Tuesday 4 November 2014

National's Housing Policy: Squander and Squalor.

Free Market Solutions: In 1890, Jacob Riis, one the world's first 'photo-journalists', published How The Other Half Lives, depicting the lives of New York's slum-dwellers. This is what affordable housing for the poor looks like when the provision of this vital social need is left to the tender mercies of "the free market".

WHAT IS IT ABOUT the National Party and state housing? What is it about supplying safe, warm and affordable housing for the poorest New Zealanders that they do not understand? Are Bill English and Paula Bennett so wedded to the notion that ‘the market must decide’ that they are willing to live with the squalor it inevitably engenders?
All around us we see the consequences of allowing market forces to set New Zealand’s housing policy. Young, well-qualified Kiwis, holding down good jobs on good pay, cannot afford to buy a house. While young families, struggling to survive of a benefit, cannot even find one. Property developers and builders, responding to market signals, construct dwellings for those in search of large and expensive dwellings. The smaller, cheaper homes New Zealand so desperately needs exist only in the dreams of the homeless, and on the drawing-boards of progressive architects.
And what is the National Government’s response? To sell up to a third of the state houses entrusted to it by the wisdom and compassion of earlier generations of New Zealanders! When thousands of their fellow citizens are living in damp, over-crowded houses; or caravan parks; or their cars; Mr English and Ms Bennett are proposing to reduce the State’s stock of housing for the poor. Why in God’s name would they want to do that?
National’s comeback is that the provision of social housing is best left to religious, charitable, and other not-for-profit institutions. The State, they say, is a poor landlord. The country’s poorer citizens, they insist, will be better off in the care of the Salvation Army; or their local Iwi; or a city council.
From what possible source will the not-for-profit sector acquire the resources to construct social housing on a scale even remotely commensurate to the urgent need of the homeless? What bank is going to lend money to an institution whose prospective clients are required to endure the most precarious of living conditions? There are very good reasons why very poor people are refused mortgages. (As the whole world discovered in 2008, when the US and UK banks’ insane decision to lend money to people who couldn’t possibly pay it back triggered a global financial crisis.)
Nor is there the slightest historical justification for believing that the housing needs of the poor can in any way be satisfied by the charitable impulses of churches, individual philanthropists, or even – heresy of heresies! – by the good offices of the free market’s mysterious “invisible hand”.
We have all, at some time, used the expression “how the other half lives”. But how many of us realise that it has its origin in a scandal arising out of market-driven housing “solutions”? It was in 1890 that one of the world’s first “photo-journalists”, Jacob Riis, published How the Other Half Lives: Studies among the Tenements of New York, a collection of photographs depicting the horrendous living conditions of the city’s slum-dwellers. The free-market’s “solution” to New York’s ever-increasing demand for affordable housing was to construct gimcrack, windowless, disease-ridden, fire-traps where whole families were forced to eke out their sorry existence in a single, fetid room. To their credit, New York’s middle-classes were shocked into action. Their radical reforms owed little to market forces.

State Provided Solutions: A street of "State Houses" in New Zealand.
And neither did the radical reforms of the First Labour Government. Because, fundamentally, market failure was the problem. Daringly, Labour’s reformers borrowed the capital required to house the homeless casualties of the Great Depression from “NZ Inc”, in the form of Reserve Bank credit. We paid ourselves back out of the increased revenue generated by the housing programme itself (state houses were built, as a far as possible, out of local materials) and, over time, out of the rentals of the tenants themselves. (Being immortal entities, states can wait a long time for their loans to be repaid!)
Has the Government truly forgotten that there is NO non-squalid market-driven solution to a market-induced crisis in affordable housing? Mr English and Ms Bennett certainly haven’t forgotten. If you press them they will admit that their own government may end up lending the potential purchasers of state houses the money needed to acquire our long-ago amortised assets. Yes, that’s right, National’s “market-driven” solution to the housing crisis is to require taxpayers to heavily subsidise private investment in property they already own because the new owners’ “independence” from the State better qualifies them to manage the nation’s stock of social housing than the State itself.
But even if that were true, the State’s alleged indifference as a landlord is almost entirely attributable to the National Party’s longstanding antipathy to the idea that when it comes to putting a roof over people’s heads we are, and must remain, “our brothers’ keeper”.  Ultimately, the Government’s market-driven alternative can only be achieved by squander and squalor.
This essay was originally published in The Press of Tuesday, 4 November 2014.


Tiger Mountain said...

Current technology offers micro scaled dwellings, modular “plonk, plumb and wire” solutions that don’t need the beautifully applied Rimu skirting or generous yards of the original state houses (though one can wish they still did).

The Nats are a hard out mob coasting on the just large enough selfish and self absorbed kiwi sector. Some of the small left sects still argue over whether “Key love” is really neo liberal in content, but really who cares about such definitions when the platform of the minimalist state is being pursued with a vigor rarely seen since Pinochet’s Chile.

All good activists should keep an eye on Glenn Innes as a potential flashpoint. FJK.

Davo Stevens said...

Why so surprised Chris? John Key is a Psychopath and a manipulative liar. Yet even when he is caught out people still think he's the greatest thing since sliced bread!

He said "No Asset Sales" but this isn't you see, he's saving the poor from themselves by selling State Houses to pay for extra accommodation allowances. How generous of him!

I despair of people waking up to just how devious,manipulative, nasty bit of goods he is.

Gnossienne said...

I remember state house families in a rural town during the war. The men were away overseas. After the war some were able to move out of state housing others were wounded in some way so stayed and there were some who stayed because of the real camaraderie which had built up in these neighbourhoods particularly among the women. My mother would cycle across town at night for a 'hen party' at the state house home of her sister in law. Another world.
I heard a story about present time reality the other day. In China one cannot own property but it may be leased from the state for seventy years. If a leaseholder dies the lease may be passed on but the inheritors must pay a third of the property value to the state. If they default the lease returns to the state. The story teller knew of the recent sale of seven houses to a wealthy Chinese non resident.
The point of the sale was not to rent out the houses but to resell them later at profit understanding that the values of these properties would increase remarkably because there were so many more wealthy Chinese buyers than there were N.Z. citizens. He knew that the extra 'gift' to the land agent for arranging the deal would be large, e.g. a car. This is merely the custom, the culture. He also knew that in the present trade war the U.S. and China are in competition for N.Z. Nevertheless he prefers N.Z. and won't be returning to his homeland. He voted labour in the last election.
We are witnessing the final shredding of social fabric and custom, incomplete and imperfect though these may have been. Such shredding is characterised by snearing distaste and loathing for 'the other' in favour of the advance of what has been called 'the sovereign individual.' It is perhaps a way of creating an identity for those who are minus a psyche therefore cannot be expected to think other than in a one dimensional fashion.

Anonymous said...

It's far worse than that. The majority of MPs are landlords, and have created a policy increasing rent subsidies by the state. As "private providers of housing" they stand to directly benefit financially from the policy they are going to enact. That's called corruption.

Guerilla Surgeon said...

I lived in an ex-Statehouse for some time Tiger. They were built by apprentices. There wasn't a right angle in the place :-). Didn't notice much Rimu in there either. But I think the earlier ones were built to a higher standard. Friend of mine had one with the original copper spouting. Luckily it was heavily painted over so no one stole it :-). Solid as the rock though. That you are correct, modular seems to be the way to go. You build 'em in a factory and have someone bought them together. As a crowd in Germany according to someone I know who produce upmarket versions that can be put together in less than a week. But expecting anything that imaginative from any politician today is a bit of a leap.

Victor said...

One of the numerous absurdity's in National's housing plans is that New Zealand property developers display a recurrent inability (or is it unwillingness?)to construct houses that are safe, warm and weather-tight.

Many of our poorer citizens certainly live in obscene conditions. But we fool ourselves if we think the building standards in wealthier suburbs match those of many other developed nations.

Is it over-stating matters to suggest that putting developers in charge is a bit like handing over a women's refuge to a serial wife-beater?

Another question that raises its head is why developers would wish to devote land to "social housing" in areas otherwise being developed for the market?

Why would they willingly devalue their investments by permitting those perceived of as the "great unwashed" to dwell cheek by jowl with paying customers?

I'm not saying there's no answer to this question. I'd just like to know how much that answer is going to cost.

Brendon Harre said...

National's ideology and ability to manage the economy is falling apart due to the obvious failings of the housing market. This quote tells it all.

"Finance Minister Bill English said this week the cost and complexity of getting council consent to build a house were major causes of poverty because they drove up house prices.

(Christchurch)Council strategy and finance committee deputy chairman Cr Raf Manji said English's comments were "fair enough".

"I wouldn't have used such strong language, but I think councils have been a major problem in constricting land supply," he said.

Local government planning rules were not the only issue and the Government needed to play a more active role to help solve the city's housing problems, Manji said.

"The Government should just buy out waves of rural land on the outskirts of the city . . . and build 5000 to 10,000 homes on it. The price of the land would be at rural prices and that's where you get your affordable housing."

Land rezoning led to "huge windfall capital gains" for the owner, but did not reduce house prices, Manji said."

The problem for Bill English is this sensible solution would be "Kiwibuild"....

manfred said...

That's how you create slums and it's also how you create horrible vibe-less cities that are impossible to link up with public transport.

Labour's idea of pepper potting attractive yet affordable apartments and houses within existing city limits is far fucking cooler and will create prosperous, dynamic and exciting cities.

Tory ideology is why we can't have nice things.

Davo Stevens said...

Yeah Brendon, I made heaps out of selling my patch to hungry developers, 300Ha of prime agricultural land. All under workshops now.

The Govt. still owns some land in the city environs that could be used for low cost housing butthey prefer to sell it to developers who are putting gated communities on it.

Guerilla Surgeon said...

Land supply. We all forget that we rely on agricultural land for much of our economy. There's only so much of it. Cities are usually built close to the best of it. So we can't just keep taking it and putting houses on it. They're not making any more as they say.

Anonymous said...

They just don't care. I'm alright mate, stuff you. National MPs are mostly all landlords, so they see the crisis as extra cream for them.
Selfish indeed. The crisis is going to get worse, and people will be setting up tents to live in. Yet does middle NZ care? They all voted for the guy! I knew a multi millionaire for PM was a really dumb idea! Like he cares.

Richard McGrath said...

Anon @ 13:37, yes I would quite believe most MPs have property investment. I seem to remember Helen Clark owning nine houses in NZ.

The future for affordable housing is probably in 3D printers being able to manufacture them very cheaply. But potential home owners are still up against the bureaucracy, council planning and consent rorts, and legal monstrosities such as the RMA.

One very affordable option for couples and small families is 'Tiny Homes' - check out the many links on YouTube.

Brendon Harre said...

Already happened, Happy Numerics.

175,000 lifestyle blocks.

Squatting on (queue drum roll and issue cliche alert) "good productive agricultural land".

Growing ponies and thistles.


pat said...

Eureka Richard! we can solve NZs housing crisis AND make the workforce more mobile and flexible in one fell swoop!

Anonymous said...

"Has the Government truly forgotten that there is NO non-squalid market-driven solution to a market-induced crisis in affordable housing?"

What is "market induced" about Council urban Planners constraining sprawl? Why are the political representatives of "the workers" such suckers for this stuff?

The correlation that explains systemic affordability, is ALWAYS "freedom to sprawl". Not only now in many US cities, but in NZ in the past. It is all very well to "provide social housing", but under these conditions of a distorted market, there will always be a cohort "not quite qualifying for social housing", who are worse off than those who do. The effective marginal tax rate on losing social housing by, say, earning a little more income, is well over 100%.

If you keep increasing subsidised social housing as "the solution", won't you "run out of other people's money"? The UK had 1/3 of its population in social housing by 1974. At what point do we wake up and stop the wealth transfers to the big rentiers in finance and property, as the REAL "smart" solution?

If you look at Real Estate sites for all the US cities that have never had a median multiple much above 3, you will find rental accommodation options provided by the MARKET augmented by a bit of charity, that are superior and more cost effective than our taxpayer-subsidised stuff. The existence of tax breaks for landlords does NOT have to be a demand-side factor forcing house prices up at all; when the housing supply is elastic enough, the right incentives will have the intended consequences rather than unintended ones.

I sincerely hope National actually does understand all this and intends to work to this end. Thatcher's big mistake was not to reform the strangulatory urban planning that afflicts the Poms, otherwise the sell-off of public housing would not have had the negative effects that it most certainly has had for the people at the bottom of society AND everyone else but the rentier class.

For my part, I would feel far more dignity and pride in being able to pay my own Houston-level rents, than to have a "Council Flat" provided for me - and I hope most human beings feel the same way.

Phil Hayward, Lower Hutt