Bill English vows to deter property boom

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The Government is looking to head off a looming property boom as Finance Minister Bill English warns that the country cannot afford another debt-fuelled spending binge.

In a sign of just how worried the Government has become over the latest indications of a property-led recovery, Mr English has refused to rule out a capital gains tax a political hot potato that politicians have been quick to boot away in the past or other changes to rein in the property market.

He said all options were on the table and there were other tools, including changes to the Resource Management Act, district council plans and public transport systems, that could be used to head off a "premature housing boom".

"If we go back to more borrowing off our houses and more spending, that can't last. The tax system is maybe one way of tilting the playing field but we've yet to see whether that would work and that's what the officials are working on."

One study has predicted a 30 per cent rise in Auckland house prices over the next three years and tips house prices nationally could rise as much as 24 per cent.

The Infometrics study says low interest rates and a shortage of new housing are combining to push up prices.

Mr English said a premature housing boom was not good for the economy or for jobs.

"Any change in tax is potentially controversial and it would be a pretty hard job persuading us to make significant changes to the current system, but clearly there are some lessons from our last economic boom that we don't want to repeat," he said.

In a speech yesterday outlining the economic challenges ahead, Mr English warned that New Zealand had to move away from "borrowing and spending" toward exporting and productive investment.

He also flagged wider use of the private sector in building and maintaining schools, roads, hospitals and prisons so as to get "the best value" from its $7.5 billion boost to infrastructure spending.

The private sector could be involved in designing, financing, building, maintaining and operating facilities where there were clear benefits to taxpayers, he said.

He cited Australia's extensive use of public-private partnerships in infrastructure projects as an example of how the system could work.

"Since 2000, around 50 major PPP projects worth about $30 billion have been completed in Australia.

"They range from the traditional road, rail, water and energy through to areas such as defence facilities, hospitals, schools, prisons and radio networks."

But Green Party co-leader Russel Norman said Australia's experience should act as a warning.

"Private companies involved in PPPs in Australia have on numerous occasions underbid, overpromised and under-delivered.

"The first aim of a private company is to make as much profit as possible from engaging in a PPP not to engage in large-scale risky projects for the good of society."

- © Fairfax NZ News