Finally one excellent Labour policy on housing!

 The “deep retrofit” – (upgrading a whole house all at once by installing double glazing, insulation, airtightness upgrades and replacing gas heating and hot water – could get a rebate of 30 percent of the total cost, capped at $18,000).

   Partial retrofits of double glazing or insulation upgrades could get up to $7000, while those switching from gas connections to electric heat pumps and cooking hobs could get up to $3000.

   The scheme would be limited to homes of up to double the median value, and those on a combined household income below $250,000. Landlords would only be eligible for the electrification rebate.

(Note: I haven’t double checked the above details because its late and I’m being lazy)

This really helps existing low income home owners. It stops building of new houses, as they create a lot of CO2 emissions, especially concrete bases, but also reduces the huge amounts of plastic that are in modern homes. And it is much quicker to fix up existing homes than build new ones so it is helping put the quality into affordable housing more quickly. 

This is almost as good as the excellent actions Labour took on a staged removal of interest deductibility for rentals. It probably would have been better to do an instant 100% removal of interest deductibility so the housing market would have gone down more vigorously; and that would have pushed people out of the rental market at a point when we had few foreign tourists or overseas students. That situation would have helped first home buyers most of all. Now forces have rallied to return their previous entitlements. 

Now Labour needs to stop its ruinous encouragement of private home building because firstly, private enterprise simply does not build affordable housing. They must maximise their profit. Secondly,  it is dividing left older voters from younger left voters when both groups are concerned about affordability and liveability. Labour is dividing its voters.

Labour should not encourage private building as it diverts resources away from building affordable houses. The 1930’s Labour govt was in the depression. Private building was low so the situation was perfect with all these building resources idle that the government could contract relatively cheaply with the builders to build affordable housing. This was how Fletcher building got up and running. 

Instead Labour has now done the daft thing of trying to encourage lots of private investment in housing and building on some bizarre misunderstanding of ECON 101 – that more houses built will bring down prices  – when it won’t. Land is a finite monopoly asset – Jacobin has an article.

The article says removing local planning regulations push up prices as it encourages speculators and investors. And if they do build they set prices according to the income of the people in that area. So if they buy a million dollar property and then build 6 units on it. They will expect to charge a million dollars for each unit because this is an area where people will pay a million dollars to live and this is a nice new property. Labour/Greens have the economic logic back to front because they don’t understand the monopoly nature of land. 

The private market is not helping fix the affordable housing problem. The private market went along with building 200sqm house when two houses of 100sqm could have been built for the same resources and the affordable housing market would not be so bad on the supply argument. 

At the end of the day Labour thought they were being super clever about affordable housing and to avoid criticism they went into a deal with National and the Greens but that has completely blown up in their faces. Rather than being ‘clever’ and have policy National helped set up; make a left policy on affordable housing. Take action to close down the private market by putting local planning restrictions back in and pull in the slack of builders, and contract them to build affordable. It’s not hard. The retro-fit policy will help as well. Force houses to be done up and rented out for long term renters in places where it is needed. The government has power, use it. National don’t see the private market as responsible for affordable housing, they think ‘affordable’ is a public duty and not the responsibility of the private sector. So Labour do it.

The Luxon Govt is looking like foolishly setting itself up as repeat of Mr John Key. Key bragged in 2010 of $15B of tax cuts, he then spent the next 7 years hacking into our public services to pay for them and get the books looking ‘okay’. We can see the massive holes in Nationals current budget and it’s excellent that at every chance Mr Hipkins should voters of it.