Editorial: A day late and a dollar short, or shrewd politics?

Bill English in particular has held his ground on the right of the political spectrum for longer than many in this current Government.

Editorial

Bill English says the Government may get more involved in building houses to alleviate pressure on the super-heated Auckland market.

For those who remember the National party of Jim Bolger and Ruth Richardson that's a remarkable statement. Over the past eight years, National has proved itself highly adept at shuffling sideways - mostly left - in order to maintain poll position in the centre of popular public thinking.

Labour MP Phil Twyford has called this move on housing "a day late and a dollar short". He might be right but it does show the extent to which this Government is prepared to keep evolving as required to stay in power.

For the right-wing party faithful, hands on state involvement in the business of building houses must seem a step too far. English in particular has held his ground on the right of the political spectrum for longer than many in this current Government so to have him talking up a building programme is significant.

There's no doubt that the centre ground has shifted. We're increasingly hearing calls from traditionally conservative economists, business leaders and financial market players for a more Government intervention in the economy and more fiscal stimulus - which a government building programme would provide. News in the past few days that numerous apartment developments in Auckland have failed to get off the ground highlights the difficulties in waiting for the private sector to meet housing demand.

So, under mounting pressure as housing costs dominate public debate it looks like National is finally gearing up on social housing - presumably with a view to having significant work under way as it begins campaigning for a fourth term next year. While adapting policy to address the popular public issues of the day makes lot of political sense - meddling in the housing market is not without its risks. You wouldn't have to look back far to hear National politicians, including English and the Prime Minister highlighting those risks.

National will be all too well aware that much of their economic success is predicated on the wealth effect of rising house prices in Auckland and further afield. A large and vocal segment of the home owning population is starting to feel uneasy about the inequity of the housing boom but it has also bought a sense of economic security to middle New Zealand voters.

There is already some evidence of price growth flattening in the Auckland market. If this epic property cycle were to reach a natural conclusion just as forces of local and central Government get their act together to open up supply then we might actually see a significant price slump. While the millennial generation would cheer, the country could face a short sharp and politically disruptive economic shock.

One suspects National's preferred scenario for this time next year is a visible building boom that is yet to hit property prices with full force. This Government, as ever, is engaged in a shrewd balancing act. Critics may see this move as "a day late and a dollar short", but one suspects that for National strategists it is very deliberately and carefully timed.