KiwiBuild Should Be Targeting The Poor.

Lotto - Oops, I Mean KiwiBuild Ballot - Winners: Derryn Jayne and Fletcher Ross pose with Phil Twyford and Jacinda Ardern outside their new KiwiBuild property in Papakura. Twyford is willing to buy Labour’s promised houses straight off the property developers’ plans. At a stroke, bad financial bets are transformed into sure things. Phil’s happy. The developers are happy. The banks are happy. And the winners of KiwiBuild ballots are over the moon.

KIWIBUILD, Labour’s flagship housing policy promising first-home-buyers 100,000 affordable dwellings by 2028, is a dog. It started out as a political fix and has yet to mature into coherent policy. Nowhere are Labour’s ambitions for KiwiBuild matched by the resources needed to fulfil them. Worst of all, the people most in need of 100,000 extra dwellings – beneficiaries and the working poor – are not the scheme’s targets. KiwiBuild is a perverse mixture of corporate and middle-class welfare, offering a handsome subsidy to builders and a generous hand-up to young professionals.

KiwiBuild began its life as David Shearer’s answer to David Cunliffe. In November of 2012, convinced that the Labour Left was plotting to replace him, Shearer was casting about desperately for a political circuit-breaker. He needed something that would halt the ambitious Cunliffe in his tracks and reassure the party’s rank-and-file that he was a Labour man through-and-through. KiwiBuild was that something. His announcement that the next Labour government would build 100,000 affordable homes for young New Zealanders brought Labour’s 2012 annual conference to its feet. In the warm glow of the membership’s support, an emboldened Shearer banished Cunliffe to the back-benches.

Having served its purpose, KiwiBuild was filed and forgotten. The necessary detailed development work on how it would be implemented, by whom, and at what cost, never progressed much beyond the hurried sketch vouchsafed to conference delegates and the news media six years ago. The consequences of Labour’s failure to fill in the gaps are now embarrassingly clear.

A Labour Party with stronger connections to the world beyond Parliament would have identified much sooner the practical limitations of KiwiBuild. The people and the products required to build 10,000 dwellings every year for 10 years simply aren’t out there. New Zealand’s construction industry remains chronically short of labour. The private sector will struggle to meet its own deadlines – let alone the government’s.

Unlike the First Labour Government, Jacinda Ardern’s coalition is attempting to build thousands of additional new dwellings with a construction industry at full-stretch. John A. (Jack) Lee, the man who oversaw Labour’s massive state-house-building programme between 1935-1938 could summon thousands of unemployed carpenters, tilers, plumbers, electricians and other construction workers to the cause of housing the people. Idle factories could be reactivated to supply the required building materials. This is what made “The Houses That Jack Built” possible. The absence of such vital enabling factors explains the houses that Phil Twyford cannot build in 2018.

Six years ago, when KiwiBuild was born, the full extent of the housing crisis had yet to emerge. Back then, affordability was the issue. The near impossibility of young professionals getting their feet on the first rungs of the housing ladder. Fortuitously, these same young professionals just happened to be the Shearer-led Labour Party’s prime electoral targets. First and foremost, KiwiBuild was a political “solution” to a middle-class “problem”.

Six years on, and the focus has shifted to beneficiaries and the working-poor sleeping in their cars or shivering in the overcrowded garages of family and friends. Voters for Jacinda’s transformational “politics of kindness” they may be, but they’ve not been deemed worthy of 10,000 houses per year. For these, the working-class people in whose name Jack Lee built the “social housing” of 80 years ago, 6,000 new state houses, in total, is considered adequate.

The irony is that, at an estimated price of $650,000, KiwiBuild’s “affordable homes” are rapidly moving beyond the reach of all but the luckiest of middle-class offspring. Those to whom the Bank of Mum and Dad still happily provides a deposit. Those for whom the wills of Mum and Dad hold out the prospect of eventual relief.

Undeterred, the Housing Minister presses on. Treasury may have revised downwards its projection of the scheme’s contribution to residential investment – but what do those “kids” know? Twyford is willing to buy Labour’s promised houses straight off the property developers’ plans. At a stroke, bad financial bets are transformed into sure things. Phil’s happy. The developers are happy. The banks are happy. And the winners of KiwiBuild ballots are over the moon.

About the only people who aren’t happy are those who believe that publicly funded social interventions on the scale of KiwiBuild should be directed first to those most in need. Tragically, however, the Coalition Government is selling the poor a pup.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 2 November 2018.

“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.

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.

Sins Of Omission: Why Phil Twyford's Most Recent Post Fails To Convince.

Revealing Statement: Why would Labour's housing spokesperson, Phil Twyford, begin his most recent blog post by listing the achievements of New Zealand’s five Labour governments – only to omit entirely any reference to the second and third? As if Walter Nash’s second Labour government of 1957-1960, and the Norman Kirk/ Bill Rowling-led third, which governed from 1972-1975, never existed. Or, if they did, left no achievements worth mentioning behind them.

 

AS ANY GOOD DETECTIVE will tell you, it’s what suspects “fail to mention when questioned” that gives them away. The subjects a person doesn’t want to talk about can tell you as much about them as the things they’re only too happy to discuss. It’s a forensic rule-of-thumb that can be applied with equal success to the utterances of politicians.
 

What, for example, can we deduce from the most recent posting (5/10/16) from Labour’s Housing Spokesperson, Phil Twyford, on the subject of his party’s “housing reform agenda”? Why would a Labour politician begin by listing the achievements of New Zealand’s five Labour governments – only to omit entirely any reference to the second and third?
 

This is what Twyford wrote:
 

“All Governments are defined by the big challenges and how they meet them. For the first Labour Government it was lifting people out of the poverty of the Depression, and dealing with a World War. For the fourth Labour Government, for better or worse, it was modernising and opening up the economy after nine years of Muldoon. For the fifth it was restoring sanity and decency to government and the economy after the nasty divisive 90s.”
 

Extraordinary! It’s as if Walter Nash’s second Labour government of 1957-1960, and the Norman Kirk/ Bill Rowling-led third, which governed from 1972-1975, never existed. Or, if they did, left no achievements worth mentioning behind them. These are serious and highly suggestive omissions. But before we examine them more closely, a word or two must be devoted to Twyford’s characterisation of the fourth Labour government.
 

Most damning of all is that ugly verbal shrug, “for better or worse”. It represents the very worst kind of moral abdication. Twyford is perfectly aware that for tens-of-thousands of Labour supporters the unleashing of Roger Douglas’s neoliberal revolution was an unmitigated disaster. Whole industries, along with the communities that depended on them, were devastated by “Rogernomics”. For those Maori New Zealanders employed in the nation’s processing and manufacturing sectors, the changes signalled the onset of chronic economic and social pain. Thirty years after the “modernising and opening up” of the New Zealand economy, the consequences of the fourth Labour government continue to blight Maori lives.
 

Twyford’s choice of the words “modernising” and “opening up” are also highly revealing. Both expressions are positive (especially when placed alongside their antonyms “antiquated” and “restricting”) and Twyford’s use of them can only be interpreted as a vote of confidence in the fourth Labour government’s actions.
 

Having examined the “worse” side of Twyford’s “better or worse” dichotomy, we must also examine who had cause to experience Rogernomics as something “better” than the economic regime which preceded it. The financial and property speculators, asset-strippers and importers whose political contributions filled Labour’s coffers in the 1980s certainly had reason to sing the praises of the Rogernomics revolution. Curiously, Twyford seems less keen to solicit their support in 2016!
 

Twyford’s essentially positive assessment of the neoliberal policies of the fourth Labour government, coupled with his equally positive comments about the fifth, provide the explanation for his unwillingness to so much as mention the second and the third. Like the rest of his caucus colleagues, Twyford wants nothing to do with the nation-building policies of Labour leaders like Arnold Nordmeyer, Phil Holloway and Norman Kirk.
 

His aversion to the economic ideas of William Sutch and Wolfgang Rosenberg is even stronger. The whole notion of import substitution and state-led investment in new industries produces only synchronised eye-rolling among the current crop of Labour MPs. The party, under Helen Clark, may have restored “sanity and decency to government and the economy after the nasty divisive 90s” (although a great many people on the left of New Zealand politics would dispute Twyford’s rosy assessment!) but that does not mean Labour has the slightest intention of embracing the economic nationalist policies of the second and third Labour governments.
 

It is this refusal that makes Labour’s flagship housing policy – Kiwibuild – so disappointing. Were Labour committed to constructing 100,000 state houses over the next 10 years. If what was being proposed was a dedicated construction force, trained, paid and equipped by the state, and with the capacity to order construction materials in the volumes local and overseas suppliers require to reduce their prices (it currently costs $NZ1,300 per square metre to construct a home in New Zealand, compared to just $NZ600 per square metre in the United States!) then Kiwis could have some confidence in Labour’s promises to build affordable homes. But all Twyford is prepared to say is:
 

“Since the 1980s a generation have convinced themselves Government is not capable of doing anything right. That you can only trust the market. We are going to change that mindset. We are going to do it in partnership with the private sector – but we are going to build 100,000 affordable homes for first home buyers.”
 

Note that well: “first home buyers”. Note also the price of an affordable home in Auckland – approximately $600,000! Labour’s “partnership” with the private sector reduces Kiwibuild to little more than a giant welfare scheme for property developers – in whose pocket the party now so clearly nestles. John A. Lee, the Labour firebrand entrusted with Labour’s original state house construction programme, wouldn’t know whether to laugh … or cry!
 

It is not difficult, however, to imagine what a political detective might say:
 

“Philip Stoner Twyford, you are charged with hoodwinking the New Zealand electorate. You are not obliged to say anything (and, quite frankly, if this is best you can manage, you’d do better to keep your mouth shut) but your failure to acknowledge, when posting, the achievements of the second and third Labour governments, and your refusal to condemn the betrayals of the fourth, will certainly harm your defence in the High Court of History.”
 

This essay was originally posted on The Daily Blog of Wednesday, 5 October 2016.

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 Space To Make Dreams Come True: Why Labour’s Latest Move On Housing Could Be A Ground-Breaker.

Back To The Future: By sanctioning green-field (as opposed to brown-field) housing development, Phil Twyford and his colleagues are now free to draw forth from Labour’s honourable past the sort of planning ideas which, had they been implemented at the time they were developed (the late-1940s) would have made Auckland a much easier city in which to live and move around.

 

PHIL TWYFORD has urged the National Government to rule Auckland’s contentious Urban Growth Boundary out of the city’s Unitary Plan. This is a major policy announcement from Labour’s housing spokesperson. By embracing the virtues of expansion over intensification, the party has repositioned itself as a defender of Auckland’s characteristic urban sprawl – and everything that goes with it. That Twyford’s announcement prompted congratulatory media releases from the National Party, Business New Zealand and the Taxpayer’s Union is a measure of just how big a concession Labour has made.
 

Labour should not, however, be condemned simply because in some respects (and only in some) its housing policies are similar to the Right’s. Politically-speaking, the policy of urban intensification was as impractical as it was controversial. Homeowners were always going to balk at the prospect of multi-storeyed apartment buildings sprouting up in their leafy streets. Overruling those objections would have required a degree of heavy-handedness quite foreign to the New Zealand scene. Those deemed responsible – be they local or national politicians – would have paid a heavy price.
 

Policy-wise, Labour now has room to breathe. It also, quite literally, has the space to display some progressive creativity. By sanctioning green-field (as opposed to brown-field) housing development, Twyford and his colleagues are now free to draw forth from Labour’s honourable past the sort of planning ideas which, had they been implemented at the time they were developed (the late-1940s) would have made Auckland a much easier city in which to live and move around.
 

Seventy years on, however, with the population of Auckland approaching two million, the size of the planning canvass has expanded considerably. Looking forward, we must now envisage an urban corridor extending all the way from Hamilton to Whangarei.
 

A conurbation of this size cannot be serviced efficiently by the automobile. Crucial to its success would be the creation of a state-of-the-art rapid-rail network capable of whisking commuters from Hamilton to Downtown Auckland in 30 minutes. (If that seems impossible, just have a word with the French and the Chinese!) The huge enabling power of such a network would be more than sufficient to underwrite the many housing developments along its length.
 

Rather than leave the design and construction of these new communities to the private sector, Labour should promote the creation of a public design and construction entity dedicated to building homes, apartments and community facilities equal to anything currently on display in Germany and Scandinavia.
 

This massive public construction programme (which would not only encompass the building of houses and apartment buildings, but also the new rapid-rail network) would need to be accompanied by a radical reform of New Zealand’s tenancy laws. Only by, once again, making the State the nation’s pre-eminent – and most accommodating – landlord will New Zealanders enjoy access to well-designed and healthy homes, with full security of tenure, at an affordable rent.
 

On RNZ’s “Morning Report”, this morning (18/5/16) Max Rashbrooke and James Crow spoke to Guyon Espiner about the urgent need for 20,000 new homes – just to meet the needs of this country’s homeless families. Many of these families reside in Auckland, and neither their needs, nor the needs of the tens-of-thousands of New Zealand and immigrant families who intend to make the Auckland Region their home, will ever be adequately met by the existing, market-driven, system – which daily demonstrates its incapacity.
 

By abandoning the Urban Growth Boundary, Labour has given itself both the physical and intellectual space in which to prove that it still knows how to make New Zealanders dreams come true.
 

This essay was originally posted on The Daily Blog of 18 May 2016.

Dirt And Squalor: The Housing Crisis Comes Full-Circle.

Planned Response: Squalor and dirt was the market’s solution to the acute shortage of affordable housing, and the First Labour Government’s heroic, state-organised, response has become the stuff of political legend. How Mickey Savage, keen to find an outlet for the restless energy of John A. Lee, his great rival for the masses’ affections, gave him responsibility for organising a massive programme of state house construction. And how Lee, by mobilising both the public and private sectors, built thousands of houses for the working poor.

 

THOUSANDS OF NEW ZEALANDERS are at the mercy of a “slum landlord”. Unfortunately, that slum landlord is the Government. The person who put into words what so many people have, for the best part of a fortnight, been feeling, was Dr Bryce Edwards. The political studies lecturer from Otago University was speaking as panellist on Television New Zealand’s Q+A programme.

 

It is a measure of how fraught the housing issue has become that TVNZ was only able to persuade the Housing Minister, Dr Nick Smith, to appear on the programme if he was interviewed alone, and was given the right-of-reply to the following interview with Labour’s housing spokesperson, Phil Twyford.

 

There was a time when Government and Opposition spokespeople felt up to the job of defending their respective positions in head-to-head debates, live, on national television. To my knowledge, guaranteeing a Government Minister a separate right-of-reply constitutes an editorial concession without precedent on either of this country’s free-to-air networks.

 

The Minister’s sensitivity was, of course, understandable in a week when New Zealanders learned that sub-standard conditions in a solo mother’s state house accommodation had materially contributed to the death of her infant daughter. Then to learn, just days later, of another death attributable, at least in part, to sub-standard state accommodation. When asked by journalists to comment on these tragedies, Dr Smith responded that: “People dying in winter of pneumonia and other illnesses is not new.”

 

This was the context in which Dr Edwards’ “slum landlord” comment was able to strike such a raw public nerve.

 

How has it come to this? What has permitted the housing conditions wheel, over the course of 80 years, to come very nearly full-circle?

 

In his book, We Call It Home: A History of State Housing in New Zealand, Ben Schrader describes how the Truth newspaper, just one week after the election of the First Labour Government, in 1935, began campaigning against “the slum problem”.

 

“The article began”, writes Schrader, “by vividly juxtaposing the newly completed National War Memorial with its sordid surroundings.” Truth compared this “beautiful piece of architecture”, erected to ensure that the “supreme sacrifice” of the Great War was not forgotten, with that of the Wellington slums, standing “a stone’s throw away” from the Memorial’s tower. In these dwellings, Truth observed: “men, women and children are making a different kind of sacrifice. They live in squalor and dirt, in little shacks lacking even the ordinary comforts of existence.”

 

Squalor and dirt was the market’s solution to the acute shortage of affordable housing, and the First Labour Government’s heroic, state-organised, response has become the stuff of political legend. How Mickey Savage, keen to find an outlet for the restless energy of John A. Lee, his great rival for the masses’ affections, gave him responsibility for organising a massive programme of state house construction. And how Lee, by mobilising both the public and private sectors, built thousands of houses for the working poor.

 

So successful was Labour’s scheme that the town planner, Cedric Firth, could write, more than a decade later, about the citizen’s right to a “decent dwelling being regarded as on the same level as the right to education, sanitation, to good and abundant water supply, to an adequate road system and a certain amount of medical care.”

 

These are no longer the expectations of either those responsible for supplying social housing, nor, sadly, of those obliged to seek shelter in New Zealand’s decaying stock of state houses. Having forgotten (if he ever knew) how manifestly inadequate the market’s “solutions” were to the problems of the 1930s, Finance Minister, Bill English, appears hell-bent on resurrecting a social housing market – even if he has to dig up the corpse with his bare hands!

 

Commentators across the political spectrum, joined just this week by economists from the OECD, are urging John Key’s National Government to launch a state-financed and directed effort to address directly the lack of affordable houses for the poorest New Zealanders. As Dr Edwards’ fellow panellist on last Sunday’s Q+A programme, Fran O’Sullivan, put it: “It’s been done before in our history.”

 

The problem, says Dr Edwards, is that the political parties’ housing agendas are “a bit deluded and empty”. National and Labour are “still quite timid” when it comes to committing themselves to the sort of low-cost housing construction effort that offers the only truly effective solution to New Zealand’s twin housing crises. The first, which condemns far too many Kiwis to lives of “squalor and dirt”. And the second, fuelled by the speculative mania currently gripping Auckland’s runaway housing market.

 

Market delusions and political timidity allowed slum landlords to thrive in the 1930s. Eighty years later, identical failings on the part of their state-owned successor have added an ironical twist to the community’s demand for radical housing reform.

 

This essay was originally published in The Press of Tuesday, 16 June 2015.

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.

 

Really?

 

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.

Housing The People: Will The Next Labour Government Be As Economically Inventive As The First?

Housing The People: During the 1930s and 1940s New Zealand cities faced a chronic housing shortage. In response the government started a state rental housing scheme, which included building entire suburbs of houses. This is the Hutt Valley suburb of Naenae in 1944. Following the lay of the land, the curving streets were designed to reduce the monotony of straight streets. (Photograph and caption courtesy of Te Ara)

WHICH IS MORE DIFFICULT? Listening to the Prime Minister deny the existence of a housing crisis, or trying to make sense of Phil Twyford’s solution to it? The Organisation for Economic Co-operation and Development’s (OECD) has just ranked New Zealand 34 out of 34 when it comes to the over-valuation of residential property relative to rent and income. According to the OECD, New Zealand house prices, relative to rents, are 70 percent too high.

 

The Prime Minister will have none of this. Rather than reflecting some sort of crisis, soaring house prices are merely a symptom of the New Zealand housing market’s rude good health. Besides, says John Key, one has only to go on to ‘Trade Me’ to discover plenty of houses priced affordably at around the $NZ300,000 mark.

 

Twyford’s response to this nonsense began well enough on Radio New Zealand’s Morning Report. New Zealand’s very real housing crisis, he said, was the result of market failure: something which only the State possesses sufficient resources to correct. Labour’s KiwiBuild programme, he said, was pledged to building 100,000 affordable homes in ten years.

 

If only KiwiBuild meant the New Zealand State buying the land, constructing the houses and then leasing them out at affordable, income-related rentals to young New Zealand families. That, after all, was what the First Labour Government had done. Between 1935 and 1949 entire suburbs had been built by the State. Sturdy, well-designed “state houses”, constructed out of local materials, were erected in the tens-of-thousands.

 

Orakei, Mt Roskill, Mt Wellington, Panmure, Naenae, Taita, Corstophine – Labour’s commitment to “Housing the People” made as real as the concrete foundations these suburbs’ state houses stood on. In its propaganda for the 1938 General Election Labour quoted the words of Professor A. H. Ryan, of Queen’s University, Belfast, who told an Auckland audience: “I had the good fortune to visit the Orakei housing scheme. I have an extensive knowledge of housing schemes and have visited them all over Europe, and I want to congratulate New Zealand in having the finest housing scheme in the world.”

 

Sadly, KiwiBuild offers nothing like the First Labour Government’s housing policy. Essentially, it is a Public Private Partnership, in which the State facilitates the private sector’s construction of houses which it will then sell at “affordable” prices ($300,000 to 400,000 in Auckland) to first home buyers.

 

In other words, Labour is promising to help the sons and daughters of middle-class New Zealand into their first home. Twyford may talk in emotive terms about coming to the aid of people living in garages in South Auckland, but the houses that he, Labour and an army of grateful property developers are proposing to erect are not intended for them. Where are working families on the minimum wage going to find the deposit on a $350,000 house?

 

The question that rattles around in my head is “Why?” With the noble precedent of Labour’s first great exercise in “Housing the People” still standing on a thousand streets all over the country, what is preventing Twyford from following it? Does it all come down, like so many things the Labour Party would like to do, to a lack of money?

 

The cost of its housing policy certainly taxed the ingenuity of the First Labour Government. The answer they eventually came up with shocked New Zealand’s Civil Service mandarins to the core.

 

W.B. (Bill) Sutch, writing in his book The Quest for Security in New Zealand 1840 to 1966, describes the extent of Labour’s political inventiveness:

 

“To build the houses, credit was created by the Reserve Bank at a rate of 1.25 percent for the first £5 million. John A Lee was made Under-Secretary in Charge of Housing. He accepted on the understanding that money would be available from the Reserve Bank. This procedure was a political victory for those in the Labour Party who wanted to use the financial system to build New Zealand even though such an action might conflict with the banking authorities in New Zealand and in Britain and necessitate a change in ‘free trade’ conceptions. Said Lee later, ‘This was a contentious Party issue. With tens of thousands of men on relief work the Labour Party, Nash and Fraser apart, believed that the funds of the Reserve Bank should be used for essential capital works until available men, machinery and materials were being fully employed. We wanted to undo the politically enforced bankers’ deflation.’”

 

Can it really be true that the Labour Caucus of 2014 contains no one with the wit and courage of Jack Lee and his colleagues? Is there really no chance that the sort of unorthodox economic thinking that made possible the first great exercise in “Housing the People” will be replicated on Twyford’s watch?

 

Is there no one in Labour’s ranks who was present and understood what the late Sir Owen Woodhouse was telling them two years ago, on 3 November 2012, at the fortieth anniversary of the election of the Third Labour Government?

 

Sir Owen was the architect of New Zealand’s world-beating Accident Compensation Scheme. Originally, the scheme had been a pay-as-you-go operation – it’s costs being met out of the levies charged, augmented if necessary from the Consolidated Fund. In the late 1990s, however, in preparation for its eventual privatization, the National Party insisted that the Accident Compensation Corporation become fully-funded. In other words it was required to build up a fund sufficiently large to meet all of its existing and likely future obligations.

 

According to Sir Owen:

 

“… ACC has been regarded by some as an insurance scheme under another name. And eventually the need for an income flow was converted from pay-as-you-go to a commercial insurance-type funded system. It is an expensive mistake. For this reason, every year employers and owners of vehicles have been paying much larger amounts than need be in order to build up the large invested funds which now total more than 20 billions. The funded approach should cease in favour of ACC’s annual needs – the system that has always operated for health, education and all general social benefits. By this simple change levies and vehicle charges would be much reduced; they could be averaged across all industries; individual ACC accounts could be amalgamated. And only by this means can the system be extended to sickness as intended by the original report and later outlined as feasible by the Law Commission. It may be asked what of the large fund now in place?”

 

What indeed?

 

Sir Owen’s suggestion was that a “sufficient portion should be retained as the necessary contingency against the risk of major disaster with a balance to future levies”.

 

Well, yes, that would be one solution. But, were a future Labour Government to follow Sir Owen’s advice and revert to a pay-as-you-go ACC, then that $20 billion, or, at the very least, the annual income it generates, could be turned to other purposes.

 

Like “Housing the People”.

 

This essay was originally posted on The Daily Blog of Monday, 19 May 2014.