STATE OF IT: Ideology Drives Government Into Desperate Seller Territory

By   /   July 3, 2015  /   19 Comments

This article was first published on EveningReport.nz

bill-english-2.gifSTATE OF IT: This week the National-led Government cited overseas investments made by the New Zealand Superannuation Fund as justification for offshore investors being permitted to purchase state house assets.

The argument goes that if it is ok for the Cullen Fund to make offshore investments then it follows that overseas entities ought to be free to invest in New Zealand’s social housing market, to exploit that investment and return profits to their state of origin.

The argument demonstrates how disciples of raw political ideology can quickly find themselves estranged from the very people, in whose interests, they are warranted to govern.

Of course, the backstory to this issue is the Government moving to create a law that will allow at least two Government ministers in its Cabinet (Paula Bennett and Bill English) the authority to direct the sell-off of state houses with a specificity not yet seen in New Zealand. It is the kind of law that would have prevented Murray McCully from being sacked as Tourism Minister in the 1990s.

Why is it doing this? Simply, the Government is desperate to create a market where, to date, no market existed, to encourage demand from offshore speculators and providers, and divorce itself of the responsibility of governing social provision.

This week, while squaring off against criticisms during Parliament’s question time, the Prime Minister John Key asserted that the in-flow of capital into New Zealand from offshore investors would be significant and that the out-flow of capital would be insignificant.

The devil, as they say, is in the detail.

That out-flow of capital the Prime Minister is sensitive to will be the sum of profits acquired off the back of former and current state tenants, profits topped up by New Zealand taxpayer subsidies.

But let’s also consider the return-on-investment offshore speculators will acquire from the future sale and trade of this country’s state housing stock.

The opportunities, and the subsequent out-flow of capital, will be significant and potentially extreme.

The legislation (which is designed to remove barriers so this new state house asset market can flow without bureaucratic weight) will, in effect, permit the fast track sell-off of this asset stock.

We understand from Government figures that it intends to shift 8000 state houses off its books. QV.co.nz calculates the New Zealand-wide average value of housing stock at $514,232.00 per unit. The annual market increase of bottom-line value is calculated at 9.0%.

Granted, this calculation does not match the exact value-per-unit that will be positioned for sale. For example, we know part of the housing stock has been poorly maintained. And it is obvious by the behaviour of the ministers involved, the Government has cloaked itself within a desperate-seller shroud.

But the QV.co.nz nationwide valuation does give us an idea of the potential profits to be made should an investor house-and-land-bank their purchases then simply wait for a couple of years while the former state house tenants and the New Zealand taxpayer pays the rent. Then, once the market promises a bounty, decide to flog them off and make a quick 20+ percent on the purchase price and siphon the loot offshore from whence they came.

Compounding this equation is the Government’s desire to sell, and sell fast, rather than strategise for the highest possible price. It appears that once the ministers have the legal status to acquire the experience necessary to safeguard their future careers, these taxpayer-paid real estate agents, fuelled by their desire to ‘sell, sell, sell’, will likely erode the book value of the state housing asset stock even further.

But then, perhaps we ought to give the Government credit. This is the kind of gift that will certainly entice foreign investors to enter this Key/English fire-sale market with the intent to exploit this country for all it is worth (pardon the pun). Will that create demand-heat above the scale of asset-dump? No, sorry, it’s not even an even bet. Sadly, it does seem this third-term government, fuelled by its long-disguised ideologic DNA, is suffering from a bad dose of arrogance over political pragmatism.

I have to agree with the New Zealand Herald’s John Armstrong who said this week: “Bill English’s willingness to allow an Australian housing provider to buy up to 500 New Zealand state houses veers perilously close to allowing blind ideology to get the better of political common sense.

Clearly, the ministers have become impatient. Governance is too obscure for this party of economically-liberal zealots. For them, the status-quo is problematic, it provides public servants too much room to construct a bureaucracy that will in turn slow-down the rate of sale. So National’s ideologues will create a law that enables them to direct their officials, direct them to sell off specific stock to specific buyers.

It is bad lawmaking, designed around the party’s interests and not the nation’s. It will enable the Government to broker deals in the dark, in the privacy of back-rooms, to expedite the process of sale. How many blind-trusts will emerge as purchasers of these assets? How many politicians and National Party stake-holders will be invisible within those entities? This is the culture of suspicion the Government is creating. And the motivation is blind ideology.

This troupe of ideologues know they are a third term government that will never again enjoy current levels of popular support. Yes, the opposition remains weak. But they know that delicate balance will change in time.

They believe in the private market, they know what they represent, and they are desperate to create an ownership and services market so private interests can become the primary providers of governmental social services.

We now know the Government is well on its way toward implementing this once-hidden master-plan – to disestablish New Zealand’s social safety net, its welfare framework, and to disinvest itself of those governance responsibilities that have long been the burden of almost a century of successive New Zealand governments.

The question lingers… once this radical National Party plan concludes, or exhausts itself, will private social investors embrace the moral-ethos to provide a sustaining safety-net, or will they seek to profit from their investment?

You be the judge.

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19 Comments

  1. Richard Christie says:

    Lol to that last question.

    The market is not accountable to nor guided by ethics.
    Even Milton Friedman freely admitted this.

    • ThinkAboutIt says:

      Absolutely correct.
      The profit maximises objective is “amoral”.
      Ethics / morality are for the state / society to set by way of regulation of business and a firm application of penalties INCLUDING custodial sentencing.
      The neoliberal system abandons this responsibility of the state hiding behind a fictitious / disingenuous supply and demand theorems and a misrepresentation of Adam Smiths work.

  2. Andrea says:

    Which more than adequately shows up the lacks in our political system.

    If the Opposition is too incoherent to both act in and out of the chamber, plus effectively gather the wider public to forcibly (not violently) remind the Government whose will they are there to serve then the system is nothing but soggy tissues.

    We need a range of answers to ‘but what can we DO?!’ Not everyone is willing or able to march, defy, or even write.

    What do we DO on this issue, and the ‘free trade’ agreements, and the other unexplained mysteries of high policy and dirty deeds sone in our names?

    A coherency of options, and a touch of leadership from the wannabes who form our Opposition is now required. Hard, solid, great dollops of feedback to our smug government, tinged with a warning.

    And get on with parliamentary/political reform. It’s centuries out of date.

  3. CLEANGREEN says:

    here is no ethics to everything this Government is carrying out Selwyn

    They are simple Carpet Baggers with no conscience and a distinct lack of ethics.

    As they eagerly seek any way to flog off the last vestiges of our social safety nets, – that past generations have paid long time taxes dearly to protect.

    They will leave us with no security and falling standards of care.

    They are traitor’s to us all.

    • Maama says:

      We need to look carefully at what is happening in Greece. I can see the same situation happening here and not too far off – sadly I can’t see any political party ready to put a stop to these shenanigans any time soon. Grrrrrrrr!!

  4. XRAY says:

    Surely waiting in the wings is privatising the health system. It was semi attempted by National when English was first in parliament albeit it almost ended Bolger’s government first term. However its the same ideology that English was and is devoted to.

    Because if selling out social responsibility namely State Houses to some nobody organisation from Australia who Key knows nothing about sounds worrying then it is only natural that to conclude that the next Frankenstein out of Nationals policy department is a user pays Health sector.

  5. Grant says:

    Combine this latest breathtakingly brainless idea in social housing with the wildly out of control Auckland housing Ponzi scheme and you have a clusterf**k of monumental proportions about to unfold.
    The fallout will be an underclass in NZ the like of which we have never seen before.
    The comfy middle classes will also become financially compromised and depressed, stuck with paying huge mortgages on their depreciating asset.
    The Aussies will soon get sick of being a landlord in a country going backwards and will want out. The Chinese will then swoop and pick up the bargains at the resultant firesale prices.
    Auckland will then become the most southern Chinese city in the world.
    NZ will never be the same.
    Future generations will pay dearly for the air- headed actions of this bunch of foolhardy short termist thickos!!!

    • CLEANGREEN says:

      1000% Grant & MAAMA,

      Is it a just a coincidence that the planned execution of minor states like Greece now by financial attrition and economic strangulation the hallmark of “The Bilderberg group” who just met two weeks ago before this came to a head now?

      It is their tool that is now being used to weaken the Government of Greece as it is a left wing persuasion and possibly that may also be used to bring NZ to its knees also next when this corrupt lot finally expire?

      http://www.sourcewatch.org/index.php?title=Bilderberg

      No Bilderberg meeting agenda has ever been made public.

      “It is the epitome of low-profile dark ops, a shadow government hidden in a doorway.”

      According to critics and close observers, it’s agenda is to weaken all world leadership but their own.

      It is also, according to a U.S. law called the Logan Act, [15] illegal:

  6. Kingi says:

    “How many blind-trusts will emerge as purchasers of these assets? How many politicians and National Party stake-holders will be invisible within those entities?” Indeed.
    I wonder how many National Party connections there are with Serco. Has anybody tried to find out?
    The commodification of the populace, at least those of us who are in some measure dependant on the provision of the state, continues unabated. Prisoners are now commodities. Mental health patients will soon become tradeable commodities. As will state housing tenants.
    We, as a nation, are letting them do this to us. What’s with that?

  7. Mike in Auckland says:

    By that logic which Bill English now follows, we should probably also open the door widely, for overseas “real estate investments” on the market for those that still have the means to buy houses and apartments, yes perhaps also build a few:

    ‘Chinese investment set to boom’

    http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11469949

    We have the Free Trade Agreement, and they must be given the same rights as others from other countries, who can “invest” here.

    We should perhaps also hold daily auctions at WINZ offices, auctioning off the job-seekers to the best bidder, for slavery jobs, relieving the state from more “burden”, by becoming “investments”.

    Hooray, the market rules.

  8. Stuart Munro says:

    The Key kleptocracy, like Soviet Russia, has difficulty recognising its mistakes. Selling state houses is too stupid even for a party containing Gerry Brownlee. Give it up you stupid assholes.

    • Kingi says:

      Brownlie, Muzza, Tolley, Parata, Bennet, Bridges, Lotu-liga, Smith, Collins, Jamie-Lee Ross, Mark Mitchell, bloody Sabin, the list goes on and on. What a combination of incompetence, ideologically-driven madness, barely concealed thuggery and snouts in the trough naked self interest.

  9. Mike in Auckland says:

    The simple truth is, the government has run out of answers. They have no more solutions available, to improve the social housing stock. First they tried to con the community housing sector, into believing they can get terms that allow them to “develop” stock they can get from the government, without costing them too much.

    Some Iwi representatives saw through it, and thought that the state houses would have to be gifted to them, to develop, as they are in their poor state basically “worthless”.

    The Salvation Army hesitated signing up to a deal, questioning the terms offered. It seems they were faced with borrowing up to their eyebrows, to fund schemes, which is not and option.

    Let us remember what Key promised or announced early in the year, the sales were meant to be made for money on the market, and at the same time offer better housing, with many questions left open.

    But now the government is losing its face.

    So what is left? The government is reluctant to raise taxes or to borrow to invest in building new, better and more social housing units. They gave tax cuts benefiting the better off earners years ago, to “reward” them for voting for them. They are generally soft on the wealthy, yes look after their well funded supporters.

    That means they cannot do a turnaround and suddenly invest in more state housing, or “social housing” themselves, as that would annoy and upset their voters.

    The only alternative left is, to offer the homes to overseas “investors”, such as Horizon from Australia. That fits their ideological approach, their hands-off dealing with many issues, and it offers them a great opportunity, to get out of the costly responsibility of looking after the poor, who cannot afford homes on the increasingly expensive market place.

    They do the same in social welfare, outsourcing more and more services, thus ridding themselves of responsibilities and saving costs, at least short to medium term.

    “Stuff” the affected people, they are given no choice, they have no choice, as in this society we now have, you only count if you have enough money in your bank account, or are a professional they need to run the system.

    That cuts out all the marginalised groups, especially those in state and social housing, those on benefits, those on low pay in low skilled jobs, they are all just NOT important to this government.

    And Labour running after the same voter base as the Nats, are sadly doing the same, side-lining and letting down significant sections of society.

    Shame on them all!

  10. donna says:

    I’d suggest that the so-called ‘once-hidden’ agenda has in fact been in full view since 2010 when the government set up the Welfare Working Group and started its welfare reforms. These were never about improving outcomes for children (as indeed state house sales are not about improving the lot of low-income New Zealanders), but were about offloading the administration and delivery of social assistance the private sector. Why? Because like a taxpayer-subsidised social housing sector, contracted social service delivery provides an income stream for people like Serco and other ‘favoured providers’. There’s money in misery.

    Most of us have stood by and let this happen because we didn’t think it was about us. Of course, it’s not about us only if we are disgustingly rich, or never get old, sick, disabled, or suffer some other setback.

    • Mike in Auckland says:

      “Most of us have stood by and let this happen because we didn’t think it was about us. Of course, it’s not about us only if we are disgustingly rich, or never get old, sick, disabled, or suffer some other setback.”

      You are so right about this.

      People have been turned into mostly highly individually minded, competitively thinking, sole fighters, most thinking of “number one”, and many are so conditioned by years of indoctrination, so that nobody dares to take a dissenting stand anymore.

      So with a working environment where most are on individual contracts, where you are taught to compete with everyone else who applies for a job you need or want, you do not get taught that much of the value of true team work. Actually the word “team” is often abused and misinterpreted in many working environments, not meaning anymore what it once was.

      We live in a modern day society, where the “leisure” time is now increasingly spent on consumerist shopping, or merely distracting entertainment, often by using technology for gaming and whatever, not so much in traditional social interactions. Where few bother engaging in real life social activities like sports, like going out and sniffing fresh air and getting in touch with nature, and rather sit before screens, mesmerised by blue and other light coming from them, and sit in their various dwellings in large or not so large urban centres, there is a loss of touch with the basics of life and human existence.

      So “society” is a much more a loose knit sum of individuals, where we are by the systems in place treated like mere “numbers”, who may only gather in large groups for some “events” like large parties, noisy concerts, or big rugby or other games, watching others play, and often getting wasted, so all contacts are superficial.

      As a result, most “modern”, commercially brain-washed people dare not to think of misfortunes that may hit us, try to avoid thinking the unthinkable, live from day to day, and walk past the homeless in the city streets.

      And when the government announces some experiments, or new approaches, to outsource, to achieve “cost savings”, to sell something that others need to live in, or depend on, then most now shrug their shoulders, think, ah, it does not affect me, so I am too busy, with my life and challenges, I cannot be bothered.

      That is what it is like now, as I see it, at least in the major centres like Auckland, Wellington and Christchurch. The realities that rule the rest of the world are catching up with us, and we follow similar trends, not for our future well-being and security, that is for sure.

  11. elle says:

    Key is getting desperate to sell or privatise everything in readiness for the enactment of TPPA, his corporate cronies will just walk in everything in readiness completed by their puppet Key.

    No need for him stay his job is complete. Key has ruined NZ along with his team of traitors. Key is so blatent in his contempt for NZs,he just dosnt even try to hide the harm hes done, the rest ofhis team will be left behind when hes gone , they will face the music and Key wont give a damn.
    Wealthy people have believed he will shield them from harm,well they will soon realise he dosnt give a damn for them either.

    NZ is in a very sad position ,It will never be the same again.
    In the past things have relatively easy , we havnt has to fight for much
    and now everyone is hoping someone will do something to stop the rot ,unfortunately there are no leaders capable,all too afraid to act. Key isn’t a leader either just a corporate raider,with a group of greedy idiots doing his dirty work for him ,these people have been named in the article. God defend NZ from these traitors


 
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