Newsroom Pro's 8 things at 8 am: Ngaro regrets lashing out; Labour would stop negative gearing

Andrew Little roused the Labour Congress with a speech focusing on housing. Photo: Lynn Grieveson

In today's email we check out what came out of the Labour and National party conferences over the weekend, including cabinet minister Alfred Ngaro getting "carried away" in a presentation on social funding.

1. A raw nerve on housing

Newsroom covered the Labour and National party conferences extensively over the weekend and found housing will be both the main battleground and the source of rawest nerves in the election campaign.

Co-Editor Tim Murphy got the scoop on National List MP and cabinet minister Alfred Ngaro's threats to pull funding for Government contracts from those who criticise National's policies.

Ngaro, who is the associate social housing minister and the community and voluntary sector minister, gave a presentation to National's northern conference on Saturday that was laced with political menace against those who question National's performance on housing.

Tim reports Ngaro linked the awarding of Government contracts to Labour List candidate Willie Jackson to his criticism of the Government, and how Ngaro also focused on the Salvation Army's campaigning on housing.

"We are not happy about people taking with one hand and throwing with the other," Ngaro said.

"Do not play politics with us. If you get up on the campaign trail and start bagging us, then all the things you are doing are off the table. They will not happen."

Ngaro said he and the Government would also 'push back' at the media on housing, referring to a "manufactured crisis" and how reports of people living in cars were prompted by "an opposition that chooses to use their constituents for political fodder."

He told conference delegates not to rely on media reports.

"Go out the back to the kitchens and ask the kuia who were watching the families. They'll say: 'There were two-thirds who were genuine and we wanted to hug them and help them. And one-third who were just ratbags and we told them to get off their backsides and do something for their families'."

Here's Tim's full article on Newsroom, which also includes Ngaro's comments attacking the Salvation Army's policy unit.

2. And then the reaction...

Ngaro's threats to pull funding from critics and the tone of his comments about Auckland's housing problems sparked immediate criticism, and an eventual apology.

Labour Leader Andrew Little described Ngaro's comments as out of order.

"We have a lot of non-government organisations contracting with government. They are entitled to know that their contracts and their futures are secure by a government that contracts in a responsible, reasonable, dispassionate sort of way," Little told reporters on Sunday.

Asked if Ngaro may have breached the cabinet manual, he said: "It’s not something that a cabinet minister should be saying," he said.

Later on Sunday Ngaro issued an apology statement.

"My comments about the Government's work in social housing and some of our partners were a bit naive, poorly worded and I absolutely regret what I said," Ngaro said.

Finance Minister Steven Joyce was quoted as saying Ngaro had gotten carried away and that Ngaro had apologised to Prime Minister Bill English and Deputy Prime Minister Paula Bennett.

"It's fine to disagree with people politically, but to make any suggestion it might impact on your relationship with government, that's where it's overstepping the mark," Joyce said.

Ngaro had been frustrated with media coverage of the housing issue, "but he realises what he said was over stepping the mark. He's very disappointed in himself," Joyce said.

The incident highlighted the raw nerve now exposed for the Government around housing in Auckland, and the risk for the Government in being seen not to take the issue seriously, or to be mean-spirited in any way.

3. Negative gearing in firing line

The other big conference of the weekend was in Wellington, where Labour held its final annual congress before the election on September 23.

Little used his main address on Sunday to launch Labour's latest housing policy - the phasing out of negative gearing for rental property investors.

He focused his speech completely on housing and roused the packed audience at Te Papa to its feet several times with his focus on Labour's housing policy, and the party's early history of building state houses.

Here's my full report on the speech and the detail of the policy on Newsroom Pro.

4. More in Tax review?

Later, when speaking to reporters, Little also reiterated Labour would launch a review of tax policies once in Government that would look at issues such a capital gains tax or a land tax.

Little dropped Labour's 2014 policy that favoured a capital gains tax when he was elected leader after the 2014 election loss.

He said stopping negative gearing was aimed at larger rental property investors, rather than 'Mums or Dads' with one or two properties. He cited IRD figures showing the top 30 percent of income earners claimed over 70 percent of the losses for tax purposes.

The removal of negative gearing would have affected 90,700 taxpayers in 2014/15, including 52,800 who reported losses who were in the top 30 percent of income earners.

IRD figures in response to Parliamentary written questions showed how much tax had been forgone by landlords claiming rental property losses against their other income, although the IRD cautioned that the data in the table below may include commercial property losses and does not include losses made on properties held in trusts.

5. Unintended consequences?

The main point of debate around the negative gearing policy was whether it would increase rents and reduce new home building funded by investors.

The Property Institute's CEO Ashley Church described the move as a cynical electoral ploy that would lead to less investment by 'Mums and Dads' in rental properties and shortages of rental properties that would rebound in higher costs for the Government.

He called on Labour to offer incentives to rental property investors.

"That might include giving preferential tax treatment to Investors who build, or buy, new homes – not punishing them for doing so," he said.

Little rejected suggestions that the tax move would increase rents, saying it would reduce competition for housing and make it more affordable.

Property Investors Federation Executive Andrew King said removing negative gearing would increase the cost to landlords of owning a home by around $79 a week.

"Labour's proposal would likely result in increased rents, making it be harder for first home buyers to save the deposits required to purchase homes," King said.

Finance Minister Steven Joyce said the policy would increase rents and reduce the number of new houses funded by rental property investors.
ACT Leader and Epsom MP David Seymour said Labour had put the politics of envy above economics.

"It is a recipe for rent hikes, putting the most vulnerable out on the streets," he said.

The one test for the rent inflation argument is what happened after depreciation on buildings was removed as an item that landlords could claim for tax purposes.

That did not lead to an appreciable rise in rents, and rents have actually fallen in markets such as Christchurch where housing supply increased.

6. 'A motorway from Whangarei to Matamata'

Tim Murphy also covered the main speeches from Bill English and Steven Joyce at National's conference on Sunday, laying out their respective pitches for an unprecedented fourth term in an MMP era.

The message from English was that National in government had taken on big, complex problems, which when it came to office had seemed intractable.

On infrastructure "it is now conceivable that you will have four lanes from Whangarei to Matamata. For a growing economy we are going to need it".

There's a lot more on English's comments on social investment, education and the respective performances of the Australian and New Zealand economies in Tim's full piece.

7. Jacinda's personal speech

Newsroom's Sam Sachdeva covered the Labour conference for us on Saturday and found plenty of warmth inside the event on an otherwise cold day in Wellington.

Jacinda Ardern's speech was the highlight, including plenty of personal details about a tractor crash in her youth and her fear of public speaking.

Check out Sam's full report on Newsroom Pro.

8. One fun thing

Alfred Ngaro's comments caused the biggest stir of the weekend and piqued the interest of the often excellent author of mock Beehive Letters on Twitter.

This mock letter from Ngaro to Bill English captures the mood nicely.

Looking ahead, Bill English is expected to hold a post-cabinet news conference this afternoon before jetting off to Tokyo and Hong Kong tomorrow. Our Foreign Affairs and Trade Editor Sam Sachdeva will be travelling with the PM.