“The Data Is Simply Not Available, Minister.”

SIR HUMPHREY APPLEBY: "Yes Minister, promising to build 500,000 affordable homes would be a very courageous policy, indeed!"

IS LABOUR getting Sir-Humphreyfied on housing? For younger readers, Sir Humphrey Appleby is one of the leading protagonists in Antony Jay’s and Jonathan Lynn’s incomparable 1980s television satire “Yes Minister”. So compelling was the Sir Humphrey character (played to perfection by the late Nigel Hawthorne) that his name quickly became synonymous with the obfuscating, prevaricating, manipulative and often downright misleading senior civil servant who steers his ministerial master away from his better instincts towards the maintenance of the bureaucratic and political status quo.

Dr Chris Harris, a specialist in urban design and planning, raised the Sir Humphrey question with me after a careful reading of “Stocktake of New Zealand’s Housing”, the study authored by Alan Johnson of the Salvation Army, Otago Public Health Professor Philippa Howden-Chapman and economist Shamubeel Eaqub, which was released by the Housing Minister, Phil Twyford, on Monday afternoon.

One figure, in particular, caught his attention. This was Figure 3.4 “New Dwellings Consented, By Owner Type, 1970-2017” (see below). It’s most notable feature, explained Dr Harris, was the extraordinary spike in new dwelling consents which followed the election of the Third Labour Government, led by Norman Kirk, in 1972.

The graph shows consents flat-lining at around 23,000 per year in 1970, 1971 and 1972. Between the end of 1972 and the beginning of 1974, however, the number of dwelling consents shot up to an astonishing 39,000.

The first and most obvious question that springs to mind is: “How on earth did the Kirk Government do it?” Finding the answer to that question would, surely, be of considerable assistance to Minister Twyford as he sets about tackling New Zealand’s appalling shortage of affordable housing?

Presumably, the same thought occurred to the “Stocktake” authors. What was their conclusion? That’s when Dr Harris’s eye fell upon the concluding sentences of the paragraph printed immediately below Figure 3.4:

“While current levels of new house building compare favourably with the low levels of construction seen immediately after the global financial crisis, during the period 2009 to 2011, these current volumes are not historically exceptional particularly compared with the early 1970s. However, data on government involvement in the 70s boom is not available.”

Get that? Information on the way in which the Kirk Government managed to nearly double the number of houses being consented “is not available”. (My emphasis.)

In his e-mail alerting me to this extraordinary omission, Dr Harris writes:

“Note the last sentence! In fact, you can find out quite a lot from consulting the on-line NZ Official Yearbooks of the time. State Advances credit, available for actual housing construction but not speculation since 1919, was increased. And on top of that there was as yet no Accommodation Supplement to fritter away government housing money, so that it very much went on actual building. There was also a shift from building large stand-alone houses on the city fringe to building lots and lots of small and affordable flats in more urban locations, which is where the real shortage was, and had long been. And this was all directed from the top by Big Norm.

“Norman Kirk re-founded the old-time Ministry of Works as the Ministry of Works and Development in 1973, and founded the Housing Corporation in 1974, also to try and get more houses and flats built. It turned out that urban flats proved easiest and quicker to build once central government weighed-in to overcome the usual obstacles. This was a really important part of the recipe for getting runs on the board quickly. Our cities are still full of flats built in the 1970s – the standards were higher than in later decades. Mass-produced hollow concrete blocks, suitably reinforced, were the building material of choice. Concrete block walls signify a 1970s flat in the same way that a tiled roof is typical of a 1940s state house. 

“Big Norm's policy of pulling out as many stops as possible and focusing on flats really did work surprisingly quickly and the proof is in the consent graph. Our population back then was only a bit over three million, so the graph actually understates the success of the policies of the 1972-1975 Labour Government.

“Actual builds are always a bit less than consents granted. In the early 1970s the peak rate for actual housing construction was 34,300 units built in one year. This roughly equates to 50,000 a year today, if not more, and that nice round number might explain why Shamubeel Eaqub challenged the government to see to it that 500,000 housing units are built in ten years.

“Interestingly enough, few of the houses built under Kirk's administration were state houses. To get things moving quickly, the policy was very much one of collaboration with commercial builders and developers, who were offered guarantees to go and work flat out building small affordable units without worrying too much where the money was coming from, or whether the consent was going to be approved.”

Dr Harris goes on to observe:

“You have to wonder whether there is some kind of an embargo on the level of government activism that led to such a boost in housing production in the early 1970s. It's like an episode of Yes Minister in which the bureaucrats have hidden all the relevant files and the politicians don’t notice that they’re missing straight away. Adding to suspicion of a stitch up by a business-as-usual brigade is the fact that the word ‘credit’ does not appear in the report and there is only spotty and empirical reference to ‘finance’. So, no need to frighten the banks in other words. There also doesn't seem to be any mention of the really important part played by central government institutions in making things happen more effectively and in a streamlined way back in the past: institutions such as the State Advances Corporation, the MWD – which the Rogernomes abolished in 1988 while dialling-back state construction lending at the same time – and the Housing Corporation. The Housing Corporation is still with us of course, but only in a feeble and gutted sort of a way.”

Here, perhaps, is the explanation for Shamubeel Eaqub’s extraordinary forthrightness during Monday’s media conference in the Beehive Theatrette. With barely concealed frustration at what he clearly regards as the new government’s half-hearted housing effort, he urged the governing parties to break free of the fiscal “straightjacket” in which they are currently restrained by Finance Minister Grant Robertson’s Budget Responsibility Rules.

The last thing the “Sir Humphrey’s” at the top of our own civil service want, deeply imbued as they are with the neoliberal economic orthodoxy which has guided New Zealand public policy for more than 30 years, is for “their” ministers to begin searching back through the historical record to discover how, forty years ago, a newly-elected Labour Government responded to the needs of its people by – of all things – fulfilling them.

This essay was originally posted on The Daily Blog of Saturday, 17 February 2018.

Taking Stock: Is the Government Doing Enough to End the Housing Crisis?

A Fading Dream: “The past 25 years have seen the gradual demise of the so-called Kiwi Dream – a place where home ownership and the economic independence which this offers, was within reach of most working families. Home ownership rates have fallen to a 60-year low and could fall further. These falls have been alongside rapid house price inflation in many parts of New Zealand and, with this, deteriorating affordability. We are quickly becoming a society divided by the ownership of housing and its related wealth and recent housing and tax policy settings appear to have exacerbated this division.” - Stocktake of New Zealand's Housing, 12 February 2018.

THE FULL MAGNITUDE of the housing crisis confronting the new government stands revealed in its Stocktake of New Zealand’s Housing. Released this morning, the document paints a far worse picture of the situation than even the parties now in government presented to voters from the opposition benches.

In the words of the three authors of the stocktake, Alan Johnson of the Salvation Army, Otago Public Health Professor Philippa Howden-Chapman and economist Shamubeel Eaqub:

“The past 25 years have seen the gradual demise of the so-called Kiwi Dream – a place where home ownership and the economic independence which this offers, was within reach of most working families. Home ownership rates have fallen to a 60-year low and could fall further. These falls have been alongside rapid house price inflation in many parts of New Zealand and, with this, deteriorating affordability. We are quickly becoming a society divided by the ownership of housing and its related wealth and recent housing and tax policy settings appear to have exacerbated this division.”

The policies advanced by the Labour-NZF-Green government in response to New Zealand’s housing crisis – most particularly Labour’s KiwiBuild initiative – no longer impress informed observers as either bold or comprehensive enough to bring about a speedy resolution of the crisis. On the contrary, they seem doomed to fail: there being neither the material, nor the human, resources required to make them succeed.

One has only to look back at the first great wave of state-initiated and funded house construction to appreciate the full scale of the difficulties confronting the new government.

Between 1936 and 1949 the first Labour government was responsible for the construction of 30,000 state houses. In other words, over a period of 13 years, the Department of Housing Construction and its private sector contractors were able to build fewer than a third of the number of dwellings which the present government has promised to build in ten!

What’s more, those 30,000 state houses were built at a time when the New Zealand economy was awash with unemployed labour and underutilised resources impatient to be set to work. Labour’s state housing programme was the New Zealand equivalent of US President Franklin Roosevelt’s “New Deal”: a massive public works programme designed to both enhance the nation’s quality of life and provide steady and well-paid employment for its people.

One of the ways the First Labour Government accomplished these goals was by mandating the use of local materials in state house construction. This decision gave an immediate and massive boost to all those businesses ancillary to the construction industry. To help the private sector keep pace with the state-induced demand, the Department of Housing Construction established two publicly-owned factories dedicated to producing the standardised joinery used in state house interiors.

The present government’s chief promoter of the CPTPP, David Parker, might pause to consider that such a policy of buying and using only Kiwi-made and sourced materials is expressly forbidden in practically all of the free-trade agreements New Zealand has signed since 1984 – including the CPTPP.

The state housing programme of 1936-1949 involved an unprecedented mobilisation of New Zealand’s human and material resources to construct a total of 30,000 dwellings. Even allowing for the fact that New Zealand’s population has more than doubled in size, how likely is it that Labour’s Phil Twyford is going to out-build Jack Lee’s Department of Housing Construction by a factor of 3 – in just 10 years?

Is it even remotely feasible that: from a tight labour market already suffering serious skill shortages; and from a construction sector already running at full-tilt; this government will be able to elicit an average of 10,000 additional houses per year?

Because, just to be clear, that total of 30,000 state houses constructed between 1936 and 1949 was over-and-above the normal total of dwellings commissioned and constructed by and for private companies and individuals. It is not yet clear whether Twyford’s promise of 100,000 “affordable homes” between 2017 and 2027 is on-top-of, or included-in, the output of private house construction.

It is important to remind ourselves at this point that Twyford’s “affordable” KiwiBuild homes are expected to sell for between $500,000 and $600,000 – a price completely beyond the reach of the tens-of-thousands of New Zealanders who possess neither a home of their own, nor a secure tenancy in somebody else’s.

For these: the working-poor on rock-bottom wages; Kiwis struggling to survive on a benefit; and, increasingly, for pensioners without a freehold home of their own; the Labour-NZF-Green government is promising to build just 1,000 state houses a year.

With the findings from the Stocktake of New Zealand’s Housing in their hands. With their heads chock-full of data showing how desperate New Zealand’s housing situation has become, Mr Twyford and his colleagues are proposing to build 1,307 fewer state houses than Jack Lee and the First Labour Government managed to build in a little country laid flat by the greatest depression in human history – eighty years ago.

This essay was posted simultaneously on Bowalley Road and The Daily Blog of Tuesday, 13 February 2018.