Why ask this when we have crazies on the right still trying to find the perfect implementation of neo-liberal economics when it was their very ideas that have impoverished us all. Well I ask because the left on housing is still trying to follow these very same poolicies – (they can’t be called real policies). And the left is attacking it’s own voters by doing this
So what i’m on about is RMA(Resource Management Act) reform and dealing with our affordable housing crisis.
The past still lives today – the truth
We have an affordable housing crisis because under Rogernomics/neo-liberal economics the government was seen as ineffective and inefficient therefore government and taxes should be smaller. So government massively pulled out of the supply of housing because private enterprise could deliver affordable housing quicker and cheaper. Now we have 40 years of empirical evidence that they don’t.
Jacinda’s government tried to tackle the housing shortage by stepping up house building but the new National coalition government with Chris Bishop has abandoned and permanently damaged as many social housing projects as he could. SO back we go and the responsibility to supply housing now sits fairly and squarely with private enterprise to build affordable housing.
Private enterprise – the truth from the evidence
History shows private enterprise does not build affordable housing. By its very nature it has to maximise profit and that means scarce building resources can’t be used to make quality affordable housing as a bigger profit can be made building for people who can afford to pay more. It would be philanthropy to build without maximising profit; and it would give a competitive advantage to your competitors.
To maximise profit you don’t compete on price; you price near to your competitors so as not to set off a price war which is damaging to profits. Then you follow the higher spec builders as they raise their prices. If you compete on price you reduce profit and risk going out of business.
If you don’t believe this there are thousands of examples e.g. phones, Apple and Samsung, largely the same product, Samsung can’t push Apple out as they have a market niche. So Samsung use high end spec differences (that actually cost very little extra) to push some products closer in price to Apple; i.e. maximise profit without price competition.
RMA (Resource Management Act) reform – the blame game; and the ideological capture of the left by the right wing neo-liberal economists
Because of the current affordable housing crises investigations were made for causes. The private enterprise model culprit to deliver affordable housing was right in the spotlight, but…no.
The developer possums, et al, fishing around looked straight into the headlights with wide eyes and said ‘it wasn’t us’. They pointed to the RMA. i.e. we would have built all the housing under the sun but the pesky local communities and local democracy, stopped us
And the left took it; the bait, the hook, the line, and the sinker.
For example a research paper by The Infrastructure Commission March 2022 “The decline of housing supply in NZ. Why it happened and how to reverse it’, is simply neo-liberal economic garbage placing the blame on planning regulations. They identify earlier periods of large housing growth as built during lax planning regulations while downplaying the reality of the significant role of government contracting for affordable housing.
Also:
demand was limited for larger expensive houses, because of the restricted financial ability of working people to pay, as families were much larger then.
the post world war 2 period still had native forests (probably taken/pressured Maori land sales) that could be exploited at relatively low cost to build cheaper housing.
there was also huge manpower resources lying under utilised directly after the war, but the boom soon dealt to that.
low education attainments and expectations in New Zealand also helped ensure a ready supply of new workers into the lower skilled jobs of the economy, like in housing, helping keep costs low.
But the left were sucked in that the current housing affordability problem was the RMA. A rather low information understanding.
The left RMA understanding means attacking their voters
In Wellington for the local body elections we have some people in Labour and the Greens happily trashing a core tenet of left philosophy that ordinary people should have a say in their local community. They celebrate RMA reform as crushing NIMBY’s (i.e. their voters in Wellington – an ageist, anti boomer, misinformed analysis) when really they are championing for an authoritarian unbridled neo-liberal power of individual developers (Atlas Shrugged) to do what they want without regard for others rights.
They falsely believe they are championing ordinary people on the mistaken belief it will deliver affordable housing; but it is proven private enterprise does not build affordable housing as it makes no sense for them to do it. Philanthroppy does exist but it will never fix systemic problems, e.g. the new green social housing building in Frederick street has not stopped homelessness in Wellington.
And the move to land value rates across the whole city is again terrible economics for ordinary people. The CBD should definately be a very high land value rate system which will help force land bankers to use it or pay big time for it. But land value rates for current residential areas that are central will simply force poorer people to live away from the central city. It will do the exact oppersite of densification and up building. It will simply priledge the wealthy who will return to the city and be able to buy up multiple residences to build low level luxury compounds. This is currently happening in some areas of Melbourne though the driver in that case is unclear.
The left moral and intellectual vacuum
Local body elections are a time for council hopefuls to stand up for ordinary people We have to vote to make sure they do. The left would do well to modify their economics and attitudes to voters.
Never forget, the left gave us Rogernomics.
Therein lies the answer to the question.
Grow up, NZ Labour was a social Democratic Party-class peace justified by useful reforms-state housing, national infrastructure, free health care etc.
A neo liberal clique delivered Rog’s plans by stealth in 1984, and systematically purged leftists via the backbone club etc. Even Jim Anderton was forced out. Many NZ leftists opposed Rogernomics including me and are on record for having done so.
Rogernomics was just our version of Reaganomics and Thatcherism. aka neoliberal economic policy. A global level policy, meaning it was think tank created, not created by a political party and or one specific political side of the so-called political divide. Best illustrated by the fact that it remains untouched, after many decades and regardless of what political side/party has been in power. Billionaire funded/created think tanks are a key link between big money interests and the people with the power to implement their interests, aka the political class.
kccc Unfortunately the Left comes from us, and so does the Right. The role that those of us looking on have, is to be aware of our human trends of mind and action, talk peace and do war etc. So can’t make godly statements about the left and rogernomics with that in mind.
On the other hand we understand that some ideas spread like diseases, and the left has was infected before f..g R..er was encouraged – with some trick of the mind or pocket to embrace neoliberalism, that must have danced in like salome with the seven veils, to lie down and be seduced, and think of riches and economic heaven.
Thanks for this analysis.
I note there was much less red tape during the post war housing boom. A relative built a house in Upper Hutt in 1963. The permit cost 15 pounds about $800 today. He had to submit a drainage plan that a council officer signed off while he waited. He showed them a standard set of 1960s bungalow drawings. An inspector checked drainage, footings and final build. No drama.
I wanted to build a garage and workshop in Auckland on a ‘difficult’ site. The planner quoted $60,000. Too much drama.
Excellent article.
6 years in charge and Labour achieved little to help bring housing prices down.The move on RMA and material cost by this government shows they are better drivers of the economy.
The Natzos are certainly better at driving people into homelessness!
The CoC Govt. are are pack of vandals-who with any good intent would stop hundreds of approved in progress state house builds, framed, some with roof on, and leave them to deteriorate on the basis of ideology?
Absolutely Trevor.
Absolutely Trevor.
Trevor:
> Labour achieved little to help bring housing prices down
When Hipkins lost the election in 2023, Grant Robertson had put in place a whole raft of policies that had started to make housing more affordable, both to buy and to rent. Most of which were canned by NatACT First.
Notably removing tax exemption from rentals. The NatACTS go on and on about increasing “supply”. But the only supply that affects prices is the supply of houses *currently available to buy*. Making landlords pay tax on their rental businesses (which is what renting out a building *is*) made it marginally less profitable to buy houses and rent them out, resulting in a lot of rental houses going on the market. Increasing the supply that actually brings prices down.
> The move on RMA and material cost by this government shows they are better drivers of the economy.
All you’ll get from hamstringing the RMA is more leaky buildings and Pacific Parks;
web.archive.org/web/20110215053629/https://www.stuff.co.nz/sunday-star-times/features/4647685/The-forgotten-people
Shoddy housing, built in dumb places. I haven’t looked into the details of their building materials policy but I’d be surprised if it wasn’t similarly misdirection.
But even if those things actually addressed the housing problem, “the economy” in the abstract is irrelevant. We’re talking about our society’s ability to use its resources to provide housing for everyone who needs it. Whether this makes “the economy” grow (or shrink, or neither, or both) is neither here nor there.
Anyone know the status of the rotting Rongotai Road (former state???) houses? Perfectly salvageable and on a frequent bus route.
Are they/have they been flogged off to be replaced by McMansions or newer units for what a developer will deem to be an “adequate return”?
You’ll note @Steven there are older houses in Mount Victoria that are now in better nick than many new builds and brought up to a good standard at far cheaper cost
But Nicoliar said on RNZ this morning her party have built thousands of social houses she must be counting the ones Labour started as I can only see empty sections. Geez this woman has no moral compass she can lie through her teeth and smile at the same time. And she must have mentioned Labour 10 times.
and now she thinks she will have a hundred new supermarkets next week .They may come but most will go broke because there is a limited population to fleece.The answer is to get the whole salers to sell to all of the small shops at the same price as the big players .Then straight away you have 1000 new outlets competing on a level playing field .Not that hard and costs nothing to implement .
gordon walker:
> The answer is to get the whole salers to sell to all of the small shops at the same price as the big players
AFAIK the Grocery Commissioner already did that. But I’m not sure how it’s meant to be enforced. How does an independent shop know that they’ve been charged more by a supermarket wholesaler than it charges stores in its own network?
Either way, preferential pricing is only one of a whole series of anti-competitive behaviours common to the duopoly that need to be regulated out of existence. Landbanking potential supermarket sites is another.
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