With Finance Minister Bill English just three weeks away from unwrapping his latest Budget, The Business asked for suggestions on what he should deliver.

THE COMMENTATOR: State houses by the thousand

Anne Gibson

Doubling the state housing stock from 60,000 to about 120,000 residences is what Shamubeel Eaqub wants from the Budget.

But the economic commentator sees that as highly unlikely.

"This Government has shown little initiative on this front but I certainly hope housing will be big in this Budget because moves so far have been too marginal and too incremental to be effective.

Advertisement

"To explicitly ask the Government to step in and build houses and related infrastructure flies in the face of current thinking, yet the situation is dire."

New Zealand house prices were among the highest in the world compared to our incomes, construction was pitifully slow and prices were becoming severely unaffordable, said the independent economist.

Because the market was not responding quickly enough, he sees a big role for the Government. He points to Fletcher Building's foundations as a state house builder as an example of the positive commercial benefits.

"A large-scale central government programme to increase social housing stock - which has a significant waiting list and faces severe mismatches between the types and location of houses available and what people actually need - may relieve some pressure on the private rental market and increase total housing supply.

"It's just ridiculous that state houses are being sold at the very time we need them. Numbers are now the lowest in New Zealand since 1957 on a per capita basis," he said.

"If I had my way, we'd build these 60,000 new state houses over a five to 10-year period, mainly in Auckland where they are most needed, either on Crown land or land the state purchases.

"Some houses would be replacing others - we have the wrong types of houses in the wrong areas," he said.

Funding of income-related rents is another concern.

"I'd also like to see research grant funding to explore how to free up land supply and residential construction because clearly what's happening now is not working. There are also broader moves needed around immigration policy. There should be some sort of soft cap on immigration.

"There are many consequences of the housing crisis in Auckland. A small and diminishing pool of people are getting wealthier by buying houses from each other. But it's at a great cost to future generations and is putting Auckland's future at risk."

AGRICULTURE: Boost science and innovation

Jamie Gray

Federated Farmers chief executive Graham Smith said farmers wanted the Government to keep a tight rein on the country's finances, focus on getting value for money to improve productivity, and to address the economic imbalances posed by Auckland's booming property market.

The Government in this Budget needed to stay in surplus because it would provide options in reducing overall debt, Smith said. "We want to make sure that our overall debt levels are not too great because it does reduce our options and our flexibility."

The Government needed to focus on getting value for money to increase New Zealand's productive capacity. "Maintaining and increasing New Zealand's competitive advantage is critical," he said.

"Fundamentally, we are a food- producing nation and, within that, agriculture is a critical platform, so for us to improve and maintain our competitive advantage we need to make sure that we get our science and technology right," he said.

Federated Farmers has for some time argued that the Government needs to increase spending on science and technology.

It argues that the structure of the New Zealand economy is different to other countries, in not having many multinational companies nor high defence budgets, both of which can drive innovation. "In recognising that, the Government needs to play a disproportionately bigger role in science and innovation."

Smith said Federated Farmers would like to see the country's infrastructure - roads, energy and water - improved. In particular, it wants farmers to have greater access to broadband to keep up with developments in precision agriculture.

Finally, Smith said the Government needed to address the imbalances brought about by Auckland's property boom, including possible incentives for people to live outside the city.

"We need some innovative thinking around Auckland because of its impact on New Zealand's fiscal and monetary policies," he said.

"We have to get Auckland right but not at the expense of the rest of the country."

REAL ESTATE: More for HomeStart

Colleen Milne

Chief executive, Real Estate Institute

With the shortage of housing in Auckland having a clear impact on property prices in many other areas, it is important to look at where and how the shortage started. The desire by Auckland City Council and others was to encourage the city to build up and not out. However, this clearly has not kept pace with demand. More migrants are entering the country and we are seeing fewer New Zealanders leaving for Australia and many returning. This all puts further pressure on housing, especially in Auckland where over 50 per cent of migrants choose to live.

Over the next 30 years it is expected that the New Zealand population will grow by more than 25 per cent. This will inevitably place pressure on our infrastructure and supply of sufficient housing, and with an ageing population, planning needs to be in place to ensure all factors impacting on infrastructure are considered to allow New Zealand to experience further economic growth.

Housing supply continues to be the main force driving the increase in property prices. With the introduction of the bright-line test last year, and changed loan-to-value ratios, we are not looking for further measures to be introduced as this would impact on investors and home owners.

Any changes around negative gearing or capital gains tax are taxation measures and we do not see these as tools with which to bring down house prices.

With higher house prices, the HomeStart subsidy needs to increase to allow first home buyers the opportunity to own a home.

With the growth New Zealand has experienced, and more and more people renting, property managers play a key role in the rental process. We see an issue with the lack of regulation, where there is no requirement for property managers to hold client or tenant funds in trust accounts. There is also no requirement for them to hold professional indemnity insurance. Both are criteria for property managers to be REINZ members.

We believe rental properties should meet a standard. Some of this was addressed in the last Budget, however, further standardisation is needed to continue with improvements.

Illustration / Rod Emmerson
Illustration / Rod Emmerson

THE TOP TABLE

Top directors at this week's CEO Summit in Auckland shared their views

Joan Withers - chairwoman, Mighty River Power and TVNZ

"I think we've got enormously good stewardship of the New Zealand economy. But the thing that concerns me into the future is what I perceive to be the growing inequality I perceive for young children in New Zealand. Living in South Auckland, I see that a bit more clearly than some others might."

While education initiatives such as those supported by the Tindall Foundation and the Government were starting to make a difference in underprivileged schools, more was needed.

"We've got to get better at disseminating knowledge and skills so that kids, no matter where they are in the socio-economic spectrum, have the best opportunity."

Rob Campbell - chairman, Tourism Holdings, Summerset Group, G3 Group and a director of Precinct Properties and T&G Global

"There are some obvious and immediate needs in terms of infrastructure in tourism and in Auckland where we need to catch up on 20 years of what we're behind. The Government is going to have to take a funding and strategic lead on that infrastructure. The hands-off approach isn't adequate.

"I'd like to see the Government take a much stronger lead on environmental and social policy - this Government is reluctant to take leads and our society badly needs that. Even though I'm a businessman, I don't believe this can be a purely business focused Budget if it doesn't offer leads. All over New Zealand, in communities there are tremendous environmental groups being developed trying to improve the situation but it does need government leadership - it's probably one of the few useful things a government can do.

"There's no question that inequality is something that people are grappling with - the community will be looking to the Government to do a lot better ... "

Tony Carter, chairman, Air NZ and Fisher & Paykel Healthcare, director of Fletcher Building and ANZ Bank

"Infrastructure in tourism is important. It would be really sad for all the additional tourists who are going to come to New Zealand if New Zealanders start to resent them because of the pressure they put on infrastructure.

"Housing is an obvious one. Clearly the house price escalation - the point is, prices are too high and we're not building enough of them. There have to be solutions to break the log jam and build more houses because the population's growing and we've got to house them.

"They're (the Government) clearly working hard on it but they've got to work with councils to consent more land and make it available and, secondly, Housing New Zealand stock has become run down under successive governments. They've got to modernise that and make it more appropriate for those who need social housing.

"You're always going to have a bottom 10 per cent but that doesn't mean you can't aspire to try and make them better off all the time. Inequality is an issue; redistribution doesn't seem to work but personally I think the answer is in education."

TOURISM: Cash for infrastructure

Chris Roberts

Chief executive, Tourism Industry Association

The Tourism Industry Association is keen to see a Government-backed infrastructure fund to help communities get the most out of the tourism boom, especially those with small ratepayer bases.

The Government has invested in marketing New Zealand as a visitor destination via Tourism New Zealand, and is now seeing an excellent return on that investment. Now it needs to support that investment with a fund to ensure visitors have a great experience.

Prime Minister and Tourism Minister John Key has already signalled that the Government is likely to provide financial aid in the Budget for small communities that are seeing increased numbers of free campers. That's great. But the infrastructure challenge is much wider than providing a few toilets and parking areas. It's also about improving our roading, walking and cycling tracks, good signage and information, recycling and waste disposal facilities, and adequate water and sewerage systems that meet the needs of locals plus visitors.

A tourism infrastructure fund would allow the most deserving and urgent investments to happen in time to match the growth in tourism.

The TIA is also keen to see increased funding for the Department of Conservation, to help support the important contribution it makes to our tourism industry.

Hundreds of tourism operators rely on access to the conservation estate as part of their businesses, and provide a quality experience for New Zealanders and overseas visitors.

While we believe there are more opportunities for DoC to partner with the private sector to fund infrastructure development, more funding would allow it to upgrade existing tracks and develop new ones, to relieve the pressure on our most popular attractions like the Milford Track and Tongariro Alpine Crossing.

We would like progress on a single tourist visa for New Zealand and Australia. It has been estimated that a joint visa scheme could increase the annual number of international visitors to our region by more than 140,000 by 2020.

The tourism industry is also keen to see Budget support for a comprehensive effort to protect and enhance New Zealand's freshwater.

Healthy freshwater ecosystems are fundamental to supporting the natural landscapes that are the primary reason visitors travel to New Zealand. They are also integral to many tourism activities such as rafting, jetboating, swimming and fishing.