Vested interests are preventing any meaningful solutions to New Zealand’s housing crisis from being proposed or implemented. And it’s not just Government – all parts of the political system are hostage to entrenched interests.
No politician will admit that New Zealand has a housing crisis requiring radical action. Some political parties pay lip service to the issue, but then propose only timid and partial solutions.
Instead of taking the problem seriously, the politicians of both Government and Opposition resort to quick-fix solutions that fail
to address the size of the problem.
The latest half-baked, quick-fix National Government solution is already on the rocks, with news that the Iwi land row heads to court. For a backgrounder on this, see Andrew Geddis' A tangata whenua shaped elephant on the path.
This latest Government bungle follows a number of other recent gaffes on the housing affordability issue - see TV3's report on the growing catalogue: Nick Smith caught selling land Govt doesn't own.
Bold solutions needed
The Government's inadequate and unconvincing response to the housing affordability problem is reflected in last week's TV3 poll which showed that 60 percent of the public think the Government is not doing enough, with only 33 percent saying that they are - see: Poll: Govt not doing enough to curb Auckland housing crisis.
Impatience with Government inaction and weakness is also reflected in a growing amount of commentary that says much more needs to be done, and on a bigger scale. For example a recent Dominion Post editorial said: Government too timid on Auckland housing disaster. The newspaper suggested that the Government was failing to look at all options, such as greater densification of central city housing, and that "Government could build houses itself - many thousands of them". It also pointed the finger at the Opposition's timidity, highlighting that "Labour leader Andrew Little complains of a lack of staff to help him think of good ideas".
Many commentators have picked up the need for the Government to initiate a mass affordable housing scheme - see, for example, No Right Turn's National's hand-wringing on housing. He argues that "They could address the underlying supply issues with a mass building programme aimed at increasing the supply of decent, affordable homes.... instead we get hand-wringing and claims of powerlessness. But those claims are false. The government is not powerless; it simply chooses not to act".
Of course both National and Labour do now admit the need for direct state intervention in the property market. For the latest - see Claire Trevett's Government fast-tracks 1000 more homes and Vernon Small's Kiwis footing bill for housing 'crisis' - Labour.
However the moderate schemes put forward by National and Labour have major fishhooks in them. Most notably, they won't actually match the major housing shortage in Auckland. As Brian Rudman argues, the timeframe and the small scale of the Government's 7500 new homes in the Tamaki redevelopment falls short of the actually need: "Last October the Ministry of Business, Innovation and Employment estimated a current shortfall of 18,000 dwellings and an 'ongoing supply shortage'. It is now predicting a shortage of 25,000 in Auckland by the end of the year. On top of that shortfall is the ongoing demand for 12,000 to 13,000 new houses a year to provide for New Zealanders returning home and internal and external migration" - see: Nick Smith, drop the club and listen.
In addition to property development, major infrastructure spending is also required, but missing. As Bernard Hickey recently explained, there's a serious need for "some hefty investment by taxpayers and ratepayers in the pipes, roads and rails needed to support the new houses" - see: Who pays the pipes?.
There are major questions about how affordable the new Government-initiated houses in Auckland will be - watch TV One's Q+A interview: Auckland housing problem - Housing Minister Nick Smith, or read a transcript: Auckland house prices rising too fast - Nick Smith. In reaction, see Anthony Robins' blog post, Affordable - in your dreams.
It's not just the political left advocating for bolder reform. John Roughan has put forward one of the most radical suggestions for change, arguing for landlords to lose their ability to make "tax deductions for interest paid on mortgages for residential property" - see his must-read column, Inaction on housing shows end is in sight.
Roughan argues that the tax write-offs investors enjoy play a crucial part in maintaining their advantage over wannabe first home owners. But he suggests that the vested interests of landlords make such a proposal untenable to all politicians: "The outcry from investors would be immense - they'd probably find this one even more fearful than capital gains tax".
Vested "nimby" interests
To solve the housing problem there's an obvious need for cities to expand outwards and upwards, and many commentators are despairing of vested interests vetoing such progress. The latest must-read column about this is from Bernard Hickey, who reports "how a small group of well-connected and extraordinarily wealthy property owners on a small isthmus of land between Auckland's CBD and Mangere Bridge were, in effect, holding New Zealand's economy hostage and entrenching hundreds of thousands of children in the sort of poverty that kills them in winter and costs taxpayers billions each year" - see: Auckland needs to grow up.
Hickey has dealt with similar "nimby" issues in previous columns, It's time renters used voting power and Door closes on Gen Rent: The proof is in the figures.
There are plenty of other economists dissatisfied with the "Nimbys" (Not In My Backyard) and "Notes" (Not Over There Either). Gareth Morgan says We warned you Nick: Auckland's sprawl is a false economy. And Shamubeel Eaqub says: "There's an ingrained negativity towards expansion, whether it's green fields or densification; an excessive focus on things like character and heritage and very little weight given to the needs of population growth and where young people might want to live" - see Joanna Wane's Generation Rent.
To see the other side of the argument, read Catherine Harris' Why intensifying our cities will hurt.
The vested interests of politicians
The second vested interest group holding back progress on affordable housing could well be the politicians themselves. After all, rather then being disadvantaged by the housing crisis, most MPs are probably personally advantaged by rising property prices and a lucrative rental market. This is the point made last week by Brian Rudman in his excellent column, 'Warm homes' rhetoric cold comfort for tenants.
Rudman highlights the fact that modern politicians appear "more skilled in amassing property portfolios for themselves" than helping create any sort of "property-owning democracy". Looking at the large number of MPs from all parties who own multiple houses, he asks: "Could it be that as landlords and 'investors', rather than renters, there's an understandable reluctance among MPs to bring the Wild West that is the residential renting market under control?"
A similar problem seems to exist in Britain - see the Guardian article, Number of MPs who earn from renting out property rises by a third. According to one campaign group, the growing property portfolios of MPs means they are inclined to favour the status quo, and "there has been a quiet cross-party consensus in parliament in favour of landlords for decades".
Blogger No Right Turn has recently examined this issue, too - see: How much have our MPs made from the Auckland bubble? and The problem . In the later blog post, he argues that "it reveals a bigger problem: our MPs are no longer representative of us. They don't live the same sorts of lives as us, they don't face the same sorts of problems. They live in a completely different world. And its no wonder then that they ignore the real problems that ordinary kiwis face".
To make our politicians more responsive and in touch with the public, we need to drastically cut their pay. That's the argument put forward in Chris Trotter's blog post, How Labour Could, Once Again, Become A Workers' Party.
If you want to see a list of all the multiple-property owning MPs, see Duncan Garner's How many houses do our MPs own?. But the MPs, themselves, are reluctant to address this issue. Radio New Zealand attempted to find out further information, but discovered that an official political party "clamp down" seems to prevent MPs from revealing additional information - see Amelia Langford's National MP property debate shut down.
Finally, a number of satirical items on the housing crisis make some cutting points. James Griffin puts forward some Alternative approaches to Auckland's housing crisis, while Toby Manhire makes some suggestions for restructuring in the Government's Cabinet - see: More heads needed to slay housing hydra.
