Voter Motivators 2017: Housing.

The House That Jack Built: A Labour Party campaign advertisement for the 1938 General Election contrasts the National Party's approach to housing the people before Labour came to power in 1935, with John A. (Jack) Lee's internationally acclaimed state housing programme.

 

“THIS IS THE HOUSE THAT GREED BUILT.” The house in question – a tumbledown shack – is the first in a series of five images. The others depict a working man down on his luck, a bloated capitalist, and the “Tory Press” (presented, delightfully, as a bellowing cow). The series ends with John A. (Jack) Lee.
 

Dressed as a carpenter, and positioned in front of one of his new “State Houses”, Lee’s caricature beams out of the pages of the 11 March 1937 edition of the Labour Party newspaper, The Standard. The caption beneath the caricature reads:
 

“This is the man with the housing plan who’s queered the pitch of the man who waxed rich by fleecing the man who lived in the shack now pulled down by Jack and replaced by the house that Jack built.”
 

Left-wing nostalgia? Of course. But The Standard cartoon tells us a lot about the first great state-driven effort to accommodate ill-housed and homeless New Zealanders, and raises some very thorny questions about the reluctant half-measures of 2017.
 

As unquestionably the biggest voter motivator of this year’s general election, “Housing” should be driving National and Labour towards ever greater competitive efforts. Their respective plans for housing the homeless and helping young people into their first home should be as imaginative as they are comprehensive. After all, as The Standard cartoon attests, New Zealand has done it before. What’s stopping us doing it again?
 

The short answer is: The Market.
 

When Jack Lee was “queering the pitch” of rack-renting slum landlords, the New Zealand economy was still struggling off its knees. Years of economic contraction had harmed every sector of the economy and the construction industry was no exception. People were living in shacks because nobody was willing to build new houses for anyone except the most wealthy. The houses that Jack built were possible only because there was an abundance of both labour and materials just waiting for the capital investment to put them to profitable use.
 

That is certainly not the case in 2017. The combined effects of very high immigration and the catastrophic Christchurch earthquakes have mobilised men and materials to the point where the availability and cost of both has now become quite inelastic.
 

Labour’s Kiwibuild programme will struggle to assemble the thousands of construction workers needed to erect the 100,000 houses it promises. The competition with private construction firms, into which the state will be forced to enter for land and building materials, will be intense and eye-wateringly costly. Keeping these structures “affordable” for young, first-home-buyers will be a mighty logistical challenge.
 

It’s a conundrum which calls to mind another housing cartoon. This one depicts a lanky “Manpower Officer” [a reference to strict wartime controls over labour] whip in hand, overseeing a hive of state house construction in Auckland while, behind the gate he’s seated on, privately-owned green fields stretch away unexploited. Published by Building Progress in the late-1940s, the cartoon offers a vivid illustration of the way “excessively high” levels of state activity in the economy are said to “crowd out” the opportunities for private investment. (The inclusion of the “Wellington Express”, carrying decision-makers away from Auckland, strikes a thoroughly contemporary note!)
 

The concerns of private construction firms in the late-1940s were well justified. Had Labour won the 1949 election, Auckland would have been a very different city. Compact, with state-designed and constructed houses and apartment blocks, the whole isthmus would have been bound together by an intricate, state-owned and run public rail network. A city constructed on the North European model. Instead, under National, New Zealand built its very own Californian nightmare.
 

The best way to come to grips with the Housing Issue is to conceive of it as a key battleground in the class struggle. It’s all there in that Standard cartoon: “The House That Greed Built” versus “The House That Jack Built”.
 

Housing the disadvantaged in dwellings which guarantee them comfort and dignity is not something the private sector will ever do uncoerced. That’s why a genuine “people’s government” will unashamedly apply its thumb to the scales of supply and demand: deliberately distorting the market in favour of the tenant and the first-home-buyer; forcing down rents and house prices by “queering the pitch” of speculators and slumlords.
 

A pity, then, that 2017’s “House of Cards” contains no Jacks.
 

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, 23 June 2017.

Homes Are Where The Votes Are.

Working Class Voters' Ballot Papers At Work: A massive programme of state house construction; a graduated Land Tax; a radical and comprehensive overhaul of New Zealand’s tenancy legislation along European lines: each of these measures would lower the cost of housing dramatically. All those suffering from the worst effects of the current housing crisis, the young and the poor, have to do is vote for them.

 

NEW ZEALAND’S HOUSING SITUATION grows daily more perplexing.

 

In the country’s largest city, Auckland, the price of residential housing surges from one scarcely believable peak to the next. Neighbour’s stand open-mouthed as the sale-price of the property across the street is communicated to them in hushed tones and wide-eyed disbelief. Like the purchaser of a Lotto ticket, Auckland homeowners are mentally spending the hundreds-of-thousands of additional dollars they’re absolutely certain to win.

 

Woe betide the politician who tramples on those dreams.

 

Meanwhile, as the amount of the required deposit leaps impossibly far ahead of their ability to save such a sum, younger New Zealanders attempting to purchase their first residential property are growing increasingly desperate.

 

Woe betide the politician who tramples on those dreams.

 

The news media is calling it a housing crisis. But the advocates for state house tenants are crying foul. “How can there be a crisis,” they demand, “when hundreds of Housing NZ properties are standing empty?”

 

What’s going on?

 

The brutally simple answer is that those New Zealanders sufficiently motivated to participate in large numbers in general elections are ruthlessly enriching themselves.

 

With sufficient political will, New Zealand’s housing problems could be resolved quite quickly. To say this, however, is to beg the question of how that political will might best be summoned. A question which, in its turn, raises the perennial and deeply subversive issue of social class – and the bitter conflicts spawned when the interests of social classes clash.

 

For an excellent example of how these class conflicts get played out politically, we have only to look at the final days of the 2005 General Election Campaign.

 

The incumbent Labour Government was on the ropes, and the Don Brash-led National Party Opposition had the scent of victory in its nostrils. It was then that Labour’s campaign manager (and party president) Mike Williams sent out a last-minute letter to state house tenants. The letter warned them that, if Labour lost the election, the new National Government’s housing policies would see many of them evicted from their homes.

 

The letter had the desired effect. As Election Night 2005 drew to its close, and the counting of the ballots cast in the polling booths of the nation’s sprawling state house suburbs was completed, Labour’s tally of Party Votes surged triumphantly past National’s to secure for Helen Clark her final and most dramatic electoral victory.

 

Had those same state house tenants turned out to vote in the same numbers at the 2008, 2011 and 2014 General Elections, then John Key may never have become New Zealand’s prime minister. But they didn’t – and because they didn’t (at least in part) the policies of John Key’s National-led Government have, for the past eight years, exacted a very heavy toll on the nation’s state house tenant’s.

 

The same could be said of the nation’s younger citizens.

 

In 2005, Helen Clark (egged on by former student president, Grant Robertson) announced that Labour would be introducing interest-free student loans. With this prospect before them, scores-of-thousands of young New Zealanders made the journey to the polling-booths on Election Day to vote for the thousands-of-dollars-worth of savings Labour was promising. A significant number of their parents did the same thing – and for much the same reason! They, too, had a role to play in pushing the red line above the blue line.

 

In the 2014 General Election, however, only 49 percent of the 743,200 New Zealanders aged 18-29 years bothered to cast a vote. Of the 864,100 New Zealanders aged 60 years and over (they’re the ones with the houses) the participation rate was 87 percent! The young people struggling to buy their first home in 2016 should, perhaps, consider how much more attention politicians would pay to their housing needs after 2017, if 87 percent of them turned out to vote.

 

At the moment, middle-class Kiwis (especially those living in Auckland) are doing amazingly well out of John Key’s government’s housing policies. With the thumb of unprecedented immigration numbers pressing down on the demand side of the scales, and the supply side embarrassingly light on available residential properties, existing home-owners are laughing all the way to the banks – who are only too happy to lend them the money for a second, third or fourth house.

 

It’s not difficult to guess which party these folks will be voting for next year.

 

Nor should it be difficult for Labour, the Greens and NZ First to work out what they need to offer young and poor voters in 2017.

 

A massive programme of state house construction; a graduated Land Tax; a radical and comprehensive overhaul of New Zealand’s tenancy legislation along European lines: each of these measures would lower the cost of housing dramatically.

 

All the young and the poor have to do is vote for them.

 

This essay was originally published in The Press of Tuesday, 3 May 2016.

The Least They Could Do

Tinkerer-in-Chief: John Key announces changes to the law relating to property speculation. Many of John Key's opponents, and some journalists, accused him of executing a U-turn on the issue of Capital Gains Tax. Labour's Andrew Little disagreed, tweeting that Key's announcement was nothing of the sort. The Prime Minister, said Little, was merely "tinkering with the housing market".

 

IT WAS THE LEAST THEY COULD DO. Indeed, had they done anything less it might have been mistaken for doing nothing at all. Still, the measures announced to the Lower North Island Regional Conference of the National Party on Sunday by John Key and Bill English were better than nothing. It’s always encouraging to see a government taking law enforcement seriously. Providing the IRD with the resources it needs to enforce already existing legislation against property speculation (including speculation by foreigners!) may even help to slow down Auckland’s runaway housing market. No, seriously, it might!

 

The government’s announcement is being represented by some Labour and Green MPs (and some of the news media) as a major U-turn. National’s hitherto staunch opposition to the introduction of a Capital Gains Tax (CGT) has, according to this reading, simply melted away.

 

Labour’s Jacinda Ardern, for example, tweeted archly that she had received the news at a Labour regional conference “otherwise known as the place we come up with ideas that National dismisses and then adopts.”

 

In a media release, the Greens’ co-leader, Metira Turei, echoed Ardern’s sentiments, saying: “This is a welcome U-turn from the Government. Only last week they were saying that capital gains taxes don’t work, so it is great they have changed their mind so quickly.”

 

The jibes of its opponents notwithstanding, the term “Capital Gains Tax” appears nowhere in the National Government’s media releases. On the contrary, the measures announced are all couched in terms of making the existing property tax regime more effective.

 

Interestingly, this is also the way that the Labour Party leader, Andrew Little, chose to characterise the Prime Minister’s announcement: “National is tinkering with the housing market”, opined Mr Little, whose preference for ditching Labour’s pledge to introduce a CGT is well known. He described National’s moves as “tentative and incremental”, and accused the Prime Minister of “creating a massive loop hole with his new ‘bright line’ test which will exempt speculators who hold onto their properties for longer than two years.”

 

Perhaps Mr Little was recalling the fate of the Third Labour Government’s Property Speculation Tax, introduced to Parliament in 1973 by Norman Kirk’s Finance Minister, Bill Rowling. Ironically, this measure was aimed at curbing a similarly rampant Auckland property market, and it, too, exempted speculators who held onto their properties for longer than two years.

 

The response of the targeted speculators is well described in a 2010 piece by Fairfax NZ’s business columnist, Bruce Shepherd:

 

“This tax did alter behaviour, in that those who held real estate held on to it for the requisite period and were gratified to do so as the market rose even faster. Simple, really, with hindsight: if you want to reduce property prices, pretty dumb to compress supply.”

 

Pretty dumb? Well, yes, it is pretty difficult to argue that the speculators of 2015 will be any less quick to spot the “massive loop hole” in the two-year rule than the speculators of the mid-1970s.

 

“But, hold on!”, National’s supporters will object. “Isn’t the government putting its thumb on the supply side of the housing crisis scales by bringing more and more residential-zoned land onto the market?”

 

Yes, they are. Although, it’s also fair to say that the measures adopted to date in no way compel land-bankers to relinquish their property at a rate sufficient to achieve the sudden and appreciable drop in the price of sections that first home buyers are so desperately seeking.

 

These sorts of voluntary, private sector-driven half-measures will never satisfy the supply side of the Auckland housing market. The National Party is quite simply incapable, for all the obvious ideological reasons, from launching the measures that will deflate Auckland’s swelling speculative bubble.

 

That task can only fall to a party with an ideological preference for state and municipal intervention in the housing market. Such intervention would necessarily entail the formation of a state-owned design and construction force along the lines of the highly innovative and creative Ministry of Works that grew out of the massive state house construction programme of the 1930s and 40s.

 

Complementing all its actual house construction, however, a future centre-left government would also need to undertake a thorough-going reform of New Zealand’s antiquated and deeply unjust tenancy laws and regulations. Genuine and long-term security of tenure, of the sort enjoyed by the municipal apartment dwellers of Germany and Scandinavia, would drive the shift in accommodation expectations so urgently needed in New Zealand’s major cities.

 

The demographic structure of New Zealand is changing very rapidly and it is increasingly clear that nothing short of a revolution in housing policy will allow our planners, developers and builders to keep pace.

 

Sunday’s housing policy announcements were about the very least the National Government could do. But so much more remains to be done.

 

This essay was originally published in The Press of Tuesday, 19 May 2015.