Metiria Turei’s speech in reply to the Prime Minister

To quote Bill English – “Is that it? Six weeks over summer to think about new policy, and the Government has comes up with precisely nothing.”

There is nothing in today’s speech that offers tangible solutions to the big issues facing everyday New Zealanders.

Worse, the direction set out by this Government does not reflect the intrinsic character of New Zealand or the underlying values of New Zealanders.

Their hands-off economic conservatism benefits their wealthy backers and runs counter to our country’s proud history of economic egalitarianism and fairness.

Their cold hearted social policies run roughshod over our decades-old social contract, of supporting people when they need help and our loving commitment to be our brothers’ and sisters’ keepers.

And their short sighted view of our beautiful environment, our rivers and beaches, forests and National Parks, as nothing more than irritating impediments to their exploitative economic agenda, is like stabbing a knife into the heart of our national identity.

It’s not who we are. And it’s not who we want to be.

It’s not who we are

New Zealanders have a strong and proud national identity.

At our best we are a unique mix of environmental guardians, social reformers and economic innovators.

New Zealanders also have a proud tradition of leading and forging an independent path.

We weren’t the second country to give women the vote – we were the first.

Hillary wasn’t the second person to climb Mount Everest – he was the first.

We said no to nuclear even though it damaged our relationship with the greatest superpower on earth, because it was the right thing to do.

We are gritty fighters who regularly punch above our weight.

We are constantly striving for a better future that is economically, socially and environmentally richer.

But John Key and his Government do not reflect who we are. Instead of making us richer in the things that matter, they make us poorer.

Because on every important measure this Government is failing. And in their failure they undermine our heritage, our identity and our potential.

Economic failure

So let’s look at that failure further, and what better place to start than the economy.

New Zealanders are finally waking up to what Americans learnt four years ago. If you want to destroy an economy, hand it over to an investment banker to run it.

All of John Key’s Wall Street insider knowledge has been used to dazzling disaster on the New Zealand economy.

The Merrill Lynch playbook of destroying good, everyday jobs, fuelling an unaffordable housing crisis, and damaging our long term viability, just so the rich can get richer quickly has been expertly implemented here.

The fallacy that National Governments are good managers of the economy has proven to be wrong again. The facts speak for themselves.

When the National Government took office, the unemployment rate was 4.5 percent. It is now 7.3 percent.

There has been a net reduction of over 40,000 jobs in the manufacturing sector alone.

When National took office, Government debt was $40 billion. It is now $82 billion.

When National took office, the national savings rate was a modest 2.1 percent. It is now 0.7 percent.

While John Key continues to blame the global financial crisis for his Government’s poor economic performance, most other OECD countries have been getting on and managing it.

IMF data shows that the New Zealand economy has performed worse than the majority of countries in the OECD since 2009. The data shows New Zealand scored 18th out of the 34 OECD countries for GDP growth, 22nd for unemployment, 30th for the current account deficit, 28th for national savings growth, and 23rd for government debt.

By nearly all measures of traditional economic success – growth, employment, the current account deficit, national savings, and government debt – New Zealand has performed poorly when compared to the rest of the OECD.

This is a bleak picture. Economic measure after economic measure tell a story of missed opportunities, that left unresolved will leave generations of Kiwis permanently worse off.

It’s not who we are. New Zealanders are proud economic innovators. We have transformed our economy many times over to respond to the world around us and seize the opportunities of the future.

The best opportunities for the New Zealand economy lie in transitioning to a truly green economy, yet there was not a single mention of these opportunities in the Prime Ministers speech today.

The Pure Advantage group’s report, released last year, tells us we have natural global advantages in geothermal energy. But the Government wants to hock off our best launchpad into that lucrative energy market by selling Mighty River Power.

We need to stop the Government’s ideologically blinkered asset sales so all New Zealanders can benefit from the huge geothermal opportunities Mighty River Power has before it.

But today’s speech attempts once more to make the unwinnable case for asset sales.

The Prime Minister is still trying to convince New Zealanders that asset sales are a good deal for the country. We know that selling our power companies doesn’t add up – that’s why over 360,000 New Zealanders have signed the petition calling for a referendum to stop the sales.

The report the Green party commissioned from BERL proved categorically that asset sales would cost the government more than they bring in. Even Treasury’s projections now confirm that the sale process alone would cost hundreds of millions.

The costs of selling our assets would go on forever. The sales would leave a $100m a year hole in the government’s books, long after the revenue is gone.

Environmental failure

The Government’s failures don’t stop there – they are undermining a key part of who we are as a country when they undermine and devalue the environment of our beautiful country.

We all remember being able to swim in rivers when we were growing up but now we can’t because a lot of them are full of, um, effluent.

The Government seems to have a pathological opposition to any measure that seeks to protect our beautiful country and make our claims to 100% Pure a reality.

Bringing in Nick Smith for a spot of Greenwash window dressing won’t change that.

The so far under told story of this Government is their failure as environmental guardians.

Their approach to the environment runs counter to our history and who we are. The Government’s environmental policies do not share the values of everyday Kiwis who want to love and protect our amazing country.

Again when we look at the environment, the facts speak for themselves. New Zealand has plummeted from the top spot overall to 14th in the most recent Yale Environmental Index.

Our Maui’s dolphins are on the brink of extinction. In 2005 it was estimated that the population of Maui’s dolphins was 111. Now it is estimated there are only 55 adult Maui’s dolphins remaining.

And yet the Government still hasn’t implemented the interim measures to protect Maui’s dolphins that DOC proposed in March of last year.

What would it say about us if we allowed the Maui’s dolphin to become extinct? How will we explain to our grandchildren we were more prepared to stand up for the interests of commercial fishing than a tiny dolphin that was relying on us for its very existence? What would the Maui’s dolphin’s extinction say about National’s actual commitment to the environment?

And let’s not forget about climate change. Our agricultural nation relies on a stable climate for prosperity, and yet this Government has pulled out of Kyoto and gutted the ETS.

And while our gross emissions continue to increase under this Government and we do a disservice to our local economy, what does it say about our commitment to our Pacific brothers and sisters?

What does our withdrawal from tackling climate change internationally say to our nearest neighbours whose islands are going under water?

We are a Pacific nation with a significant Pacifika population here, but we don’t care enough to do the heavy lifting on climate change to tackle this serious issue playing out in our own backyard, to our own family.

That’s just not who we are.

Social failure

I wouldn’t want to be a child growing up in New Zealand today. The support that my daughter and I received, that helped me to get to where I am today, has been stripped away by this Government.

This Government’s social policies have been a disaster for New Zealand families, especially children.

On official measures, income inequality in New Zealand is now the highest it has ever been. Low and middle income earners are feeling the squeeze while the best-off continue to increase the share of wealth in their control.

At the same time, more of our kids are now living in poverty, from 22 percent prior to the election in 2008 to 25 percent at the end of this Government’s first term. National crows about its rheumatic fever program but allows more and more kids to suffer from it because they ignore the housing crisis.

Everyone deserves a secure roof over their heads. But our rates of home ownership have plummeted with less than two-thirds of homes now owned by the families living in them.

The recent Demographia report, showing that New Zealand has some of the most unaffordable housing in the world, was met with more inaction by this failed Government.

So much for all of us being in this together. For many New Zealanders the ability to lead a good life is cut off at the knees by the lack of opportunity and support at an early age.

The Government’s mean spirited approach to poverty and hardship does not reflect the values that have shaped our more egalitarian past.

We can be a more caring country again, one that protects our most vulnerable citizens and offers an equality of opportunity for all.

No new ideas

The Government has lost touch of who we are as a country and have no new ideas to get us out of the hole they have dug.

The desperate cabinet reshuffle embeds that failure; it rings only a change of personnel, not policy.

And the Prime Minister’s plan, set out in a speech last Friday and again today, offers more of the same blame and excuses. A boring plan by a bored man.

It’s the Government’s worst ideas of 2012 repeated, it’s Groundhog Day.

Adverse asset sales that will make the Government’s books permanently worse off, and lose the clean energy potential of these companies.

A shonky SkyCity convention centre funded by the proceeds of gambling addiction, human misery and money laundering.

Dangerous deep sea drilling that puts our beautiful beaches at risk of a Gulf of Mexico scale oil spill.

Today’s speech from the Prime Minister is most telling for what it doesn’t mention. The plans the Government is not making.

Not a word on the crisis in manufacturing and the 40,000 jobs lost under their watch.

Not a single word on climate change. Not mentioned once.

Just a sentence on child poverty, and only a vague reference to looking at other peoples work and recommendations.

Not an utterance on the Auckland CBD rail loop and the Government’s plans for support of it.

Where are the plans to tackle youth unemployment, the exodus of New Zealanders to Australia, restocking the empty earthquake fund or rebuilding our billion dollar 100% Pure brand after recent criticisms of it?

All the Government is good for is name calling, untruthful slander and school yard jibes that seek to ridicule real work the opposition is undertaking to address big issues like unemployment and housing affordability.

You know a Government is tired when all it can do is attack good ideas that are popular with the public.

John Key has been relegated to the Prime Minister for making excuses. Deep down he knows they’ve failed and under National the future is blighted rather than brighter.

The Government’s long holiday from running the country needs to end. If they won’t act we all need to step up instead if we want a better future.

Green priorities for 2013

Unfortunately 2013 isn’t an election year. But New Zealanders can’t wait until the next election to stop the dangerous direction the Government is taking.

This year the Greens will step up the fight for decent jobs, elimination of child poverty, and our defence of our environment.

We will do this through generating fresh thinking and new ideas, and through building a movement of people to stop the worst of the Government’s agenda.

At Ratana last week, I announced our plans to help families achieve the kiwi dream of owning their own home, or being more secure in a rental home.

This initiative will have lasting impacts. It will give young families a real shot at owning their own home. It is also great for our environment as we build more sustainable, compact homes, and on child health and family well-being. It will also create thousands of jobs.

The Green Party will continue to develop smart solutions to our modern problems. We will offer New Zealanders real alternatives to this tired, bored and unimaginative Government.

But as well as new ideas, we will also offer New Zealanders the opportunity to take action.

The Green Party has launched an initiative to draw together new constituencies of New Zealanders disillusioned with the direction the Government is taking.

We are committed to giving New Zealanders a political voice and the opportunity to be involved in politics outside of elections and without having to join a party. We think this is essential for our democracy.

Opposing a tired old Government, developing new ideas and giving Kiwis the chance to get active in politics. Those are our priorities for this year.

It is clear that the Key Government is resorting to the politics of fear and hate to try and hold onto power, but it won’t work because that’s not who New Zealanders are.

The Government may have given up on making our country a better place but the people

47 thoughts on “Metiria Turei’s speech in reply to the Prime Minister

  1. Metiria,

    Yes we are in a recession, and with all the nasty stuff that goes with it. I predicted we would be when Labour was in power, because Labour created the conditions dictating it. First remember that before singling out National.

    Here is what Key said in his latest State of the Nation speech: “Labour’s so-called ‘plan’ to build 100,000 houses doesn’t do anything to fix the actual cost of building – so will either fail miserably, deliver dwellings that people don’t want to live in, or require massive taxpayer subsidies.”

    And on that, he is absolutely right.

    http://andrewatkin.blogspot.co.nz/2012/12/affordable-housing-is-there-any-hope.html

    Geothermal potential? Yes. I am with you on that. But your grasp on the economics of housing affordability is lame. Nation does at least *know* what needs to be done.

    Like or Dislike: Thumb up 7 Thumb down 10 (-3)

  2. “Massive taxpayer subsidies” Absolutely correct Mr. Key especially from the 1%, the large corporations like Comalco/Rio Tinto (Bluff smelter) who have been milking this country for decades.

    Like or Dislike: Thumb up 2 Thumb down 2 (0)

  3. I’m not sure whether you actually believe what you say about housing or you’re just saying it to lure unthinking voters.

    Which is it?

    That plan makes no economic sense.

    As Mike Butler points out:

    “Here’s the biggie. How much would each such deal cost the government if it ran to 58 years? A sum of $300,000 at 3.5 percent annually for 58 years would compound to a whopping $2.2-million. Therefore, this Green initiative would lose the government $1.3-million on each deal!

    http://breakingviewsnz.blogspot.co.nz/2013/01/mike-butler-green-sub-prime-housing.html

    Like or Dislike: Thumb up 1 Thumb down 4 (-3)

  4. Nzers should look a bit more closely at the profiles of the people who stand for parliament in the election because that choice will reflect the nations course after
    We have seen the effect of a govt which we have now which is appalling for the majority
    It reflects the failing economic policies of the free market which is really profit and no responsibility to the environment that produces it in this country wealth
    Mainly because the people who govern now have never really understood that this country has been a place where people have generally been satisfied with
    less of everything that is often touted as essential to be getting a head by the haves in richer economies We nzers have used our time with less to get educated by learning what they really need to survive
    Yet we are constantly set upon now by a government that is not prepared to help this population achieve anything that will get us out of the impending reality that we are becoming a 3rd world nation
    History to this lot governing now is something to be buried or used as a political lever to con the voters into not thinking straight about what is really necessary for their survival in the future because their leader doesnt have much of a life history in this country and his ambitions and aspiration really dont reflect the majority of kiwis who are happy to have an environment that they can actually live in that is clean, economical , and free of Bullshit from the national party of nz

    Like or Dislike: Thumb up 8 Thumb down 2 (+6)

  5. Roll on 2014.. in the ‘mean’-time its more of the same right wing neo-liberal politics: privatise, user-pays & putting the boot into workers & those on benefits etc.
    If this is the ‘bright new future’ that those on planet-key promise us then ‘God help us all’ (oh dear)

    Kia-ora

    Like or Dislike: Thumb up 4 Thumb down 1 (+3)

  6. Doesn’t matter what you call the politics, we don’t have $1.3 million to spend on each “free” house and never will.

    There is not enough money in the system to transfer to make that happen.

    Like or Dislike: Thumb up 0 Thumb down 5 (-5)

  7. If the downvoters could provide calculations that show Mike Butler to be wrong, that would be informative.

    Because, if you can’t, then you’re left with this:

    We don’t have that money

    Given we don’t have that money, the housing plan can’t be implemented.

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  8. Great speech Met. It seems the Prime Minister had so little to offer in his speech that he spent a significant amount of his time criticising Labour and the Greens. This is an indictment of National’s failue to even engage in the necessary planning.
    What plans they do have are too little, too late. For example; the apprenticeship plan: The funding equates to slightly less than one dollar per hour for a full-time employee for 52-weeks at 40/hours per week. Yet we need apprentices and others with post-secondary qualifications, an issue which was identified years ago. (Ironically National have made several changes which make it harder to many to take part in these educational opporitunities, particularly second-chance ones.)
    It also seems that to rely on the Chch re-build as the main source of econo0mic growth is perverse.
    The welfare reform will simply release 149,000 (at least) additional job-seekers without addressing the environment needed to create jobs – outside of Chch that is…. Addressingn the value of the dollar would be the single most effective policy directive in this regard. However, our merchant banker will never try to influence the value of a currency.
    We have endemic economic and social failure – made worse by inaction and erroneous action by National.
    Roll on the General Eelections and hopefully a Government with a heavy Green pressence.

    Like or Dislike: Thumb up 4 Thumb down 1 (+3)

  9. Graham,

    National does have a plan. They plan on studying and attacking the cost of the extraordinary and artificial price inflations for new-builds. They have identified the role of restricted land supply in particular, and will target this.

    If Labour and the Greens get into power, and they do not follow through with National’s work, then that “traditional” New Zealand home will sell for $500,000 a pop, and growing.

    Forget the politics, Graham. This is an economics problem. Look at my link for a start.

    http://andrewatkin.blogspot.co.nz/2012/12/affordable-housing-is-there-any-hope.html

    Once you know what needs to be done, you can see the difference between a real plan and a fruitless disaster in the making.

    Also look at Nick Smith’s recent media release. It’s credit due to those of us who understand the problem.

    http://www.stuff.co.nz/nelson-mail/8246561/Smith-vows-to-tackle-housing-costs

    Like or Dislike: Thumb up 0 Thumb down 3 (-3)

  10. Forget the politics, Graham. This is an economics problem.

    Which is true. And then one looks at your link-to page and it says

    The Labour party. THE VERY PARTY THAT CREATED THE HOUSING CRISIS TO BEGIN WITH

    Funny. And very wrong. Utter bullshit, in fact. And that goes to the heart of housing affordability. And not to mention it looks like politics to me.

    As you note, its economics. Quoting the almosty-universally-wrong-but-right-in-this-instance Hugh Pavletich, the affordable “Median Multiple” (median house price divided by gross before tax annual median household income) is three-ish. Looking at The Treasury’s Affordability of Housing: Concepts, Measurement and Evidence (WP 06/03) figure 10, shows that number from 1983 to 2005 (the graph is clearer in the downloaded PDF). The multiple was under 4 until 1993. Which if you want to play politics, was the fourth National government.

    That is when housing became unaffordable, a situation that remains to today.

    We got into this mess because the banks became willing to lend more than the traditional multiplier. So house prices went up to make use of the money available.

    The hoary question is how to fix it.

    The first thing is you cant fix it whilst keeping existing astronomical house prices intact, unless you build slums and even then I don’t think that is a workable solution.

    What you could do (ha!) is to drop a million “affordable” houses into the market in one go. Then supply would vastly outnumber demand, prices would drop, and that would be a start. (Assuming that houses could actually be built affordably, which they cant, because of land price issues)

    The other thing is to prevent banks lending higher multiples of salary than they did a few decades ago, and then sellers would have no market, and so would have to match prices to the available money supply. (This isn’t a complete solution; there are other issues that then become important)

    Either way, its a mess. You can understand why Key is keeping clear (whilst making soothing noises), and have to wonder about the sanity of other parties who think they have a solution.

    (And Pavletich understands the problem, but “competitive land supply” solution is simply not credible in places where it matters. Anyone who watches what happens with oil supply and prices will understand why)

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  11. The other thing is to prevent banks lending higher multiples of salary than they did a few decades ago, and then sellers would have no market, and so would have to match prices to the available money supply.

    Which would leave people in negative equity positions, which would kill a lot of retirement savings, so more liability would fall back on the government to provide.

    I think we’ll have expensive houses for a long time to come. At best, there will be a few more reasonably priced shoeboxes.

    Public transport fanboys will like this….

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  12. Negative equity is solvable at the stroke of a pen. That is one of the wonderful benefits of fractional reserve banking. (And that’s one of the things I meant when I said there are other issues)

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  13. dbuckley,

    You remind me why I stopped contributing to this forum. You are so confident even though you don’t know what you’re talking about. And no doubt you can’t and won’t learn.

    “We got into this mess because the banks became willing to lend more than the traditional multiplier. So house prices went up to make use of the money available.”

    Banks only become an issue in driving up sale prices when the housing supply is restricted.

    http://andrewatkin.blogspot.co.nz/2009/10/explaining-new-zealands-property.html

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  14. Arana:

    New Zealand’s ability to take care of its elderly will come back to the bottom line: The productivity of the nation, per capita. You can inflate the sale price of just about anything by playing games with supply, but real wealth goes nowhere.

    Increasing property prices reduces real productivity per-capita because it drives capital investment away, as new businesses are not interested in expensive places to operate – especially if they’re innovative start-ups.

    I promise you our status-quo will only make those hospital waiting lists longer.

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  15. You remind me why I stopped contributing to this forum. You are so confident even though you don’t know what you’re talking about. And no doubt you can’t and won’t learn.

    Thats what happens in debates. People put forward their positions. To get others to agree one’s positions one needs to put forward reasons why one is right and the other is wrong. I sometimes hold strange or contrary views, but I am always willing to illustrate the logic behind that view. Convince me my logic is wrong, I’ll change my view. As an example, my position on fracking has done an about face in recent times. So I am a long way from “no doubt you can’t and won’t learn.” All you have to do is illustrate why your logic is right and mine is wrong and the job is done.

    We are actually quite close in what we say, but differ in what we believe to be the why.

    Lets start with something from your linked page.

    New Zealand’s property bubble has been dependant on 3 fundamental variables:

    1. The inflation of demand.
    2. The restriction of property supply development.
    3. The facilitation of credit.

    We don’t disagree on this list. Item one is obvious, and is just a symptom of population growth, which is an issue in its own right, but that’s for another day.

    Item two is the reason for lack of housing availability, and, in the absence of item three would explain the problem of affordability, particularly if we were talking about something other than housing here, something that isn’t an individuals single biggest purchase.

    Banks only become an issue in driving up sale prices when the housing supply is restricted.

    Yes, but, sale prices only went up as they have because of this.

    House prices (we believe?) obey the supply and demand principle.

    Although there is a huge desire for housing, that (in this context) is not the same as demand, because in order for there to be demand the buyer has to have the ability to pay for the house.

    For example, I desire a Jet Ranger helicopter, but I don’t qualify as demand for that product, as I dont have the ready cash, and the bank are unlikely to loan me the requisite funds on my salary.

    So, going back to reality… Lets go back to when this all started, and the demand for housing outstripped supply. Thats the point at which housing went from being a buyers market to a sellers market.

    Being a sellers market, the sellers (collectively but individually) decide to raise their prices. What would be the result of that?

    The way it happened was that bankers gave ever larger multiples of salary as loans, and so the competitive buyer situation remained; demand outstripped supply. Houses continues to sell at the higher price as well as they did at the lower price (for the same asset and the same salary level of the buyer) so prices continues to spiral. It turned out (and continues to be) that house prices can rise well above the affordable, and yet still sell in big numbers; sufficiently big numbers that the limit point hasn’t been reached yet.

    Now instead of what actually happened, lets assume that the banks had remained resolute and would only lend 3.something. Prices would have been raised as before, but the pool of capable buyers (the demand) would reduce, as many wannabe buyers simply could not afford the higher prices. The higher the prices went the less buyers there would be. Thus a competitive situation could not have developed, and we would have a buyers market rather than a sellers market. There would be more houses wanted to be sold then there was demand (but not desire)

    Thus, in order to sell, houses had to be priced so as to be “affordable”.

    It might be worth musing at this point what would happen if morgate rates weren’t 4.99% but 12% or even higher. You have to think that a lot of housefolds that can just afford their mortgage today would be stuffed with that level of interest payment.

    Now lets more to the other side of this, which (I believe) you (and Hugh) think is the more important issue, the issue of housing availability.

    It is true that lack of land availability is contributing to the lack of housing. So the suggestion that if there were more land then there would be more houses and thus prices would drop (or even reduce their tendency to spiral would be a start) seems, prima facie, to make logical sense.

    There are two core problems with this.

    The first is the assumption is that there is land there waiting to be sold.

    If there was land just waiting to be sold, the folks would have just sold it years ago. It is true, people have land. But people actually want to keep their land. The only reason causing land to be sold now is because people are getting stupid prices for it. So someone getting $200K for half their section or a chunk of their farm might go “yes please”. Offer them $30K (which is a guess at what the land might be “worth”) and they’ll say “no thanks, I’ll keep it for the kids to play cricket, or the sheep to graze on.

    So I contend that the statement that there is land there just waiting to be released cheaply is fallacious. People like their land, and will keep it unless they get an offer that is literally too good to be true.

    The second problem is that there is huge demand from the rental market for housing, and these people are better funded than the people who really need the starter homes. So those newlyweds who want to get on the ladder will always be outbid by the investers.

    Thus if you fix the availability it still wont fix the affordability as the demand (not the desire) will still exceed the supply.

    This is why I suggested (with tounge in cheek) that if we could magic one million houses into existence simultaneously we could overcome this barrier, as that would ensure that demand exceeded supply, and pretty much everyone who wanted a house could have one, and thus the investors would not bother as they would have no-one to rent to.

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  16. dbuckley:

    Demographia has shown that massive property inflation only occurs in “smart growth” zones, where there is a green ring and limited land supply is enforced.

    If people can build their own new home for a realistic $200,000 on the city fringe, like they can in the non smart growth zones, then banks lending $500,000 loans or more will not have an impact because people don’t borrow more and more money just because they can. They do it because they need to.

    When there are enough farmer joe’s out there allowed to sell their land for housing they then compete against each other, and fringe land for development quickly drops to roughly rural values.

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  17. …I should note that in the past I have suggested, if possible, that the government introduce laws which control how much money people can borrow for a house, until the supply game sorts itself out. This way although you will still have over-crowding and the like, at least people won’t have to take on crazy mortgages.

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  18. Comprehensive capital gains tax INCLUDING the so-called family home.
    No foreign ownership of NZ land.
    Housing capital cost solved.

    Next comes the cost of ownership…
    The code needs to be upgraded to produce homes as close to nett-zero-energy as possible.

    Then we might have truly affordable homes.

    Like or Dislike: Thumb up 2 Thumb down 0 (+2)

  19. “Comprehensive capital gains tax INCLUDING the so-called family home.”

    That increases the purchase cost.

    “No foreign ownership of NZ land.”

    Foreign ownership is one, minor factor.

    “Housing capital cost solved.”

    Not even close.

    “The code needs to be upgraded to produce homes as close to nett-zero-energy as possible.”

    That significantly increases your building cost. It is doubtful you’d ever recover it in energy savings.

    “Then we might have truly affordable homes”

    No we wouldn’t, as you haven’t addressed the factors making them unaffordable, namely land cost (due to smart growth planning), council ticket-clicking (pointless building tax), and supply issues (cost of materials)

    Like or Dislike: Thumb up 1 Thumb down 3 (-2)

  20. @ Arana “That significantly increases your building cost” I’d suggest you are dead wrong there. A truly energy efficient home will be efficient in function too. That will almost invariably result in a smaller house. The big McMansion is a big problem. inefficient at many levels.
    “It is doubtful you’d ever recover it in energy savings.” I disagree, but how about we add into that equation quality of living, health benefits (and the resulting real $$$ saving in the health industry) and I believe such homes would compare very well to the dinosaur variety.

    Capital gains tax increasing purchase cost? Huh? Please explain…

    “council ticket-clicking” totally agree there! Don’t forget the council time wasting too

    Like or Dislike: Thumb up 0 Thumb down 0 (0)

  21. And in addition to the reduced energy cost and higher comfort, there are health benefits too. The entire economy benefits from more energy efficient homes, Arana should be shouting this one from the rooftops!

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  22. I’m all for energy-efficient houses, but spending on making them so doesn’t make houses more affordable.

    It may reduce running costs in the long run, but it won’t make it any easier to buy one.

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  23. It may reduce running costs in the long run…

    An energy efficient house reduces running costs from day one.

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  24. “An energy efficient house reduces running costs from day one.”

    It increases capital costs from the time it is built. Eventually, those capital costs will be recovered, but it may take a long time.

    I’m not arguing against the wisdom of doing this, I’m saying that it doesn’t make houses more affordable. One does not follow the other.

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  25. Te greenz are proposing building 100,000 state houses.
    If they were all built to as near as possible zero energy the economy of scale would prove they don’t need to cost more to build.
    I have various ideas on just how that could be achieved.
    Are the greenz prepared to do this new policy properly?
    Lets develop a kitset zero energy home for the future.

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  26. When it comes to housing the Greens need to hurl themselves off the edge of a cliff.

    …But now they’ve put their stake in the ground with their ideas, they can’t change them. They have become like Labour – very dangerous to New Zealand prosperity.

    This is what happens when politicians pull bullshit out of their asses to polarise against the opposition, prematurely. They become DANGEROUS.

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  27. Here is my old post:

    http://andrewatkin.blogspot.co.nz/2009/10/explaining-new-zealands-property.html

    I am going to quote myself:

    Note: Governments can talk about the importance of economic growth and “rising living standards” until they are blue in the face, but the fact remains that when you install policies that have the direct effect of restricting supply of base-need items/services, so that there develops a real under-supply of what is essential, then you can only end up with a poverty class regardless of net national productivity.

    Explaining: If you have an under-supply of houses, as my example, then it will not matter if everyone in your country is earning a million dollars a year: in these conditions you functionally must have over-crowding and/or homelessness because money cannot buy what does not exist. The result would in turn be incredibly high rents as people are forced to hand whatever money they have over to the landlord, to avoid living under a bridge or in over-crowded conditions etc. Again, the market is like an auction: you have to compete with other buyers for whatever is available.

    Likewise, you can see that one of the most irresponsible and anti-egalitarian things that a national (or local) government can do is facilitate the development of an under-supply of base-need items; items such as food, water, electricity and housing etc. If the under-supply is substantial and serious then, in these conditions, it is virtually impossible to avoid creating a poverty class with respect to real living standards.

    And here is a video making my point.

    http://www.3news.co.nz/New-Zealands-working-homeless/tabid/367/articleID/285573/Default.aspx

    RELEASE THE LAND! Thanks.

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  28. On the issue of housing supply and land values – people should note that farmland is also rising in value.

    The common factors are outside buyers, access to foreign mortgage finance and making an untaxed CG.

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  29. Andrew – any increased cost at building time is risible. There are fundamentally two issues. One is an increased wall thickness for insulation thickness, the other is double or secondary glazing built in as part of the house. Overall the additional $$ is probably in the near neighborhood of $10k. Which will be paid back in energy costs within 3 to 5 years. The third issue is site placement and design, which costs someone with a decent modeling tool about 15 minutes to optimize. Want to really add value? For an extra $10k put a basement under the house.

    That is SO not a New Zealand way to do things.

    This country is with respect to housing, insane. You with your embrace of urban sprawl, designers who don’t put in basements, or second floors but instead create 200 m2 behemoths that sprawl over 200 m2 of land, councils which clip tickets for inspections but can’t take responsibility for the quality of the house, buyers who don’t inspect, BANKERS who don’t inspect, buyers from china using it as an aid to immigration, “investment” buyers who get to deduct mortgages and rates where the interest is paid to foreign banks and while ordinary owners cannot, no Capital gains tax… I could go on… and on… and on…

    Then we add to the issue that Christchurch has taken about 2 years longer to START rebuilding than it ought have and Auckland is the only city most people want to live in (I prefer Wellington thanks, it has a working rail system).

    Your bete’noir is that we object to urban sprawl, but there is a problem we as a society cannot ignore and that is energy. Distance costs. I can’t even really go with the notion of bedroom communities connected through a high speed rail network. Yet at the same time there is really no option of having NO growth in the area of the city, so you are not wrong either.

    We’ve created a society that doesn’t work because both partners must. They are unlikely however, to work in the same place of employment, and often will not live near to either place of employment. This creates a situation where at least one of them will always have to commute… somewhere. This is more than an inconvenience, and it is a symptom of larger and more difficult issues in the way our society and economy works. WHY does it take two incomes to pay for the family house? Why are so many of us so underpaid? Why are some of us so OVERpaid? The issues multiply like rabbits in heat and it appears that many of the issues with housing are merely symptoms of something larger, but collectively those housing issues are market failure writ so large that the Mars Explorer could see it… from Mars.

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  30. bjchip

    According to Hugh Pavletich, it costs $700 per square-meter to build a new home in Houston, Texas – all up. It costs $2,500 in Christchurch and $3,500 in Auckland – all up. I believe him because I have seen what you can get for your money in Houston. It’s like another universe.

    Let’s start from there.

    ..And here before I have to repeat myself on the issue on distance costs:

    http://andrewatkin.blogspot.co.nz/2011/12/green-sprawl-why-not.html

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  31. BJ, you ask why both parents/partners have to work etc etc…
    Balance of payments deficit for 40+ years explains it nicely.
    As the seven dwarfs so succinctly (didn’t) put it…
    “I owe, I owe, so off to work we go…”

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  32. It also doesn’t help that there is an effective monopoly on housing materials (with the associated price gouging) courtesy of Fletchers.

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  33. Samiam, it was a rhetorical question. Nor is it different in the USA or anywhere else that has banks and bankers in charge of a fractional reserve fraud based money supply.

    All workers, no matter how skilled, are being reduced to indentured servitude. Owners are being elevated to being Lords and Masters. It is not going to stop until the peons decide that they will no longer be peed on.

    :-)

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  34. Gregor, the same effective monopoly holds true in electrical supply.

    RCD outlet in Mitre 10 now $235, wasn’t available until I pointed out that they were $280 in the Electrical Supply houses.

    RCD outlet, identical, in Australia. $40

    RCD outlet in the USA, $25

    We aren’t doing too well here. Some people get wealthy, other people can’t have safety equipment at a reasonable cost.

    BJ

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  35. There are very few places in or around Auckland, or Wellington, where you can draw a straight line and not hit a harbor, hill, bay, volcanic island or ocean. I have seen all manner of “comparisons with Houston”, but Houston is a city on an unbroken plain that extends hundreds of kilometers in every direction, no geological faults to worry about, and easily dug dirt underneath.

    That is one problem with your notion Andrew. We have to deal with real topography, buildings that are actually present already, concentrated access regions (say for shopping) – where I think you can get some advantage but only if thought is given to the interaction of customer traffic and vehicles, and finally the changeover. We need a plan to get to there in the future from here and now.

    Which plan, if it does not exist, makes building the expanded community a no-go.

    We have to transition to the self-guiding “cars” and infrastructure to support them in some manner. Emergency services get more spread out… a problem in terms of numbers. Could be done. Water pipes get a lot longer. I can accept the septic-tank-field approach to waste, but individual supply seems unlikely on the scale you propose. I can accept the electrical lines being longer.

    Houston is also blessed with typical US subsidies for energy and the important thing they DO NOT do, is they do not care if the house that is built is “fit for purpose” in the same way that we are restricted here. County, City… don’t give a rats behind. Buyer beware, banker beware and inspections are for the safety of the connections to the mains.

    It is true, we are getting ripped off at several levels… and the land prices are a part of it. Don’t fixate on one thing though.

    The key to making your notion workable is the transportation and the transition to that transportation.

    I am not saying no it can’t work. Just pointing out that there are problems. No free lunch.

    OT: (because it is a problem with the current system too) – There is another problem with all transportation based on roads, no matter who runs it. Tires.

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  36. Does that make mine a rhetorical answer??
    Did I just ask a rhetorical question?
    I need a coffee…my head is beginning to spin v e r y s l o w l y around.
    :)

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  37. According to Hugh Pavletich, it costs $700 per square-meter to build a new home in Houston, Texas – all up.

    A goodly few years ago we nearly had a house built in Orlando, so we could regularly holiday there. We were living in the UK at the time. The cost of building houses there we noted was ridiculously cheap compared to our European experience. Car transport with almost free petrol (and, frankly, almost free cars) was a given.

    The area we were interested in (Loma Linda and Loma Vista) was (back then) two sleepy circles, but is now a very big housing area.

    Anyway. On a particular three week holiday there, we watched a bare section go from being a, well, bare section, to a fully built house complete with swimming pool and landscaping including palm trees. In less than three weeks. Go to whoa.

    The other important thing is that these houses also don’t last. I don’t think they are intended to, they seem to pull them down and start again. Or a natural disaster trashes it.

    Anyone who is used to shopping for building stuff at Home Depot in the USA or B&Q in the UK will have a heart attack when they walk into Bunnings or Mitre 10, or Lighting Plus for that matter. The cost of building materials in New Zealand is just taking the piss.

    Example: A humble double socket outlet from a retail outlet. UK 13A double socket by MK, top of the line, £2.99+VAT. Leviton dual in the USA $2.99+local sales tax. Here in NZ… PDL 692 double socket cheapest retail is $16.85+GST. You don’t need xe.com to work out there is a difference in prices there even after exchange rate differences.

    I’m told by an IT mate who has worked at both UK and NZ chains that if the UK folks saw the margins the NZ chains make they’d cry. Welcome to ripoff New Zealand.

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  38. bjchip:

    I agree land isn’t the only factor, but it is the major factor – especially if you only want a simple building on top of it. But, if there is an enforced under-supply of land, then any across-the-board reduction in building costs will translate to a functional subsidy that only further inflates land prices.

    It’s a competition among buyers – more money in their hands, in the context of an under-supply, will just bid up the prices. Savings on one level leads to inflation on another, as the final price is set to the maximum of what the market can afford.

    …I would imagine that the best way to drive down construction prices, once we’ve got the land game right, is to import good Kit-sets from overseas?

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  39. We build our own kit-sets right here. We have the lumber, the energy, and the skills to do it… and there are several local mobs that have decent products. Not usually well sized, but I can’t imagine a good reason to import anything really. The issue of where the money comes from is quite nasty from my point of view… but overall it is such a mess that I’d recommend that I can’t even pick the worst part of it.

    Gregor… when I saw the RCD price I nearly spewed. I asked if it had gold contacts. I didn’t believe it and I wrote letters to several people… including media… that was 6-8 months ago. Astonishingly, it is now possible to find this…

    http://www.kiwisparks.co.nz/products/pdl-double-horizontal-rcd-power-point

    Someone got the message. Not sure who, how or why… but the price is halved, and the Aussie price is up now.

    Still, the US price is down in the $15 range. A tenth.

    http://www.howmuchisit.org/gfci-outlet-cost/

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  40. Andrew – There’s plenty of suppliers out there and even a LOT of cheap choices. The issue isn’t really competition, or even price. The problem is uptake, and compliance costs, and the land issue. Land is banked, it is an investment and developers buy up blocks at the high prices, they control what gets built which is invariably the house that makes them the most money, a custom designed high-end structure, and there is no cheap housing to be had.

    Hard pressed to say what is the best answer to that, a tax on unused land would cause them to disgorge their holdings but the whole ownership of land model is logically wrong. Humans don’t “own” land… we don’t live long enough to “own” land… it -owns- us. A different model seems appropriate. Then there is the fact that the Councils have abandoned their actually reasonable position of being the developers of sections and blocks of development land.

    COUNCIL gets rates forever on a developed property, and selling the developed section at a low price is an option for councils after developing the roads and infrastructure because of that, but councils are looking for money, despite being a government that supposedly represents us.

    One has to consider that dynamic within councils. It is easy to see… if you step back… how often have Greens found that a local council is as pwned as National? Not working for all its people but just for the people who have money?

    Lots of tough choices out there… and a lot more selfishness than sense.

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