Govt plans supply side action on housing (Danya Levy, Fairfax, 29/10/2012)
Finance Minister Bill English has indicated the reforms will force councils to open up more urban land to be redeveloped and allow more sites on the outskirts of cities to be zoned for housing. The Government also wants to speed up and simplify planning processes.
Key today said there would also be no first home-owner schemes, despite him being in favour of them, because the Government didn’t want to boost demand for houses before addressing supply issues.
“Capital gains taxes do not work,” he told TVNZ’s Breakfast programme, adding the scheme proposed by Labour excluded three-quarters of all housing. “So what it encourages people to do is buy big houses in Parnell and Remuera and ditch their beach house because the beach house would be included and the home in Parnell would be excluded.”
I can’t believe anyone could be so out of touch with the lives of 99% of New Zealanders.
Maybe for the 1% on Planet Key this is a real dilemma. But the rest of us aren’t agonising about how many mansions and beach houses we should own, but about how we can get by and pay the rent or the mortgage so that one day we can be free and have a place to lay our heads without paying the aforementioned Planet-Key-1% large chunks of our income for the privilege of living.
If he’s right about how Labour’s capital gains tax would affect incentives for him and his rich friends, then I guess we need to be harsher on him and his rich friends. We should introduce a capital gains tax that hits rich property owners harder than what Labour are suggesting, not ignore the exploiter/exploited relationship and pretend the only supply-side problem in the housing crisis is a lack of building consents.
National’s law changes may bring prices down in the long term, and so they may eventually increase housing affordability for those of us for whom housing affordability is the relevant concept, not investment returns. But when it will only be profit-maximisers building new housing, the changes will ultimately also improve things for property developers. The idea that the only way to help the struggling majority is to first help the privileged and exploitative minority is just as badly out-of-touch as John Key’s musings about whether someone should own a beach house and/or a Remuera mansion.