NZ votes ‘yes’ to housing ponzi economy

By Leith van Onselen

In the months leading-up to Saturday’s New Zealand election, various Roy Morgan Research surveys revealed significant voter angst over housing, specifically concerns about affordability/increasing prices as well as homelessness/housing shortages.

Labour went to the election with an excellent housing platform that addresses both supply and demand with negative gearing reform, banning foreign buyers of existing homes, tighter capital gains taxes, removal of urban growth boundaries, plus bond financing for infrastructure. It also outlined a plan to reduce immigration by around a third in order to relieve chronic housing and infrastructure pressures.

Given the National Government’s epic failures on housing, as well as recently thwarting legislation that would have removed Auckland’s urban growth boundary and freed up density controls, I was expecting that Kiwi voters would swing to Labour and thrust them into government.

However, the latest results from Saturday’s election shows that National has dominated the vote; albeit not by enough to gain the 61 seat majority required to form government (it effectively sits on 59 seats with the support of ACT):

Labour has a working agreement with The Greens to form a coalition government, but this still leaves it nine seats short of a majority.

This leaves Winston Peters’ New Zealand First (NZF) as the ‘kingmaker’ that holds the balance of power and gets to decide whether National or Labour will form government.

The ‘nationalist’ NZF should be more oriented towards Labour given Peters has strongly backed both housing reform and lower immigration. However, it is unclear whether he could work with the left-leaning Greens.

Peters said yesterday that he had started talks with members of his party about who to support in a coalition government, but declined to put a timeframe on a decision.

Meanwhile, Labour’s housing spokesman, Phil Twyford, still holds hope that Labour can form a coalition Government with NZF:

So there you have it – a hung parliament with National probably in the box seat to form a minority government given its huge advantage in seats.

Despite Kiwis voicing strong concerns about housing in the lead-up to the election, nearly half voted for a continuation of the status quo: an immigration-fueled ponzi economy, as clearly articulated by JBWere’s Bernard Doyle:

New Zealand has been in a productivity recession since 2012. Not that you’d notice from headline GDP numbers, which continue to print impressively…

In the absence of productivity gains, our economy has relied on more people, working more hours. Net migration provides a conveyor belt of fresh labour, but it comes with attendant bottlenecks in housing and infrastructure…

An economic growth model that is reliant on pushing the capacity envelope can be prone to mishap. Against that, our key sources of demand: agricultural commodities, tourism and net migration, are volatile and have a habit of evaporating at short notice. Moreover asset prices have become a vulnerability: both housing and equity markets in New Zealand are priced for perfection…

The New Zealand economy appears locked in a volume game. Since the turn of the century, the economy has grown in size by around 50%. However most of the growth has come from more workers, working harder…

High immigration is touted as a solution to alleviating capacity pressures, but it becomes a game of bop-a-mole. Shortages of labour in specific sectors (agriculture, tourism) may be relieved, but exacerbated in others (housing, infrastructure, education). Why? Migrants, like locals, need accommodation, transport, schools, hospitals and other necessities of life…

Assuming National earn a fourth term, watch on as housing, infrastructure and living standards continue to get crush-loaded.

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Unconventional Economist


  1. Which is why nothing will change in Australia, either! Why do you think we have this onslaught of multi-culti being shoved down our throats for the past nearly 12 months?

  2. makes you wonder whether people deep down really want cheaper houses. they might protest or express their concerns out of guilt in explicit polls but subconsciously plenty feel very proud of themselves for sitting on their swelling equity pots of gold and basically are fine the way things are. there’s too much ego – and a perception of a big, but phony – net worth in the game here for people ever to really be motivated to want the government to bring about real change.

    • People actually believe that all the money they pour into the mortgage is like a savings account or like buying gold bars. While that belief persists, you will not get any change, because at the moment being given a mortgage by the bank is seen as a golden ticket.

    • We might reach a tipping point when 51% of the voters are renting. The renters probably want real estate prices to crash but renters are not yet a majority.

      On a side note, you can put on your resume that you have completed year 12 – nobody checks. I have worked in several jobs and was never asked to produce my year 12 certificate in a job interview.

    • There are a couple of inherent problems; while Labour, or rather their housing expert Phil Twyford, understand that you have to allow splatter development (i.e. no growth boundaries), which is the reason that their proposed reforms stand a chance of working, the average NZ voter hasn’t a clue about the land-economics complexities. They, and most of the MSM talking heads, want to have their “compact city” cake and eat their “housing affordability” cake as well. It was a milestone in political history when Twyford “got it” about this. It is similar to Labour’s Roger Douglas getting insights about the benefits of free-market reform in his time.

      And Labour was talking about all sorts of reforms on the tax side, that unfortunately, NZ-ers are obviously uncomfortable with.

      Jacinda Ardern and Labour failed to sell “tax reform” as a “rebalancing”, where existing taxes will be mitigated as new taxes are imposed. GST was always sold to NZ-ers, as “an income tax cut”, hence the support for it. The impression conveyed to NZ voters, was an increase in the overall tax burden, in the form of new taxes on top of existing ones. One can’t help suspecting that Jacinda Ardern found it distasteful and impossible to ever say the words “tax cut” other than when criticising National’s proposals for tax cuts.

    • Of course they dont want housing prices to fall. There is no compulsory super in NZ, and hardly anyone does it voluntarily. Houses ARE Kiwi’s super. So the more they are worth, the more secure they feel.
      Plus National promised FHB a $30k handout.

  3. Labour went to the election with an excellent housing platform“… talk about biased reporting! Yes there is a mood for change in NZ, but putting up essentially an republican anarchist, will never attract the Maori vote! Nor the youth vote that they desperately need…

    NZ Labour threw that election on a neophyte. Who couldn’t coherently put anything together, other than “I will change everything”! Its not like no one has heard that line before…

    And lets be brutally honest, that housing policy was zip, it wouldn’t have solved anything! Because it doesn’t address the real problem. Its just PC words with no budget behind them.

    Bill Shorten, take note.

    there is a real lack of analysis and cynicism with much of this NZ diatribe over the past couple of years. Its biased, and not based on the facts on the ground. Its all NG and MP – and guess what! It did absolutely nothing… as some of us suggested several years ago.

    • I don’t agree that “excellent housing platform” is a biased assessment at all. Labour didn’t lose support “because of” their housing platform. I don’t support Labour overall, but I supported Roger Douglas and his reforms in his time, and Phil Twyford “gets it” about housing markets in a similar way to Roger Douglas getting insights back in the 1970’s, about those “evil” free markets actually having some benefit.

      In contrast, National’s “housing” team led by Nick Smith, are arrogant, closed-minded, Muldoonist “state-provided solutions” ideologues who are a disgrace to any political heritage right of centre. They have been ignoring years of advice from the nation’s top economists like Arthur Grimes and his colleagues, not to mention Don Brash (an economist and former RBNZ Governor as well as a one-time politician) and honest advocates like Hugh Pavletich, the late Owen McShane, the distinguished Oliver Hartwich and colleagues (Hartwich is massively over-qualified for NZ) – and advice from visiting international academics like Peter Gordon, Paul Cheshire, Alain Bertaud and others.

      National is a disgrace, equivalent to Australian governments disgrace in their dereliction of duty and service to a rentier-capitalism racket. Labour in NZ is where enlightenment has taken place, thus far.

      It should be said that the minnow ACT party is clear on this and always has been.

      • I didn’t say that Labour lost the election because of housing – rather I blamed a nutty leader, whom if anyone one thought more than five minutes, would go, nah… moreover, I made the point that the “excellent” housing policy did nothing to address housing prices, as it didn’t remotely address the source of demand!!!

        Everyone knows this point – therefore, its no housing solution at all !!! Therefore, its not an election issue. Despite yours and others contention.

        BTW – I like Rob Muldoon, the only problem was that he was 40 years before his time… if he was alive now, he would be called a visionary, with his profligate fiscal stimulus packages. A lot of people don’t remember, when when David Lange won the election, and he saw the books, he recanted on every election promise… NZ was two weeks away from international default.

        Still liked the piggy though… his heart was in the right place.

      • Researchtime, you aren’t very coherent. Even if you deny the evidence (eg from many US cities) that virtually ANY level of housing demand CAN be coped with if you have sufficient supply elasticity, wherever did you get the idea that NZ Labour has no policy to address the demand side? They also had immigration reductions as part of their platform, just not as extreme as Peters. Peters proposed immigration reductions are absurd, unworkable unless you literally stop NZ citizens from returning home after a time abroad, or provoke an exodus like Muldoon did.

        You respect Muldoon??? Horrors!

        Yeah, his “Keynesian stimulus” ideas have returned to fashion but that doesn’t make them right. He sure didn’t get the highway networks built that Auckland and other NZ cities needed (and that had already been postponed), and what he did do, was classic crowding out of the private sector. As you admit, NZ was on the brink of sovereign default, and I often wish that this had just been allowed to happen, and that lessons had been learned an even harder way than Rogernomics, which took integrity, principles and courage. There is now far too much retrospective condemnation of the reform era, as if counterfactuals like just letting sovereign default happen would have had a happy ending. Venezuela in the South Pacific, anyone?

  4. Mr Winston must demand that immigration be paused for 10 years to allow infrastructure and wages to catch up. That is his raison d’être. He will destroy his brand if he refuses to pause mass low-wage immigration.

    Sure, we can let in people on $150k/year but the vast majority are closer to $15k/year.

    The Greens vote in AUS peaked in 2010 because they had Gillard over a barrel till 2013 but: they refused to put in a national recycling program, refused to stop the 457 visa rort, refused to give poor me a carbon compo cheque, refused to touch negative gearing. And the carbon tax they put in was massive – $23/ton while it was only $10/ton in EU!

  5. Winston Peters is a Muldoonist, Statist-solution man. Every time he talks about housing, he talks about a return to the 1970’s in State housing, State development and construction, government-provided artificial low-interest loans for first home buyers, etc – and he never mentions 1970’s freedom to convert rural land to urban use, or private-sector developers building thousands of homes per year (several of them used to do this; now there is just one developer doing more than 1000, and no-one else doing more than 200). Peters, like Muldoon, instinctively hates the private sector, business men, and market freedom. He would reinstate feather-bedded protected NZ cottage industry and outrageous rip-offs of NZ consumers for inferior over-priced local manufactures. He hates private schools and private hospitals. He sabotaged health system reforms that were unleashing private-sector efficiencies, in 1996, as part of a coalition agreement.

    He might support Labour’s full reform package on housing, but ideologically he is more likely to sabotage the most effective parts of it.

    • Ironically, although Peters has an anti-immigration and xenophobic platform not unlike Pauline Hanson’s, the other policies that Peters espouses, back in the time of Rob Muldoon, led to NZ hemorrhaging population – to which Muldoon’s response was to make it hard for Kiwis to leave, by effectively freezing their assets if they did so. That was NZ’s dark ages in “modern” politics.

      Of course Muldoon was loved by his supporters, not least for his quick if abrasive wit. His famous response on the Kiwi exodus to Australia in his time, was that “it raised the average IQ level in both countries”.

      • Xenophobic? 40% of MEL and SYD are foreign-born. That is not enough globalism?

        What % of Oslo, Tokyo, Munich are foreign born?

      • I must admit I don’t object to inbound-migrant-driven growth as long as it is properly provided for (eg Houston was 4.2 million people in 2000 and is 6.6 million now, and the house price median multiple has never even hit 4, and highway building has kept congestion constant at around 27 minutes per hour of driving at peak) – and provided that the local culture is confident and the immigrants are coming with the intention of assimilating and partaking in the western enlightenment project.

        I think you will find that Oslo and Munich are swamped with immigrants too, and much worse-quality ones than what this part of the world has on average. But Tokyo is a good example of a preserved monoculture. The stats on Wikipedia for Munich are from 2005 and it was 23% foreign-born then. Given the policy trend since, it will have risen substantially. Oslo appears to have hit 30% and is expected to hit 50% by 2040.

        I don’t agree with the suicidal multi-culti pandering policy, or the insane urban planning that leads to immigrant ghettoes. By the way, Houston and Dallas are the least segregated and most diverse cities in the USA, thanks to the affordability of the suburban housing dream for all as the rapid growth has been efficiently enabled.

        If you want to drag up the “but they failed to plan for flood protection” argument, this is BS. No city anywhere is planning in a way that would make them sustain a weather event like Houston just had, and in fact the most disaster-prone cities in the world are the ones where cram, stack and pack “compact city” policies are happening, and there is no way the existing aged drainage systems are even able to be expanded, let alone that the utopian planning slope-brows are even caring about this.

  6. reusachtigeMEMBER

    This is great news and just confirms that the right sort of people love the vibrancy that mass immigration gives us and want their house prices and property investments to keep booming. Youse are all on the wrong side of history… and poor! Go work out how to profit instead of whinging!!


    It is not clear until special votes are counted …

    Special votes: What you need to know – NZ Herald

    … and coalition talks are concluded with New Zealand First with its leader Winston Peters.

    As the NZ Herald article above outlines, the special votes are likely to lift the Left vote.

    Labours Phil Twyford is correct within the video clip above.

    It is important too to understand the significance of the opposition political parties working together within the MMP environment … as illustrated with the RMA amendment legislation back in March (much the same with the HASHA legislation September 2016) … reported by Bernard Hickey of Newsroom soon after …

    7. Just in case you missed it…

    One curious coda to the RMA debate that concluded last week was that the Opposition parties plus ACT and United Future all voted again during the third reading debate for amendments that would have abolished Rural Urban Growth Boundaries and allowed the financing of infrastructure bonds paid for with targeted rates.

    The amendments were defeated by National and the Maori Party.

    The irony of a Government that has railed against restrictions on land development by councils voting against removing those restrictions should be noted. And also that the proposal for infrastructure bonds was backed by the right-leaning New Zealand Initiative and voted for by the Greens and Labour. Strange times indeed.
    The online Fairfax poll on favoured political party combinations needs to be considered …

    Poll: Which governing arrangement would you most like to see? … Stuff / Fairfax NZ

    Without going in to a long winded narrative, I’m rather comfortable in how all this is playing out. Like the majority of the 56,000_ participants in the above Fairfax poll, I expect a Labour NZ First Greens Coalition Government by mid-October at the latest.

    • Note within the Fairfax online poll … where near 60,000 have participated already … the ACT NZ First National combination is just favoured by 4% … whereas the NZ First National combination is favoured by 34% !

      That speaks volumes about ACT and its leader David Seymour.

      Even caretaker National Prime Minister Bill English has made it clear that the far Right party ACT will not be part of any coalition talks.

      It seems likely National will no longer tolerate ACT … and no longer ‘gift’ it the Epsom electorate.

      ACT is only of any benefit to National if the former can perform well on the party vote. That’s not the case … as the figures within Leith’s article above illustrate.

      New Zealand First leader Winston Peters has no time whatsoever for ACT and its leader David Seymour …

      Watch: ‘The day I stop to think about the ACT Party …I’ll check myself into a lunatic asylum’ – Winston delivers two fingers to David Seymour … TVNZ

      NZ First will not need to be reminded what happened to the Maori Party when it went in to coalition with National.

      ‘Friends’ are absolutely essential within an MMP environment.

      National has massive problems going forward.

      • ACT cut adrift …

        ACT’s David Seymour cut adrift by Bill English ahead of negotiations with Winston Peters |

        It’s been a faithful National Government support partner for nine years, but Prime Minister Bill English has told ACT its services are no longer required.

        ACT leader David Seymour made it back into Parliament off the back of a long-running deal in which National has gifted the party, which failed to register one per cent of the party vote, the Epsom electorate. The deal has occurred in the past as a way to ensure National would have an extra seat in Parliament, however as English prepares to go into coalition negotiations with NZ First leader Winston Peters it’s apparent he considers it too difficult to negotiate between them.

        “I’ve spoken to David Seymour, I think he understands how the numbers stack up,” English said. … view & read more via hyperlink above …

        My sense is that the 2017 election is the last time National ‘gifts’ the Epsom seat to ACT.

        National will be very much on its own.

      • Phil Twyford calls out Bill English for ‘overreaching’ | Newshub

        … extract …

        … Mr Twyford said Labour is “back in the game”.

        “We’ve worked with the Greens and NZ First in Parliament now for quite a few years. We know each other pretty well. I’m confident that there is both the policy alignment between these three parties and the personal relationships that we can stitch something together. But we all know Winston is in the box seat right now.”

        He said there has not yet been an official phone call.

        “Winston himself said yesterday he’s going to take two weeks – he’s not interested in negotiating until the special [votes] are in.”

    • Yeah but the young aren’t helping, by failing to even register as voters. But hopefully this correlates with their wisdom level, when they do register and vote, they might do so more intelligently. Most of the little dears are loyal Greenies, so they get no sympathy from me if they whinge about the cost of housing, and expect taxpayers to build “affordable housing” for them, when NZ has land to burn at $10,000 an acre.

      • Don’t worry Phil. The young have signed up for l$g&[email protected] postal vote shock I understand puts them on the electoral role. That said why would anyone bother to vote between lib lab green. Manyhave better things to do with their time on Election Day. Hardly matters anyway – all gifts will keep immigration gates wide open like bikie run brothels when navy is in town. As long as it benefits them. “#selfinterest

      • After reading the policies of NZ First, my first assumption is that they should party with the Labour Party.

    • Young people get older too. By the time they are paying their own mortgages, trying to put their kids through Uni, and caring for elderly parents, they wont be so idealistic and naive as to vote for a party that will make their lives more difficult so the new generation of kids can have it easier. It will be all “when I was your age, I had to give up avocado on toast and have a 2 year old iphone in order to afford a house”.

      • LOL the thing is FHB are dwindling, and home ownership is down. SO eventually there will be more people without owning houses then their are people with houses. So when the workers unable to build wealth who do you think they’re going to target?

  8. NZ First should be cautious before getting in bed with the Nationals as the trend would suggest that parties that do that go backwards. They didn’t do particularly well this election despite being kingmakers post election.

    What is noticeable is that other than the one ACT member, the rest of the electorates went to either Nationals or Labour. So things seem to returning to a Two Party plus system as opposed to the multi-party system that has been happening since the start of MMP. Alternatively, it could looked upon as a four party system with Right, Centre Right, Centre Left and Left Parties.

  9. Everyone assumes that National is opposed to housing reform, when perhaps, they were simply not dumb enough to election campaign on it (knowing it was a losing position). However, if they can palm such reform off on NZ First as the price the coalition has to pay, so as to have someone else to blame in the next election if it all goes horribly wrong (whilst still claiming credit if it all goes right) they may well give Winston what he wants. Plus it will cut the legs off Labour in 3 years time.