GUEST BLOG: Chris Leitch – Doing the same, but more of it, won’t fix the housing problem


Dr Eric Crampton of the New Zealand Initiative, Finance Minister Grant Robertson, and Reserve Bank Governor Adrian Orr all appear to be singing from the same song sheet. Let’s just keep doing what we’ve been doing, but do more of it and that will fix all our problems, tra la la.

Dr Crampton must have been fossicking around in the basement at the New Zealand Initiative and come across a cobweb-coated chest labelled neo-liberal bright ideas. In it he’s found a little gem – another way for people who have lots of money they can afford to lose, and those who haven’t that they can’t afford to lose, to have another gamble – a bet on the future price of houses.

It’s similar to the bright idea that caused the 2007/2008 global financial crisis. That was triggered by get rich quick bankers whose idea was to package up house mortgages that were already in default or about to be, and market them as investments with high potential returns to greedy investors prepared to take a gamble.

Hard-working taxpayers ended up bailing out the failing banks, many lost businesses and properties, and the get-rich-quick bankers continued to get their big bonuses.

This time, don’t bet on real houses – just the likely future level of price rises or decreases in the hope that when you want to buy a house you’ve made the right bet. As usual with get-rich-quick type schemes, few will win big, most will lose big. 

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Doing the same thing that got us into the mess we’re in, but more of it.

When the level four lock down was imposed and the government announced a financial rescue package, the first impression was that Grant Robertson had dug out some old Labour Party literature and finally read about Michael Joseph Savage and his use of the credit creation capacity of the Reserve Bank to invest debt-free money to build houses, create employment, and improve infrastructure, to build up the economy. 

Oh the disappointment when it became obvious that the dramatic increase in government spending was going to be financed by a dramatic increase in government borrowing from commercial banks, pension funds, and private investors, with taxpayers footing the bill for interest and loan repayment.  

Doing the same thing that got us into the mess we’re in, but more of it.

After the dour financially conservative Reserve Bank governors of the last few decades, Adrian Orr seemed like a breath of fresh air.

The Bank already provided the government with a zero interest overdraft facility which it used on a regular basis, but suddenly, early this year, first $30 then $60 then $100 billion of newly minted digital money was to be put into the economy. 

Perhaps during the lockdown Orr had been reading Social Credit policy.

But no. Instead of that new money going debt-free to the government to spend on supporting those in need or building state houses or for healthcare, it was going to the already rich to increase profits for bank shareholders and executives, pension funds and wealthy investors, by purchasing the government bonds (IOUs) they already held, and the new ones they got by lending more money to the government. 

With interest rates so low, that Reserve Bank money went into assets, mainly to housing, supported by a lending splurge by the commercial banks who ramped up money creation for lending on housing to help replace their tighter margins with an increased volume of interest income. 

The Reserve Bank has just announced that a further $28 billion in newly created digital money will be available to commercial banks as a base on which to create even more money to lend. Much of that is likely to go into the housing market too, driving prices even higher. 

Doing the same thing that got us into the mess we’re in, but more of it.

The result of Crampton’s, Robertson’s, and Orr’s actions will be a massive increase in debt, a greater transfer of wealth from the majority (hard-working wage earners) to the wealthy minority (bank shareholders and already wealthy investors), and even more people locked out of an increasingly overheated housing market.

So what should be done instead?

The New Zealand Initiative should put the lock back on the cobweb-coated chest and leave it to the spiders, lock the basement and throw away the key, and take up tiddlywinks – a pastime more useful than trying to resurrect outdated failed ideas.

Grant Robertson should actually dig out those campaign speeches of Michael Joseph Savage, and having read them, call in Adrian Orr for a coffee and a chat to arrange a zero-interest non-repayable line of credit from Adrian’s Reserve Bank – which the government owns. 

Quite simply it should borrow from itself to fund a massive state house building program (using factory built pre-finished panels), infrastructure development, investment in hospitals and healthcare, and a substantial lift in low incomes – including those of beneficiaries, through targeted tax cuts.

Adrian Orr should stop feeding fuel to the housing market and use the Reserve Bank’s credit creation facility to provide zero-interest loans to local bodies for infrastructure – water, wastewater treatment, rubbish recycling, roading, and environmental projects, along with replacing any existing borrowing originating from credit creation by the banks. That money, when repaid to the banks, will be cancelled out of existence.

In addition it should make zero-interest funding available to innovative New Zealand businesses such as, for example, those house building factories, Haydon Padden’s production of electric powered rally cars, and EV Maritime’s electric ferries, which could provide substantial employment and export income for New Zealand. 

Then we might be heading in the right direction – an economy based on credit not increasing debt, where the infrastructure that business and the pubic need is put in place, where our most productive assets are in Kiwi, not overseas hands, and where wealth is spread to the majority not further concentrated in the hands of a minority.

Not doing more of the same thing that got us into the mess we’re in.

Chris Leitch
Social Credit


  1. You’re right Chris

    Regardless of the financial aspect – the core issue here is that there is a genuine shortage of housing. When you combine that with ultra low interest rates and a government seeking to print its way out of the pandemic, it’s inevitable that will lead to a bidding war at house auctions.

    However, NZ is literally 98% unoccupied: There are vast tracts of land of low agricultural value available for development, including near Auckland. The only thing stopping us repeating what Savage did is local government and how they wield the RMA as a weapon against developers. Amusing then that the worst offending councils are Labour controlled. 😉

    Another ticking time bomb for this government is the rental market. Having spent three years beating up landlords with political rhetoric and new regulations, these landlords are now cashing up and getting out of the business. They’re selling to recent returnees and first time home buyers who are taking advantage of the low interest rates. So my guess is that Labour will deservedly get an absolute flogging at the next election over the state of the rental market, homelessness and the state housing waiting list.

    Politics aside, this whole affair is yet another example of New Zealand’s tendency to trip itself up with poorly framed but well intentioned regulation.

    • Andrew your implication of NZ having 98% unoccupied land is grossly untrue.
      All of NZ is occupied either by housing, roads, farms, DOC estate or natural wilderness and now rare wetlands. Our environment is being seriously degraded with insufficient action, to stop polluters, create clean waterways and stopping the polluting of groundwater we rely on for drinking.
      Marine environments are being progressively damaged with increasing toxic runoff and overloaded drainage infrastructure.

      “The only thing stopping us repeating what Savage did is local government and how they wield the RMA as a weapon against developers”

      The RMA is to regulate how our natural resources are managed and already much of the wide scale pollution is there because regional councils have avoided managing the natural resources. Councils have allowed developers, dairy intensification, use of fertilisers, toxic waste dumps, felling of forest on hill country, mining and other industrial activity, to create a mess with ongoing consequences that would cost many billions to try and rectify.
      The best market garden land close to Auckland has been allowed to be developed into housing. This means food has to be grown further away and so more transportation is needed daily producing more greenhouse gas emissions.
      Planning is not effective unless a wider view of future needs are identified and infrastructure as well as environment is balanced in the vision of how those future needs are to be met by building on a more comprehensive set of considerations, not just housing nor developers wishes.

      It was J A Lee who organised and managed the State Housing and State Advances loans, not Savage. It was a very different landscape then and many mistakes were made that we suffer with today.

    • Remembering the previous government Andrew completely fucked up the property market to where it is now. Asking this government to come up with a miracle cure for the rabid immigration by National that led to a shortage of housing is rather hypocritical.

  2. What gets me is that, with all the supposedly informed opinion being doled out left and right. No one (else) seems to have noticed that 60 000 mostly cashed up overseas based returnees has suddenly appeared on the market looking to make a killing on real estate (or even just avoiding paying rent)while they wait out a vaccine before abandoning New Zealand once again. I’m willing to bet that more than a few of these show up as first home buyers in the statistics. While we might not be able to stop them doing so, We should, at the very least, allow some sort of cgt in the short term for houses owned less than a year by everyone..

  3. You are spot on Chris.
    I expect Social Credit to receive a windfall of votes in 2023 if this current Govt. continue to govern for bankers and investors.
    From my (admittedly limited understanding), Social Credit is the only party that flat out advocates for the sort of monetary policy that actually allows for real transformation, WITHOUT enriching the parasites.
    Hope to see more Social Credit contributions on The Daily Blog.

  4. The banks have had a bonanza over the last 150 years in NZ reaping massive accumulated profit that has left our shores and sucked live blood from Kiwis prospects.
    Now with NACT having allowing record immigration, the increased importation of cheap bonded labour, overseas ownership of housing, rising overseas student numbers, all contributing to record house prices and skyrocketing rentals supported by banking activity.
    Just as thousands of families have had to scrimp their food budgets then it seems fair that banks can expect a haircut as well. Their privilege to create money can be restrained.
    As bank loan out money they haven’t got thus creating money out of debt, then surely families buying their first home can have a cut on bank loan repayments and interest to be paid.
    Speculators using housing as a commodity can expect to find regulation strongly discouraging and curbing that activity.

  5. This could be the ruination of New Zealand. We have the chance maybe once again to become the Norway of the Pacific, but we will become the new Greece. Worse still it will be self inflicted. Someone should call out the Armed defenders sqaud, but on who, Orr, Robertson,Crampton (all of em). It is that urgent.

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