Key admits to ‘crisis theatre’ and talks up house-price inflation

 

You may have thought John Key was genuine when he’s talked about fixing the crisis in affordable housing – despite his deliberate tardiness in even acknowledging the crisis.  That isn’t the only thing about which he’s been deliberate.

Key’s visceral overreaction reaction to economist Arthur Grimes’s quite sensible proposal to reduce Auckland home prices by 40% reveals all you need to know about how serious he is about achieving affordable housing. Answer: he isn't, and would run a mile before allowing it, or anything remotely like it, to happen on his watch.

Grimes, a former Reserve Bank chairman at least dimly aware of central banks’ role in creating housing bubbles all around the world, suggests that by flooding the city with 150,000 homes prices would fall dramatically, by around 40%:

My call for policies to drive a house price collapse is driven by my personal value judgement that it’s great for young families and families on lower incomes to be able to afford to buy a house if they wish to do so. My concern is not for older, richer families, couples or individuals who already own their own (highly appreciated) house.
    Others may have a different value judgement to mine – but rarely do they make such a judgement explicit.

Key lost no time in making his own judgement explicit:

"Nah, I think it's crazy," Key [said].

Translation: Too much electoral damage for the PM to pursue.* Older, richer families, couples or individuals who already own their own (highly appreciated) house do vote National, and these people are very much Key’s concern. So policies will continue as they are, the beneficiaries of government-maintained house-price inflation can continue boasting at dinner parties, and Joe and Josephine would-be-first-home buyer can just go out and get fucked.

He concedes only that a little bit of house inflation will do you good, and that is precisely what he would like his “policy settings” to deliver. Never mind all the very real the dangers of letting the inflation genie out of the bottle. When pointed out to Key that the modest price fall proposed by Grimes would simply take prices down to where they were in mid 2012, Key responded:

What Auckland needs, and what the rest of New Zealand needs where it's in high growth, is a sustainable supply of housing to meet the demand. Obviously making sure that prices don't go up too rapidly is an important part of what we're trying to achieve here. [Emphasis mine.]

This tells you more clearly than you may have wanted to know that every measure mooted by his government to “solve” the housing crisis is precisely what it appears to be: nothing more than ‘crisis theatre’ – action to appear as if action is being undertaken, and nothing more. Because we now have it confirmed that key Key policy is making sure, or trying to, that house prices keep going up. That’s “an important part of what we’re trying to achieve here.”

A pity for Joe and Josephine that his favoured policy settings have left them outdoors, their poorer relations sleeping in cars, and house-price inflation well on into its galloping phase. Just an unfortunate but electorally undamaging blowback from “what we’re trying to achieve here.” Because despite almost every government everywhere being tempted to inflate away their problems ( like every dieter: “just a little bit and no more!”) no government in history ever, anywhere, has managed to keep that inflation under control, to keep prices rising-but-not-rising-too-rapidly. Not one. What the policy unleashes, and has unleashed here, is severely destructive capital consumption acccompanied by “wicked inflation that no one can control” – the very ‘tiger by the tail’ that Hayek and others warned about that, once into its galloping phase, can only be cured by real pain.

But I doubt from what Key says that the crisis he’s helped cause and then stoke keeps him awake at night.

I doubt that, because rising house-price inflation has been his policy from the start of his premiership; the scumbag revealed it when he blithely dismissed leaky homes as a crisis that would be cured by the printing press. Speaking to Guyon Espiner seven years ago  about his plan to sweep the $11.5 billion leaky-home liability under the rug, Key said his plan was explicitly to inflate his way out. He told Espiner,

if we can ensure that a homeowner has guaranteed access to funds, and a guaranteed ability to repay . . . we can allow inflation and we can allow rising house prices to let people fix their home and actually move on and move out of the situation.

As I said when the Rug-Sweeper-In-Chief first let that news slip,

    Key’s plan to wipe out the billions of dollars of leaky home liability (and by implication the tens of billions of dollars his government is spending that it hasn’t got) is not to address the real problems, it’s going to be to print money – the age-old remedy of quacks, charlatans and short-sighted so-called statesmen.

No wonder the policy looked so appealing to this lot.

But that doesn’t explain why Espiner and other media have never picked up on the admission.

Or why we must be forced to continue living with all the unintended, but entirely predictable, consequences.

* * * *

NOTE:

* Writing of the very similar UK housing bubble and politicians fear to prick it, Dominic Frisby writes in the Guardian:

The solution to the housing crisis is lower prices. What politician will stand for that? They daren’t let this market fail because too many people’s wealth is dependent on the value of their home – and homeowners vote more than renters…
    The collapse of UK property prices between 1989 and 1994 made the Tories unelectable for half a generation. No party wants such a fate. Indeed if interest rates reflected 10% house price inflation, homes would become affordable pretty quickly, but then the whole financial house of cards would come crashing down too. Those responsible for that would become [totally] unelectable…
    However this ends – falling house prices or a generation even more excluded – it is going to be painful. But the sooner we recognise the causes of high house prices – our systems of money and planning – the sooner the problem can be properly dealt with.

N.B.:

Grimes recognises that inflationistas like Key will argue that a collapse in house prices of the magnitude he proposes

would cause financial instability given banks’ loans to mortgage-holders. Luckily [says this former Reserve Bank chairman], New Zealand’s banks are well-capitalised and stress tests have shown that they can survive a large fall in house prices – mostly because the bulk of their loans pertain to older mortgages with plenty of equity behind them.
    For those who share my wish to bring house prices back to a level which ordinary people can afford, what is to be done? …
    The question is how can Auckland grow and at the same time have house prices that become affordable for more people. Logically, the only answer to that conundrum is that the city needs a massive increase in the number of dwellings.

Like Eric Crampton last week, and me yesterday [scroll down to the first update], he has a raft of sensible solutions. “To save the city,” he summarises, “ we need to flood it with housing.”

READ  ON FOR GRIMES’S SOLUTIONS:
How to fix a broken Auckland? Add 150,000 homes to crash prices by 40% – Arthur Grimes, SPINOFF
AND FOR KEY’S REVEALING RESPONSE:
PM says Arthur Grimes' call to build 150,000 new houses in Auckland to produce a 'supply shock' that drives prices down 40% is a 'crazy idea'; says home owners don't want equity values to fall; says it would hurt banks – INTEREST.CO.NZ

.

Mr Key’s dirty little secret

If you’ve wondered why the world’s politicians seem so relaxed about their ability to repay the trillions of pounds, dollars and euros they’ve been throwing around in recent months, then rest assured they have a dirty little secret.

And if you’ve wondered why John Key seems so relaxed about the outstanding bill for NZ’s leaky homes – a “bill that is likely to top $11.5 billion” – then rest assured Mr Key has the same secret.  It’s the same secret on which his finance minister Bill English is relying to repay the decades of govt deficits over which he’s now presiding.

That secret can be stated in one word: “inflation.”

Except Mr Key can’t keep a secret, and in that respect he’s different to most of the world’s politicians.  They call it “quantitative easing” and figure that as long as they all inflate at the same rate, then no-one will notice because all their currencies will be going down the toilet together. Yet Mr Key (if not his deputy) is happy to admit that he’s planning to inflate his way out of several messes.

Speaking to Guyon Espiner on the weekend about his new plan to get rid of that $11.5 billion leaky-home liability, Key said his plan was basically to inflate his way out. He’s up front about it.  He told Espiner,

“if we can ensure that a homeowner has guaranteed access to funds, and a guaranteed ability to repay . . . we can allow inflation and we can allow rising house prices to let people fix their home and actually move on and move out of the situation.”

Did you get that? “We can allow inflation and we can allow rising house prices to let people fix their home and actually move on and move out of the situation.” Key’s plan to wipe out the billions of dollars of leaky home liability (and by implication the tens of billions of dollars his government is spending that it hasn’t got) is not to address the real problems, it’s going to be to print money – the age-old remedy of quacks, charlatans and short-sighted so-called statesmen.

“Inflation is like sin,” said Frederick Leith-Ross, “every government denounces it and every government practices it.”  Key at least is ingenuous enough to admit it (and astute enough to realise his policies are already allowing house-price inflation to take off).

Let’s get one thing very clear here: New pieces of printed paper bring no new resources into existence. None at all. But by diluting the purchasing power of every existing dollar, inflation take resources from savers (involuntarily and against their will) and gives them to borrowers, gives them to governments, gives them to those the government has chosen (this week) to favour.

The history of the twentieth century’s money is the history of its dilution by governments’ central banks. Ever pound and every dollar is worth now around one-hundred times less than it was one-hundred years ago because of governments printing money. And every government secretly thinks it can control the process – and every bubble, every hyperinflation, every careful “quantitative easing” tells the same tale: they can’t.  (Read Fiat Money Inflation in France to see just how deluded “statesmen” can be when taking this particular tiger by the tale.)

The danger of inflation is great, but the temptation is always greater. “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”  John Maynard Keynes said that in his instruction manual to thieving governments. Key plans to confiscate openly.

And don’t think this just means he intends inflation to help out people paying to fix their homes.  He intends it to help out his government.   As Stephen Horwitz points out,

    “A clear message of [inflationary policies] is that one cannot separate inflationary monetary policies from profligate fiscal policy, As with counterfeiting, the lure of inflation is that the inflator can acquire real resources at virtually zero cost. It does this not only directly, but also by reducing the value of the government’s massive debt. For political actors seeking votes, or governments seeking power, inflation is a far more palatable way than taxation to pay for new programs or military adventures.“

Mr Key’ dirty little secret is that he knows that.   He just hopes that you don’t.

John Key is still a fucking moron

Cartoon by Richard McGrail from The Free Radical

I've been reminded this morning about what a clueless fucking moron we had as a Prime Minister for two-and-a-half terms. Back a few years ago when we were "rock stars." Remember that?

Anyway, here's John Fucking Key last month giving his considered analysis of what's wrong with New Zealand's economy now:

"The guts of what’s wrong is that the housing market is going down, not up,' he said.
    “When house prices go up, everybody tells the pollsters, ‘Oh that’s terrible, my son or daughter can’t buy a house. I feel really bad.’ The technical term for that is ‘bullshit’.
    “What they really do, is they say to their wife – or the wife says to her husband – ‘God, we paid $1 million for this house and it’s worth $1.7 million now.’ Quietly they go, ‘Oh, we feel rich’.
    “And then they go and borrow a bit from the ANZ and they go on holiday and they upgrade their kitchen, they feel good about life. So when you have a negative wealth effect, they feel bad.”

And I bet the roomful of home owners and property "investors" and National Party political advisors — no to mention all his former colleagues on the ANZ board —had a smug little chuckle into their at their man's shrewd witticisms. It's hard to know where to begin at his economic acumen however, 'cos apparently it's never begun.

Let's make it simple, since that's the best description of Key's grasp of things. Trump's been called a fucking moron for not understanding the economic destruction of tariffs. And rightly so. But Trump doesn't pretend to be in any way clued up about economics. Key does. And yet the fucking moron apparently knows nothing about a simple enough concept: capital consumption. It's a process of converting someone else’s wealth into your income.

And this is his one simple trick to fix the fucking economy.

You wouldn't believe it.

Here's what the fucking moron either doesn't know, or doesn't care to know.

That fucking "wealth effect" the moron talks about is paid for by one thing: it's paid for by eating the fucking seed corn. The seed corn is the part of your harvest you put aside to plant again next year. Without that seed corn, you have nothing to plant, and nothing further to harvest. What Key wants to "fix" the economy, the simple guts of it, is for is to eat the fucking seed corn. That's his recipe for success. 

Any fucking moron could get a "wealth effect" (and a poll bump) by consuming the seed corn.  But ultimately the farmer will pay a price; he'll no longer have anything to farm.

Fellow on the right enjoys Key's "wealth effect." Not so much farmers on the left.

But the difference in what Key proposes is even worse: he wants home owners to consumer other people's seed corn. Hayek used to call this "forced saving." Savers have to save more, or else, because the "seed corn" being consumed is theirs. 

Here's the thing: When mum and dad borrow a bit from the ANZ and go on holiday and upgrade their kitchen and put in another fucking ensuite, that's paid for by what was, or would have been, accumulated capital. The accumulated capital of those other savers. It's called "forced saving" because what pays for John Key's fucking borrowing is new counterfeit capital: i.e., new money that's been borrowed into existence to pay for the holiday, the new kitchen, the fucking ensuite. That counterfeit capital means savers are forced to save more just to keep up.

That's because this new borrowing is new money "injected into the economic system at a specific point" that advantages those consuming the counterfeit capital while disadvantaging those trying to save.

If the money or credit were evenly distributed among all economic agents, no “expansionary” effect would appear, except the decrease in the purchasing power of the monetary unit in proportion to the rise in the quantity of money. 

However if the new money enters the market at certain specific points, as always occurs, then in reality a relatively small number of economic agents initially receive the new loans. Thus these economic agents temporarily enjoy greater purchasing power, given that they possess a larger number of monetary units with which to buy goods and services at market prices that still have not felt the full impact of the inflation and therefore have not yet risen.

The purchasing power of these home-owners is paid for by the losses of savers. 

Hence the process gives rise to a redistribution of income in favour of those who first receive the new injections or doses of monetary units, to the detriment of the rest of society, who find that with the same monetary income, the prices of goods and services begin to go up. “Forced saving” affects this second group of economic agents (the majority), since their monetary income grows at a slower rate than prices, and they are therefore obliged to reduce their consumption, other things being equal.

In a nutshell Key's quick-fix for poll-driven success, and economic growth, is to grant home-owners purchasing power by quietly, secretly and unobserved, stealing from savers. ("By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens." ~ John Maynard Keynes)

Recall that he said something similar when the problem erupted of paying to repair leaky homes. He said quite bluntly, not to worry,  inflation would fix that. Remember that when housing unaffordability was bad before he took office, and he promised to fix it. He didn't, of course. Instead, he did everything he could to put rocket fucking fuel under house prices. It would, he claimed, 'fix" the problem of paying for the problem. 

This prick has form.

He's either a calculating Machiavellian.

Or he's pig ignorant.

My money's on the latter.

RELATED:

• Key on housing affordability and elsewhere - NOT PC, 2007
• Counterfeit capital - NOT PC, 2008
• Mr Key’s dirty little secret - NOT PC, 2009
• We’re rock stars! - NOT PC, 2014
• How Do People Destroy Capital? - Keith Weiner, SNBCHF, 2015
• Housing bubble is consuming our capital - NOT PC, 2015
• The Reserve Bank’s war on capital - NOT PC, 2016
• Key admits to ‘crisis theatre’ and talks up house-price inflation - NOT PC, 2016
• John Key has had an unbelievable solution for affordable housing - NOT PC, 2017

John Key finds another new tax - #LandTax

 

"Some experts have declared that it is necessary to tax
the people until it hurts. I disagree with these sadists."
~ Ludwig Von Mises, from his essay ‘Defense, Controls, and Inflation’

For a Prime Minisister elected on a platform of “no new taxes,” your ever-popular leader has been very good at discovering new ways to steal from you:

• GST increase from 12.5% to 15%
• GST on items purchased online from overseas
• Capital gains tax on houses sold after owning for less than two years
• Increased taxes on KiwiSaver
• The 2012 ‘Paperboy’ tax
• Civil Aviation Authority fees increase
• Additional fuel tax increase of 9 cents with annual CPI increases locked in for perpetuity
• Road User Charges increased
• Massive ACC levy increases
• New online company filing fees
• Creeping expansion of the scope of Fringe Benefit Taxes; and, most recently
• the so-called "Netflix tax" on services, media or software purchased from an overseas online retailer.

He’s now suggesting another way to put the grey ones’s hands in your pockets: a land tax on non-NZers and NZers living overseas. A land tax said to be around ten percent of the land’s value, payable every year. A land tax payable by owners out of their income on the value of their asset. A tax that will undoubtedly require a whole new army of assessors to value these ever-rising assets. A tax imposed on land owners as a xenophobic political sop instead of acknowledging the government policies that have made land in NZ far, far too expensive.

A land tax that would see many folk having to find around $100,000 every year or face the consequences -- to pay for the consequences of the very government policies that made their purchase more expensive!.

The argument for it? There may be “evidence,” says Mr Flip Flop that foreigners are “pushing up” New Zealand house prices.

First thing to say: not one land tax anywhere in the world has stopped house-price inflation or any of the housing bubbles in any foreign jurisdiction anywhere. Not in Britain, not in Ireland, not in Australia, not in Singapore, and certainly not in the US. So there’s that, i.e., no empirical evidence whatsoever.

Second: this is a highly progressive tax, in that the heaviest burden would tend to fall on the wealthiest. Yet progressive taxes are something Key’s Blue Team are supposed to be against. Key’s reason for suggesting it however is simply his same old tactic of requiring his supporters to swallow dead rats to ‘head off’ the Red Team, the tactic meaning the Blue Team instead implements everything the Red Team would do anyway. So much for reasons to support Key’s Blue Team.

Third, this must of necessity be a tax on land both productive and unproductive ( to make too many exclusions simply invites loopholes), so much of the cost will fall on land that is agricultural, or industrial, or  that is maybe being prepared for subdivision or waiting for rezoning or consent so it may be prepared for subdivision. Adding more cost simply adds another cost to the already rocketing costs of producing sellable land.

Fourth, a tax of ten percent on land value is (in round figures) represents esentially a 100 percent tax on rent that land might be earning. or even more in some cases. This would make the real capital value to the owners fall to approximately zero – so this new Key Tax would not just be a discouragement to these owners to own rental land, but a complete and total disincentive.

Fifth, it is argued that the tax would discourage foreign “speculators.” Yet what is a speculator but someone waiting for a profitable opportunity that has not yet arisen. Speculation itself does not raise land prices—speculators simply take advantage of the dislocations in the market that are causing those price rises. It would be better to remove those dislocations – such as the Metropolitan Urban Limit that arbitrarily makes some land inside the Limit worth up to ten times more than the equivalent land just outside—if their were a Government with the courage to do so. But there is not.

Sixth, the reasons for rapidly-rising house prices are hardly a mystery, and hardly the fault of foreigners – and the money they do bring in to pay for their houses and their upkeep is real money that local tradesmen live on and local vendors can and do invest productively.

As we recited here the other day, the reasons for rapicly-rising house-price inflation are easily put. There are three::

• money became too cheap
• planning rules became too numerous, and
• it’s in the interests of the political elite to keep them that way.

Much has been written about the second and third. But just consider how cheap is the first.

The money used to buy houses is mostly borrowed. The way our system of money is organised, it is essentially debt organised into currency. Your Reserve Bank oversees the creation of this new money (new debt) that is being borrowed into existence – currently at the rate of around $3.8 billion of new debt/money every year – that’s a rate of money/detb creation of  between 8-13% per year.

And you’ll never guess where most of that new borrowing/new money goes: more than two-thirds of it ploughed directly into the already over-inflated housing market. Every year.

It’s a bit f’ing weak to blame foreigners for that.

Because to blame them for anything is frankly just a political sop. A bit of xeonophobic misdirection to get a new tax on the books.

But rest assured that like rust, the taxman never sleeps.  Every new tax starts with a single foot slipped quietly in the door like this one would be. First it’s one size ten inside your door, then two, and next thing you have a whole freaking home invasion. If this first step comes off, expect land taxes on everybody within this decade, and a fully-fledged wealth tax on everything soon thereafter.

Which will help no-one at all except the grey ones themselves.

This is precisely the sort of thing those parasites feed off.

Auckland world’s fourth-hardest place to buy a house

 

Yes friends, the bad news for all those living anywhere between Pokeno and Wellsford (or wanting to) is that the Auckland housing market is now the fourth-most unaffordable in all the places in the world that are measured by the study out this morning. Which is a lot. And Tauranga – Tauranga, with ample land around it on which to spread! -- is not far behind.

Frightening!

What the new study by Demographia confirms is that (as measured by comparing the median house price in a city to the median salary enjoyed by that city’s residents), Aucklanders have the fourth-most expensive city in which to buy a house in all off Australasia, Canada, China & Hong Kong, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States (I told you they measure a lot of places).

So that makes Auckland a more expensive place to buy a house, by this median multiple, than every city in this measured world apart from Hong Kong, Sydney and Vancouver. More expensive than Tokyo. More expensive than New York, Osaka-Kobe-Kyoto, and Los Angeles. More expensive than London!

In Auckland, the median multiple (the ratio of the city’s median house price to its median salary) is now 10.0. In London, it is 8.5.

In a normal housing market, in which supply is not constrained unnecessarily, that median multiple is around 3.0 – as it was for most of Auckland’s history until now, and as it still is in very liveable and relatively unconstrained cities in the US like Rochester, Buffalo, Cincinnati, Cleveland, Pittsburgh, Oklahoma City, St. Louis, Grand Rapids, Indianapolis and Kansas City (whose median multiples range from 2.5 to 3.0)

And Auckland continues to grow more unaffordable, not less, every year this study has been performed.

No wonder ACT’s David Seymour has broken ranks with his National partners, saying (accurately) that “the government's housing policy will go down as one of the most cynical pieces of politics in New Zealand's history.”

Here is the full press release and executive summary by the survey’s authors:

PRESS RELEASE:

New Zealand’s housing consensus:
Where is the political leadership ?
Hugh Pavletich, co-author Demographia International Housing Affordability Survey

The 1st Annual Demographia International Housing Affordabilty Survey was released early 2005.

These annual surveys, as Oliver Hartwich of The New Zealand Initiative within the Introduction to this year's edition makes clear, have proven to be an essential foundation for constructive public discussion of these issues.

By early 2007, the then New Zealand Opposition National Party, under the leadership of the young John Key, started to ‘use’ the housing issue to pressure the then Labour Government in the lead-up to the late 2008 election.

The Key-led National Party won.

Mr Key was extremely clear from 2007 through to the election late 2008, as this interview and  speeches at the time illustrate.

Sadly … post- election …the ambitious action man became the can kicker.

In advocacy terms however, the ‘tipping point’ was the October 2012 Government response to housing affordability report  ( video - media presentation ), led by then Finance Minister (now Prime Minister) Bill English … with the focus on –

• land supply,
• infrastructure financing,
• process and
• construction costs.

The performance since that time … now over four years ago … could most charitably be described as woeful.

The incompetence of a supposedly centre-right government has been extremely disappointing.

Mr Key had long been disruptive to progress on these issues ... again, as this writer made clear soon after the major October 2012 announcement with … Housing: Mr Key – Get on the Programme .

Since the October 2012 announcement, for example, Auckland housing has further inflated from about 6.7 times household income to 10.

Auckland’s median house price was $427,500 when Mr Key’s Government came to office late 2008 (refer 2009 5th Annual Demographia International Housing Affordability Survey ).

If prices had even been held at this level … with a sound mix of land releases and progressive bond financing of infrastructure … and with Auckland’s current median household income of $83,000, Auckland’s median multiple today would be 5.1 not the current 10.

Median house prices are currently way out of control at around $830,000.

Better still … if prices had been allowed to gently ease since late 2008 (as polling has illustrated most New Zealanders prefer … and currently getting underway in Greater Christchurch, led by easing rentals), then Auckland today would be well on the road to restoring housing affordability.

Auckland’s house prices would now be around 4 times household incomes, not the egregious 10 times incomes they are.

The median house price would be about $330,000 … not the current stratospheric and grossly irresponsible $830,000 !

Political failure of epic proportions !

Thankfully however ... there is now a very broad consensus across the political spectrum.

This is thanks to New Zealand being a dynamic democracy with an engaged and responsible media … as illustrated within the extensive postings within ‘Three Years On … The Great Consensus Emerges’ and the ‘2016’ sections of this writers archival website Performance Urban Planning .

This broad consensus is remarkable. A world first.

By May 2016, polling by Newshub/Reid Research  found an unprecedented 76% of the public dissatisfied with the Governments management of the housing crisis.

What had been a housing crisis worsened to become a political crisis as well.

I predicted late August housing would be Mr Key’s Waterloo.

Also during late August, Mr Key had an unfortunate  interview with Mark Sainsbury at Newshub. 

Labour’s Housing Spokesperson Phil Twyford followed, speaking competently with conviction.

Mr Twyford’s comments reminded one of Labour’s proud history on housing … Restoring the housing that Jack (and Norm) built ... Oliver Chan ... Spinoff.

Late November, the Labour Party leader Andrew Little spoke to the Property Council.

Housing concerns featured very prominently within the September New Zealand Herald’s Mood of the Boardroom 2016 .

Business leaders had lost confidence in Mr Key.  And even more so, his Housing Minister Dr Nick Smith.

Mid 2016 Nick Smith welcomed the Labour Party's call to abolish city limits.

Astonishingly, he has made no attempt whatsoever to reach out to other political parties to form a broad coalition on these issues.

The broad consensus is there. The only obstacles are political incompetence and inertia. 

In contrast, Labour’s Housing Spokesperson Phil Twyford, with his colleague David Parker,  are reaching out to other political parties, as happened with the Housing Accords Extension legislation earlier September … and on other occasions.

In private during September and with an election required by the end of 2017, Mr Key made the decision he was going to exit politics.

He had no intention of facing the music in 2017.

Within the meandering Media Conference on the date of his resignation … Monday 5 December … no mention was made of the housing crisis.

Remarkably, the journalists present failed to ask Mr Key … why ?

2017 is election year, with housing the Number One issue yet again as this pre – Christmas poll result made crystal clear.

Voters will decide who is capable of getting the essential changes in place … an exercise in sorting out the performers from the pretenders .

ENDS

---

EXECUTIVE SUMMARY:

13th Annual Demographia International Housing Affordability Survey

How does your city rate?

The 2017 13^th Annual Edition …

The 13th Annual Demographia International Housing Affordability Survey covers 406 metropolitan housing markets (metropolitan areas) in nine countries (Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States).  A total of 92 major metropolitan markets (housing markets) --- with more than 1,000,000 population --- are included, including five megacities (Tokyo-Yokohama, New York, Osaka-Kobe-Kyoto, Los Angeles, and London).

Rating Middle-Income Housing Affordability

The Demographia International Housing Affordability Survey rates middle-income housing affordability using the “Median Multiple,” which is the median house price divided by the median household income. The Median Multiple is widely used for evaluating urban markets, and has been recommended by the World Bank and the United Nations and is used by the Joint Center for Housing Studies, Harvard University. The Median Multiple and other price-to-income multiples (housing affordability multiples) are used to compare housing affordability between markets by the Organization for Economic Cooperation and Development, the International Monetary Fund, The Economist, and other organisations.

Historically, liberally regulated markets have exhibited median house prices that are three times or less that of median household incomes, for a Median Multiple of 3.0 or less.

Demographia uses the following housing affordability ratings (Table ES-1).

Housing Affordability in 2016

There are 11 affordable major housing markets, all in the United States. There are 29 severely unaffordable major housing markets, including all in Australia (5), New Zealand (1) and China (1). There are 13 severely unaffordable major markets in the United States, out of 54. Seven of the United Kingdom’s 21 major markets are severely unaffordable and two of Canada’s six.

The most affordable major housing markets in 2015 were in the United States, which had a moderately unaffordable Median Multiple of 3.9, followed by Japan (4.1), the United Kingdom (4.5), Canada (4.7), Ireland (4.7) and Singapore (4.8).  Overall, the major housing markets of Australia (6.6), New Zealand (10.0) and China (18.1) were severely unaffordable.(Table ES-2).

There are 11 affordable major housing markets in 2016, all in the United States. Rochester was the most affordable, with a Median Multiple of 2.5, followed by Buffalo (2.6), Cincinnati (2.7), Cleveland (2.7), Pittsburgh (2.7), Oklahoma City (2.9), St. Louis (2.9) and four at 3.0, Detroit, Grand Rapids, Indianapolis and Kansas City.

There are 26 severely unaffordable major housing markets in 2016. Again, Hong Kong is the least affordable, with a Median Multiple of 18.1, down from 19.0 last year. Sydney is again second, at 12.2 (the same Median Multiple as last year). Vancouver is third least affordable, at 11.8, where house prices rose the equivalent of a full year’s household income in only a year. Auckland is fourth least affordable, at 10.0 and San Jose has a Median Multiple of 9.6.

The least affordable 10 also includes Melbourne (9.5), Honolulu (9.4), Los Angeles (9.3), where house prices rose the equivalent of 14 months in household income in only 12 months. San Francisco has a Median Multiple of 9.2 and Bournemouth & Dorsett is 8.9.

San Diego has a Median Multiple of 8.6 and London 8.5, the same as last year. Toronto has a Median Multiple of 7.7, like Vancouver, showing a year-on-year house price increase equal to a year of household income.

There are 99 affordable housing markets of all sizes including 82 in the United States, 10 in Canada, 4 in Australia and 3 in Ireland (Table ES-3). The most affordable market is Racine (WI) in the United States, with a Median Multiple of 1.8.

There are 94 severely unaffordable markets, with 36 (of 262) in the United States, 33 (of 54) in Australia, 11 (of 33) in the United Kingdom, 7 (of 40) in Canada, 6 (of 8) in New Zealand and the one market in China. Singapore, Japan and Ireland had no severely unaffordable housing markets. 

The least affordable among the smaller markets is Santa Cruz (CA) in the United States, with a Median Multiple of 11.6.

“Best Cities” for Middle-Income Households

Every year, “best cities” and “most liveable cities” lists are produced by various organisations. Aimed at the high end of the market, these surveys virtually never evaluate housing affordability. Yet, the media often mischaracterises the findings as relevant to the majority of households.

In fact, a city cannot be liveable, nor can it be a best city to households that cannot afford to live there. Households need adequate housing.

The “best cities” for housing affordability are often better on middle-income urban outcomes that the high-end best cities that attract media attention. This is illustrated by a comparison between Dallas-Fort Worth, where housing affordability is far better than in Toronto, which was rated as the “best city” by The Economist. In addition to better housing affordability, traffic congestion was better and incomes were higher. This is despite the fact that Toronto employs the most favoured urban strategies, which Dallas-Fort Worth does not.

Another comparison shows that Kansas City has better middle-income outcomes that all of The Economist’s top 10 (for which data was available) in housing affordability and traffic congestion and higher incomes than all but three.

Excessive housing regulation has been identified as having significantly reduced economic growth in the United States and inequality internationally. It has complicated the inflation controlling role of central reserve banks.

Economic uncertainty is a substantial concern for households. It is important to keep housing affordable, so that households can live a better standard of living and greater poverty can be avoided. This requires avoiding urban planning policies associated with artificially raising house prices, specifically urban containment. Failing that, housing affordability is likely to worse further.

Paul Cheshire, Max Nathan and Henry Overman of the London School of Economics recently suggested that “… that the ultimate objective of urban policy is to improve outcomes for people rather than places” and that “… improving places is a means to an end, rather than an end in itself.”

Following that policy prescription, a number of cities (such as Dallas-Fort Worth, Kansas City) have achieved the objective of placing people over place For most of society, middle-income households, as well as lower income households, the best cities are where government authorities have overseen local housing markets competently, evidenced by housing that is affordable, all else equal.

The perspective of the Demographia International Housing Affordability Survey is that domestic public policy should, first and foremost be focused on improving the standard of living and reducing poverty.

Survey Introduction

The Introduction to this year’s Survey is by Dr Oliver Hartwich, Executive Director of The New Zealand Initiative, a public policy research organisation based in Wellington. Dr Hartwich has had a long association with the co-authors of this Survey, since his time with Policy Exchange in the United Kingdom.

Wendell Cox, www.demographia.com

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Handy Index:

MAJOR MARKETS … RANKINGS: http://www.demographia.com/dhi13-s1.pdf

MAJOR MARKETS … ALPHABETICAL: http://www.demographia.com/dhi13-s2.pdf

ALL MARKETS … RANKINGS: http://www.demographia.com/dhi13-s3.pdf

ALL MARKETS --- ALPHABETICAL: http://www.demographia.com/dhi13-s4.pdf

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Minimum wages. Again. [Update 3]

Phil Goff has gone where common sense has feared to tread. Desperate for the attention of anyone, even Matt McCarten’s union, he told Labour delegates over the weekend that if he somehow found his way into Premier House in November, the first thing he would be doing is to price unskilled labour out of the employment market.

Which is exactly what raising the minimum wage to $15/hour would do.  In fact, that’s what having a government-imposed minimum wage does. It sets a floor below which freely-agreed wage rates between employer and employee are made illegal, and would-be marginal employees are instead made depressingly unemployed.

It’s like kicking out the bottom rungs of the employment ladder, and telling the unemployed you’re doing it for their own good.

Now I doubt that Phil Goff disagrees with any of the analysis suggesting his move would cost young and unskilled jobs. Like Paul Bennett, he cares more about his job than theirs.  But if you really think that raising the minimum wage by one-sixth (by $2/hour, from $13 to $15) won’t affect the number of folk to whom employers can offer paying work, then I suggest you buy just as much when the price of beer goes up by one-sixth; just as much milk and cheese when the price of milk and cheese goes up by one-sixth; just as much petrol, as many hamburgers, as much on your mortgage.

If you think that putting up the costs of a thing won’t affect how much of the thing can be bought, then I have a large number of overpriced things right here to sell you.

It’s no different for jobs than it is for milk and cheese.

The only way that raising the minimum wage rate won’t affect any jobs at all is if raising the rate is simply a ratification of wage rises that have already occurred due to increases in productivity and investment. And if you think you’ve seen any of those, I suggest you head to the nearest optometrist to get your eyes looked at.

John Key reckons he knows all  this. He reckons Phil Goff’s wrong. Mind you, if he did know it and if he did care about it enough, then his party wouldn’t have raised the minimum wage rate in February. But they did, so he clearly doesn’t .

And if he did know about, and care about its effect on marginal employees, his party would have voted for Roger Douglas’s bill to abolish the ban on youth rates and so allow employers to pay youth rates again to young unskilled employees (the abandonment of which has seen youth unemployment soar).

But they didn’t. So I doubt he does.

PS: Just as ignorant as the claim that raising minimum-wages by fiat doesn’t cause unemployment is that claim that it does cause price inflation.  That it sets off a so-called “wage-price spiral.” The proponents of this argument reveal an ignorance even greater than Phil Goff’s.

Price inflation is a phenomenon in which we see universally rising prices right across the board. But if the price of Product A goes up because the wages of the those producing it have gone up, then that leaves less in consumers’ pockets to buy Product B, C and D—in which case the reduced demand for these products will lead to lower incomes for these producers and unsold stocks of goods.

The only way the prices of all products can go up right across the board is if the government expands the money supply so that all products can be bought at the new higher prices. In other words, if the increase in money wages is accompanied by a commensurate increase in monetary inflation.

Which is, I suggest, what Phil Goff is counting on when he talks about raising money wages.  At root, he’s just another inflationist.

UPDATE 1: Higher wages do not create price inflation. Don’t just believe me. After all, I don’t even wear a tie:

UPDATE 2: “Could someone please ask Phil Goff [asks Eric Crampton]why, if a fall in unemployment following a small increase in the minimum wage during a boom period is post hoc ergo propter hoc evidence that a large increase during a recession would not reduce employment, why he isn't promising to raise the minimum wage to $20?”

UPDATE 3: Danyl at Dim Post drops this dangerous graphic into the conversation and concludes “more research is needed.”

Malthus explains the problem with #TeamKey’s first-home buyer subsidy [update 2]

National launched their election campaign over the weekend, the headline grabber being a $20,000 taxpayer subsidy to first-home buyers.

Even Hard Labour knows this is risible electioneering, but they have no more real answers to fix housing than the Nats.  Not that long ago, socialist Venezuela experienced the same problems with toilet paper as NZ has with housing, and for similar reasons.  Eric Crampton summarises how NZ’s two main parties would be dealing with it:

Labour would put capital gains tax on toilet paper.
National would subsidise first-time toilet paper buyers.

Neither would have any effect. That is, neither would have any positive effect.

We’ve known for at least two-hundred years that subsidies don’t work the way politicians say they will – at least since British classical economist Thomas Malthus wrote his seminal Investigation of the Cause of the Present High Price of Provisions, which even Uncle Keynes thought was top stuff.

To make it easy for Bill English, I’ve translated the relevant passage into modern idiom:

NZ's finance minister prepares us for ballooning deficits

Politicians are rarely explicit in advance about how they plan to fleece the public; if you want a heads-up then you have to read their tea leaves. New finance minister Grant Robertson has just dribbled out one of these tea stains in the same way that John Key once did, one that shows what he really plans for at least the next three years.

You'll perhaps remember that before being elected in 2008, John Key, aka Smile and Wave, firmly denounced the failure of Labour's policies to contain rising house prices, which he swore once in office to contain. Once in power however, he confided that in fact he really rated this house-price inflation stuff, because it would inflate away the enormous repair bill of the country's leaky homes. (And we've all seen how well that inflation has worked out, haven't we, not least for all those young families trying but failing to get on the first rung of the housing ladder.)

Similarly, you might remember that before being elected in 2016, Grant Robertson and Jacinda Ardern, aka Smile and Waft, decried the National Party's $60 billion deficit, and announced their own ambition for severe fiscal rectitude over their three-year term. Now they're in power, however, Robertson has signalled that this "low level of public debt" (i.e., that same $60 billion) is just a platform for him to really get started.

As sharemarket turmoil in the United States spread around the world, Robertson said in an interview that he had real confidence in New Zealand’s economic fundamentals.
“Essentially the low level of public debt is a really important part of it.”

It's fair to ask here if Robertson is a hypocrite or just a chancer. It's possible of course that he's both, but in any case he's signalling here that he's ready to take "neo-Keynesian" remedies should sharemarket turmoil become something more -- good neo-Keynesians running surpluses in times of robust good health (as Michael Cullen did), and exploding the deficit when economic turmoil erupts in the streets.

So in that sense it's not hypocritical for a good neo-Keynesian to decry a $60 billion deficit at one point in time (when everything is coming up roses), and some time later (when things are not) to suggest that figure represents a "low level of public debt." It's not hypocritical but, when coupled with Winston's post-coalition announcement that we face economic turmoil in the very near future, it definitely suggests we should look forward to many, many years of red ink ahead -- which means many, many years of good money being sucked away into piss-poor projects and monument building.

Don't say I didn't warn you now.

[Pic from Vicki Richards]
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Government finally plans to address unaffordable housing. But… [updated]

Graph from Rodney Dickens’s report “Quantifying the Housing Affordability Time-Bomb”

FOUR YEARS AFTER THEIR election pledge to address housing unaffordability, and ten years after the housing bubble began to seriously inflate, the National Government is finally making noises about the problem.

Unfortunately, I’m not sure they’re the right noises.

Short on specifics as yet—apparently there is a paper being submitted to Cabinet today outlining “a multi-pronged work programme” issued in response to the Productivity Commission's report on this issue,* after which we might perhaps learn more—and not a  peep has been heard out of housing minister Phil Heatley—so all we have to go on presently are the noises about this made over the last week and weekend by Finance Minister Bill English.  And those noises are not altogether encouraging.

English identifies housing affordability as a problem, yet his characterisation that the "housing market is not working properly” is neither accurate nor helpful.  The housing market is working as well as it can within the shackles and costs placed on it by government and councils. What is not working however are the planning, regulatory and rates burdens that constitute those shackles and add to the costs—such that between 1992 and 2012 the national average house price increased more than four times more than prices in general, which should ring warning bells.

IT IS ENCOURAGING THAT English is framing the debate around Hugh Pavletich’s annual Demographia  International Housing Affordability Surveys,** which now show the median cost of a house in New Zealand is 5.2 times the median income in New Zealand, and in Auckland 6.4 times median income.

Any ratio above five is considered unaffordable [says English in last week’s Herald]. Despite demand for low cost houses, relatively few are being built - in part because of the very high cost of land, particularly in Auckland.

Yesterday on Q+A he expanded on that, recognising “there are a number of problems.”

One is the cost of building. That does appear to be pretty high, particularly compared to Australia. There's a lot of work being done on why that might be the case. More scale, building regulation - all of that can be improved, and that process is underway.

While it is accurate however to say “that process is underway,” it is totally inaccurate to characterise Maurice Williamson’s amendments to the Building Act as anything but a sop. Nothing proposed therein will help reduce the increasing time, costs, delays and uncertainties involved in getting a building consent and in enduring the inspection process on site—instead he will be imposing new costs and further muddying the already opaque waters around risk and responsibility.   Not to mention the licensing of building practitioners, which will further reduce the already low number of builders in the country while doing nothing to ensure their quality. All of which will further reduce the number of houses being built.

And while the cost of building materials sky-rocket, nothing proposed therein is going to make it easier to break what is essentially a “regulatory wall” of box-ticking making it almost impossible for NZers to use inexpensive foreign materials, or to enjoy the cost-savings of innovative building systems and techniques and systems. Systems like these Structural Insulated Panels, which are used in Canada, Europe, the US and Australia to great effect—low cost, low risk, low energy, huge insulation value, robust--but which are virtually impossible to build with here at home under our command-and-control building regulations that dictate virtually every detail of every new build.

There will be no innovations in NZ’s high-cost labour-intensive building techniques until innovative systems such as this can be painlessly introduced and exploited—perhaps only when councils themselves are taken out of the chain of responsibility for policing building standards…

WARNING: White noise on housing (updated)

Fascinating to see that in today's speech to parliament outlining her election-year programme, Helen Clark has signalled that her government will be making crown land available for new housing.  This is Clark's first genuine salvo in the battle with increasing housing unaffordability, and a bid to outflank John Key's platititudinous four-point plan for housing affordability announced at last year's National party conference. 

If the Clark scheme does manage to spike one of U-Turn Boy's key 2008 campaign guns, it will only be like spiking a pop gun -- even if the powder of Clark's own scheme is as wet as I expect.  On its face the idea is a good one and I look forward to the details, but I expect that we'll be looking at a similar sort of scheme proposed by the British Labour government last year -- one that that British writer James Woudhuysen called "a kind of Army Surplus approach to housing."

‘Public sector land use’ ... turns out to be barracks, canals, railway sidings, and turf owned by the National Health Service (NHS) or by local councils. Here we are asked to scrape the bottom of a very small barrel. In effect, the [government] searches for the public sector bits of the 5.5 per cent of England’s surface that is brownfield land.

In effect, as Woudhuysen says, this amounts to little more than a little massaging of existing "ultra-restrictive land provisions" in the addled expectation it will have some effect.  It won't. 

The hope is that a tiny relaxation of planning constraints will encourage the private sector ... and numerous hybrid housing vehicles, state monoliths and quangos to build more homes, especially homes that are ‘affordable.’

That approach won’t work. It will mean some extra homes are built, but it will not make proper home ownership cheap. It will provide jobs for – and protracted quarrels amongst – many happy middle-class people: planners, architects, building employers and environmentalists. Yet precisely because what it is proposing amounts to a job-creating exercise in changing jurisdictions and diffusing authority, the government will find that all its eye-catching, bullet-pointed initiatives will not lower the sale price, the rent, the maintenance costs or the buildings insurance attached to a real home.

It's impossible to say without seeing Clark's own eye-catching, bullet-pointed initiatives, but I suspect her proposal is little more than election-year white noise.  Even if Bernard Hickey is right that house prices will drop by up to thirty percent over the coming year, something more radical is needed.  Woudhuysen has such a proposal, one on which both Clark and U-Turn boy should sit up and take note.  I paraphrase his proposal for a New Zealand audience:

Real homes will only become affordable if, in principle, everyone can go to a farmer, buy a hectare of land for $30,000, and freely build a house there at a cost, perhaps, of just $100,000. That kind of transaction would lead to significantly lower prices than the $390,636 average asked for a home in NZ today. The state should stop preventing deals like this from being done. It should step back, and instead provide the infrastructure to let that house-on-a-freely-bought-hectare thrive.

That such deals can't be done, and won't be done as a result of either Clark's or Key's announcements is a measure of the overbearing powers of the state in relation to the land.

Ever since the Town and Country Planning Act of 1927, to buy that $30,000 hectare of land and build on it has been illegal. The nanny state, not the popular will, determines who may build where. The state essentially retains a complete monopoly over what land can be developed for housing and what cannot. To end house price inflation therefore, Britain must end its state-imposed scarcity of land.

The lack of affordability that characterises Britain’s housing market is not about too many people – single-person households, divorced families, immigrants and their children – chasing too few homes. It is not simply an economic question of supply and demand. The housing market is profoundly distorted by the political intervention of the state, which imposes drastic limits on land that can be developed upon. Only a similarly drastic counter-attack on state controls, amounting to a veritable bonfire of National's Resource Management Act and the country's forty-odd District Plans will allow housing in NZ to acquire a semblance of either rationality or efficiency.

What's needed in other words is not massage or spin, but a planning revolution -- one that sees the country's planners joining the shortened queues of the unemployed.

UPDATE 1:  The bureaucrats have obviously been given their talking points this morning ahead of the Prime Minister's speech this afternoon. 

Government  building 'experts' BRANZ (the chaps who okayed the cheap Tuscan claddings on nineties housing) for example have two chaps talking up Clark's bullet points in advance.  Ian Page is an economist with BRANZ, and if you find yourself wondering what sort of economist would want to work for this sort of organisation, then you only need to read his analysis to find out it's a very poor one.  Burgeoning land prices are affecting housing affordability, says a 'report' co-authored by Page, while developers are controlling ample supply.  Says 'research strategy manager' Chris Kane of BRANZ, the problem is not the state's restrictions on land development but greedy developers who are keeping their land off the market. Wellington City Council urban planning director Ernst Zollner followed on the talking points by "confirming" there were "huge tracts of land in Wellington zoned for housing ... but that doesn't mean it's available. In Wellington the land is tightly held by a few men," he said.

All this is a miasma of bureaucratic bullshit, as just a moment of thought and a sprinkling of real fact is enough to show. 

First of all, New Zealand's cities are among the least dense in the world, and land in them amongst the most expensive compared to income -- it's the planning restrictions put on land by councils themselves that makes them so.  And as with Auckland's planning gurus boasting about "releasing" land (ie., taking some rules off land owned by you and me), the amount 'released' is nowhere near the amount of land that's needed under current planning rules.

Second, and with all New Zealand's major cities ring-fenced by zoning, there's a rent-seeking bonus for any land-owner who owns land just outside the ring-fence or in a lower density area if he can sit tight until the zoning changes (or if he can wine and dine the planners and councillors and encourage them to change it). With the holding costs of empty land, you're only going to keep it empty if there's a huge windfall profit at the end of it -- such profits only come when plan changes rezone land from higher densities, which is what those developers are waiting for, and one reason they have such good budgets for wining and dining*.

Frankly, both ring-fencing around cities and enforcing lower densities within them are the twin causes of the problems (and its the state giving planners power to do both that needs to be expunged).   There's no problem with sprawl if the ring-fencing were relaxed (New Zealand's urban areas account for less than 1 percent of the total country, one quarter of that in the Auckland region. If all of NZ's 1,471,476 existing households were to be rebuilt on an acre of land -- which was the sort of thing proposed by Frank Lloyd Wright in his Broadacre project, right-- we'd all fit in an area less than one-quarter the size of the Waikato , and just think how easy it'd be to thumb a lift out to Raglan!).  And there's really no problem with higher densities within cities if the planners are muzzled, if the private sector gets to offer buyers what they want, and if the state is barred from building the sort of thing the state always likes to build -- which is building the slums of tomorrow.

What it comes down to is choice.  If people were only left free to live in the way they wanted -- however apoplectic that made all the many enemies of choice -- the problems of housing unaffordability would disappear overnight.
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* As James Woudhuysen explains the point,

A housebuilder once typically took out an option with farmers so that he could buy their greenfield land at an agreed price in the event that he secured planning permission. However, once state policy shifted decisively toward high density, brownfield development, housebuilders found options on urban land much more expensive than the old sort. That made them build up their own stocks of land, whose price they could rightly expect to appreciate very nicely over just a few years. Land banking is a symptom of the inability of the housebuilder to deal with farmers through options, [and] because the state has decreed that low-density suburbia can no longer be his core business.

UPDATE 2:  Owen McShane told Leighton Smith the BRANZ report itself is one of the best he's seen, and says nothing like what's been reported -- which if true means it's the reporters who are following the Prime Minister's talking points, and those like me who relied on the reporters' integrity have again been misled.

What the report does show, says McShane, is that in Auckland for example it's the ring-fencing of the city by Auckland Regional Council planners that is causing land prices to explode.

UPDATE 3:  McShane also warns that Clark's speech and the talking points foreshadowing it are likely to see the announcement of a new policy from Team Red allowing the taking of private land by the state, to be given to other developers who suck up to nanny.   If true, this  presages the worst violation of property rights ever in this country, and shows what happens once respect for property rights is dead.

And there'll be no opposition at all from the blue corner, since it's a policy already announced by John Key in his point 2a of his "four-point plan" announced last year.

UPDATE 4:  Regarding that speculation about new laws to be introduced by the Clark Government allowing the involuntary acquisition of private property by the state, I could have said its introduction would effect the worst property rights violation proposed since National's U-Turn Boy proposed it himself last year ... or I could have said it will be the worst legislative attack on property rights since the National Party introduced the Resource Management Act in 1991 ... or I could have said that it presages the worst property rights violations since those empowered under the Public Works Act, which was introduced by the National Party in 1981...  Do any supporters of the National Socialists see a pattern here?

As it is, Helen Clark and the Red Team will simply be completing the path of property rights destruction begun by the Blue Team.  Remind me again why anyone would think the National Socialists are the answer?

UPDATE 5:  Helen Clark's speech is here.