Who Is Responsible for Housing Affordability?
The solution to Auckland’s twin housing problems of homelessness and unaffordability seems as far away as ever, despite the much-trumpeted Housing Accord signed by the Auckland Council and the government.
I say “seems” since it appears that no one has the information that allows us to make an accurate judgment. Under the Accord, which was approved in September 2013, ten per cent of the new homes built in Special Housing Areas have to be affordable housing – that is, houses that could be purchased by a first-home buyer on a modest income.
It is now clear that, such is the lack of seriousness with which these issues are being tackled, neither of the signatories has bothered to keep a reliable (or any) record of how many affordable homes have actually been produced and what proportion they represent of the new houses that have been built.
In the meantime, the median house price in Auckland has risen to over $860,000 – hardly most people’s definition of “affordable” – and the average price is higher still. The Housing Minister, Nick Smith, tried to deflect criticism when questioned by asserting that it is not the government’s responsibility to see that the promised affordable houses are produced – even though it is his signature that commits the government to achieving the targets identified by the Accord.
He concedes that the government has failed to check that private developers meet their obligation to declare formally that 10% of the new houses built are affordable; he argues instead that the much delayed pick-up in new housing consents will eventually help, as and when the houses are built, to restrain the rise in house prices, even as they continue to rise, albeit a little more slowly. He thereby by implication consigns the 10% affordable houses target to the scrap heap.
This is, of course, entirely predictable and in line with the government’s conviction that the private market can be trusted to solve the affordability problem. Why should we even bother, the government says, to make sure that the government’s friends in the development industry keep their word on affordability when increased supply alone will do the trick?
So wedded are the government to this view that we can now, it seems, treat the Housing Accord, and the commitments required of developers, as just so much waste paper – a perception reinforced by this week’s news that more than half of the Special Housing Areas have been scrapped. Nick Smith’s signature seems to mean nothing.
What this debacle reveals is a complete failure to identify the true causes of the problem. Ministers and others cannot seem to get their heads around a very simple proposition. If you have an asset (like land and, by extension, housing) that is in limited supply, but you have a virtually unlimited supply of purchasing power chasing that asset, the inevitable consequence is that the price of that asset will rise and will go on rising inexorably.
Even if (with or without a meaningful Housing Accord) you manage to increase the supply a little at the margin, but do nothing to restrain the volume of demand for the asset (or the purchasing power available to purchase it), the only outcome will be – as mortgage lending increases to match the increased supply – higher prices (and profits) across the greater volume of the asset. And that is even more likely if you take no steps to enforce any commitment agreed with those controlling the asset whereby they undertake to provide certain classes of the asset on favourable terms.
The proposition that increased supply will resolve the unaffordability problem is, even assuming that Nick Smith actually believes it, nothing more than a con trick – a trick designed to benefit private developers, but destined to betray those who have been priced out of the housing market. And so, prices go on rising, even if marginally more slowly.
Ministers have no excuse for adhering to such evidently mistaken nostrums. They need only look to the analysis developed by the Reserve Bank. The central bank has demonstrated, through its introduction of loan-to-value ratios and debt-to-income ratios, its understanding that only the restriction of the otherwise unlimited power of the banks to create money by making loans on mortgage will succeed in restraining the rise in housing prices – and such fall as there has been in the rate of increase is clearly attributable to the introduction of these measures.
But rather than concede and act further on this simple point, Nick Smith prefers to inflate the developers’ profits, disappoint those who cannot afford to buy their own home, and disclaim all responsibility for his own signature.
And if he really believes that it is exclusively supply, rather than demand, that is the problem, why does he not, rather than sub-contract it to developers, take that problem on himself – by tasking the government to build the affordable houses that are needed?
Bryan Gould
6 July 2017
Who or What Is “Ridiculous?”
Stephen Jones is the rugby correspondent for the Sunday Times. He has a long record of, as he puts it, “winding up” the New Zealand rugby public by pooh-poohing New Zealand’s rugby success and criticising just about everything about the way it is played by the All Blacks and other New Zealand teams.
It is perhaps unfortunate that a supposed expert on rugby matters should deliberately, on his own admission, fail in his duty to provide a balanced and accurate analysis to his own readership and give priority, rather, to the pleasure he apparently derives from irritating readers in another country.
He then seeks to deflect the criticism that inevitably comes his way from those who dislike the obvious bias and spleen by accusing the New Zeal rugby public of being unable to “understand irony” – the classic defence of the intemperate across the ages. A rugby correspondent worth the name might do better to focus on rugby rather than supposed irony.
It is not that he is bravely ploughing a lonely furrow. His bile is best regarded as the distillation of a puzzlement no doubt shared by many for whom the All Blacks’ success is an impenetrable mystery. Rather than use what limited expertise he might possess to unlock the secret, he takes refuge in a range of explanations – the All Blacks cheat, they practise foul play, they are favoured by referees, and so on. The possibility that the All Blacks, and New Zealand rugby in general, might be better – not on every occasion, but most of the time – cannot, apparently, be admitted.
But he has now broken new ground. He no longer limits himself to denigrating New Zealand rugby but has taken on the role of social critic. We are treated to a further display of his supposed expertise when he says solemnly (oh, I forgot – with irony) that New Zealand is obsessed with rugby and that the obsession is “ridiculous”.
I do not claim to be an expert commentator on rugby (though I share an interest in it or “obsession” as Stephen Jones would have it) but I do rather fancy myself as a student of New Zealand history and society. It is true that many New Zealanders – but far from all, perhaps not even a majority – are proud of and interested in the dominance of world rugby (and I don’t think that is an over-statement) achieved by our teams.
But there is no shortage of Kiwis who regret and criticise what they see as the intrinsic violence of rugby as a game, the macho and sexist attitudes it promulgates (though that has been tempered by the growth of women’s rugby and the success of the Black Ferns) and its record of accommodating apartheid – though that unfortunate episode now dates a long way back.
To describe the country’s attachment to rugby as ridiculous, however, is to betray a total and disqualifying ignorance of rugby’s history and continuing role in this country. Despite the understandable reservations felt by many Kiwis, most of us would – I believe – recognise the seminal influence rugby has had on our development as a nation.
I recall my long and dear departed mother telling me how, as a girl, she and thousands of others would assemble in 1924 outside the Wellington Post Office to see the results, delivered by telegram, of another Invincibles victory posted on public display – and those triumphs, following on the success of the Originals of 1905, were hugely important in developing a national identity and in convincing us that a tiny and new-born nation could achieve distinction on the world stage.
We now know that we can lead the world in many spheres – not a vainglorious claim, though no doubt producing a smirk from the Stephen Joneses of this world. But it was rugby that first showed us that we could excel.
Even more important were the other lessons we learned. We could excel, even against our former colonial masters. The skills and aptitudes needed for success in rugby seemed perhaps better developed in our small country than in countries with apparently much greater resources.
Those skills and aptitudes were not only more likely to develop in a pioneering society where self-reliance, effort and teamwork were prized, but they were also – mirabile dictu – particularly suited to the combination of individual and collective effort that characterised Maori society and, in due course, that of the Pacific Islanders who made their homes in New Zealand. There is probably no factor that has done more than rugby to bring races together and foster mutual respect in an integrated society that, while far from perfect, leads the world – yes, that again.
I write this after the Lions’ deserved victory last week and before the game to decide the series on Saturday. I don’t apologise for hoping that the ABs reinforce their claim to be the most successful team in the whole of international sport. But if they lose, that’s rugby. Nothing changes; they will live to fight – and win – again. And rugby, with no help from Stephen Jones, will have done what it should be allowed to do – bring people and peoples together.
Bryan Gould
3 July 2017
The Price We Pay for Tax Cuts
Some things never change – and it is, I suppose, somewhat reassuring when people of whom you have a particular expectation behave in a way that is true to type.
That is exactly what I felt when Bill English floated the possibility of tax cuts at the National party’s pre-election conference – though in this case, I have to admit, I felt not so much reassured as both depressed and scornful.
Right-wing politicians across the globe can be guaranteed, when votes are being sought and the road is a bit bumpy, to turn to the promise of tax cuts in order to garner more support, and – at a moment when the Prime Minister is in some trouble over the Todd Barclay affair – the expected has happened right on cue. Sadly, history tell us that it’s a ploy that works all too often.
Our fellow-citizens are all too likely to look only at what they imagine will be the immediate impact on their own personal finances and to ignore some of the wider and longer-term implications.
The voters never learn – that tax cuts can easily, post-election, be reversed, or substituted for by increases in other charges and levies, and that all too often tax cuts benefit the wealthy few first and the average taxpayer a long way back in second.
Most significantly, few pause to think of the price that will be paid tomorrow for the tax cuts they are promised today (assuming that they do in fact materialise as promised). If the government takes less in tax, the few dollars saved in the individual pay packet or weekly budget will be multiplied many times over, and will mean reduced spending (usually called cuts) in providing essential services on which a civilised and economically productive society depends.
I could not help but be struck this week on hearing – on a perfectly ordinary day for news – two further instances of the wearyingly familiar theme of how cuts mean that we are, in large numbers, worse off than we should be.
First, family doctors pointed out that increasing numbers could not afford to see the doctor when they are sick, because the funding for primary care is inadequate.
And school principals complained that their low level of funding made it impossible to maintain appropriate levels of trained staff to teach our children.
A moment’s thought would convince most people that underfunding our children’s health and education in this way is not a sensible way of building our future – yet those same people would happily fall for the bait they are offered when tax cuts are dangled in front of them.
And that is to say nothing of other cuts, right across the board – cuts in essential services such as defence, or law and order, or biosecurity, or in investments in our future capabilities – that make us less secure, less fair, less integrated and less productive.
That may be bad enough, but this is a dynamic, not a static, situation. The offer of tax cuts tells us about both the past and the future. It tells us that the government has taken more from us in tax over recent times than it turned out to need – that, according to its own calculations at any rate, they can give some of that tax take back to us. What parades as an apparent act of generosity is, in other words, merely a confession of past miscalculation.
But it also tells us that the government has learnt no lessons from the downsides of its usual policies. It is still prepared to gamble with our future and to preside over a country that is weaker, less united and less able to face the future than it need be – and all for the sake of gaining a few more votes from those who can be bamboozled.
The lesson should be clear. Tax cuts are bought at the cost of worse public services – and worse pubic services (or cuts) mean that the price we pay is a heavy one, and it is usually paid by those least able to afford it.
Bryan Gould
29 June 2017
TV Commercials – How Bad Are They?
When my wife and I returned home from England 23 years ago, one aspect of New Zealand life we noticed was the length of the commercial breaks on television. I could get down to the end of a long drive to pick up the mail and get back to resume watching a favourite programme, to find the commercial break still going on.
The compensating factor was that many of the commercials were made with charm and wit. We quickly grew to enjoy some of our favourites, which exhibited much of the flair and technique that came to characterise New Zealand film-making more generally.
I later served on TVNZ’s board, at a time that television – so long a “licence to print money”, as British commercial television was once described – was beginning to feel the heat from commercial rivals, particularly on the internet.
That heat has intensified over recent years. One of the factors that has made life more difficult is the new-found ability of the average viewer to avoid having to watch or listen to television commercials. If they cannot pre-programme their television sets to switch off during commercial breaks, most viewers are at least able to record programmes and then speed through the commercials, or at the very least they can mute their sets when the ads appear.
These responses are surely all the more likely if the viewers expect that the commercial will introduce a distracting or irritating or otherwise unwelcome intrusion into the domestic living room. Most viewers will know what I mean – those ads where manic faces shout and scream at the tops of their voices, where the women’s voices are shrill and piercing , and where voices seem to be deliberately distorted in terms of tone or accent so as to sound positively unpleasant.
If challenged, those responsible for making such commercials will say that they are deliberately produced to sound like that so as to attract attention – and that they serve their purpose when viewers (or listeners) who complain have at least noticed them. I am sure I am not alone in saying to myself that an advertiser who so gratuitously offends my eardrums does not deserve – and will not get – my custom.
The complaint that the commercials are louder than the programmes is of course a perennial one – as is the television companies’ assurance that this is not the case. But what the companies seem deliberately to ignore is that while commercials may be broadcast at the same level as other programming, some are made at high volume in the first place.
In broadcasting commercials that are made to “grab attention” – in other words, to be deliberately annoying – the television companies are playing with fire in a self-defeating fashion. By allowing advertisers to use such techniques, they are, whether realising it or not, encouraging viewers to avoid the ads altogether; they thereby reduce the commercial value of, and therefore the price they can charge for, the airtime they are selling. It’s surely time the television companies pointed out to their advertisers that this serves neither of their interests.
In pointing the finger at commercials that sound terrible, I say nothing of those ads whose content is an insult to the viewers’ intelligence – whoever thought, for example, that adding caffeine to shampoo, without any attempt to explain how that might be beneficial rather than simply a gimmick, could be described as “German engineering”? Or of those ads that are repeated with such monotonous regularity as to bring to mind the tortures inflicted on the inmates of Guantanamo Bay – is there really such a huge market for insurance to cover funeral costs?
There are of course still the commercials that are made with real flair and wit. They often seem to involve children or dogs – the attempt to involve an Australian playmate in the building of a retaining wall, for example, is a joy.
And there is one tv ad that should serve as a model to all those who want to get the best return for their outlay. It has no moving film or complex soundtrack – merely still photographs and three sounds of breaking glass. It must have cost next to nothing to make and lasts just a few seconds. But everyone knows the six-word punchline.
Bryan Gould
24 June 2017
Do We Have to Put Up with Mike Hosking?
Why do so many people dislike Mike Hosking? On the face of it, he has everything needed to host a successful daily television show. He is nice-looking (if you like that sort of thing), articulate and intelligent (or passably intelligent – let’s not get carried away here).
He is so familiar – appearing as he does, if we let him, in our homes every weekday evening – that he is almost a member of the family. So, why have tens of thousands signed a petition demanding that he is removed from our screens?
I have some sympathy with the petitioners, but I confess that I do sometimes watch him, not because I think he offers good television but because I am convinced that it is only a matter of time before he comes a cropper and I want to see it when it happens.
There is something about the way he rears backwards, throws his head back, and points his nose at the ceiling that suggests that he is about to sneeze – and not just a little sneeze, but a real and messy explosion that splatters gunge all over the studio cameras – thereby doing physically to the cameras what he does figuratively to his viewers every evening.
Television is a demanding medium. On the one hand, it rewards the showmen, but on the other hand, it also finds out the fakes and the phoneys. The front man of a daily show can quickly be exposed if he isn’t honest and genuine.
That is especially so if he seems more concerned with his own image than with the stories he presents to his audience. And Mike Hosking is nothing if not self-aware. One gets the impression that he is constantly acting to the camera, always reviewing how he is looking and trying to decide what would be the most appropriate expression for a given moment. It is as though he has developed his own mental image of what a popular presenter should look like and spends his time trying to match his words and expressions to that image.
The result is that he forfeits the one element that is essential to a successful presenter – the trust and respect of his viewers. He always seems to be making a point – his point – about the stories he presents. His problem is that he is not quite skilful enough to conceal that from the audience who have learned over the months and years to understand exactly what that point is.
We know from long experience that he likes winners and has little time for those whom he thinks of as losers. He believes that everyone should stand or fall according to their own efforts, that those who walk off with the spoils should be able to keep them and owe nothing to anyone else, and that those who lose out should stop moaning.
His political bias does of course have its uses. We can judge the importance of the Todd Barclay saga, for instance, by the number of times Mike Hosking, in his various media outlets, told us that it didn’t matter at all.
We detect that bias because we read and hear what he has to say in those other media outlets where he has also demonstrated the ability to slide a politically jaundiced comment into even the most innocent story. John Campbell, at the other end of the political spectrum, at least has the honesty to proclaim his political views quite openly.
Hosking’s problem is that his audience has developed antennae that are increasingly sensitive to concealed but consistent political bias. The problem is compounded by Hosking’s ubiquity. If it is not on early evening television, then it is on breakfast radio – and if not on the radio, then in the pages of the Herald.
It is bad enough that we should be fed a diet of such determined prejudice in one medium. It is intolerable that we should be obliged to encounter it wherever we go across the whole spectrum. Little wonder that the Commerce Commission expressed concern about any further restriction of the already narrow range of views to be found in the mainstream New Zealand media.
Bryan Gould
22 June 2017