Editorial, Tuesday July 21, 2015

Peter Jackson, editor, The Northland Age

Is this racist?

ONE OF the less endearing traits that has developed in this country over recent years is that of shutting down a conversation by labelling one of the parties racist. Or sexist. Or homophobic. Depends on the subject, but the intention is always simply to shut down the debate.

Helen Clark was a master at it, but ironically it's her successor Andrew Little and fellow Labour MP Phil Twyford who have become its most recent victims.

Was it racist for Mr Twyford to use leaked data to claim that Chinese nationals with money to burn are responsible for Auckland's ridiculous housing market? No it wasn't. At least not by the traditional definition of racism (which requires the belief that one race is inherently superior to another). Using the data in that way was at worst a trifle silly, given that they relied more on supposition than any scientific value, and perhaps opportunistic in that his use of them served to fuel the common perception, which might or might not be accurate, that Chinese investors are coming here, spending up large then disappearing back to China while New Zealanders are rapidly losing any ability to buy homes of their own.

Mr Twyford was at worst naive to go in to bat armed with nothing more than a list of names that sounded Asian to prove his point. He would have been wiser to point the finger at all non-resident house buyers, whoever they might be, rather than those from one particular country, but dismissing him as racist doesn't help. The fact is that there is a problem with house prices in Auckland, and it would be nice to know what's behind that problem. The return of expats, other immigration, a shortage of land, compliance costs and demand that far exceeds supply all contribute to rising prices, but there are strong grounds for suspecting that cashed-up foreign buyers, whether they be Chinese, French (who were last week reported to be showing keen interest in our real estate) or something else, are playing their part too.

This has given the government the chance, once again, to pat us on the head and tell us that there's nothing to worry about. That might have worked once, but increasingly the assurances that government knows best come across as patronising. We deserve some sort of reliable analysis of the problem with Auckland's housing market, what's causing it and what can be done about it. Telling us that Phil Twyford and Andrew Little are racist and that the price explosion is complicated doesn't cut it.

The government is quite entitled to label the data that provided Mr Twyford's ammunition as dodgy, but someone needs to prove that. Governments in other countries are taking very specific measures to at least slow the rate at which foreigners are buying real estate, and, to be fair, our government has come up with a response that it reckons will do the trick. That's debatable, but before we can argue that we need to quantify the problem, if indeed there is one. Until we know how much real estate is going to non-resident buyers we don't actually know what we're talking about.

It is of little comfort to see that other countries, including Australia and Canada, are experiencing what is happening in Auckland. Perhaps this is just a natural phenomenon arising from China's emergence as a financial superpower, as other economies have been in the past, but it is difficult to avoid the conclusion that we are sitting on our hands while real estate is being snapped up by non-resident foreigners at a rate of knots.

One would hope that the government will do something to slow this process, if it ever gets around to establishing that what many fear is happening is not a figment of their imagination, but its response to the foreign buying of farm land does not bode well. That process too seems to be gathering pace, foreign buyers even setting out to process what the land produces for their own domestic markets. If anyone can show how this is good for our future they have yet to do so.

But while the government is morally obliged to govern this country in the best interests of its people, it might not be possible to prevent non-resident Chinese from buying real estate here, at least not without breaching the free trade agreement signed with China in 2008. That agreement demands that Chinese investors in New Zealand be granted the same rights as their New Zealand counterparts. Presumably that means that any Chinese national is perfectly entitled to buy real estate here, even if they have no intention of occupying it.

This country's history is littered with examples of poorly-drafted laws that have had unfortunate, unintended consequences, but this could be the champion of them all. One gets the feeling at times that when it comes to dealing with other countries New Zealanders are minnows bargaining with sharks.

It might seem reasonable to allow the residents of a much bigger country to invest here, but any politician or bureaucrat who could not imagine that disparity in size and wealth might one day cost the smaller party dearly shouldn't be allowed to sign anything on our behalf.

Meanwhile those who have leapt to the defence of the real estate employee who lost their job for leaking the information that has been used by Messrs Little and Twyford are misguided. That person betrayed their employer in the most egregious fashion, creating the potential for many others to lose their jobs should customers decide not to deal with a firm that plays fast and loose with their right to confidentiality.

Andrew Little has resisted any temptation to defend the leaker (foolishly referred to by some as a whistle-blower), but covered himself and his party in ignominy last week when he claimed that the information was already publicly accessible via valuation records. If that is so, why didn't he go there and find it rather than relying on stolen data that actually prove nothing? One assumes Labour does have a research unit.

And finally, the protestations of real estate agents add nothing useful to the debate. No one who relies on houses changing hands for their living is going to contribute to any slowing of the market. Real estate agents, especially in Auckland, must be doing very nicely these days, and it's hardly realistic to expect them to suggest killing the goose that's laying so many golden eggs. Those who have said they don't know the status of the people who buy the homes they market are probably quite right, but they might add that they don't care. A real estate agent's sole job is to get the best price possible for the person they are working for, the vendor, and few if any would give a hoot about where the money came from.

There is only one party, the government, that is morally obliged to find out what's happening, and, if necessary, to do something about it.

At the end of the day any form of overseas investment is only of value of it makes life better for New Zealanders. 'Investment' that deprives the people of this country of one of the most fundamental benefits of their citizenship, the right to own their own home, does much harm and little good, and it would be nice to know if that's something we should be worrying about before it's too late.