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Children’s Commissioner Judge Andrew Becroft calls for a fairer, egalitarian New Zealand

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This weekend (26/27 May), two disparate voices called for a more egalitarian society in our country. The voices of Children’s Commissioner, Judge Andrew Becroft, and Chief Executive of the Employers & Manufacturers Association (Northern), Kim Campbell, both made statements on  TV3’s The Nation and TVNZ’s Q+A (respectively), that only a few years ago would have been heresy to neo-liberal orthodoxy.

The neo-liberal economic model demands minimal state intervention in the economy and reliance on private enterprise to provide services and desired outcomes.

After thirtyfour years, the results of our experiment in minimal government/freemarket has been dubious. The housing “market” has failed to meet demand, blaming local government “regulations”, central government regulations/RMA,  “town boundaries”, lack of skilled workers, sunspot activity, etc.

Writing for The Spinoff last year, author and journalist, Max Rashbrooke pointed out;

In short: overall poverty hasn’t increased, but its most extreme forms have. In a way, what the [National] government has done is to revive the old and false idea, never far from middle New Zealand’s intellectual surface, of the distinction between the “deserving” and the “undeserving” poor. The in-work battlers get carrots, the beneficiaries who make “poor choices” get mostly sticks. It’s a “distinction” that gets you nowhere, though, because those struggling the most are generally facing even tougher battles or have even fewer informal supports around them, rather than being lazier or more feckless.

The other point, of course, is that just maintaining poverty and inequality at their current high levels is a colossal failure. Under Labour both were falling, albeit slowly; that progress has been lost. The New Zealand Initiative likes to point out that our big increase in income inequality – the developed world’s largest – happened in the 1980s and 1990s, as if that diminishes the problem. In fact it intensifies it. Unfair inequality divides society, creating concentrated neighbourhoods of wealth and poverty, reducing people’s empathy for each other, and lowering trust. Poverty denies people a fair chance to succeed and leaves permanent scars on children. Every day those corrosions are left unchecked is a day lost, a day in which a child’s life is damaged and the social fabric is further rent. The fact that these problems have compounded for twenty years makes them worse than if they had sprung up yesterday. And such extremes – one in seven children living in poverty, while the wealthiest tenth have 60% of all assets – are neither necessary nor justifiable.

A July 2017 MSD report confirmed Rashbrooke’s observations;

Beneficiary incomes were flat or declining in real terms. The trajectory of incomes after deducting housing costs (AHC) is less favourable for the medium to long-term picture as housing costs now make up a much larger proportion of the household budget for most…

[…]

For under 65s, over the whole bottom quintile, housing costs account on average for just over half of household income (51%), up from 29% in the late 1980s.

The same MSD report also briefly referred to the wealthiest in our country;

The share of income received by the top 1% of tax-payers has been steady in the 8-9% range since the early 1990s, up from 5% in the late 1980s.

[Note: “Quintile“: Any of five equal groups into which a population can be divided according to the distribution of values of a particular variable.]

In a report this year, Oxfam revealed a ‘snapshot’ of inequality in New Zealand;

A staggering 28 per cent of all wealth created in New Zealand in 2017 went to the richest 1 per cent of Kiwis. While the 1.4 million people who make up the poorest 30 per cent of the population got barely 1 per cent, according to new research released by Oxfam today.

The research also reveals that 90 per cent of New Zealand owns less than half the nation’s wealth.

Oxfam New Zealand’s Executive Director, Rachael Le Mesurier,  stated the fairly obvious;

“Trickle-down economics isn’t working. The extreme gap between the very rich and the very poor in our country is shocking. As new wealth is created it continues to be concentrated in the hands of the already extremely wealthy.

2017 was a global billionaire bonanza. This is not a sign of success but of economic failure. Experts are clear, high levels of inequality are bad for economic growth – for everyone except the small number of super-rich, who on a global scale are often able to translate their disproportionate control of resources into disproportionate influence over political and economic decision making. This can lead to policies that are geared towards their interests, often at the expense of the majority.

To end the global inequality crisis, we must build an economy for ordinary working people, not the very few rich and powerful.”

Ms Le Mesurier added something that may not be quite so obvious to some – at least not for those who traditionally vote National;

“Kiwis love fairness, not inequality. Governments can tackle extreme inequality here and globally by ensuring the wealthy and multi-nationals pay their fair share of tax by cracking down on tax avoidance – then using that money to make our country and the global economy a fairer place.”

Since 2008, between 1,053,398 and 1,152,075 New Zealanders – roughly a quarter of the population – have voted for a party that has over-seen a worsening of extreme poverty; falling home ownership; and rising homelessness.

The claim that “Kiwis love fairness, not inequality” may not be as fairly reflecting our society as we might like to believe. At best, it might be claimed that  “*Most* Kiwis love fairness, not inequality”.

Despite not wanting to measure child poverty in 2012,  five years later, Deputy PM Paula Bennett had to concede the enormity of the crisis that National had ignored for so long;

“We had no idea how much it was going to cost. We had no idea it would ever be this big… In hindsight, you always wish you’d gone earlier”.

Thanks to National’s negligence – and supported by over one million voters – our homelessness is now the worst, according to an international report last year;

YaleGlobal Online, a magazine published by the prestigious US university, says “more than 40,000 people live on the streets or in emergency housing or substandard shelters” – almost 1 percent of the entire population, citing OECD statistics.

On 26 May, interviewed on The Nation by Lisa Owen, Children’s Commissioner Judge Andrew Becroft said what *most* New Zealanders know in  their hearts to be axiomatic – or the bloody obvious, in Kiwispeak;

“…The gap is now massive. We dropped the ball on policy for children. I think one of the big, I guess, platforms of our office, the one thing I have to say clearly, is we need to have a community-wide consensus on policy for children. We haven’t had that. We could do it. Other countries leave us behind. Scandinavian countries have parental leave for 16 months. They have free school lunches for preschool and school children for the whole community, free doctor and dental visits, good social housing, free early childhood education. That’s what we need. We’ve never had the systemic commitment to a good policy for children.”

To illustrate (literally) Judge Becroft’s comment  a report from UNICEF published last year compared New Zealand’s abysmal ranking with that of our Scandinavian cuzzies.

Food insecurity:

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Income poverty;

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League Table* – Country performance across nine child relevant goals:

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However, to prove that not all is lost, and that New Zealand can excel – we are the eighth largest milk producing nation on the planet;

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Without doubt we display incredible efficiency when it comes to our agrarian sector.

Not so good, however, when it comes to ridding our shores of child poverty and homelessness.

Priorities, eh?

In our rush to achieve neo-liberal nirvana after thirtyfour years of economic “reforms” and the engendering of hyper-individualism, New Zealanders can only look with envy at Scandinavian countries.

Even Employers & Manufacturers Association (Northern), Kim Campbell lamented on TVNZ’s Q+A on 27 May;

“In fact, a government who has stepped right away from the state housing story completely. You know, when I was growing up we had the Ministry of Works building state houses, which were made available through suspensory loans and so on. That’s all gone. And you’re seeing the outcome there. So, frankly, we could fix it if we wanted to.”

But there is no Ministry of Works anymore. It was privatised in November 1996.

We now have to rely on private enterprise to build houses.

We now have families living in garages; overcrowded houses; and cars.

We now have greater income inequality and extremes of poverty.

So as Mr Campbell said on Q+A;

“And you’re seeing the outcome there. So, frankly, we could fix it if we wanted to.”

If we wanted to“…

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[* The Right love League Tables, so that particular one should be in no dispute.]

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References

Scoop media: Mediaworks/Newshub Nation – Lisa Owen interviews Children’s Commissioner Judge Andrew Becroft

TVNZ: Q+A – Panel on Homelessness

Investopedia: Neoliberalism

Scoop media:  ACT Party – NZers deserve honest appraisal of Government housing failure

The Spinoff: Why the attacks on National over poverty and inequality are unfounded – mostly

Ministry for Social Development: MSD’s Household Incomes Report and companion report using Non-Income Measures – Headline Findings

Oxford Living Dictionaries: Definition – Quintile

Scoop media: Oxfam NZ inequality data 2018

Wikipedia: New Zealand general election, 2008

Wikipedia: New Zealand general election, 2017

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

NZ Herald: Homelessness rising in New Zealand

NZ Herald: Measuring poverty line not a priority – Bennett

Mediaworks/Newshub: NZ’s homelessness the worst in OECD – by far

UNICEF: Building the Future – Children and the Sustainable Development Goals in Rich Countries

World Atlas: Top Milk Producing Countries In The World

Wikipedia: Ministry of Works and Development

Treasury NZ: Income from State Asset Sales as at May 2014

TVNZ:  Tax is vital for reducing inequality but NZ is not collecting enough of it – Oxfam report

Additional

Fairfax media: Housing stocktake blames homelessness on drop in state housing

Mediaworks/Newshub:  Govt will have ‘failed completely’ if they don’t reform benefits – Andrew Becroft (video)

Previous related blogposts

An unfortunate advertising placement, child poverty, and breathing air

Poor people – let them eat cake; grow veges; not breed; and other parroted right wing cliches

Poor people – let them eat cake; grow veges; not breed; and other parroted right wing cliches… (part rua)

Once were warm hearted

National’s Food In Schools programme reveals depth of child poverty in New Zealand

National’s new-found concern for the poor

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This blogpost was first published on The Daily Blog on 28 May 2018..

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When Life is a Lottery

20 November 2016 2 comments

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Fun Fact #1: Between 2006 and 2013,  the number of homeless grew by 25%. Based on Census data;  one in 100 were homeless in 2013; one in 120 in 2006, and one in 130 in 2001.

Fun Fact #2: In 1986, home ownership in New Zealand stood at 73.5%. By 2013, Census data showed home-ownership had fallen to 64.8%.

Fun Fact #3: In August this year, Auckland’s average house price reached – and passed – the $1,000,000 mark.

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Make no mistake, housing has become a crisis in New Zealand as this May poll for  a TV3/Reid Research Poll highlighted;

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Even 61% of National voters accepted the new reality in our once-egalitarian nation. Housing unaffordability (for the middle classes) and homelessness (for beneficiaries and the working poor)  could no longer be ignored.

Stepping back to 20 August 2007, National’s newly-elected leader, John Key, made an impassioned speech to the  Auckland branch of the New Zealand Contractors Federation. In it, he excoriated the then-Clark-led Labour government;

“Over the past few years a consensus has developed in New Zealand. We are facing a severe home affordability and ownership crisis. The crisis has reached dangerous levels in recent years and looks set to get worse.

This is an issue that should concern all New Zealanders. It threatens a fundamental part of our culture, it threatens our communities and, ultimately, it threatens our economy.

The good news is that we can turn the situation around. We can deal with the fundamental issues driving the home affordability crisis. Not just with rinky-dink schemes, but with sound long-term solutions to an issue that has long-term implications for New Zealand’s economy and society.

National has a plan for doing this and we will be resolute in our commitment to the goal of ensuring more young Kiwis can aspire to buy their own home.”

Nine years later, Key’s description of New Zealand’s housing crisis has changed markedly. It is now a “challenge“, as he painfully tried to explain on TVNZ’s Breakfast programme;

“I don’t think it’s a crisis, but prices are going up too quickly. There are plenty of challenges in housing, and there have been for quite some time.”

On 9  November, a Hibiscus Coast couple were the incredibly lucky couple to win the latest multi-million dollar Lotto prize;

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claimed-44-million-lotto-prize-radio-nz

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The Radio NZ story further reported;

The man’s wife said at first she thought her husband was joking about the win.

“My head started spinning, my heart was racing and I got the shakes.”

The couple claimed their prize at Lotto’s head office on Thursday afternoon.

“As we sat in the winner’s room, he kept turning to me and saying ‘Am I in a dream?’ and I kept turning to him and saying ‘is this real?'” the woman said.

“We’ve been busting our guts trying to buy our first home,” the winner said.

“We just went to the mortgage broker earlier this week to see what they could do to help. But they just couldn’t make anything work for us.

“We were absolutely gutted and I just said ‘maybe that ship has sailed’.

“But my wife tried to stay positive and said ‘don’t worry, something good will happen for us’.

“I don’t think either of us thought that the something good would be $44 million.”

Note what the woman said here;

“We’ve been busting our guts trying to buy our first home. We just went to the mortgage broker earlier this week to see what they could do to help. But they just couldn’t make anything work for us. We were absolutely gutted and I just said ‘maybe that ship has sailed’.”

When couples have to rely on winning Lotto to be able to afford to buy their first home,  there is something seriously askew in society.

Remember Dear Leader Key’s own words;

“We are facing a severe home affordability and ownership crisis. The crisis has reached dangerous levels in recent years and looks set to get worse. This is an issue that should concern all New Zealanders. It threatens a fundamental part of our culture, it threatens our communities and, ultimately, it threatens our economy.”

In the United States, commentators from the msm, politics, dissident community; and further afield, have rapidly come to the realisation that Donald Trump’s unlikely, unforeseen, and up-till-now improbable victory in the 2016 Presidential  race was predicated on the belated understanding that globalisation and neo-liberalism  have left behind millions of people.

In the Voting Booths across the United States, Consumers became Citizens again, and cast their ultimate sanction against the political establishment and those who supported the neo-liberal orthodoxy. The status quo of Margaret Thatcher and Ronald Reagan (the latter, ironically a Republican like Trump) was utterly repudiated.

The disenchantment and alienation of the Working and Middle classes germinated during the 2008 Global Financial crisis and resulting Great Recession – the effects of which are still with us, eight years late. In the United States, millions of Americans lost their homes.

More than four million Americans have lost their homes since the housing bubble began bursting six years ago. An additional 3.5 million homeowners are in the foreclosure process or are so delinquent on payments that they will be soon. With 13.5 million homeowners underwater — they owe more than their home is now worth — the odds are high that many millions more will lose their homes.

Most telling was this criticism by

Housing remains the biggest impediment to economic recovery, yet Washington seems paralyzed. While the Obama administration’s housing policies have fallen short, Mitt Romney hasn’t offered any meaningful new proposals to aid distressed or underwater homeowners.

Writing for the Huffington Post a year later, David Coates pointed out

“… the vast majority of those four million lost their homes because they lost their jobs, not because they had in better times taken out mortgages that they could not afford.

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It is not the rich who are being foreclosed. It is those on the margin of the core middle class. It is particularly middle class minorities who have taken the greatest hit on both their personal wealth and their associated credit scores. Falling house prices since 2008 have pulled median white net-worth down by 27 percent but median black net-worth down by anywhere between 40 percent and 53 percent.”

All the promises of neo-liberalism had come to nought. Instead millions had lost their jobs and those lucky enough found new work in low-paid service industries. Take-home pay was cut – and Humiliation applied in abundance as ‘compensation’.

The Working and Middle Classes not only lost their job and homes – their new status in low-paid work was precarious.

Events post-2008 hastened the  demise  of the American Dream and the rise of the Precariat, as Richard  McCormack wrote, in February of this year for the Manufacturing and Technology News;

The effects on the U.S. economy caused by 30 years of offshore outsourcing of production and jobs is starting to drive major changes in the American political system. The rise of a “precariat” class of Americans — those who are living “precarious” lives — has created a populist movement that shows no sign of acquiescing to the “establishment” in both the Democratic and Republican parties.

The new precariat comprises a growing class of people who are going nowhere in their jobs, who are insecure and unstable. The group is “experiencing the breaking apart of the American Dream, which is what historically held the country together — the rise of the middle class, with everyone doing better,” notes visiting scholar John Russo of Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor. “It’s not working that way any more.”

Driving the rise of the precariat is a society that is not generating enough wealth. De-industrialization, the shift of major goods-producing industries to foreign nations, and both the Republican and Democratic establishment’s embrace of free trade, are leading to a populist uprising.

The precariat is becoming one of the largest classes of Americans, encompassing far more than blue-collar workers who have been slammed by economic forces outside of their control. It now includes millions of Americans with college degrees who are under compensated or can’t find full-time employment with benefits.

As white-collar jobs have been outsourced, Americans with more than high-school degrees are starting to see their prospects “mirror those of the working class,” says Russo. “That insecurity and instability is now part of their life. That is why this new group is not yet a class in itself. It hasn’t defined what it is going to be.”

It is fragmented, but it is big, and much of it is angry.

In his article, McCormack quotes John Russo from the Georgetown University’s Kalmanovitz Initiative for Labor and the Working Poor;

“As steady formal work has been disappearing over time, informal work began to move beyond traditional concepts such as consulting, internships, subcontracting, privatization and intermittent employment,” Russo explains. “Rather than the continued rise of the formal economy, it is the informal economy that is growing.”

The precariat is “potentially all of us united by the fear of insecurity,” he notes. It is made up of “individuals living precarious and insecure existences lacking employment security, job security, income security, skill security, occupational security and labor market security.”

This is no longer the underground economy, but includes displaced individuals from the public and private sectors, millennials dealing with mountains of student debt, and baby boomers forced into early retirement without enough savings to support themselves.

There is little public assistance for the precariat class and “they’re not making demands to get better wages or improved benefits [because they] are replaced easily,” Russo notes.

Three years after Coates’ story,  and nine months after McCormack’s insightful analysis of the public mood, Trump’ ascendance as America’s 45th President was complete. Trump won the States where blue-collar workers had suffered the most.

The story of globalisation and neo-liberal “reforms” of our own economy has followed a familiar story; loss of long-term employment; ever-increasing need for re-training; the rise casualisation and contract piece-work; and the increase of lower-paid service-work.

Depressingly, economist Shamubeel Eaqub has predicted;

“The workplace is likely to be further casualised. “

Which adds further hopelessness to New Zealanders increasingly locked out of what was once known as the Great Kiwi Dream of home-ownership.

The National government ostensibly understands the notion of aspiration, as Dear Leader Key said six years ago;

“I want New Zealanders to be aspirational – to want more for themselves and their families, and to know that they have opportunities to do that.”

Those words ring hollow as National scrambles frantically to make itself  “look busy”, trying to alleviate the dual crisis of  worsening home ownership and homelessness.

Bennett’s suddenly-announced  policy of bribing state house tenants with (up to) $5,000 was widely seen as a panic-driven, ad hoc policy. It certainly caught Finance Minister Bill English by surprise, having no forewarning of Bennett’s media announcement on the issue.

The twin tsunami-waves of homelessness and housing unaffordability appears to have utterly over-whelmed National Ministers.

As Trump’s victory in the US Presidential election has demonstrated with crystal clarity, Consumers can easily become  Citizens again, re-discovering the power of their Vote. When Citizens’ anger becomes focused, and a perceived solution (or even just an opportunity to say “FUCK YOU!” to the Establishment) is put before them – they will vote for it.

Especially when they have lost so much, and have little left to lose.

Such was the case of  the US presidential elections, and before that, the ‘Brexit’ Vote.

As New Zealanders become more and more conscious of how much they have lost in the last thirty years, they too, will find themselves pissed off.

The opening lines of the song  from ‘Les Miserables’ – Do You Hear The People Sing? – should serve as a reminder to the political establishment in this country;

“Do you hear the people sing?
Singing the song of angry men?”

The Great Kiwi Dream of home ownership was never predicated on the long-odds offered by  a little yellow piece of paper;

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Home ownership should not be a Lottery.

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References

Otago Daily Times: Homelessness increasing in NZ

Fairfax media: NZ home ownership at lowest level in more than 60 years

Radio NZ: Auckland’s average house value tops $1 million

TV3 News: Government gets thumbs down on housing

Scoop: Key – Speech to New Zealand Contractors Federation

TVNZ: Is there a housing crisis? John Key fails to say yes or no after being put on the spot

Radio NZ: Claimed – $44 million lotto prize

NY Times: The One Housing Solution Left – Mass Mortgage Refinancing

Huffington Post: America’s Half-Forgotten Housing Crisis

Manufacturing and Technology News: The Rise Of The American ‘Precariat’ – Globalization And Outsourcing Have Created A Combustible Political Culture

Chicago Tribune: How Trump won the presidential election – Revenge of working-class whites

Fairfax media: Shamubeel Eaqub – Job casualisation a global phenomenon

NZ Herald: John Key’s speech to the National Party convention

Interest.co.nz: Paula Bennett announces plan to offer $5,000 to homeless Aucklanders and state house tenants to leave Auckland

TV3 News: Govt to help fund Auckland homeless to move

Metrolyrics: Les Miserables – Do You Hear The People Sing?

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!

Government Minister sees history repeat – responsible for death

Housing Minister Paula Bennett continues National’s spin on rundown State Houses

Letter to the Editor – How many more children must die, Mr Key?!

National under attack – defaults to Deflection #1

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)

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

Another ‘Claytons’ Solution to our Housing Problem? When will NZers ever learn?

National’s blatant lies on Housing NZ dividends – The truth uncovered!

National and the Reserve Bank – at War!

The seductiveness of Trumpism

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This blogpost was first published on The Daily Blog on 15 November 2016.

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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.

[…]

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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1623616_704918519553325_1013129092_n

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

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Letter to the Editor: Business Roundtable up to their old tricks?

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old-paper-with-quill-pen-vector_34-14879

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More right-wing nuttery…

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NZ Initiative

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But who is the “NZ Initiative”?

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FROM:      "f.macskasy" 
SUBJECT: Letters to the editor
DATE:        Thu, 01 May 2014 10:39:22 +1200
TO:            "Sunday News" <editor@sunday-news.co.nz>

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The editor
Sunday News



Dr Bryce Wilkinson, recently authored a report for the
so-called "NZ Initiative", calling for more unrestricted
"investment" in New Zealand - specifically allowing foreign
property speculators unfettered right to buy up housing.

At a time of falling home ownership - 49.8% in 2013; 53.2%
in 2006;  67.8% in 2001; 70.7% in 1996; and 73.8% in 1991
(Statistics NZ) - the last thing we need is for New
Zealanders to be competing against well-financed, wealthy
speculators from overseas.

In effect,  we are denying our own children the right to own
their own home.

So who, precisely, is "NZ Initiative" and what is their
agenda?

"NZ Initiative" is the Business Roundtable, rebranded, when
the BRT and right-wing think tank, New Zealand Institute,
merged in 2012.

I guess that puts things into perspective that this is the
same group of well-heeled oligarchs who would sell New
Zealand to the highest bidder from Boston, Berlin, or
Beijing.

It is high time to put an end to this neo-liberal dogma 
which has benefitted a small minority, leaving the rest of
us to pick up the scraps.After 30 years of "rogernomics", I
think it's safe to say that the Great Experiment in
neo-liberalism has been a spectacular failure.


-Frank Macskasy
[Address & phone number supplied]

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References

Fairfax media: NZ needs foreign money – NZ Initiative

NZ Herald: Census 2013: Property ownership keeps falling

Statistics NZ: Owner-Occupied Households

Wikipedia:  NZ Initiative


 

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Skipping voting is not rebellion its surrender

Above image acknowledgment: Francis Owen/Lurch Left Memes

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Is this really the solution to our housing problem?

28 February 2013 4 comments

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Illustration by Tim Denee – www.timdenee.com

Illustration by Tim Denee – http://www.timdenee.com

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Our housing problem is getting worse with each passing year and each successive government.

In 1991, 73.8% of  households in New Zealand lived in their own home. By 1996, this figure had dropped to 70.7%.

By 2001 home-ownership rate was 67.8%, and by 2006, this had dropped below the half-way mark to 44%

(see: Stats NZ – Owner-Occupied Households, Home-ownership falls dramatically)

As with so many other indicators, the “free market” reforms of the late 1980s and 1990s were creating a flow-on effect that very few had foreseen.

The drop in home ownership was perhaps worsened after the 1987 share-market crash when  investors – many of them ordinary folk – were burned and lost theire lidfe savings, and often their homes.

Part of the problem is that the housing stock is insufficient to meet demand of New Zealanders wanting to buy their own home. Far from being a Local body council or RMA problem, this blogger sheets home responsibility on successive governments who have failed to,

  1. Introduce a comprehensive capital gains tax to stifle speculation,
  2. Speculation drove up property prices as investors played an out-bidding war against each other,
  3. Uncontrolled capital flowing into the country allowed prices to rise as vendor’s expectations grew for higher and higher sale prices (much like in the 1970s and ’80s when wage spirals led to price-rise spirals)

During the  2011 Election, Labour campaigned to introduce a Capital Gains Tax (CGT).  A CGT, Labour (and others) maintained, would put a dampener on housing speculation by removing it’s near total  tax-free status. As well as driving up house prices, speculation of this sort took investment away from more productive industry.

Speculation also relies on using overseas borrowings, pushing up the amount we owe to offshore lenders,

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Treasury

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Predictably, the “genuises” at National – and especially John Key – trashed the idea immediatly,

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New property tax would send NZ 'screaming backwards' - Key

Source

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Key’s criticism ranged from “complexity” (it is not more complex than other tax laws) to “when you put more taxes on the economy you slow things down” (the economy can’t be any slower than it is now).

A few days later, Key went one step further,

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Labour's capital gains tax aims misguided - Key

Source

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According to Dear Dear, in one of his LSD-inspired moments of alternate-reality,

Labour are trying to put up, as a stalking horse if you like, a problem that existed when they were in government but doesn’t exist now.”

Source: IBID

That was Key being his usual mendacious self, of course. Despite his assertion that National had “solved the problem”, our housing crisis was worsening.

In fact, less than  two years later,  the headlines were screaming the problem from Bluff to Kaitaia,

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NZ housing 'seriously unaffordable'

Source

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As per usual, National Ministers were pointing the finger at everyone except themselves (see:  Dear Leader Key blames everyone else for Solid Energy’s financial crisis) and English was quick to point the finger at the RMA ands local body councils.

Of course, the last time National interfered with home-building processes, they de-regulated the building industry; loosened the Building Act 1991; and gave New Zealand a legacy of thousands of rotting houses.

National’s most recent pronouncements are vapid and will do nothing except put  superficial band-aids over a deep cancer in our society and economy,

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House buyers may need bigger deposit

Source

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Restrict high-loan-to-value ration lending in the housing sector”  translates to requiring first home owners – usually young couples – to have to save tens of thousands of dollars, whilst at the same time paying high rents and other out-goings.

Let’s be crystal clear what National is advocating here;

1. Without a capital gains tax, National is allowing the older generation (sometimes referred to as “Baby Boomers”) to;

  • keep their rental investments,
  • use the equity in their currents investments to buy more properties,
  • eventually ‘flick off’ their investmental properties for a tax-free profit

2. New home owners will have to;

  • build up a large savings deposit (returning us to a 1970s-style era),
  • create a demand for more expensive, second mortgages,
  • push up rents as more and more young people are forced to rent for longer,
  • compete with property investors who will continue to drive up prices,  to buy a home

In effect, young New Zealanders will find it harder and harder to get into their own home whilst Baby Boomers will continue  to make the most from increasing rents and a tax-free regime for property  (house) investments.

It will be young New Zealanders being penalised for high house prices – a situation not of their making.

And worse still – and this is truly salt in the wound for young New Zealanders – the money they will be forced, by National’s decree, to save, will be used by Banks to on-lend to housing speculators to buy more investment properties.

The sheer obscene unfairness of this scenario cannot be under-stated.

By what logic, or concept of justice, is it fair to make it harder for young New Zealanders to buy a home whilst older generations continue to enjoy their tax-free investments – which contributed to driving up house prices and our overseas borrowings in the first place???

If this country wants to send another 500,000 New Zealanders to Australia, I can think of no better policy with which  to achieve this enforced emigration. National is practically screaming at our kids to “bugger off !”.

Good on you, John Key, Bill English, Steven Joyce, et al. Another dumb idea.

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Previous related blogposts

A Capital Gains Tax?  (3 Aug 2011)

Blood from a stone? (27 Jan 2012)

Regret at dumping compulsory super – only 37 years too late (21 Jan 2013)

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