Mike Williams: Housing pickle leaves Govt vulnerable

Mike Williams

LAST week I went to Wellington to take part in the Labour Party's 100th anniversary celebrations and to speak at a seminar on the Party's history. For more than a decade, as the Labour Party's campaign manager and president, I went to Wellington weekly and was immersed in politics and the party organisation.

I'm not unhappy that this phase of my life is over, but I do, however, take a general interest in the well-being of the Labour Party and I was pleasantly surprised to find the large turnout of conference delegates. They seemed united and in very good heart despite the party's doldrums in the political polls.

I saw many fresh faces, the sign of a healthy organisation undergoing renewal.

The Labour Party took advantage of the media attention around the Party's centennial to launch a comprehensive suite of housing policies aimed at solving the worsening crisis in that most basic of human needs, a roof over your head.

For possibly the first time, the John Key National Government looks to be under severe pressure on an issue, and has been reacting in an increasingly erratic fashion.

Late in May, Social Housing Minister Paula Bennett announced that there would be funding of up to $5000 for homeless people and those on Housing Corporation waiting lists to move away from Auckland. This policy swerve took Finance Minister Bill English by surprise and was clearly a rush of blood to Mrs Bennett's head.

Now, in mid-July, no takers have been reported.

This scheme was followed early this month by the announcement of new Government borrowings of a billion dollars to be on-lent to local authorities for infrastructure construction.

As this initiative was not included in the 2016 Budget delivered just two weeks before it was announced, this must be another ad hoc policy, developed on the hoof for the National Party Conference.

It was immediately noted that this money wouldn't go very far and that many councils, Auckland included, were up against their statutory borrowing limits and would be unable to take advantage of this offer.

What came next was even more bizarre.

Part of the Labour Party's suite of housing policies was a commitment to turn the Housing Corporation into a Ministry, and remove the requirement to run at a profit and pay a dividend to government.

Miracle of miracles, the non-payment of a dividend by HCNZ almost immediately became National's policy too, and this new swerve was announced by Minister Steven Joyce on Twitter, of all places.

Housing Corporation dividends of $92 million in two tranches featured in the 2016 Budget, so yet again we see ad hoc me-too policy-making with no apparent grasp of the seriousness of the housing problem and no integrated response.

A government that suddenly finds a billion dollars and then flags away $92 million two weeks later risks losing financial credibility, and wise heads like Bill English will know this.

So what's going on?

My guess is that the housing crisis in all its forms has quite suddenly featured in the National Party's frequent polling.

I'd take a further punt that this issue is starting to hit National's vote in those polls.

Given that National's support is on average less than 5 per cent ahead of the combined Labour/Greens tally, the swapping of a couple of points between the two blocs of votes could mean big trouble for the John Key Government.

National might have deserved some sympathy had it not delayed for so long in addressing the crisis.

The party is now caught in a classic "wedge politics" dilemma.

The rapidly rising house prices, spreading well beyond Auckland, which are excluding first-home buyers and putting heavy upward pressure on rents, are very popular with those who own houses, nearly 65 per cent of us.

National's strategists will also know that those who are victims of this bubble, young first-home aspirants and renters, are also those least likely to vote.

The challenge for National is to be seen to be doing something about this crisis but not so much that the Government gets the blame when the bubble bursts.

This conundrum may explain what, on the face of it, looks like a headless chook response to the housing issue. This extended to this week when Minister Bennett revived the 1950s concept of transit camps to accommodate the homeless.

The central fact is that no private developer in his or her right mind would build an "affordable" house with a small profit when they could build an expensive house with a big profit, so National's reliance on the private sector to solve the crisis is misplaced.

For once, Labour has the edge on a major issue. Let's see if they can turn it to their long-term advantage.

-Mike Williams grew up in Hawke's Bay. He is CEO of the NZ Howard League and a former Labour Party president. All opinions are his and not those of Hawke's Bay Today.