• 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

  • 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

  • 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

  • The End of a Promising Career

    My twenty years in parliamentary politics taught me that, contrary to the opinions of many, most politicians pursue a political career for other than exclusively self-serving reasons.  Most genuinely want to serve their fellow citizens or believe that they can make a real contribution to improving the way our society works.

    I concede, though, that there are some politicians who could properly be called “careerists” – the term is not intended as a compliment.  These are people who see politics as a path to fame and fortune, and they tend to be found – without wishing to make a party political point – more on the right of the political spectrum than on the left.

    A careerist will often be ambitious for promotion and preferment and will feel that destiny calls.  That is not in itself a crime but it can all too easily become a conviction that destiny is not to be frustrated by the usual rules of good behaviour.  Someone who believes that he or she is on the threshold of great things may be impatient of those of apparently lesser ability, more cavalier about observing the requirements of law or morality, and more arrogant and driven by chutzpah in pursuing his own interests at the expense of others.

    At the extreme, someone of this personality type – and particularly  one who enjoys at least a modicum of success – can develop what might be called a “Messiah complex”.  Perhaps the leading example of this syndrome was Tony Blair; his conviction that he was destined to save the world led him into the ill-fated invasion of Iraq, and the world he thought he was saving has paid the price ever since.

    These thoughts were brought to mind as I contemplated the saga of Todd Barclay.  A young man of undoubted ability, he must have been excited at inheriting the safe parliamentary seat vacated by Bill English, then the Deputy Prime Minister.

    His youth and impatience led him, however, to a fractious relationship with the staff in his electorate office, and thence to a course of action which involved him in the criminal offence of recording another’s conversation without their knowledge or consent.  In what is a sadly familiar downward spiral, he then compounded the error by falsely denying that he had done any such thing.  As so often, it is the cover-up, rather than the original offence, that causes the real problems.

    His problems multiplied when his lack of honesty implicated the Prime Minister who appears to have knowingly supported him in his denial of a now admitted truth.  His resignation merely of course delayed the inevitable.  But that ignominious outcome is far from the end of the story, which now involves not only the career prospects of a single (and misguided) individual but important principles of public life.

    It is also significant that his departure has been arranged in such a way as to maintain his eligibility, as a retiring rather resigning MP, for all the advantages accruing to one who leaves the parliamentary scene with plaudits for a job well done, rather than in disgrace.

    If proper standards are to be maintained, we must now ensure that an elected representative cannot use his status to avoid being held accountable for his actions, and that others who have connived at the attempt to achieve precisely that are also held to account.

    That means that the Prime Minister must recant his earlier attempt to obscure the truth and protect his protégé.  It means that the police must – following the admission that what appears to have been a criminal offence had been committed – re-open their prematurely foreclosed investigation as to whether that was so; they were, after all, very keen to pursue Bradley Ambrose, the cameraman who inadvertently recorded John Key’s conversation with John Banks in the 2011 election campaign.

    Most of all, it requires that others should learn the lesson that Todd Barclay  overlooked – that public life in New Zealand demands that its practitioners should tell the truth.

    Bryan Gould

    21 June 2017

     

     

     

  • What Does Inequality Look Like?

    What does inequality look like?  In a society where the gap between rich and poor has widened significantly, what evidence of that gap would one expect to see?

    A dramatic and painful answer to that question was provided to us this week with the shocking image of the burning London tower block.  If we ever wanted evidence of how – even in a society that is relatively affluent – the poor can be disregarded while the rich pursue their own interests, this was it.

    The “towering inferno” occurred in one of London’s most affluent boroughs.  While around 120 poor families were crammed into Grenfell Tower, a 24-storey tower block, most of the borough comprises leafy suburbs and million-pound houses.

    The borough’s elected local authority apparently saw it as its first priority to lift property values in the borough and, as a necessary step to that end, to corral the poor into limited locations, getting them off the streets, out of sight and out of mind.  The residents of Grenfell Tower, it seems, sensed that this was the case – a perception borne out when the concerns they repeatedly expressed about the safety of the tower block were ignored.

    We all saw the consequence of that neglect.  It is already clear, even before the necessary inquiries into the tragedy have been set up, that the building was unsafe and had been from the moment that the first tenants had taken up residence.

    There were, it seems, no fires sprinklers.  The fire alarms were inadequate.  The building design made no attempt to inhibit an outbreak of fire and on the contrary ensured that flames would spread rapidly.  Worst of all, it seems that the cladding attached to the building when it was refurbished a little time ago was of “limited combustibility” – and we now know that any degree of combustibility was too much.

    These manifestations – literally of “care-lessness” – reflect an order of priorities that should have no place in a civilised society.  The local authority seems to have been more concerned with saving the ratepayers money, avoiding “unnecessary” regulation, and promoting the interest of the wealthy in seeing property values rise, rather than in providing a safe living environment for those who could not afford to buy their own homes.

    We might have hoped that the democratic process would have ensured that the interests of the poor could not have been so easily swept under the carpet.  But, sadly, the western world offers many instances of how democracy can be diverted to serve the interests of the already powerful.  In Donald Trump’s America, for example, the President is celebrating his “achievement” in denying health care to 23 million Americans so that he can deliver billions of dollars in tax relief to big corporates.

    In New Zealand, we like to think that we are spared such excesses.  We know, because we read about it, that there are people who are homeless – living in cars and garages – and that there are many children growing up in poverty, suffering ill-health and inadequate education as a result.

    We read about it, but it fails to make an impact on us, because our own lives are relatively comfortable.  It is someone else’s problem – the government’s – and when we cast our votes to elect a government, we are more concerned with how much tax we pay than about the cold, damp rooms, the overcrowding, the wheezing lungs and the empty tummies.

    Thankfully, these attitudes do not produce by way of consequence – or have not done so far – anything remotely as dramatic as a flaming tower block.  We do not, after all, have many tower blocks available to test out degrees of combustibility – or culpability.

    But the damage we do to ourselves – as a society and to its individual members – can be just as serious as the fire at Grenfell Tower.  The flames that engulfed so many were a demonstration – cinematic in its power and intensity – of what inequality can mean.  We have persuaded ourselves that we can live with the less dramatic but no less lasting penalties that we choose in effect to impose on our fellow citizens.

    We may not force them to jump out of burning windows.  We simply condemn them to a lifetime of disadvantage.

    Bryan Gould

    16 June 2017