Deputy Prime Minister and Finance Minister Grant Robertson. Photo / Mark Mitchell
Deputy Prime Minister and Finance Minister Grant Robertson. Photo / Mark Mitchell
OPINION:
Trick question. Does Labour want to extend the bright-line test in order to cool the housing market?
The trick in it is that you believe what you want to believe. That is probably by design.
At the start of last week, Finance Minister Grant Robertson let it be knownhe had written to Treasury asking for advice on extending the bright-line test. The implication was he's keen to do it and he's going to do it.
But by the start of this week, under sustained questioning, Robertson also started saying that, while it was the "responsible" thing to do, "no decisions have been made yet" and "people are getting ahead of themselves".
The implication was he's keen to do it but he's not going to do it.
You decide.
Either way, you'll have to wait until next year to find out whether you're right, so this really is a holding pattern. It's likely designed to give the appearance of dealing to rising house prices, without actually having to deal to house prices.
There are signs Auckland's property market may be cooling slightly. Photo / Supplied
If Robertson's buying himself time, his goal will be to get to Wednesday. That's when Parliament rises and he's largely off the hook. He'll be - for the most part - able to avoid the 6 o'clock news.
Before we know it we'll be marking Christmas, taking the usual slow start to the new work year and soon enough March will be upon us and - fingers crossed - the Reserve Bank's LVRs will kick in and cool things down.
There are already signs the Auckland housing market is cooling off slightly, with elevated numbers of listings and an asking price increase that is half the national average. Robertson will probably be praying that continues and spreads throughout the country before he is forced to act.
It's possible he's also trying to jawbone the market a wee bit. That would explain Revenue Minister David Parker's threat to increase the trust tax rate. His threat is that if he sees wealthier Kiwis avoiding the new 39 per cent income tax rate by funnelling cash into trusts and then into the housing market, he'll hit them where it hurts.
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He can't be serious about this because to do so would break Labour's pre-election word, where they repeatedly promised not to touch taxes.
So, the most logical - and generous - explanation is that he and Robertson are just sounding off in the hope their threats plus the looming LVRs cause investors to cool their jets.
It seems unlikely Robertson wants to follow through with the bright-line and trust tax threats because of the damage it would do to his personal integrity and the fact it would prove National right.
Pre-election, National repeatedly warned voters Labour would raise taxes, saying the 39 per cent income tax rate was "just the beginning".
In response, Robertson promised "Labour will not implement any new taxes or make any further increases to income taxes next term", and when asked on Newstalk ZB Drive on September 9 whether he would change the bright-line test, the rate or the five-year limit, he replied "no".
To backflip would warn voters he cannot be trusted and would give National something to hammer Labour over for three years.
It seems Labour doesn't really know how to fix the housing market, or even if it wants to. But any reprieve it buys itself with this holding pattern might only be temporary, if the history of our housing market is anything to go by.
Post-summer, interest rates will still be low, capital gains will still be largely untaxed, and the temptation to pop money into housing will still exist.
A holding pattern only lasts so long. Eventually, Labour will have to take the guessing out of the question and do something to answer our question: does Labour want to extend the bright-line test in order to cool the housing market?
