In justifying her decision to bring new ministers into the mix to tackle New Zealand's housing issues, Prime Minister Jacinda Ardern said that doing so was not an admission that Phil Twyford had failed, but rather a recognition that tackling those issues was a job for more than one minister.
While that sounds plausible, I doubt that adding ministers to the mix is going to make any difference. If Labour's spectacular failure on the housing front had simply been the result of putting too much work on the shoulders of one person, I could have accepted her explanation, but it isn’t. The Government's housing program is failing because it has allowed impractical ideology to influence policy in a way that ignores market realities and creates perverse results in the sector.
We’re seeing that in the private rental sector, where the Government's determination to punish landlords has led to initiatives such as the ring-fencing of tax losses, and, until recently, the spectre of a capital gains tax – all of which have ended up frightening property investors, pushing up the cost of renting, and potentially scaring off further investment in the sector at the very time when we badly need more rental homes.
We’re seeing it with state rental housing where an impractical welfare approach has seen the end of time-limited tenancies thereby putting increasing pressure on limited stock and forcing low-income tenants into sub-standard temporary accommodation.
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We’re seeing it in the local government sector in Auckland where, despite spending years creating the SuperCity and pushing through a Unified District Plan, we’re now throwing it all out and starting the whole process again by setting up a new, untested Urban Development Authority with draconian powers and an unclear agenda.
And we’re seeing it with KiwiBuild, where the Government has completely misread the market and is trying to build homes to a formula that worked during the boom but doesn’t now, and for a segment of the market that many would struggle to see as "disadvantaged".
These misguided reforms are built around Labour and New Zealand First policies – some of which were also underway under the previous National Government – so it would be unfair to blame them all on Twyford. Simply plugging in new ministers won’t make a jot of difference unless those new ministers also have a mandate to start with a clean sheet of paper.
If the Government is genuine about wanting to succeed in the housing space, it needs to forgo attempts to socially engineer the market or curry favour amongst its supporters and, instead, fundamentally rethink its entire approach to the sector. This would mean focusing on initiatives which increase the stock of rental and private housing as quickly as possible. These initiatives might include abandoning or substantially modifying policies which add to the cost of owning a rental property; dumping plans to set up an Urban Development Authority and giving councils the powers that were intended for them; and reintroducing fixed-term tenancies for state housing tenants.
Such an approach would also impact on the KiwiBuild "reset" and would mean turning KiwiBuild into an agency which monitored the private sector construction of new homes to ensure that numbers were keeping pace with targets; working with the private sector to help to remove the roadblocks which slow down that construction, and focusing its primary attention on developing sustainable shared equity schemes and other initiatives to get low-income Kiwis into their own homes – exactly as recently suggested by the OECD.
Our housing issues are solvable – they just need strong leadership, clear thinking and an overwhelming focus on doing the things that increase supply or private and rental housing as quickly as possible.
- Ashley Church is the former CEO of the Property Institute of New Zealand and is now OneRoof's property commmentator. Email him at [email protected]
