Herald on Sunday editorial: Mayor to march on Wellington

Auckland Mayor Len Brown celebrates his re-election with his wife Shan Inglis. Photo / Doug Sherring

Opinion

'The role for the mayor of Auckland," says Len Brown in an interview with the Herald on Sunday today, "is a role of advocacy not dissimilar to the role of the Prime Minister."

That is why the re-elected mayor has vowed to march down to Wellington next month, if the lot of first home buyers is not improved, to have a word with Reserve Bank Governor Graeme Wheeler.

It is difficult to understand how the fiery language Brown used on the hustings did not set the election campaign alight. You can tell Brown was all het up when he promised to "investigate the impact of and advocate for appropriate amendments to new macro-prudential tools such as LVR lending restrictions."

Owwwee! Watch out Wellington.

Brown may be a lover not a fighter, but them's fighting words (albeit heavily camouflaged with the bureaucratese of a smalltown lawyer). He intends to make sure Wheeler knows exactly what Auckland thinks of the loan-to-value policy change, whereby banks are prohibited from lending more than 80 per cent of the price of a house to most buyers. The Reserve Bank hopes the new policy will slow the rate of residential property inflation, particularly in Auckland, by forcing buyers to stump up with more of their own cash.

Len Brown reveals today that he wants first home buyers and young families seeking to buy those "affordable" homes among the 6000 new properties announced this week to turn up with lower deposits and get a bigger loan.

Brown believes they are unfairly penalised by the 80 per cent limit - and real estate agents tell us the mayor is right. First home seekers have virtually disappeared from the market. Few are now getting pre-approved mortgages that enable them to bid at auctions. Investors in rental property say they are getting houses more cheaply now.

And therein sounds the first note of caution for those young couples who want to borrow big for their first home. If house prices drop by 10 to 20 per cent, as they did five years ago, then their tiny 5 or 10 per cent equity will be wiped out and they will be left owing more than their house is worth.

John Key suggested first home buyers ought to be exempt but, when the bank stuck to its guns, the Prime Minister respected its independence. Labour's David Cunliffe does not respect that independence, saying if he becomes prime minister the bank will be instructed to exempt first home buyers. He has a long way to go to become prime minister and in the meantime he can play politics.

But mayor of Auckland is a responsible position. So is Brown planning to advocate for Auckland - or is he over-reaching by trying to be a national player in setting the nation's monetary policy?

The mayor's role is not to bully the Reserve Bank into providing his Auckland constituents with special treatment.

It is not his role to demand Parliament provide him an income-based rating system so he can punish those well-heeled ratepayers who voted for John Palino. And no, the role of Mayor of Auckland is not akin to that of the Prime Minister.

Brown has done as much as a mayor can do to bring housing costs down by agreeing to faster development and building consents in the Housing Accord. He has been an engaging civic leader and a consensus builder in his first term. He needs to ensure that his second term is equally successful.

Over-reaching would not be a good start.