NZ POLITICS DAILY: Sceptical reaction to housing affordability plan

Housing is a political minefield, affecting every single voter one way or another.

After all, it’s an industry, investment, business, nest egg, bureaucracy and, ultimately, a roof over our heads.

Yesterday the Government outlined its plan to deal with what is widely accepted as a major problem (particularly in Auckland): the lack of new affordable housing.

Most reaction to the announcement was fairly sceptical as to whether house prices would really be reduced. It is too little, too late says Duncan Garner: ‘The horse has bolted in Auckland and National's changes won't go anyway towards catching it. It has shied away from getting hands on or even getting its hands dirty’ – see: Government's housing changes are underwhelming. Garner is very dismissive of National’s proposals, and even suggests that Labour’s criticisms have been too mild.

Similarly, John Armstrong reports that there has been a ‘ho hum’ reaction to an empty announcement – see: National’s affordable housing package lacks any substantial detail.

Hugh Pavletich, co-author of the Demographia housing affordability survey, said the proposals were a step in the right direction but were weak and sorely lacking in any concrete detail – see Claire Rogers’ Government plans to make housing affordable. Even when finalised, the plans will largely depend on the co-operation of local councils, and it may take another three years before any changes to residential planning processes come on-line – see Alex Tarrant’s Government releases response to Productivity Commission's housing affordability report.

At least it seems that the debate might finally move beyond the false dichotomy between ‘urban sprawl’ and ‘higher density’, with the Government including both strategies in its plan to the approval of the Auckland Mayor – see: Auckland mayor pleased at approach. This is welcomed by Libertarianz blogger, Peter Cresswell, but he thinks that the local councils should be removed from the equation so that people are ‘free to choose. That’s the path to genuinely liveable cities, and to affordability’ – see: “Sprawl” versus “intensification”. Richard Long also believes councils should be removed from the consent process – see: Nats’ turn to try to solve housing crisis.

No such radical reforms are being contemplated but, as you would expect from a National government, the public focus is more on cutting red tape, and Adam Bennett says that ‘the package also includes significant changes to the Resource Management Act’ – see: English calls for more land.

While this gives at least the impression that there is something the Government can and is willing to do, it is clear that there are other much more difficult issues involved, as evidenced by the Auckland Council pointing out that current building activity is only using a quarter of the city sections currently available.

Previewing the announcement on TVNZ’s Q+A, Bill English admitted that there was ‘market failure’ in low cost housing. In analysing his comments Tim Watkin writes that the public admission that more intervention is required is politically dangerous: ‘Start using such words and you pretty soon you have to start delivering results. Hence my point that he's grasping a third rail – start talking about a broken property market and the dangers of rising house prices and people pretty soon start expecting you to do something about it. And blame you for it if nothing changes’ – see: Bill the Builder – can he fix it? Let's hope he can!

The main theme of the policy is to increase the supply of housing and lower its cost. Other possible tools – such as financial assistance to first-home buyers – are feared as they may simply force the price of houses up further, although John Key indicated he was in favour of such schemes in the future – see Danya Levy’s Govt plans supply side action on housing.

Some are questioning whether this supply-side focus is justified. Speaking on One News, economist Gareth Morgan said the problem was actually that of artificial demand: ‘It's people buying multiple houses. So it's people not buying houses to live, they're buying them as investments – see: Housing cost crisis in Government's sights. Developing this theory further, Bernard Hickey says that it is therefore not in the interest of current house owners to have the cost of houses lowered, and that means further blocking of development is likely: ‘It has proved a profitable strategy for homeowners and land-bankers, given the median house price in Auckland has more than doubled to $515,000 in the past 10 years as the number of building consents has more than halved – see: Nimbys thwart housing options.

The answer according to today’s Herald editorial is to introduce a capital gains tax, because there’s too much demand due to rental property investment – see: Tax change would help ease housing. If tax-free capital gains are the carrot keeping investors in the housing market then their experience in the sharemarket and, more recently, with finance companies is the stick preventing investment in more productive assets.

Despite the extreme mildness of National’s proposals, voters may still appreciate the efforts being made as other political parties have failed to impress in this area. Labour was in power for the decade that created this housing crisis and did virtually nothing to counter the worsening situation – especially for its poorer constituents. The Greens also appear opposed to the release of more land for housing and unenthusiastic about spending substantially more on the provision of social housing. James Henderson at the Standard pokes fun at Bill English for not seeing the obvious answer in his search for a large scale developer with access to capital and land willing to build low cost housing – see: On the tip of his tongue. This ‘ideological blindness’ appears to afflict both sides of the house, and so National will not be particularly unhappy about increased public discussion about housing affordability – the Government has had worse issues being discussed in recent months.

Other recent important or interesting political items include:

* Although its leaders admit that they somewhat lost their way politically, the potential solutions offered at the Maori Party’s annual conference didn’t really seem to show a clear path for the future. The main problem is that their role is disappearing says Audrey Young: ‘In reality it has seen itself more as a facilitator of the Crown and iwi groups. But with the rising influence of the iwi leadership group and the iwi chairs forum, no go-between is necessary – see: Maori Party needs to refind its focus.

The call to embrace Pakeha candidates and voters seems opportunistic rather than heartfelt. Martyn Bradbury was quick to point out that just a year ago Pita Sharples was attacking Hone Harawira and Mana for including Pakeha – see: Maori Party identity crisis. Will it work? Anthony Robins at the Standard thinks it’s ‘worth a try I guess, but I don’t see any reason for Pakeha to be any more impressed with the Maori Party’s performance than Maori are themselves’ – see: The slow decline of the Maori Party. The reality is that the party has a desperate fight to just hang on to its three existing seats. Tariana Turia is the only one with a comfortable majority and even that plummeted in 2011 from nearly 8,000 to just over 3,000. The party vote may be the only way they can avoid becoming a one MP party. Despite this, the party’s ageing leadership is staying put and Te Ururoa Flavell, who seemed chaffing at the bit to replace Sharples after the last election appears resigned to waiting – see Adam Ray’s Turia, Sharples to stay with Maori Party.

* Do New Zealand export companies participate in corruption in overseas markets? Transparency International has released survey results that show businesses frequently participate in bribery – see Hamish Rutherford’s NZ firms 'complacent' about bribery overseas.

* The ‘red-green-black trio of opposition parties’ of Labour, Greens and NZ First have much in common – especially their opposition to the orthodoxy of new Reserve Bank Governor Graeme Wheeler, according to Colin James in his ODT column, Wheeler stance uneasy with opposition. Yet James points out that Labour differs strongly with the anti-free trade stances of the Greens and NZ First, and this could eventually be the undoing of ‘the red-green-black dalliance’.

* The latest poll is Grim news for Labour leader writes Gordon Campbell, and Irish Bill at the Standard agrees that it is not just a rogue poll – see: The job ahead.

* The hope in the Beehive is that the worst is over for 2012 but Tracy Watkins has compiled quite a long list of possible pitfalls still to come in Year's end could turn ugly for National. The Prime Minister’s recent woes show that the pragmatic and relaxed style that proved so effective for National will ultimately be his undoing says the Political Scientist blog in a lengthy but interesting essay – see: Key’s approach won’t work “over time”.

* The National Government is practising what it preaches in terms of state ownership of ministerial houses – it’s been partially privatising them. Adam Bennett reports today that over the last three years the Government has sold off three of its eight ministerial houses – see: Sale of three ministerial homes and contents raises $3m. The remaining five are worth about $18m, and won’t be sold.

* Has justice ‘cut off its nose to spite its face’ with the decision to throw out charges against gang members because of police misconduct? Stephen Franks thinks so (Judge applies islamic terrorist principles in Red Devil case) and so does John Roughan: Justice mounts a high horse. Others think the line had to be drawn and we should be thankful – see Chris Trotter’s We owe a huge debt of gratitude to Justice France, Catriona MacLennan’s Time for inquiry on police actions and even the Nelson Evening Mail, where the Red Devils operate – see: Red Devils bring a black day for police. In any case it was a tough week for the cop in charge - see Steve Braunias’ The Secret Diary of . . . Detective Inspector Grant Wormald.

* Grand Designs presenter and designer Kevin McCloud is so concerned about the Christchurch rebuild process that he has written an open letter – see: Dear Christchurch - get it right.

* Finally, Jane Clifton reflects on why Lockwood Smith's stocks have fallen dramatically towards the end of his tenure as Speaker and an old testament style plague in the Beehive – see: Roadkill, a fly infestation, and the Speaker’s “hypocrisy” tangle.

Bryce Edwards

NZPD Editor (bryce.edwards@nzpoliticsdaily.co.nz)

Today's content:

Housing

John Armstrong (Herald): National's affordable housing package lacks any substantial detail

Duncan Garner (TV3): Opinion: Government's housing changes are underwhelming

James Henderson (Standard): On the tip of his tongue

RNZ: Govt says housing plan relies on local councils

Newswire: More land for housing

Alex Tarrant (Interest): Government releases response to Productivity Commission's housing affordability report

Tracy Watkins (Stuff): Councils could have to rezone land

TVNZ: Breakfast: Housing report 'considered and sophisticated response' - Len Brown (7:21)