Member log in

Winston Peters attacks Auckland land bankers

The Dirty Politics saga is a new low in politics and Judith Collins should go, Winston Peters said on TVNZ's Q+A this morning.

“I think it's irreparable, unless she finds God or something people have no reason to believe her in the future, but I think it's all over now," the NZ First leader said.

“Anyone in the Prime Minister's situation who is prepared to keep Judith Collins on is actually first of all letting the whole of his caucus down, the whole party down, and I think the country – the country right now would be 80% for her to go.”

New attack on foreign buyers
Separately, at a meeting in Auckland today Mr Peters delivered a fresh attack on foreign buyers, this time focussing on alleged land-banking in the Auckland housing market.

The NZ First leader said developers have told him that foreign buyers are buying up land around the outskirts of Auckland, just waiting for the housing demand to come to them.

He spoke of a lifestyle sub-division on the outskirts of Auckland where all 22 lots have been pre-sold to Asian buyers for exactly $500,000 each.

"All 22 lots sold to overseas buyers; Kiwi buyers did not even get to see the land promoted because it was not promoted in this country," he said.

Mr Peters said it was unheard of for sections to all sell for the same exact amount.

It looked "seriously fishy" and could be tax and price-declaration evasion, he claimed.

"What it points to is money laundering, GST avoidance and cash top-ups," he said."They will not be selling it in total for $500,000; there will be behind the scenes and under the table payments," he alleged.

He called on Inland Revenue to investigate.

Foreign investors had tax advantages not available to New Zealand home buyers and the interest rates they received were a fraction of those charged here, Mr Peters said.

NZ First, Labour and the Greens have promised to restrict foreign home buyers.

Conservative leader Colin Craig has said he favours compulsory acquisition of property held by land bankers around Auckland if they sit on the land without developing it.

Comments and questions

In some countries unoccupied property attracts higher rates.

Really? Name one.

Colorado, US

A land value tax (or site valuation tax) is a levy on the unimproved value of land only. It is an ad valorem tax on land that disregards the value of buildings, personal property and other improvements. ... A land value tax is also a progressive tax, in that it would be paid primarily by the wealthy, and would reduce economic inequality. ... Land value taxation is currently implemented throughout Denmark,[4] Estonia, Russia, Hong Kong, Singapore, and Taiwan. The tax has been applied in subregions of Australia (New South Wales), Mexico (Mexicali), and the United States (Pennsylvania). Land value taxation is known as site-value tax, LVT, split rate tax, and site-value rating. (wikipedia)

Land Tax, Land Tax, Land Tax.
If you want to stop this type of "investment", by foreigners AND locals, make it less attractive .
Land tax is a much better tool than CGT as it effects them while they hold, not just when they eventually sell.
Also size and amount that can be purchased by foreigners should be limited.

Aucklanders would be hammered by a proposed land tax, with households facing an annual bill running into thousands of dollars. ...
A land tax was one of several in the tax working group's recommendations to the Government this month. An economist has also given warning that such a move would lead to falls in property values and an increase in rents. If the value of land was taxed, the rich would pay more, but people on low incomes who have property would be the hardest hit. (NZ Herald 2010)

The Victoria University-led tax working group recommended taxing the unimproved value of property - the land, not the house. ... Taxing the unimproved value of land could be an effective lever to raise revenue while dampening a resurgence in house prices without creating too many distortions, the group said. Local councils or Inland Revenue would gather the tax, based on the rating valuations. "As a base-broadening measure, land tax has a number of merits," the group said. ...
Concerns about the effect of the tax on Maori landowners and farmers have been raised since the proposal was floated. The Greens support it, according to co-leader Metiria Turei. Reserve Bank chairman Arthur Grimes, an economist, has been advocating a tax on all land for some years. ... BNZ chief economist Tony Alexander is sceptical a land tax will ever be enacted, "given the long list of exemptions which would be needed and the outright opprobrium it would generate". However, he added that it would be logical to remove tax breaks for landlords, such as depreciation allowances. (NZ Herald 2010)

Size is the amount.

Winston Don Quixote Peters tilting at another windmill?

Would have thought the fall from his high horse from the Huka windmill was enough.

We consider other concerns that may be raised against foreign investment either do not justify intervention, are best addressed by other means, or should be balanced against the benefits foreign investment can bring:
a. We have previously advised you on why we think the ‘profits going offshore’ argument has a weak economic basis
b. Concerns about high external indebtedness are better addressed through savings policies than by restricting foreign investment.
c. Concerns about the affordability of farmland are also unlikely to be best addressed by restricting foreign investment. For example any response needs to consider benefits such as higher sale prices for vendors, the recycling of capital into the local economy, and that land sales to foreigners are only one of many factors affecting market prices.
d. Concerns about hollowing-out such as by production being moved offshore, can be addressed by removing incentives to relocate offshore, such as double taxation of dividends and pursing policies to encourage ‘recycling’ of talent.
e. Concerns about a loss of sovereignty through land sales to foreigners need to be weighed against the benefits from foreign investment and whether other countries would reciprocate if New Zealand was to tighten its ownership rules.
f. ‘Strategic’ concerns are frequently raised but very rarely defined in any meaningful sense. Often they can be the same as other concerns noted above.
(NZ Treasury, Advice on the Aggregation of Farmland by Foreign Investors, 2010)

Land banking is hugely profitable because Councils ration land.

The Councils benefit from ever increasing rates income and the land bankers benefit because Council policies make it worthwhile to hang on to land knowing that its value will go up for as long as the Council's crazy policies persist.

The easy way to fix it is to remove the huge benefits by making sure that adequate land is available for development.

Totally agree: if the problem is caused by government rules then the solution is to scrap those rules, not to put new rules in place.

Peters wants the IRD to investigate a development he won't identify?

What a moron.