Monday 9 January 2017

#TopTen | #2: John Key had an unbelievable solution for affordable housing

 

Today I’m blogging last year’s second-most popular post here at EnZed’s fourth-most read political blog, with the strange tale that John Key not only knew that New Zealand had a problem of unaffordable housing, not only did he know the problem was urgent, but he had already announced an unbelievable solution to fix it.
Trouble, was, this was way back in 2007 in one of his major election speeches …


John Key has had an unbelievable solution for affordable housing
11 October, 2016

John Key has an unbelievable solution for affordable housing, which he recognises is urgent – and made more urgent by government inaction. He says as much here in a major speech to the contractor’s federation:

It wasn’t so long ago, in the 1990s, in fact, that New Zealand had a high level of home ownership compared to other countries. Not so anymore. We now have what has been described as the second worst housing affordability problem in the world.
    Make no mistake; this problem has got worse in recent years. Home ownership declined by 5% [in the last five years] to just 62.7%. To put that into context, home ownership for the preceding five years had been stable at 67.4%.
    If you dig down into those numbers a little deeper, some worrying facts emerge. The share of homes owned by people aged 20 to 40 dropped significantly [in that period]. Young people – the people we most want to prevent joining the great Kiwi brain-drain – are really struggling to get onto the property ladder.
    This decline shows no signs of slowing. In fact, on current trends, the crisis will only deepen. Home ownership rates are predicted to plummet to 60% within the next decade. And one of the biggest factors influencing home-ownership rates over the next 10 years will be the difficulty young buyers will have getting into their first home.
    This problem won’t be solved by knee-jerk, quick-fix plans. And it won’t be curbed with one or two government-sponsored building developments.
    Instead, we need government leadership that is prepared to focus on the fundamental issues driving the crisis. National is ready to provide that leadership. Earlier this month I announced our four-point plan for improving home affordability:

    1. Ensuring people are in a better financial position to afford a house.
    2. Freeing up the supply of land.
    3. Dealing with the compliance issues that drive up building costs.
    4. Allowing state house tenants to buy the houses they live in..

National’s goal is to turbo-charge the supply of housing in New Zealand by confronting the fundamental constraints that have kept a lid on it. By contrast, Labour’s instinctive reaction to the housing supply problem is to say the government must get in and build some houses…. I think it’s dangerous for the Government to pretend that developments such as that [government-promoted scheme] at Hobsonville are some sort of panacea to the housing affordability crisis…

Great stuff, don’t you think? Magnificent in today’s context.

Well, let’s get real here. If we want to make houses more affordable for first-home buyers, we need more houses to be built as cost-effectively as possible. Unless the Government thinks it can do the job all by itself, we’re going to need property developers to come on board.
    That means providing a legislative and regulatory environment that makes it cheaper and easier for people to develop and build houses. That helps first-home buyers.
    Going back to basics, supplying a house requires the following things:

     Land to build it on.
     Someone, i.e. a developer, who is motivated to build on that land.
     Regulatory consent to build on that land.
     Resources, i.e. materials and labour, to build the house.

So, it’s safe to assume that when supply is lacklustre then something must be going wrong with one or all of these things. That’s certainly the case in New Zealand:

     There’s been a lack of land available to build on.
     Opportunities for developing the land have been reduced, and the costs of doing so have got bigger.
     Acquiring resource and building consent has got harder and harder and takes longer and longer.
     And resources for building, particularly skilled trades people, have become scarcer.

If we’re serious about increasing housing supply, we need to enhance the incentives to build new houses by addressing these problems. Because, for as long as the costs of development keep rising, housing investment will fall and housing affordability will get worse.
    So, National’s plan for housing affordability tackles these supply-side problems in two main ways. First, by freeing up the supply of land and secondly by dealing with the compliance issues that drive up development and building costs.

Great stuff, I”m sure you’ll agree – and I can’t wait for him to get on with it.

Sadly, however, this was not John Key speaking this week, this month, or even this year.

Not even this decade.

No, it was the Prime Minister speaking in 2007, before he was even Prime Minister.

And this decade? Since you lot voted him in? Since he got the top job? He’s done nothing. Nothing for nine long years.

Nothing to ensure people are in a better financial position to afford a house.

Nothing to free up the supply of land.

Nothing to deal with the compliance issues that drive up development and building costs.

Nothing. Nothing at all.

Zero – apart from a smile a wave and a small litter of panacea projects to grab a headline and do nothing to solve the problem.

Nothing that Labour before him had not already (not) done.

And so, now, nine years later, even fewer people own their own homes, even fewer young people even try to, and we read this in this afternoon’s news …

The Government is tightening the number of residency permits it grants, in a bid to stem rising demand among foreigners to live and work in New Zealand… A spokeswoman clarified that the changes were a bid to pre-empt rising demand for residency, which was forecast to blowout beyond the normal planning range within a few years.

… and this in this morning’s:

The Government is preparing to build tens of thousands of houses for private sale in Auckland as it tries to tackle the city's housing crisis, Finance Minister Bill English says.

More intervention to cure (not!) the results of all the previous intervention (and the failure to fix all the previous intervention) of this government and every other.

A restriction on immigration and one or two government-sponsored building developments, even more panaceas, neither of which will come close to curbing the problem this government’s inaction has caused, and more problems down the rack from both. Not mention the effect on every would-be buyers and would-have-been immigrant.

Market failure? No, it’s not. It’s abject, complete and self-evident government failure. Government failure by the very political party that introduced and administered both the RMA and the Building Actthe two pieces of legislation which have done more than any other to hamstring builders and land-owners and create this torrid mess, two shackles on enterprise that the Bolger Government introduced, that the Shipley Government did nothing to repair, and that the Key Government has never begun doing anything with other than tinker.

And some of you people still support these malodourous, malingering, irresponsible, do-nothing pricks.

It makes me want to turn to heavy drink.

[Hat tip Hugh Pavletich]


Tomorrow, last year’s most popular post by far: a guest rant about a Nobel Prize winner or two …
Join me then.

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1 comment:

paul scott said...

Quite a few other writers backed up your general thesis of the PM who kicked cans down the road for about a decade. A few weeks after his slipping away, his reputation is just as shallow.
Bill English is now carrying on the process of separatism, co-governance and apartheid.
Most people will not like the results of the 2017 election, but the traitors to democracy, nanny blue rinsers have brought it on themselves.
It is too late now for the 5th Nat Government to recover from her gross negligence and apathy, and the sleepy old girl does not even seem aware of the danger.
One other thing about John Key, he seemed aware that the wind has changed, and quietly and gutlessly slipped out the back door.