Monday, 6 August 2007

Key on housing affordability and elsewhere

The headline paragraph from John Key's conference speech yesterday appears in his introduction:
Why have we given up our weekend to gather here in Auckland? I'll give you one reason. We're sick of Labour telling us what to do. We're sick of being told how to bring up our kids, what to put in school lunchboxes, and that we have to microchip our dogs. We're sick of being told off for buying houses and for eating pies.

But it's more than that. We are also here because we believe in the principles of the National Party. We believe in individual freedom and individual responsibility. We believe the government should underpin our society but not dominate it...
All very good ... and if only we could believe he means a word of it. How, for example, does this follow from that?
So, after careful deliberation, we announced our target of cutting New Zealand's greenhouse gas emissions by 50 per cent by the year 2050.
How on earth does shackling and shutting down industry reflect a belief in individual freedom and individual responsibility? And why do the headline tax cuts -- one of the few policies on which National and Labour do differ -- why do these only arrive in 2010, three years from now? If the Nats believe "the government should underpin our society but not dominate it," then why not give us our own money back ASAP, not on some sort of never-never plan.

There were headline announcements on improving housing affordability that constitute more policy than we've seen from Key so far:

Mr Key signalled a National-led government would improve housing affordability by embarking on a programme of personal tax cuts, changing the building regulatory regime, keeping interest rates lower, reforming development rules to free up land, and allowing state house dwellers to buy their homes.
All very promising if the reality matched the headlines, so just how do these headline announcements hold up? Let's hear:
International surveys rank New Zealand as having the second worst housing affordability problem in the world. Auckland is one of the 25 least affordable cities on the planet. But it's not just a problem in Auckland. You can buy a condo on the Miami waterfront for less than the price of the latest beachfront apartment on the Kapiti Coast... Onerous rules and requirements have made land more expensive and building on that land more expensive. Meanwhile, we're running out of people who are able to build houses in the first place. As a result of all this, there are not enough houses being built to replace the old ones and to keep up with population growth.
This is all too sadly true, so what's John Boy's solution? He announced a "four-point plan":
No, 1... We will lower personal income taxes, which will ease the burden of mortgage repayments, and will also help people who are saving for a house deposit.
Very good, but waiting until 2010 won't help them soon enough.
No 2. We will take the legislative actions required to ensure there is an increased supply of suitable land available to build houses on. Difficulties with the Resource Management Act, and disagreements between various arms of local government, too often slow the release of land. This drives up its price and the cost of its development.
The most important legislative action that is required to ensure there is an increased supply of suitable land available on which to build houses is to remove the RMA, or at least to remove from the RMA and the LGA the powers for council planners to zone private land, and the power to set urban walls around New Zealand towns and cities. However, since details are few and far between (and those details bear little relevance to what's needed here), I'm not sure that's genuinely on offer, and anything less will just be window dressing. As always with politicians the large print giveth and the small print taketh away.

Continuing Key's four-point plan however sees the same nannying from Key that he complains about in his introduction:
Any changes we make to streamline and speed up the process of zoning or land release will require developers to build on that land within a reasonable timeframe. This will prevent the land-banking that is currently choking off the supply of land.
Forcing developers to build on their own land when it's not economic to do so is hardly consistent either with National's supposed principles of individual freedom and individual responsibility, -- with the principle that government underpins our society without dominating it -- or even with good economic sense. It's just dumb.

What currently chokes off the supply of land is not tardy developers, it's zoning, zoning restrictions and the council-mandated erection of urban zoning walls around cities. I want to hear from the Nats how these are going to be removed, not that hard-pressed developers (who will need to become less hard-pressed if houses are to become more affordable) are to become even more hard-pressed under a National Government. Sheesh! But let's continue:
No 3. A high legislative priority for National will be amending the Building Act to pull back the red tape and instead drive quality through greater commercial accountability.

Labour's new Building Act has added enormous costs and delays for builders and councils. Development and building levies have tripled under Labour. Quite simply, these costs are making houses unnecessarily expensive for the average Kiwi family.
"Amending the Building Act to pull back the red tape and instead drive quality through greater commercial accountability" would be good for everyone if Key's lot could do it -- and it's encouraging that Key's lot recognise that quality is driven better and more effectively by commercial accountability than it is by regulation and controls -- but it's not at all encouraging that this is the same lot that brought in the Building Act that started all the problems that house builders and home-owners now face, and without any details (and the knowledge of the complications involved in amending the Building Act) this promise at this stage is just so many empty words.

So what's next? What's next is actually very good:

No 4. We will allow Housing New Zealand tenants who want to purchase the house they live in, to do so.
That's very good. That's very, very good. When Margaret Thatcher's Conservatives allowed sitting council house tenants to buy at a heavy discount the houses in which they lived it was enormously popular (indeed, her "right-to-buy housing revolution" as it was dubbed was the first enormously popular thing her Conservative Government had done) and enormously successful, and there's no reason it wouldn't be both successful and popular here.

In the UK after introduction of Thatcher's 1980 Housing Act, home ownership grew from 55 % of the population in 1980 to 64 % in 1987; by the time Margaret Thatcher left office in 1990 it was 67 %. That's a huge jump, and it inspired a huge change in fortunes, and in expectations.

With "right-to-buy" Thatcher wanted to create a social revolution, and she did. Bby 1995 2.1 million working class tenants had become members of the "property-owning democracy," changing Britain and these people's lives for the better. This is one thing I'm very pleased that the Nats have learned from the Tories (albeit twenty-seven years late), and very pleased to see Key's Pink Tories even talking about privatisation . . . any privatisation at all. I'm very pleased too to see this:
Alongside this four-point plan, National is also going to increase trades-training opportunities so New Zealand has more skilled people to build and develop new houses. This will start with our trades-in-schools programme, and will include boosting apprenticeship training. New Zealand has faced a critical shortage of builders, plumbers and electricians for far too long.
Also very good. Without detail it's impossible to know if it's possible to increase trades-training opportunities, and without the will to face down the education mandarins it's impossible to make a dent in a promise like this, but seeing a commitment to do so is fantastic, albeit nearly twenty years late.
And, yes, as Nick Smith told Conference yesterday, we will reform the Resource Management Act.
Oh, really? Forgive my scepticism. This is the chap whose mentor Simon Upton introduced the Resource Management Act, who administered it without change for five years, and who ever since has proposed amendments that he himself has described as "window dressing." (I'll look at Smith's speech later today.)

I can't help thinking that in fact National's real plan for housing affordability is to make nice sounds, while waiting for a market correction. I'll wait to see more detail before I change my mind about that.

And perhaps temper any enthusiasm you might have at Key's great introduction by reading the speech's conclusion, where the same old platitudes emerge:
...when you leave here today, and as you prepare for next year's election, never forget what you are fighting for. You are fighting for tomorrow. For the chance to shape tomorrow. For the chance to make a difference and to leave behind a better New Zealand.

Because it's time. It's time for confidence. It's time for optimism.
It's time once again, it seems, for platitudes and for wheeling out Jenny Shipley's speech writer. But at least for once their was some meat. For once.

UPDATE: It's important to clarify that date of 2010, which is when John Key himself told The Press that any National tax cuts would happen. From Thursday's Press:
Hopes of early personal tax cuts under a National government have been dashed, with leader John Key saying they probably will not start until 2010.

National has promised tax cuts in its first Budget if it wins power, and Key said yesterday that meant tax cuts from April 1 the following year.

That opens the door for Labour to promise to cut taxes earlier in Finance Minister Michael Cullen's next Budget, which would see cuts start from April 2009.


Key suggested yesterday, before his first annual party conference as leader this weekend, that an early Budget was not on his agenda at this stage.

Asked if that meant a tax cut in April 2010, he said: "Yes, that's right. It could be that sort of distance away, notwithstanding any changes we might make.

"We have always argued about phased-in tax cuts, not a big-bang approach."
Over to you, John Boy apologists.


  1. From Key's speech:

    "It starts with progressively cutting personal taxes, and that will begin in Bill's very first Budget."

    Doesn't sound like waiting until 2010 to me.

  2. "John Boy Apologists"? Given that that was written in the update added to address the issue I made in my first comment, I guess that's an insult aimed at me.

    And one that I'd more expect to read on Jordan's blog. Go figure....

  3. So do you acknowledge how carefully weasel-worded that promise from Key's speech is, Spam?

  4. I was actually glad that you linked to the Press article - I don't recall seeing that.

    But how does the way Key weasel-words promises mean that I deserve to be insulted?

    I object to being labelled an apologist. To my mind, that label suggest someone who does not think for themselves, refuses to criticise when criticism is deserved, and blindly follows anything because it comes from the 'right' team. Well, that is not a label that fits me.

  5. Fine. Then you aren't an apologist. I apologise.

    I hadn't posted the remark as an intended insult to you, BTW. I thought when I initially wrote the post that most were aware of that 2010 date, (Cactus for one had posted it last week) and I posted the link to head off complaints from those who ARE apologists, and who will deny until the cows come home the weasel-wording of Key and Smith and the rest of the National luminaries.

  6. Thanks.

    I will wait to see the actual policy, and actual timings when the election lolly scramble comes to fruition. Whilst I would prefer a flat-tax, I struggle to see one of those on the horizon (despite Act's best intentions).

    As for apologists, they're obviously on both sides, but the majority that I've seen appear to be red, rather than blue.

  7. Come on, PC. You've said Key's making all the right noises, about all the right priorities in making housing more affordable.

    I encourage you to hammer them if they don't live up to it, and provide sensible advice on how to implement it, but giving them shit for no reason, other than them talking on-message is a bit rich.

    Frankly, I don't see that there is any scope for seriously gutting the RMA, and the Building Act, without tearing apart the massive mess that is local government in New Zealand. I suspect that the Nats are putting that in the too hard basket at the moment, at their peril.

    We aren't going to see any substantive changes to zoning, land use, and the operations of the RMA and the Building Act without a fundamental reduction and rationalisation of the size of local government.

    I'm hoping to see that come from the Nats soon. 5% of the economy is far too much to leave in the hands of petty local authority politicians. My view is that ratepayers throughout the country are just on the cusp of revolt mode, and there is no mass sympathy for protecting the interests of socialist aspirants in local government.

    It is, of course, no small piece of work.

  8. "I'm hoping to see that come from the Nats soon."

    Yeah, but that's the rub, IP. I'm *hoping* too; well, I'd like to hope; but with the likes of Key, English & Smith in charge of National, I'm not counting any chooks.

    The Nats talk freedom & enterprise, etc, but talk's cheap, more's the pity.

  9. What I would like to see is government continue on in labournationalfirst socialist mode for another two or three election cycles. By then they should have given the people exactly what they want and deserve. Forget about the housing affordability. By then that'll be a faint dream as the debt gets called in.

    Try doing some research. Check out S/Auckland. Where are the manufacturers? Most commercial operations around the show are warehouses distributing imported goods. Aside from some farm stuff, NZers produce bugger all. But they sure consume.

    Well, at least the Kiwi will have got what he wanted- egalitarianism. They'll all be tenants of their own country. Renters all. Suckers!

    Democracy is when the people get what they want good and hard!

    Here's to Johnny goving to ya!


  10. Apologist:

    I don't see what your point is. Who cares if most of the buildings in South Auckland/East Tamaki are distribution warehouses for imported goods? Why should they be stocked full of domestically manufactured goods?

  11. I said do your research and check out what is there, insolent prick. I did not write that the buildings in S/Ak should be stocked full of domestic goods.

    What I am trying to draw your attention to is that the productive sector in NZ has shrunk. Where there were once some very successful productive enterprises, now there is but warehousing for imported goods. So the Kiwis consume but they are failing to produce. That won't last. Watch and see.

    In the end I couldn't care less about most Kiwis. From my experience they are pleasant enough company but vague, intellectually inferior and full of expectations of respect, even though the vast majority of them are not productive at all. To the Kiwi, fair go means a free hand out. A tall poppy is anyone who has done better than he has. Class means being common and/or crass. Somehow the Kiwi believes that his government will hand out good times and easy living. Who pays? Who cares. The gummintz gonna do summin. What a corrupt culture of uselessness.

    Many decent productive Kiwis bail out. They become Australians or Poms or Yanks or lately Chinese. They won't be back any time soon.

    I expect a few more election cycles will soon bear the fruit of the Kiwi culture. Tenants and servants to be, all of them! Maybe they'll be allowed to clean the houses or do the gardens for the new owners..


    PS go West young man.


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