By David Hargreaves
Bill English's decision to go into an election year without a housing minister by name would appear to me to be his first serious mistake as Prime Minister.
You can argue, as English undoubtedly will, that 'what is in a name?' and that effectively the jobs a 'housing minister' would do are being done by Amy Adams as social housing minister and Nick Smith under the building and construction label.
I would argue, however, that it's a bit deeper than just a name game.
It is a further adaptation of the tactic of attempting to deal with a problem by refusing to acknowledge its existence.
Beyond cute
English's attempts at his news conference yesterday to shunt things on to the Auckland Council in respect to who answers questions about Auckland house prices is beyond cute.
As I read the list of cabinet responsibilities today, the story is that if I'm a homeless or a Housing NZ tenant I have a minister. If I'm involved in building a new house or the like I have a responsible minister. What if as a private individual I've got a problem, a big problem with my private apartment rental agreement? Or as a private individual I've got some big problem with the real estate industry regarding the sale of my house? Write a letter to the minister? Which one? Who's in charge?
If we apply the apparent logic underpinning this decision by English, we could do away with a health minister too. Let's have a minister of primary health and a minister of hospitals. That will sort it. Except it won't and I don't think any government would seriously countenance such an idea. Why? Because nobody would carry the can for the 'issue' of health.
So, why, when housing is likely to be as big an election issue this time around as possibly ever in New Zealand's history, has National decided - apparently for the first time ever - to not have a minister answering to that title?
Nobody in charge
The point is, just in the same way a carving up of health titles would not work, trying to run housing as an issue with separate ministers and separate titles means that nobody takes responsibility for 'housing'.
And if nobody takes overall responsibility for a specific issue then things fall between cracks. It's like when sports teams appoint 'joint captains'. All it means is the buck isn't stopping anywhere. What do you do - have a committee meeting when a ruck is forming? Somebody has to take charge.
Labour's already made clear that housing is big on its hit list for election year and it has structured both its campaign team and its shadow cabinet team along those lines.
In all seriousness, if Labour has (and I'm thinking they will) any thoughts of asking questions during Parliamentary Question Time next year about house prices, who are they going to address them to?
Sorry, guys, that's about Auckland houses, ask the Auckland Council?
Yeah, right.
Saving face?
Now it could be that English was trying to in some way save face for his old mate Nick Smith by doing what he has done, with Smith largely seen as having failed in the housing portfolio. But sentimentality has no place in politics and I would have thought that English would have had plenty of time to learn that lesson from John Key, the smiling assassin himself.
Given that she was already involved in housing, I don't see why new deputy PM Paula Bennett couldn't have been named as Housing Minister to, in effect, act as chairman of a small board. It could have been made an essentially honorary title, with Adams and Smith doing all the grunt work. But Bennett as deputy leader and an Auckland-based MP would have had credibility in the role as a point of final recourse.
It may be of course that Bennett, as one who would presumably now harbour ambitions of being National leader herself at some point, didn't want the job. Housing is probably going the same way as things like taxation among the list of things politicians don't want to be identified with.
Housing won't go away
Housing as an issue is not, however, going to go away just because the new Prime Minister has decided to try to wash his hands of it.
This has been a mistake and I dare say it is one that English will have to move to rectify when he makes the other deferred cabinet decisions on education and foreign affairs next year.
Otherwise he may give the opposition parties a free pass to gain political capital on a subject matter that National is apparently trying to ignore.
62 Comments
Banking Crisis is in full swing as it has Restricted Lending to Developers, Builders and Overseas income Buyers of Housing.
The Banks are creating a Lending crisis that is stopping Supply in it's tracks!
No Developer would not proceed even if they managed to get second tier Lending because there is no buyer demand!
English at the press conference said the government couldn't control house prices in Auckland and that was something for the Auckland council. If he is so dumb to really think this and abolish the housing minister role, he shouldn't be running for any public office let alone Priminister.
The problem with the Auckland council is that land rezoning for housing is in the hands of the local boards and they are in the hands of members of the old councils which the Unitary board was supposed to sort out.
For instance one could well ask why the large areas of flat land within walking distance of Pukekohe rail station and township and associated schools and medical centers is not being developed for high density housing while land in Paerata miles from anywhere is. The land near the rail station etc is close to the water, storm water and sewerage systems while that at Paerata has none of these.
Now how is the Mayor of Auckland much less a government minister in Wellington supposed to overcome the local Franklin board that for whatever reasons is promoting Paerata over Pukekohe.
I dare say there a similar examples for every local board in the Auckland unitary council area.
Local authorities and councils are always in the hands of the local elites representing local special interests. Likewise their supposedly independent staff are reliant on these same elites for their salaries and promotions.
Consequently until some way is found to dissolve this unhealthy parasitism between local authorities and local elites you can bang on about immigration, interest rates, foreign buyers all you like. Nothing will change.
No, that is what he would be saying if there was a Minister for Housing.
If there was a minister for housing, that would enable the ministers for immigration policy, tax settings, social housing and macro economic decisions to say of immigration, tax, social development decisions that affect housing are "not my problem, ask the minister for housing". All of these ministers should be thinking about housing, and the existence of a minister with "housing' in his job description enables them to avoid this responsibility.
Precisely the reason why I've always been opposed to the appointment of a Minister for Women. The existence of that post enables the ministers of health, employment, education etc to say that the health, employment, education etc of women are not their responsibility.
Oh good. So what you're saying is that I am completely right and you agree with me. Great.
See what I did there? I repeated back to you, something that is not what you said at all, and I drew an entirely baseless conclusion from it. Just like you did.
What I was saying, as in fact you did, is that there are many aspects of Government policy that impact upon the market's ability to produce more houses in response to increasing housing demand. Therefore there are many Ministers who ought to see it as their business to consider the impact of their policies upon housing.
Therefore, the fact there is not a specific Minister of Housing is not in itself evidence that the Government doesn't intend to address the issues currently affecting housing supply.
There are a few, more immediate steps that could be taken to reduce demand as well, as you know, severely limiting immigration and getting foreigners completely out of the market, the existing houses, the land banking and ni foreigner renting houses back to us. Those things would actually completely sort the market, I reckon
Sorry, guys, that's about Auckland houses, ask the Auckland Council?
It is an election year and Auckland Council has been run be Labour for 6 years now, deflecting blame is half the point of politics. The government has tried to work constructively with Auckland, but planning restrictions against new land continues to be employed to maximum effect.
The government has lost control of housing as a responsible function of government. Instead it has welcomed speculation - foreign and domestic - in inflating asset values as a driver of wealth and economic activity.
When the only measure of success you're willing to look at is GDP, it's little different from looking at your cellphone while you're on the motorway. Sooner or later you lose control. And when politicians lose control of anything, they do whatever they can in hope the problem will go away. Who'd want a portfolio like housing? A next generation is largely unable to buy, and many of the poorest are homeless.
But these social issues can be pushed to the side or into the future just as long as the money keeps flowing in and assets values don't fall back. That, in truth, is the only housing agenda there is. But you could hardly make protection of asset values into a ministerial role.
In democratic societies we expect elected governments to provide economic structures and social strategies that enable safe and secure living choices for citizens. And in New Zealand society that has meant, among other things, the independence and/or the security of having a roof over one's head. When people are earning, we expect they will be able to buy. When they are unable to earn sufficiently, we expect they will be cared for. These are matters of natural human drive on the one hand, and natural human decency on the other.
If food reached a price where a significant proportion of the population couldn't afford it, it would be an issue for the government.
Also, we do expect the government to buy food for us. That's the point in a welfare state - those without the income to provide for themselves will be provided for so they don't starve in the streets.
Finally, no-one is asking for the government to buy houses for them (as far as I'm aware) - what people want is for houses to be affordable for them to buy themselves, which the government can influence through policy (planning, immigration etc)
Are you labouring under the misconception that people who are concerned about people not being able to afford housing are expecting the govt to buy them for them? Trouble is, they leave all the settings in such a place that housing becomes the preserve of the rich, then the govt WILL have to do something, as in state housing, top ups etc. It is in maintaining laws, regulations etc that do not allow earnings and the cost of housing to grow increasingly apart that they WON'T have to do that.
Unless of course you've spotted a wee hillside that would benefit from barrios
When someone is seriously in need, we do expect this. (And, of course, there are community-minded people who will do the same.) We treat social housing the same way. But let me repeat or re-state my point regarding housing policy. We expect democratically responsible governments to provide economic and social structures that enable earning citizens to buy houses for themselves if they wish to, and enable those who are not able to do so to be housed. This is what housing policy generally means.
Right now, though, NZ housing policy is concerned primarily with protecting the asset values of those who own residential property - these being a considerable proportion of the present government's supporters. In this environment, housing opportunity for the coming generation is now a (very large) problem for the future, and housing needs for those without opportunity is now a (very large) problem for anyone who'll pick it up. In any sane view of government responsibility, this amounts to policy failure.
Other societies have expected the government to buy food willy-nilly for its people. To answer your question directly, we don't expect our government to do this because we have seen what happens.
"Other societies have expected the government to buy food willy-nilly for its people. .. we don't expect our government to do this because we have seen what happens.."
Not yet we havent. A food crisis is coming everyones way courtesy of the soon to be screening GFC 2 - but i wouldn't pin your hopes on the Govt plugging the gap for long. Simply look at how places like kaikoura (with very few people to feed!) coped when supply chain problems hit ...
MS de Meanour - As a real Kiwi PM once said - "people don't want much, just "Someone to love, somewhere to live, somewhere to work and something to hope for.""
https://en.wikipedia.org/wiki/Norman_Kirk
Makes the Clayton PM types we have had recently look pretty poor doesn't he? The Nats took a poor housing state back in 2008 where they campaigned strongly against high house prices and have turned it into a monster which now is probably TBTF. Shame.
No Min of Housing - not ideal, but end of the day it simply makes it easier for someone else to launch housing policy against the Govt and its vested interests being the domestic specuvestors that vote national, and the foreign buyers of which you would think were an easy target because they dont vote.
BH is already calling it out - all of those that bleat about renting, break away from your iphone for five seconds and ACTUALLY vote or you will continue to be "nothing" to the politicians. Hopefully this time will be different, especially considering that its a lot harder to run away and hide in Australia or London. After reading how Trump leverage social media to trumpet his case, its pretty clear to how to target this group now...
The answer is for questions on Housing to be put to Woodhouse as Minister of Immigration who's policies are possibly the largest contributor to the Demand side of housing. Since one extra house Supplied is equal to say 2 to 3 immigrants less Demand, we have the answer.
EUREKA! The Edward deBono solution.
let me see, bill's theory about the government not being able to affect house prices.
Can the Auckland Council ban foreign buyers, could it slow immigration...perhaps it could even up tax policy so housing profits are taxed properly...could the council ease building laws, prevent money laundering in NZ, tilt the scale to help poorer people into housing....and so on.
All the big things that could really shift the needle on house prices are the domain of central government. Pull the other one bill
For those who haven't been paying attention the land cost in Auckland is more than twice as high as Melbourne's. And it is entirely the preserve of Auckland Council.
Because Auckland Council spends all of the ratepayers money developing new land in Warkworth, Kumeu, Silverdale, Clarks Beach, Helensville, Pukekohe... there is no money left over for Auckland. And the land price of Auckland goes up and the council budget goes up and the sprawl goes up.
But don't worry it is much easier blaming immigrants or the tooth fairy (or whatever it is this week).
BE can take the risk as he too knows that media is not their to question them and highlight it. It is good of David H to highlight it but again will be one article today and gone tomorrow. Need journalist and media to keep on nailing till they reposne.
Name and Shame is the only option now.
Edited 2007 KEY video on housing reform.
https://www.youtube.com/watch?v=cWPgoAI1cLE
We now have the highest house prices in the world relative to incomes.
http://www.imf.org/external/research/housing/
(2 bottom graphs in above link)
What a legacy!
WHAT BETTER TIME THAN NOW TO REMOVE THE HOUSING MINISTERIAL PORTFOLIO
But ironically they are still relatively 'affordable' because of record low interest rates. So the post GFC which led to their low interest rates have only fueled house price increase. But I would be scared to earn less than 100k, but if I want to buy one of these timber shacks, I would have to pay a million dollars for it. Even 600k for a terrace 'house', would worry me.
I think people on this site are probably victims of that new phenomenon the information or filter bubble. Daily you come to interest.co.nz and read the rants of like minded people. Daily it reinforces your belief that housing is the biggest issue of our times. Believe me this is not even an issue for most people who are perfectly happy, even ecstatic, with the status quo. I have had an epiphany of sorts, a paradigm shift for me, when I realized what a victim I too was due to my self selecting of which news to read, most of it fake. Now I put my faith in the experts on these matters like the government and mainstream news morning talk shows. I find I can get a lot more done around the house and my life is a lot more fulfilling.
I look for contrary opinions Zach especially after i watch mainstream media and get alarmed by what i think is sanitised news in favour of the status quo. But I think the truth lies somewhere in between. But i will say this, is house price growth now more an indicator of a country doing well than wage growth?
There's no 'housing crisis' in Greater Christchurch. This rather gives the lie to the claim that it's something affecting the entire nation...
Round 'ere, a brand new hoose and small plot can be had for around $400K - try searching Mike Greer http://www.mikegreerhomes.co.nz/home-and-land/search/ or Signature http://www.signature.co.nz/house-and-land/canterbury
This was achieved by the LURP (Land Use Recovery Plan) which essentially threw out all previous Council attempts to strangle supply, and let Ms Market have her wicked way. Tough on builders and developers, as they actually have to (sob, gasp) Compete Fiercely. Good for buyers, as them prices do seem to indicate.
What housing crisis?
What need of a Housing Minister for Christchurch?
Waymad I acknowledge the housing crisis in Christchurch has stabalised unlike Auckland. But I think new house prices could drop back even further if NZ had more effective housing reforms -so more could be done -it is not like Christchurch house price have dropped back to historic price to income ratios. Also Greater Christchurch could easily slip back into its old ways once the pressure to 'do something post-quakes' effect abates. So I would still want some attention from a housing focused minister of the crown on Greater Christchurch.
Absolutely agree that $400K price in a city where household incomes struggle to average $70K is not a Good Thang in absolute terms. It implies a Median Multiple north of 5.
But the price is a game of two halves - house and land, and both halves have their issues.
Land:
- Zoning still exerts a 10x Planners Gain compared to rural pricing of $5K for 600 squares of raw dirt
- Councils still exert Financial Contribution racketry - no contribution, no consents, permits, movement. As this is early in the development cycle, interest and 'carry' rates start to bite early
- The 'carry' can easily double initial costs over the typically protracted development cycle. So Councils' injection of Time can, alone, cause significant cost pressures.
- Don't forget GST at 15%...
And for house, we have:
- A cosy
carteloops I meant Duopoly in materials (Farters and Clutchers)... - Councils again with Producer Statements for everything, multiple inspections, and Modest Fees at every turn - figure at least 10%
- Elfin Safety (scaff, fencing, fall protection, tagged cords for builders' chargers, radios and shavers - it's a long list getting longer by the day) - adds around 15%
- Oh, and GST at 15%, engineers, architects at 10% for the terminally stupid, draftspeople, conslutants (yes, Freudian slip there) to navigate the District Plan and Building Regs...
- Tradies who actually do the work. After all, those frames don't go up by themselves, even if they do then stand out in the weather for weeks, maturing like fine cheeses...
A Tiny House can be smacked up for around $15-40K. Sure, it's just a trailer-park deal, but faced with all of the above, it's actually a rational choice for many.
The trouble with being able to buy a house for 5 x 70K is you will get couples on 100k+ each, which is not uncommon, hoovering up the cheap houses as rentals. The real figure should be something like 6 x household income.
Somehow you need to change the culture or mindset of buying houses as investments but it's too late for that now. In a multicultural world the common culture is money.
$400k is for a tiny unit or apartment. Not really relevant to existing house prices.
Indeed the Chch market has stabilised not because of the LURP or any Government action, it is a consequence of the completion of red zone destruction and the completion of insurance settlements for those who needed replacement homes, this drove the market up unsustainably in 2012 and 13, price stability over the past two plus years is purely a consequence of this demand ending, nothing to do at all with supply side increases.
The lesson for Auckland is control demand and the prices will stabilise. 40% deposits are controlling demand, so the Auckland market is going to tank despite immigration and lack of supply.
It's just like watching a slow motion train wreck - a career defining moment.
Keys left English holding the can, Kiwis are living with massive sociol fall out and cost. Continued tinkering, delaying is not the answer but resounding tuffer stance and creative change with tools like property rules to meet current circumstances - foriegn ownership, land banking.. is the quick, convenient and powerfull way to help balance a very taxing housing issue.
It'll be a small blip on a wealthy investors balance sheet, who won't be sleeping on the street or missing a meal any time soon.
As B. Hickey wrote if we take the hit now it won't be such a massive train wreck.
The issue is whose interests do National actually have in mind?
Que Sera
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