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

Papua New Guinea’s government has defended the use of force to evict residents of an informal settlement in the capital Port Moresby.

Police used tear gas to move people out of the Two-Mile settlement last week, while heavy machinery was used to tear down homes and two people were killed in clashes.

Acting Prime Minister John Rosso said the forced eviction was necessary to protect law-abiding citiizens from long-running criminal activity in the community.

The National reports him saying the settlement was on state land which had been unlawfully occupied for years.

“The settlement has, for far too long, been a major source of law and order problems, resulting in numerous attacks on city residents and police, as well as injuries to innocent people,” Rosso said.

“This eviction is not happening without reason. It is the direct result of repeated criminal activities and serious threats to public safety.

“The state has a responsibility to protect law-abiding citizens and restore order.”

Rosso, also the Minister for Lands, Physical Planning and Urbanisation expressed sympathy for the hardworking people who had been living at Two-Mile, saying that not everyone there had been involved in criminal activities.

The eviction operation prompted unrest and clashes between some settlers and police.

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

Article by AsiaPacificReport.nz

French Polynesian authorities have retrieved a total of eight bodies that were buried following a major landslide on its main island of Tahiti.

The disaster struck several houses in the town of Afaahiti-Taravao, southeast Tahiti, on Wednesday, about 5am local time (Thursday NZT).

The final toll comes after one day and one night of searching for potential survivors.

The search operations involved about 200 emergency staff, gendarmes and firemen, medical emergency teams, underground cameras, radars, drones but also an army helicopter as well as sniffer dogs.

One of the victims was a three-year-old girl.

Earlier, in this hillside village, search operations had to stop due to more landslides and collapse of whole portions of the mountainside soaked by days of torrential rain.

French Polynesia President Moetai Brotherson said a medico-psychological assistance unit remained active to help local people cope with the disaster.

French High Commissioner Alexandre Rochatte said an investigation for “manslaughter” was underway to try and establish the causes of the tragedy and whether the affected buildings and location met the requirements for dwellings of this type and the constructed zone.

“This type of tragedy reminds us why there are rules,” Brotherson said.

“Some of these houses are over 40 years old.”

He said current building regulations and requirements were now “stricter”.

Flags flying at half mast
All flags at public buildings in French Polynesia are flying at half mast and Friday’s sitting of the Territorial Assembly will be marked by one minute of silence in homage to the victims.

Brotherson also said an ecumenical religious service was currently being prepared.

Messages of condolence, support and solidarity have flowed, including from French President Emmanuel Macron and French Minister for Overseas Territories Naïma Moutchou.

Moutchou said a team of geological experts was on its way from Nouméa (New Caledonia) and Paris with a mission to establish whether the landslide-affected zone was secure or not.

Article by AsiaPacificReport.nz

As you know, there’s a tiny group of Dame Jacinda Ardern haters in New Zealand who are easily triggered by facts and the ongoing success of the former prime minister on the world stage.

The tiny eeny weeny group is made to look bigger online by an automated army of fake profile bots who all say the same five or six things and all leave a space before a comma.

This automation is imported into New Zealand so many of the profiles are in other countries and simply are not real humans.

Naturally this illusion of “flooding the zone” programmatically on social media causes the non-critical minded to assume they are a majority when they have no such real evidence to support that delusion.

Yet here’s some context and food for thought.

None of the haters have run a public hospital, been a director-general of health during a pandemic, been an epidemiologist or even a GP and many struggle to spell their own name properly let alone read anything accurately.

None of them have read all the Health Advice offered to the government during the covid-19 pandemic. They don’t know it at all.

Know a lot more
Yet they typically feel they do know a lot more than any of those people when it comes to a global pandemic unfolding in real time.

None of the haters can recite all 39 recommendations from the first Royal Commission of Inquiry into Covid-19, less than three of them have read the entire first report, none have any memory of National voting for the wage subsidy and business support payments when they accuse the Labour government of destroying the economy.

Most cannot off the top of their heads tell us how the Reserve Bank is independent of government when it raises the OCR and many think Jacinda did this but look you may be challenged to a boxing match if you try to learn them.

The exact macro economic state of our economy in terms of GDP growth, the size of the economy, unemployment and declining inflation forecasts escape their memory when Jacinda resigned, not that they care when they say she destroyed the economy.

They make these claims without facts and figures and they pass on the opinions of others that they listened to and swallowed.

It’s only a tiny group, the rest are bots.

The bots think making horse jokes about Jacinda is amusing, creative and unique and it’s their only joke now for three years — every single day they marvel at their own humour. In ten years they will still be repeating that one insult they call their own.

Bots on Nuremberg
The bots have also been programmed to say things about Nuremberg, being put into jail, bullets, and other violent suggestions which speaks to a kind of mental illness.

The sources of these sorts of sentiments were imported and fanned by groups set up to whip up resentment and few realise how they have been manipulated and captured by this programme.

The pillars of truth to the haters rest on being ignorant about how a democracy necessarily temporarily looks like a dictatorship in a public health emergency in order to save lives.

We agreed these matters as a democracy, it was not Jacinda taking over. We agreed to special adaptations of democracy and freedom to save lives temporarily.

The population of the earth has not all died from covid vaccines yet.

There is always some harm with vaccines, but it is overstated by Jacinda haters and misunderstood by those ranting about Medsafe, that is simply not the actual number of vaccine deaths and harm that has been verified — rather it is what was reported somewhat subject to conjecture.

The tinfoil hats and company threatened Jacinda’s life on the lawn outside Parliament and burnt down a playground and trees and then stamp their feet that she did not face a lynch mob.

No doors kicked in
Nobody’s door was kicked in by police during covid 19.

Nobody was forced to take a jab. No they chose to leave their jobs because they had a choice provided to them. The science was what the Government acted upon, not the need to control anyone.

Mandates were temporary and went on a few weeks too long.

Some people endured the hardship of not being present when their loved ones died and that was very unfortunate but again it was about medical advice.

Then Director-General of Health Sir Ashly Bloomfield said the government acted on about 90 percent of the Public Health advice it was given. Jacinda haters never mention that fact.

Jacinda haters say she ran away, but to be fair she endured 50 times more abuse than any other politician, and her daughter was threatened by randoms in a café, plus Jacinda was mentally exhausted after covid and all the other events that most prime ministers never have to endure, and she thought somebody else could give it more energy.

We were in good hands with Chris Hipkins so there was no abandoning as haters can’t make up their minds if they want her here or gone — but they do know they want to hate.

Lost a few bucks
The tiny group of haters include some people who lost a few bucks, a business, an opportunity and people who wanted to travel when there was a global pandemic happening.

Bad things happen in pandemics and every country experienced increased levels of debt, wage subsidies, job losses, tragic problems with a loss of income, school absenteeism, increased crime, and other effects like inflation and a cost of living crisis.

Haters just blame Jacinda because they don’t get that international context and the second Royal Commission of Inquiry was a political stunt, not about being more prepared for future pandemics but more about feeding the haters.

All the information it needed was provided by Jacinda, Grant Robertson and Chris Hipkins but right wing media whipped up the show trial despite appearances before a demented mob of haters being thought a necessary theatre for the right wing.

A right wing who signed up to covid lockdowns and emergency laws and then later manipulated short term memories for political gain.

You will never convince a hater not to hate with facts and context and persuasion, even now they are thinking how to rebut these matters rather than being open minded.

Pandemics suck and we did pretty well in the last one but there were consequences for some — for whom I have sympathy, sorry for your loss, I also know people who died . . .  I also know people who lost money, I also know people who could not be there at a funeral . . .  but I am not a hater.

Valuing wanting to learn
Instead, I value how science wants to learn and know what mistakes were made and to adapt for the next pandemic. I value how we were once a team of five million acting together with great kotahitanga.

I value Jacinda saying let there be a place for kindness in the world, despite the way doing the best for the common good may seem unkind to some at times.

The effects of the pandemic in country by country reports show the same patterns everywhere — lockdowns, inflation, cost of living increases, crime increase, education impacts, groceries cost more, petrol prices are too high, supply chains disrupted.

When a hater simplistically blames Jacinda for “destroying the economy and running away” it is literally an admission of their ignorance.

It’s like putting your hand up and screaming, ‘look at me, I am dumb’.

The vast majority get it and want Jacinda back if she wants to come back and live in peace — but if not . . .  that is fine too.

Sad, ignorant minority
A small sad and ignorant minority will never let it go and every day they hate and hate and hate because they are full of hate and that is who they really are, unable to move on and process matters, blamers, simple, under informed and grossly self pitying.

I get the fact your body is your temple and you want medical sovereignty, I also get medical science and immunity.

It’s been nearly three years now, is it time to be a little less hysterical and to actually put away the violent abuse and lame blaming? Will you carry on sulking like a child for another three years?

It’s okay to disagree with me, but before you do, and I know you will, without taking onboard anything I write, just remember what Jacinda said.

In a global pandemic with people’s lives at stake, she would rather be accused of doing too much than doing too little.

Gerard Otto is a digital creator, satirist and independent commentator on politics and the media through his G News column and video reports. This article is republished with permission.

Article by AsiaPacificReport.nz

The country’s largest trade union — The Public Service Association — says the ministry has informed staff that it is looking to shed 63 of 156 positions.

Opposition MPs have slammed the decision, which they say will undermine the delivery of services to Pasifika communities in New Zealand.

Labour MP and former deputy prime minister Carmel Sepuloni said it also reduced a Pasifika voice in the public sector.

“Our overriding concern is not only the impact on direct support from the delivery of services to communities, but also the equality of advice that would be offered across government agencies in areas such as health, housing or education,” Sepuloni said.

“We would have a thought that Pacific people should be a priority given the fact that many of the challenges in New Zealand at the moment disproportionately affect Pacific people.”

The slash is the latest proposal by government to cut staff across the public sector. Within the last week alone, the Ministry for Primary Industries and the Ministry of Health proposed cuts amounting to more than 400 positions.

Prime Minister Christopher Luxon said the cuts were needed to “right size” the public service.

Staff cuts had long been promoted by Luxon in order to fund a tax cut package.

“What’s happened here is that we’ve actually hired 14,000 more public servants and then on top of that, we’ve had a blowout of the consultants and contractor budget from $1.2 billion to $1.7 billion, and it’s gone up every year over the last five to six years,” Luxon said.

“And really what it speaks to is look, at the end we’re not getting good outcomes,” he added.

But critics say the cuts will only cause mass unemployment and undermine services needed across New Zealand. Public Sector Association national secretary Duane Leo said the cuts would have far-reaching consequences for the health and well-being of Pasifika families in Aotearoa.

“We know that Pasifika families are more likely to be in overcrowded unhealthy housing situations and challenging environments, and they’re also suffering from the current cost of living,” Leo said.

“The ministry plays an active role in supporting housing development, the creation of employment opportunities, supporting Pasifika languages cultures and identities, developing social enterprises — this all going to suffer.

“The government is after these savings to finance $3 billion worth of tax cuts to support landlords … why are they prioritising that when they could be funding services that New Zealanders rely on.”

The extent of staff cuts will be revealed next month when the New Zealand government is expected to announce its Budget on May 30.

Sepuloni said the massive cut indicated a move to get rid of the ministry, something that has long been promoted by Coalition partner — the ACT Party.

“We have to wonder if these are the first steps towards abolishing the Ministry,” Sepuloni said.

“It’s undermining the funding to an extent that it looks like they’re trying to make the ministry as ineffective as possible, and potentially justify what ACT has wanted from the beginning . . . which is to disestablish the ministry.”

In response to criticism about cuts to the Ministry of Pacific Peoples, Finance Minister Nicola Willis said all government agencies should be engaging with the Pacific community — not just the Ministry of Pacific Peoples.

Willis said the agency had grown significantly in recent years and a rethink was appropriate.

“It’s our expectation as a government that every agency engaged effectively with the Pacific community not just that ministry,” Willis said.

“We think the growth that has gone on in that ministry was excessive.”

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

Article by AsiaPacificReport.nz

Opposition National Party deputy leader Nicola Willis was among three political leaders who made a surprising commitment at a debate last night to build 1000 state houses in Auckland each year.

Labour Party leader and caretaker prime minister Chris Hipkins and Green Party co-leader Marama Davidson also agreed to do so, with resounding “yes” responses to the direct question from co-convenors Sister Margaret Martin of the Sisters of Mercy Wiri and Nik Naidu of the Whānau Community Centre and Hub.

All three political leaders also pledged to have quarterly consultations with a new community alliance formed to address Auckland’s housing and homeless crisis and other social issues.

The “non-political partisan” public rally at the Lesieli Tonga Auditorium in Favona — which included more than 500 attendees representing 45 community and social issues groups — was hosted by the new alliance Te Ohu Whakawhanaunga.

Filipina lawyer and co-chair of the meeting Nina Santos, of the YWCA, declared: “If we don’t have a seat at the table, it’s because we’re on the menu.”

Later, in an interview with RNZ Morning Report today, Santos said: “It was so great to see [the launch of Te Ohu] after four years in the making”.

‘People power’
“It was so good to see our allies, our villages and our communities — our 45 organisations — show up last night to demonstrate people power

“Te Ohu Whakawhanaunga is a broad-based alliance, the first of its kind in Tāmaki Makauarau. The members include Māori groups, women’s groups, unions and faith-based organisations.

“They have all came together to address issues that the city is facing — housing is a basic human right.”

She chaired the evening with Father Henry Rogo from Fiji, of the Diocese of Polynesia in NZ.

Speakers telling heart-rending stories included Dinah Timu, of E Tū union, about “decent work”, and Tayyaba Khan, Darwit Arshak and Eugene Velasco, who relating their experiences as migrants, former refugees and asylum seekers.

The crowd was also treated to performances by Burundian drummers, Colombian dancers and Te Whānau O Pātiki Kapahaka at Te Kura O Pātiki Rosebank School, all members of the new Te Ohu collective.

Writing in The New Zealand Herald today, journalist Simon Wilson reported:

“Hipkins told the crowd of about 500 . . . that he grew up in a state house built by the Labour government in the 1950s. ‘And I’m very proud that we are building more state houses today than at any time since the 1950s,’ he said.

“’Labour has exceeded the 1000 commitment. We’ve built 12,000 social house units since 2017, and 7000 of them have been in Tāmaki Makaurau. But there is more work to be done.’

“He reminded the audience that the last National government had sold state houses, not built them.

“Davidson said that housing was ‘a human right and a core public good’. The Greens’ commitment was greater than that of the other parties: it wanted to build 35,000 more public houses in the next five years, and resource the construction sector and the government’s state housing provider Kāinga Ora to get it done.

“’We will also put a cap on rent increases and introduce a minimum income guarantee, to lift people out of poverty.’

“Willis told the audience there were 2468 people on the state house waiting list in Auckland when Labour took office in 2017, and now there are 8175.

“’Here’s the thing. If you don’t like the result you’re getting, you don’t keep doing the same thing. We don’t think social housing should just be provided by Kāinga Ora. We want the Salvation Army, and Habitat for Humanity and other community housing providers to be much more involved.’

“Members of that sector were at the meeting and one confirmed the community housing sector is already building a substantial proportion of new social housing.”

Article by AsiaPacificReport.nz

French Polynesia’s newly-elected President Moetai Brotherson has presented a 10-member government, which includes four women.

Brotherson has confirmed his pre-election choice of Eliane Tevahitua as Vice-President as well as Culture, Lands and Environment Minister.

Several of the ministers are new to politics, with 29-year-old Jordy Chan as Infrastructure and Transport Minister being the youngest.

Vannina Crolas, who was an official in the now ruling Tavini Huira’atira party, is the new Public Sector and Employment Minister.

Minarii Galenon, who has been the president of the Women’s Council, is the new Housing Minister.

Nahema Temarii has been made Sports Minister.

Brotherson said weeks ago he had more women than men aspiring to be ministers but as some women withdrew, he has not been able to form a government with gender parityas he had expected.

Gender parity the aim
Before the election, Brotherson said he planned to have a government made up by at least half with women.

Ronny Teriipaia has been made Education Minister, and Tevaiti Pomare has become Finance Minister.

Cedric Marcadal has been made Health Minister, and Teivani Teai is the Primary Industry Minister.

He added an additional position to his line-up by making Nathalie Salmon-Hudry an interministerial delegate responsible for People with Disabilities.

Wanting a broad government, Brotherson offered one ministerial position to the pro-autonomy opposition A here Ia Porinetai party, but it declined.

The term of government is five years.

Meanwhile, Brotherson has reaffirmed that the main priority for his government is not independence from France but continued assistance to the victims of the flooding two weeks ago.

The pursuit of independence, which is the central tenet of their Tavini Huira’atira, has been Brotherson’s repeatedly stated endeavour and a long-term goal but, like his predecessors, he has shown no hurry to call a referendum.

Article by AsiaPacificReport.nz

Green Party MP Chlöe Swarbrick is brushing off concerns a temporary rent freeze in flood-hit Auckland would just see landlords hike rents even more when the controls were lifted — arguing they should stay permanently.

More than 20 organisations have signed a letter urging Minister for Auckland Michael Wood, Housing Minister Megan Woods and Prime Minister Chris Hipkins to “recognise the difficulties facing families in Auckland” and ban landlords from raising rents for six months.

Among the signees are Renters United, the Citizens Advice Bureau, the Salvation Army, Child Poverty Action Group, Unite Union, Save the Children NZ, FinCap, various student unions and more.

This morning we’re calling for compassion and protection – a freeze on rent increases for six months. The last thing renters need is to loose more of their money to rent. https://t.co/9sPwtiZIhu

— Renters United (@rentersunited) February 2, 2023

“This is a response to some really troubling calls and comments we have heard from landlords and their representatives that they intend to increase rent, piled on top of the trauma that Aucklanders have just gone through,” Swarbrick told RNZ today.

Earlier this week, the Auckland Property Investors Association said “market forces” would  see rents in the city go up, with fewer rentals available after the record-breaking rainfall of last weekend.

“We will have a shortage of supply of rentals for a period of time just while these repairs are undertaken,” said president Kristin Sutherland, denying it was just greed.

“I’m not in a position to say whether it’s fair or not. It’s the same in any market when the supply and demand changes. I don’t think landlords are out there to make an extra buck.”

‘Really troubling’
Swarbrick called Sutherland’s comments “really troubling” and “disconcerting”.

“They’ve said that these are supposedly market forces at work, but if you lift the lid on that, these forces are their decisions and their disproportionate power being wielded over New Zealanders and Aucklanders who have really, really been through a lot.”

She has the backing of Human Rights Commissioner Paul Hunt, who said the right to a decent home is especially important in a state of emergency.

“What we’re urging is for the government to reassure Auckland renters that they’re not about to face an escalating cost of crisis to add to the burdens that too many people are facing,” Human Rights Commission’s housing inquiry manager Vee Blackwood told RNZ  Checkpoint.

Too many people were already paying high rents and unable to deal with unexpected costs, Blackwood said.

Reassurance could include a rent freeze, she said.

“It could include a rent freeze if government policy analysis indicates that would be the best response,” but there could also be other support offered such as an increase in accommodation subsidies, she said.

Businesses have responsibilities
“We acknowledge that many landlords are working in really good faith with their tenants to respond to that flood damage,” she said.

“What I would say is that landlords are businesses as you’ve acknowledged. Businesses also have human rights responsibilities.

“So their responsibilities are to respect the human right sof their tenants and to respect the fact that a decent home is a fundamental human right and not something that can just be divorced to making profit, especially when people are doing it this rough.”

Kiwi home ownership has been dropping for about three decades, particularly in younger age groups.

The government implemented a rent freeze in 2020 to “ensure that people can stay in their homes during this challenging time” as the country went into strict lockdown to eliminate the spread of covid-19, back when there were not any vaccines or effective treatments available.

When it was lifted however, landlords hiked rents more than they ever had before.

“That becomes the point of rent controls,” said Swarbrick.

‘Market forces’ at play
“Rent controls are about realising that these supposed market forces that are at play really boil down to the decision of landlords . . .

“The Greens are backing that call for a rent freeze, but obviously our long-term position has always been for there to be rent controls in place.”

Critics of rent controls say they discourage investment, restricting the supply of new rentals, and encourage people to stay in places that are cheaper, but might not suit their changing circumstances — such as having children or getting a new job somewhere else.

Consumer NZ says landlords who own rental properties damaged in the floods should actually be reducing rents, not hiking them.

Tenants in properties they cannot live in don’t have to pay rent at all, the watchdog said earlier this week.

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

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

While news from Tonga is still disrupted following the massive undersea eruption and tsunami on January 15, it’s clear the island nation has suffered significant damage to housing stock and infrastructure.

Once initial clean-up work is done, the focus then turns to rebuilding — specifically, how to rebuild in a way that makes that housing and infrastructure stronger, safer and more resilient than before the disaster.

This is where the United Nations’ Sendai Framework for Disaster Risk Reduction comes into the picture. It advocates for:

The substantial reduction of disaster risk and losses in lives, livelihoods and health and in the economic, physical, social, cultural and environmental assets of persons, businesses, communities and countries.

Beyond the framework, however, we have the lessons learned from previous disasters and recovery efforts in the same region — notably what happened in Fiji after Cyclone Winston in 2016.

These lessons can be applied to the Tonga rebuild.

Lessons from Cyclone Winston
Winston was a category 5 cyclone, one of the most powerful storms ever recorded in the South Pacific. When it approached Fiji’s largest and most populated island, Viti Levu, winds reached 230 km/h, with gusts peaking at 325km/h.

Over 60 percent of the Fijian population was affected, with around 131,000 people left homeless. The cyclone destroyed, significantly damaged or partially damaged around 30,000 homes, or 22 percent of households, representing the greatest loss to Fiji’s housing stock from a single event.

Notably, some models of the traditional Fijian bure survived the cyclone with minor or no damage.

Our research team from New Zealand followed and recorded the housing recovery. What we found could benefit Tonga as it faces reconstruction of so much housing stock.

As in Tonga, power, infrastructure and communication systems in Fiji were extensively damaged. Given that “building back better” involves applying higher structural standards than existed previously, we looked for evidence that Fiji was rebuilding in a more resilient and sustainable way.

Fiji carefully recorded and analysed data, employing systematic reconnaissance surveys and damage assessments to identify building performance, structural vulnerabilities and failure mechanisms, as well as community needs.

These assessments were done well, to international standards.

Understandably, Fijians were also aware of the need to reduce risks to housing from future cyclones. After the immediate post-cyclone humanitarian response, housing was their main concern. This became a key focus for government agencies as a way of demonstrating the recovery was under way and that communities were at the heart of the process.

Problems with rebuilding
We studied two main initiatives: a government-funded rebuilding programme for houses (the “Help For Homes Initiative”) and the rebuilding programmes led by various international and local NGOs.

Help For Homes provided credit for construction materials to people who had lost homes, assuming recipients met certain criteria related to household income, damage and location.

Communities were free to choose the basic type of dwelling, its interior design, external features and materials. Information and instructions about building best practices and standards were provided, but technical or practical support was limited.

Overall, the initiative had mixed reviews. On the one hand, people had autonomy over their future homes; if things went to plan, they liked the outcome. On the other, lack of building skills led to some poor-quality construction, and limited resources (mainly materials) pushed costs up.

A lack of suitable alternative building material also created problems. Material choice, material substitution, resource costs, low community technical expertise and low building standard knowledge are all issues Tonga might also face.

Some homeowners were left without the material they needed, and in some cases with only a partially rebuilt home.

The NGO rebuilding programmes, by contrast, usually employed their skilled workers to build and supervise construction activities, often with the help of community labour. But again, reviews were mixed, especially when the communities didn’t have sufficient input into the rebuilding process.

While housing design was largely standardised for quick construction, the NGO houses tended to be technically strong and more resilient to future hazard events.

The best of both worlds
The main lesson was that high levels of community involvement and strong technical support were key to building resilient, future-proofed houses. For Tonga, the Fijian experience offers the opportunity to apply that lesson in four principal ways:

• ensure the initial assessment process is thorough and up to international standards
• recognise that housing stock overall needs to improve, and commit to higher construction standards
• analyse local architecture and building practices for disaster-resistant features
• combine the best of government-led and NGO building systems to maximise community involvement while ensuring good technical support and building expertise.

Overall, to have the best chance of rebuilding with the resilience to withstand future shocks, Tonga will benefit greatly from a three-way partnership between the government, NGOs and local communities.

As advocated by the authors in their book Resilient Post-Disaster Recovery through Building Back Better, co-ordination of such partnerships should be government-led and include trusted local community leaders and a consortium of NGOs.

The authors acknowledge the collaboration of Diocel Harold Aquino (Associate Professor of Civil Engineering, University of the Philippines) and Sateesh Kumar Pisini (Principal Lecturer in Civil Engineering, Fiji National University) in the preparation of this article.

Dr Suzanne Wilkinson is professor of construction management at Massey University; Dr Mohamed Elkharboutly is lecturer in built environment at Massey University, and Dr Regan Potangaroa is professor of resilient and sustainable buildings (Māori engagement) at Massey University. This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Article by AsiaPacificReport.nz

This last week I watched Push: The Global Housing Crisis on Al Jazeera, featuring Leilani Farha, Canadian lawyer and former United Nations special rapporteur on adequate housing. She is now leader of The Shift (the global movement to secure the human right to housing).

The central takeaway from this ‘Witness’ documentary is that the housing crisis is a global financial crisis (as opposed to the Global Financial Crisis of 2008).

The problem is essentially the concept of housing (and the real estate that it sits on) as more a form of financial wealth (‘financial wealth’ is an oxymoron, by the way; it means ‘wealth comprised of claims on wealth’) than a human right; as such, whether housing is occupied or not – or whether it is occupied by sojourners rather than residents – is incidental. In this financial view, all that matters is the dollar value attributed to assets, and that wealth is somehow generated through a bidding process that raises that dollar values of financial assets.

Managed Funds, especially Government (or government-mandated) Pension Funds

While we may emphasise the self-perceived entitlement culture of individual speculators in financial assets, the point of emphasised by Leilani Farha was the role of managed funds, which means that – indirectly – many of us, with savings ‘invested’ in these funds, are financial speculators without thinking of ourselves as such.

A particularly important class of managed funds is government funds, including and especially government pension funds. The worst kind of these funds would be the kind such as the New Zealand Superannuation Fund created by Roger Douglas in 1974 and thankfully disestablished by Robert Muldoon in 1976. The Canadian government pension fund is notorious in this regard. And New Zealand does have a smaller-scale government fund of this sort; it came to be known after its establishment in the 2000s as the ‘Cullen Fund’.

We can generalise here, by thinking of Sovereign Wealth Funds, many of which are classed as ‘pension funds’; and we can think of private managed funds – the mainstay of the financial industry – many of which (like KiwiSaver) are government partnerships with that industry. Governments, around the world, have a deep stake in the financialisation of real estate assets; both as governments, and in the private capacity (as speculators) of finance industry and technocratic and bureaucratic and elected elites. In the formal sense, as citizen holders of public equity, we are all speculators when government-directed funds are deployed in the speculative financial marketplace.

Yes, including the homeless and the underhoused among us; the deprivileged among us can still feel good that our unrealisable public equity increases as our housing and other material rights deteriorate. We own notional shares in the lands we are evicted from.

The way around this financialisation approach to ‘wealth management’ is the ‘pay-as-you go’ approach, which was last championed – in New Zealand – by Sir Robert Muldoon. New Zealand Superannuation is still largely funded – as it must be – out of current economic product; and not through the sale of financial assets that we hope can be converted by retirees into goods and services of a certain value. Further, pay-as-you-go is the essence of the Basic Universal Income, an income distribution mechanism based on democratic accounting standards (ie based on basic human rights); a mechanism that can form the basis for the re-engagement of the rapidly marginalising populations of each country in the world.

(The scandal of Covid19 is how the entitled minority of the world’s population has spread this virus to the disentitled – including the disengaged poor – infecting them, and killing them in numbers on a World War scale.)

Pandora Papers

Other stories this week underscore the conjoint problems of financialisation, inequality, and impoverishment. One such story is the release of the Pandora Papers’ leak to global media organisations.

These papers reveal a comprehensive story, not of illegality, but of uber-elite entitlement; of legal theft.

Control of price-appreciating financial assets, as revealed by these papers, is more than ‘mere’ tax avoidance. It is theft in the fullest sense of the word, in that it is increasing the claims of the entitled on the world’s finite economic output, thereby diminishing the claims of the disentitled, and pushing them into unsustainable survival practices. Financialisation is an entitlement mechanism, and it applies to both the demanders and the suppliers of financial products.

Entitlement is not only a problem of the uber-elite. Indeed, through our KiwiSaver accounts and the like, we all come to align ourselves to some degree with the highly entitled. Further, the highly entitled go well beyond the ‘one-percenters’; rather the top nine percent (or even the top nineteen percent) of the ’99-percenters’ tend to have an entitlement mindset towards property values and interest rates, even while blaming the conspicuous ‘one-percent’ for the world’s woes.

One test of entitlement culture is a person’s attitude to interest payments. People who believe that they are entitled to an interest ‘return’ on saved income over and above the inflation rate are people who believe that they are entitled, as a form of self-congratulation, to an increased share of the world’s goods and services. It was in medieval times clearly (and correctly) understood that it was sinful to ‘make money from money’. This is distinct from making a profit from investments, such as planting a crop, irrigating a field, retaining livestock for breeding, or learning a trade.

In reality, the ‘real rate of interest’ is sometimes positive; that’s when lenders (ie savers) are scarce and borrowers (including investors and willing governments) are abundant. Under those conditions – rare in the lifetimes of people alive today – a legitimate premium is payable to people holding rather than spending money. The reverse conditions are much more familiar – an abundance of unspent money, and an aversion to deficit financing – in which, naturally, the real rate of interest should be negative.

Indeed, it was the negative real rates of interest during the global Great Inflation of the 1970s and early 1980s, that rumbled the uber-entitled, and led to the global financialisation coup of the late 1970s and (in New Zealand) the 1980s; the world event that is commonly called the neoliberal revolution. Theft through financial chicanery has prospered ever since.

New Zealand’s Official Cash Rate (OCR)

The first raising of the OCR in New Zealand for several years is indicative of this entitled view that real interest rates (as an indicator of real financial returns) should always be above zero. As such, the management of interest rates is the illiberal intervention in the marketplace that is most used to support economic liberalism.

By and large, the New Zealand public falls for the argument that higher interest rates are needed to slow down the rate of increase of financial asset prices (eg of house prices). There is little evidence for this, and indeed the 2004-08 house price inflation was in large part a result of rising interest rates.

The problem is that genuine economic borrowers are discouraged by high or rising interest rates, and that rising interest rates make very little difference to speculative borrowers. Thus, when interest rates increase, increasing proportions of all borrowed funds are lent to acquire financial assets with a view to making returns through capital gain. (Capital gains’ taxes are rarely sufficient to offset this reality; the main driving force pushing money into speculation is reduced lending to the real economy.) This truth is clearly evident by a cursory inquiry into the behaviour of house prices during periods of rising real interest rates.

In addition to rising interest rates ‘inadvertently’ stimulating financialised markets, the countries which intervene to raise their interest rates the most find that their exchange rates increase, as foreign money increasingly treats domestic money as a speculative asset. While this currency appreciation may dampen inflation in these countries – while exacerbating inflation pressures in the countries with falling exchange rates – it also does much harm to the export industries of these countries. Export industries suffer the double whammy of higher borrowing costs and an appreciating exchange rate. Indeed, the aggressive raising of interest rates to engineer an appreciating exchange rate has all the entitlement hallmarks of a Ponzi scheme. (Just look at New Zealand in years such as 1987, 1995-97, and 2004-08. If you don’t believe me, look at Iceland in the years before 2008.)

We should note that if rising interest rates make any difference at all to the global rate of inflation, they indeed exacerbate rather than diminish inflation. The only proviso to this is that rising global interest rates also create global economic crises, such as 1929-31, 1979-82, 1989-93, 2000-01, 2005-08, and 2010-12. While rising global interest rates are inflationary – they raise business costs, including higher required rates of profit – global recessions are clearly deflationary. Higher interest rates only reduce inflation by creating recessions, an even worse problem.

Basic Principle

Consumption entitlements should be distributed as human rights, and not as greed premiums. They should be paid as we go, and not divvied out from greed funds. As it is, most entitlements are of the greedy, by the greedy, for the greedy. Inasmuch as we are incentivised to contribute to government-sponsored greed funds, most of us are a little bit greedy. We live in a greedocracy, not an economic democracy. A true democracy distributes public equity dividends – as the economy goes – as a human right.

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

***

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.

I was encouraged to hear Nicola Willis, National Party’s spokesperson on housing, make the key point that the central problem in New Zealand’s housing crisis is that of people being squeezed out of the private rental market. I made this point and more in detail earlier this year (Solving the Housing Crisis: Making Homes, 30 March). Note that being ‘squeezed out’ need not mean an eviction or a discontinuation of a tenancy; it could refer to people being squeezed out from entering the market in the first place, squeezed out by city land hoarders refusing to supply the market for rental houses.

Like other people asking and answering questions on this issue, Ms Willis didn’t venture down the obvious path, which is to question what is happening to the houses that people are being squeezed out of.

Clearly, if houses are being retenanted to other families, or purchased and occupied by other families, then this is not a societal problem (though it may be a problem for the affected tenant). What is a problem is the growing mass of ‘unrented rentals’ (an oxymoron, but most commentators continue to call untenanted houses ‘rentals’). Unrented rentals are in fact hoarded properties, and their owners – inappropriately called ‘investors’ – are ‘property hoarders’. While hoarders sometime ‘flip’ their properties, the incentives in place today are for ongoing hoarding.

The authorities refuse to count unrented rentals, let alone formulate policies to eliminate the problem of hoarders hoarding unrented rentals.

The solution to the whole problem is quite simple, although not politically palatable to the political class who are themselves a large part of the problem. Essentially, the hoarding of unrented rentals needs to be banned.

All residential houses should be either: rented to their owners (ie owner-occupied), rented to other households, or (eg some houses in coastal resorts) exempted (eg as holiday homes) through a publicly transparent process (and listed on a publicly accessible exemption register). All unexempted unrented houses need to be (by law) sold by their owners within a short (but practical timeframe), and auctioned (as if a mortgagee sale) if that timeframe is not met. If not sold, they need to be acquired by the public housing authority at a below-market price.

New Zealanders are largely ignorant of their country’s history. In the 1890s, a law was passed allowing for the compulsory purchase of hoarded land; indeed, it was the defining legislation of the Seddon government. (This followed on from land taxes introduced by John Ballance, Richard Seddon’s predecessor.) The compulsory purchase provision of land from speculators was not actually performed very often; the speculators understood, and acting in the shadow of the law, they subdivided and sold their properties to people who went on to make appropriate economic use of these lands. This was a liberal Liberal government, which strongly believed in private property rights; rights that were expected to be exercised responsibly. This was not Communism!

While New Zealand does need more newly fabricated houses and apartments, the construction of new homes should not be little more than an offset to the increase in unrented rentals that Nicola Willis spoke about.

Keith Rankin, trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

contact: keith at rankin.nz