John Armstrong is the Herald's chief political commentator

John Armstrong: Labour starts to put its houses in order

Bold policy is a return to the old ways, and a worry for National.

Housing, a big part of Shearer's keynote conference speech, is Labour's bold policy focus as it promises to build 100,000 affordable homes in 10 years. Photo / Mark Mitchell
Housing, a big part of Shearer's keynote conference speech, is Labour's bold policy focus as it promises to build 100,000 affordable homes in 10 years. Photo / Mark Mitchell

For the first time in a very long time, Labour has come up with something radical on the policy front which may grab the public's attention, if not imagination - and which National cannot really get away with copying.

In promising to build 100,000 modest but affordable homes over 10 years, Labour is drawing inspiration from its proud legacy as a provider of state houses during the Savage and Kirk eras.

But the similarities end there. Under Labour's KiwiBuild programme, the Government will borrow about $1.5 billion to start what will become a self-funding scheme as the proceeds from the sales of houses to first-home buyers are reinvested.

National has sought to paint the scheme as unworkable - especially in Auckland, where the crisis in home ownership is at its worst.

It says Labour's claim that a modest entry-level home can be built for less than $300,000 is absurd because the price of sections in Auckland is close to that level even in less-well-off areas of the city.

But Labour's policy is being written by no less than the formidable Annette King, who holds the shadow housing portfolio.

She says the high section prices in Auckland could result in Labour promoting mixed housing developments in which the more expensive homes would cross-subsidise the ones meeting the affordability criteria.

King is still very much fleshing out the detail of the policy framework unveiled by David Shearer at Labour's annual conference two weekends ago.

There have been rumours this may be King's last term in Parliament. But she says she is not going anywhere. That is bad news for National. She has out-foxed National generally and Housing Minister Phil Heatley in particular.

Thanks in part to her, Labour easily trumped National's limp response to the Productivity Commission's report on the provision of affordable housing.

The Government's "package", which was released in late October, focused on little more than freeing land for new housing and cutting red tape to speed building consents.

That is all fine and dandy. But it takes a while for such changes to have an effect, and they do nothing to address what amounts to the market failure. In Auckland, only about 5 per cent of new homes are intended for the lower end of the market.

National's measures do not tackle what has become a major problem since the global financial crisis and the collapse of finance houses - getting money for housing developments.

National's response to the affordability crisis was to be seen to be wringing its hands. In contrast, Labour is rolling up its sleeves.

Its package directly addresses market failure. The policy is something of a Trojan horse which has infiltrated its way into the fortress of free-market ideology.

It heralds Labour's adoption of a more interventionist, hands-on style of governing which the party believes the electorate is increasingly willing to embrace, especially where market-driven approaches are not delivering.

Labour is being bold. Like the push for a capital gains tax, the housing promise is a break from Labour's immediate past of playing safe and finding excuses for not doing things.

It was noteworthy that David Parker, Labour's finance spokesman and third-ranked MP, this week spoke proudly and unselfconsciously of using "the power of the state" to bulk- build houses. While Helen Clark and Michael Cullen were hardly averse to state intervention, they couched their language in more cautious fashion.

It is what the housing policy says about Labour's direction which is possibly as important as the policy itself. It shows Labour regaining its soul.

It also pushes many political buttons to Labour's advantage.

It will appeal to middle-income voters congregated in the political centre, especially those worried that they or younger relatives will never get on the home-ownership ladder.

Those voters worried about Labour being profligate with taxpayers dollars will be comforted by knowing the $1.5 billion will be designated as capital and thus will not slow the country's return to budget surplus.

What the capital injection will provide is stimulus to a sluggish economy. The 10-year programme will provide some certainty to an industry which has notoriously been victim to boom-bust cycles.

The increase of building activity dovetails with Labour's long-held preference for an effective apprenticeship system while at the same time cutting back youth unemployment.

The policy is also an answer to the anti-poverty lobby which argues not enough is being done to lift the quality of the housing stock.

Labour also intends using the policy to turn the tables on National in another way.

New Zealanders will be offered the chance to invest in Housing Affordability Bonds, something Labour says is far more preferable than buying shares in state assets they already own.

Lastly, the target of 100,000 new homes over 10 years is the kind of promise which only one of the two main parties can make with any certainty it will be fulfilled.

It should shift votes Labour's way, shifting the balance of power on the centre-left away from the surging Greens and back to Labour.

All of this should be of major worry to National. Labour may well be capable of shooting itself in both feet on occasion - the public argument at Labour's conference over the finer details of how the party will elect its future leaders combined with David Cunliffe's less-than-subtle self-promotion for that job inevitably overshadowed the announcement of the new housing policy and consequently reduced the amount of publicity the policy would otherwise have got.

But what the infighting masked, is that in terms of ideological renewal and momentum, Labour is starting to get it right.

National's nervousness at what Labour might come up with on the housing front was evident even before the unveiling of KiwiBuild.

Having got wind that housing was a big part of Shearer's keynote conference speech, National sought to cancel out in advance whatever the Labour leader had to say. On the preceding Friday, National announced that up to 600 of the 2500 to 3000 homes to be built at Auckland's Hobsonville Point would be priced at $485,000 or less.

This was a dramatic u-turn and very cynical politics. National originally set aside 100 houses in the development for first-home buyers. That figure was cut to less than 20 last May.

National was punting that its sudden generosity combined with Labour's reluctance to be seen as spendthrifts would be sufficient to neutralise Shearer's announcement.

That might have worked in the past. Labour's newfound willingness to take risks suggests it won't in the future.

- NZ Herald

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John Armstrong is the Herald's chief political commentator

Herald political correspondent John Armstrong has been covering politics at a national level for nearly 30 years. Based in the Press Gallery at Parliament in Wellington, John has worked for the Herald since 1987. John was named Best Columnist at the 2013 Canon Media Awards and was a previous winner of Qantas media awards as best political columnist. Prior to joining the Herald, John worked at Parliament for the New Zealand Press Association. A graduate of Canterbury University's journalism school, John began his career in journalism in 1981 on the Christchurch Star. John has a Masters of Arts degree in political science from Canterbury.

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