Economist warns the fabric of NZ society is being "torn apart" by the housing crisis
Economist warns the fabric of NZ society is being "torn apart" by the housing crisis
WHANGANUI LETTERS
Housing divide
Recently I wrote of the increasing divide in NZ due to unbounded property speculation and successive governments' timidity in resolving it.
House values rose 83 per cent 2010-2019, this year another 20 per cent. Disposable income after housing costs rose only 32 per cent 2010-2019. Estimates of houseprices are a further doubling at least in 7-8 years.
The PM now talks about more money to first-home buyers - without due consideration of housing supply - fuelling the flames. She was congratulated at the APEC summit on NZ's handling of the Covid-19 pandemic. Unfortunately, her legacy is most likely to be remembered for the housing epidemic of 2020-30 with its ugly beginning late 1980s.
Economist Shamubeel Eaqub warns of the fabric of NZ society being "torn apart" by the housing crisis and recommends mass building of rentals and renting to own - and I agree. He says the Reserve Bank has lost the plot. In 10-20 years unless significant steps are taken, we will be as disunited as the United States, no longer a supposed "team of five million".
The Labour Government re-introduced the Four (including economic) Wellbeings to local government. This is where Whanganui, other cities and our eco-development agencies need to partner up to demand two solutions, 1) to alleviating the housing problem and 2) expanding local government's sources of revenue away from being the narrowest in the OECD.
It's where the rubber hits the road – out in the cities/ provincial NZ – marrying government strategy with successful implementation. But I doubt whether Whanganui District Council can move away from its timid nature or Whanganui and Partners has the courage and vision to take up the challenge.
The current pre-occupation with overly-protecting homeowners' assets and banks' interests must be disrupted - otherwise, mark my words, we won't be able as a society to divert from this self-destructive path.
Steve Baron (Letters, November 21) rightly condemns the way our council staff resorts to interest rate swaps in futile efforts to balance the books.
Like other fairy-dust derivatives (collateralised debt obligations, special investment vehicles) such swaps serve to expose the severe weaknesses in the way the financial markets are propped up.
If our elected council members actually understood this complicated process they would surely question it.
But the solution is not, as Steve Baron advocates, adopting a floating rate of interest. A bolder policy would be to have no interest at all on council borrowing.
The NZ average currently at 6.4 per cent according to latest LGNZ figures. That's over $6 in every hundred going to private owners profiting from local body debt. And that's not including the GST.
Now that the public has discovered the power of our Reserve Bank to create ("print") money, there is a growing realisation that councils could be directly funded instead of depending on selling bonds through the semi-visible LGFA (Local Government Funding Agency) spawned by Treasury's Debt Management Office back in 2011.
In a press release Local Government NZ president Stuart Crosby stated that "... we need every idea on the table to jump-start our economy". I trust he means it.
