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Bryce Edwards’ Political Roundup: The Housing problem hits rock bottom

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Political Roundup by Dr Bryce Edwards – The Housing problem hits rock bottom

[caption id="attachment_4808" align="alignleft" width="150"]Dr Bryce Edwards. Dr Bryce Edwards.[/caption]

Housing affordability continues to dominate New Zealand politics, and finally the focus is on those worst hit by the crisis – the people who can’t even find a proper roof over their heads. It’s a shameful problem, but are there any radical solutions?

State housing and the crisis at the bottom of the housing market could yet be the biggest political story of the year. The escalating housing affordability problem – which is termed a “crisis” by the left, and a “challenge” by the right – has mostly been concerned with the impact on so-called middle New Zealand. Most of the debate has been on the cost of buying property – especially for first home buyers. 

The debate has expanded to include the increasing cost of rental accommodation and unhealthy homes, and now it has landed on the problems of those who can’t even afford to rent a proper home. So this week we’ve been talking about overcrowded flats, and people living in structures not designed for habitation: garages, shipping containers, and even cars. 

The situation is even getting international attention – the Guardian newspaper has reported the experiences of The Salvation Army’s Campbell Roberts, who says that it’s the “worst homelessness I have seen in 25 years” – see: New Zealand housing crisis forces hundreds to live in tents and garages.

The homelessness debate of the past week was sparked by Mike Wesley-Smith’s report for TV3’s The Nation last weekend – see the must-watch 13-minute item: Auckland’s hidden homeless

The reporter was so moved by his investigation that he wrote about his experience putting the story together, which is also well worth reading – see his opinion piece, Surely NZ is better than this

Wesley-Smith says, “To witness young children aged under five living in a car for two months was bloody shocking.” And although the situation of the low-income families was depressing, he also reflects that the “car community” was still a positive one, with mixed backgrounds: “Many were working full time, some had university degrees, some were Maori, some were Pasifika, some were European. If these were the people society forgot, they didn’t forget each other. They cooked together, kept the surrounding park tidy and even cleaned the local toilets each morning. The local cleaning lady can’t speak highly enough about them.”

He also reports on the very good work being done by social workers and government agencies, but nonetheless “something is seriously wrong with the system”.

RNZ has also played a significant role in fostering the debate, with both Morning Report and Checkpoint featuring substantial investigations and interviews on homelessness. John Campbell has some excellent videos and reports – see his two five-minute videos, Auckland’s housing crisis worsens and WINZ emergency housing at $1330 a week

Such coverage has moved many to take the problem seriously and reflect on the severity of the situation. Late on Tuesday night, for example, Linda Clark (‏@lindaclark1) tweeted: “If you’re heading to bed about now to a bed and not a car or a garage then spare a thought.”

Emergency accommodation debate

The Prime Minister’s appearance on RNZ’s Morning Report on Monday played a significant part in keeping the focus on the plight of those urgently needing housing. Asked what homeless people should do, he replied: “My really strong advice is to go and see Work and Income… and we’ll see what we can do, because I think people very often don’t understand what’s available to them”.

This sparked responses from a number of people who had sought such help, without satisfactory outcomes – see, for example, RNZ’s Work and Income advice ‘passing the buck’ – homeless mum and Homeless mum: ‘It’s pretty scary at night’.

The focus turned to the fact that Work and Income are willing to find emergency motel accommodation, but the agency then insists on the homeless paying back the cost – see Alex Ashton’s Homeless borrow thousands for motels

Although the policy is set to change, many now have huge debts to Work and Income, and an online petition has been started – currently with 3,186 signatures – to get the debts dropped – see the ActionStation petition: Minister Anne Tolley: Forgive WINZ motel emergency accommodation debt

Blogger No Right Turn makes the case against how Work and Income are operating: “So, basically, WINZ fails to do its job of providing people in extreme need with a state house, then makes its victims pay for that failure. And at a top rate too, far more than you’d pay if you just booked a motel online. But because its not on their budget, and someone else eventually pays, WINZ has no incentive to ensure that its victims are getting value for money” – see: Forgive this odious debt

Work and Income’s procedures have been judged to be incoherent, unfair and unaccountable – and that’s not the view of the agency’s critics, but of the Ministry of Social Development, who told Paula Bennett this last year – see RNZ’s Emergency housing sector ‘unaccountable’.

The Government has announced significant new funding for emergency housing – see RNZ’s Govt to spend $41.1m on emergency housing

However, this isn’t necessarily about the purchase of new beds, but funding existing ones. Russell Brown says therefore it’s “basically keeping the ambulance at the bottom of the cliff from being scrapped and sold for parts” – see: Crowded houses

Brown also points out that the level of accommodation supplement provided by Work and Income hasn’t been increased for years. Similarly, see RNZ’s Plea for budget to deliver on Auckland housing. In this, Budgeting and Family Support Services chief executive Darryl Evans says, “The accommodation supplement – which many of our families will apply for and qualify for – hasn’t risen for a number years. And so the maximum entitlement is $200 a week, but if the rent is $500 or $600, then there’s a huge shortfall.”

Emergency ideas

Debate has turned to how New Zealand society can immediately find shelter for those in need. The Executive Director of Unicef, Vivien Maidaborn, has put forward a list of ideas, including the need to “Create an immediate process for government to rent motels, and empty buildings like, defense force buildings, education or health buildings and prepare them for emergency accommodation.” – see: Housing crisis: A call for urgent action.

Others have suggested camping grounds and provincial agricultural housing – see the Herald’s Emergency housing crisis: Camping ground solution debated

The state housing problem and solution

Of course New Zealand does have a traditional way of dealing with the housing needs of those on low-incomes: state housing. But the supply of such housing has not keep up with the growth in population, to say nothing of the collapsing ability of many to afford to buy property. There simply aren’t enough state houses anymore to cope with greatly increased demand. Max Rashbrooke (@MaxRashbrooke) put it succinctly on Twitter: “20,000 fewer state houses (per capita) than in 1991. 34,000 ppl in severe housing deprivation who need c.20,000 homes. You do the maths.”

Back in the early 1990s there was one state house for every 50 citizens, and now there is only one for every 68. Therefore it seems that a massive expansion of state housing is required if the government is to solve the crisis. 

The Green Party has announced something that might go partly towards this, proposing that Housing New Zealand no longer be required to pay dividends and tax to the government, which might allow the agency to build an extra 450 houses a year – see Nicholas Jones’ Greens plan to free up $207 million to build new state houses

And to make their point, the Greens have spotlighted the desperate struggle of one woman to find housing for her family – see Sam Sachdeva’s Auckland mother shares housing woes as Green Party pushes for more state house.

But does state housing need a rather bigger expansion? Bryan Gould suggests that it’s simply a question of priorities – see: Homelessness a problem Govt chooses to avoid. He argues “The problem of families with children forced to live in third-world conditions is eminently resolvable. It simply requires the application of resources – resources that a country with our wealth could easily afford.”

There are some signs that Labour is set to announce a policy of major state house building. At its upcoming centenary celebrations later this year it’s likely to use the occasion to show how it can still propose bold and radical policies in the social democratic mold. A massive house building exercise might well turn out to be its most radical policy announcement of 2016. 

So National could be vulnerable on this issue. And, as Brian Rudman argues, they can’t plead ignorance on the state of homelessness – having been well aware of the problem since 2008 – see: Blaming others won’t build homes, Mr Key.

To get an historic account of the importance of housing – from a very personal perspective – it’s well worth reading Lynn Williams’s On the state of housing. It’s a heartfelt and stirring story about what housing means to the realities of individuals’ lives, with the conclusion that the current housing situation “is the exemplification of all that is wrong with our society”.

And if you want to know what it’s like to have to deal with Work and Income, a sad picture is painted by Vicki Anderson in her article, Joining the queue at Work and Income: Where no one seems happy.

Finally, for parody about the dark situation faced by the homeless, see the Standard’s Key to Homeless: You Can Stay at Mine, and Raybon Kan’s Car-sleepers camping at the bit for Key’s help.

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Across the Ditch: Housing Bubble Sees People Living Rough + Planet Key May Play Again

In this week’s Across the Ditch bulletin Australian radio FiveAA.com.au’s Josh Sampson and EveningReport.nz’s Selwyn Manning discuss how the soaring costs of housing in New Zealand has driven prices beyond the reach of most Kiwis, and rents well beyond what is affordable for thousands of people. PLUS: The song that was released a month before the 2014 New Zealand election, and then immediately banned by the Electoral Commission, has had its creators back in court, this time the Government’s Electoral Commission has sought to justify it banning the song in the 2014 General Election – this after the High Court decided the song did not fall foul of New Zealand’s electoral law. ITEM ONE: The soaring costs of housing in New Zealand has driven prices beyond the reach of most Kiwis and rents well beyond what is affordable for thousands of people. The problem is at its worst in the cities, particularly Auckland where the average home sale price is almost $1million. The demand for rental accommodation has seen landlords renting out tin garages for around $400 per week, and a 28 square metre chicken-coop apartment will cost you $330.00 per week. Last year, we reported on FiveAA’s breakfast programme that the imbalance in the New Zealand economy, led by a hot property market in Auckland, had worsened and had been in evidence for over a year. We also reported that the Reserve Bank had warned in 2015 that the housing market had ballooned out and posed a significant risk to the entire New Zealand economy. This year, on May 11, the New Zealand Reserve Bank issued another warning, suggesting that if the housing bubble bursts, the impact on the New Zealand economy will be dire: “The Bank remains concerned that a future sharp slowdown could challenge financial stability given the large exposure of the banking system to the Auckland housing market. Further efforts to reduce the imbalance between housing demand and supply in Auckland remain essential.” (ref. http://foreignaffairs.co.nz/2016/05/11/housing-and-dairy-risks-to-financial-stability) Beyond the wider domestic economy, the impact on every day life for thousands of Kiwis is already dire. For weeks now the news has been filled with real life examples of people living beneath the breadline. The state broadcaster, Radio New Zealand, has been leading almost continuously with reports about families living in cars, in tents, in garages, shacks, caravans, sleeping rough. Many of these people are women with children, and many have jobs but simply cannot afford a roof over their heads and have been squeezed out. (ref. http://www.radionz.co.nz/news/national/304179/where-do-homeless-go-when-help-runs-out) Early this week the Prime Minister John Key said people who are sleeping in their cars should contact Work and Income New Zealand – the state social provider that is tasked with assisting families in dire economic circumstances and getting people back into work. But the Minister in charge of Social Housing, Paula Bennett, admitted on Radio New Zealand this week that in Auckland there simply is not enough accommodation available to house those who have nowhere to sleep. She did say her department would be able to put people into motels as a short term fix. However, this week it was revealed, every person placed into a motel by WINZ is then charged at the market motel rate per night. The people who cannot afford rent, are placed into this form of the government’s temporary accommodation find themselves thousands of dollars in debt to the Government. Debt the Government charges interest on. (ref. http://www.radionz.co.nz/news/national/304122/homeless-borrow-thousands-for-motels) ITEM TWO: https://youtu.be/p8_B6CqCLb4 Meanwhile, a song that was released a month before the 2014 New Zealand election, and then immediately banned by the Electoral Commission has had its creators back in court. The song is a parody of the Prime Minister’s comments, a vision of his ideal New Zealand. John Key said: “I do not know so much about Planet Key, but my expectations are that it would be a lovely place to live, it would be beautifully governed. Golf courses would be plentiful, people would have plenty of holidays to enjoy their time. And what a wonderful place it would be.” Kiwi musician Darren Watson and video maker Jeremy Jones released their song in the early stages of the 2014 General Election. Immediately, there was an outcry by those passionate who were that John Key should not be the subject of satire during an election campaign. Then the Electoral Commission moved swiftly to ban the song and initiate legal proceedings against Darren Watson and Jeremy Jones. The two creators decided to take the song off the internet rather than risk facing a $40,000.00 fine. Since then, in the High Court, they have defended their right to create and release such a song, even should it be satire, should it focus on the Prime Minister, and even if the song should be released during a political campaign. The Electoral Commission argued before the High Court that it considered, under New Zealand law, that the song was an election advert (even though no politician or party paid for it to be created or released). But the High Court judge ruled that the song was ok, and did not come under New Zealand’s electoral act, and as such, should not have been banned. While the Government’s Electoral Commission is fighting that judgement in the Court of Appeal, it has conceded that it now does not want to hold the two creators of the song to account, but just wants the courts to clarify the law before the 2017 election year begins. The Court of Appeal will now consider the two arguments. In the meantime, Kiwis can enjoy the parody of John Key’s vision for New Zealand.

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TPPA Ministers issue bland statement, serious pressures behind the scenes

Ministers from the 12 countries that negotiated the Trans-Pacific Partnership Agreement (TPPA) have just met in Arequipa, Peru. [caption id="attachment_6181" align="alignleft" width="150"]Professor Jane Kelsey. Professor Jane Kelsey.[/caption]‘The four paragraph ministerial declaration (so far only available in Spanish) is as bland and uninformative as their previous statements, reiterating how great they say the deal is and how eager other countries are to join’, according to University of Auckland law professor Jane Kelsey. ‘What they don’t tell us about their meeting is what really matters’, she said. ‘The fate of the TPPA is captive of US politics. President Obama will have stressed the need to provide assurances to gatekeepers in the US Congress who want stronger protections for new generation biologics medicines, oppose the protection of tobacco control measures from investors’ rights to sue, and to stop governments from requiring that financial data is held inside the country’. ‘This is make or break time for Obama, whose “legacy” deal is in jeopardy if he can’t get the TPPA through Congress during the “lame duck” period between administrations’, Kelsey said. ‘In reality, the timeline under the Fast Track law makes a vote during the lame duck period virtually impossible. Then the supposedly final text will be subject at least to renegotiation on those key points, if not blocked altogether, under a new administration.’ ‘There are high risks of countries agreeing to more concessions now, especially a side letter setting out a strong interpretation of the vague compromise wording on biologics, and facing new demands for more concessions, whichever party wins the presidential race and/or control of the Congress.’ Professor Kelsey called on new trade minister Todd McClay not to sell New Zealand further down the road for a deal that imposes unacceptably high costs for New Zealanders for very little return.]]>

Across the Ditch: Tax Haven Qs See Prime Minister Chucked Out of Parliament

Across the Ditch – Australian radio FiveAA.com.au‘s Peter Godfrey and EveningReport.nz‘s Selwyn Manning deliver their weekly bulletin, Across the Ditch. This week: The Prime Minister John Key was chucked out of Parliament yesterday (Wednesday) after a series of questions probing into what his government is going to do about New Zealand’s foreign trust/tax haven debacle. BACKGROUND: [caption id="attachment_10203" align="alignleft" width="300"]Panama Papers: Mossack Fonseca and the tax haven graphic. Panama Papers: Mossack Fonseca and the tax haven graphic.[/caption]New Zealand was named in the Panama Papers leak as a tax haven alongside 20 other countries, including the Cook Islands, Niue, Samoa, Singapore and Hong Kong. This week, a joint investigation between Television New Zealand, Radio New Zealand and internationally regarded investigative journalist Nicky Hager revealed New Zealand was referenced more than 61,000 times in the latest release of documents – information leaked from the Panamanian company Mossack Fonseca. Mossack Fonseca specialises in foreign trusts and taxation services. In the last two years, the company has actively promoted New Zealand to its clients, particularly those from Latin America, as a place to park their money. Since then, there has been a spike in money flowing into foreign trusts and look through companies set up in New Zealand. When John Key became Prime Minister back in 2008, and on numerous occasions since, he openly spoke about a desire to see New Zealand become the Switzerland of the South Pacific, the Singapore of Australasia – in essence, a place where foreign currencies, wealth, goods, services, transactions, could be traded or transacted freely, with first-world security, and when it came to foreign trusts… with a minimum of public disclosure… and a high degree of confidentiality. PUBLIC OPINION: Since the Panama Papers were released, John Key has found himself on the wrong side of public opinion. Two weeks ago, a UMR poll found 57% of those polled were concerned NZ foreign trusts were being used by people overseas for tax evasion purposes. (ref. Scoop.co.nz) Only 21% thought John Key’s Government was handling the tax haven problem well. 52% believed a full independent enquiry was needed. Women in particular are upset, with 63% of those polled being concerned about New Zealand being used as a tax haven. POLITICAL SENSITIVITY: Since the poll, the news has been all bad for John Key as, initially, he attempted to play down the problem. Last week, Kiwis found out that when Inland Revenue sought to review the laws surrounding foreign trusts in New Zealand, it quickly became a sensitive political issue. John Key’s personal lawyer, who operates a trust for the Prime Minister, quizzed John Key about whether the Government was going to crack down on the secretive industry. John Key said he didn’t think so, and told him to ‘go talk to Todd McLay’ (the then revenue minister). Then, the Prime Minister’s lawyer and a host of other accountants and lawyers who specialise in foreign trusts got a meeting the very next day and in an email the lawyer told McLay that the Prime Minister John Key had told him he didn’t want changes made to foreign trusts compliances. A short time after the meeting, the Revenue Minister told Inland Revenue not to pursue a review of foreign trusts. Then in April, while under pressure to act, the Prime Minister agreed to a review of how Inland Revenue Department handles foreign trusts, and whether New Zealand complies with the OECD guidelines on foreign trusts. However, the Prime Minister has refused to initiate an independent inquiry into the matter, something that would essentially reveal whether the perception is justified… that New Zealand has become a tax haven. HOW IT WORKS: According to information sourced from the Panama Papers, the word around Mexico, Columbia and latin America in general, is that New Zealand is seen as a ‘respectable’ jurisdiction, a perfect place to park your wealth, hide it from the wife or your colleagues. New Zealand has become a prized place that ultimately provides enough secrecy as to be an attractive jurisdiction where money obtained from dodgy and/or criminal deals can be laundered. And if you are looking to avoid paying your proper share of tax, then New Zealand’s trust set up is literally gold. Since John Key’s National-led Government was elected in 2008, it has brought in a law where foreign trusts in New Zealand are taxed at zero percent, as long as the money held within the trust was not earned in New Zealand. Once here, the wealth can then be declared to the country of origin that the money has been taxed in New Zealand. The administrators then get a tax waiver from the country of origin, and the money can then be cabled back home. This zero-tax loophole permits the owner of the wealth to avoid paying any tax. Additional to this zero tax loophole, unless the entities or principles whose wealth is held within a New Zealand foreign trust live in Australia or New Zealand, a high degree of secrecy can be applied, in essence people and entities of good or dodgy character, can stash their loot in a secret, safe, and fairly respectable place right here in New Zealand… And, the question is, does the Prime Minister think that is ok? WHERE TO FROM HERE: By the weekend, the Prime Minister began to insist, that no New Zealander has avoided paying tax. But that comment diverts attention away from the real problem, that the system John Key’s Government has in part created:

* allows people and companies from other countries to avoid paying millions, potentially billions, of dollars in tax

* and due to the degree of secrecy that the law provides to foreign trusts, John Key’s Government has built a system that is attractive to those who have accrued wealth through corrupt practice, drug dealing, arms trading, and possibly terrorist activity (revelations justifying this comment are now emerging through questions under privilege in Parliament).

And all this brings me back to the opening line in this bulletin. This week (Wednesday) the Prime Minister was chucked out of Parliament by the Speaker after he continued to shout down the opposition, continued over the top of the Speaker as he stood there attempting to bring the Prime Minister’s exchange and Parliament back into order. The Finance Minister Bill English was left to limp on answering on the Prime Minister’s behalf. What’s clear this week is, Kiwis do not like their country being used as a ticket clicker for dodgy deals and tax avoiders. And, for some, the Prime Minister is seen as part of the problem rather than the initiator of a solution.

Across the Ditch was recorded live on 12/05/16 and broadcast live on Australia’s FiveAA.com.au and webcast on New Zealand’s EveningReport.nzLiveNews.co.nz and ForeignAffairs.co.nz.

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