Grant Robertson categorically ruled out making changes to the Bright-line test to control the housing market.

The Prime Minister ruled out a Capital Gains Tax.

Now under urgency, starting from 27 March, the Brightline test is going to double to ten years of ownership of a non -family home before a sale can be made without capital gains tax being payable.

The Government has also decided that Landlords will not be able to offset mortgage payments against the income tax on the rent they receive. For people who have borrowed significantly to buy a house that they then rent out to those who can’t afford to buy, this is going to be very expensive. If the rent goes up so does the tax and the tax cannot be deducted against mortgage payments. Property investors’ representative organisations are furious and call the moves ‘bizarre’ and ‘crazy”.

It is also extraordinary that the government is going to tax gains made on sales of the main or family home if that home is rented out for a period of more than a year and sold within 10 years of purchase. This is definitely a Capital Gains Tax.

In an attempt to sweeten the deal, the Government is going to put $3.8billion into the budget for infrastructure so that new housing developments can go ahead because there will be water, sewage and roads available to service them.

Whether this actually speeds up the production of houses for people will still depend on the time it takes to get everything consented by local government. Because once again the government has not provided the details, the timelines or the targets.

It seems that luck will determine if you get a Kiwibuild house and if you are not lucky, high rents will be inevitable as landlords need to get a return on their investment.

The problem we have is the time it will take to get all of this development going despite the government acting urgently. The government’s legislation may bring the housing market to an “abrupt stop” and cause a big drop in the value of houses but that doesn’t mean greater supply or lower rents.

Many landlords, who are just ‘Mum and Dad’ investors, will be really hit hard because their investment property has just become less affordable for them because of its sudden lower value, as well as the annual tax on income from it going up without mortgage payments being deductible. There will be flow-on effects for tenants as well, like higher rents and other consequences, which haven’t been identified, but also for landlords the outlook is bleak.

Like some commentators, I think it will not change the current housing market prices in the short term but it will stop people selling existing houses pretty quickly and developers may have second thoughts.

Kind regards,

Judith.