The New Consensus Misses the Target
So, now we know. The two major parties are agreed that the homelessness and unaffordability crisis has arisen because the market has not been allowed to function properly. It seems that the Auckland Council, in a misguided attempt to prevent urban sprawl, has restricted the supply of land with the result that prices have risen. With the Council cast as the villain of the piece, it looks as though the government can celebrate getting off the hook – but whether the consensus is in Labour’s interests, or those of the homeless, is less obvious.
The Greens, on the other hand, have a different take. For them, it seems, the pressing problem is the one that has been hogging the headlines – the plight of that growing number of Kiwis, in Auckland and elsewhere, who literally have no home, no washing or toilet facilities, no home comforts, nowhere to relax at the end of the day, nowhere to call their own.
That crisis demands the fastest possible solution. That will not be achieved by firing the starting gun for another round of property development. The crisis has arisen because we have not been building homes for that significant sector who simply cannot afford either purchase prices or rents – those whom the market, in other words, totally overlooks and does not provide for.
Our decade-long failure to concern ourselves with this group of our fellow-citizens has led inexorably to the current crisis. It can be remedied only by making good – and fast – our past failures. That means a publicly funded building programme of decent houses at reasonable rents in the areas where they are needed.
How is that funding to be found? It depends where our priorities lie, but a decent start could be made, as the Greens suggest, by desisting from treating Housing New Zealand as a cash cow, extracting over $100 million a year from the poorest people in our society to pay over to the government, and using that money instead to finance a building programme.
But, it will be argued, homelessness is only one aspect of a malfunctioning housing market. It surely stands to reason that an increase in the supply of housing will help to resolve the separate problem of unaffordability by bringing prices down? Isn’t the National/Labour cross-party consensus right on the money? And doesn’t the enthusiastic support from Business New Zealand, the Property Developers Association and the real estate industry show that the politicians have at last agreed on the right solution?
It is certainly true that property developers, the banks, speculative investors, all love the idea – I can hear them salivating from here. Any concept of sensible planning and land use, any concern for other interests such as our important horticulture industry, any reckoning of what further urban sprawl would mean in terms of infrastructure costs and longer travel distances is swept aside.
Supporters of the consensus have little patience with these concerns. The market, they say, must be allowed to operate. The housing market is like any other market, and rigidities must be removed so that it produces optimal results.
But the housing market is not like any other market. There is no other market of any size where purchasers are armed with a purchasing power up to nine times higher than their annual incomes, where recent experience shows that they can expect huge untaxed capital gains, where speculative investment using borrowed money can virtually guarantee a huge return – all because house prices go on rising and banks go on lending.
Economists may see, and warn about, all the signs of a rapidly inflating bubble, but those who are responsible for the inflating are not to be deterred. As the consensus promises to provide yet wider opportunities for profitable investment, property developers stand ready to bid up the prices of the newly available land, the banks stand ready to lend virtually without limit to both the developers and the eventual purchasers of the new houses, and the inflow of new lending and credit into the housing market ensures that the bellows applied to housing prices will continue to blow fiercely.
As another round of house price increases is generated, the gap between those who are already in the housing market or who are able to borrow, and those who are not and cannot grows, ever wider. And, the diversion of yet more of the country’s finances into speculative rather than productive activities leaves us even more dangerously exposed to the risk of a housing bubble that one day is certain to burst.
The proposed solution, in other words, may in due course bring housing values down all right, but not in the way that is foreseen – and that outcome would be at huge cost to the national economy.
Bryan Gould
20 May 2016.
“Middle ” New Zealand?
The Prime Minister, asked on National Radio this morning what advice he would offer to an Auckland family with nowhere to live but in a car, suggested that they should “go to see Work and Income to see what help they could give them.” The advice that a desk officer in Work and Income could miraculously find them a house they could afford was the equivalent of shrugging his shoulders and saying, “I have no idea of what they could do and I don’t really care.”
Auckland’s shortage of affordable housing and soaring house prices are now so significant that they could threaten the financial stability of the whole country, but there is no one at greater risk than Auckland’s poor. For them, the possibility of buying a house is non–existent, and – as speculative investors buy up the cheaper houses and force up the rents – their meagre budgets do not extend as far as even the cheapest rented property.
Yet let us be clear. The problem of families with children forced to live in third-world conditions is eminently resolvable. It simply requires the application of resources – resources that a country with our wealth could easily afford. The issue is one of priorities. We could put an end to child poverty and housing shortages if we decided to move the issue nearer the top of the list. It doesn’t happen because we choose that it shouldn’t.
We choose to elect a government that we know will give a low priority to the most vulnerable in our society – a government that on the other hand will strive might and main and will take considerable political risks in the interests of, for example, its friends in the foreign trust industry. We endorse, in effect, the Prime Minister’s confidence that “middle New Zealand” will support his casual dismissal of concerns about the plight of the homeless and the consequent blight on our society.
Mike Hosking, the self-proclaimed champion of “middle New Zealand”, that apparently uncaring and blinkered sector of society, assures us, in the authentic language of neo-liberalism, that the “free market” would solve the problem if only there were more opportunity for speculation, profit-taking and unrestrained bank lending. The market, it seems, despite its current excesses and failures, is the solution, but government – our government – is either part of the problem, if local, or absolved from responsibility, if central.
We, “middle” or otherwise, could change this attitude if we so decided. There was a time when New Zealanders would have reacted with distress and even anger at the thought that we would tolerate homelessness on a significant scale in our midst. Sadly, the cynical view of human nature represented by the values of so-called “middle New Zealand” now allow our government in effect to wash its hands of the problem.
It is no accident that the concept of “middle New Zealand” has been established and has prospered in the media where, with honourable exceptions, a self-serving attitude has been assiduously propagated. That trend is likely to strengthen if proposed changes in media ownership take place.
The concentration of cross-media ownership in New Zealand is already of dangerous proportions. With important outlets in the press, radio, and television already in single ownership, we already see a politically partisan figure like Mike Hosking free to peddle his literally eccentric views across all of those outlets. His very ubiquitousness allows him to claim his chosen role as the spokesperson for “middle New Zealand”.
That, however, is just the forerunner of what will happen if NZME and Fairfax merge their New Zealand operations. Virtually the whole of New Zealand media will then be in single ownership; views that diverge from the supposed “middle” will be heard even less than they are today.
The Commerce Commission will of course have to assess the proposed move in terms of whether or not it will reduce competition. But that is a financial judgment that takes little account of the importance to a properly functioning democracy of allowing a diversity of views to be expressed.
If those views are not heard, we will become more and more inclined to accept that we should look at all issues in the public domain through a business lens. We have already travelled a long way down that path.
How many people, for example, even noticed, let alone reacted adversely to, the statement from our Health Minister that he was “preparing a business case’” in respect of a decision as to whether or not to fund a bowel cancer screening programme? When other countries with whom we like to think we are comparable see it as a worthwhile expenditure, what does a “business case” have to do with it? And in such a business case, what dollar value is to be placed on the lives saved, the pain avoided, the grief and misery of bereaved families?
There are some areas of course that are apparently exempt from a calculation as to a monetary return on investment. Does anyone recall a business case being prepared for the $26 million spent on the flag campaign?
Bryan Gould
16 May 2016
A Blight on the Game
There was a point in Friday night’s Super Rugby game between the Crusaders and the Reds when Scotty Stevenson said in his television commentary, as the referee signalled yet another penalty advantage to the visiting Reds, “it’s like a never-ending advantage.”
There must have been many, both at the ground and watching on television, who shared his frustration, and not just because they were supporting the Crusaders. The comment came during a passage of play with which we have become all too familiar and which epitomised what is in danger of becoming a blight on the game.
The sequence of events followed a mind-numbingly predictable pattern. All that is required to set it in motion is that a penalty is awarded to the recipient team somewhere in the opposition’s half of the field. The decision is taken to kick for the corner rather than take a shot at goal, or a quick tap, or an up-and–under, or any other option that might involve the handling, passing and running skills that constitute so much of the appeal of rugby as a game.
The kick for the corner is duly taken and results in a lineout, usually five metres or so from the line. By virtue of the penalty, the attacking team has the advantage of throwing into the lineout and can be virtually guaranteed possession, since the defending team dares not contest the lineout for fear that if it does so it will not be properly prepared to resist the inevitable drive for the line.
The drive duly follows, and is organised on the basis that players from the attacking team who do not have the ball are entitled to charge forward, clearing opponents out of the way, so that one of their number carrying the ball at the back of the five-metre drive can dot it down over the line when the opposition have been splintered.
If the opposition are unwise enough to respond in kind by tackling the players advancing on them, they are penalised for “dragging down” the drive, in which case the ball is again kicked into touch and the manoeuvre is repeated. If the same result is produced, another penalty will be awarded and there is a danger that the outcome will eventually be a penalty try, perhaps accompanied by a yellow card.
The repetition is so marked that, as Scotty Stevenson remarked, it’s as though we are “on a loop”. The defending team, once locked into the sequence, finds it very difficult to break free, and the effect is magnified by the length of the advantage that most referees now allow.
The tactic is permitted by the current rules, which referees cannot be criticised for applying. But it is surely obvious that the lineout drive is increasingly at odds with the kind of contest that the game is intended to promote.
It is increasingly used by teams that do not have the wit, skill or ambition to score tries in any other way. In recent weeks, in the Super Rugby competition, we have seen teams like the Sharks, the Brumbies and the Reds all attempt to negate the superior skills of their opponents by taking advantage of the rules that in effect hand the ball to them just five metres from the line and then invite them to mobilise anything up to the whole team in order to push opponents out of the way so that one ball-carrier can cross the five metres to the line.
The rules mean that the awarding of a penalty on the halfway line can produce an outcome that is often out of all proportion to the gravity of the offence. It will often lead to a protracted sequence of play, when the ball does not move for minutes on end from a narrow sphere just metres from the line and when repeated and valiant defensive efforts are met by a succession of penalties that ensure that the same dismal manoeuvre is endlessly reproduced. The advantage from the original penalty can be endlessly prolonged.
It is worth noting that the Crusaders on Friday night, after scoring five tries through running rugby, eventually made what might be regarded as an ironic point by scoring a sixth as a result of a well-executed lineout drive. They demonstrated that there is room in the game for the traditional rolling maul – as long as it is not the only tactic employed. The varied range of skills and tactics that are possible in rugby is, after all, one of the reasons why it is such a great game.
The powers that be have already begun to address some of problems arising from the current rules. The solution surely lies in ensuring that the balance of advantage does not lie, with such boring predictability, so one-sidedly in the hands of a team that has done nothing more to earn it than to be awarded a penalty within kicking distance of the corner. It must surely be made possible for the defending team to resist the drive by legitimate means so that it does not repeatedly run the risk of being pinned on its line until a try or further penalties are conceded. What must be changed is the high probability that the endless deployment of a sterile tactic will produce an unjustified bonus on the scoreboard.
Bryan Gould
7 May 2016
The Buck Stops Anywhere But Here
It was Harry S. Truman, the post-war U.S. president, who famously had a sign on his desk that read “The buck stops here.” It was apparently a play on “passing the buck”, a phrase once used in poker to indicate that it was someone else’s turn to deal.
Our own Prime Minister has not bothered with a sign, but in his case it would read “The buck stops anywhere but here.” He has made an art form out of shuffling off responsibility to someone else when things go wrong.
There have been countless occasions when John Key has claimed not to remember (his “brain fades” are notorious) or not to know – it is amazing how often a Prime Minister who totally dominates his government seems to have been left out of the loop when crucial issues are decided.
Nor has he been overly fussy in choosing whom to blame. A misleading allegation about a security briefing received by the Leader of the Opposition? It was the Director of the Security Intelligence Service, Warren Tucker, who was required to carry the can.
A series of damaging exchanges with the blogger Cameron Slater about “dirty tricks”? It was a staff member from the Prime Minister’s office, Jason Ede, who stepped forward to accept responsibility.
His ministers have been quick to learn. One of the prime exponents of the art of ducking responsibility has been Murray McCully. A botched “reform” of the Ministry of Foreign Affairs? Nothing to do with the Minister but the Chief Executive, John Allen, was moved on. The Saudi sheep scandal? It was the lawyers who gave bad legal advice and landed him in it.
Perhaps the most extreme example of the genre, however, is the Prime Minister’s current attempt to distance himself from the IRD’s inexplicable decision to abandon their planned inquiry into the damage to New Zealand’s reputation that could result from our disreputable activities as a tax haven.
In this instance, the fall guys are the Prime Minister’s personal lawyer and one of John Key’s junior ministers. The cover story requires the lawyer, Ken Whitney, to plead guilty to misrepresenting the Prime Minister, and the junior minister, Todd McClay, to profess to feel “insulted” by any thought that he might have allowed himself to be influenced by the Prime Minister’s known support for the foreign trust industry.
The Prime Minister himself, of course, claims to have been totally unaware of the IRD’s concerns, and to have pleaded ignorance of it when approached by his lawyer – someone he knew to be a leading figure in the foreign trust business and indeed to be the chair of the Antipodes Trust Group, a major player in the industry.
The Prime Minister’s own view of such matters is now well-known, though it is worth recalling that no one would have known anything about those views and his connections to the industry if it had not been for the leak of the Panama Papers. Even after that leak, the Prime Minister was still happy to express strong support for secret foreign trusts as a worthwhile business – indeed, he expressed the hope that New Zealand could become the “Switzerland of the South”, a haven where the rich could hide their money in secret.
When Ken Whitney became alarmed at reports that the IRD was preparing to launch an inquiry and approached him on the matter, neither party would have been in any doubt, in other words, as to where they both stood. The approach was in essence a request that the Prime Minister should intervene in a matter of concern to them both and that the IRD should be told to drop its proposed inquiry.
John Key has – improbably enough – tried to equate this request to those many instances when he is no doubt buttonholed for a moment or two by strangers about matters of little consequence.
We are asked to pile improbability on top of improbability by believing that Ken Whitney would then, at the Prime Minister’s direction, repeat his concerns to a newly appointed and anxious-to-please junior minister and that neither of them would have thought to mention John Key’s known views or to take them into account.
What we do know is that the Whitney/McClay meeting was organised almost immediately following the approach to the Prime Minister and that the IRD subsequently, and without explanation, abandoned its plans for an inquiry into foreign trusts.
The end result is that, instead of an independent inquiry organised by the IRD in the public interest into business practices that do New Zealand no credit, we have a limited inquiry conducted by a single finance industry insider, hand-picked by a Prime Minister whose hand has been forced.
When the establishment of that inquiry was announced, it was met with widespread scepticism. With all that has happened since, both the credibility of the inquiry and the Prime Minister’s reputation have suffered further damage. We need something better.
Bryan Gould
4 May 2016