The Labour Party launched its package of ideas to fix the housing crisis over the weekend. Their ideas match ours in many ways. This is good news, because it means that when we change the government we’ll be ready to hit the ground running with a common policy programme to tackle one of the most significant challenges facing the country right now.
Build affordable homes
Building 100,000 new affordable homes – half in Auckland – is a no-brainer. As Andrew Little said, “When you don’t have enough houses, you bloody well build some more and that’s what we’re gonna do.”
The Greens and Labour have been singing from the same song-sheet about this for a while. Even the Minister of Finance, Bill English, said earlier this year that not enough affordable homes were being built. He doesn’t seem to have a solution, but Labour and the Greens do. The market has failed to build enough affordable homes, and so the government has a role to play to correct the market failure.
Setting up an urban development agency, or affordable housing authority, to lead the work to fix the affordability crisis makes sense.
In government, it will be the Green Party’s job to make sure these 100,000 new affordable homes are energy efficient. The affordability of a home isn’t just in the sale price – it’s also in how much it costs every month to live there, including the power bill. Of course they’ll be insulated, but should they have solar panels and battery packs? LED lighting? How can we work with the power companies to make these new homes are “smart”, help the power grid be more efficient, and save money in the long term?
Like Labour, we believe that people should have a choice about where they live. But a lot of people want to live close to the central city where they work or study. That means delivering more high-quality, inner city housing options, not endless sprawling new suburbs.
It’s often easier and cheaper to revitalise central suburbs than it is to build new suburbs on the city fringes. Infrastructure for new sprawling subdivisions is very expensive. The economic cost of long commutes quickly becomes a strain on families and businesses, not to mention the environment. Any new homes at the fringes of the existing city need to be built as part of low-carbon communities, not endless car-dependent sprawl.
No one should be forced to drive to get some bread and milk from their local shops. In government with Labour, we’ll make sure new communities are designed so it’s safe for all kids to walk or bike to their local school, and good public transport connections are available. We should encourage car-share schemes for all new housing developments – urban and suburban. Picture a new street of 50 homes with fifteen electric cars of various sizes that are bookable by the hour or the day.
Cool housing demand
Both the Greens and Labour know that building new homes is critical, but also only part of the answer. In addition to supply-side solutions, we also need to cool demand. The Reserve Bank says rental property investors borrowed $2.7 billion in May 2016 alone, compared to $1.9 billion in May last year. Most of that went to buying existing properties, not building new ones.
That not only pours fuel on the housing crisis fire, it also unbalances our economy. So much of our country’s money is tied up in property, when it could be more productively invested in businesses to grow our exports and create new jobs.
An important part of rebalancing the economy and cooling demand for investment properties is a capital gains tax (excluding the family home). Labour have said that they would extend the “bright line test” from two to five years. The bright line test is an almost capital gains tax (although the National Government refuses to admit this), and also excludes family homes. So, again, Labour and the Greens are broadly aligned on this front.
The Greens want to stop non-resident foreign buyers from participating in the property market, as does Labour. In a market as hyper-inflated as the one we’re in at the moment, this is particularly important. Even a small number of transactions at the margins (the Government says about 4% of residential property transactions are to non-resident foreign buyers) has a huge distortionary effect on house price inflation when the market is as pressured as it is now.
Warm, safe rentals
The other side of the housing crisis is, of course, in the rental market. When it comes to rentals – whether they’re private rentals or state houses – we’re in agreement.
The Greens and Labour have together been calling for a Warrant of Fitness for rental homes for a long time. I think it’s safe to say this will be high on the priority list when we change the government.
National has taken half a billion dollars in dividends from Housing NZ since 2008 and sold off a net 2,500 state homes. I completely agree with Andrew Little that this is just ridiculous, at a time when families are living in cars and garages and in terribly overcrowded conditions.
Several months ago when the extent of the homelessness crisis was becoming clear, Metiria announced that the Green Party would stop requiring Housing NZ to make a profit for the government, and instead invest that money into building new state homes. Labour agrees. And yesterday, so did the Government!
Making Housing New Zealand pay millions of dollars in dividends back to the Government every year, while families are forced to sleep in their cars, isn’t just stupid, it’s also immoral. Housing New Zealand should be using that money to build more state houses.
Funding more emergency housing beds, as Labour suggested, is also easy for me to agree with. My hope is that after a few years of a Green-Labour Government, we won’t need to fund so many emergency housing beds because there will be more permanent housing available. But as long as the emergency beds are needed, we’ll provide them. It’s the least a government can do.
All in all, I was really pleased to see Labour’s housing plan. What it shows is that the Greens and Labour are ready to fix the housing crisis when we get into government.