On the crisis in affordable housingJanuary 22nd, 2013
The lack of affordable housing, as Finance Minister Bill English conceded last year, is an example of market failure, and in this Q&A transcript English frankly conveyed the enormity of the problem. Our housing prices are inflated, that our building costs are higher than in Australia, there’s a shortage of suitable land, councils have to worry about the related infrastructural costs of unlimited expansion, central government already pays $2 billion in housing supplements to over 300,000 New Zealanders etc etc. Plus, the situation is deteriorating – such that whereas only 20 years it cost only two or three times the median wage to buy a house, that figure has now risen to between five and six times that figure. With this result:
Corin Dann : : But I’ve seen figures showing that 30% of Aucklanders, for example, simply can’t buy a $400,000 house. You know, there’s big chunks of the Auckland market that can’t even get into a $400,000 house.
English : That’s right, and more of those people are finding themselves in low-quality rentals, and a lot of them find themselves on government subsidies for those rentals. And those subsidies are growing quite fast, so the government has a direct interest in enabling those people into the market.
Ah, the invisible, implacable market – which, in terms of political accountability, is the equivalent of pale green pants with nobody inside them. Clearly, this mess did not arise overnight. Yet when the workings of the market fail to produce a basic social need, isn’t that also failure by government, which sets the rules under which the market operates in order to produce adequate social outcomes? The provision of access to shelter for a country’s citizens would seem a basic function of government – which alone has the means to plan for future needs, rather than leave them to the short term and haphazard workings of the market. That’s what Barack Obama seemed to be saying in his inauguration address this morning:
Together, we discovered that a free market only thrives when there are rules to ensure competition and fair play. Together, we resolved that a great nation must care for the vulnerable, and protect its people from life’s worst hazards and misfortune.
Unfortunately, the government’s belated recognition that a problem exists in housing (and the fact the Labour opposition seized on the issue has been a major factor in its awakening) is unlikely to produce a noticeable response in the term of this government, or even the next. Central government may be voicing its concerns about the issue, mainly because it would be politically suicidal for it not to sound concerned. Yet it also seems intent on passing the buck – if not the bucks – to local government. As English also made clear late last year, the timeframe for the process stretches out for years and years:
[The] ongoing work programme focussed on RMA and Local Government Act (LGA) amendments, including work on the standardisation of building consent processes across the country. It was also possible the government would investigate the make-up of the building supplies industry. English noted any investigation into that industry would have to look at the near-monopoly held by Fletchers…..English said the RMA and LGA work programme should be completed within six to nine months.
“But just to give you a sense of the scale, most major district plans took ten years to become operative, and a lot of the changes take three to five years. The one plan for Auckland, we’ve made a decision that that’ll all be done in three years,” English said. “So it could be…two to three years before the significant changes in the planning processes. We do always have the option of some legislative change from Parliament, but we would want to be careful about cutting across the mandate and the knowledge of local councils. “We’d prefer to work with them,” English said.
Of course, the government was ready to set those democratic niceties aside when it came to the “mandate” and “knowledge” of Environmental Canterbury – but that was about something really important like the water demands of dairy farmers, rather than putting a well-insulated roof over the heads of the country’s children. The current strategy puts the focus solely on the supply side of the problem, while leaving the demand side all but untouched – which means that the role of the banks in fostering housing price bubbles will continue to be ignored.
In the meantime, local government can be blamed for the delays, since red tape and bureaucracy is always a handy scapegoat for the centre right. Given the government’s wilful impotence on this issue. Labour and the Greens can make inroads on this issue (especially in Auckland) right up until election 2014. Haggling by government over the feasibility of Labour’s house-building plans will only expose the paucity of its own response.
Mayhem in Mali
Last year, I did a long piece on the civil war in Mali for Werewolf, including input from the British academic and North Africa expert, Jeremy Keenan. The bloody hostage crisis at the Algerian gas plant at Amenas fits one of the scenarios that Keenan raised. Having enabled a motley group of Salafists in northern Mali to destroy the indigenous Tuareg uprising, France, Algeria and Ecowas have now turned on their jihadist protégés within Mali to restore the former status quo in the region. Which includes control by Mali’s neighbours of the lucrative smuggling trade that passes through Mali:
The Salafi-jihadis are flush, courtesy of booming cocaine smuggling from South America to Europe via Mali, plus human trafficking. According to the UN Office of Drugs Control, 60% of Europe’s cocaine transits Mali. At Paris street prices, that is worth over $11 billion.
And then there’s the wider perspective:
Mali borders Algeria, Mauritania, Burkina Faso, Senegal, the Ivory Coast and Guinea. The spectacular Inner Niger delta is in central Mali – just south of the Sahara. Mali overflows with gold, uranium, bauxite, iron, manganese, tin and copper. And – Pipelineistan beckons! – there’s plenty of unexplored oil in northern Mali. As early as February 2008, Vice Admiral Robert T Moeller was saying that AFRICOM’s mission was to protect “the free flow of natural resources from Africa to the global market”; yes, he did make the crucial connection to China, pronounced guilty of ” challenging US interests”.