Housing Minister Phil Twyford says he is expecting the Government to build “far more” than the planned 100,000 KiwiBuild houses over the next 10 years.
Speaking to reporters after the release of a new housing stocktake report on Monday morning, Twyford was forced to defend the Government’s “lack of ambition” on its state house building policy.
The call came from one of the stocktake report’s co-authors, Shamubeel Eaqub, who reiterated his thoughts that the Government should be targeting 500,000 new KiwiBuild homes.
“If you look at the rate of build we have had since the 1980s, it has been too low and it has been too slow,” he says, adding that at least 30,000 new houses need to be built a year to get on top of New Zealand’s housing shortage.
When pressed about the Government’s lack of ambition in this area, Twyford joked that he was “so happy that for once I’m not the most ambitious person in the room,” before telling reporters that the government would actually build “far more” than 100,000 homes.
“I believe using the levers that are available to Government, the balance sheet of the Government to stimulate the building of affordable homes, more state houses building and an urban development authority that can undertake these ambitious, large-scale urban development projects, we will end up building over the new decade far more than the 100,000 Kiwibuild homes.”
Eaqub was also critical of the lack of detail on the KiwiBuild policy.
Twyford was not able to provide more detail than had already been announced, but did say more information would be coming “in due course”.
But he did let on that the Government is in the process of talking to market players about how it could buy and underwrite “affordable properties” off the plan in private developments.
He also revealed the Government has managed to find some extra Crown land where houses could be built that the National Government had not already bought.
He would not reveal any details, saying only he will make information available “in due course,” but says the land he’s looking into was private, as well a Crown-owned.
“We’re going to be acquiring land – [we’re] also going to be doing development projects with other land owners, council, iwi and other private investors.
“In many cases they aren’t developing that land. It’s just sitting there, they’re looking for partners.”
Government’s fiscal responsibility rules a ‘straightjacket’
Eaqub was also critical of the Government’s position on debt, calling its fiscal responsibility rules an unnecessary “straightjacket”.
Before the election, Labour and the Greens outlined the rules, which included reducing net crown debt to 20% of GDP and keeping government spending below 30%.
But Eaqub says when it comes to housing, the Government should be taking on more debt to solve the problem.
“The state of the current housing market as a cluster… you fill in the gap.”
He says, for example, the Government should be doubling Housing New Zealand’s (HNZ) stock over the next decade, and taking on more debt is the best way to achieve this.
“When it comes to HNZ specifically, we should be gearing that up a hell of a lot to try and create housing supply,” he says.
“My view [is that] the last decade has been the best time to borrow money – money is cheap and everyone is looking to lend you money.
“You’re a fiscal idiot if you don’t borrow money when interest rates are at the lowest level in a century.”
Asked if the Government is constrained by the social responsibility rules, Twyford says industry capacity also has to be accounted for.
“It’s not just the fiscal limits, there is also a question about industry capacity – [there are] a whole lot of other things which are currently constraints we’re trying to dismantle so we can up the build.”
127 Comments
“You’re a fiscal idiot if you don’t borrow money when interest rates are at the lowest level in a century.”
Shamubeel Eaqub
If you borrow four times as much at a quarter of conventenal interest rates, you will be in serious deep trouble before you know it.
Eaqub hasn't got a clue.
"But Eaqub says when it comes to housing, the Government should be taking on more debt to solve the problem"
Anyone noticed that we are already drowning in housing debt? Put on a land tax, get land prices down and then you want need so much debt. If this had been done years ago, imagine how many new homes would be built on the current debt levels...as opposed to using this debt to pump up the same dog boxes through the stratosphere....JK ..what a visionary.
The adjustment in land prices from a land tax would help no one other than government revenues as the savings from reduced borrowing costs would be drained via the land tax so there is no net benefit to home buyers and there is a net negative to home owners. The transfer of funds from the private sector to the public sector would cause inflation to drop and the government would need to respond with a spending program to compensate and all you end up achieving is the government deciding on what gets money rather than the private sector. I have no comment on if thats good or bad but your comment is misleading. Drop in land prices, less incentive to develop land, less houses built. After adjustment in prices, lands net carrying cost would be the same, albeit comprised in part by a land tax, and the volume of land banked would remain steady.
Your net effects would be:
Short term increase in land sales
Short term increase in foreclosure
Short term reduction in wealth inequality
Medium term reduction in development of land
Medium term drop in inflation
Medium term drop in employment
Medium term reduction to GDP growth
Long term increase in public sector spending
Long term increase in public sector to private sector ratio
The compensatory program may or may not recover the lost momentum and total loss to average GDP growth would depend on the efficiency of the government programs implemented to fill the private sector spending gap.
I don't think the governments intention is to add a marginal tax but to reduce other taxes so that the land tax is revenue neutral.
A country with a land tax and lower income tax should theoretically be more productive than one with a higher income tax and no land tax.
If its coupled to income tax cuts then the answer is actually a broad based wealth tax as a land tax isn't properly targeted. never the less your statement is correct. However I have not heard labor talking about a tax cut, say for example in relation to cap gains so i dont see why a land tax would be met by income tax cuts, although that would be rather reasonable.
The unfortunate fact is that there are many property owners on super and not much else. No tax cut for them and the family would likely end up paying the tax out of the estate. It’s a certain vote loser. I can’t see any radical moves as it plays right into National’s hand.
Property owners now on super have had plenty of tax cuts. Far too many in my opinion. 1, land tax was removed. 2 Superannuation investments were stopped partly to fund income tax cuts for the top brackets. 3, property rates have been suppressed for so long that local councils have been borrowing for future generations to pay for the running of their cities.
Ocelot your opinion could very well be one eyed!
https://en.wikipedia.org/wiki/Taxation_in_New_Zealand
New Zealand went through a major program of tax reform in the 1980s. The top marginal rate of income tax was reduced from 66% to 33% (changed to 39% in April 2000, 38% in April 2009 and 33% on 1 October 2010) and corporate income tax rate from 48% to 33% (changed to 30% in 2008 and to 28% on 1 October 2010). Goods and services tax was introduced, initially at a rate of 10% (then 12.5% and now 15%, as of 1 October 2010). Land taxes were abolished in 1992.[1]
And those same people receiving superannuation now were lumbered with enormous interest rates from the 1980's onwards.....what percentage of those rediculous interest rates found its way to the government from the RBNZ?
It is the government who creates all issues and the supply shortage of housing is no different to any other crisis throughout history.....If you want affordable housing you have to deregulate and kick government and all its hanger-ons to touch.
The best thing you can do for your descendants is to invest in their education and teach them to make their own money - inherited wealth tends to get squandered. A society where every generation stands on its own two feet and has a level playing field sounds like a good one to me.
mfd - your comments are contradictory.
Firstly your advocating for the right to tax.
Taxation is spent by people working in governments and the public services.
Secondly you want a level playing field where everyone stands on their own two feet!
Well if all the politicians and public servants stood on their own two feet we wouldn't tax at all.
So you're not really after a population that stands on its own two feet but rather advocating for a twisted version that certainly is not a level playing field......it's called socialism and the only people who stand on their own two feet are those who are working in private enterprise......the rest are on the take and contribute nothing but more and more costs......
Socialism is great - imagine the extra burden if you not only had to pay privately for all the services the state provides, but also for shareholder profit on top. And that's ignoring the basic inhumanity of forcing those who cannot afford basic services to go without.
It goes without saying that we are investing in their education and we will do the same for grandchildren if we are alive at the time. I look back at my life and consider the couple of decades to acquire capital as somewhat wasted. If my parents had the resources or invest in me earlier in life I would have made different choices. I want to supercharge my children’s prospects. If others want to give their money to the SPCA then well and good.
Was it wasted or did it make you into the man you are today? If you skipped that bit, would you be as careful with and appreciative of money as you (presumably) are now? The evidence suggests not. The assumption that being born into wealth gives you a happy, productive, successful life is not well supported.
"70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy"
There was a decade of monotonous saving to ensure my family had a home. It made me appreciate the value of a dollar earned but it also ate up my 30s, which I believe are the formative years. It’s worked out well, but I would like my children to bypass wasting a decade.
As for family wealth, I have absolutely seen the same progression you mention and it would be nice to party up my last 30 years but I prefer to think they will use some of the money wisely.
Your National membership and constant endorsement just doesn't seem to make sense, then. That's exactly what National has done for the last nine years, and campaigned on more of that - increasing WFF, accommodation supplement etc.
National can't rail against WFF as "communism by stealth" then only go and increase redistribution - including bragging about increasing the benefit more than any time in the last 30 years - while ignoring underlying issues that discourage productive investment and instead funnel all money into housing.
Heck, they even quietly stopped talking about closing the productivity gap with Australia.Their track record should put you off.
What's the alternative to National? there isn't one for SME's other than ACT.......there will be people jumping off bridges but not from supporting National.....but rather from all their hopes and dreams burned up by those who think you can tax and tax and tax and tax some more.......good people who are working their butts off in private enterprise trying to keep their heads above water while the greedy left rob them blind!
What's the alternative to National? there isn't one for SME's other than ACT.......there will be people jumping off bridges but not from supporting National.....but rather from all their hopes and dreams burned up by those who think you can tax and tax and tax and tax some more.......good people who are working their butts off in private enterprise trying to keep their heads above water while the greedy left rob them blind!
Followership without question describes Labour voters...6 weeks no substance, no experience but tick anyway!
What about the hidden tax when you support National as an SME owner. Increased wages in Auckland and places like Tauranga and Wellington where property prices are eye watering and your workers are struggling to pay. Hospital ques where there were none. School closures so that workers children have to go to schools not convenient anymore. Homelessness, mass immigration which impact on our infrastructure costs. These are all costs that need to be taken care of somehow.
We cant use a magic wand to fix these issues that National in all its glory willfully ignore and so it seems so do its supporters. As long as Im ok Jack, if I close my eyes these issues dont exist. It seems like we want NZ to become like Johannesburg where the rich are surrounded by security and barb wire. What a way to live.
...course it can be done.... but not by bob the builder (which is the basis of your pipe dream reckoning). We will need our Chinese friends to do it. No problem for these boys, and more opportunity to get NZ in hock.
https://www.theguardian.com/world/2015/apr/30/chinese-construction-firm…
Have you developed before?
If you had, you would know that with the amount of regulation we have in our system it would never work with a Chinese Construction firm. Health and Safety rules, water impact regulations, environmental impact regulations, traffic impact regulations and so on and so on. It can take 18 months before a nail is hit. 100,000 homes in 10 years is unachievable with the RMA and a Government hell bent on reducing immigration.
Most kiwis I chat to seem to agree with these views about socioeconomic problems and would be happy to see an increase funding in this area. However given the existing legal framework and RMA, economic incentives in place the prevent councils persuiting aggressive policies, tax incentive structures etc. I don't see how the construction industry scales at this rate. It would take a new approach, new incentives and new legislation.
Unlikely. But the answer is staring us all in the face
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=119…
https://www.stuff.co.nz/business/industries/101250384/applications-for-…
Adding 100,000 is entirely doable...
This sort of thing just makes me even angrier about what has been going on in this country for years, all these houses we need, should have been being built all along, by NZers as their job of work, now it has gotten so dire we have to outsource it, thereby missing the opportunity for all that time and the time to come for NZers to live and work and support and house themselves.
But now, we have come to this, and we face having to pay another country to home our people, I feel we have to get behind this government because the consequences of not doing do not bear thinking about.
I hope this time will be a sharp lesson learned for a long time to come.
More will come by claiming credit for whatever will be built in future as part of the 100000 regardless who built it .... even some that started last year under the previous Gov ... read this:
"The report's release follows Finance Minister Grant Robertson announcement last week that the government accepted the business case for a housing project being spearheaded by the Hamilton City Council.
The council had applied for funding under the previous government's Housing Infrastructure Fund for the area of Peacockes, a development site on Hamilton's fringe area, opening up residential land for 3,750 new homes within the next 10 years, representing nearly 4 percent of the KiwiBuild target. It would then rise to 8,400 over the next 40 years. Robertson said final documentation is being worked on and "we expect that construction can start in earnest when long-term plan approval is gained in June."
http://www.sharechat.co.nz/article/e03f99cb/nz-housing-market-crisis-mo…
So after a great report - we learn nothing new we didn't know off - other than super+AS is increasing by 2000 a year .. and that would be normal after the GFC ... it also doesn't mean that these boomers do not own a house , but means that they haven't paid it off yet !!
Few questions are :
- Did the Gov really needed this report to discover these problems ?? ... what do different relevant department managers and CEOs do for living ??
- We are getting into the 5th month of Gov in power - we still hear the same Blames, Story, Promises !! we are waiting for the PLAN of action and what is going to be done about the KNOWN issues .... when are we going to see action ?
The Last thing we want to hear is: " But wait, there's more" !! - sounds like a desperate salesman running out of pitches!
This Gov has to rely on the private sector to build new homes - no matter what they claim. It better not do a big blunder in pissing off property development ( house or rentals)
Those thinking otherwise are still living in cuckoo dream land and have no clue of what goes on in the world, just like Sham !
As you say, early days, only the 5th month.
Some of these problems were years in the making.
Best to get a thorough understanding of the issues rather than simply charging in blindly.
Otherwise you simply risk a Nick Smith type of silliness.
I don’t think anyone really wants that – Bill certainly didn’t.
Someone could correct my figgers ... but , if we're currently 500 000 houses short ... and the population is growing at 2.1 % p.a. ... and Phil the Tool-man Twyford can build 100 000 houses over the next 10 years ... at the end of that decade we'll be 515 000 houses short ... an increase in the shortage of a further 15 000 houses ...
( P.S. for serious students of maths ... the Gummster used to get only half the answers correct ... and I bluffed my way through the other 35 % ) ..
If many more houses are built then many more mortgages will be required. Therefore, will it be possible for our banks to balance the losses of falling prices of our current stock, especially in Auckland, with our investments in the new? In other words will building many new houses save our banks, hence our economy?
Money alone does Not build houses - Confidence does !!
Borrow as much as you like, Build as much as you can - try selling them in a shabby market with looming value deterioration will need more than the enthusiasm of a clueless economist ( who might dream to become a minister one day) ... it will need confidence in the future .... something this Labour Led Gov is driving it into the ground - big time !!
Business,and consumer confidence is the canary in the coalmine ( corrected) - this Lot seem to be unaware as to how to proceed and what should come first ... The absence of business minded experience is more than obvious ... they are busy painting the carriage, maybe one day a horse will come along and get the load moving.
One striking piece today was the increase of homeless people ( no matter what the measures for that are) - I would have thought the first thing after stopping the sale of HNZ homes was to get on with refurbishing them ASAP during this summer and getting some off the streets before winter kick in, after all they were campaigning hard on this and blackmailes most naive voters ... but obviously talk is cheap !!
Everything the Gov will do will eventually come at the taxpayer's expense ( current and future) the more mucking around and delays in solving issues , the bigger the bill will be !
confidence doesn't build houses.. Builders with materials do. Both of those require money, not confidence.
As for the selling.. why sell them if they are state houses. Stop paying private landlords top-ups in the form of accommodation supplements and watch as the price of shabby do up lower quartile properties plummets, dragging down the middle of the market with it. Making property prices sane again, then some of those tenants will buy houses of their own.
It's ironic that the people who have done most to create this debt house of cards now claim the house of cards must not be touched lest there be a "loss of confidence" that could send it toppling. Sounds like self interested pleading to me
I assume you saw the Economist's figures on relative house price affordability. It seems NZ, Aus and Canada are in a class of our own when it comes to real estate bubbles. I was a bit shocked at just how grotesque our bubble is when compared to other countries esp the UK. But then houses prices cannot fall in NZ, ever, so that made me feel better about it.
Story of pseudo-capitalism in the last decade or so. Speculators whining that they must be protected at all costs from the consequences of their actions. Privatise the profits, socialise the losses - all born by those who have to work for a living.
Now we have folk even trying the "but we're too big to fail and you need to bail us out" line with regard to Fletchers.
How can we take a Sham seriously.
Mr I will keep renting while prices rise and then he buys when they are at their peak!!!!!
Is Sham really a qualified economist because he really does come out with some absolute crap.
500,000 houses and what price are these houses Sham?
Twyford also has t got a clue either and as someone has said after all this time and stating this 100,000 houses he still hasn’t got any details????
How on earth can the coalition supporters have any confidence in this lot as they say things and then have no idea on how to implement them!
No need to expand on this as we all know what “The Man” is saying don’t we!
.
Custard, I don’t know why many keep,on bringing up the past Government as they were voted out by three minor parties combining to oust them.
There is a new coalition government now and they are the ones in power and coming out with these policies and yet they have no idea on how they are going to be implemented.
Lefs have all these working parties as we really haven’t got any idea so we will put the onus on these experts like Sham etc. as he has a great record of accurate predictions!
A little clarity – more voted for a party other than National – thus a coalition
.
If we are to point at “no idea” – then I suggest Nick Smith.
It really is early days, perhaps we could give the coalition a little more time, as National certainly had, before we merrily throw them onto the scrap heap of history.
This is a pretty good article on what different generations have faced. Pretty even-handed and recognises the fact not all have ended up prospering from those times, though conditions are plainly significantly different for young people today due to more recent changes: http://www.bbc.com/news/magazine-21302065
Yes, it is the latter and no, it never was, but we got pretty close, especially post the second world war, a time of a lot of camaraderie.
Even then no-one expected everyone to be/have the same, but the difference was not that incredibly great, as it is now, and those who didn't have a hell of a lot, are now those who now have nothing, they are growing in number, and have little prospect of ever having anything. Society is much the poorer for that.
This link covers the years from ‘82 to ‘14.http://archive.stats.govt.nz/browse_for_stats/snapshots-of-nz/nz-social…
Housing costs have had a clear impact under both Red and Blue Governments, since the ‘90s. It would be a miracle if Taxinda could change this. Listen carefully to her words as I don’t think she is prone to lying. The can do list is being whittled away by the day.
Its NEVER GOING TO HAPPEN and you know it. We are going to be in exactly the same place next election and the Labour government are going to be asking for "Another Term" to complete the work "We already started". If it was so easy to solve we wouldn't be in this mess to start with, think about it. So many things need to change before the rate of building gets to where it needs to be and there are too many vested interests keeping it at the current status. Labour is all talk, sure they are making all the right noises, but talk is cheap. They will be judged on actual results next election. All I hear from them is that things are "Worse than they thought" so is that already an excuse for "Don't expect the results to be as good as you expect?"
Yes I will vote Labour, I have done so in the past but not since Helen Clarke. Now older and wiser however and Adern is as transparent as a crystal glass, she knows exactly what to say and what buttons to press to get elected, just like Trump but both of them are going to be in the same place come the end of their term, that is they will both be gone.
Of course it will never happen however they have a two pronged approach tackling both supply and demand. Supply more houses at the same time as mis-managing the economy to the extent where people start moving overseas making demand drop. In 3 years time everyone will own a house and problem is solved.
Actually while yes they will need more staff, consents should actually be self-funding, ie the fees they charge should cover the costs so existing rate payers should not be stiffed.
Of course we have lots of people (especially in here) who just cannot understand why these fees are so high. The solution to this is something Brendon(?) was advocating, a special area trust ie a MUD that installs all the needed infrastructure and in turn charges its own rates. https://en.wikipedia.org/wiki/Municipal_utility_district
Of course whether this would be any cheaper is a big Q.
It might be possible if and only if the government:
* Remove the red tape involved in council consents.
* Update building regulations to modern methods and materials are acceptable and easy to import (why does GIB get a license to print money?)
* Tax land banking.
* Invite over some companies experienced in mass production.
Right now we have the worst outcome of regulation. Enforced low quality. Cold metal window frames, zero air tightness requirements, cold foundations and durability backed by limited liability companies.
The NZ building industry always hides behind the "NZ is unique" excuse. They're harping on like rain and earthquakes don't exist anywhere else. It's bollocks.
Incorrect. National are not in Government because they had the sheer audacity to try and hang Winston Peters and NZ First out to dry. A party who was absolutely essential to them. Did they seriously think they wouldn't need him in a Coalition? Astounding arrogance. Paula Bennet is a genius.
Labour can readily produce any number of targets because there is absolutely no context in which we can conceive of that ambition. Their optimism is, I’m forced to admit, quite breathtaking whether you believe their targets or not. They realise that such an approach will, at least in the short term yield much kudos particularly in light of what has gone before and they will know that they’ll, at least in this term, have to demonstrate that they can live up to their widely proclaimed expectations. To be fair they know also they’ll need to be very successful in the initial phases of delivery to ensure at least a second term. They also know that there is a huge tradeoff between preserving status quo and addressing the ideals of equality etc and they also know their mandate rests on that. It will be very interesting to see, over the next year or so what National brings to the party. If initially successful it may well serve them to be accommodating rather than trying to point score off hiccups along the way. Its a big challenge to both the major parties particularly with Labour bestowed the mantle and National’s electoral arrogance which now increasingly casts them as a party in need of a bit of a political makeover to make them a little more relevant and palatable to the wider tastes, from fast food junkies to the connoisseurs.
Being charitable here, Labour won because they they had nothing to lose (in fact I’d argue that despite MMP, out of the two major parties, it was Labour that would’ve been consigned to the status of a political pauper had it not been for the now, as it turns out, rather fortuitous series of events (along with above) which saw them deposited into the driving seat.
Kiwibuild can work. I think it fair to say that Labour needs some unfettered optimism in order to get it humming. With the several billion allocated for the first tranche of 16000 homes and, at least initially large scale procurement of off the plan builds already in progress, into what maybe a challenging economic environment, developers will be happy to be of service. Obviously there will be some dealing required in that market space but in the interim they can work on freeing up Crown land, private purchases and putting in place the mechanisms for large scale standardised build programmes. Again, with temporarily sourced migrant labour they can also develop the structures required to sponser the training of a whole raft of necessary trades required to deliver the bulk of the future programme. There will of course be social outcomes of this rebalancing in the interests of equality and proportionality seen and yet to be realised, both good and bad. But currently the opportunity costs are outweighed by a dynamic of urgency and pragmatism that perhaps we as the electorate are unfamiliar with, at least those of us who were not around so much in the 80’s.
I for one wish us well. My own personal view is largely politically and philosophically neutral as the interconnectedness of our world is simply too entreched for any one particular model to deliver what I perceive as sound outcomes. As said before I pretty much rely on my self and my partner in whatever environment we find ourselves in. I certainly make no claim to be anything other than self interested and have no qualms in acting accordingly however I also am obliged to behave in certain ways because I do not live in isolation hence I do believe in doing unto others etc despite being burned numerous times. But that is life and unfortunately life is random, short and fairness is but a social construct, which some of us value more than others. End of.
Agree. Fairness is a social construct, like a thin veneer covering innate self interest. I like to watch behaviour at my bus stops. There is a marked difference between queuing behaviour for an empty bus and one that has few spare seats. Add the impact of regulars versus strangers and you have another factor to add to the mix. Upscale that to 4.5 million people and you have politics where people seem to want others to change their behaviour but theirs is apparently beyond reproach.
Thatcher was (falsely?) credited with saying, "A man who, beyond the age of 26, finds himself on a bus can count himself as a failure".
People at work do ask if I've lost my licence. The real reason is more simple than that, it's cost. I live a frugal life to save for a full retirement. The habits that paid off my mortgage are hard to break, plus the reality is that my home is not a piggy bank. It takes savings to pay the bills in retirement.
Ex Expat - did my time on the buses - twenty years of it. Had a repore with the drivers a bit along the lines of the Luxton Bus Co. Was in between cars a wee while back and used the bus one way. Said to my wife I was reliving the nostalgia and might go carless. I lasted but one day. Your good humour and sensible shoes do you credit. I got lost when the driver said they didnt have credit/eftpos and told me rather curtly that I either needed an electronic concession card or cash, neither of which I possessed. The door then closed in my face and I ended up walking. Serves me right.
Its amusing. In SE Asia I didn’t take exception to lack of personal space but remember in London, running late for work and jumping on a bus and making the back seat. There was a woman, of let us say, not so petite proportion coming along behind me, so it was with a little surprise that once seated she simply backed up and sat squarely on top of me. Didn’t say a word and I maintained a semblance of composure and journeyed the rest of the way with my uninvited travelling companion. Hashtag MeToo!
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