NZ housing minster lays out reform masterpiece

By Leith van Onselen

I noted in the lead-up to the New Zealand General Election, held on 23 September, that Labour had an excellent housing platform that addresses both supply and demand distortions via negative gearing reform, banning foreign buyers of existing homes, tighter capital gains taxes, removal of urban growth boundaries, plus bond financing for infrastructure. Its plan to reduce immigration by around a third is also sound, and would help to relieve chronic housing and infrastructure pressures, especially around Auckland.

Last month, New Prime Minister Jacinda Ardern gave her ‘speech from the throne’, which confirmed that the Government would pursue its housing reforms in-full. New housing minister, Phil Twyford subsequently confirmed the timeline for these reforms in an interview aired last week on Interest.co.nz.

On Friday, Twyford gave a speech to the Salvation Army whereby he explicitly set out the direction of Labour’s housing policy. Below are some highlights:

The housing crisis is quite unacceptable for any New Zealander.

It offends the sense of fairness and opportunity for all our country was built on.

We have a broad housing reform agenda and we are already taking the first crucial steps towards fixing the crisis.

Central to that agenda is a reassertion of the role of state housing.

We are going to put the state back into state housing.

Our Government rejects the view that state housing is a redundant idea from the 1930s and that modernisation means selling off the houses and getting charities and the private sector to do this work instead.

Given the state of the housing market right now, it should be clear to anyone that state housing – decent, secure, income-related rental housing for the people that need it most – is needed more than ever.

Our Government will not milk Housing NZ for profits. We will reinvest any surpluses back into the building of new homes and upgrading existing ones.

We will stop the mass sell-off of state housing, and as part of our 1st 100 Days, the Prime Minister will have more to say on this shortly.

I want Housing NZ to be a world class public housing landlord…

We are going to build a lot of houses.

And we are going to build whole communities…

Through Kiwibuild we are going to build 100,000 affordable homes for first home buyers, half of them in Auckland.

We are going to set up the Housing Commission, a national urban development authority that will lead large-scale projects to build whole communities, with the jobs, and transport infrastructure and open spaces and amenities that communities need. Along with the housing types that people need at costs they can afford.

These communities will have a mix of state and community housing, affordable Kiwibuild homes for first home buyers, and open market homes.

One of the big differences between our Government and the last is that we are going to build affordable homes, and public housing, wherever we possibly can.

Because if we don’t, who will?

We are closing the door on speculators. We are introducing legislation in our first 100 Days so that only citizens and permanent residents can buy existing homes. We are pushing the bright line test out to five years so if a speculator sells a rental property within five years they will pay income tax on the capital gain.

We will also shut down the negative gearing tax breaks that give speculators an unfair advantage over first home buyers.

And our Tax Working Group is being asked to design tax reforms that will tilt the playing field away from real estate speculation and towards the productive economy that creates jobs and exports.

Yesterday we passed the Healthy Homes Guarantee Bill that will set minimum standards to make sure rental properties and warm and dry. Backed up by a beefed up compliance capacity within the Ministry that will see risk-based auditing and investigations.

Next year we are going to review the Residential Tenancies Act to deliver more security of tenure for renters. Because well over a third of us renting these days we cannot continue with the current outdated law.

All this is supported by what I call our Urban Growth Agenda. It is a set of reforms designed to allow our cities to make room for growth, and bring down the high cost of urban land that is at the heart of these problems.

I know this is an ambitious agenda. But the scale of the crisis demands ambition…

The Sixth Labour Government’s housing reform agenda is also about nation building.

It recognises we have a crisis, and is bold and broad in response. It has the courage to tackle deeply entrenched problems that have been allowed to fester for too long.

It redefines the role of the state, and gets it back into the business of mass home building.

It will tame the out of control speculation that has been so destructive, and modernise rental laws.

In building 100,000 houses, re-inventing state housing, and building dozens of thriving modern communities around New Zealand, it will change the face of our towns and cities.

It will create the conditions for our people to thrive.

Once implemented it will amount to the biggest overhaul of housing policy since the time of the First Labour Government.

While the proof of the pudding will be in the eating, Twyford has ticked all the right boxes, tacking not just demand and supply-side reforms, but also changes to rental laws (to improve rental standards and security of tenure), as well as broader tax reforms to shift the New Zealand economy away from ponzi housing speculation towards sustainable productivity-driven growth.

Labour’s reforms are clearly a huge improvement on the former National Government’s do-nothing approach. Australia’s delinquent politicians on the fake left and right should take note.

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Comments

  1. Glad to say I got to vote for NZ Labour, after wasting years supporting the sham that is the ALP. I too wish that the ‘left’ back home would take some notes, but instead I would say to the rest of my generation: get out while you can

  2. Thank Winston Peters.

    Here is his housing agenda – May 2017.

    https://m.youtube.com/watch?v=zXksT_-DC3I

    “Unlike the others’ (both NZ Labour & the NZ national party intended to retain the high migrant intake & do little on solving NZ housing crisis).

    “We will pause the migrant intake”.
    “We will stop foreign ownership housing speculation”
    “We will reserve land and build lots of houses”
    “Using State funds – Affordable (State) houses for everyone, for the poor & needy so they don’t live in social degradation ( in tents camps etc) in their own country”.

    New Zealand is the mini me of the same much larger issue in Australia. NZ is the third world backdoor & transit stop to get residency, then enter Australia on a NZ Special Category Visa (SCV) with full Australian work rights & access to Australian citizenship.
    Their migrant impact will clear away once they get those NZ residency stamps and that problem then enters Australia.
    A third of NZ SCV coming into Australia are now non NZ born.

    Australia.
    1.8 million migrant grants in the last decade as Citizen/PR – now say nearly 2 million with the birth rate & extended family reunion.
    Occupying some 450,000 dwellings.
    88% concentration in Sydney & Melbourne.
    Sydney 1.1 million, Melbourne 700k, 200k elsewhere.

    Plus – another 2.7 million mostly third world unskilled Migrant guestworkers on pretext temporary, or illegally working visitor or tourist visas – (of which at least 1.8 million are illegally working).

    92% concentration in Sydney & Melbourne.
    1 in every 5 people.
    1.4 million Sydney, 1.1 million Melbourne, 200k elsewhere.
    Occupying an additional 450,000 ‘ex Australian’ dwellings in mass scale foreign owned bunk & room share subletting.

    That’s 900,000 dwellings in total.
    Mostly low end established housing bought by new migrants or foreign syndicates & proxies to run as cash in hand sublet migrant guestworker bunk share accomodation.

    790,000 in Sydney or Melbourne.
    And we wonder why we have a housing bubble or an affordability crisis..

    Lest we forget.
    Liberal nationals – open door mass immigration, no controls, no tracking, token gestures, lower wages.
    Do nothing on Australian unemployment and the affordable housing crisis. 50,000 homeless.

    Labor – do nothing, in the pocket of the Chinese & foreign interests. Open door migration, big Australia.
    And look at their the track record.
    NRAS – national rental affordablity scheme.
    $4.5 billion pledged by Rudd grandstanding in a homeless shelter / then redirected by Tanya Plibeserk the Member for Sydney away from Australian poor & homeless to her Uni & developer cohorts with incentives for foreign buyers to house ‘international students’ as “poor people can’t pay rent”.

    Neither Labor or the LNP will do anything about migration or housing affordability – unless forced to by someone else holding the balance of power.

    We need a Winston Peters.

  3. Peters is an ally of convenience who is NZ’s Pauline Hanson on immigration. That is, he is right about it for the wrong reasons. On housing, he shows his Muldoonist, private-sector-hating colours by talking about massive State involvement, and not a word about abolishing growth boundaries and central planning.

    Phil Twyford, on the other hand, has something of the spirit of Roger Douglas about him, I am confident that he understands housing economics possibly better than any other politician in the entire western world today. But his problem will be whether his dinosaur colleagues, including Peters, accept that a lot of houses, in fact the greatest majority by far, are going to need to be built by the private sector, on greenfields land, under competitive land supply regimes, if there is to be genuine systemic affordability of housing. Otherwise the allocation of State-provided “affordable homes” turns into a lottery with winners and losers – and the losers who are left to pay their own way in the still-distorted “rest of the market” are actually worse off than if the State hadn’t got involved.

    • Otherwise the allocation of State-provided “affordable homes” turns into a lottery with winners and losers – and the losers who are left to pay their own way in the still-distorted “rest of the market” are actually worse off than if the State hadn’t got involved.

      +100

  4. THE URBAN REVIVAL IS AN URBAN MYTH, AND THE SUBURBS ARE SURGING … JOEL KOTKIN … NEW GEOGRAPHY

    http://www.newgeography.com/content/005815-the-urban-revival-is-urban-myth-and-suburbs-are-surging

    The past decade has seen a gusher of books arguing for and detailing the supposed ascendency of dense urban cores, like the inimitable Edward Glaeser’s influential Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier, and about the ‘burbs as the slums of the future, abandoned by businesses and young people, like Leigh Gallagher’s The Death of Suburbia: Where the American Dream Is Moving.

    But as we show in Infinite Suburbia, the new book we co-edited, the vast majority of American economic and demographic growth continues to take place there.

    Let’s start with people. … read more via hyperlink above …

  5. There is extensive background material at my recently revamped and updated archival website … PERFORMANCE URBAN PLANNING http://www.PerformanceUrbanPlanning.org

    Read and view in particular the Ardern / Twyford section near the top.

    There is a very very long history to this issue in New Zealand.

    Realistically … I am extremely heartened with the evolutionary and inclusive progress made … and am confident this new Labour – led government will get sound and workable solutions in place.

    Historically … Labour has been the political party of reform in New Zealand.

    In having said that, we owe Bill English, former National Prime Minister and Finance Minister and Former Reserve Bank Governor Graeme Wheeler, enormous gratitude for their skills and commitment to these issues.

    Both are men of tremendous character and integrity.

    English and Wheeler bought the whole machinery of government on board with these issues.

    Labours Phil Twyford is just the guy to lead the ‘implementation phase’.

    I have enormous admiration for English, Wheeler and Twyford. They make me proud to call myself a New Zealander.

    New Zealand is the global leader on the path of restoring housing affordability … as I explained to one of New Zealand’s leading journalists, Heather du Plessis Allan, on radio mid last year …

    Talking housing affordability across the globe with Hugh Pavletich

    http://www.radiolive.co.nz/Talking-housing-affordability-across-the-globe-with-Hugh-Pavletich/tabid/506/articleID/122978/Default.aspx

    I ‘walked through’ the issue around the same time within this article …

    Restoring affordable housing: An advocates tale … by Hugh Pavletich

    http://www.performanceurbanplanning.org/definition-of-affordable-housing.html

    As I made clear within the early part of the above article, restoring affordable housing is a ‘nonsense issue’ … in the sense that the solutions are so blindingly obvious !

  6. MediocritasMEMBER

    @Leith, slightly off-topic, but take 15 minutes to watch this: https://www.youtube.com/watch?v=EC0G7pY4wRE

    Werner is well worth listening to as he’s one of the few economists who correctly understands the monetary system. Here he suggests that bank lending, for the purpose of asset speculation purposes, be banned. Period. Of all the listed reforms that could address the housing bubble, closing the credit spigot would pop it the fastest.

    Secondly, Australia’s hyper-concentrated commercial banks need to be split up and scattered to the winds, all the way back down to the community level, preferably as credit unions. Local banks are far more likely to lend to local businesses and less likely to lend into asset speculation, as Germany demonstrates.

  7. Can we arrange for the Kiwi’s to invade us, or annex us, or perform a soft-power takeover or something? Anything to get sensible ideas like these implemented here, and also to swing some of our politicians on lampposts.

  8. Sales are well down at Barfoot & Thompson but new listings are well up, suggesting there will be stockpile of unsold properties after the Christmas break | interest.co.nz

    https://www.interest.co.nz/property/91222/sales-are-well-down-barfoot-thompson-new-listings-are-well-suggesting-there-will-be

    The outlook for Auckland’s residential property market over summer is not looking good, with Barfoot & Thompson’s sales hitting their lowest point for the month of November since 2010. … read more via hyperlink above
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    New building work worth $5.51 billion in the third quarter of this year – Statistics NZ | interest.co.nz

    https://www.interest.co.nz/property/91228/new-building-work-worth-551-billion-third-quarter-year-statistics-nz

    The total value of new buildng work commenced hit $5.51 billion in the third quarter of this year, up 6.4% compared to the same period of last year, according to Statistics NZ’s Survey of Building Work Put in Place.

    The biggest increase was in new residential building work, which was worth $3.606 billion in the third quarter of this year, compared to $3.357 billion in the second quarter of this year and $3.286 billion in the third quarter of last year.

    Non-residential building work was worth $1.904 billion in the third quarter of this year compared to $1.8 billion in the second quarter of this year and $1.893 in the third quarter of last year. … read more via hyperlink above …

  9. Build, build, build: Why housing supply matters | The Spinoff

    https://thespinoff.co.nz/auckland/05-12-2017/build-build-build-why-housing-supply-matters/

    Yes, Auckland does need more houses. Urban planner Joe Jeffries explains why.

    A recent article in The Spinoff made the extraordinary claim that increasing housing supply cannot improve affordability and seemed to suggest it could make things worse. That article relied on a strawman version of Economics 101 supply and demand, claiming that model doesn’t take into account the role of cheap credit and the financialisation of housing. … read morevia hyperlink above …

  10. Surely one of the main ingredients of making unaffordable housing more affordable… has to be a hefty tax on properties deliberately left vacant. Especially if foreigners are allowed to scoop up unlimited amounts of new dwellings as they come onto the market. Hasn’t Auckland got thousands of empty homes? The city of Paris has recently instigated a 40% tax on the annual rental value of vacant properties and rightly so.
    The rise and rise of Airb’n’b coupled with investors who want to leave their IPs empty is a big part of the problem. Not the only problem needing fixing certainly, but recognising this as an issue affecting affordability is vital.

  11. Sydney and Melbourne Are Fueling Two-Thirds of Australian Growth – Bloomberg

    https://www.bloomberg.com/news/articles/2017-12-04/sydney-and-melbourne-are-fueling-two-thirds-of-australian-growth

    Australia’s two largest cities now account for more than two-thirds of the nation’s economic expansion, underscoring the concentration of growth drivers in a country that occupies an entire continent.

    Sydney, the epicenter of a residential construction boom and infrastructure spree, contributed 41.6 percent of growth in the 12 months through June, a sharp increase on its average 28 percent since the start of the decade, consultancy SGS Economics & Planning said in a report Tuesday. Melbourne, which is seeing a surge in internal migration, made up 27.1 percent. … read more via hyperlink above …

  12. Special Report: Hidden peril awaits China’s banks as property binge fuels mortgage fraud frenzy … Reuters

    https://www.reuters.com/article/us-china-risk-mortgages-specialreport/special-report-hidden-peril-awaits-chinas-banks-as-property-binge-fuels-mortgage-fraud-frenzy-idUSKBN1DY1AS

    SHANGHAI/HONG KONG/BEIJING (Reuters) – When Zhu Chenxia bought a flat early last year from Lei Yarong in the up-market Nanshan district of China’s southern metropolis of Shenzhen, the two women drew up three purchase agreements to cover the deal.

    Only one was genuine.

    In the legitimate contract, Zhu agreed to pay Lei 6.49 million yuan (about $980,000) for the 96-square-meter apartment near the city’s border with Hong Kong, according to records filed in a Shenzhen court. With the help of her property agent, Zhu cooked up a second contract with Lei that overstated the value of the flat at 7 million yuan. This one was for the bank. … read more via hyperlink above …
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    Chinese mortgage fraud touted too large for authorities to clamp down on; Bitcoin now bigger than New Zealand; Government to urgently establish committee to fix health system; UST 10yr yield at 2.39%; oil and gold down; NZ$1 = 68.5 US¢, TWI-5 = 71.3 | interes

    https://www.interest.co.nz/news/91218/chinese-mortgage-fraud-touted-too-large-authorities-clamp-down-bitcoin-now-bigger-new
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    Mortgage fraud is widespread in China … forexlive com

    http://www.forexlive.com/news/!/mortgage-fraud-is-widespread-in-china-20171204