Treasury pours cold water on leaky home GST relief

Photo / Richard Robinson

Treasury has today poured cold water on the hopes of additional financial relief for leaky home owners, saying government would not receive a GST windfall to provide additional funds for these repairs.

"GST is a broad based tax and the money the government, councils and homeowners spend on repairing leaky homes would otherwise be spent on other goods and services elsewhere in the economy"

the Treasury said in a December report released by Building and Construction Minister Maurice Williamson today. "These goods and services would also be subject to GST so there is unlikely to be any net increase in GST."

The announcement was in response to an enquiry from Prime Minster John Key, who requested advice as to whether the government would be able to contribute a greater amount to the repairs, funded by a large GST, or Goods and Services Tax, windfall from the additional spending on repairs for leaky homes.

The release of the report comes hot on the heels of a Covec Consulting Group report, commissioned by Auckland's North Shore City Council, which claims the government will reap 25 cents worth of GST in every dollar spent on repairing these leaky homes. With repair costs estimated in at $11.3 billion dollars, the net GST windfall is said to be in the $2 billion range.

Councils and taxpayers are largely on the hook for this bill, after John Key's National Party disavowed responsibility for the bulk of these costs, despite being responsible for relaxing the building regulations which lead to the crisis when it was in power in the 1990s.

The repair bill has been labelled as New Zealand's biggest man-mad disaster in media reports - overshadowing the country's largest natural disaster, the Napier earthquake in 1931, which cost $648 million dollars.