One-word summary: Pathetic.
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.
Graph 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:
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.
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.
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:
- 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?
- 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?
- Is it even ok to be both landlord and local MP for several houses’ worth of people?
- Is he a ‘good landlord?’ Are his properties part of the 44% of NZ’s rental housing assessed as in poor condition?
- 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.
Photo by Greg Presland
The spectre of a possible leadership challenge in Labour isn’t going away as long as David Shearer remains incoherent, visionless and powerless against John Key. A lot of good stuff has been said about this whole mess by The Standard, Tumeke, Chris Trotter, Gordon Campbell, Brian Edwards etc, but I want to highlight one sad result of the ongoing dominance of the caucus by the old guard, anti-democratic, right-leaning, “Anyone but Cunliffe” clique.
The main feature of the recent Labour rankings reshuffle is promotions of Shearer supporters and opponents of the democratisation of the party, and demotions of Cunliffe and democratisation supporters (note also Charles Chauvel’s recent resignation).
Most notable among these demotions is Lianne Dalziel, who goes from list rank 14 to the unranked back benches with Cunliffe and most of his other supporters. This is a slap in the face to Dalziel who has been a tireless advocate for Christchurch, and an advocate for the East and the people against Brownlee’s support of big business in the recovery. Unfortunately for her, she has also been an advocate for the democratisation of the Labour party and for a return to its left-wing roots. The only two Canterbury-based MPs in Labour’s top 20 now are Clayton Cosgrove (who has no earthquake-related portfolios) and Megan Woods (who moves off the back benches to number 20).
Of course, the lack of Christchurch representation in Labour isn’t new. Christchurch people, who tend to be more working class than Auckland or Wellington, are more left than liberal; that is, they seem to be more attracted to a classic left politics of economic justice, as embodied by the last great Christchurch prime minister Norman Kirk, rather than the liberal identity politics that Labour has turned to since Kirk’s time. I’m a lot more supportive of Mana and the Greens than what Labour have become, but I’d still hope that Labour would prioritise the Canterbury region at the moment. If they really want to win back the city, they should be articulating a powerful people-first alternative to Brownlee’s way of doing things – not to mention to school closures and the steamrolling of ECAN.
I’ve remarked before that “Anyone but Cunliffe” should apparently be taken in its full possible meaning: “Key rather than Cunliffe”. It’s very sad that it apparently also means “Brownlee rather than Dalziel”.
Here’s the full numbers for the reshuffle; list and portfolios are here, I’ve noted promotions, demotions, locations and (suspected) factions/cliques. Sue Moroney is the only exception to the general pattern.
‘Cunliffe’ supporters are taken from TV3’s Patrick Gower, so should be taken with a massive grain of salt. ‘Old Guard’ are taken from bloggers Chris Trotter and The Standard, who seem to have have been a lot more honest on these matters than the mainstream media (please note this conflates various groups that don’t necessarily fit together neatly: the ‘old guard’, opponents of democratisation, neo-liberals or those fearful of returning to the left, and supporters of Shearer). The rest all most likely support Shearer, but have been less vocal about it.
1 David Shearer (no change) – Auckland
2 Grant Robertson (no change) – Wellington – OLD GUARD
3 David Parker (no change) – Dunedin
4 Jacinda Ardern – (no change) – Auckland – OLD GUARD
5 Clayton Cosgrove (little change) – North Canterbury (office in Kaiapoi) (no earthquake-related portfolios)
6 Annette King (PROMOTION) – Wellington – OLD GUARD
7 Shane Jones (no change) – Whangarei
8 Phil Twyford (promotion) – Auckland – OLD GUARD
9 Maryan Street (no change) – Nelson
10 Chris Hipkins (PROMOTION) – Wellington – OLD GUARD
11 Nanaia Mahuta (demotion) – Waikato-Hauraki (offices in Hamilton and Auckland) – CUNLIFFE
12 David Clark (PROMOTION) – Dunedin
13 Sue Moroney (PROMOTION) – Hamilton – CUNLIFFE
14 Su’a William Sio (demotion) – Auckland – CUNLIFFE
15 Phil Goff (little change) – Auckland – OLD GUARD
16 Darien Fenton (promotion) – Auckland – OLD GUARD
17 Damien O’Connor (promotion) – South Island West Coast (offices in Motueka, Westport and Greymouth)
18 Clare Curran (promotion) – Dunedin – OLD GUARD
19 Andrew Little (promotion) – New Plymouth – OLD GUARD
20 Megan Woods (promotion) – Christchurch (Christchurch Transport Issues Spokesperson) – OLD GUARD
Remainder of Caucus listed by length of time in the House
Trevor Mallard (DEMOTION but lined up for Speaker) – Wellington – OLD GUARD
Lianne Dalziel (DEMOTION) – Christchurch (Earthquake Recovery Spokesperson, EQC Spokesperson, Civil Defence and Emergency Management spokeperson) – CUNLIFFE
Ruth Dyson (no change) – Christchurch (no earthquake-related portfolios)
David Cunliffe (DEMOTED last year) – Auckland – CUNLIFFE
Parekura Horomia (no change) – North Island East Coast (Office in Hastings) – CUNLIFFE
Moana Mackey (no change) – Gisborne – CUNLIFFE
Iain Lees-Galloway (no change) – Palmerston North
Raymond Huo (no change) – Auckland – CUNLIFFE
Rajen Prasad (no change) – Auckland? – CUNLIFFE
Kris Faafoi (no change) – Wellington – OLD GUARD
Carol Beaumont (promotion – brought into Parliament as Chauvel leaves) – Auckland
Louisa Wall (no change) – Auckland – CUNLIFFE
Rino Tirikatene (no change) South Island (offices in Invercargill, Christchurch, Nelson, Wellington) – CUNLIFFE
Ross Robertson (no change) – Auckland