Friday 27 November 2015

Build Now - Save Later

Little Edens: These new houses bear testimony to the success of the Waimahia Inlet Special Housing Area in Weymouth, Auckland. At between $350,000 and $540,000 each, however, these houses are still far beyond the resources of those in the most urgent need of accommodation. Houses for the poorest New Zealanders are still in critically short supply. Tackling homelessness now will reap significant social benefits in the years to come.
WHY IS THE GOVERNMENT so reluctant to get its hands on the housing crisis? Reviewing its performance over the past seven years, it is clear that John Key is prepared to do just about anything to reduce homelessness – except build the houses that people so desperately need.
In Auckland, where the crisis is most acute, Dr Nick Smith keeps announcing the creation of Special Housing Areas (SHAs) to streamline the building consent process. Nine more of these were promulgated by the Minister for Building and Housing on Monday, bringing the tally to 106 SHAs – space for upwards of 48,000 new homes!
Dr Smith is inordinately proud of his creation. But, having made space for all these mini-Edens, the Minister, like the Creator God of the Book of Genesis, has simply blessed the property developers, instructed them to “be fruitful and multiply”, and withdrawn from the scene.
Actually building houses, in numbers sufficient to significantly reduce homelessness, is not something this government believes the state should be doing. It is the National Party’s firm belief that the actual process of house construction should be left to the market’s “invisible hand”. (Presumably, the one wielding the invisible hammer!)
Unfortunately for Dr Smith, the Market has so far displayed minimal interest in constructing homes for poor people. (Or even, it must be said, for tolerably well off people.) According to the Labour Party’s Housing Spokesperson, Phil Twyford, the Auckland City Council has been able to account for only 102 houses completed in Dr Smith’s SHA’s since 2013.
“We now officially have more Special Housing Areas than actual houses built in them”, quips Mr Twyford. “The consenting rate still languishes at 4300 below the 13,000 new homes Auckland needs every year just to keep up with population.”
It’s important to understand that this exchange between Dr Smith and Mr Twyford is not about homes constructed for the poorest New Zealanders. These two politicians are merely debating the building of homes per se. In some parts of Auckland, the average price of one of these per se homes is fast approaching (or long ago exceeded) $1 million dollars. Hardly the sort of small change your average, poverty-stricken Kiwi family is likely to find down the back of the sofa!
Labour’s housing policy (assuming it remains Labour’s policy) is called Kiwibuild. It envisions the construction (by private developers) of 100,000 “modern affordable homes” over ten years for first-home-buyers.
Just how the very poorest New Zealanders are supposed to pay for a “modest entry-level home” priced at around $300,000 Labour does not explain. (And that $300,000 figure, cited when the policy was first released back in 2012, has likely inflated to around $500,000 in the current Auckland property market.)
Kiwibuild would, however, assist a great many young, middle-class couples into their first home – which is, unquestionably, a good thing. But, it would do little to address the acute shortage of low- and no-cost emergency accommodation which is presently forcing Maori, Pasifika and immigrant families into doubling- or tripling-up with relatives and friends. That’s when they’re not driven to sleep in caravan parks, under bridges, or in their cars.
The Finance Minister, Bill English, has, for some time, been arguing for a whole new approach to managing the burgeoning cost of New Zealand’s welfare state. By intervening early, says English, the State can save millions – quite possibly billions – of taxpayer dollars. Children raised in poverty, whose lack of a stable home environment often requires a host of extremely costly state interventions in later life, could, if targeted early for state assistance, end up becoming net contributors to society.
The rapid construction by Housing New Zealand of thousands of units of emergency accommodation would not only contribute to the well-being of thousands of New Zealand’s poorest and most vulnerable citizens, but would also largely pay for itself. Well-designed, warm, and energy-efficient, such units could be provided free-of-charge – at least initially – while their occupants lives were restored to some sort of order. Once family life had stabilised, regular rental payments could begin.
English’s actuarial approach to welfare would require considerable political courage to implement. The trick, electorally speaking, would be to demonstrate the huge potential savings in Vote Health, Vote Education and Vote Corrections. National’s slogan could be: “A tax-cut to every voter who provides a future for every child.”
This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 27 November 2015.


Brendon Harre said...

Chris as someone who is a member of the Labour Party and therefore was allowed to attend the full National Conference I can tell you Labour is very much committed to KiwiBuild. This being just one cog in Labour's housing platform. Which will include, not selling off State housing, in fact Labour like in the past will build State housing. It will also reform rental rules to provide more stability, as renting has become the new norm -51% of NZ adults live in rentals 57% in Auckland. Labour will reform the planning rules so that speculation and land banking is not rewarded -the political/economy of housing will be reset back to traditional kiwi values of fairness and giving everyone a fair-go. This will be part of a wider programme to provide innovative attractive cities that give opportunities to all hardworking businesses and workers going forward in the 21st century. Chris despite your constant drip-drip of negativity, pessimism, divisiveness and general air of hopelessness I think you will find Labour is making steady inroads into the issues that face ordinary kiwis.

Chris Trotter said...

Well, Brendon, I sincerely hope you're right. Although, I'd feel more convinced if Phil Twyford and Andrew Little were reiterating these housing policies publicly and often.

And I flatly reject your characterisation of my actions as negative, pessimistic, divisive and hopeless. Were I bereft of hope, I'd hardly devote so much of my time to berating the Labour Party - would I? Nor am I divisive - at least not in the sense of originating division. I do call out those who by their actions foster division within the caucus and the party. Unfortunately, the people most prone to this behaviour are Labour's MPs and their hangers-on.

As for being negative and pessimistic, well, that charge is just nonsensical. I defy you to identify anyone in or out of the Labour Party as staunchly social-democratic as myself. I have always been, and remain, indefatigably positive and optimistic about the possibility of bringing about progressive change in New Zealand.

What does rile me, however, are those who seek to stifle debate. It is my firm belief that only through the free and frank discussion of policy, tactics and strategy can Labour recover the ideological confidence so essential to taking-on - and defeating - the National Party and their neoliberal backers.

Until people like yourself, Brendon, understand this, then Labour will continue to languish in the low 30s in the polls, and any hope of forming a government with both the will and the right to enact radical reforms will be dashed.

Labour is not an army - it's a movement. If you don't get that, then you simply don't get progressive politics. Only something that is, itself, alive can serve the living.

Brendon Harre said...

Chris you would be free to debate what the Labour party should do if you joined the Labour Party. There is no stifling of debate -other than the fact that when one is inside a glass house one has to be more careful about throwing stones -falling glass can be dangerous. Chris there was some limits placed on a media during the National conference, but frankly that was probably deserved given how toxic the media has become. Anybody who wants to join the Labour party, engage in debate, try to make a difference is free to do so. I know this because I have done it.

Chris I will admit I wrote my comment before counting to 10, having a cup of tea, so probably it was a bit harsh. I have read your writings for years, including your book "No Right Turn". I do think on the continuum between optimism and pessimism, you are too far down on the latter. You do not celebrate enough the times when collectively progressive NZ has turned left.

This is important. The biggest weapon the likes of Textor/Crosby has against progressive forces is the spread cynicism, hopelessness and the idea that it pointless to try to make a difference, to vote for someone who will help -because those politicians are all just selfish, self-serving bastards.....

Regarding how Andrew and Phil promote Labour's policies -I have some faith that they are good people and will do their best to build up steam and peak in effectiveness for the next election. I know the Labour Party is not an army, but if it were, you would not want it to panic and discharge all its best ammunition prior to the real battle, would you?

Chris Trotter said...

I'd think better of this comment, Brendon, if you'd given my book its proper name - which is "No Left Turn"!

Your view of me as a pessimist is not shared by many on the Left - most of whom dismiss me as a hopeless romantic.

I commend to you Antonio Gramsci's excellent political axiom:

"Pessimism of the intellect; optimism of the will."

Guerilla Surgeon said...

" The biggest weapon the likes of Textor/Crosby has against progressive forces is the spread cynicism, hopelessness and the idea that it pointless to try to make a difference, to vote for someone who will help -because those politicians are all just selfish, self-serving bastards..... "

The problem is there's quite a bit of truth in that. I think politicians start out with good intentions but become cynical self-serving bastards after a few terms. And it may well be pointless to try to make a difference, because voting Labour won't produce much of a difference. Now you're in the Labour Party Brendan so probably know more than I do, but just judging by public pronouncements, we've had nothing but platitudes and vague generalisations. Jobs, jobs, jobs.... As I said a week or so ago has anyone ever said "Fuck jobs we're not going to bother"? What you do us the courtesy of letting is in on what you're going to do? How can I make a decision on whether to vote Labour or not with the information I have at the moment? I'll answer that myself – I can't – I'll be fucked if I can, because there is fuck all information. And I'm not what the Americans call a low information voter. The problem is you buggers are all scared – either to have proper left-wing policies, or if you have them, to actually explain them in case the so-called average voter wets their knickers. So what's your answer?

Brendon Harre said...

Apologies for the brain fade...

Brendon Harre said...

Maybe Chris your hopeless romanticism makes you susceptible to making the "perfect the enemy of the good" or the Nirvana Fallacy.

greywarbler said...

You sound more and more like the voice of reason, so I am glad that you can rear up and answer the naysayers like Brendon Harre and many of the Anonymi.

Has Labour talk mentioned sweat equity - they have had this in their kitbag before. Are the practical approaches used by the Habitat for Humanity charitable group being planned. People are vetted, then take part in building their own house. Of course besides houses, there need to be low-rise apartments, which people would be more limited for personal contribution to.

However an aspect of both self-advancement and trade training could come about through employing numbers of low income men, and some women, to give them a basis for gaining qualifications as well as working on either their own, or community's homes. Homes with a heart like this would do wonders. They would take longer to do, they wouldn't be easy to manage, have to watch for stealing, have to store machinery away from the sites probably, but it would be feeding two birds in one swoop. And be very strengthening for people who have been flattened by a lack of opportunity for so long.

Anonymous said...

There is not a country in the world that has been able to solve the plight and anguish of the homeless who live in that countries cities. Labour and Phil Twyford know that, so they put effort in saying they will build more house's implying that this will solve homelessness, it will not. Those house's will got to working people who can get a deposit to satisfy a bank.
I do not know the answer to this problem. Henry Ford, who was a Nazi sympathiser, some say a genius, put in the continuous production line, he paid his workers $5 per day which was about double the going rate, he stated that his cars should be able to be purchased by the people that made them, subsequently most Ford workers were driving around in a Ford car. There was a dark side, when I was in Detroit I met old-timers who spoke of company spies who attended off-plant meetings so as to tell Ford management who was trying to form a Union, indentification meant instant dismissal. There were many other matters and much as been written.
The World needs a man of Henry Fords genius to solve the homeless question, I do not know where he would start or what he do but he would not get off the ground if he had conform to council rules or put up with lying politicians saying they can fix the problem. Until government and councils admit the truth and accept defeat then we will continue to have homelessness as part and parcel of life in this World.

pat said...

the problem is unable to be solved by either party's policy....they both rely on private appetite. ...the fact is the capacity is not there and will not be for the foreseeable.
This problem stems from the dismantling of the apprenticeship system and the privatization of large government entities like the MoW and Railways that were closely involved in both training and construction.Private industry has always avoided the cost of training, particularly boom and bust industries like construction.
The only way sufficient housing stock will be built (and at the level appropriate) is a direct intervention by the Government ( of any hue) in all aspects of the process.
It requires a back to the future solution...Sate housing 2.0

greywarbler said...

Your comment sets the housing neglect syndrome in perspective and all your points are on the nail.

Nick J said...

Growth based economics....hmmm..requires more people who need more houses...what we are not breeding fast enough...more immigration please. Must say Treasury economists really are good dont you think?

Brendon Harre said...

Chris if you are looking for public speeches from Phil Twyford on what Labour will do about housing. How do these speeches measure up? Do they hit the mark? Are they public and often enough?

Compare this with the disillusioned drifting away from the right or whatever ACT is these days. They were so annoyed about the lack of progress on affordable housing they have produced a short video on "The Great Auckland property bubble".

Bushbaptist said...

How did we get all those State Houses that the current Govt. is desperate to sell off? They are all paid for and didn't cost us anything to build. From the 1930's to the 1960's thousands of those houses were built at little to no cost.

Tricky Nicky Smith has all that land available to build on so he hands it over to Private Developers whose weasel words play into the hands of this bunch. Those developers will build $1 million houses because there is more profit to be made in them. They are not interested in low cost housing regardless of what they say.

I will leave it up to you lot to work out how we achieved all those houses at little cost to the Taxpayers. And how we can achieve it again.

Unknown said...

Hard to solve the homeless problem when immigration is a sacred cow.

Unknown said...

Labour MP Phil Twyford and Oliver Hartwich, executive director of The New Zealand Initiative, on the housing problem and what can be done about it.
By Phil Twyford, Oliver Hartwich
I'm bed with the devil.

Brendon Harre said...

RE: Getting into bed with the devil?

I think at the beginning of JK's administration he made the decision that the positive wealth effect mainly incurred by National constituents of unaffordable housing outweighed the social costs mainly incurred by Labour's constituents and the productivity losses were too spread out for anyone to care.

Hugh Pavletich and many others have told National exactly what Phil Twyford and Oliver Hartwich wrote. Hugh was expecting housing reforms way back in 2008, in the first 100 days of office. Privately former National party insiders admit that Nick Smith and Co know all this stuff about how to make effective housing reforms to provide affordable housing. I think these facts back up my contention that JK has long ago decided not to make affordable housing reforms.

Now this implicit decision is going to exposed to the publics explicit view.

What will JK do?

Will he sell the alliance between the NZ Initiative and Labour on housing reforms as a 'political coup' that has created the space to act when he couldn't or wouldn't before or will he prevaricate and do nothing?

I think Bill English would act -I think he is a progressive -but that might divide the party -like what happened to Robert Peel the British Tory PM in the 1840s when by repelling the Corn Laws the Tories were perceived as attacking landowners.

I suspect JK will not act because he is stubborn and will think his charisma and willpower will get him through this crisis.

In the end the public will win, certainly the 51% of the adult population who rent. Because either National implements the Twyford/Hartwich plan now or it happens when Labour nexts wins an election.

I recommend everyone watches this issue closely. This could be the defining battle of our time. Generation rent vs. the new landed gentry.

Unknown said...

Hugh Pavletich (963 comments) says:
November 30th, 2015 at 9:30 am


Labour MP Phil Twyford and Oliver Hartwich, executive director of The New Zealand Initiative, on the housing problem and what can be done about it. … read more via hyperlink above …

Wages, cost of living and housing affordability top list of Kiwis’ concerns, new poll reveals | ONE News Now | TVNZ

Hugh Pavletich
Co-author Annual Demographia International Housing Affordability Survey
If you think immigration affects house prices like the Savings Working Group ; investors to investors (but not Connell Townsend to Radio NZ listeners) vote for NZ First.

pat said...

although I won't be voting NZFirst anytime soon I am happy to agree that immigration as it has been practiced under this administration has had a negative impact (in terms outcome) on the housing market, particularly Auckland (and that oft ignored area of productive rural land)....however, until it is recognized that any construction under market conditions (urban planning changes or no) will not result in AFFORDABLE houses for the average Kiwi...that will require the stopping of cartel behavior by the near monopoly building supplies companies, the endless ticket clipping by all involved in the relevant industries and the making available of suitable sites without unjustifiable council development demands and importantly the training of competent , repeat competent tradespeople at scale. This will not happen unless it is directly controlled by the State...we are witnessing the results of market failure, it is foolish to seek a market solution.

Brendon Harre said...

“you don’t have to be a conservative to believe that we have too much [land use]regulation”

Paul Krugman

Pat the housing market works in a capitalist social-democratic framework. From the top you have rules, regulations, structures like State Housing, accommodation supplements, planning rules designed to prevent the overcrowding and disease spreading urban areas of past and so on. This framework is the result of our democratic process and is designed for the greater good. Some of this framework is dated and needs reviewing. We have a system for undertaking this review process -it is called democracy.

At the top of framework is the state which decide on all these top-down structures. At the bottom is the individual or family who decide how to fit into the framework -with regard to housing -where to live, what sort of house, big or small, big garden or small garden or no garden and so on.

If you eliminated all the bottom up decision makers by say nationalising everyone's property rights you would create a communist system but that hasn't work so well.

If you eliminate the top you would have some sort of ACT free-market nightmare but you would lack the ability to provide new structures for the greater good.

The compromise is a stable social democratic system that values egalitarianism and giving everyone a fair go. Luckily despite a history of flirting with the extremes NZ has a history of successful compromises.

Bushbaptist said...

@ Brendon: "If you eliminated all the bottom up decision makers by say nationalising everyone's property rights you would create a communist system but that hasn't work so well."

Fer gawd's sake learn the difference Brendon. Communism has never been tried anywhere!! THERE HAS NEVER BEEN A COMMUNIST GOVT. ANYWHERE IN THE WORLD! I'll explain; We can have a Socialist Fascism, or a Capitalist Fascism or even a Communist Fascism Govt. but they are still ALL FASCISM!!

Communism is where the workers OWN the means of production, what you describe is Fascism where the Govt./Business owns all the means of production not the workers.

I agree Pat, the old State Housing system worked well. It trained many skilled people in all the construction trades. They were taught on the job by skilled tradesmen by working at the job. The same with the Railways, they taught many skilled people in the Engineering trades. The main problem with all those depts. was that they had become cumbersome in their middle age and needed streamlining. My criticism of them was the seniority rule where some-one could become a manager who wasn't capable of doing the job properly. The Peter's Principle. That rule needed to be consigned to the dustbin of history.

Guerilla Surgeon said...

"At the top of framework is the state which decide on all these top-down structures. At the bottom is the individual or family who decide how to fit into the framework -with regard to housing -where to live, what sort of house, big or small, big garden or small garden or no garden and so on. "

I'm not sure that decide is the right word to use here considering the constraints that people have with income et cetera. Looking for a new house at the moment. I'd love to be able to 'decide' to have a garden, but to put it bluntly we're too poor.

pat said...

You miss the point Brendan....let the market do what the market does but don't expect it to solve this problem. I don't advocate wholesale political reform (in this instance)....I do however advocate that affordable housing (both for purchase and rental) in the current(and foreseeable) market can only be provided from outside the market....any attempt at a half arsed PPP or private solution will fail due to the reasons mentioned i the previous post.....those barriers can only be solved expeditously enough directly by the State...its not exactly radical, after all that is what was done before and successfully.

Brendon Harre said...

Sure Pat there is plenty the state could and should do to improve the housing market -including building state housing and ensuring builders are adequately trained. But the point I was making was unless property ownership, legal titles etc were eliminated then a market will still exist. So like it or not housing decisions are made at both the state level and the individual/family level. A stable fair equilibrium point needs to be found between top down decision makers and bottom up ones.

I would want the market to work better so we don't send the likes of Guerilla Surgeon into mortgage slavery or be stuck in some sort of second class purgatory of a rental market where all the rights are with the landlord and tenants rights mean they have no security to create a home.

I grew up into adulthood under Rogernomics and know full well what that extremism did to this country and its values. Maybe the likes of Chris Trotter will criticise me for working within the system. But I genuinely believe this approach will gently allow core kiwi values of egalitarianism and giving people a fair go to reassert themselves.

pat said...

"I would want the market to work better so we don't send the likes of Guerilla Surgeon into mortgage slavery or be stuck in some sort of second class purgatory of a rental market where all the rights are with the landlord and tenants rights mean they have no security to create a home. "

your still missing it Brendon...forget about "the market"..and let it carry on its merry(?) way...and solve the problem

Brendon Harre said...

No Pat if you are not prepared to eliminate the market and I have explained why that is not feasible then you need to understand the market.

The housing market needs to be better regulated, it needs to serve us the ordinary kiwi. Just ignoring it will not solve the problem. At best you will provide a temporary palliative cure.

A government can and should build state houses that it will ration to the most deserving. But if you haven't fixed the rest of the market is this the best the government can do?

pat said...

understand the market fine can seek to improve market regulation and modify the incentives...good luck with that, as the vested interests will delay and water down anything that has real impact...meantime the problem and its flow on effects continue.....I suspect that those increasingly affected (and due to downstream impact, society in general) will be quite happy with a "theoretical" temporary palliative cure...oxymoron that it is.