Category: earthquake

National’s big housing announcement: tinkering for the middle-class, hand-outs for the rich

One-word summary: Pathetic.

Scoop cartoon housing crisis I’ve blogged before about National’s staggering denial of the housing affordability crisis. It seems they’ve now woken up somewhat, as they’ve released a housing policy as the flagship policy announcement of their campaign launch.

They claim to have “overhauled” the existing scheme (introduced by Labour in 2007) whereby you can withdraw from your KiwiSaver savings for a deposit on your first home, and many people can get a government top-up too.

In fact, they’re only making a few changes to the scheme:

1) They’re increasing the house price limits – you can now buy a house worth more and still be eligible for the top-up. This is good and necessary, given our skyrocketing house prices. But it will be generally wealthier people gaining eligibility.

2) That’s even more true for the second change: Currently, the top-up is $1,000 for every year you’ve been in KiwiSaver, to a maximum of $5,000. National will double these amounts, but here’s the kicker: only for those buying or building brand new houses.

3) Aside from the top-up, you can currently only withdraw your employee and employer contributions for your first home deposit. National propose to let you withdraw your annual government contributions (max $521/year) too. I’m actually 100% behind this, and don’t know why it’s not already the case – but, again, the people with the maximum government contributions will usually be wealthier.

4) In October, the Reserve Bank introduced Loan-to-Value ratio restrictions, meaning most buyers now need a 20% deposit for a home loan. This has slowed house-price inflation, but also priced poorer people out of the market. Under National’s proposal, first home buyers will now only need a 10% deposit. This will certainly help, but it’s only a partial backing-away from the Reserve Bank’s policy.

I agree with most of the above, and I’m glad the government have stopped ignoring at least one aspect of the housing crisis.

But there are at least five significant problems, which mean this policy completely misses the mark:

Firstly, it’s pretty small-fry. A lot of it is good, but “tinkered” or at best “expanded” is more accurate than “overhauled.” A couple with maximum eligibility will be able to draw $7,294 more of their savings for their house deposit. If they can afford a new house, they’ll also get $10,000 more from the government. They’ll also probably benefit from being able to buy with a lower deposit – let’s round up the total benefit to $20,000. But that’s still only how much house prices inflate in Auckland and Christchurch every few months. (If you’re buying on your own, all these amounts will be halved, except the house cost/inflation of course.)

Secondly, it helps the better-off the most. “Maximum eligibility” does not correspond to maximum need, but maximum privilege. This is already a flaw with KiwiSaver and the home withdrawal scheme – the people with the most to withdraw are those who’ve earned the most since 2007. But it’s compounded under National’s proposals.

Even more significantly, while the proposed expansions let normal buyers withdraw more of their own savings, they give an extra hand-out of $5,000 per person free money to those who can afford to build or buy new houses. How many people do you know who can afford a new house, let alone for their first home? If you can think of anyone, I’m guessing they either have parental assistance, inherited wealth or very high-earning jobs (you can earn quite a lot and still be eligible, btw). Acknowledging that even these privileged people need help buying homes is admission that our house prices are out of control. But it’s disgusting that the less-well-off are denied this generous and much-needed hand-out.

Thirdly, National’s numbers look impressive by themselves (90,000 helped! Thousands of $ of support! Only costs $218 million!), but if you actually whip out your calculator and analyse them, you’ll notice that only the 10,000 luckiest will be eligible for the big bucks, their mortgages will still be officially classified as 150% unaffordable, and even with these big benefactors pushing up the average, the average assistance is only about $2,000 per home-buyer.

Fourthly, this only helps people buy their first home; it doesn’t do anything about the investors with multiple homes, crowding the market and pushing both rents and house prices sky-high. Unlike in most other countries, you can still “earn” tax-free passive parasite income off other people’s poverty, and unlike Mana, Green and Labour, National don’t see a problem with this (not surprising, since many of them are property investors themselves).

Fifthly, the best National can offer is modifying an old Labour idea, which speaks volumes about their lack of vision. Labour thought up KiwiSaver in the first place, and now they, Green and Mana actually have new ideas to help people into home ownership – and, unlike for National, the most emphasis goes to the people that need it the most.

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Housing crises are great for Brownlee’s net worth

10041146Graph from The Press

A quick recap on the NZ and Christchurch housing affordability crises:
– 80s-present: NZ housing affordability worsens throughout the neo-liberal era (p. 13-14, 68-70).
– 24/1/2011: Auckland, Christchurch, Wellington and Tauranga house prices assessed as “severely unaffordable.”
– 2010-2012: Canterbury earthquakes reduce housing supply and increase rental housing demand.
– 20/3/2012: National and Gerry Brownlee decide to leave the market to sort out the Christchurch housing crisis.
– 18/6/2012: Brownlee suggests rent rises in Christchurch aren’t “astronomical” compared to other cities.
– 29/6/2012: Brownlee and John Key deny there’s a housing crisis in Christchurch.
– 7/7/2012: Brownlee says he can only see positives in Christchurch’s skyrocketing rents.
– 29/10/2012: John Key rules out a capital gains tax like most countries have, simultaneously showing just how out of touch he is.
– 27/8/2013: Housing is now less affordable in Christchurch than Wellington.
– 14/5/2014: Christchurch rents projected to hit Auckland levels in January 2015. Housing Minister Nick Smith suggests “the real problem” is not enough rental accommodation for tourists.
– 15/5/2014: The Budget offers a pittance and cuts for housing, and worse for Chch.
– 19/5/2014: An OECD report finds New Zealand has the most over-valued houses in the developed world. Key, true to form, disagrees with the OECD, and tries to spin the news as a positive as more people are entering the “housing market.”

A consistent theme emerges in the current government’s attitude to these developments: (a) there’s no crisis – if anything it’s a good thing, (b) if there is a crisis, the market will sort it out by itself (because dog-eat-dog individual selfishness systems are great for the vulnerable, eh).

It’s tempting to say they’re simply idiots, but it’s better to ask which groups in society are they representing, and which aren’t they?

For most groups in society, the above information amounts to a housing crisis nationwide, and particularly in Christchurch. But for one group, rapidly rising rent and house prices doesn’t amount to a crisis, but an opportunity for increased profit. This is the group that treats housing as an investment, not somewhere to live: rental property investors.

Gerry Brownlee and many other National MPs are in this group of people. Most of Brownlee’s rental properties are in his own Ilam electorate, where rents in one suburb (Aorangi) rose by 51% in a year. I think this is a pretty important conflict of interest at the best of times, but even more so amid the housing crisis Brownlee and his party are determined to ignore.

I recently wrote to Brownlee, essentially asking him to clarify the question I asked in an earlier blog:

How much passive income does Brownlee get for his properties, and how much has it gone up since 2010 and him subsequently “letting the market sort out” the housing crisis?

If you’re interested, here’s Brownlee’s response. My attempt to name-drop the Official Information Act backfired – it turns out this info isn’t available under the OIA because it’s not government info. So the public don’t get any more detail than what’s listed on the register of pecuniary interests. I asked if he’d answer my questions anyway, as a goodwill gesture to one of his constituents… I’ll let you know if he replies.

If National win this year’s election, it will be because of personality and PR. If they lose, it will be because of housing. It’s the biggest issue in Brownlee’s electorate and the country. While National are denying, blaming and doing nothing, Labour are making supply-side and demand-side action on the housing crisis the centre of their campaign.

A quick word on tax cuts

coma cartoonNational has announced their first budget surplus, after plunging us into debt for the last five years.

They’ve also hinted that at some stage before or after the election campaign, they may announce what makes all our hearts instinctively leap, at least before we think about it: tax cuts. This would mark the first changes to tax since 2010, when they shifted the tax burden from the rich onto poor and middle-income earners.

Mana’s John Minto has an interesting reaction. He says tax cuts are a great idea, and suggests shifting the tax burden back again: abolishing GST and tax on the first $27,000 of income, and paying for this by finally taxing the unproductive untaxed income of the 1% – capital gains and financial transactions.

Something tells me a party of property magnates and investment bankers is not going to propose those kind of tax changes – any recovery-era tax cuts will presumedly be along similar lines to their recession-era tax cuts.

Does this strike anyone else as a little strange? Not just because they’re promising tikka masala before the chickens have hatched (the surplus is tiny, and only a projection based on fudged numbers, disguised cuts and abandoning Christchurch).

The main reason it’s strange is that when we were heading into rough financial times, they thought the appropriate thing to do was to cut taxes on the rich. And now in healthier financial times, they again think the appropriate thing to do is to cut taxes (presumedly again on the rich). Never mind the fact that they haven’t paid off their debt from the last tax cuts and tough economic times yet.

The truth is that they’re not responding to the economic climate at all. In tough times or healthy times, they’re pushing a philosophical agenda to let the rich continue getting richer while paying lower taxes, and reduce the social safety net to pay for it. Bill English recently let this agenda slip in a recent speech to the party’s Southern Region conference. They’ve already let public goods and services drop from 35% of GDP to 30% – one of the lowest rates in the OECD – and they intend to reduce that even further, to 26% over the next six or seven years. This is not what NZers want.

The obvious solution is not to let them rule for the next six or seven (or three) years.

Landlord, local MP, regional czar, next-door-neighbour-to-my-doctor, guy-who-took-a-photo-of-me-once

Brownlee property ownership 31/1/2013 - http://www.parliament.nz/resource/0000262069

Inspired by comments on the Standard, I checked out the Register of Pecuniary and Other Specified Interests of Members of Parliament here. I was particularly interested in Gerry Brownlee’s* four** properties in his (and my) stomping ground of northwest Christchurch.

In ensuing Facebook discussion, a few questions quickly presented themselves:

  1. How much passive income does Brownlee get for his* properties, and how much has it gone up since 2010 and him subsequently “letting the market sort out” the housing crisis?
  2. How is someone whose decisions have such a massive impact on the Christchurch housing ‘market’ allowed to own potentially millions dollars’ worth* of properties here?
  3. Is it even ok to be both landlord and local MP for several houses’ worth of people?
  4. Is he a ‘good landlord?’ Are his properties part of the 44% of NZ’s rental housing assessed as in poor condition?
  5. Who’d like to become one of his tenants? (there are ways of finding out the addresses.)

* It’s possible that Brownlee only has a small pecuniary interest in the listed properties. The Register doesn’t declare other owners, if any.
** As at 31/01/2013. Apparently it’s become five since then.

Politics without politics – a local election guide

Progress without PoliticsPhoto from David Small

We have a week and a half to send in our votes for local body elections and then a few days later we’ll have a dramatically changed city council. Quite an exciting time, but the main barrier to informed voting seems to be that most candidates are doing their utmost to portray themselves as being non-party-affiliated and sometimes even ‘non-political.’

For some reason, this phenomenon seems particularly strong in Christchurch – Wellington have a Green mayor and Labour candidates.

I guess candidates want to cash in on cynicism about politicians, and appeal to our lazy post-modern ‘post-political’ ‘post-ideological’ political ideology. But it does make it rather hard to tell what they’re actually standing for, when nobody really follows local politics, and then all we get from the candidates is vague billboards and a paragraph of meaningless platitudes.

I’ve been looking into what lies behind these meaningless platitudes. Here’s what I’ve found out – four quick questions I think are worth asking:

1. Who voted for Marryatt’s pay rise?
2. What do the parties mean?
3. Who are the independents?
4. How about the mayoral candidates?

1. Who voted for Marryatt’s pay rise?

The seven right-wing councillors who voted for Tony Marryatt’s $68,000 pay rise won’t hold the balance of power anymore after the election – Bob Parker, Sue Wells and Barry Corbett are stepping down.

But the other four are standing again – Jamie Gough and Claudia Reid are standing for I-Citz in Fendalton-Waimairi, and Ngaire Button and Aaron Keown are standing for City 1st in Shirley-Papanui. There’s been some helpful billboard adjustments to remind us of who they are.

Gough is grovelling and asked to be forgiven, pleading youth and inexperience. $538,529 probably doesn’t sound like too much to a member of the Gough family… I guess he didn’t realise how pissed off everyone would be.

Anyway, hopefully voters haven’t forgotten how pissed off we were. James Dann is predicting two of the four will make it back – hopefully it’s less.

2. What do the parties mean?

I-Citz (Independent Citizens) ≃ National

I-Citz are “in essence, the local body version of the National Party.” Their typo-riddled website boasts of formal independence from national political parties, and National officially don’t dabble in local politics (see John’s comment below). But I-Citz’ candidates are all right-wingers such as the aforementioned Jamie Gough, Helen Broughton (who’s taken a better stance on Marryatt than her I-Citz colleagues) and conservative blogger John Stringer.

The People’s Choice = Labour

People’s Choice (formerly Christchurch 2021) was founded by Labour Party members in 1995. They’re open about their connection to Labour on their website.

The current People’s Choice councillors (Yani Johanson, Jimmy Chen, Glenn Livingstone) seem to have done pretty well from what I’ve heard.

City 1st ≃ National/ACT

A new spin-off of I-Citz and the now-defunct City Vision, City 1st try harder than the other parties to act like they’re not a party. I challenged them about this on their Facebook page and while Ngaire Button responded, she didn’t give me a good explanation of what makes her party not really a party. There were a few more comments today, but before I got a chance to read them, they deleted the whole thread and seem to have disabled all comments on their page. Thankfully I was paranoid enough to expect this and save some screenshots.

Anyway, Aaron Keown stood for ACT in the 2008 general election, while Button appears generally right wing and stood for I-Citz last time.

Saying the names of these ‘independent’ parties with a Sean Connery accent seems to make them more accurate.

A ‘network of the like-minded’ ≃ ??? Greens ??? Student Volunteer Army ??? Gap Filler ??? A Paradise Built in Hell ??? Well-meaning yuppies ???

I learned today that apparently four other council candidates are standing as a loose alliance – Raf Manji, Vicki Buck, Ali Jones (more on them below) and Erin Jackson.

They’re not using shared branding and they don’t have a group name, but they know each other, agreed to stand in four different wards, and seem to be into the same kind of things: participatory democracy and budgeting, environmental sustainability, community collaboration, ‘e-democracy’ and social entrepreneurship. All four are endorsed by It’s Our City.

They’re arguably just as much of a party as the others, and perhaps a lot of the same criticisms I’m making to City 1st apply to them too. But I think they’re a more genuine alternative to ‘party politics’ than City 1st – they seem to have a quite different view of how to do democracy. They also seem more genuinely bipartisan – they seem keen to work with Dalziel as mayor, and they seem more left than right, but not in really a traditional sense. But they’re enthusiastically endorsed by the right-leaning Sam Johnson, who’s not standing this time but he’s amongst their group.

At least, this is the impression I got from the one not-very-critical article I read. I’m not sure how reliable that article is (Gen Y? Really? Vicki Buck was mayor when Gen Y-ers were born). Seems interesting though.

3. Who are the independents?

The best way to find out about unaffiliated independents seems to be to google them and see what they’ve done before, and check if they have blogs etc. I can only comment on a few…

Fendalton/Waimairi: Raf Manji seems an intelligent guy with his finger in a lot of pies. My impression was that Faimeh Burke is most famous for her husband, Sir Kerry Burke, a former Labour MP and one of the ECan councillors the government dumped in 2010 (but see Jean-Luc’s comment below).

Shirley-Papanui: Ali Jones is a prominent critic of EQC and advocate for claimants. Jono Corfe is the quizmaster at Chch’s best pub quiz.

Riccarton/Wigram: Vicki Buck is bringing herself back (yet sadly without taking great pun opportunities). She was a popular (independent) mayor from 1989 to 1998 and since then has worked in clean energy and set up Unlimited and Discovery One schools.

4. How about the mayoral candidates?

Lianne Dalziel = Labour

I almost forgot to the mention the mayoral race, because it seems to be in the bag for Lianne Dalziel (but please nobody mention seismic shifts). Dalziel is running as an independent but she’s been a Labour party MP since 1990 (she’s stepping down to run for mayor). Since the earthquake she seems to have battled for the people of Christchurch better than most local MPs, particularly for her Christchurch East electorate. It’s a shame she won’t get a chance to take Gerry Brownlee’s job when the next Labour government gets in. But I think she’ll make a pretty good mayor, particularly if she follows through on social housing promises.

A fun fact about Dalziel that you won’t read elsewhere: as an idealistic teenager just returned from Cambodia, I e-mailed every MP and asked them to sponsor me for the 40 Hour Famine. Lianne Dalziel was the only one who did – she sponsored me $40.

Paul Lonsdale ≃ National/Business

Dalziel’s main competition, Paul Lonsdale, is best-known as manager of the Central City Business Association, which meant driving the youths away from the Hack circle before the earthquake, and managing the Re-Start container mall after it. He thinks political organisations should be run like businesses rather than political organisations (so he’s moving in the opposite direction to the ‘post-corporate’ democratic ideas of Manji et al).

Following a familiar theme, Lonsdale claims to be “completely apolitical,” but all his friends seem to be National Party/I-Citz members, and he thinks we need to work alongside Brownlee et al rather than challenging them. He also thinks dumping ECan democracy and selling council assets makes sense.