Scott appointment riles Labour and Greens

The credibility of Productivity Commission inquiries into housing affordability and international freight services is in doubt because a former ACT Party candidate is on it, Labour and the Greens say.

The Government announced the inquiries yesterday, saying Sally Davenport and Graham Scott had been appointed as commissioners to work with chairman Murray Sherwin.

Former Treasury secretary Dr Scott previously stood for the ACT Party and Labour's David Cunliffe said it was hard to see how such a person could take a non-partisan approach.

He had hoped the commission would take a long-term view and not be stacked by the Government with "people even more right-wing than they are", he said on Radio New Zealand.

"It will be judged by the quality of the work but I give this warning, if its product is as ideological as that appointment was it will simply be ignored."

Green Party co-leader Russel Norman told the broadcaster that Dr Scott headed Treasury during a period of anti-regulation which had led to the leaky homes crisis.

ACT leader and Regulatory Reform Minister Rodney Hide said Dr Scott had served Labour and National Governments.

"Graham Scott has been sought internationally from Governments of all stripes and persuasions for the quality of his analysis," he said.

NDU general secretary Robert Reid yesterday said for the housing inquiry to be truly productive, it needed to look at implementing a capital gains tax, something the Government previously ruled out.

"There is something fundamentally wrong with a housing market that is structured to deliver untaxed capital gains to those who have capital, at the same time as denying the dream of home ownership to the upcoming generation," he said.

Westpac Institutional Bank chief executive David McLean said the housing inquiry would provide a better understanding of the varied needs of New Zealanders.

"Government assist those in need but a change in the current model of state housing will really make a difference. The nature and scale of the social housing problem demands we do so," Mr McLean said.

"New Zealand needs more houses in the right places. It is hard to build new houses when thousands and thousands of houses in the existing stock need to be rebuilt."

Mr McLean urged the Government to consider public private partnerships and not-for-profit initiatives using Government capital and or stock transfers for social housing projects.

NZ Property Investors' vice president Andrew King said blaming house prices for poor productivity ignored real problems.

"Is lack of capital really the key problem with New Zealand's productivity? Perhaps there are other more serious factors, such as selling our most profitable businesses, like banks, to overseas owners; selling low value primary products rather than hi-tech and high-value products; poor management of our existing companies; ineffective use of new technology or low economies of scale through focus on the domestic market.

"The obsession with the housing market as all that is wrong with productivity in New Zealand has to stop otherwise we will never get to the crux of the main problems."

The commission, which formally starts work today, has a wide-ranging brief to inquire into productivity-related matters. It is funded by redirected money from the existing budgets of 29 government agencies.

It is due to report back on housing affordability by February 1 and on freight services by April 1 next year.