A Papua New Guinean anthropologist has warned that a campaign by authorities to remove communities from informal settlements in Port Moresby will not solve growing social problems in PNG’s capital.

The government is determined to end the role of settlements as what Prime Minister James Marape describes as “breeding grounds for terror” as part of its law and order reforms, but recent evictions have run into problems.

Almost half of Port Moresby’s estimated population of around 500,000 live in settlements, often without legal title or access to basic services. Some of the settlements have become notorious as crime hotspots.

However, in late January, police moved into the settlement at 2-Mile, sparking clashes with residents that resulted in two deaths and numerous injuries.

Police then moved to evict another settlement at 4-Mile, but this met with a legal challenge which led to the National Court placing a stay order on the eviction.

While the campaign is essentially paused, Marape has said his government would soon announce a permanent plan to replace unplanned settlements with properly titled residential allotments.

He also apologised to residents affected by the evictions, in recognition that many law-abiding and hard working families have made settlements their home over the years.

In numerous cases, homes were destroyed or razed to the ground, people were left homeless and then simply moved to other areas of vacant land or ended up living with wantoks in other parts of Morebsy.

A PNG anthropologist who has done extensive work on settlements, Dr Fiona Hukula, noted that settlements are long-established communities, stretching back decades.

“Essentially, people came to work in the towns and the cities, like in Port Moresby, and so where there was low cost housing, or where people weren’t able to afford housing, they started living in settlements, and some of the settlements on the outskirts, there’s stories that they made some kind of connection and deals with the local landowners.”

Dr Hukula said over the decades, migration to the towns and cities had grown significantly, but the available housing had not kept pace.

“People are just now coming into the city, really, to access better services, health and education. Some Papua New Guineans are coming to the city to escape various forms of conflict and violence.

“And this is now where we’ve seen just an influx of people coming into the city, and obviously there’s nowhere to live, and they live in settlements, and many of Moresby settlements are populated by families who have been there for several generations.”

‘Difficult thing I have to do’
Many of Moresby’s settlements are now populated by families who have been there for several generations. Removing people from these communities is a complex challenge.

“An eviction is not going to solve the problem, because people will just go and find somewhere else to stay (in Moresby), especially if they’re generational families who have lived in these settlements, who don’t necessarily have the ties back to their rural villages and their connections to their people in their village,” Dr Hukula said.

Adding to the complexities of the eviction drive are social connections forged in the National Capital District (NCD) over the years.

The head of the NCD Police Command Metropolitan Superintendent Warrick Simitab admitted that for him personally, leading the eviction exercises such as at 2-Mile had not been easy.

“It’s been difficult, because I grew up here. I grew up in NCD. For example in 2-Mile. Most of my classmates that I went to school together with, they live there. So for me personally, it’s a difficult thing that I have to do,” he told RNZ Pacific.

Simitab would not be drawn on when the evictions would start up again, saying things were paused while political leaders decide next steps.

Criminal hotspot
The local MP for Moresby South Justin Tkatchenko said the 2-Mile settlement had become a notorious criminal hotspot, and that the people of the city had had enough of it.

“Hold ups nearly every night and every day, women have been raped, attacked, citizens have been held up, cars stolen, injured, abused for nearly 20 years,” he said.

Things came to a head when police were shot at and those living in 2-Mile refused an ultimatum given by police to hand over the criminals, he explained.

Tkatchenko said the government was steadily working on resettling settlers with proper, legal allocations of land to live on.

“We have already allocated land and sub-divided that land for over 400 families in the 2-Mile Hill area and other areas. Some have already been resettled and moved, and others will follow suit,” the MP said.

Dr Hukula acknowledged that crime linked to some settlements was an issue that the general population keenly wanted addressed.

But she said persisting with displacing communities from other settlements would not address the underlying cause of the problem.

‘Ticking time bomb’
“It is a ticking time bomb. It’s going to be like this, where there’s evictions and then people move. And the thing is that the cycle of violence continues, and that’s what we’re trying to address here, the crime.”

The anthropologist stressed that “not everybody in settlements are criminals”, saying the people who lived in settlements were often working people, “people who are doing the menial jobs in the offices, the office cleaners, the people who are drivers, all of these kinds of people also live in settlements.

“And so when they’re being kicked out, there are people who can’t go to work, children who can’t go to school”.

Dr Hukula has researched and written about how settlement communities have developed informal systems of settling disputes or addressing law and order problems such as through local komiti groups or village courts.

These provided a way in which the communities could maintain order and general respect between their people. But “because the settlements have just exploded now it’s not like necessarily everybody comes from the same area or the same province” she said, making it harder to maintain a social balance.

In Dr Hukula’s view, “the village courts and the community leaders still play an extremely important role in being that bridge” between the authorities and the settlement community, and should be supported to play that role.

She said one of the other main things the government could do to help the situation was “to make sure that there’s affordable housing for all levels, all kinds of Papua New Guineans”.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

In 1988, our National Housing Commission declared, “New Zealand does not have the huge, insoluble problems of homelessness and substandard housing which confront many other nations.”

This was the final report of the then disestablished commission, which to that point had reported detailed data every five years to keep the country and policy-makers informed about what we had once considered the foundation of stable society — a home for New Zealanders to call their own.

I was born six years after that report, and in those years and across my lifetime, deliberate political choices — specifically, political choices by people sitting in Parliament — have shredded that once-guaranteed housing dignity and stability.

They traded it for a game of Monopoly, which, the pecuniary interests register tells us, also happens to disproportionately benefit around half of the “representatives” in there with interests in more than one property (notably, approximately just 2 percent of the general population are landlords).

This dire situation is the direct consequence of political decisions, and it is disproportionately hurting the 1.4 million renters in this country that our Parliament, by majority, and as an overwhelming majority of comfortable homeowners, continues to structurally disempower.

In spite of this, we have made some slow progress. In 2017, the Greens worked with Labour to introduce Healthy Homes Standards and a slate of amendments to the Residential Tenancies Act, removing no-cause evictions and allowing renters to take claims to the Tenancy Tribunal anonymously.

Some standards, we obviously agreed, were better than nothing. A set of rules means it’s clear how a game should be played, but those rules become pretty meaningless if there’s no consistent referee monitoring and enforcing them.

Compliance not tracked
Unfortunately, that’s what the Healthy Homes Standards have become. My parliamentary written questions last year showed the government isn’t tracking how many private rentals are compliant.

It doesn’t know how many landlords and property managers have decided to self-exclude their properties from compliance. It has no tabs on the cottage industry of companies that have cropped up to verify these standards, let alone the variance in their approaches.

This leaves the third of New Zealanders who rent left to shoulder the burden of enforcing these basic rules which are supposed to protect them.

It’s a funny thing that whenever the Greens mention renters, we’re immediately shouted down and told that the problem is, somehow, that landlords aren’t given enough free rein. That the solution is more commodification of basic human rights.

Ironically, this is exactly what the National Housing Commission warned against back in 1988, that shifting of responsibility from the state to the private sector would, “add little to the total housing supply while allowing private landlords and property speculators to make even higher charges for a non-expanding supply of housing… rais[ing] the purchase price of land and rented property”.

We now know, viscerally, how right they were. Whatever metric you choose, we have the most expensive housing in the world.

The Accommodation Supplement, once rationalised in the state-housing sell-off to help support lower income New Zealanders pushed into the private sector, is now paid out to the tune of $2 billion a year with evidence showing it primarily serves to just bid up rental prices and effectively subsidise private landlords.

Special tax preferential
We remain one of the only countries in the developed world that continues to provide special tax treatment and preference to properties, incentivising the flow of capital into unproductive property speculation, or what University of Auckland researchers called, “a politically condoned, finance-fuelled casino”.

In less than 40 years, political decisions have not only made housing one of the major drivers of poverty and inequality in this country, but one of the major determinants of both physical and mental health, not to mention education achievement and school attendance.

So, who pays the cost?

Most immediately, it’s the 1.4 million renting New Zealanders, who Statistics New Zealand tells us spend more of their income on older, smaller, mouldier, lower quality housing.

Renting is no longer a transient state — unless you’re talking about the literal transience which sees renters in this country maintaining their tenancies for, on average, just 16 months at a time.

Almost all of us will know families with children and friends in their 30s and 40s who are flatting. A quarter of retirees don’t own their own home.

This didn’t happen overnight. It happened within a generation of political decisions that sold our human right to housing to the highest bidder.

As depressing as that may be, it makes clear that the status quo is not an inevitability. It can and must change if we want any hope of a fairer society.

The good news is the Greens have unveiled our plan to fix it all.

Chlöe Swarbrick is the Green Party MP for Auckland Central. This article was originally published in The New Zealand Herald and is republished here with the author’s permission.

Article by AsiaPacificReport.nz

Nearly 40 percent of Pacific people in Aotearoa New Zealand live in crowded homes — almost four times that of the general population, according to a new report.

The report by Statistics New Zealand was based on data from the 2018 Census, which showed 39 percent lived in a home that required additional bedrooms for the number of people living in it, which shows no progress has been made since 2013.

The data showed nearly 60 percent of households with Pacific people had more than five residents. But with more than 65 percent of Pacific people living in rented homes, just 4 percent of rented homes had five or more bedrooms.

An organisation supporting Pacific families said, while intergenerational living and big households are not new to the Pacific community, there was an urgent need to support people suffering from the negative impacts of overcrowded living.

The Fono’s spokesperson Frank Koloi said during the pandemic, large Pacific families were already straining from the pressures of looking after visiting relatives stranded in the lockdowns.

He said the unaffordability of homes and the rising cost of living is another blow to intergenerational households struggling to get by.

Koloi said there were a range of other issues typically seen in crowded homes.

‘Truancy in schools’
“From truancy in schools, family violence … the current outbreak of measles and rheumatic fever is still prominent within Pacific families in south Auckland,” he said.

“So there’s a real need to address the overcrowded homes in terms of resourcing these families.”

Koloi said the Fono was supporting these families with wrap-around services, including budgeting advice, supporting kids going back to school and helping people into higher paying jobs through upskilling.

Stats NZ’s wellbeing and housing statistics manager Sarah Drake said the current growing Pacific population was often unsupported, particularly in large urban areas like Auckland — where even unsuitable housing can be unaffordable to rent or own.

The data also showed more than half of people living in crowded homes had a problem with damp, cold, mould, or needed major repairs.

Stats NZ’s principal analyst of census insights, Rosemary Goodyear, said they would like to see more people from the Pacific community do the Census this year so that their circumstances and voices could be heard.

In 2018, just 35 percent of Pacific peoples lived in owner-occupied homes, compared with 64 percent of the total population.

The homelessness rate for Pacific peoples was 578 people per 10,000 — more than double that of the general population.

This article is republished under a community partnership agreement with RNZ. 

Article by AsiaPacificReport.nz

A new $100 million apartment complex is coming to Manukau — Auckland’s heart of Pacific communities.

But you’ll have to be aged at least 55 to get in.

Kāinga Ora is expected to start construction of the 123 apartments in Osterley Way in March. The 16-storey tower will include 94 one-bedroom and 29 two-bedroom apartments.

The government said it was necessary to target targeting specific age groups to match an increasing demand from “older customers”.

“Kāinga Ora recognises our older customers have specific housing needs, which we are addressing through senior housing developments such as the proposed project in Manukau,” regional director for Counties Manukau Angela Pearce said.

Pearce said one in five of the agency’s homes in Counties-Manukau had someone over 65 living in it, while 670 of its homes in the area were occupied by sole tenants in the same age group.

“With an aging population, Kāinga Ora recognises the importance of dedicated senior housing where our older tenants can live well, feel safe and secure, both in their homes and the community.”

Two years on state house list
Maureen O’Meara, 75, spent two years on the state house waiting list and was renting a two-bedroom unit in Pakuranga for $420 a week until earlier this year.

“I had $17 left a week after paying the rent,” O’Meara said. “Being on a pension and paying market rent meant I didn’t have a lot of money left to live on.”

O’Meara managed to find somewhere more affordable in May after she was put in touch with Haumaru Housing, a joint venture between Auckland Council and the Selwyn Foundation.

But O’Meara said the Manukau development reflects an increasing number of people reaching retirement without a home.

“And I think there’s going to be a need for more places like it,” she said.

Age Concern Auckland chief executive Kevin Lamb said it’s important the development was close to public transport and community facilities.

“We think it’s high time older people had accommodation that is new and more appropriate for their needs.”

Big part of pension on housing
Recently-released research by Te Ara Ahunga Ora Retirement Commission showed superannuitants still paying rent were more likely to be spending 40 percent or more of their pension on housing.

While long-term trends suggest more older New Zealanders are likely to still be renting in their retirement.

Te Ara Ahunga Ora director of policy Dr Suzy Morrissey said with declining home ownership rates there was a growing need for public housing and accommodation for those aged 55 and over.

“When NZ Super was introduced, it was with the underlying assumption that those accessing it would be mortgage-free homeowners,” she said.

“Today, the reality is very different. There are declining home ownership rates, more people needing to continue working longer because they still have mortgages to pay, are paying rent, or haven’t been able to save enough to retire.”

• Auckland is currently in the middle of the local body elections with a Pacific candidate, Fa’anānā Efeso Collins, one of the two top contenders for mayor of the super city.

Article by AsiaPacificReport.nz

Deception and political spin crossed new boundaries this week with Prime Minister Jacinda Ardern, under pressure to explain the housing catastrophe in Rotorua, making the absurd statement:

“Our long-term plan is to get them into sustainable, long-term safe housing. It’s why for instance we’ve worked so hard to now have built 10 percent of all the state houses in New Zealand.”

Meaningless, ludicrous and irrelevant.

Why was she not challenged by journalists on this preposterous statement?

The government has been demolishing state houses almost as fast as it builds them so that the net increase in state houses over the last five years stands at a piddling 1100 per year for a waiting list of 26,664. The waiting list has increased five-fold since Labour came to power in 2017.

Labour is taking us backwards on state housing at a spectacular rate.

And neither is it the fault of the previous National government. Labour has kept the policy settings for state house building the same as applied under National — right down to maintaining the same tough criteria to enable a low-income tenant or family to get on the waiting list.

Largest Labour privatisation since 1980s
The awful reason Labour is demolishing state houses and selling the land is to provide funding for Kainga Ora. The government doesn’t want to borrow to build, which any sensible government would, so it is forcing Kainga Ora to sell land and properties to do this.

It’s the largest privatisation of state assets by Labour since the 1980s.

Where are the journalists to put some simple questions to the Prime Minister?

• Why has Labour allowed the state house waiting list to INCREASE FIVE FOLD (from 5,000 in late 2017 to over 26,000 in 2022) with no effective policy response?
• Why does Labour still think it’s OK to produce just 1,100 net new state houses per year for a state house waiting list of over 26,000? (When Labour came to power there were 63,209 state houses which has increased to just 68,765 by June this year).
• Why are the number of children living in grotty motels STILL INCREASING?
• Why is the number of children living in cars STILL INCREASING?
• Why are the number of children in tents STILL INCREASING?
• Why is Labour still ONLY FUNDING 1600 new IRRS places (for state house and social housing providers combined) each year for the more than 26,000 families on the state house waiting list?
• Why does Labour still think it’s OK to keep the proportion of state house at just 3.6% of total housing stock when it was 5.4 percent in 1990?
• Why has Labour not instigated an industrial-scale state house building programme such as the first Labour government did in the 1930s? (Labour then built 3500 state houses each year – equivalent to 10,000 today on a population basis).
• Why is the government planning to sell 55 to 60 percent of crown land in Auckland to private property developers when we have a housing catastrophe for low-income New Zealanders?

Where are the journalists to expose this prime ministerial spin?

Republished from The Daily Blog with permission.

Article by AsiaPacificReport.nz

***

SPECIAL REPORT AND ANALYSIS – by Stephen Minto.

Housing affordability is more than a simple case of demand and supply; there are structural factors creating too much investor demand for residential housing.  Because of this, New Zealand can’t just build its way out of this crisis. And removing planning restrictions will delay intensification and the supply of affordable housing, the exact opposite of what its proponents claim. The structural forces, in which the property market functions, must be fixed.

To see this we need to understand three things:

1. How we got here, and where here is.
2. Our current trends and economic forces.
3. What direction do we want to go in and how (possible solutions).

Part 1: How we got to this crisis – the NZ economy is a one trick pony; residential housing

We all know:

• The ‘normal principles of taxation’ favour holding a relatively low-effort, non-productive asset – residential property. Especially because you could claim the mortgage interest paid as an expense.
• There was no capital gains tax.
• The banks want to lend on leveraged property as a relatively secure loan. They are risk adverse.
• You can have a holiday home and rent it out occasionally as a pretend business to subsidise having it.
• Huge tourism to New Zealand along with AirBNB and ‘bookabach’ etc have given a lucrative income stream in the short-term rental market.
• Mum and dad savers/investors learnt from the 1987, 1998, and 2008 economic crashes that property was the best at retaining its value.
• The renters pay your mortgage, so there is little drain on your ‘income’ or there is positive enhancement from rental losses.
• New Zealand has had positive migration flows.

All these factors have been in place for many years making residential housing a fantastic investment, or superannuation scheme, or wealth–gain mechanism. It’s not clever to invest in residential property, it’s stupid not to.

But wait there’s more – the neo-liberal economic crisis

Commentators don’t talk about the neo-liberal structural changes in New Zealand and other first world economies from 1980 that have collapsed alternative investment opportunities.

The world economy was opened up on the mistaken belief that the great growth years of capitalism were made in an environment of little regulation and tax. A mantra to free up the private suppliers of goods and services (supply side economics) from laws, labour, and taxes was said to lead to an economic boom.

We all know there has been no boom for working or middle class people. There has been a boom for financial capitalism, technology, and billionaires.

What happened was skilled manufacturing and industrial jobs were exported to countries like China, Vietnam, and India. Many high income jobs evaporated in New Zealand leading to fewer people being able to save house deposits or save capital to start a business. Yes we got lower cost imports to match lower incomes, but we also got a throw away society with so much rubbish brought in.

Also, lower taxes and a smaller government meant the main source of apprenticeships, from Ministry of Works, Railways, Defence etc., dried up, leaving New Zealand small businesses without a source of trained and qualified people. They now had  to pay to train them. We now have to import skilled people. We have fewer skilled people to build houses. Fewer apprenticeships means fewer people to set up their own businesses meaning fewer opportunities for those wanting to strike out on their own. Fewer new businesses means fewer medium-sized businesses, which could be an investment option for those wanting to invest.

The above reality is compounded due to the absence of a capital gains tax as business owners have an incentive to take an easy-life option and sell up to overseas buyers. These overseas owners contribute tax and labour costs but they often do their best to avoid these. Businesses listed on the sharemarket are often sold overseas and pulled out of our sharemarket. We now have a thin share market. Profits from New Zealand assets are exported overseas. Most investment capital is not being invested back into growing the New Zealand economy, instead huge amounts of New Zealand’s investment capital is going to non-productive assets, such as residential property. These are all structural problems significantly damaging the ability of the New Zealand economy to grow.

New Zealand is now a service based economy but business set-ups in New Zealand are often for overseas franchises with low margins and wages. In fast food our small shop owners struggle. Retail as a business model is struggling because consumers have less disposable income because of high rents. High rents, and other utilities like power, suck money out of other areas of the economy. Our overall economy is being damaged by being skewed to the non-productive asset, residential property.

This is where the New Zealand economy is today; there is almost nowhere in New Zealand to invest except in residential property. Neo-liberal policies have shrunk our domestic economy and removed opportunities for investment. Entrepreneurs are risk averse – they minimise risk and buy property.

Is there a property bubble?

Yes. High house prices mean loans are beyond the ability of borrowers to ever repay. But that is still profitable for banks. The loans help push house prices higher, which rewards investment in property, and so it continues. But like the 25 July 2021 Radio NZ article ‘The problem with economists forecasts’, many have predicted a bubble burst but all have failed. Why? It’s obvious. The structural problems and incentives to buy residential housing are all still in place. Where else can the investors go? The economic signals from a dysfunctional economy trap investors in residential property. (ref. Radio New Zealand; July 25, 2021)

The property bubble can’t deflate until there is a functioning economy with alternative low-risk options for investment.

There are ways out of this, which is covered in Part 4 of this four part series.

Part 2: The current trends and economic forces shaping housing affordability

New Zealand can’t just build its way out of the affordable housing crisis. Previously I noted the ‘normal principles of taxation’ and the legacy of the neo-liberal experiment are skewing the economy to trap investors into holding residential housing as investments.  This part looks at the recent developing economic trends that now trap middle and working class people into renting for life and why that is bad for our economy.

Trends – big business residential renting

The New Zealand situation sits along with a trend in the United States where large corporations, e.g. the Koch brothers, have been investing in new rental properties because the returns on rentals are so strong. This is because house prices in the US, like NZ, are high. This shuts out most young middle- and working-class buyers. These people then become a captive market of renters as they are wealthy enough to pay high rents. And the high rents in turn make it almost impossible for renters to save a deposit to buy a home, and the captivity continues. The returns and prospects for business are great.

Over time, the rental investor market is moving away from mum and dad investors as they surrender their houses to pay for retirement homes or to release capital to live comfortably. Big business will take up a lot of that divestment; they can leverage far more and so are able to pay and sustain high prices for residential houses. They will also be buyers of older homes to redevelop into more ‘productive’ new builds. Banks will feel secure to lend to a large business with captive renters.

This means the future of housing is evolving into a big business ‘build to rent’ model, which means not ‘generation rent’ but ‘generations of rent’.

And this is bad for the economy. One of the ways it is bad is it leaves people with little capital to borrow against to take up a business option. It traps people as employees. And people renting won’t be able to build equity because there are fewer other investments options and those other options aren’t performing as well as residential property because all the investment capital to grow those other options is being sucked into residential property. And the chances of saving to build equity are low because rents are high. More reasons are given in the next trend (see below).

Some governments have also undermined social housing, which has exacerbated the problem, but that failure did not create the affordable housing crisis.

At this point, some people who own lots of properties will say, ‘So what?’

• Nothing is wrong with people renting.
• Nothing is wrong with high rent if the market is willing to pay it.
• The critics are all anti-business.

My response is this:

• Yes, it is wrong if there is no choice.
• People are not willing to pay high rents – they have to pay them.
• Redirecting investment to the productive economy (exports, innovation, producing goods and services) is good for business.

All businesses will benefit from a shift to investment in the productive economy except the types of business based on highly leveraged rental property. The property investor landlords that are not based on highly leveraged property will carry on renting.

Trends – high price houses and rents are here to stay.

In theory, increasing housing supply will bring down house prices, but that is not so in the economy we have.

For renters, the high prices paid for housing purchases are used to justify charging high rents. Also, big business is very keen on making sure there is a good rate of return on capital, so there’s an incentive to keep rents high.

Supply of housing and the rental price is not really linked. Pricing is about how much ‘consumer surplus’ the seller believes they can extract. It is not about the costs of the business so much as what they think the renter can pay e.g. linked to area, what others are charging in that area for that size of house. What the renter thinks the rent should be is not really relevant. Business costs do not really matter for price e.g. as a landlord pays down their mortgage on a rental property they do not reduce the rent on the property. Cost and supply do not drive rent prices.

The easiest example to see how supply and price is not linked is the car market (used and new). There are a huge number of cars in New Zealand and it is presented to the consumer as a myriad of choices about car style and performance, ‘why do you want the car?’. Each choice means it becomes a smaller range of cars to choose from. Every ‘extra’ feature is a way to distinguish one car from the hundreds of other cars; to push price up, or help hold it up.  This is what will happen with the housing market. The business model market will have a deliberate desire to push choice and variety up to push, or keep, the price up.

So for the ‘build to rent’ business model we will see tiny studio apartments marketed as the affordable option, which really primarily just suits a very young guy on his own, or short-term stays. As the size increases it will exponentially get more expensive. The business model will run that tried and true for-profit strategy. They will start organising your loans to make the purchase so they can get a commission.

Supply is only one of the many factors (e.g. location, quality, number of rooms), to set a rental price. Too many people are talking as if supply will fix the problem of affordability and this is a mistake. For example, a ‘tradie’ did a job at a rental house (almost $700 a week for a whole house in an outer suburb) there were several people home (a Polynesian extended family) and the rental owner, in casual conversation with the tradie, said as there were more people in the house than they thought, they would raise the rent, i.e. they can charge more. This is an insight to price setting. The idea, that people can just go somewhere else if rents rise, is silly. People want continuity with where they live, especially if they have children at schools. Also, demand to rent a property would generally be seen as inelastic, i.e. you need a place to live so you have to pay what is asked for. If you negotiate a rent reduction it tends to be by quite small amounts. (I’m sure there are anecdotes of some large reductions but clearly that is not the norm from the Trade me site or as renters report).

This shows cost, and supply, is not what primarily drives rent prices and this business model will work counter to the government’s, and most voters’ objectives, of ensuring there is affordable housing for our families, children and grandchildren.

Trend – a business ownership model versus a home ownership model

Residential housing is currently being repurposed into a very strong and profitable business model either with long term renting, or short term renting (Airbnb, book a bach etc) for tourism – when tourism returns – the previous model being high levels of home ownership. These business models will further push out home buyers unless they can pay a very high price. Therefore an affordable housing shortage will persist due to New Zealand’s lack of building resource capacity and a positive net migration. This is the nature of the private market and it has already shown it can’t deliver affordable housing. It needs a push, and help, to deliver affordable housing.

With a move to big business running more rentals, the chances of rents being lowered by supply are slimmer than if it was lots of mum and dads running the rental market. A large business will hold many properties and can carry empty property more easily as tax deductions can still be made against the property. High rents on some properties can cover for vacant periods on other properties.

Also the concept of ‘affordable’ is a monetary concept but housing is a qualitative experience. The economic/profit drive for business will be what is market ‘affordable‘ – e.g. those apartments that are south facing and that do not get any direct light, or they look onto a concrete wall. More planning rather than less will be needed to avoid these sort of outcomes.

The private rental market is not conducive to lower rents. For example, one rental comes onto the market and the fact that 10 or 100 people applied for that one new flat is taken as a signal to all the other people holding rentals (with that rental service company) to raise the prices on their other rentals. The private market tends to quickly inflate the impacts of scarcity. But when one rental takes a long time to rent there is no rush to drop their prices on their other rental properties. Private markets tend to hold prices high. So housing supply, if held in the private business model market, will not necessarily bring down rental prices. Anecdotally, I am personally aware of many houses in New Zealand’s capital city Wellington, that are not occupied. Ideally, this housing stock would be used for housing supply if done up, restored, renovated, or simply rented out. Some supply currently exists but is not being utilised. This is the scourge of land banking.

Rents are high now and deflation is only generally associated with economic crashes. There is nothing identifiable yet that would indicate rental prices will decrease. The whole discussion, about increasing the supply being the solution to the housing affordability crisis, is just magic thinking. If left alone, the economic forces at work will prevent increasing supply being able to have a positive impact.

Former BNZ economist (and now an independent economist) Tony Alexander made a point in a NZME bulletin that getting tough on landlords will just drive up rental prices. However, I argue, prices not quality have been rising anyway. Therefore, now is the perfect time to remove interest deductibility from residential rental property, particularly as interest rates are currently low. Nobody is getting tough on landlords, rather investor demand is being dampened and investment capital gently directed away to the productive economy. (ref. Youtube, NZHerald.co.nz; March 1, 2021)

I repeat increased supply and intensification definitely needs to happen but it is not going to launch a huge reduction in house prices or rent as the forces driving investor demand will still be in place. And supply is still a long way off.

But there are things that can be done to free renters and house buyers from high prices by making the market work better. See solutions in Part 4 of this four part series.

Trend – Government as the good quality high paying tenant

The outlook for investors in the rental business is getting even better if rent is made to beneficiaries as the rents are paid direct to the landlord by the government. If there is an overloaded or not properly funded bureaucracy any complaints about the quality of the rental may be slow for the government to follow up on, but the rent continues to be passed through directly to landlords. Business loves it as it is a very secure income stream. If government has to pay repairs for damage it may be a more reliable payer than a private tenant.

On rental price settings that impact government, it was strongly anecdotally reported that with the Government’s first budget, where the accomodation allowance was raised by $50 a person, rents increased correspondingly. This showed the rental business market’s true colours. The rental rise was not based on costs but on the ability to extract the money as the government had declared it available. This shows the government therefore will become trapped in a cycle of paying for high rents by leaving so much of the rental market in this growing private business model.

Trend – business model housing is bad for the economy.

This is bad for the New Zealand economy. High rents, or mortgages (and for other utilities) means less disposable income for renters/mortgagees which leads to less stimulus into the rest of the economy. More disposable income could mean more people seek education, experience the arts, take up exercise, domestic travel, etc. All these are NZ based service industries that are struggling at the moment. But landlords in particular have a captive inelastic market where they can continue to raise rental prices even though interest rates are at a record low.

As said before, high house or rental prices prevent/slows people developing capital on which to create a business opportunity and/or push an innovation they may have developed.

As bad if not worse is the diversion of so much of New Zealand’s investment capital into a non-productive asset, residential housing. We need that investment capital to go into innovation projects and/or producing things for export, or for the services industries that our economy employs most of our people in. The housing market, built on a business model, is not a service industry we want to encourage.

And once the ‘build to rent’ companies take over and they are big enough they might list on the stock market and then the chances of it being sold overseas – with all the rental profits going overseas – becomes very real.

New Zealand will not get wealthy selling houses to each other.

No business representative group should be upset about this redirection of investment into the productive sector of the economy. It will benefit most businesses. It is only those rental businesses built on being highly debt leveraged that will have to change.

There are solutions to high housing prices and the affordability crisis outside a big business rental model, I talk about some solutions in Part 4 of this four part series.

Part 3 – The problems that come from a supply fixation as a solution to housing affordability

The government is aware of complexity in dealing with the housing affordability crisis so it wants to include the private market as part of the solution. They have reflected this in the Urban Growth Agenda. It encourages changes to relax planning rules to facilitate residential development and intensification. This means developers can force their dreams and vision through, rather than a community’s visions of a city being realised. History shows this will inevitably result in conflict and a firestorm will come down on the government and councils as the private market will not deliver affordable housing. Again, inevitably, government and councils will be blamed for damaging the cities as developers will insist they are simply following the rules. And, in turn, opposition political parties can exploit that conflict. The places where these ideas arose from is as follows.

Alternative ideas on affordability

Tony Alexander in the YouTube clip ‘When will house prices cool down/Cooking the books’ from March 1, 2021 says house prices won’t go down because low interest rates are what is driving the high prices. This is a factor because it makes it easier to borrow and leverage a property. But pressed for his suggestion to solve the housing crisis, it is not to raise interest rates (I agree with him) but to remove planning restrictions. This solution is linked to the defective increase supply argument as explained previously. He expresses sympathy for first home buyers and has a great analysis but overall he is passive about most of the factors driving affordability, they just exist for him. Using the metaphor of climate change, I think his analysis is more as a weather forecaster looking at the factors of the day but not as a climate scientist looking at what is underlying and driving the factors.

Alexander’s suggestion on planning is to relax the rules so that six story buildings can be built beside single story buildings. To take Wellington as an example, when this sort of absence of rules existed back in the 1950’s and 1960’s, huge amounts of heritage (for example in central Wellington, Te Aro flats and into Thorndon and Mount Victoria) were destroyed in an ugly way. This is why protection rules were introduced.

Alexander also critiques actions that impact the landlord/investor as being counter productive as any costs placed on them will just be passed on in rents. But even without any government actions rent prices are unaffordable. Fatalism, or perhaps a desire for defeatism, pervades his argument. Because if the actions were successful and investors are less active in the market there would be less demand and less push for prices to rise. And the New Zealand Property Council has said actions on removing the deductibility of interest would dampen investor demand.

• Can planning laws alone fix supply?

The answer is no because of the structural problems created by the ‘normal principles of taxation’ and the neo-liberal economic legacy that encourages excessive investor demand and that will hold housing values up – which holds up rents as well. Planning laws are needed to drive intensification which I fully support, but not at a cost to the historic character and liveability of a city. However, it appears the policy ideas Alexander supports are being listened to by the government.

Urban Growth Agenda – right idea, wrongly executed

For those on the left, the government’s recently developed Urban Growth Agenda is a neo liberal’s dream come true. Why? It is predicated on giving ‘permission’ to private developers to disregard the needs and wants of the existing local communities so the developer can build a six story build right beside one story houses meaning they will loose their sun and privacy with no chance to complain. The developer’s dream or plan (to make money) will come first and be forced through.

The Urban Growth Agenda does not have urban planning as its primary focus. It does have a vision of urban growth intensification which I fully support, but it is not ‘urban planning’. It has a feature Housing Infrastructure Fund which is money set aside to pay for infrastructure to support the private developer’s vision. This fund could cover parks, play areas, but it could also cover drains and water etc. But that is not urban planning for the local community. The risk is the fund will just be mitigation after an eyesore is built and the damage done to the house values of surrounding private home owners – the result: one group is allowed to make money over another group.

Some developers may not care if large buildings are built beside their properties as they can put one up beside it and each building can look into each other. The private developer sector’s vision is bounded by the constraints of; – I have this bit of land here and I need to maximise the profit from it so I stay comfortably in business. Even allowing for ideas like stunning new architecture it is still bounded by those facts. And those facts are not transformative urban planning in a positive community-led way.

The Urban Growth Agenda  also has the Housing Acceleration Fund which provides for government directed as well as private developments. Why should it include private developments when these companies already have access to funds through debt leveraging, which banks seem quite happy to do? Our current housing experience in Auckland already shows private developers are not building affordable housing. They advertise studio apartments for $600,000. This suits short term rentals (Airbnb) investments, or young men looking for a bolthole to call their own. And if a studio costing $600K is rented out, the rent will be high, it will not be affordable.

The history of private developers conflicting with the Resource Management Act is simply their vision conflicting with others who are also stakeholders in the community. A simple way to fix this problem is for there to be an earlier process to identify needs in the city, a proper urban plan of what the housing should approximately look like in this or that area or site, and then for developers bidding or volunteering to be part of that development. The current connect of development and ownership of random pieces of land and then developers trying to impose their vision on that piece of land is causing conflict. Urban development should be more planned. Areas should change as part of a process that is well signalled and worked towards over time. In many areas of central Wellington for example, this can be done quickly as there is so much low intensity commercial use.

The current Urban Growth Agenda is not urban planning but a one sided urban permission to build. The plan too much takes the side of the developers’ interests. Once high rises are built there will be community reactions. Developers will then say we are just doing what we are allowed to within the rules. The public will then turn on the rules makers (the government and council). It is a recipe for anger and conflict which is generally not good long term politics.

There are many ideas to fix the affordable housing crisis while increasing intensification which I fully support. I cover these in Part 4 of this four part series.

Wellington City – an example of planning relaxation that will not lead to intensification and affordable housing supply

Presumably following the Urban Growth Agenda the current Wellington City Council has gone zombie-logic against historic suburbs in the mistaken belief that this is the cause of a lack of intensification in the central city where more people want to live. But a simple glance across the city shows there is lots of low-level commercial buildings and plenty of land on which to intensively build (e.g. Te Aro), and there is little heritage over large parts. Huge fields of carparks cover large amounts of Te Aro. So intensification is not happening in the non-heritage areas, which indicates that heritage is not the cause of a lack of intensification.

There is simply no economic push to intensity which is why intensification hasn’t happened. And reducing the planning rules to increase the amount of land that could be available to intensify (which is what the council has done) will actually reduce the drive to intensify in the central areas.  The issue is simply not about heritage holding back intensification, and counterintuitively, is not about relaxing planning restrictions to increase the supply of land.

There needs to be some scarcity and an economic push to intensify (profit is a good one but that won’t make for affordable housing), and not just a council or government planning rule ‘we want to intensify’ and a permission ‘you can’. Developers will be screaming at this point ‘there is scarcity now!’ Okay? So what is causing that scarcity for their development ideas? Landbanking.

Developers have their little pieces of land they want to develop but they can’t get central city pieces of land because others own it and are just holding it for huge capital gains, (and possibly a lack of finance, or ideas, or ability, or desire). As an example; Wellington City is underdeveloped for central city living because of previous lax misguided neo-liberal councils and in part caused by reducing rates on commercial ratepayers and shifting (the cost of commercial rates reductions) onto residential taxpayers as part of the user pays philosophy. With lower land/rates costs businesses can afford to sprawl and underutilise land. Land banking is more cost effective with low costs. This has encouraged a lack of intensification of land use in the central city and encouraged suburban sprawl up the coast and Hutt Valley to get affordable housing.

The Wellington City council is currently allowing several developments of low level townhouses in the city, (car yards in Taranaki Street, and near Vivian Street between Willis and Victoria streets). The obvious question ‘why aren’t these semi industrial/commercial areas (car yards and carparks) developed into quality high-rise intensified living areas? The owners likely answer is – that low level two story builds are lower-cost to build compared to multi-storey builds, and therefore profit is maximised. But the real answer is nobody is demanding they build up or else. Developers should be instructed that as this site/area is slated for medium to high density housing, therefore they must comply and build it that way. And, if they are unwilling to do so, then perhaps somebody else will.

Another example to demonstrate this lack of push to build up, is car parks in Wellington. Carparks used to be many stories high. Now Te Aro has many sprawling field carparks. Parking provides enough income to business to cover costs. There is no drive for central city landowners to intensify and make the most of their land, so they do not. Council has listened and responded to developers who argued about planning issues, because that is what developers see. But what residents see is liveability with heritage. There are plenty of other areas to build affordable housing without destroying heritage.

The new Wellington Spatial Plan, which has significantly relaxed planning rules, is a disaster for heritage housing in central Wellington and the liveability of the city for all ratepayers. Heritage brings tourism and is one of the main factors that makes a place special and gives it character. Successful central cities have gardens and trees connected to history that allow views and sun. For those who have lived in and hated dilapidated heritage houses; that fault lies with the landowners who are land banking and exploiting people. That is what needs to stop.  Heritage housing can easily be renovated and restored to a modern exciting excellent standard.

To those who say heritage is a poor use of land which is not permitting inner city development to occur so as to accomodate an increase in inner city residents; and people come first. Heritage is people coming first. The brand new two story no parking townhouses in Taranaki Street are no more effective at housing than low level heritage. Yes more people will live there than before (it was a car yard) but what about the long term opportunity cost of not having medium to high density intensification on those sites. More importantly these are crammed in with little outlook or privacy. The chances of them being subject to an urban ‘Vicious cycle’ is quite high, i.e. good residents move out as the units are too cramped/not private/noisy from wooden frames, ergo; rents drop, maintenance drops, those with little means arrive, poverty can drive overcrowding, meaning more people move out, repeat.

But even if we destroy all heritage and built residential Burj Khalifi towers over every block in Wellington, a time will come when all space will be used with a maximum possible number of people – then what for the people who still want to come? My point; there is a limit to the number of people who can live central. New York did not destroy Central Park to allow more people to live central. Beijing didn’t destroy the Forbidden city to allow more people to live central. Wellington should not destroy its heritage either.

Heritage (pre-1930’s houses) is a very finite and dwindling resource that is critical to the Wellington economy, i.e. tourism, including domestic tourism. It is also critical for the liveability of all residents. And unfortunately New Zealand history can’t just be corralled to a few tiny zones as proposed in the plan because historic houses in Wellington have not been corralled previously, so they are mixed in with other buildings, that is the nature of history. The problems arise as though the buildings do not mind a big new six story building beside it, the people living there do, and they vote.

Relaxing planning rules on heritage is not the solution to drive intensification of the residential housing supply.  More planning and direct requirements on developers is needed, not less. But their projects can be supported when they accord or are adapted to fit with the community’s vision of the city. It could be that a developer may have land in an unsuitable location for their desired project but there may be land in another location, held by council, or government, or somebody else that could fit with that development. So it could be supported by a land transfer or some such vision.

I put forward several solutions to the housing affordability crisis and the need for intensification in Part 4 of this four part series.

I also suggest that Wellington City councillors roll back their Spatial Plan before the next local body election as there is already talk about councillors being challenged. It is a political gift to an opposition when large buildings are built in low level residential areas. Councillors want affordable housing and intensification like I do, but the roll back of planning restrictions is the empowerment of big business to force through changes they want without direct community involvement. You are facilitating the old neo-liberal ideas that have failed. (So Ironic that Nicola Young didn’t vote for less planning rules. Good on her.) On affordability you are saying to developers ‘you do it, build it, save us’. But that is simply not how they operate. They are attracted by the high prices for high rewards. But the high prices can’t deliver the affordable rents as they must have a sufficient return on capital. Your permission to developers to ignore the community is going to come back and bite you.

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Part 4. Solutions – What can we do to fix the housing affordability crisis

SOLUTIONS: We first need to acknowledge there is an affordable housing crisis. Also, it is not a political issue but a fact that needs action to be taken to address it. The current actions will not fix it because the underlying economic forces are still in place that trap investors in the housing market and an increasing number of renters will be trapped renting, with long term equity consequences for the New Zealand economy. That is the basis for the following suggestions. It is the crisis that means we must look at things that may previously have been unthinkable for many.

No political party should be upset about redirecting investment into the productive economy for innovation and exports. No political party should want to stop voters, the average New Zealander, having the chance to build some equity through owning a house, and possibly create business opportunities for their family and for the rest of society from that equity. Those on the conservative side might reflect on the fact that homeowners have traditionally been more conservative. Voters who are eternal renters may be less conservative than you would like.  Tough confronting solutions have to be looked at; it is a crisis.

The following areas of action are needed:

1. ‘The normal principles of taxation’ are overdue for a reset – not just for housing, but in regards to how it directs and shapes the economy, and supports tax avoidance. If done right, it can lead to a less growth oriented economic model but a more sustainable one. Less chance of boom/bust, with more economic activity that benefits smaller entrepreneurs and NZ based businesses. If we don’t do this the lack of affordable housing will remain a problem for New Zealand as the principles are twisted in our economic environment and it will continue to push money into housing that is not affordable. I have developed a submission that reduces tax avoidance, and by shutting down some behaviours it redirects investment capital into innovation, exports, technology, and small local businesses.
2. Provide councils, communities and government with the tools to urban plan more forcefully and directly. These can then be used to ramp up affordable housing much more quickly. The current idea with reduced planning rules is to give that ‘force’ to private developers.
3. Ensure the current housing stock is available and being used to reduce the affordable housing crisis.  This is a cheaper and quicker option than building new, especially compared with intensification projects.
4. Create secure, profitable, alternative investment options other than housing.

Government must take the lead

To build an affordable housing market there is no escaping the fact that the government must take the lead. It must be government projects first. The recent trends show private enterprise does not deliver affordable housing. The burden must be on private developers to prove otherwise.

How can the Government build affordable housing?

The government is best placed to provide affordable housing but is constrained by not having much control over urban land on which to build and intensify housing. And it needs to be fiscally prudent to prevent inflation so it must be careful about borrowing. So as the need for social housing is in crisis, the government should take some or all of the following steps to get hold of existing residential housing.

• Trade in house for investment security – mum and dad investors with one or two rentals may be willing to trade the rentals in for a long term Government ‘term deposit’ paying a high rate of interest that is sufficient to compensate for loss of the rental revenue. This means government gets a house it can provide instantly to a family or person in social need (displacement of demand by another renter occurs but it is for a higher need).
• Public Works Act acquisition – we do it for roads so let’s use it for affordable housing. Sites close to transport could be taken if they were identified for development. From my understanding the Act is actually generous and some people dream of the cash injection from having some rural land taken. A question to consider is; should it be this generous? (In the Netherlands and Germany such acquisitions for housing are normally made at existing land use cost – I’ve not researched what happens in New Zealand).
• Trade up a home for a home – If an intensive development is going to occur but some local houses are needed for that development then perhaps they should be invited to choose one of the brand new houses at no cost to surrender their existing house. This policy would need to consider how much mortgage there is to pay. Should some of that mortgage be paid as well?
• Low intensity land use swap – a developer may have a vision for urban housing intensification and can think of a site where it would be good but does not own the land. In such a situation, a process could be initiated to evaluate the desirability of the low intensity land use versus the quality ‘affordable’ development, and whether the two could be integrated e.g. business on a lower level with apartments above. Once a decision is made, a swap of land could be enforced and perhaps a small compensation paid. Exemptions for historic buildings can be made for low intensity use. Other factors would need to be considered. The same could also apply for the government or local council around transport hubs where they have a desire for housing intensification, or other urban planning objectives, like parks that would support intensified housing.
• Reverse mortgages for house acquisition – the government eyeing up future development sites or as a more general service, could enter the reverse mortgage market with lower fees and protections for these people. A purpose in this is that the house could eventually become an asset for affordable housing.  It should allow transfers from other entities that hold reverse mortgages. These mortgages are generally not good for home owners in rising markets.

Several of these options are relatively low cost to the government or a council. There is a cost layout but the asset (house and land) will be on the government’s/council’s books.

Once land is accumulated the process may be the government/council create a site, designing and planning its function and then inviting tenders to build it. If land is going to ancillary services or activities attached to it e.g shops, there may be the possibility of a joint cost or build. It could be that a site or area is identified and developers are invited to make proposals and tenders for development of that site.

Redirecting investment from housing.

• Trade in house for investment security – The first bullet above is a key component for redirecting investment. In some ways it is similar to a mum and dad rental investors who pay a property company to handle dealing with the rental (maintenance and monitoring etc) and the renters. So they don’t really see the rental house. This option would have to be developed and promoted.
• Micro private/public partnership – The government can also rethink the private/public partnership model which is heavily centred on cooperation with large corporate enterprises. The government could trial a descale down to individual New Zealand investors. A series of infrastructure projects (e.g. transport, housing, education, research, stadium) could be announced  and people could choose to sign up to invest in the ones they want to. Their capital could be used to support the construction and then they would get some sort of reward over time as the asset is used. It means New Zealanders can use their capital to back New Zealand projects and they can see the result. The government would have to ensure there is not too much exposure to risk, just like they do with a big business.

Other options to deliver affordable housing sooner.

• Requiring maintenance of historic houses – For historic houses (pre 1930’s) the local council should have the power, whether the building is rented or not, to require the owner to bring the house up to a modern or restored excellent standard of housing. A house cannot be left to become dilapidated even if the owner chooses to do that, because it is an asset for the city and future generations. It is also a little piece of carbon capture. But as importantly the community must ensure a person living there is not at a health, fire, or safety risk to themselves or others.  If the house is rented then the renting standards should apply – there should be no slum landlords. But the local council or government (perhaps administered by Heritage New Zealand) must decide if any action is to be taken. Should the owner not be financially able to update the house professionally, then the council/government should undertake the work and the amount spent becomes a low interest loan that is secured over the property. They should not be permitted to do the work themselves unless it is professionally being done and checked. Timeframes would be established. When the person sells or dies the loan can be collected from the house sale/disposal, or the house can move into the council’s or government’s stock of affordable housing assets with any balance in value paid out to the estate.
• An ‘empty home tax’. This is a tax in Vancouver as I understand. Anecdotally around Wellington there are lots of empty houses that could be rented but aren’t. Such houses should be sold if the person doesn’t want to do it up. Neighbours could be one of the main way this is identified. Obviously more work needs to be done to investigate and establish how this would work before it is applied.
• If a house has no occupier, then the house must be required to be rented – this is similar to an historic houses requirement and an empty home tax. If the house is in need of repair so it can then be rented, the council can undertake the work (contract in) and the cost of the work becomes a loan (normal interest) secured against the house. In Wellington for example there is anecdotally many empty houses that are a little rough but could quickly and easily be brought up to an excellent standard for rental. If the house is still not rented then the ‘empty home tax’ would apply. Details to stop delaying tactics would all need to be worked out.

These options would all generate local work and open opportunities for apprenticeships. They are quicker than new builds to increase the housing supply.

How should the government/council treat housing ownership when built through schemes it leads or looks after

The ownership model for affordable residential housing is open.

• Government ownership with rotating occupancy as people move on (Traditional state housing occupiers and rents).
• Rent to buy with financial support schemes from government to make this viable.
• Government (creates and builds affordable housing) on sells. The price will vary according to each development. Price would be influenced by market but pushed down to make affordability possible.
• Government owns houses but rentals not targeted to any economic group, rents capped at affordability for the renter. e.g. 20% of income. As income rises so does the rent.

A mix of the above is possible, and there may well be others. e.g. below – rent capped.

Rent capped?

According to some economists there should be no need to buy a house but just rent which gives social/economic mobility if people need to move for work or there’s a change in family circumstances. I do not support this model but it is not without some merit. If this was the case most housing should be owned by government or other entities and rent capped according to an ‘affordability’ concept. e.g. 20% of income. Some push back may occur if private entities complain about the ability to maintain property, or to get a sufficient return on capital.

You can clearly see the housing investment sector is currently in a holding pattern due to the government announcements on removing interest deductibility and the Inland Revenue discussion document that holds out the prospect of options to get around the restrictions. But if this rent cap was required by government now, it would certainly create a very quick and immediate reaction in the rental and housing sectors. It is not something I would recommend but excess investor demand would dry up almost instantly.

In summary

The New Zealand economy is a one horse pony based on residential housing. Excessive investor demand, driven by ‘the normal principles of taxation’, leveraging, and a lack of safe alternative investor options is holding up prices leading to a housing affordability crisis. High prices shut out working and middle class people from buying, and make saving deposits impossible as high prices mean high rents. Even if banks make huge loans for people to buy, this strips disposable income out of the economy just as high rents do. This leads to less demand through all other sectors of the New Zealand economy, e.g. education, arts, domestic tourism, hospitality, the ‘trades’. As importantly it leads to less chance for a person to build equity, to one day take up a business opportunity of their own making, which in turn could employ others and turn into a medium sized business that further benefits New Zealand.

New Zealand has had almost forty years of a private business model focus on housing and it has not delivered affordable housing but rather the opposite. It can not deliver supply to meet demand. The new ‘build to rent’ model is driven off the current system and the prospect of good profit, not affordability.  But we cannot build our way to sufficient quality affordable houses because all the drivers of excess demand remain in place, so prices will remain high. We need to make a collective effort, not just our private effort, and use the strength of government for; tax reform, overhaul existing housing stock, and building.

The affordable housing crisis is not just about the low quality of the lives of New Zealanders now and the problems from low levels of disposable incomes. It is now about the strength of the economic future of New Zealand, for our children’s and grandchildren’s sake.

EDITOR’S NOTE: Stephen Minto lives in Wellington with his two children. He worked for New Zealand Inland Revenue Department for approximately 33 years and is now enjoying no longer being bound by public service etiquette of being non-political.

While I am always happy to celebrate any accolades my country and city might garner on the international stage, seeing Auckland/Tāmaki Makaurau awarded the top ranking in a recent “most liveable cities” survey left me somewhat flummoxed.

In particular, I would argue that many Māori whānau in Auckland do not enjoy the benefits of this supposed “liveability”.

This is important, given Māori comprised 11.5 percent of the Auckland population in the 2018 Census. Roughly one in four Māori in Aotearoa New Zealand are living in the greater Auckland region.

The survey was conducted by the Economist Intelligence Unit, sister company of The Economist, and looked at 140 world cities. Auckland was ranked 12th in 2019, but took top spot this year for one obvious reason:

Auckland, in New Zealand, is at the top of The Economist Intelligence Unit’s Liveability rankings, owing to the city’s ability to contain the coronavirus (COVID-19) pandemic faster and thus lift restrictions earlier, unlike others around the world.

Most cities in Europe plunged in the rankings this year as the EIU’s liveability index incorporated new indicators related to covid-19 https://t.co/8555hY1f2U

— The Economist Data Team (@ECONdailycharts) June 9, 2021

Alternative liveability criteria
Each city in the survey was rated on “relative comfort for over 30 qualitative and quantitative factors across five broad categories: stability, healthcare, culture and environment, education and infrastructure”.

Overall rankings depended on how those factors were rated on a sliding scale: acceptable, tolerable, uncomfortable, undesirable, intolerable. Quantitative measurements relied on “external data points”, but the qualitative ratings were “based on the judgment of our team of expert analysts and in-city contributors”.

The methodology, particularly around culture and environment, seems somewhat subjective. It’s predicated on the judgement of unnamed experts and contributors, and based on similarly undefined “cultural indicators”.

To better understand the living conditions of Māori in Auckland, therefore, we might use more robust “liveability” criteria. The New Zealand Treasury’s Living Standards Framework offers a useful model.

This sets out 12 domains of well-being: civic engagement and governance, cultural identity, environment, health, housing, income and consumption, jobs and earnings, knowledge and skills, time use, safety and security, social connections and subjective well-being.

The Māori experience
Applying a small handful of these measures to Māori, we find the following.

Housing: According to recent reports, Auckland house prices increased by about NZ$140,00 on average in the past year. That contributed to Auckland being the fourth-least-affordable housing market, across New Zealand, Singapore, Australia, the US, UK, Ireland, Canada and Hong Kong.

Next to that sobering fact, we can point to estimates that Māori made up more than 40 percent of the homeless in Auckland in 2019. We can only assume this rapid increase in house prices has made homelessness worse.

Poverty: Alongside housing affordability is the growing concern about poverty in New Zealand, and particularly child poverty. While there has been an overall decline in child poverty, Māori and Pacific poverty rates remain “profoundly disturbing”.

Employment: As of March 2021, the Ministry of Business, Innovation and Employment recorded a Māori unemployment rate of 10.8 percent, well above the national rate (4.9 percent). This is particularly high for Māori youth (20.4 percent) and women (12.0 percent).

Health: Māori life expectancy is considerably lower than for non-Māori, and mortality rates are higher for Māori than non-Māori across nearly all age groups. Māori are also over-represented across a wide range of chronic and infectious diseases, injuries and suicide.

The digital divide: The Digital Government initiative has found Māori and Pasifika are among those less likely to have internet access, thus creating a level of digital poverty that may affect jobs and earnings, knowledge and skills, safety and security, and social connections.

Making Auckland liveable for all
Taken together, these factors show a different and darker picture for far too many Māori than “liveable city” headlines might suggest.

I say this as someone who has lived in Auckland for the majority of the past 60 years. It is a city I love, and I acknowledge the grace and generosity of the mana whenua of Tāmaki Makaurau, with whom I share this beautiful whenua and moana.

I am also part of a privileged group of Māori who enjoy job security, a decent income, a secure whānau and strong social networks.

But, until we address and ameliorate the inequities and disadvantages some of our whānau face, we cannot truly celebrate being the “most liveable city in the world”.

Dr Ella Henry is an associate professor at Auckland University of Technology. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Article by AsiaPacificReport.nz

You can’t get the right answer if you keep asking the wrong question.

A question this neoliberal New Zealand government and previous ones continue to ask is:
“How can people get to own a home?”

There are very, very limited answers to that question.

But if you ask: “How can we give people security of tenure in a healthy, warm, dry, afforable home?” then lots of alterative answers emerge.

Such as long term leasing.

This would mean not relying on Mum and Dad private investors to house our people but creating large government funding mechanisms, eg. by insisting that the Superannuation Fund invest a set percentage of their profits in long term housing investments and reinstating the State Advances Corporation.

In short the government has to regain control of the mortgage market it abdicated to the privately owned banks in thhe early 1980s

This approach has worked in Berlin for example where citizens get lifelong leases on their apartments at government controlled and affordable rents (and, yes, people can decorate their homes as they wish as long as they don’t make structural alterations.)

You can find out about other solutions to our housing problems by watching my documentary Who Owns New Zealand Now? which I made almost 5 years ago now. (Especially the last couple of parts which deal with solutions).

Asia Pacific Report republishes occasional commentaries by journalist and documentary maker Bryan Bruce with permission.

Article by AsiaPacificReport.nz

For the majority of Papua New Guineans living in the capital of Port Moresby, providing a home for their families is only a dream as housing has become a luxury that only the rich can afford.

Many families are forced to rent out single rooms for between K500 (NZ$200) to K800 (NZ$315) with common shared facilities like bathrooms, toilets and kitchens. Others move to the many settlements scattered around the city where houses can be rented for up to K1500 (NZ$600) fortnightly.

But it wasn’t always like this.

I was born and raised in Port Moresby and back in the 1990s when I was young, we used to live at Henao Drive in Gordons in a two bedroom, two storey house with a bathroom upstairs, a large dining room and living room downstairs.

The backyard was huge. We had a small duck pond and a BBQ place with a basketball court in the back. How did much my father pay fortnightly? Less than K300 ($NZ$118).

Houses, at that time, were being sold for between K10,000 (NZ$4000) and K20,000 (NZ$8000) at the new Rainbow suburb in Port Moresby’s North-East electorate.

Fast forward to the year 2000 and boom! The housing and rental rates in the city hit the roof….No. It went straight for the heavens.

We can only dream
I mean seriously … back in the 1990s we had homes. Today, we can only dream of one day providing a home for our children. It’s a sad reality for thousands in the city where most families can only afford to rent a room.

While many have cried for housing and rental rates to be regulated, the National Capital District Commission (NCDC) and the National Housing Corporation still do not have the powers to do so. Unless laws are passed on the floor of Parliament giving them the powers to do so.

Nothing has been done to address the issue. It makes one wonder if it is it because the people in authority who have the power to make decisions are also property owners. Property owners who make thousands out of the ridiculously high rental rates?

Houses on the rental market are priced at K1200 (NZ$470) to K3000 ($1180) weekly not fortnightly … WEEKLY! Looking at these prices you know right away that the majority of Papua New Guineans who are middle to low income earners won’t be able to afford this.

So, who do these real estate companies and property owners have in mind when they place ads for these prices? Expatriates? CEOs, managers and MPs?

What about the people, the people of this country?

Even the BSP First Home Ownership Scheme did not work out.

A scheme for the wealthy
How can a low to middle income earner afford the 10 percent needed to get that loan to purchase a home?

Again, it was almost as if the scheme was done to benefit only the wealthy.

Property developers have built many houses over the years to complement the First Home Ownership Scheme. But with houses going for K350,000 (NZ$137,000) to K500,000 (NZ$196,000) and the bank requiring a 10 percent down payment…. where are the people supposed to get the K35,000 to K50,000?

It’s high time the issue is addressed. The current government promised to “take back PNG” and they must do that by ensuring that their people’s welfare is taken care of. The housing issue must be addressed.

Laws and policies on real estate and housing must be reviewed, amended, changed to favor of the people.

There are so many aspects to the issue and many studies has been done by various organisations including the National Research Institute, over the years. Yet none of the recommendations have ever been implemented.

So, as the rich continue to live in their glass castles the people continue to suffer – living out of rooms, trying to earn a living and supporting their families.

Rebecca Kuku is an occasional contributor to Asia Pacific Report, a content contributor to The Guardian (Australia) and to the PNG Post-Courier. This article was first published on Scott Waide’s My Land, My Country blog and is republished with permission.

Article by AsiaPacificReport.nz

Dear Prime Minister Marape

Our government has to admit the fact that there is a glaring imbalance between Papua New Guinean and foreign ownership of businesses. We own very little in our country.

The retail, wholesale and real estate in our towns and cities are controlled by Chinese interests. We own almost nothing in the logging industry. It is, as we all know, controlled by Malaysian interests.

There is an increasing push by (new) Chinese business owners who are buying up National Housing Corporation (NHC) properties and forcing out Papua New Guineans – YOUR people – onto the streets.

There is no strong legislation that prevents 100 percent foreign ownership of property and land. We need those laws in place now. We need the political will to do it. Now.

The justice system can’t protect our people. They don’t have the money to fight long protracted legal battles… …and the syndicate – yes, syndicates – know this and they take advantage of it.

Recently, local people along the North Coast of Madang protested against a sand mining proposal. The people associated with the sand mining company have also evicted families from NHC properties in Madang.

It is no secret. It was reported by the media.

Tack Back PNG more than a slogan
Take Back PNG must not remain a political slogan for elections. The people must live it.

I am calling for legislation that protects the social and economic rights of our people. I want lower taxes (or no taxes at all) for struggling SMEs.

Give them tax holidays like the government did for RD Tuna and the petroleum sector. Give them REAL financing. Not a figure on paper they can’t access.

We want shop spaces in the centre of our towns and cities. Give it to us. This is our country. We want what is ours.

If the laws don’t allow it. Change the laws to suit our people’s needs.

We cannot continue to exist on the fringes of a large Pacific economy that boasts a “healthy” GDP yet cannot show it in the impact on the lives of our people.

Tax the alcohol companies. They contribute to the widespread abuse and the violence associated with it.

Society not mature enough
Our society is not mature enough to allow the widespread consumption of alcohol.

Tax the cigarette companies. Make them all pay for the ill health of our people.

We are not taking back PNG by allowing these cancers to continue untreated. We are in fact, selling off PNG’s future.

Reduce the cost of medical treatment at the private clinics and hospitals. Reduce the cost of dental care. It’s UNAFFORDABLE. How can a papa or mama in the village afford K500 for a tooth extraction.

Give your people the means to look after themselves. Give your people the means to pay for their children’s education so they don’t become enslaved by politicians who peddle election policies that don’t really serve our people.

We don’t want to be dependent on government. We want to make our own money. Wealth in the hand of its people is real wealth.

We demand preferential treatment for US.

Our resources. Our country. We deserve more.

Scott Waide is a leading Papua New Guinean journalist and a senior editor with a national television network. He writes a personal blog, My Land, My Country. Asia Pacific Report republishes his articles with permission.

Article by AsiaPacificReport.nz

Million-dollar houses are now being sold in one of Auckland’s lowest-income suburbs and a local politician says New Zealand government failure is allowing the market to drive further inequality and hopelessness.

Last month an unremarkable 1960s weatherboard house on less than a quarter acre section in Ōtara in South Auckland sold for $1.01 million.

Another – which 12 years ago sold for $340,000 – went for $1.1m, more than triple its last sale price in October.

Manukau ward councillor Fa’anānā Efeso Collins said more than 80 percent of Pacific people did not own their own homes, and rising house prices were a cause of pain for his constituents, as rents went up and incomes did not.

“That means there are times where some people have to go without,” Collins said.

“I know there are parents who are decreasing the number of meals they’re having to ensure that the kids are eating enough, and getting three basic meals a day. That’s part of what I call the social trauma that’s being faced by many constituents that I work with.”

He said people felt hopelessness about the situation, which they did not think would get any better.

People ‘have given up’
“I think people have given up. There are many people in the Manukau ward… that have just given up,” he said.

“I’m really disappointed with what the government’s done. I think the government’s thrown money at a banking system that in my view isn’t working, and that’s not going to keep house prices down.”

The new highs in the local housing market served as a reminder to people in a low-income Auckland suburb that housing costs were eating up their paychecks.

“There are parents in Ōtara that I know of that are going without just to keep their babies fed,” one woman in Ōtara’s town centre, who did not want to be named, said.

“Sometimes you hear of parents that don’t eat because their babies need to eat.”

Born and raised in Ōtara – and still living there – she thought the high cost of living was feeding crime.

“It contributes to the poverty in Ōtara. How expensive the houses are is contributing to why there’s such a high crime rate,” she said.

Window washing
“There are heaps of children out here that are window washing because there parents can only just afford the rent. It’s not their fault – they are doing crime, but if they’re doing it to put bread and milk on the table, who can blame them?”

Another woman, a shop owner, said she was a Labour voter but housing was the government’s biggest failure.

“I’ve been living here for 35 years. I would like to buy my own house but I can’t afford to. It’s ridiculous, and now I’m over 60 [years old].”

She had been in paid work her entire adult life, and was only ever just keeping her head above water, she said.

“They’re too greedy, landlords. Every year she’s putting up our rent.

“For nearly six months I [haven’t] cut my hair. I have no money… $35 for a haircut, I can’t afford to pay. House prices must come down in New Zealand.”

One man in Ōtara said Auckland was a city of the haves and the have-nots. Another, without a house at all, said homelessness had broken him.

Economists and banks are not expecting house price rises to plateau any time soon.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

By Rahul Bhattarai

A housing trust chief executive has condemned the government for taking “short cuts” to tackle New Zealand’s housing crisis.

“We need to stop pulling rabbits out of hats and looking for quick fixes,” said Bernie Smith, CEO of Monte Cecilia Housing Trust.

Speaking at the annual Bruce Jesson Foundation lecture in Auckland on the topic “housing crisis – a smoking gun with no silver bullet”, he soundly criticised the government for not doing enough to provide affordable housing.

“A bit dramatic but I am known to be dramatic from time to time.”

READ MORE: Tūhoe leader’s address to deliver ‘hard truths’ about New Zealand

He said that there were no short-cuts to building affordable housing.

-Partners-

Smith has 40 years of experience in various forms of leadership in state and local government and not-for-profit sector.

The lecture has been delivered in previous years by prominent figures such as investigative journalist Nicky Hager and a former prime minister, David Lange, in honour of the late journalist and political thinker Bruce Jesson.

Bernie Smith … “We need to stop the blame game, we need to stop thinking central or local government will resolve this issue.” Image: Rahul Bhattarai/PMC

Work together
To resolve the housing crisis, Smith said the government and bureaucrats needed to work together and have a generational housing strategy that “builds strong housing communities for the present and the future generations”.

The coalition has been in government for 11 months and it has been “claiming all the issues that we are confronted with today are solely due to previous government”, he said.

“We need to stop the blame game, we need to stop thinking central or local government will resolve this issue, that housing first or some other programme is a quick fix,” he said.

Barry Wilson, president of Auckland Council for Civil Liberties, said that the political parties should be working together to “house the homeless in a comfortable secure condition”.

“There should be some unified political approach, it’s not productive every time they change the government,” Wilson said.

Long term strategy
New Zealand needs a 25 to 30-year-long housing strategy “that every political party agrees and signs to”, Smith said

“Labour has a plan that National is trying to drag down. What they should do is be working together on a long-term plan, not one that depends on the three-year election cycle,” Wilson said.

New Zealand housing strategy should be created not by the politicians or bureaucrats, rather by the people from the community, who have lived with experience, like the homeless, the renters, community housing providers, and people form wide ethnic communities including Māori or Pasifika, Smith said.

“A strategy that looks at the whole of the continuum and recognises into generational living affordable rentals, affordable home ownership, does not forget a strategy that includes building strong healthy and safe communities with clear mile stones and targets,” he said.

Smith said the country needed to have a strategy that is housing community “value” focused rather than the housing “volume” focused.

Community value was focused when each and every individual is seen as equal no matter their housing option, either state housing, private renter, or an owner-occupier.

Overcrowded households
In Auckland there are 92,000 households living in unaffordable rental situations spending more than the 30 percent of their net income on rent.

“Thirty six thousand households living in overcrowded conditions.”

In Auckland alone, there is 20,300 homeless people, where the Māori population is five times and Pasifika 10 times more disproportionately affected.

Kiwi Build was not an affordable housing solution to many New Zealanders as it was only affordable to middle class people with higher household incomes, Smith said.

Smith said it was noted at a recent Kiwi Build Affordability meeting with Auckland city mayor Phil Goff:

“Auckland Council’s chief economist stated in July that to buy a 3-bedroom Kiwi Build house at $650,000 they will need either an income of $106,000 with a $130k (20 percent) deposit or an income of $120,000 and a $65,000 (10 percent deposit) for the household to affordably purchase a Kiwi Build home (and that is with debt servicing ratio of 35 percent.

“This means that Kiwi Build houses are only affordable for the top 40 percent of Auckland’s households.”

• Housing issue not just ethnic – Pākehā leaders have ‘failed’, says author
• Pasifika voters want ‘hand-ups, not hand-outs’ in NZ housing crisis

The Auckland housing continuum. Image: Rahul Bhattarai/PMC

Article by AsiaPacificReport.nz