The quiet desperation of low-income families Vs middle-class angst

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It’s a sad truth that in our daily political discourse the struggle of people on low incomes doesn’t rate much.

It flares only occasionally when some brave souls speak out in frustration and/or desperation as Christchurch residents of the council’s cold damp rental housing units did last week, subsequently revealing that over 900 of the council’s 2,200 rental units had no insulation. The council has avoided responsibility for this citing a loophole saying they don’t have to do it if its impracticable. It turns out putting in insulation can be done at a reasonable cost but it has rated at such a low priority that nothing has happened.

Remember this is Christchurch – not Auckland – where it’s often bitingly cold in winter. The middle class and the super wealthy welcome the snow so they can ski but for council tenants in uninsulated units it means surviving biting cold.

Councillors ran around for a couple of days embarrassingly trying to bring forward funding to do the job but that’s only because the election is close. For many years they have been happy to ignore the issue while tenants suffer in silence.

On the national level the same thing applies. Occasional flareups on the national housing scene occur but are usually quickly buried in a welter of issues relating to middle-class angst.

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Here is the latest effort to get government action on state housing for the 41,000 families facing severe housing need. Labour’s official policy is to build 1500 (sic) new state houses each year.

OPEN LETTER TO THE STATE HOUSING MINISTER

Kris Fa’afoi

Minister responsible for State Housing

Parliament Buildings

Wellington

k.faafoi@ministers.govt.nz

Kia ora Mr Fa’afoi,

The best way forward for State Housing

I’m sure you will be getting a lot of advice from various people in different sectors about how to address the housing crisis.

The State Housing Action Network has a clear idea on the direction the government should be taking, and we hope you will give it serious consideration.

The problem as we see it is that there is not enough affordable housing for low and middle-income tenants and families. Kiwibuild seeks to provide housing options for the children of middle-class families but the houses are simply too expensive even for this group as well as most low- and middle-income earners.

Our solution is for the government to return to its knitting. We urge you to consider the approach to housing taken up in the late 1940s by the first Labour government when it was building up to 10,000 houses per year in response to the housing crisis caused by large numbers of soldiers returning from WWII, marrying and raising families.

That housing crisis was solved with large scale state house developments in areas such as the Hutt Valley and the Tamaki area of Auckland (Glen Innes, Point England and Panmure).

We have a similar problem now with low and middle-income families absolutely struggling to get into warm, dry, affordable housing.

In the current housing crisis there are three critical issues the government must recognise:

    1. The private sector is unwilling and incapable of responding to the housing crisis. If the private sector could have built houses New Zealanders need and want they would have done so. Instead, over recent decades they have only built “flash” houses for higher income earners to maximise the return for the developer rather than meet the needs of low and middle income New Zealanders.
    2. In any case only the government has the resources and capacity to build the very large number of houses needed to meet this crisis. The government can borrow money more cheaply than local councils or private developers and can use economies of scale to dramatically reduce the cost of materials and hence the cost of building. The government also has access to land without that cost needing to be added to the cost of rentals.
    3. Across the country we have a huge skills shortage of qualified tradespeople such as builders, plumbers and electricians etc and this shortage will not be solved through the current privatised model of “industry training” whereby apprenticeships were abandoned in the 1990s in favour of “on-job” training.

If the government accepts these three points then the way forward becomes much clearer. Our proposal, based on these three realities, is that the government should:

    1. Return to Labour’s promise going into the 2017 election to transform Housing New Zealand into a government department rather than a state-owned enterprise.
    2. Use the government services model to establish a government enterprise to design, borrow and build thousands of new state homes on crown and local body land around the country.
    3. Use this large state building programme as a training ground for a new generation of skilled tradespeople to address the looming trades crisis as baby boomer tradespeople retire.

This is NOT an expensive option. The money borrowed will largely be paid back as people either pay rent or pay into a rent-to-buy scheme associated with the building programme.

This will also save billions of dollars into the future as payments of the accommodation supplement to subsidise the incomes of private sector landlords will be able to be phased out. Current spending on the accommodation supplement is at $1.7 billion per year.

We would welcome the opportunity to speak with you about this proposal and look forward to hearing from you.

17 COMMENTS

    • @ Chris Harris: Second rate, not first rate, solution. The 1940’s Labour goivernment is rightly praised for its successful house building project but we are not told that the money needed for it came from the Reserve Bank, which loaned the Government the amounts needed at 1%. As stated, it was not expensive because the money was recouped by the rental repayments. Why is this never mentioned?
      Also it would be better if all the land that is New Zealand was owned by all Kiwis and administered by the government on behalf of its citizens. This means that land can never be sold – it would only be available on long term lease. This would stop all land speculation,which is important because it is the land that rises in value during a speculative bubble, not the house.

  1. In terms of solutions to the housing crisis I’ve been saying something along these lines on different sites and social media for years now. I would guess if any government had planned to do anything substantial about this problem they would have done so already? The question then becomes whose interests are they catering to?

    I’d add I personally don’t believe its the middle class. Much has been made about middle class landlords doing the wrong thing to cash in but my view is this is a distraction and a case of buck passing. Government know there’s a problem but seem unwilling or unable to solve it so they blame private property owners.

    Reality is the private sector has never been responsible for public housing so the simple question is why is it now? Of course its not but it doesn’t stop the finger pointing from the very institution tasked with providing public housing. Paid for by taxes by from the public no less, including landlords. Landlords whose rental income has been fenced in so they can no longer claim rental losses against other taxable income. Hows that’s supposed to help the housing crisis is anyone’s guess as the loss this represents has to come from somewhere. Indeed, its fair to say, this probably will, I predict make, the situation worse.

    The reality is there’s a fat surplus but it doesn’t seem to be getting spent on housing, at least not in my opinion where its needed or in a manner that addresses the problem in a meaningful way. There are as you rightly point out John there are plenty of good solutions so the real question becomes why are they not being implemented?

    • We have the money and land to build houses what we don’t have is the army of workers needed to build it to the scale we need, yet. If we bring in more overseas labour where do they live and this will impact on our infrastructure that is already struggling and bursting at the seams due to poor planning and poor governments

  2. I do not usually agree with John Minto but he is correct to say housing the low income sector is a problem for the government to fix. Why then is he standing for Mayor of Chch on a platform of the council getting involved in social housing. Often those seeking help need more than just housing support to make it through so why get council involved and double up on the social services needed.

  3. The Parliamentarians cannot be relied on due to their conflict of interest as a bunch of property investors. The artificial scarcity is just what they need to prop up their portfolios. Not to mention the inevitable price gouging and cost overruns inflicted by suppliers, or property traders buying them up for themselves and titrating supply. If you trust that lot then I have a bridge to nowhere you could be interested in which is similar

  4. Let the market correct itself (it will because we are about to see the mother of all crashes in a year or two), and wean off subsidies. Then that money can go to increasing benefit levels instead of greedy landlords.

  5. I’d like to see you in the job, John. Dear Bruce Jesson did so well at the Auckland Harbour Authority. For a strong people’s govt we will have to go to the commentators. No one else about. Everyone in the 84 ruling class is coopted and exhiliratingly happy about life above the 90 %.

    This is a pivotal moment when the Reserve Bank and Business NZ are on our side. And a shadow-scared Labour is to the Right.

  6. Preventing councils from cracking down on tiny houses would help mitigate the housing crisis. As would allowing intentional communities to get on with their eco-sensitive plans to increase the housing available on their land, giving them a larger labour pool for sustainable food production and cottage industries based on what they produce.

    Successive governments have enacted clusters of policy (eg the “Jobs Jolt”) that force people into the larger cities and effectively trap them there, even though there’s not enough jobs or housing there, and it starves rural communities of labour, skills etc. Making it easier for working age people to live rurally as a lifestyle choice would reduce demand on urban housing, and it might make it easier for farmers and growers to get seasonal workers when they need them.

  7. Danyl Strype: “….force people into the larger cities and effectively trap them there, even though there’s not enough jobs or housing there, and it starves rural communities of labour, skills etc.”

    I agree with you. Little doubt that it’s also increased urban crime. It was the Clark administration, I think, which was responsible for that Jobs Jolt policy; well-intentioned it may have been, but we’re seeing the unintended consequences of it now.

  8. We have the money and land to build houses what we don’t have is the army of workers needed to build it to the scale we need, yet. If we bring in more overseas labour where do they live and this will impact on our infrastructure that is already struggling and bursting at the seams due to poor planning and poor governments

  9. Michelle: “…MAORI WERE FORCED INTO THE CITIES”

    No. They weren’t. Some of us have been around long enough to know that isn’t true.

    • For economic reasons, D’Esterre, for all intents and purposes they were. It is a global trend as well as here in New Zealand Aotearoa. However, the situation in this country was worsened by the alienation (polite way of saying outright theft) of their lands and assets. So yes, it’s true.

      • So far New Zealand’s 160 year old democratic experiment is yet to fully convert the 700 year old Māori culture. With each treaty settlement the crown has tried desperately to pull the last of the Māori to there side.

        And for a hundred years now Māori, well the young Māori people that I know are told to get educated, and get a real job ect, even though Māori are half as likely to achive a tertiary education.

        So I think these messages of the future is only bright if you go to school and be a good little maari is bullshit. Being a farm labourer or owning a farm and working the land or driving trucks is some of the highest payed jobs New Zealand has. So it’s just as likely Māori sacrifice the bright lights and loud music for a well payed rural jobs.

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