Jacinda Adern rediscovers housing crisis

When Jacinda Adern became New Zealand’s 40th Prime Minister on 19 October 2017, we were enamoured by her excellent and comprehensive election platform.

Among other things, Adern promised to fix New Zealand’s chronic housing affordability problem by both addressing supply and demand distortions via negative gearing reform, banning foreign buyers of existing homes, tightening capital gains taxes, removing urban growth boundaries, plus bond financing infrastructure.

Adern also sensibly promised to reduce New Zealand’s turbo-charged immigration intake by around a third, which would have helped to relieve chronic housing and infrastructure pressures (especially around Auckland), as well as promised to build 100,000 public houses over a decade (via ‘KiwiBuild’).

In short, Jacinda Adern was like a breath of fresh air that promised to tear apart decades of neoliberal orthodoxy.

However, Jacinda Adern’s first term largely failed to deliver on her key election promises.

In particular, Adern’s promised ‘KiwiBuild’ program to build 100,000 public houses descended into a farce, with the government abandoning its building target and instead announcing a bunch of demand-side measures would inflate prices.

Adern abandoned capital gains tax reforms and back-slid on her promise to abolish Auckland’s urban growth boundary and reform infrastructure financing.

Adern also abandoned promised immigration cuts, instead opening the visa sluice gates.

Her only bright spot with regards to housing policy was that she managed to ring-fenced negative gearing.

Nevertheless, New Zealand house prices surged to an all-time high and the home ownership rate cratered to a 70-year low.

Now with an election due in a fortnight, Jacinda Ardern has vowed to tackle the nation’s housing crisis:

New Zealand Prime Minister Jacinda Ardern on Friday vowed to tackle the country’s chronic housing shortage, focusing in on a vulnerable election issue for the Labour Party ahead of early voting starting this weekend.

Ardern is expected to secure re-election in the Oct. 17 poll after winning praise for her handling of the COVID-19 outbreak and other crises, but Labour has done less well on some domestic issues, including plans to build new homes and rein in the cost of housing.

The Labour Party-led coalition’s ambitious affordable housing project to build 100,000 homes in a decade has faltered, with only 600 homes being built so far and about a 1,000 under construction.

On Friday, Ardern promised to deliver more homes and replace a 30-year-old law blamed for high housing costs and impeding urban development.

“Overly restrictive planning rules are one of the causes of high house prices,” Ardern said, adding she was determined to remove barriers to the supply of land and infrastructure for housing, including replacing the country’s Resource Management Act (RMA).

New Zealand’s house prices have soared nearly 90% over the past decade, analysts have said, due to a shortage of over 100,000 homes.

Successive governments have failed to ease the red tape around land approval, making land artificially scarce. For private developers the costs and consent process are significant hurdles, making properties unaffordable.

Jacinda Adern’s performance with the COVID-19 pandemic has been exemplary.

She managed to unite the nation to fight the virus, implemented a harsh stage 4 lockdown early alongside well-targeted fiscal support, and has been successful is making New Zealand relatively COVID-free.

Jacinda Adern’s behaviour after the Christchurch terrorist attacks last year was also exemplary, again uniting the nation. She has also sensibly sought to abandon GDP as the nation’s key economic metric in favour of community wellbeing.

Housing policy is clearly Jacinda Adern’s Achilles Heel and she needs to turn rhetoric into concrete action.

Unconventional Economist

Comments

  1. Labor in NZ doesn’t govern with a majority. How much of the action to inflate house prices was due to Winston Peters?

  2. kiwikarynMEMBER

    Helen Clark’s government was often referred to as “National in drag”. This Labour Govt has proven to be much the same, although on the subject of housing and immigration, they actually managed to “out-National National”. If it had been a National Govt that instead of delivering housing affordability, drove house prices to an all time record, or promises of lowering immigration resulted in 2019 being a record year for the number of new immigrants and people on temporary visas, and drove the public housing waitlist from a stable 5000 up to 20,000 – then I’m pretty sure National would have been in political exile for a decade. However, Jacinda can do no wrong, the media refuse to condemn her (probably because they are now being paid $50 million to blow smoke up her a55) and her cult like following think that a country can be run on the basis of simply “being kind”, like its kindergarten or something.

    • Completely agree. She cant make hard decisions. Her tax policy at last election was ro have a tax working group to formulate tax policy. The twg decided there should be a cgt. Jacinda said there should be a cgt. But no cgt and they used Winston as an excuse. Weak.
      Covid response was pretty slack to begin with and nz just got lucky ie island, one significant international entrance, spread out population etc. Certainly no better than aus, except dan andrews of course. And christchurch, again no hard decisions to make there.

      • Arden is spending like a drunk. Any economic moderation she has wasted, and claims she has beaten Covid, ultimately a fiction.

  3. The problem for NZ like Australia is that affordable housing will trash the Economy. Too many people employed by property industry directly or indirectly and lower prices means higher unemployed. That’s why she’s done nothing because it’s a hard problem to fix without broader repurcussions.

    If Labor got elected here, same thing. Nothing would have really changed.

    • You’d have to be very senior in banking and finance, to abolish rising mass migration and rising house prices. It’s way beyond the pay grade of an Australian or NZ Government.

      Will tomorrow’s budget rubber-stamp the return of Big Australia? You bet you are you bet I am.

    • “The problem for NZ like Australia is that affordable housing will trash the Economy. ”

      Lols.

      Exactly, like lowering the cost of other essential business inputs such as energy would trash the economy.

      Stick to Mazda’s and internal combustion engines mate. High real estate costs are the single biggest constraint on our economic prosperity.

      • I’m not saying you’re wrong. But look at it from a Politicians perspective and how many vested interests will lobby them against change.

        That’s why nothing changes. Despite the fact that lower prices would benefit most of us.

          • Yeah I prefer to debate the facts than to have a go at each other. Try not to take it personally.

            Oh and to labour the point further. Lower prices would benefit a majority of us. But a small cohort do very well out of high prices including Government that benefits from the duties.

            So there needs to be an entire structural change. And we need to kill this idea of the wealth effect. Poisonous idea it is.

  4. Arthur Schopenhauer

    Most Aussies don’t know that every NZ bank, bar the state initiated Kiwi Bank, is subsidiary of an Australian Big 4 bank.
    Australian banking policy effectively governs NZ banking policy.

    • happy valleyMEMBER

      Except that NZ has explicit deposit bail-in rules whereas Straya at present only has implied depositor bail-in but it will soon become explicit once ON Senator Roberts’ deposit bail-in exclusion bill is likely voted down in the Senate in November. So, come March 2021 compliments of Josh Rainbowberg we’ll have banks lending more totally irresponsibly than ever and thus depositor bail-in will happen sooner, rather than later.

    • my toranaMEMBER

      I think I saw a bank shareholding chart that showed massive American share ownership of the big four. So most Australians don’t know that our banks are owned but some US big four.

  5. New Zealand has trodden hard yards before.
    In the 1980’s we knew we had a problem on our hand with the closed farm subsidies; ‘riding off the sheeps’ back’ and all that was entailed in that cosy status quo.
    But we, in the form of a transformational Labour Government under David Lange, did what had to be done. We didn’t vote for it, but it came after the election and we cut the rural sector loose, devastating many in that community. The irony being, that is was going to happen at some stage anyway. Lange avoided (or delayed) dragging the whole economy down with the farmers.
    Now, if Ardern has any courage left…it’s the turn of the urban dwellers.
    If we don’t address the imbalances in our economy created by the distortions in the residential property market now, it’s going to happen at some stage anyway. So we may as well get on with it whilst we can.
    Will Ardern have the courage of David Lange? If Labour ‘get in’ on their own merit (more than 50% of the vote and no ‘hanger-on’ coalition ‘partners’) we will find out.

    • Arthur Schopenhauer

      Didn’t Richardson follow Lange, and eviscerate the Kiwi economy by applying economic policies to the right of Thatcher? That saw just about all manufacturing leave the country and large reductions of income for the bottom half of NZ society.

      • bolstroodMEMBER

        Lange had a treasurer Roger Richardson who brought in extreme Thatcherite policies, (Rogernomics)
        Lange apologised to the NZ people after leaving office saying that “The people would have bee within their rights to drag himself and Rihardson out into the street and hang them from the nearest lampost.”

    • kiwikarynMEMBER

      Due to her cult like international image, there is zero chance of Jacinda Ardern doing anything to rock the boat. She is young, she has her eyes firmly set on her next job on the global stage. The PMship is but a mere stepping stone for her. All she has to do is ride the adulation and not do anything to ruin her golden image. This is one advantage of putting old people in charge of the country, they don’t have a next job to worry about, and thus could take the hard road without fear of repercussions. At the end of their tenure they can pocket a nice pension and get to enjoy free international travel for life. Meanwhile, the likes of Ardern and Trudeau have to consider where their next mortgage payment comes from just like the rest of us.

      • “This is one advantage of putting old people in charge of the country, they don’t have a next job to worry about, and thus could take the hard road without fear of repercussions. At the end of their tenure they can pocket a nice pension and get to enjoy free international travel for life.”

        If that is correct, why hasn’t this happened in the past 20 odd yrs? I’d have thought unless they have limited exposure to the “present” economy they have as much to lose.

        • “nearly always driven by the young”

          Cucked, open borders, soft, youth are going to save themselves are they?

          Not this time.

          Not with the elites so organised and clever, they’ve indoctrinated the young to think and vote 100% against their own interests.

          • Ok boomer.

            Every contemptuous view you have about the yoof, your grandparents had about you. And their grandparents about them.

            Etc, etc.

            A world run by wealthy old men is certainly shaping up pretty well at the moment. Obviously they just need MOAR power to fix things up. 🙄

      • So true. It’s just a very long-winded job application. If Gillard could palm herself off as a “feminist” and “educational reformer”, the mind boggles at where St Jacinda could go. Joint head of IMF and UN?

  6. PaperRooDogMEMBER

    She has been great in many ways, but I can’t believe her re the above, don’t get sucked in.

    • She should be measured by her lies.

      If we all measured them that way, democracy would function much better.

      If i were a kiwi, voting for her, would be completely out of the question.

        • You misread who I am.

          If Labor were in our interests and doing what Labor traditionally did, I’d still be voting for them. I am at heart VERY pro environment, and worker. I am VERY pro Australia and opportunity for Australians. I am 100% against globalisation that negatively affects Australians.

          Modern Labor are no longer any of that.

          Labor are now a corporate driven, pro immigration disaster for the native population.

          Labor are at the core of every problem we’ve got, because we can’t vote our way out of mass immigration, and the destruction of Australia and Australians.

          • bolstroodMEMBER

            I would read you better if your view was less skewed.
            The LNP do exactly the same, but you just focus on Labor, who have not held Govt for 8 years, and then only briefly.
            I agree that LibLab are not the answer.
            Our salvation may come from the Bush, the National party membership is dwindling, down 1/3 in the past 6 months due to Barnaby, MCormack , Baralino Koala killing policy and Nats pushing CSG in Narrabri. This is allowing space for a new political force to emerge, my hope is a lot of strong Independants take the balance of power. There is also the emergent Bullsh!t Party.

          • I understand the confusion.

            Here is my rationale.

            LNP have not changed, meaning they get the following they always have had. In addition, LNP gather voters either because they can no longer vote Labor, or they think they now belong to the elites party LNP.

            Labor have immeasurably changed. That means;

            1. Their policies are no longer in the interests of their original following.

            2. They can’t win government because their followers have abandoned them (and some now even vote LNP).

            Why, oh, why, would we want to vote for a party no longer in our interests?

            Solution? Some will move to vote for LNP and get on the greedy train. Some, like me, are looking to replace Labor with a party that does what Labor used to do. That is, look after the environment, workers, Australia and Australians.

            You are never going to fix this mess attacking LNP, while voting for Labor. They are pretty much exactly the same thing now.

            To fix this country, Labor MUST go, and be replaced with Independents or other parties that will actually oppose LNP on what matters.

          • “who have not held Govt for 8 years”

            Cause and effect. How can they win, if the party’s policies no longer match their original voter base.

            Labor went to the electorate throwing around policy, such as massive immigration, development, parental visas, 99% of people I know (ex Labor voters) were horrified with.

            I have never seen a larger disconnect with reality anywhere ever.

  7. It was US President Harry Truman who said ‘Getting progress in politics is like kicking jelly !’

    However … slow and muddled progress is being made … check out the recently updated website PERFORMANCE URBAN PLANNING http://www.PerformanceUrbanPlanning.org … starting with the September Update.

    Note just prior to that the February 2019 Update and the massive blow – up over KiwiBuild.

    Check out too … the magnificent job Statistics NZ is now doing (after starting at the regional level with the July release for June) with the comprehensive territorial authority level as well ‘ … residential consents / approval rates per 1000 population per annum …

    Building consents issued: August 2020 … Statistics New Zealand

    https://www.stats.govt.nz/information-releases/building-consents-issued-august-2020

    The above needs to be carefully read and considered.

    Leith may like to compare New Zealand’s ‘consent / approval rate per 1000 population per annum’ with others of the Anglosphere … Australia, the United States, Canada, United Kingdom and Ireland. I think it will be found that New Zealand leads currently … and the gap will likely widen going forward.

    Watch as the recently implemented Urban Development Act, Infrastructure Funding and Financing Act and Urban Development National Policy Statement ‘kick in” … and most importantly, a far more efficient and lower cost production industry structured construction sector is restored in New Zealand … like they have in Australia, Canada and the United States for example.

  8. Houso’s already vote Labor.

    Promising social housing is a politically fatal error. Most people don’t want more money going to welfare of this kind.

    Disabled already have social housing. That’s enough to satisfy 95% of the electorate IMO.

    • kiwikarynMEMBER

      I think you mean promising home ownership is a fatal error. The more people you can keep dependent on the Govt teat, the more voters the Labour/Greens have. Once you own your own home, you probably become a National/ACT supporter overnight, in favour of increasing house prices and easy credit.

      • While I understand the sentiment, most people I know who own housing are opposed to it being so expensive and dictating all policy.

        Most people know it’s not sustainable, nor is it desirable.

  9. kiwikarynMEMBER

    The irony is that now that Australia has opened the borders to NZers, net migration will go back to being negative as skilled NZ workers head off to Australia to enjoy higher wages and better weather. So the need for all this housing may disappear soon anyway.

    • So the need for all this housing may disappear soon anyway

      Then again it may not.
      The best thing to do is to solve the housing shortage by a tremendous building program. At the same time tackle the underlying problems that led to the shortage.

      Remember:
      (births + immigration) > (building) + TIME = SHORTAGE

  10. Ardern promised to take a pay cut – which wasn’t actually as much as she suggested owing to all the non-salary benefits – and it didn’t happen…she talks about bubbles with Australia but they won’t happen either. She talks about housing but does nothing about it…

    … basically she does absolutely nothing that’s not in her own personal calculated interest.

    She’s an appalling PM. Makes ScoMo look great.

    • kiwikarynMEMBER

      Yes, that annoys me that she’s been pushing the Australia/NZ travel bubble issue for months now, and now that Australia has finally done it, she’s reversed direction. It could be accomplished very easily – by directing all Australian flights to/from Queenstown, which is taking no other international flights and so no risk of cross traveller contamination, then route tourists from Queenstown on domestic flights to wherever they want to go. Its not rocket science.

    • I agree. She’s a dishonest person who shouldn’t be in government.

      If the electorate put up with this rubbish, they deserve what they get.

      • bolstroodMEMBER

        Isn’t lying the first requirement of a successful political career ?
        Don’t all politicians lie ? even the LNP ?

        • They can lie, everyone lies.

          What they can’t do is offer XYZ at the election, then give us ABC.

          For me, if we accept that, we need our heads read.

          If we hold them to account, our country would be fffffaaaarrrrrr more healthy for it.

          Whether it’s LNP or Labor I don’t care. That kind of lie (or broken promise) should be terminal.

          You don’t agree?

          Remember Howard’s “core promise”

          You still actually think I’m an LNP fan don’t you!!!!!!

          I’m absolutely not, and would prefer a party in the interests of Australia. That’s not Labor, ergo, my argument is as always, Labor need to be replaced to give the plebs a choice to get our country out of this disastrous path.

          • bolstroodMEMBER

            Thanks for taking the time to explain your position, I appreciate it.
            I agree that Labor are no longer the party of Australian workers and their constantly falling percentage of the primary vote is ringing a bell for their demise, and I don’t see how , even if they wanted to Labor can again be the workers party.The Union movement is a shadow of it’s former self and that is not going to change.
            No party speaks for the ordinary Australian.
            As I noted The National Party is on a similar trajectory, and since the Coalition Government is built on 1 premis, keeping labor out, the political landscape may alter in the next decade or so. It take a lot of time to build a political party or social movement, Ive been part of 2 such movements from the ground up, Stop theVietnam war and CSGFree Northern Rivers. I know the work and commitment necessary to achieve the result.
            Really I think Gunna has the right idea, and if the MB commentairiate will back him with the time effort and money to build it, the Bullsh!t Party may be the best bet.

          • Gunna is too left. No one is going to support a high number of humanitarian intake, social housing and a few others I saw.

            Look after Australians, completely reject globalisation, give everyone an opportunity to work and study, look after the handful who can’t and you’ve got an election winning party.

    • bolstroodMEMBER

      During the great depression communists were popular among the working classes. .
      During the coming depression caused by the failure of Neo-Liberal philosophy they may again be so regarded.

  11. Jacinda Adern has been a complete disgrace in tackling the housing shortage. Basically a liar. Vote her last until she repents and changes.

    I have been reading some of those repetitive posts by Hugh Pavletich and the only progress in New Zealand housing that I can see is:
    * Christchurch has used the earthquake as a reason to cut the nonsense and build many homes. This has kept rents down and also prices down.
    * Phil Twyford has finally got through an urban infrastructure financing arrangement that should stop local councils from choking the supply of housing to save themselves money.

    • bolstroodMEMBER

      The flood of overseas buyers may also be restricted due to the Virus, which would take pressure off housing.

  12. She wore a veil. Trudeau wore black face, multiple times.

    Larping.

    The entire western world is living off borrowed credit. Others will be forced to reckon with the largess and the reckless who caused the problems will chastise the victims from their towers.

    .

  13. my toranaMEMBER

    She signed the letter
    All yours
    Jacinda
    Jacinda
    Jacinda
    Yi yiiaay

    Standing in for Spunky.