The Listener's editorial, 7 February 2019.
When a nation’s flagship housing policy is such a spectacular failure that it makes the New York Times, the minister in charge cannot avoid the international embarrassment.
This is the position Housing Minister Phil Twyford now finds himself in. Having arrogantly sneered at all those who dared question his strategy and timetable, he has failed to deliver on the very thing New Zealanders care most about – the urgent need for a solution to our housing crisis. This policy was central to Labour’s pitch to voters at the last election. The failure to deliver 1000 KiwiBuild homes by July – so far only 47 have been completed – is the definition of a broken promise, ameliorated only by the likelihood that few truly believed the Government would keep its word in the first place.
That the previous Government struggled to make any meaningful changes in the housing area should have indicated to Twyford that affordability was more complex than Labour, and National before it, had assumed.
Prime Minister Jacinda Ardern declared the market had failed, so the Government had to step in. She was right that the market had failed, but wrong to assume that the Government would make complex problems disappear merely by becoming a property developer itself.
Inevitably, it has come up against all the same obstacles private developers face. These include the high cost of land, labour and materials, restrictive regulations, local authorities’ planning rules, lack of infrastructure, the Resource Management Act and neighbourhoods where existing homeowners refuse to countenance more intensive development. The market failure Ardern referred to will not be solved by swapping a private property developer for a state-owned one. The market failure is not ideological. This is the real world, and not the 1930s with plenty of suburban land available for state housing.
Many of the obstacles New Zealanders have faced in trying to build their own homes – in particular, the cost of land, labour and materials – are largely outside the control of developers, regardless of ownership, and even of scale.
Sometimes, the Government will have advantages. For example, it may, on occasion, own the land it wants to build on. Yet there’s still a problem. If it were to sell it off to private owners at below-market prices, it would be using a taxpayer-owned asset to significantly subsidise the cost of a home for a few private owners lucky enough to get one. That is hardly fair. There’s already a lottery of birth in which young middle-income people whose parents can help them buy a house are among the few who can hope to own one. Adding another lottery, in which only those young middle-income people – and even, as we’ve seen, doctors – whose number comes up in a state ballot ever get a KiwiBuild house, is not a solution to the housing affordability problem.
The Prime Minister hasn’t resiled from the Government’s commitment to deliver 100,000 houses in 10 years. But a Government that is elected for three years still promising to ratchet up house production with a goal 10 years hence when it may not be in office, is not treating the public with respect. New Zealanders, having already witnessed the debacle over tree planting, are not so easily fooled.
The Government needs to urgently do what it can to change those things over which it has control. The Opposition, having itself failed when in government to make headway on housing affordability, owes it to New Zealanders to support any reasonable legislative changes to facilitate more house building. Ratepayers, too, need to allow councils, which have more say than the Government over the availability of land for new, infill and high-density housing, to use the powers at their disposal. And we all need to accept that changes that make homes affordable may affect the value of many existing houses.
The recent Demographia International Report, which compares median house prices in seven wealthy countries plus Hong Kong, reports that in Australia housing has become more affordable over the past year as prices fell due to tightening credit. Yet, alarmingly, New Zealand housing has simply become more unaffordable since this Government took office. Property here is now further out of reach than in the US, Australia and the UK. This is beyond embarrassment. This is a national disaster.