Green Party and Labour announcement
Green Party and Labour announcement

Thoughts on Labour’s new housing policies

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.

Metiria Turei, Andrew Litte, and James Shaw
The Greens and Labour stand for many of the same things when it comes to housing.

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.

Auckland, New Zealand, where the current average house price is $975,000

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.

10 Comments Posted

  1. “I agree with Tony that excessive immigration must be stopped to deflate the Auckland bubble. That problem has been created by National’s growth addiction” Got it in one there Denis. Cramming more and more people into NZ to fuel the neoliberal exponential growth meme is the main cause of the property bubble. The planned urban sprawl over New Zealands’ most productive land is a special kind of insanity! A CGT doesn’t seem to have slowed property speculation in the jurisdictions where it currently exists, why would NZ be different? The answer is to decrease demand!

  2. I agree with Tony that excessive immigration must be stopped to deflate the Auckland bubble. That problem has been created by National’s growth addiction.

    Housing unaffordability for young kiwi families is not just due to that cause. The other primary driver of escalating house prices is the leveraging-up by multi-property-owning investors. That problem has been created by National’s ideology around private-property rights and freedom of choice.

    Regulation to control both sources of upward pressure on house & land prices is now essential. A Labour/Green policy platform promising such regulation is therefore required to make a change of government seem a good idea. Declare this agreement asap.

  3. Green/Labour has our support. However we would like to see a more proactive independent foreign policy based on stringent adherence to international law in particular with regards the ME and the Palestine/Israel conflict. We like a future Green/Labour government to support international efforts in rebuilding GAZA and ending the now eight year old blockade of GAZA. Please visit my blog/facebook on geopolitical affairs.

  4. But what about addressing the ongoing the CAUSE of the current so-called housing crisis?

    ‘So called’ because to anyone who can count – and surely every Green can count – the National Governments policy that has brought in 500,000 new Kiwis and is ongoing at a rate of 200 more per day is what has brought about the shortage of housing.

    You cannot bring in 500,000 people without building hundreds of thousands of dwellings without a housing crisis resulting. And now that the shortage is developed without building more and more and more houses until the tidal wave is stopped.

    Not too the effect of this giant tidal wave of immigrants on every other resource including jobs, health and education and most especially the environment.

    I mean, just how many houses do we want to have – and how much of our resources and environment do we want to turn into those houses before we say ‘enough’?

    When will we Greens stop talking about the symptoms and look to address the cause – the tidal wave of immigration?

  5. How about changes the rules so that only NZ based residents can buy property of any kind, and that property investors be locked out of the market until all the family purchasers have been housed. In other words, you have to be an owner/occupier to buy a house.

  6. Ha Ha Ha. Affordable for WHO.
    The homeless pensioner on $350 a week. NOOO
    The unemployed on $200 a week NOOO
    The minimum wager on $400 a week. NOOO
    The married minimum wager on $800 a week NOOO.
    So WHO are we TALK TALK TALKING about NZers.
    A BARE section in a New SUBDIVISION will soon cost $500-000
    Owned by the WEALTHY.
    And SOON to be DESTROYED as the HURRICANE BELT moves slowly southwards with your pollution COST?

  7. Colin – Did you know that we’ve discussed the basics around “the Chicago plan” (this is the first I’d heard of it yet it contains much of my own thinking) . Real money represents work done. The result is that it needs to follow the laws of thermodynamics. The consequences of that…. include but are not limited to the “Chicago Plan”.

    The problem with fractional reserve banking was debated here

    at length…. but a more complete exposition is now here.

    Comments there will be turned off shortly and so the site may go.

    Interestingly they use an interface called “Discourse” which appears to beat the heck out of what we have here. PREVIEW! EDIT! Easy HTML TAGS!

  8. Of course they’ll be insulated, but should they have solar panels and battery packs? LED lighting?

    Actually, they should be Passive House Standard to minimise electricity use. They should have solar panels on them but not batteries. The ‘batteries’ that we should be looking to use are our hydro-lakes.

    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?

    We don’t. We renationalise and turn power generation and distribution into a government service run through a government department and ministry. It’s far cheaper as it gets rid of duplicated bureaucracy and over paid CEOs as well as allowing us to design and implement a smart grid meaning that we’ll be able to make better use of renewable electricity generation as well as saving us the dead-weight loss of profit that’s endemic to privatisation.

    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.

    A CGT will only go so far and so what we need to do is to stop the private banks creating money. Known as the Chicago Plan. To do that effectively we need to make it so that only the government creates money, known as Sovereign Money, which it them spends into the economy and thus becomes the full driver of the economy.

    We need a financial system that is fit for purpose and the one we have isn’t. In fact, the one we have is delusional and it’s that which is driving our continued destruction of the environment.

  9. I publish stats about the property market that actually show a very different market from that suggested in your article – for that matter in most comments, however the stats may agree with your solutions – I certainly do after understanding them.

    My stats are drawn from stats – those that are published every Monday.
    Auckland has plenty of houses, with rental listings showing no shortage of houses to rent, in fact the inventory of rental properties is higher now than in the previous 2 years and midpoint for the last 8 years.

    Wellington has an increasing shortage of both rent and sell houses, down to the lowest ever in both.

    But there is a very vocal number saying that there is a shortage of houses in Auckland. Why is that?

    I believe they really mean a shortage of affordable houses. Rents have continued to rise with household income as they have for the last 20 years, but then so has the cost of ownership – except in Auckland where my stats show the level of speculation where property costs (interest, insurance, maintenance and rates) have risen well above 30% of household income – the long term trend.

    Take a look at my page

    or compare with Wellington

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