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.
The two faces of National’s hitherto successful PR strategy
UPDATE (19 Aug, evening): Literally in the last few hours, National have unveiled some policy on their website. This renders the first two graphs and table out-of-date. But the second half is still relevant, and I reckon it’s worth leaving the first half online as a time capsule of what National’s campaign looked like until WhaleGate. Coincidence? What do you think?
Original blog (19 Aug, afternoon):
“the left have given up on the policy argument. They don’t think they can beat the National Government on the issues … so what they’ve decided is they’ll play the man, not the ball … but we’re going to keep talking about the ball.”
This is similar to his quip when Laila Harré announced she was running against Key in his local seat:
“we won’t be having much of a debate about policy – the only policy the Internet Party has is to make sure Dotcom isn’t extradited.”
In fact, I’ve been following and compiling the various parties’ policies, and the Internet Party have far more policy on their website than National do – even though the IP have only had a few months to formulate theirs. In fact, National have less policy on their (single) policy page than any other party – significantly less than most of them. On word count, they only provide literally 2.4% as much as Labour or 1.1% as much as NZ First:
It is true that some parties (notably Labour, the Greens and the Internet Party) provide fuller versions of their policies or additional documents, linked from their main policy pages. This is the main difference between National’s and the IP’s policy websites.
If we’re generous, we can include a couple of documents from January about their 2014 priorities in this category… the speech is largely not policy, but they do link to these documents at the bottom of their policy page. This time National manage to claw their way up to 2nd-to-last, because ACT only expand upon two of their policies – but they’re still left in the dust by the left-of-NZ-First parties he accuses of giving up on policy:
It’s also worth noting that Labour and the IP both state that even more policy is forthcoming, and the Greens are frequently updating theirs. I wonder if National’s are on the way, too? [update: I guess so! National also now say there’s more on the way]
Here’s the full data, if you’re interested:
While I spent an embarrassingly long time on this [update: now-obsolete! grrr…] number-crunching, we actually didn’t need these numbers to know that National try to run policy-free campaigns and policy-free politics wherever possible. They don’t engage with public questions like this, this or this. They don’t engage (openly) with blogs; certainly not opposition ones, and certainly not on policy questions.They don’t really put policy on their billboards – some people had to do it for them last election. Their flagship policies are generally pretty unpopular. They [update: still] have [basically] no policy about some of the biggest issues facing NZ (climate change, child poverty, inequality and the housing crisis) – in fact, they often deny that they’re issues.
Nicky Hager’s Dirty Politics has provided some alarming insight into what kind of politics they do instead of policy politics. I haven’t read it, but Danyl McLaughlin helpfully summarises the basic thesis thus:
John Key’s National government uses a ‘two tier’ communications strategy; positive communications, which are focused around John Key, who is presented as ‘relaxed’ and decent, and negative/attack communications, which are conducted covertly by senior staffers in Key’s office and fed to the media mostly – but not exclusively – through Cameron Slater’s WhaleOil blog.
Obviously, the emphasis of the book is on the negative ‘tier’; the positive ‘tier’ was already quite obvious… but in fact both strategies involve “playing the man, not the ball” … positively, they focus on “the man” of John Key, his smiling face [update: which emblazons 12/18 of these and 4/4 of these plus a bonus] and perhaps some content-free feel-good generalities coming out of it. Negatively – well, you can read the book or the excerpts or the leaks or the blogs yourself.
Playing the man in these two ways has been a winning strategy so far, and has kept National riding high since Key took over (they’re currently polling well over double their 2002 election result). Will Dirty Politics and Whaledump change that? I hope so, but I can’t say with confidence.
What I can say with confidence, though, is that Key’s latest accusation is the most brazen hypocrisy I’ve witnessed since I’ve been following NZ politics.
Post-script (21 August):
Here’s the updated first graph now that National finally have some policy (5965 words of it, to be precise):
They’ve also deleted the two documents they previously linked to, but they’ve added a whole lot of links on each of their policy pages (mostly past news stories about what they’ve done while in government, which is kind of cheating… but also some fuller policy statements). I can’t be bothered counting that up at this stage. My guess is it’s still much less than Labour and probably less than the Greens and Internet Party too (definitely if we only include policy announcements proper).
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.