Prime Minister Bill English says Andrew Little's promise to crack down on property speculators is nothing new, and housing construction is on track.
Mr Little told the Labour Party during their election-year congress at the weekend that a loophole allowing speculators to offset losses from their rentals against other income to pay less tax would be closed.
Source: 1 NEWS
"Right now, speculators can take losses from their rentals and offset that against their personal income. It allows them to avoid paying tax," he said.
"This loophole is effectively a hand-out from taxpayers to speculators. It gives them an unfair advantage over Kiwi families.
"This policy is about the big speculators who purchase property after property ... It's about those big time speculators who are taking tens of thousands of dollars a year in taxpayer subsidies as they hoover up house after house."
Mr Little said about $150m would be saved per year from the change.
Mr English, speaking this morning to TVNZ's Breakfast programme, said the policy was nothing new and was a rehash of Labour's 2014 election promise, and also said such a move could slow down housing construction, which is going well.
"It puts more tax on houses just when we need more houses - we don't need less," he said.
"If you combine it with the policy about slashing work visas just when we need an expanding construction force then it would be bad for new supply."
In terms of speculators, Mr English said the problem had already been dealt with.
"They've been dealt with in a couple of ways already - one is the Bright-Line test, so if they turn it over within two years they pay full income tax, and the Reserve Bank's constraints on investors, which seem to have made some impact," Mr English said.
"So the actual speculators are paying tax."
Mr English said the government is doing all it can to address the shortage of housing as fast as it can.
"It's just the unglamorous business of getting the infrastructure built, getting construction done and getting the materials and the people on the site," he said.
"The next step there is the Housing Infrastructure Fund - $1b the Government's put on the table.
"It's happening as fast as it can - the construction sector here is running as big as it ever has - it's got record construction, record growth in construction and now this $1b fund that's going to create more opportunities."