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The Free-market, Hyper-individualism… and a Culture of Cruelty?

15 July 2018 3 comments

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Up till recently, I had believed that there were two facets comprising to create a  neo-liberal economy (not “society” – neo-liberalism does not recognise community or society where individuals organise for a greater collective good).

The first was a free market predicated on minimal regulation; reduced government; greater reliance of private enterprise to deliver services; and a lower tax-take which forces future left-leaning governments to curtail vital infra-structure and social-spending.

As Coalition Finance Minister, Grant Robertson clearly told the told the country in March this year;

“We’ve put aside $42bn over the next four years for capital investment but you know what? It won’t be enough. We understand that we need to take a more innovative approach to the financing of infrastructure.”

Which was well understood by National’s former Finance Minister, Steven Joyce,  when he accused Labour of a so-called “$11.7 billion fiscal hole” in their pre-election costings.

National’s tax cuts of 2009 and 2010 were not just an election bribe at a time the country could ill afford them – they were a strategic move to constrain a future Labour-led government in a tight fiscal straight-jacket.

Then-Finance Minister, Bill English, said that the 2009 tax cut represented a $1 billion loss of revenue to the National government;

“About 1.5 million workers will receive a personal tax cut, injecting an extra $1 billion into the economy in the coming year.”

The following year, National’s tax would be estimated to cost the State at least $2 billion in lost revenue.

This was well-under-stood by commentators, analysts, politicians. National-leaning John Armstrong explained this in straight-forward terms;

The message is Labour – if it wins – is not going to spend money the new Government will not have…

… is not going to make promises in advance he cannot keep.

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The yawning chasm of the Budget deficit meant there was no new money to spend. Some cherished policies would have to be introduced progressively – rather than in one go. Savings would have to be found; sacrifices would have to be made. And so on.

That was penned by Mr Armstrong in 2011. It still holds true today.

The second facet of neo-liberalism is promulgation and amplification of the Cult of the Individual. Whether this means cheaper imported goods at the expense of local industry and jobs; doing away with retailing restrictions (or even planned, deliberate breaking of the law); easier access to alcohol and subsequent social impacts; the primacy of the Individual’s rights for self-interest and gratification would trump communities expectations of collective  responsibility; social cohesion; the health and wellbeing of the population, and the greater good.

For example, attempts by communities to restrict and reign in plentiful availability of cheap alcohol is usually  met with a predictable vocal chorus of indignant outrage from people for whom the Right To Buy When/Where-ever supercedes any societal problems. The most spurious arguments are presented, attempting to portray consumers as hapless “victims” of “bureaucracy-gone-made”. Or “Nanny statism”.

Yet, the cost of alcohol abuse was estimated to be approximately $5.3 billion in 2016. That’s $5.3 billion that could have been invested in education, health, public transport,  housing, conservation and pest control, increased research in green technologies, etc.

The heavy  costs of alcohol abuse is socialised, whilst profits are privatised to business and their shareholders. For many, it is more important to be able to buy a drink at 4am in the morning than social problems arising from easy availability.  For some individuals, that convenience outstrips whatever harm is occurring elsewhere. “It’s not my problem”, is the thought that often runs through the minds of many who demand their rights – regardless of consequences.

But there is a third aspect – like a third leg to a three-legged stool – that must exist if neo-liberalism is to thrive: Cruelty.

A certain amount of callousness; disdain; and outright hatred must replace  compassion, egalitarianism, and a sense of community cohesion if the neo-liberal version of “society” is to operate successfully.

It is the reason why neo-liberalism never took hold in Scandinavian countries.

It is the reason why – once a foothold was gained in the late 1980s – successive governments ensured the neo-liberal model was maintained in this country.

Almost by definition, neo-liberalism cannot operate in a society which has values diametrically opposed to it. It took an “economic crisis” in 1984/85 for the Lange-led Labour government to impose Rogernomics.

In 1991, Ruth Richardson used the “BNZ Crisis” to implement drastic cuts to health, education and welfare. Housing NZ tenants were forced to pay market rents. User-pays was introduced for hospitals and schools – though the public resisted and ignored the $50/nightly charge for public hospitals.

Neo-liberalism could not have been introduced so easily without the convenient constructs of various so-called “economic crises”. The mainstream media at the time was complicit in the “reforms” sweeping every aspect of New Zealand’s cultural, social, and economic activity.

But once introduced, the speed of so-called “reforms” accelerated and opposition became harder. Mass protests seemingly had little or no effect. The change of government in 1990 from Labour to National only made matters worse – Richardson’s “Mother of All Budgets” plunged the country further into recession.

For the following thirty years, the neo-liberal paradigm ruled unchallenged, with perhaps the rear-guard action from the now-defunct Alliance, and a few stubborn media commentators who still asked uncomfortable questions where we were heading as a country.

By 2002, the Alliance was crippled and forced out of Parliament.

The remaining critical voices of media commentators grew fewer and fewer.

The “revolution” was all but complete. Neo-liberalism was bedded-in, supported by a propertied Middle Class feeling “wealthy” with bloated house-values and bribed with seven tax cuts since 1986.

But all was not well in Neo-liberal Nirvana.

There were embarrassing reminders that the notion of “trickle down” – now repudiated by the New Right as an ‘invention’ by the Left – was not working as per expectations of devotees of the Chicago School model. As Budget Director for the Reagan Administration, David Stockman, said;

“It’s kind of hard to sell ‘trickle down, so the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory.”

It became apparent that the promises of neo-liberalism were largely faith-based. Enormous social problems were being caused as corporate power increased;  union power waned; wages stagnated; wealth drained away to a tiny minority; and simple things like home ownership rates were falling dramatically.

Tellingly, it was the gradual loss of the great Kiwi Dream of home ownership that was a litmus test-paper for the toxicity of neo-liberalism’s false premises and empty promises.

Ironically, this was happening at a time when mortgage money was easier and cheaper to obtain from the banks. But only if you earned a high income or already owned property to borrow against. Or could rely on the Bank of Mum and Dad.

Those who already had the assets could hope to get more.

Those at the bottom, or struggling middle classes, would miss out.

For many, they discovered that hitting rock-bottom wasn’t as low as you could go. For growing numbers of New Zealanders, “bottom” meant a shredded welfare safety-net  that had gaping holes in it under the National government;

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Added to a mounting housing crisis, various National ministers exploited every opportunity to portray the poor; the homeless; the chronically sick; unemployed; young people; in the worst possible light. They were authors of their own misfortune, according to former PM, John Key;

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National’s Bill English disdain for young unemployed was made abundantly clear on several occasions;

In 2016;

“ A lot of the Kiwis that are meant to be available [for farm work] are pretty damned hopeless. They won’t show up. You can’t rely on them and that is one of the reasons why immigration’s a bit permissive, to fill that gap… a cohort of Kiwis who now can’t get a license because they can’t read and write properly and don’t look to be employable, you know, basically young males.”

Last year;

“ One of the hurdles these days is just passing a drug test. Under workplace safety you can’t have people on your premises under the influence of drugs and a lot of our younger people can’t pass that test.”

And again in December this year;

Government’s fees-free policy will ‘soak up staff out of McDonald’s’...”

English’s demonisation of unemployed and young New Zealander’s appeared at complete variance with those same people desperate for paid work. But that did not make him pause in his attacks.

Housing for the poor, the homeless, and vulnerable was also on National’s “hit list”, as they pursued their agenda to down-size state activity in housing.

First came the “reviews” and people’s live upended as National ended tenancies based on an ideological notion that state houses were not for life. The social problems resulting would be euphemistically known later as “unintended consequences”;

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National’s response was predictable,

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Therein lay their own seeds for electoral  defeat three years later.

In the years that followed, National portrayed welfare beneficiaries and Housing NZ tenants as negatively as they could possibly get away with.

The meth-hysteria portrayed HNZ tenants as hopeless, lazy drug fiends. National was only too happy to fan the flames of demonisation, as it allowed National to evict tenants and sell off state houses.  Their policy in September last year was unequivocal, and linked gangs and drugs, with Housing NZ tenants;

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The press statement above was issued by former welfare beneficiary-turned-National Minister, Paula Bennett. The same Paula Bennett who, only eight months later, lamented on Radio NZ;

“I’ve always had concerns… I just didn’t think that the 0.5 [microgram limit] sounded right. I questioned [the Health Ministry] in particular who had set that standard, questioned Housing NZ numerous times, got the Standards Authority involved.”

She suggested tenants should be compensated. That was ‘big’ of her.

She also stated,

“[I] was horrified that people might be smoking P in houses, I’m not going to shy away from that.

Then I started seeing reports and I remember one in particular from an expert – he said, ‘You can just about get more P residue off a $5 note than you could have at some of these houses with 0.5 micrograms’ and so that raised alarm bells for me.

But … then who am I to be standing in and saying at what level I felt that [the limit] should be?”

Maybe she could have asked Sir Peter Gluckman. He was the government’s Science Advisor at the time. The one appointed by John Key. Yeah, that one.

Or, she could have paid more attention to a 2014 MSD report which revealed a staggeringly low rate of drug-use amongst welfare beneficiaries;

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Yeah, that one!

But that would have gotten in the way of National’s cunning plan.

Plans that drove thousands of welfare rolls, as Key’s administration struggled to balance the government’s books after two unaffordable tax cuts in 2009 and 2010;

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In September 2017, on TV3’s ‘The Nation‘,  then Welfare Minister, Anne Tolley, described National’s drive to reduce welfare recipients in the most Orwellian way;

“But we do have a significant number of people who are looking for work, who are capable of working, and so most of them, it’s just a light touch to help them along the way.”

In the same interview, Lisa Owen challenged Minister Tolley on the fate of welfare beneficiaries who had been pushed off welfare. Minister Tolley admitted that she and the National government had no idea what had happened to the thousands of people, including families with children;

Lisa Owen: How do you know that they’re going on to a better life?

Tolley: Look, there’s a whole lot of people that don’t want the state in their lives. Tracking people is awful. They go off the benefit—

[…]

Anne Tolley: They go off the benefit for a whole variety of reasons.

Lisa Owen: How can you claim success, though, for that when you don’t actually know if they’re earning more money than they were on the benefit—?

Anne Tolley: We do track if they come back on to benefit, and we do have a close look at what has happened. As I say, we do do a lot of training. We do provide a lot of opportunities for people to retrain.

Lisa Owen: But you don’t know what’s happening to those people. You’ve got no idea.

Anne Tolley: We have 44% who self-identify to us that they’re going off into work. You know, people go overseas. They age into superannuation. There’s a whole lot of reasons why.

Lisa Owen: All right, so you don’t know.

Thankfully, former PM John Key was more forthcoming in 2011 that New Zealand’s “under class” was growing.

As National ramped up it’s campaign of  denigration and punitive action against welfare beneficiaries and Housing NZ tenants, compliant State organisations were reaping their victims.

One was forced to suicide;

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One was a victim of damp housing and poverty-related disease;

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One was chased for a welfare debt she could have no chance of repaying – but MSD pursued it “in case she won Lotto“;

MSD was trying to recover approximately $120,000 from a chronically-ill beneficiary in her 50s who will never be able to work again. The Ministry has pursued her for years and spent a large amount on the case, even though it is plain the woman has no money and her health will never allow her to work again.

The judge asked the Crown lawyer whether it was worth continuing to pursue the beneficiary.

The lawyer responded that it was, as the beneficiary might win Lotto and would then be able to repay the money.

And the most recent example of victimising the homeless simply defies comprension;

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Homeless men at the “drop-in centre” were shaken awake through the night every half hour.

All because the facility was not compliant with fire and building consents. To it’s credit the Rotorua Lakes Council said “fire and building consents were being rushed through so people could sleep at the shelter“.

But Mr Deane – the organisor of the facility ” was told yesterday [5 July] that they had to remain awake until the necessary  consents were granted”.

The common term for this is sleep deprivation.

It should not be forgotten that the practice of sleep deprivation was one of the five techniques used by the British government against Northern Irish citizens arrested in 1971. Subsequently, in January 1978, in a case taken by the government of Ireland against Great Britain, in the the European Court of Human Rights, ruled that the five techniques – including sleep deprivation – “did not occasion suffering of the particular intensity and cruelty implied by the word torture … [but] amounted to a practice of inhuman and degrading treatment“.

Sleep deprivation was determined to be a breach of the European Convention on Human Rights.

In 2010, the British government lost a Court appeal to prevent public release of a report revealing the practice of sleep deprivation torture had been used against British resident, Binyam Mohamed. The Court judgement stated;

“The treatment reported, if it had been administered on behalf of the United Kingdom would clearly have been in breach of  [a ban on torture].

Although it is not necessary for us to categorise the treatment reported, it could be readily contended to be at the very least cruel, inhuman and degrading treatment of BM by the United States authorities.”

In 2014, the UN committee against torture condemned the United States for allowing sleep deprivation to be used as a torture technique against prisoners at Guantanamo Bay. The United States governments calls such practices “enhanced interrogation”.

To discover that sleep deprivation is being used against homeless men in New Zealand is disturbing.

To realise that a practice considered torture by various international organisations has barely been reported by the mainstream media – is deeply troubling.

We have reached rock-bottom as a society when people are being subjected to “a practice of inhuman and degrading treatment” – simply because they are homeless.

This is the definition of  abuse against the vulnerable: they are unable to fight back because they are utterly powerless.

If this practice of sleep deprivation was carried out in our prisons, there would be a major Royal Commission of Inquiry.

But not when the subject of this abuse is the homeless. Their powerlessness is worse than men and women incarcerated in our prisons, despite being “free”.

The cruelty shown to our welfare beneficiaries; to Housing NZ tenants; and to the homeless, has been sanctioned by a sizeable ‘chunk’ of our population;

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(2008) (2011) (2014) (2017)

Fully a quarter of the country’s population has continued to endorse the National Party at four consecutive general elections.

What does this say about a quarter of the population’s attitude to what has amounted to a campaign of vilification and  denigration against those at the bottom of our social-economic ‘ladder’ – a campaign that has been skillfully carried out to facilitate pushing people off welfare and selling off state houses.

This degree of callous cruelty has been led by various  ministers in the previous National government who have mis-used information; misled the public; and made derogatory comments against those whose sole ‘crime’ was to be poor.

This was bullying from the highest level of power, toward those at the lowest level of powerlessness.

National’s subtle and graduated vilification of the poor made cruelty permissable in a country which once valued tolerance, fairness, and egalitarianism.

When depriving homeless men barely merits a mention in our media, and few bat an eyelid, what other possible conclusion can be made?

This Coalition government is constrained fiscally when it comes to welfare and state housing.

It suffers no such constraints when it comes to showing strong moral leadership to reject State-sanctioned cruelty.There is no fiscal cost to compassionate leadership that lifts up the powerless.

There are good men and women in Labour, the Greens, and NZ First. That is perhaps their strongest common bond between all three; a rejection of the culture of callousness that has seduced and poisoned the hearts and minds of so many New Zealanders.

Every Minister in this coalition government can reject decades of a culture of cruelty by reaffirming the humanity of the unemployed; solo-mums; youth; sickness beneficiaries; state house tenants; the drug and alcohol addicted; and the homeless.

Every Minister in this coalition government can use their position of power to speak on behalf of the powerless.

Every Minister in this coalition government can remind all New Zealanders that we are not bullies; we are better than that. If we cannot look after the powerless in our own society – then what possible hope is there for us and our children’s future, to be a compassionate society?

This will be the defining point of difference between what we have been – and what we hope to become.

This is what will inspire New Zealanders to choose what we aspire to be, and what kind of leadership will take us there.

Cruelty or compassion? Hopefully that will be the true point of difference in 2020.

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~ In Memory ~

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~ Emma-Lita Bourne ~

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~ Wendy Shoebridge ~

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References

Radio NZ: Robertson on infrastructure – $42bn ‘won’t be enough’

Fairfax media: Steven Joyce sticks to $11.7 billion hole in Government budget

Scoop media: Government delivers April 1 tax cuts, SME changes

Scoop media: Govt’s 2010 tax cuts costing $2 billion and counting

NZ Herald: John Armstrong – Labour confined to a fiscal straitjacket

Dominion Post: ‘Pressure valve’ medics patch up night’s drunks

Fairfax media: Alcohol – How can we reduce the harm it causes?

RBNZ: Banking crises in New Zealand – an historical perspective

NZ Herald: July 1984 – When life in NZ turned upside down

The Encyclopedia of New Zealand – Te Ara: The ‘mother of all budgets’

Wikipedia: The Alliance

NZ Initiative: Defeating the trickle-down straw man

The Atlantic: The Education of David Stockman

NZ Herald: Home ownership rates lowest in 66 years according to Statistics NZ

Interest.co.nz: Housing mortgage rates are more likely to go down rather than up

Fairfax media: Bank of mum and dad could be NZ’s sixth largest first-home mortgage lender

NZ Herald: Auckland teen couple face sleeping in car

TVNZ: More homeless people sleeping in cars

Mediaworks/Newshub: The hidden homeless – Families forced to live in cars

NZ Herald: Minister spells out $43,000 ‘salary’ claim for solo mum

NZ Herald: Benefit cuts for drug users defended by PM

NZ Herald: Bennett increases pursuit of welfare ‘rorts

Fairfax media: Key – Mums of one-year-olds better off working

NZ Herald: Food parcel families made poor choices, says Key

NZ Herald: Beneficiary birth control ‘common sense’ – Key

Fairfax media: House call plan to nab benefit fraudsters

NZ Herald:  Unions demand Bill English apologise for describing jobseekers as ‘pretty damned hopeless’

Fairfax media:  Bill English says employers are regularly telling him that Kiwis can’t pass drug tests

Twitter: Newshub – Bill English “soak up staff out of McDonalds”

Frankly Speaking:  Fact Sheet – Employment-Unemployment and Queues for Vacancies

Dominion Post: State tenants face ‘high need’ review

Fairfax media: Nearly 600 state house tenants removed after end of ‘house for life’ policy

Fairfax media: Housing policy will destabilise life for children

NZ Herald: State housing shake-up – Lease up on idea of ‘house for life’

Fairfax media: Housing policy will destabilise life for children

NZ Herald: ‘No point’ in new state houses – Bill English

National: New crack down on gangs and drugs

Radio NZ: Paula Bennett: HNZ too cautious on meth testing

Beehive: PM appoints Chief Science Advisor

NZ Herald: Minister claims low drug result as victory

NZ Herald: Bennett trumpets 5000 fewer on DPB

Fairfax media: Number on benefits drops, reaction mixed

NZ Herald: Over 5300 benefits cut due to info sharing

NZ Herald: Benefits cut for 13,000 parents in new regime

NZ Herald: 11,000 disabled children lose welfare benefit

Radio NZ: About 2000 children hit when parents lose benefits

Radio NZ: Thousands losing benefits due to paperwork

Mediaworks/TV3: The Nation – Welfare Debate

NZ Herald: Key admits underclass still growing

Fairfax media: Aggressive prosecution focus at MSD preceded woman’s death, inquest told

NZ Herald: Damp house led to toddler’s death

Catriona Maclennan: Loans to feed kids are income and disqualify benefit, says MSD

Radio NZ: Homeless shaken awake as Rotorua shelter awaits consents

European Court of Human Rights: Case of Ireland v. The United Kingdom

BBC: Binyam Mohamed torture appeal lost by UK government

The Guardian: UN torture report condemns sleep deprivation among US detainees

Wikipedia: New Zealand general election, 2008

Wikipedia: New Zealand general election, 2011

Wikipedia: New Zealand general election, 2014

Wikipedia: New Zealand general election, 2017

Additional

Gordon Campbell:  Ten Myths About Welfare – The politics behind the government’s welfare reform process

Other Blogposts

Public Address: We are, at last, navigating out of the “meth contamination” debacle

Pundit:  Beneficiary ‘impact’ highlights poverty of social policies

The Daily Blog: A Fair suck of the sauce bottle!

The Daily Blog: New Government response to MSD sadism is just not good enough

The Standard: Loans to feed kids are income and disqualify benefit, says MSD

Previous related blogposts

Week Watch – 7 June

Easter Trading – A “victimless crime”?

Professor Bill English lectures young New Zealanders on free education

The Mendacities of Ms Amy Adams – “hidden borrowing”?!

Tracy Watkins – Getting it half right on the “Decade of Deficits”

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This blogpost was first published on The Daily Blog on 10 July 2018.

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Housing; broken promises, families in cars, and ideological idiocy (Part Toru)

1 November 2014 11 comments

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1949 state house in Taita

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Continued from: Housing; broken promises, families in cars, and ideological idiocy (Part Rua)

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Bill English comes clean on National’s intentions for HNZ privatisation

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On 14 October, in a report on The Daily Blog, I wrote,

In his story, TV3’s Brooke Sabin raised the question,

“So a big cull of state houses is about to get underway, but the crucial question is: Will all that money make its way back into social housing or will some be pocketed by the Government? The official response is that hasn’t been worked out yet.”

Yes, it has, Mr Sabin.

The money will indeed be “pocketed by the government”.

For no other reason than their re-election in 2017 depends on it.

The TV3 story reported that up to 22,000 homes worth an estimated $5 billion could be sold off. This would make it one of the biggest asset sales in recent history – when John Key himself promised an end to state asset sales in February this year.

It is also a time when 5,563 are on Housing NZ’s ever-growing waiting list.

Three days later, on 17 October, Brook Sabin’s question was answered in full, and my prediction (once again) proved to be correct. A quote from our esteemed Deputy Prime Minister, Bill English,

‘No point’ in new state houses – Bill English

Finance Minister Bill English says the proceeds from selling state houses are unlikely to be spent on new state houses and may go into the Consolidated Account.

“I mean, if we want less stock, there’s not much point in rebuilding stock with it” …

Hat-tip: Anthony Robins

Whilst National “made noises” about some  Housing NZ properties being sold, or transferred to social organisations early in the year, there were no pre-election policy announcements  remotely resembling those made public by Bill English two weeks after the election. (See: National’s pre-election policy: 2014)

This was a radical, unannounced, policy that has taken the country by surprise.

In the Herald, columnist Dita De Boni was scathing in her condemnation of Key’s heretofore secret plan to sell  state houses,

Those conditions gave the Labour Government – elected in 1935 – a mandate to make the provision of state housing a top priority. Then Minister of Housing Walter Nash told New Zealand it could not prosper or progress with a population that “lack[s] the conditions necessary for a ‘home’ and ‘home life’, in the best and fullest meaning of those words”. It was a popular sentiment at the time, but look how far we have since regressed. We again have children and their parents living in cars and sheds. We have thousands of homeless; old diseases and ingrained misery have returned as sections of the population struggle to keep pace with the rising cost of living.

And at this critical juncture in our history, our Government is looking, instead, to offload state housing. It is the absolute, ultimate irony: a public welfare system that bridges the gap left by market failure, that, when starved, denigrated and under-resourced, as it is now, can only, apparently, be saved by the market.

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The Government has tried to slip the sell-off of state housing under the radar: I guess they don’t want to be seen to be contradicting their pre-election promise not to sell any more state assets. They focus instead on “first home affordability” – a much more pressing concern for their supporters (as long as it does not affect their other supporters, who don’t want too much new housing to depress the capital value of their property).

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It is hard to understand how reverting to the Victorian solution of seeing churches and social agencies haphazardly tackle this gaping social wound will work. They don’t have the resources, for one thing. They are also not plugged into the bigger picture – the social needs of the tenants, the transport and logistics needs of new housing and so forth, all things a clever, committed government can oversee. Not ours then, which is trying desperately to shift the immediate costs of social housing elsewhere, and the benefits to a crony cohort.

One method they’ve used is to seed the idea with the public that state housing is all let to gang members and chronic social misfits who trash their properties and refuse to move out. Of course, that does describe a percentage of state house tenants – or any tenants.

Call me old-fashioned, but I tend to think that housing is one of the core concerns of Government, and that the provision of state housing – as well as its proper management and upkeep – is fundamental. It is astonishing that a Prime Minister who grew up in a state house, and has gained huge political advantage from being able to trumpet that fact, can’t see why it is wrong to pull up the ladder after him.

I encourage the reader to read Ms De Boni’s full piece. It is a savage indictment of John Key’s miserable agenda to get the State out of social housing.

New Zealanders should be under no illusion:  housing in this country is about to get a whole lot worse before it improves. We can expect to see more over-crowding;  entire families living in cars, under bridges;  the rise of  the first squatter camps since the Great Depression; more poverty; and more spreading disease.

Bill English has made it abundantly clear: this government will be selling state houses. It will not be “rebuilding stock” (houses).

This may not be what New Zealanders voted for on 20 September – but did 1,131,501 voters who ticked the box for National expect better?

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References – Part 3

TV3 News: State housing sell-off worth $5B

Radio NZ: PM rules out more asset sales

Fairfax media: Housing NZ waiting lists swamped

NZ Herald: ‘No point’ in new state houses – Bill English

NZ Herald: State housing shake-up: Lease up on idea of ‘house for life’

NZ Herald: Dita De Boni – State house poster boy callous to pull up ladder

Wikipedia: New Zealand general election, 2014

Previous related blogposts

Can we do it? Bloody oath we can!

Budget 2013: State Housing and the War on Poor

Budget 2013: State Housing and the War on Poor

National recycles Housing Policy and produces good manure!

Our growing housing problem

National Housing propaganda – McGehan Close Revisited

Housing; broken promises, families in cars, and ideological idiocy (Part Tahi)

Housing; broken promises, families in cars, and ideological idiocy (Part Rua)

Other blogs

The Jackal: More homelessness under National (30 July 2012)

The Standard: Unaffordable housing & the culture of greed

No Right Turn:  A surprise policy

Social Groups

Facebook: Affordable Housing For All

Facebook: Housing NZ Tenants Forum

Facebook: Tamaki Housing Group- Defend Glen Innes


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Irony of ironies, a National Party 1938 election poster

Irony of ironies, a National Party 1938 election poster

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This blogpost was first published on The Daily Blog on 28 October 2014

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Housing; broken promises, families in cars, and ideological idiocy (Part Rua)

18 October 2014 17 comments

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1949 state house in Taita

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Continued from: Housing; broken promises, families in cars, and ideological idiocy (Part Tahi)

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National’s housing development project: ‘Gateway’ to confusion

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Perhaps nothing better illustrates National’s lack of a coherent housing programme than the ‘circus’ that is their “Gateway” policy. The history of this project has to be seen to be believed. As I reported in November 2012;

October 2010: Gateway Project ON!

On 10 August 2010,  the resignation of  former Labour Pacific Island Affairs Minister, Winnie Laban,  triggered a by-election in the Mana electorate. National stood Hekia Parata, a List MP, as their candidate.

As part of National’s campaign to win Mana from Labour, Housing Minister Phil Heatley announced a new housing programme called the “Gateway Housing Assistance“. According to their press release,

Housing Minister Phil Heatley has today launched a new programme which will make it easier for first-time buyers and those on lower incomes to build or purchase their own homes.

Gateway Housing Assistance allows purchasers to build or buy a property but defer payment on the land.

“It is important the Government provides opportunities for people to move into home ownership. Affordable homes schemes such as Gateway is another way we can assist more people into a home of their own,” says Mr Heatley.

“Under Gateway full and final payment for the land can be deferred for up to ten years. This ten year period allows people on lower incomes to concentrate on designing and building, or buying, their homes before they assume the additional burden of paying for the land,” says Mr Heatley.”

It was an election stunt, of course. Much like National’s “sudden interest” in upgrading State housing in the Porirua area.

Three months, the by-election was won by  Kris Faafoi.

May 2012: Gateway Project OFF!

Having lost the 2010 Mana by-election, and as National scrambled to cut  state services; close schools; and scrap any  projects it could get away with (avoiding any public backlash in the process)  the “Gateway Housing Assistanceprogramme became a casualty,

John Key has defended a decision to cancel sales of affordable housing in an Auckland development, saying low interest rates are making it easier for first-time buyers and people on low incomes to afford their own homes.

The Hobsonville Point development, started in 2009, allocated up to 100 of 3000 houses under the Gateway scheme, a helping hand for lower-income first-home buyers who could not afford to buy in Auckland.

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The Prime Minister defended the decision not to include more of the Hobsonville development in the Gateway scheme.

“The Government has looked at that programme and decided that’s now not the most effective way of going forward”.”

Key added,

He said one of the positive stories at the moment was that mortgage rates had fallen.

“So we think the capacity for lower income New Zealanders to own their own home is greatly enhanced by the fact interest rates are lower.

“If you have a look at the average home owner in New Zealand, they are paying about $200 a week less in interest than they were under the previous Labour Government”.”

November 2012: Gateway Project ON (again)!

On 18 November, Labour Leader David Shearer delivered a speech to  his Party conference, promising to implement a mass-construction project to build 100,000 homes for desperate families.

Having gotten ‘wind’ of Shearer’s plans for “Kiwi Build”, National scrambled to dust off it’s Gateway Project, three days before the Labour leader’s speech,

The Government has reinstated plans to allocate a percentage of the houses at Hobsonville Point in Auckland as affordable homes priced under $485,000.”

Then Housing Minister, Phil Heatley, was keen to reassure the voting public that National would “do it’s bit” to help Kiwi “mums and dads” into their own homes – something that has become a distant dream during National’s term.

Even pro-National columnist, John Armstrong, was less than  impressed at the time,

“…when it comes to increasing the housing stock, there is not a lot central government can do unless it is willing to spend big bikkies.”

As was widely reported at the time, the so-called “Gateway Project” was less than a stirling success;

“In 2009, 100 of the 3000 homes at the development were tagged as affordable under the Gateway scheme, giving lower-income first-home buyers a helping hand.

Only 17 were sold, 14 for less that $400,000.”

As I pointed out two years ago – and not much seems to have changed in the interim under this government –

One aspect to Housing Minister Heatley’s press release (Hobsonville Point a boost for Auckland housing) that is painfully evident, is National’s luke-warm approach to the housing problem in this country.  Having read it, one cannot avoid the conclusion that their heart simply isn’t in it, and each word in their press release must have felt like pulling teeth.

Just by comparing the two releases of housing policies, one could easily gauge which Party was more enthusiatic;

National: a press release

Labour: a major policy speech,  given by the Leader of the Labour Party, at the Party annual conference, and released via television, internet, newspapers, etc.

National was not interested in assisting New Zealanders into their own homes. In this instance, National was more interested in trying to up-stage and undermine Labour’s release of  a major policy initiative.

October 2014: Gateway Project –  Status Unknown

As at this point, the status of Housing NZ’s ‘Gate Way‘ assistance project is uncertain, with a previous page on Housing NZ’s website now apparently a dead-link;

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Housing  NZ - Gateway assistance project - webpage

 

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“We’re sorry, but that page doesn’t exist” – is appropriate. The Gateway Project – after only seventeen homes sold under the scheme – seems to have been quietly canned. But as John Armstrong pointed out in 2012, the purpose of National’s quasi-housing “scheme” was not to build new homes for struggling New Zealanders;

“… the Government has finally steered political debate on to something it wishes to talk about, rather than being hostage to what Opposition parties would prefer to debate.”

High rents; growing unaffordability; a shortage of social housing; and growing homelessness – all impacted on our notion of having a decent roof over one’s head. News that,

“…more than half of New Zealand’s homeless were under 25, and a quarter were children. Most lived temporarily with friends or family, squeezed into living-rooms or garages, rather than on the streets.”

– was not what New Zealanders wanted to hear. Not in a nation that once prided itself on high rate of home ownership and the “quarter acre pavlova paradise” was deeply ingrained in the Kiwi psyche. That Paradise was fast disappearing, according to Richard Long, writing in the Dominion Post in 2012,

“So much for our quarter-acre pavlova paradise. The Government belatedly has come to the conclusion that something needs to be done about the failure of the housing market to provide the necessary land; and for resources, somehow, to be directed to providing low-cost housing instead of the present concentration on the expensive stuff.

All this is hardly new. I recall Helen Clark, when prime minister, lecturing me at a Wellington Cup meeting more than a decade ago about the need for land to be made available – at a reasonable price – to address the crisis. She surmised then that speculators were holding on to the land to gain higher returns. And she fingered, quite prophetically, the absurdity of house construction costing 30 per cent more in New Zealand than in Australia.

As the 2014 Election rolled closer, housing once again became a major election-issue. As Long wrote,

Now the Nats are going to have a go at solving the problem, with Finance Minister Bill English basically admitting the market system has failed.”

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Key’s promise – 25 February

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The sell-down of Air New Zealand, Genesis Energy, Mighty River Power, and Meridian raised approximately  $4.67 billion. This was a far cry from earlier expectations of   between $5 billion and $7 billion – and way below Key’s initial, wildly-optimistic forecast of $7 billion to $10 billion in January 2011,

“If we could do that with those five entities … if we can make some savings in terms of what were looking at in the budget and maybe a little on the upside you’re talking about somewhere in the order of $7 to $10 billion less borrowing that the Government could undertake.”

On 25 February 2014, Key announced an end to National’s asset sales programme,

“The truth is that there aren’t a lot of other assets that would fit in the category where they would be either appealing to take to the market or of a size that would warrant a further programme. Or they sit in the category where they are very large, like Transpower, but are a monopoly asset and so aren’t suited I think.”

He explained,

“Just as we did before the last election we’re making our position on share sales clear to New Zealanders before we go to the polls later this year.

We’ve achieved what we wanted with the share offers in energy companies and Air NZ. We’re now returning to a business-as-usual approach when it comes to [state-owned enterprises].”

Why was Key making such a clear promise to the electorate?

An earlier Roy Morgan Poll on 22 January 2014 – one month before Key announced a cessation of asset sales – would have sent National’s back-room strategists into a screaming tail-spin;

National: 43.5%

Labour: 33.5%

Greens: 12.5%

Those were heady days for National’s opponents, and a change in government seemed inevitable.

By committing National to an end to asset sales, Key was being strategic. He knew state asset sales were deeply unpopular with the public, and National did not want to risk giving opposition parties any further ammunition during what was then considered to be an up-coming, closely-fought election.

The polls (at the time) had forced National’s hand to acquiesce to public pressure. It would prove to be a pre-election promise they would regret later.

National made its panic-driven decision to abandon further asset sales at the same time that Fonterra announced at the end of February this year that it would be boosting it’s payout to dairy farmers,

Fonterra’s 35 cent lift in its milk price for the 2013-14 season to $8.65/kg milk solids means an extra half a billion in revenue for New Zealand.

The new forecast is a record payout from the co-operative and with the 10 cent kg/MS dividend on top, meant potential cash in hand for a fully shared up Fonterra farmer-shareholder of $8.75 kg/MS.

Federated Farmers’ dairy chairperson, Willy Leferink, was ebullient,

”In 2010, the NZIER said a $1 kg/MS rise in Fonterra’s payout makes every New Zealander nearly $300 better off.  Given this latest 35 cent kg/MS uplift, every New Zealander could be $100 better off as a result of what we do.”

It was also no doubt something that National was casting a keen eye over, as an increased Fonterra payout meant more tax revenue. National was ‘banking’ on high dairy prices to get it back to surplus by next year, 2015.

It would be a slim surplus of $372 million.

By 24 September, Fonterra had slashed it’s forecast payout down to $5.30/kg.

Prime Minister John Key was candid in the implications for the economy and the  government’s tax-take;

“It can have some impact because if that’s the final payout, the impact would be as large as NZ$5 billion for the economy overall, and you would expect that to flow through to the tax revenue, both for the 14/15 year and the 15/16 year. My understanding is Treasury is working on those numbers for the incoming Minister of Finance, which fortunately is the same as the outgoing Minister of Finance as well.

They are giving him (English) a bit of an assessment of what impact that might have. There’s a lot of different factors that go into that surplus. We expect it to have some impact and it’s a very narrow surplus. That doesn’t mean that we won’t achieve surplus. It means the Government will have to think through all of the issues here. There may be other options we choose to take.”

Bill English was already working on those “other options“. He needed to find $5 billion dollars to fill a hole left by collapsing international dairy prices.

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National’s pre-election policy: 2014

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National’s housing policies for the 20 September  election were ‘divvied’ up between first home buyers and ‘social’ housing. Note that throughout National’s policy document, they refer to “social housing” and “state housing” is referred to as “state houses”  only in terms of properties, not as a policy term.

For first home buyers, National was prepared to allow Kiwisaver investors to effectively ‘raid’ their savings and use the funds for a deposit for a house purchase. Aside from further pushing up the price of a limited availability of properties, this is hardly what Dr Michael Cullen had in mind when he set up Kiwisaver in July 2007. Saving for home ownership and saving for retirement are not necessarily the same thing.

On 24 August 2014, Key stated in a speech,

“The policy will help tens of thousands more first home buyers achieve their dream of home ownership. It will get young families started building what for most will be their biggest asset.

National backs young Kiwis who are disciplined, save up and want to put a deposit down on a house.  National values home ownership.  That’s because it provides stability for families, strength for communities and security in retirement.”

However, not all New Zealanders  are fortunate enough to be in high-paying jobs where they can afford to “save up and want to put a deposit down on a house” – and pay high rent whilst doing so in rented accomodation.

Whether the houses are actually there to buy is also a moot point.

To date, this country has been woefully short of supplying new, mid-priced homes, to meet demand. Instead, ” the majority of new homes today are upmarket affairs“, as Rebecca Macfie reported for ‘The Listener‘ in July 2012.

The problem, simply, is insufficient supply to meet demand – especially of affordable properties. According to National’s policy, they need to find “ 90,000 lower and middle income first home buyers into their own home over the next five years” – a policy sounding remarkably similar to Labour’s 100,000 new homes over a space of ten years.

National’s social housing policy was more vague, with passing reference only to social housing providers other than Housing NZ;

What we will do next…

Continue helping those in most need

Support a growing role for community housing providers in delivering social housing through the social housing fund and Housing New Zealand.

In case the page mysteriously disappears (as have other National Party policy releases), the relevent section of the  Social Housing page   is posted here;

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National Party - 2014 election - social housing policy - Housing NZ

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There was  no mention of things to come once the election was over. Certainly no mention of a mass housing sell-off,  which could also be described as  a partial asset-sale of Housing NZ.

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English Blames Everyone Else

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On 7 October, as the National government faced increasing pressure over New Zealand’s growing economic and housing problems, Finance Minister Bill English made this bizarre accusation against local bodies;

“The growth in housing costs over time, to the point where you’re seeing families spending 50 or 60 percent of their income on housing – that’s pretty devastating at the low end.

So councils need to understand that when they run these policies that restrict the availability of land and the opportunity for lower value housing they are causing poverty.”

It was an accusation that startled city leaders from one end of the country to the other, from Auckland to Christchurch.

Green co-leader Metiria Turei was speaking for hundreds of local body elected leaders when she quite rightly pointed out,

“Nowhere in any report from any non-government organisation or Government department has urban planning been blamed for child poverty.

What I think is happening is Bill English is trying to divert attention from the fact that the solutions are obvious and within the power of the Government to implement, but they don’t want to.”

Interestingly, as reported in the same Radio NZ story,

ANZ chief economist Cameron Bagrie said restrictions around the availability of land had affected housing affordability but it wasn’t the only factor to blame for poverty.

He said there were a lot of other challenges behind the scenes, and there was no one-size-fits-all solution to make houses more affordable.

Mr Bagrie said housing unaffordability was possibly due to wages being too low.

In essence, if workers’ remuneration is too low, they cannot purchase the consumer goods and services their society produces.

English, though, was not blaming Councils simply because he was having on “off day”. His diatribe was part of a carefully-calculated agenda, and National’s attack on Local Bodies was  part of a slowly unfolding plan.

He was looking for $5 billion, and there was precious little loose change behind the sofa cushions in the Beehive. Also, as Key had promised on 25 February 2014, National’s asset sales programme had been completed, and there would be no further full-scale privatisation of SOEs.

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Key’s promise – 6 October

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On 6 October, both Key and English made public statements that, on the face of things, seemed to be at variance with each other.

Key said that the government would not “you know, go crazy” selling Housing New Zealand homes

Yet, at the same time, he made clear what his interest in Housing NZ was;

“Housing’s a big issue, I think, for the Government; it’s a big issue for New Zealand and there’s specific parts to that.

So what we’ve done there is to have Bill English as the Minister of Finance responsible for what is a very big asset now in the Government’s balance sheet: Housing New Zealand. About NZ$15 billion worth of assets there.”

Now, in theory, with the income related rents there is a cash flow there that should allow them to actually go and build their housing stock. That is at way too slow a rate than what the government would like to see. So if you think NZ$15.5 billion sitting there for Housing New Zealand and NZ$100 million sitting in social housing, that mix is wrong and I think there is a real opportunity here to potentially change that dynamic and I want to see a lot more work done in that area.”

Part of National’s new agenda was Key’s intention to create a ministerial team compromising of Bill English, Paula Bennett and Nick Smith. The three ministers “would work together on housing issues”.  But the crucial, critical appointment was Bill English, who would take responsibility for Housing New Zealand.

Bill English; Finance Minister and now also Minister Responsible for HNZC (Housing New Zealand Corporation)?  What was the connection between the two portfolios?

As well as eying up the multi-billion asset that is Housing NZ and the additional millions in cash-flow, Key padded his speech with a litany of alleged “faults” with the Corporation;

  • too slow “ to actually go and build their housing stock”
  • “the mix is wrong”
  • the asset is often in the wrong place
  • governments of “successive persuasions have struggled with”  State housing flexibility
  • there was too much ” capital tied up in Housing New Zealand stock
  • they are not always terribly flexible
  • the previous government completely ignored the upkeep of those homes

The implications from repeated rhetoric is clear; Housing NZ has allegedly “mis-managed” their stock, and the State “struggles” with being a suitable landlord.

In his speech, Key failed to mention that National (and previous governments) have been using Housing NZ as a “cash cow”, demanding huge cash dividends from the corporation. As Nick Smith admitted in Parliament on 8 May,

“The average dividend under the 5 years so far of this Government has been $88 million. The dividend this year is $90 million.”

Sucking an average $88 million per year from Housing NZ – a government body charged with assisting the poorest people in our communities – was bound to have negative consequences. Key’s “litany of faults” was wholly predictable – a result of government self-interest to balance their books, at the expense of Housing NZ tenants.

It is not the first time National has used a SOE as a cash cow – or perhaps more akin to a lethal parasitic organism – to the  SOE’s eventual detriment (see: Solid Energy – A solid drama of facts, fibs, and fall-guys).

At any rate, Key’s 6 October speech was laying the groundwork for National’s new State housing policy – which Bill English was making public the very same day. After all, as Tom Scott so astutely pointed out in 2012, Key was renowned as “the Great Salesman” for good reason;

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Chairman Key - The Dear Leader

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Who better to “pitch the deal” to the public, than the most trusted, popular, apolitical  Prime Minister since perhaps David Lange?

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Real Reason for sell-off?

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Meanwhile, Bill English was outlining National’s true agenda, whilst Key was putting on his benign face to the New Zealand public.  As TV3’s Brook Sabin reported,

“A big state-house sell-off is on the way, and up to $5 billion-worth of homes could be put on the block.

The shake-up of the Government’s housing stock will be a key focus for the next three years, with Finance Minister Bill English to lead it.

On the block is everything from a tiny 75 square metre two-bedroom state house in Auckland’s Remuera, on the market for $740,000, to a three-bedroom home in Taumarunui for just $38,000. Thousands more properties will soon hit the market.”

The reason for putting up to  $5 billion-worth of homes  on the block?

Crashing dairy prices had left a gaping hole in the National Government’s books, and their much-vaunted Budget surplus next year was under threat. Remember that  Key was candid in the implications for the economy and the  government’s tax-take; when he stated – also on 6 October;

“It can have some impact because if that’s the final payout, the impact would be as large as NZ$5 billion for the economy overall, and you would expect that to flow through to the tax revenue, both for the 14/15 year and the 15/16 year. My understanding is Treasury is working on those numbers for the incoming Minister of Finance, which fortunately is the same as the outgoing Minister of Finance as well.

A day later, on 7 October, Fairfax’s Vernon Small reported on English reiterating the government’s parlous fiscal position;

The Government has posted a Budget deficit of $2.9 billion in the year to June 30, $338m worse than forecast in the pre-election opening of the books.

Finance Minister Bill English said the result was the third consecutive narrowing of the deficit before gains and losses (Obegal) and was further evidence careful fiscal management was producing consistent gains over time.

However it compared with the forecast deficit of $2b in the 2013 Budget.

The major changes since the pre-election picture were a decline in tax revenue, an increase in treaty settlement costs and an increase in earthquake rebuild expenses.

[…]

English said the economy faced some headwinds, including lower dairy prices, uncertain tax revenue, global risks in China and Europe and the impact of the Auckland housing market.

It was therefore rank hypocrisy when English justified the massive sell-of of state housing by linking it to impoverished families’ needs,

“There will be state house sales because we need to move a lot faster if we’re going to provide enough houses for low-income families,” says Mr English.

English’s planned $5 billion sale of State houses is a panic-driven measure by the National Government to plug the gap left by falling dairy prices and concomitant falling taxation revenue.

National’s re-election on 20 September was predicated on it’s undeserved reputation for being a “prudent fiscal manager” of the country’s economy. It was not just their surplus that was at risk – it was their carefully cultivated public perception at being better at managing the economy than Labour.

If National could not deliver a surplus – as it had promised – what good was it as a fiscal steward? It would prove to be a major mill-stone around their neck for the 2017 election.

In the meantime;

Housing New Zealand figures show that at the end of March 5563 people were on the waiting list, compared with 4495 at the same time last year and 4637 the year before.

Our poorest schools are swapping nearly half their pupils a year, as transient families chase work or flee debt.

Some schools say they have taught 7-year-olds who have been through eight schools in their first two years.

Many transient children also have learning difficulties but are often uprooted before schools can bring in extra support.

A decile 1 school will, on average, have twice the student “churn” of a decile 10 school, according to Ministry of Education figures. During the 2013 school year, a typical school in a highly deprived area would have lost and gained the equivalent of nearly half its roll.

A decile 10 school typically has a much more stable roll, with about a quarter coming or going last year. This does not include pupils starting or finishing their schooling.

The transience was even worse in primary schools, hitting children at a time when experts say moving schools is the most harmful.

The figures, released under the Official Information Act, show Russell School, a decile 1 primary in Porirua, had the highest level of pupil turnover in the Wellington region two years ago.

Principal Sose Annandale said a Housing New Zealand shake-up was probably partly responsible for the high turnover that year, but transient families continued to be a big problem.

[…]

The higher level of transience in low-decile schools was not surprising, as deprived families were more likely to move for housing or work.

“Many of these transient families do not have a fixed abode. They are just staying with whanau for a while, until they have to move on again.

As  the Salvation Army’s  Major Campbell Roberts, stated with matter-of-fact bluntness;

“We, at the present in New Zealand, don’t have enough social housing, so to reduce that number further would be a major problem. What there needs to be is an increase in the numbers of social houses.”

In his story, TV3’s Brooke Sabin raised the question,

“So a big cull of state houses is about to get underway, but the crucial question is: Will all that money make its way back into social housing or will some be pocketed by the Government? The official response is that hasn’t been worked out yet.”

Yes, it has, Mr Sabin.

The money will indeed be “pocketed by the government”.

For no other reason than their re-election in 2017 depends on it.

 

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References – Part 2

Scoop media: Gateway to improve housing affordability

Hekia Parata: State housing improved in Porirua

NZ Herald:  Key backs cut-off for cheap homes plan

Labour Party: Speech – New Zealand – A new direction

NZ Herald:  Quota reintroduced for Hobsonville housing development

NZ Herald: John Armstrong – National’s affordable housing package lacks any substantial detail

Housing NZ: Gateway Project

Dominion Post: Richard Long – So much for our quarter-acre paradise

Radio NZ: PM rules out more asset sales

NZ Herald: PM – no more SOEs to sell after Genesis

Fairfax Media: Labour spits over National’s asset sale figures

Fairfax Media: John Key reveals plan for asset sales

Roy Morgan: Poll – January 22 2014

National: Helping first home buyers

National: National to help 90,000 first home buyers

The Listener: Why it’s more expensive to build in NZ than in Australia

Otago Daily Times: Labour – 100,000 more affordable homes

National: Social housing

Radio NZ: Councils reject blame for poverty

Fairfax Media: Fonterra forecast worth an extra $500m to NZ

NBR: BUDGET 2014 – Government surplus meets global rating agency expectations

Interest.co.nz:  Fonterra cuts milk payout forecast for 2014/15 to NZ$5.30/kg

Hive News: Treasury re-crunching Budget numbers for low Fonterra payout

Interest.co.nz:  Key signals big shift towards community-provided social housing from pure state housing in creating ‘super group’ of housing ministers

Radio NZ: John Key reveals new Cabinet lineup

Parliament: Hansards – Housing, Affordable—Progress and Management of Housing New Zealand

TV3 News: State housing sell-off worth $5B

Fairfax Media: Government deficit widens

Fairfax Media: Housing NZ waiting lists swamped

Radio NZ: Govt pushes on with state house sales

Dominion Post: Kids dragged from school to school (See also: Housing policy will destabilise life for children)

Additional references

Dominion Post: Housing policy will destabilise life for children

Fairfax media: Over-crowded house blamed for baby’s death

TVNZ News: Thousands of Kiwi kids homeless

Previous related blogposts

Review: TV3′s The Nation – “Let them eat ice cream!”

Previous related blogposts

Can we do it? Bloody oath we can!

Budget 2013: State Housing and the War on Poor

Budget 2013: State Housing and the War on Poor

National recycles Housing Policy and produces good manure!

Our growing housing problem

National Housing propaganda – McGehan Close Revisited

Solid Energy – A solid drama of facts, fibs, and fall-guys

Social Groups

Facebook: Affordable Housing For All

Facebook: Housing NZ Tenants Forum

Facebook: Tamaki Housing Group- Defend Glen Innes

Other blogs

The Jackal: More homelessness under National (30 July 2012)

The Standard: Unaffordable housing & the culture of greed

No Right Turn:  A surprise policy


 

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This blogpost was first published on The Daily Blog on 14 October 2014

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Housing; broken promises, families in cars, and ideological idiocy (Part Tahi)

17 October 2014 23 comments

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1949 state house in Taita

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Intro. Lamp-posts, letterboxes, and liquor outlets

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Barely  three weeks since the election, and Key’s re-elected government is set for one of the biggest state asset sell-offs since… last year.  In line for privatisation; an estimated $5 billion worth of State housing.

State housing is one of the most critical of this country’s social service,  delivering a much-needed roof over the  heads of society’s poorest, most vulnerable, and often most transient. It is fair to say that without state housing – a legacy of enlightened Labour governments and a more sympathetic past public values –  we would have thousands more families living in squalor or on the streets, as currently happens in the richest nation on Earth.

In the US, street homelessness is now as much a feature of the urban landscape as lamp-posts, letterboxes, and liquor outlets;

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Homeslessness

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Here in New Zealand, we seem to be going all-out to emulate our American cuzzies, as our housing situation at all levels is worsening.

Overall home ownership has dropped from 1991, when  73.8% of households own their own home (or held it in a family trust) – compared to last year’s census which now reports 64.8% home ownership (or held in family trust).

In Auckland, home ownership rates are worse, 58% today, compared to 64% in 2001.

Homelessness is a more difficult notion to measure, as the Statistics NZ pointed out for it’s 2013 Census,

In general, people are becoming more difficult to contact in any census or survey collection…

• people having no usual residence (eg homeless people)

However an Otago University study, released in September 2013 concluded,

An estimated 34,000 people, or about one in every 120 New Zealanders, were unable to access housing in 2006, according to the latest available census and emergency housing data.

UOW researcher Dr Kate Amore says very little is known about this population, and the study provides the first ever New Zealand statistics on the problem.

“These 34,000 people were crowding in with family or friends, staying in boarding houses, camping grounds, emergency accommodation, in cars, or on the street. They all had low incomes.

Many of these people are excluded from poverty and unemployment statistics, and are not on social housing waiting lists. They are extremely disadvantaged, and it’s great that we now have a way to produce robust numbers about the size of the problem and who’s affected.”

The tragic nature of homelessness was chillingly spelled out when the report went on to state,

A quarter of severely housing deprived people were children under 15 years, living in these inadequate situations with their family.

The  report went on to reinforce the growing social problem of the working poor,

About a third of the adults in the population were working, but still could not get a house for themselves or their family.

The 10th annual Demographia International Housing Affordability Survey showed housing as severely unaffordable in all eight of New Zealand’s major centres.  Christchurch-based survey author Hugh Pavletic blamed recently centrally-imposed State controls on mortgage loan to value ratio (LVR) restrictions, low mortgage interest rates, and lack of land as reasons for increasing unaffordability.

The same report stated that Auckland house prices were  less affordable than Los Angeles or London.

Meanwhile, the Reserve Bank’s loan to value ratio (LVR) controls – approved by Bill English on 16 May 2013 – has apparently succeeded in not just forcing first home buyers out of the housing market, but into renting, and pushing up rents.  The average weekly rent for a three bedroom home in Auckland  increased by 29%, from $440 in 2005 to $570 in 2013.

Long time property investor, Ollie Newland, has warned of slums developing as over-crowding increases,

Some landlords were capitalising on the desperate market by renting out homes on a room-by-room basis.

“It’s not a good look. We don’t want to go the way of Bangladesh. It’s quite rife. We come across it all the time, especially in the lower socio-economic areas.

So has housing only recently become a critical social problem?

Not according to the Prime Minister…

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National’s pre-election policy: 2008

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In January 2008, then Opposition Leader, John Key attacked Helen Clark’s administration for Labour’s track record on the economy. He said, in part,

“Tomorrow, Helen Clark will tell us what she thinks about the state of our nation.  In all likelihood, she’ll remind us how good she thinks we’ve got it, how grateful she thinks we should be to Labour, and why we need her for another three years. 

Well, I’ve got a challenge for the Prime Minister.  Before she asks for another three years, why doesn’t she answer the questions Kiwis are really asking, like:

[…]

  • Why can’t our hardworking kids afford to buy their own house?”

Indeed – why can’t our hardworking kids afford to buy their own house?

In the Otago University study (see above) Dr Amore stated,

“We know that housing shortages, poverty, and crowding are very serious problems in New Zealand, so these findings are not surprising. We expect the problem is bigger now than it was in 2006. This study just adds to the evidence that housing is major issue, and we need a lot more quality housing that people on low incomes can afford to live in.”

In the Sydney Morning Herald, when interviewed on the issue of child poverty in this country, John Key was uncharacteristically candid when he admitted,

“Our opponents say more children are living in poverty than when we came into office. And that’s probably right.”

So what is the National government doing about a pressing social problem that is, by the Prime Minister’s own admission, growing?
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Gerry Brownlee – Waiting for Godot, Tomorrow, and Private Enterprise?

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Earthquake Recovery Minister Gerry Brownlee has been made aware of a critical housing shortage in Christchurch, due to the September 2010 and February 2011 earthquakes which devastated much of the inner city. According to a Buddle Findlay report dated February 2012,

The sheer number of buildings up for demolition is significant.  The Canterbury Earthquake Recovery Authority (CERA) currently lists 742 CBD buildings that have been or will be demolished.  In his state of the economy address in Auckland on 25 January, Prime Minister John Key said that of the 1,357 buildings approved for partial or full demolition in greater Christchurch, over two thirds have been demolished.  In addition, the demolition of the up to 7,000 residential red zone homes has recently begun in Bexley.

This has resulted in a massive shortage of rentals in Christchurch, with rents continuing to escalate, and people forced to live in substandard or over-crowded accomodation. A 2013 Ministry of Business Innovation and Employment (MoBIE) report revealed,

No reliable statistics are available on the number of people living in insecure housing. To generate an estimate of the scale of housing insecurity the report starts with a baseline established by a study of homelessness in Christchurch, supplemented by 2006 Census figures on people living in overcrowded housing. Qualitative information from non-government organisations in the area is used to identify plausible increases in the numbers of people living without shelter or in temporary or emergency shelter. Estimates of the housing stock lost due to earthquakes are used to identify the potential increase in numbers of people living in crowded conditions with other households. Through this approach, the report’s initial estimate of the scale of insecure housing is expressed as a broad range. That range runs between 5,510 and 7,405 residents, up from 3,750 before the earthquakes.

The same report updated the decline in housing stock in the quake-ravaged city,

“…it has been estimated that the total housing stock has been reduced by a net 11,500, or 6.2% of the previous housing stock.”

Predictably, as housing stock and rental numbers fell, rents skyrocketed. According to the same MoBIE report,

In the month of February 2013, the average weekly rent from new bonds lodged for the greater Christchurch region was $384. This is a 31% increase compared to the pre-earthquake month of August 2010 when the average rent was $293. The majority of this increase took place in 2012, as shown in Graph 6. Greater Christchurch’s average rent increased $92 per week which is very significant and will have an adverse impact on many tenants’ financial wellbeing. During this same period, Auckland’s average rent increased $50 per week or 13%.

When confronted with this crisis, Minister Brownlee’s response was reported in The Press, on 20 March 2012, offering this “solution” to Christchurch’s housing-shortage;

The Government appears to have ruled out further intervention in Christchurch’s worsening rental housing crisis.

The solution is best left to the market, Earthquake Recovery Minister Gerry Brownlee says.

A month later, Brownlee continued his ‘King Canute-like’ resistance to the problem,

People may be sleeping in cars, sheds and garages, but there is no rental housing crisis in Christchurch, Earthquake Recovery Minister Gerry Brownlee says.

“This is a problem, I’ll accept that, but I don’t think this is a crisis,” he said yesterday.

And incredibly,

Brownlee said the steep increase in rent was “not a problem that has been brought to my attention”.

The Government would not intervene in the issue, he said.

“A rent freeze doesn’t increase supply and will never encourage new stock to come in. We won’t be moving to regulate rents but we most certainly are actively providing new housing.”

Brownlee’s defensiveness is understandable. Nationwide, it is estimated that 20,000 – 23,000 new homes are required per year,  to meet demand.

However, over the last three years, less than 15,000 per year have been built.

So much for “the market”.

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Making Supply “meet” Demand – a sleight-of-hand trick

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When “market” supply doesn’t meet demand, there are three options available,

  1. Increase supply
  2. Dampen demand
  3. Ignore the problem

National chose Option 2 as the fastest, cheapest way to address the problem. As referred above, on 16 May 2013, Finance Minister Bill English approved a “Memorandum of Understanding” with the  Reserve Bank’s loan to implement  Loan to Value Ratio (LVR) controls. In simple terms,

Banks will be required to restrict new residential mortgage lending at LVRs of over 80 percent (deposit of less than 20 percent) to no more than 10 percent of the dollar value of their new residential mortgage lending.

Banks which exceeded the limit (10% of all lending) of low LVR (20% deposits) risked considered reprisals from the RBNZ,

If a bank breaches the speed limit it will be in breach of its conditions of registration. The Reserve Bank would need to consider the reasons for the breach and may impose a range of sanctions.

Again, Key was candid in the plan to address demand-side pressures on housing,

“Even with LVRs introduced, interest rates may ultimately rise anyway, but the intention with these loan-to-value ratios is to provide the Reserve Bank with other tools to dampen demand.”

Not since the Muldoon-led National administration, when price-wage controls froze the economy in 1982 – with dire results – has a government attempted to control a facet of the banking system with such direct, interventionist controls. Again, state intervention was the tool-of-choice, as Key admitted,

“We need to try to help people into their homes but also facilitate an orderly market.”

This was Muldoonism 2.0, and it was coming from a supposed free-market National government, with the blessing of Muldoon’s successor, John Key.

Even before the RBNZ implemented their new, prescriptive LVR regulations, National was pushing for exemptions with  New Zealand Bankers Association chief executive Kirk Hope stating the obvious,

“The Reserve Bank policy will have an impact on low income buyers. It will knock them out of the market.”

By December 2013 the Reserve Bank had “buckled” to government pressure. The government realised that preventing first-home buyers from getting into their first house was not a palatable political option.  The opposition would have a field day at National’s expense, and New Zealanders would begin to notice.

Forcing the RBNZ to implement first-home buyer exemptions for new-build houses ultimately proved fruitless. By 1 October  this year, the damage had been done and the results were wholly predictable;

Experts say the Reserve Bank’s controversial home loan restrictions have achieved the desired effect, but at the expense of first-home buyers.

One year ago today, the central bank introduced limits on high loan-to-value ratio (LVR) loans in an attempt to slow house price growth and reduce risk to the financial system.

The latest bank lending data from the June quarter shows the rules have been highly effective, wiping $5.5 billion worth of high-LVR loans from the balances that were recorded on September 30, last year.

[…]

HSBC chief economist Paul Bloxham said the limits had helped dampen house price inflation, though it was difficult to say by how much.

“It’s still unclear as to whether LVRs were the driver, or the higher interest rates were the driver.”

Bloxham said the limits had worked well in removing risk from the financial system, but not without social consequences.

“Along the way . . . the largest effect it’s had is to cut the first-home buyer out of the market.”

New Zealand Institute of Economic Research economist, Shamubeel Eaqub,  was damning of the government-sanctioned LVR restrictions,  saying that   first-home buyers had been unfairly blamed for  the housing bubble,

“The data we have seen very clearly shows it was investors.  We don’t think there’s any reason to maintain the LVR restrictions any further, especially now [the Reserve Bank] has raised interest rates.”

Bear in  mind’s National’s technique for solving problems. It would set the stage for  New Zealand’s growing shortage of social housing, and National’s ‘Clayton’s‘ response.

To be Concluded: Housing; broken promises, families in cars, and ideological idiocy (Part Rua)


 

References

TV3 News: State housing sell-off worth $5B

Radio NZ:  Home ownership on decrease

Ministry of Business, Innovation, and Employment: Housing key facts

Statistics NZ: Coverage in the 2013 Census based on the New Zealand 2013 Post-enumeration Survey (pdf)

Otago University: 34,000 people missing out on housing, University of Otago research shows

Fairfax media: Housing affordability getting worse

Reserve Bank NZ: RBNZ signs MOU on use of macro-prudential tools

NZ Herald: Rents rise as buyers forced out of market

John Key: A Fresh Start for New Zealand

Sydney Morning Herald: The Key Factor

Buddle Findlay: The Progress of earthquake related demolitions in Christchurch

Ministry of Business, Innovation, and Employment: Housing Pressures in Christchurch (pdf)

The Press: Christchurch rent crisis ‘best left to market’

Fairfax media: No Christchurch rental crisis -‘Pontius’ Brownlee

Reserve Bank:  Loan-to-value ratio restrictions – FAQs

Dominion Post:  Few first home buyer details in PM speech

Te Ara – TheEncyclopedia of New Zealand: Muldoon announces a wage and prize freeze, 1982

TVNZ News: Govt pushes for loan restriction exemption

NZ Herald: Reserve Bank buckles – new homes exempt from loan rules

Fairfax media: LVR works at first-home buyers’ cost

Scoop media: Gateway to improve housing affordability

Hekia Parata: State housing improved in Porirua

Additional references

Dominion Post: Housing policy will destabilise life for children

Fairfax media: Over-crowded house blamed for baby’s death

Previous related blogposts

Review: TV3′s The Nation – “Let them eat ice cream!”

Previous related blogposts

Can we do it? Bloody oath we can!

Budget 2013: State Housing and the War on Poor

Budget 2013: State Housing and the War on Poor

National recycles Housing Policy and produces good manure!

Our growing housing problem

National Housing propaganda – McGehan Close Revisited

Social Groups

Facebook: Affordable Housing For All

Facebook: Housing NZ Tenants Forum

Facebook: Tamaki Housing Group- Defend Glen Innes

Other blogs

The Jackal: More homelessness under National (30 July 2012)

The Standard: Unaffordable housing & the culture of greed

No Right Turn:  A surprise policy


 

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This blogpost was first published on The Daily Blog on 12 October 2014

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How To Beat Up a Story

3 September 2011 2 comments

Today’s  “Dominion Post”  contained an interesting editorial – interesting because the editorial related to what amounts to be a non-story;

No police record, no known next of kin, no mail, no benefit history. For 30 years 88-year-old Michael Clarke kept to himself in his Newtown bedsit. Some time last year he died the same way.

His remains were discovered in his bedsit at the grim Newtown Park Flats last week. Authorities believe he may have been dead for as long as 14 months.

The discovery has triggered an outpouring of dismay, but the discovery of a body in Wellington City Council accommodation is not an uncommon occurrence. As far back as 1997 former Wellington coroner Erika Kremic called upon the council to institute regular checks of its tenants. It is a call that has been echoed periodically by police who have to deal with the grisly remains when a death goes unnoticed.

But the council says there is a limit to what it can do. Council social portfolio leader Stephanie Cook said this week that staff tried to keep tabs on tenants and knocked on doors and visited them at least once a year. Yet many of the council’s tenants valued their privacy and did not like intrusions. The newspapers plastered over interior windows in the Newtown Park complex bear out her words.

However, it is no more acceptable for bodies to lie around for weeks or months than it is to shoehorn the vulnerable into cramped, dilapidated tower blocks that reek of urine.

Tenants in the council’s 40 housing complexes – a high proportion of whom are either elderly, immigrants, or suffer from physical and psychological disabilities – should be checked upon. Any who object should be informed that the checks are a condition of occupancy.

To its credit the council is taking steps to improve the quality of its accommodation, much of it built in the 1960s to accommodate single workers.

In conjunction with the Government, it commenced a $400million upgrade of its housing stock in 2008. Interior walls have been knocked down to make bigger flats suitable for families, communal landings and long corridors have been removed to get rid of gathering places for undesirables, and communal gardens have been established to encourage neighbourliness. Already the Central Park flats at the bottom of the Brooklyn hill have been transformed and work has commenced on the three tower blocks that are to remain at the Newtown Park Flats.

But the revamp will take time and will not entirely solve the problem. As a provider of last resort housing, the council will always have antisocial tenants who object to anything they regard as scrutiny. It will also always have vulnerable tenants who are fearful and suspicious of authority. They may prefer to keep to themselves, but regular checks are preferable to the alternative – dying alone and unnoticed as Mr Clarke did.

Source

I have two problems with this editorial.

1. The editorial claims that   “the discovery has triggered an outpouring of dismay“?

That claim is debateable at best – and a downright exxageration at worst.  Comments left on the “Dominion Post’s” own webpage were, by considerable majority, of the view that Mr Clarke’s passing was regrettable and that these things sometimes happen. In other words, it is a fact of life – however sad and unpleasant – that sometimes people will pass away in such circumstances.

I have read very, very, few comments of  “dismay“.

In fact, the only “dismay” seemed to be directed at the media that appeared to be “feasting” on this story and beating it up for all it’s worth. The media appeared  to be totally out-of-step with public thinking on this issue.

2.  The next issue that I raise is this part of the editorial;

“Tenants in the council’s 40 housing complexes – a high proportion of whom are either elderly, immigrants, or suffer from physical and psychological disabilities – should be checked upon. Any who object should be informed that the checks are a condition of occupancy.”

Pardon?!

Since when did New Zealand society take a sharp right-turn (or left-turn,depending on your political viewpoint), and abrogate peoples’ rights to privacy and keeping bureacrats out of their lives, as a “condition of occupancy”?!

Would the writer of this editorial insist that everyone living in a rental flat, regardless of socio-economic position, be “checked as a condition of occupancy”?

Or is he/she simply insisting on Council/HNZ tenants?

As  MilesLacey stated  on a “Dominion Post”  Forum;

As a former Wellington City Council tenant I think it’s worth pointing out that people move in and out of WCC flats all the time so it was probably assumed by everyone that Michael Clarke had simply moved on like so many others. Even if people do think that it’s odd that someone hasn’t been around for some time there is still the notion that it’s none of our business to meddle in the affairs of others unless they let us.

We can’t force people to care about others. We can’t force people to watch out for their neighbours. Once we start doing that we move into the murky world of the surveillance state where everything we do starts being monitored “for our own good”.

And I would also point out that not all people who die alone and aren’t discovered for weeks or months on end are elderly or living in city council flats. Why impose upon the privacy of council tenants, as proposed by the editorial [of Sept 3], but not anyone else? Seems less like looking out for our neighbours and more like snooping on the “undesirables” such as the poor.” – Miles Lacey,  Sep 03 2011

Considering that Council/HNZ tenants are at the bottom of the socio-economic pile (generally), the suggestion is that if you are,

A. Poor

B. An immigrant

C. Have a disability

… then you are less deserving of privacy that someone well-off; not an immigrant; and able-bodied/minded. This is not “Nanny Statism”. It’s not even National’s “Daddy Statism”. This is Big Brother, knocking on our doors, and demanding that we open up for inspection!

Today it will be Council/HNZ tenants.

Tomorrow, it may be superannuitants.

And next week – the rest of us. Big Brotherism – for our “own good”.

And it all began with the “Dominion Post”.

For our own good, of course. Are we feeling any safer now?

Can we do it? Bloody oath we can!

3 August 2011 44 comments

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STATE HOUSE RESIDENTS MOVED

Meanwhile, almost 400 tenants have been kicked out of state houses in the last three years.

Housing Minister Phil Heatley said 241 tenancies were ended in the last year.

Tenancies were ended because people had failed to inform Housing New Zealand about income from employment, business interests, assets, that they lived with a partner of sublet the house.

Since July 2010, 119 tenants were successfully prosecuted for fraud.

Housing New Zealand has also identified $6.6 million from the last 12 months that is owed to the Crown, largely for overpaid rent subsidies.

“The state housing system is designed to help people in their time of need. It’s unfair and unacceptable for people to abuse the system and commit fraud to get benefits they are not entitled to. People who deliberately rip-off the system deprive families in real need,” Heatley said.

The houses were now freed up for those with genuine need, he said.

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On most levels, the mis-use of State assets (ie; owned by us, the People)  is a rort that cannot and should not be tolerated.  Housing Minister, Phil Heatley is correct when he reminds us that,

“The state housing system is designed to help people in their time of need. It’s unfair and unacceptable for people to abuse the system and commit fraud to get benefits they are not entitled to. People who deliberately rip-off the system deprive families in real need.”

Although I note that Mr Heatley’s admonitions did not stop certain Ministers of the Crown from ripping of the tax-payer, when it suited them…

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And similar cases where Members of Parliament used their accomodation allowance in ways in was not intended…

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Defence Minister Wayne Mapp said his previous apartment had been very small and was not suitable for him and his wife, now he was spending more time in Wellington as a minister.

He confirmed the apartment was owned by his superannuation trust and was rented to National MP Bakshi Singh, for $400 a week.

As an MP Mr Singh can claim up to $24,000 year in accommodation costs from Parliamentary Service.

Dr Mapp also collected around $700 a week for his new larger apartment and said he could see why his rental income should be used to offset his expense claims.

“I can see why people have concerns and the review will deal with that,’ Dr Mapp said.

Housing Minister Phil Heatley also said he was renting out his old apartment and claiming a $1000 a week in accommodation expenses in a larger home to accommodate his wife and young children.

Mr Heatley would not say whether this was rented to an MP.  – Source

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It seems that rules are different for some folk.

The shortage of state housing is a serious matter, though. This critical problem of decent, affordable housing is not helped by the fact that the Fourth National government (1996-1999) sold around 13,000 State Houses in the 1990s.  These properties were supposedly made available to tenants – but actually went mostly to property speculators (who later sold them for tax-free capital gains).

When Labour was elected to power in November 1999, they immediatly placed a moratorium on the sale of state housing. According to HNZ, they currently ” own or manage more than 66,000 properties throughout the country, including about 1,500 homes used by community groups”

This government has re-instated the sale of state houses.  It does not take rocket science to work out that selling of state housing reduces the availability of housing stock.   Housing Minister Phil Heatley said that,

“… about 40,000 of the 69,000 state house stock will be available for sale,”  but then added,  “that the vast majority of tenants do not earn enough to be required to pay market rent means relatively few will be in a position to buy“. (Source.)

There seems to be nothing stopping tenants from buying their state house and immediatly on-selling it to a Third Party.

Is it any wonder that the shortage of state housing is not being addressed in any meaningful way? It certainly does help those on the current waiting list (as of 30 June);

  • 402 were Priority Eligible — A
  • 3,352 were Priority Eligible — B

Plus a further 5,132 in categories “C” and “D”.

Problem:  there are currently 8,886 people on the HNZ waiting-list.

Solution: build more houses.

This may seem like a ‘flippant’ answer to a desperate problem – but it is not.

The building of 10,000 new state houses may seem an outrageously expensive idea.  But it would address at least three pressing problems in our economy and society;

1. Persistantly high unemployment.

2. Low growth.

3. Inadequate housing for the poorest of our fellow New Zealanders.

At an average housing cost of $257,085 (calculated at DBH website @ $1,773/m for a 145 square metre, small house), the cost (excluding land) is $2.57 billion dollars,  including GST (approximate estimate).

By contrast, the October 2010 tax cuts gave $2.5 billion to the top 10% of income earners.

For roughly the cost of last year’s tax cuts, we could have embarked on a crash building-programme to construct ten thousand new dwellings in this country. The immediate effects would have been profound for the building industry and would have created work for;

  • architects
  • builders
  • glaziers
  • roofers
  • electricians
  • plumbers
  • drain layers
  • painters
  • plasterers
  • tilers
  • landscapers
  • bricklayers
  • concreting contractors
  • insulation installers
  • home-heating installers
  • carpet layers
  • etc, etc.

Work would flow through to associated contractors;

  • truck drivers
  • building waste disposal

Turnover would increase for timber and framing suppliers as well as other building supplies outlets.

In turn, those in the building and associated industries would enjoy massive increase in demand for their products.

And equally important, those on the unemployment queue would suddenly be in high demand, as we needed to train more tradespeople. Which would mean a flow-on effect to polytechnics as they suddenly needed to train hundreds more tradespeople.

A further flow-on effect would impact positively on service industries, as money flowed into the economy, into supermarkets; entertainment; clothing; and elsewhere into the retail sector. As Bill Kaye-Blake of  NZIER, said in April of this year;

The economy is sluggish because people are not spending.

It would be a boom-time, as two and a half billion dollars was spent on products and services.

Would it actually end up costing taxpayers $2.57 billion dollars? The answer is ‘no’.  Government would actually re-coup much of that initial outlay through;

  • gst
  • paye
  • other taxes
  • reduced spending on welfare for unemployed
  • and investment re-couped by rent paid for new rentals

Would it work?

Yes, it would.  An NZIER survey expects a strong pick-up in 2013 when the rebuilding phase hits full-flight, with 3.9% annual growth predicted from a previous forecast of 2.6%.

The government has a strong role to play in tough economic times. A “hands off” approach will achieve nothing except unnecessarily drawing out an already painful recession, and prompting more frustrated  New Zealanders to “cross the Ditch” to Australia, where their government has announced a  programme aimed at 500,000 new jobs.

There is no reason why a determined government cannot adopt a bold programme for economic growth.

Instead of borrowing to pay for tax cuts we can ill afford, we should be investing in jobs.  The rest will almost invariably take care of itself.

We have the resources. We have the money. We have the demand for new housing. What else is missing?

The will to do it.

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Updates

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Fletcher shares at 2-year low after warning

Wellington rental market tough for tenants

Major housing shortage looms

Business NZ sees no economic plan

Downturn in building sector ideal timing for state house build

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