Bernard Hickey gives real praise to Chris Bishop but then highlights why he is failing

I consider Bernard Hickey as one of the best political/economic commentators in NZ, so when he is praising Chris Bishop, it forces me to reconsider my undying hatred for Chris Bishop…

A housing supply shock in exactly the wrong direction

Chris Bishop wants to unleash a housing supply shock to improve affordability & is revamping the rules for councils, but his actions so far have actually slashed and/or frozen new housing supply

I admire Housing and Infrastructure Minister Chris Bishop’s ambition and plain talking when it comes to improving housing affordability through increasing the supply of housing. He has been one of the rare politicians in recent years to admit he’d like to cut real house prices and rents through a housing supply shock.

And he’s been a regulatory action man to back the big talk in the Government’s first 18 months, repealing the RMA, reinventing Labour’s Three Waters into Local Water Done Well to increase water infrastructure investment and pushing hard to improve housing density rules near city centres, rail lines and bus stations. He has had to fight hard against opponents of densification and more affordable new housing among those in his coalition Government’s parties, and their allies in councils.

Just last week, Bishop again talked up the need for much, much more affordable housing in our biggest cities, rattling his sabres in a speech to about the potential to remove Auckland’s calamitous ‘view-shaft’ rules stopping densification in view of the city’s volcanic cones and forcing councils to budget for 20% faster population growth than Statistics NZ currently projects. He also revealed he would soon have new powers to over-rule council decisions “if they negatively impact economic growth, development capacity, or employment”.

…hmmmm.

It pains me to acknowledge Bernard may have a point.

PAINS ME!

Look, Bishop, being in the pocket of the property speculators, has indeed pushed for reform  so that his property speculator mates can start bowling inner city state houses for slum towers.

He’s certainly put the hard yards in for his Property Speculator Masters the way he did for Tobacco…

National received donations from Russell Property Group and the company’s director, Brett Russell. It also received a donation from Gibbston Valley Wines, which has directors linked to the Gibbston Valley residential project. Projects from these companies are included in the Fast-track legislation.

Chris Bishop, a National MP, assessed projects related to housing, land development and infrastructure. He stood aside for one project, the assessment of Winton’s Sunfield development as he had advocated for it in the past. He did not stand aside for the assessment of Russell Property Group’s Beachlands South, or Gibbston Village.

…The Bish is a team player, and if you are paying him, he’s as aggressive as a pissed Minister talking shit about Stan Walker at an awards ceremony and then leg wrestling Don McGlashan for supremacy afterwards.

The Bish is init to win it.

He’s a right Brooke van Velden.

So Bernard’s praise demands attention, but surely Bernard, The Bish’s gutting of state housing that has shut down construction alongside this Government’s torpedoing of Public Transport is undermining any gains Chris is getting his property speculator mates…

He is serious and is no doubt working hard on all these things, but the Government’s first priority of stopping new debt-funded Government investment and rejecting council pleas for more funding tools and capital grants, along with more public transport investment has created a much bigger shock in exactly the wrong direction.

…oh thank Jesus! I can go back to loathing him…

Stopping the biggest house-builder from building doesn’t help

Last week’s long-foreshadowed announcements by Kāinga Ora of the cancellation of over 100 projects to build over 1,650 new homes is a major part of the negative supply shock, along with uncertainty caused by the freezing of funding and delays in planning for schools, hospitals and public transport projects. The upheavals, again, of rules around District Plans, the RMA and Local Water Done Well, set developers and planners further back on their heels, after two years of interest rate pain that has yet to abate.

The numbers are clear in this chart via Tony Alexander showing dwelling consents have slumped back to pre-GFC norms and the chart below that from Musical Chairs showing consents falling, just as house prices are still falling.

And therein lies one of the problems for Chris Bishop. Relying on the private sector to build homes only works when house prices are rising, because tax-free capital gains are the major incentive for developers and buyers. If a supply shock pushes prices down below profitable levels, they stop building. There is a market failure to be solved by some sort of public subsidy, which Bishop is removing.

…and that’s the fundamental problem.

We have market failures in NZ because we don’t have the population density to make the free dynamics of competition work efficiently.

We are two giant sparsely populated Islands who have always relied on the state b being the foundation stone to our economy.

By cutting back on the state in the hope the market will step in and do it cheaper misunderstands the problem and only exacerbates it.

PS – Fuck Chris Bishop.

 

 

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