The Government’s housing announcements have been a shock. In this special edition of Free Press, ACT Housing spokesperson Brooke van Velden makes sense out of the madness, and sets out what ACT will do about it in the next Government.

Today I have launched a petition today seeking your support to repeal the bright-line test and reintroduce mortgage interest deductibility on residential property income.

The Government says it will ‘tilt the balance’ towards first home buyers. That got me thinking about who else is involved in this picture. If the Government is ‘tilting the balance’ towards some people, it must be away from others.

This is the Government of ‘be kind,’ but the headlines are already talking about winners and losers from its policy. The policy is introduced as pitting people against each other. The subtext of this policy is that there are good people and bad people, and the Government is punishing the bad.

The actual policies can be divided into three types. There are policies that subsidise first home buyers, policies that punish other homeowners and policies that are supposed to boost supply.

The subsidies are changes in the First Home scheme. A first home buyer who earns under $95,000 (up from $85,000) or $150,000 as a couple (up from $130,000) only needs a 5 percent deposit to receive a grant, and will be able to buy more expensive homes.

That’s just the entrée though, the real deal is the punishment of everyone else.

ACT said in 2015 that National’s two-year bright-line test was an acorn. Since then it’s grown into a full-size tax tree. The extension to 10 years is not the real action though.

The Government also, under parliamentary urgency last night, said if you don’t live in your family home for more than a year you may have to pay capital gains tax. If you get a two year secondment to work on a project, perhaps you are a civil engineer, you could end up paying the tax.

Imagine a young person starting their career at Tiwai Point. They’ve moved to Invercargill for its more-affordable-than-most housing market, and Rio Tinto offers them an exciting secondment offshore. One day they could bring home valuable insights, but will they bother under this regime? All we know is it just got a lot less likely. Life is complex, there will be lots of unintended consequences like this.

In 2023, a vote for ACT will be a vote to abolish this capital gains tax in drag completely because you simply can’t be a little bit pregnant, as National tried when it introduced the two-year version of the bright-line test.

This is probably a good time to point out that capital gains taxes have not made housing more affordable for anyone. Not anywhere, not ever. I can tell you as an economist that if demand outstrips supply then prices will rise, but you don’t need to be an economist for this one. It’s actually a stick up, the Government is cutting itself into the capital gains game.

Far more destructive is the removal of interest deductibility for property investors. It’s bad policy. Income tax is supposed to be on income but this effectively makes it a revenue tax. In 2023, a vote for ACT will be a vote to abolish this perversion of the tax system.

On the divisiveness, note the Government called mortgage interest deduction a loophole. This government is attacking people as exploiting a loophole for following perfectly orthodox tax laws. It’s a poisonous way to treat people.

If you were paying 3 percent on a million-dollar mortgage, you now get a $10,000 tax bill, every year. Of course, that cost will be passed on to the tenant. This is about webs of people, and guess who tenants are? Most tenants are also known as wannabe first home buyers. In its rush to divide and conquer, this Government has engaged in friendly fire.

The Government doesn’t understand that people are interdependent. There are not good people and bad people. In fact, most of the difference between people is actually in the stage of life. Kids move out of home to become renters, then homeowners, then investors. The Government is just pitting you against your past and future self.

Of course the real answer is to build more homes. The Government has paid lip service to this. It has identified the real problem, we aren’t short of land, but sections. The difference between land and a section is infrastructure and consenting.

For infrastructure there is a $3.8 billion dollar fund but, get this, the small print says they’ll decide the details in June. It is not even clear how many years it’s spread over, but we guess four. The rest of the supply side announcements such as having the Government buy land for housing, reform the RMA and the Urban Development Act are all reheats of old policies that clearly haven’t worked or we wouldn’t be here. So much for supply.

The real take out is that this Government is no different from the others. The idea that it is somehow kind, inclusive, and charting a new course the way foreign media portray it is piffle. They have were elected to fix housing. Not only have they failed but they’ve used populist, divisive politics to try to cover it over.

ACT’s housing plan is about changing the land use planning, infrastructure funding and building consent system for all builders, not just the Government. Instead of dividing New Zealand we would unite New Zealand behind good ideas. The alternative is to keep fighting over a shortage.