Scoop Election 08: edited by Gordon Campbell

On the government’s inertia on housing needs

February 20th, 2012

The weekend protests about Housing New Zealand’s Tamaki Transformation programme (which aims to relocate residents of 156 state house to make way for a mix of state owned and privately owned housing) are merely the tip of the iceberg of Auckland’s shortage of affordable housing – which is set to get worse, not better.

Auckland’s housing shortage may have been compounded by the leaky homes debacle, but as Bernard Hickey pointed out in an excellent NZ Herald column last week, there is no audible political debate on how we should be responding to the crisis in availability of cheap, affordable housing.

The Department of Building and Housing forecast this month that New Zealand needs to build 20,000 to 23,000 housing units a year over the next five years to keep pace with population growth. We have been building at a rate below 15,000 a year for the past three years.

It could be argued that this also ignores the destruction or degradation of large swathes of housing stock in Auckland and Christchurch because of the leaky-building disaster and the earthquakes of 2011. Auckland needs at least 10,000 new homes each year, yet less than half of these are being built.

Late last year, a report by the Child Poverty Action Group pointed out that while the links between inadequate housing and poor health and education outcomes are “well understood” by the government, action is not being taken on a scale sufficient to meet the need. This is a chronic problem, as the Salvation Army pointed out last week in their comprehensive fifth annual report on the nation’s social needs, entitled The Growing Divide..

Among the Salvation Army’s telling points on the housing crisis (see pages 63–72) is that 64% of New Zealand’s population growth over the past five years has occurred in Auckland, but Auckland has seen only 25% of the new building consents. Central or local government, the Salvation Army report says (page 64) don’t seem to comprehend the scale of the housing problem, let alone have an action plan to deal with it:

Government and local councils appear unwilling or unable to acknowledge the extent of the housing problem New Zealand is facing, despite warnings from independent agencies.

In its report last September, CPAG recognised the same levels of inertia, and urged the formulation and funding of a national housing plan to address the current and emerging housing shortages. Such a plan would have to ensure that the housing is affordable and appropriate (eg the national housing plan will have to address issues of overcrowding, dampness and cold). However, these calls are likely to fall on deaf ears in government, given the “shoot the messenger” approach taken in Parliament last September by Social Development Minister Paula Bennett, to CPAG’s entire list of recommendations on child poverty. For example :

Hon PAULA BENNETT: I think I have made it quite clear that I do not put merit on the Labour document that is the Child Poverty Action Group’s report, which, quite frankly, is just a rehash of old policies and of what Labour perhaps intends to do, depending on whether it changes its mind in the next few weeks.

That’s the great thing about any solutions to problems that government keeps on ignoring: they quickly become what Bennett calls “old policies” even if they are the only solutions being proposed to deal with “old” problems such as poverty, housing shortages, over-crowding and the diseases of poverty that they foster, and which clearly test the Minister’s patience if you mention them.

For now, the government appears to be obsessed with just one side of the national ledger. It aims to reduce state spending and the size of government as if these were virtues in themselves, and appears to have little interest or ability in using state resources to help to grow things, or to build things. Yet as Bernard Hickey points out, the current housing shortage offers a golden opportunity for New Zealand to meet its accommodation needs, while simultaneously addressing the major problem we also have with youth unemployment :

New Zealand has 83,000 people aged 15 to 24 who are not working or in education. The youth unemployment rates for Maori and Pacific Island youth, mostly in Auckland, are scandalous at 30.4 per cent and 29.8 per cent respectively….That brings us to a huge opportunity. Why can’t we, as a nation, take a strategic decision to solve these two crises by training these 83,000 young people as plumbers, chippies, electricians, roofers and the like in preparation for a national-scale building programme?…

Before we can do so, Hickey concludes, we need to talk about it, and recognise the pressing need to build more housing. Yet unless the government shows more sign of being interested in listening, all the talk and all the quality research done by the likes of CPAG and the Salvation Army will continue to be futile.


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    1. 8 Responses to “On the government’s inertia on housing needs”

    2. By Joe Blow on Feb 20, 2012 | Reply

      It looks like the government’s top priority is protecting the bubble in the property market. Their only concern is the land owning class of babyboomers that will out vote youth for decades to come. If the insurmountable goal of owning a house was not already out of arms reach, just getting a job has become the next insurmountable goal in life for the young.

      I hope the property market bubble grows to breaking point. It would serve them right. But that could never happen because the land owning elite think it’s safe as houses…

    3. By nommopilot on Feb 20, 2012 | Reply

      the major problem I can see is that most homeowners in New Zealanders have used equity in their homes as well as property investment as a form of savings. there were huge tax incentives for generations to do this. consequently any policy to reduce house prices is going to negatively affect a huge chunk of National’s support base and a reasonable amount of Labour’s.

      don’t have a solution to this, but it would seem like the source of our inertia.

      I would be surprised if the 120 members of our parliament collectively owned less than about 250 houses between them (John Key has 4), so there is quite a vested interest in maintaining high house prices…

    4. By Peter Dyer on Feb 20, 2012 | Reply

      “Government and local councils appear unwilling or unable to acknowledge the extent of the housing problem New Zealand is facing, despite warnings from independent agencies.” This applies to a subset of New Zealand’s housing problem: the leaky building problem. It is predicted eventually to equal or surpass in dollar amounts the Canterbury earthquake damage. Parliament–Labour and National alike-remain unwilling or unable to acknowledge the extent of it, much less devise any sort of realistic solution.

    5. By pclarebu on Feb 20, 2012 | Reply

      I am not sure what it costs to build a house nowadays – including the land as well. If it costs between $200,000 and $400,000, then to build the 23,000 houses we need per year would be between 4.6 Billion and 9.2 billion. I am not sure if this number includes the current Christchurch rebuild quota. But that is quite a lot of money and it’s an annual cost for the next 5 years. So that is between 23 and 46 Billion just to catch up on “one” of our problems – albeit one that has numerous side effects in other social problems.

      What amazes me is that the poor old government (and it really matters little which party leads it to be honest), is trying to deal to a raft of problems, with everyone knowing exactly what they should do, (and obviously it is not what they are currently doing)

      But when you start adding up all the cost of all the things they have to do it is staggering.

      Even if we sold off 100% of the state owned companies that are the subject of the current debate we would not even get close.

      So I can just imagine Gareth Morgan when he realises that instead of his mantra of not investing in property we potentially need to spend another $46 Billion just to catch up.

      Someone can check my figures I may have some decimal points in the wrong place which stuff up the figures a bit.

    6. By Mike on Feb 20, 2012 | Reply

      I dont think that the idea is to give the houses away – just to make them affordable

    7. By Andrew R on Feb 20, 2012 | Reply

      The Productivity Commission has released a draft report on housing affordability. It is a good example of neoclassical thinking. Just open up more land for housing. No discussion in the report about the effects of decreasing income and its role in making housing unaffordable. Rather blame local government and the resource management act.

    8. By Andrew R on Feb 20, 2012 | Reply

      The Productivity Commission draft report also downplays the effect of property speculation.

    9. By Joe Blow on Feb 21, 2012 | Reply

      @ pclarebu

      I don’t think anyone is suggesting that the government should build all of the 23,000 houses we’ll need annually, but kicking people out of state housing and selling it off is not going to help the overly inflated prices of housing in New Zealand.

      In fact, the conditions are right for another mini boom (how much will those 23,000 houses a year cost then?):

      All aboard the property rort

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