Naming, blaming shaming

July 13, 2015

Labour’s housing spokesman Phil Twyford did some numbers on names and leapt to the conclusion that Auckland’s housing woes are caused by Chinese buyers.

(The transcript is here).

Thomas Lumley, Professor of Biostatistics counters his assertion in a post headlined what’s in a name?

. . . So, there is fairly good evidence that people of Chinese ethnicity are buying houses in Auckland at a higher rate than their proportion of the population.

The Labour claim extends this by saying that many of the buyers must be foreign. The data say nothing one way or the other about this, and it’s not obvious that it’s true. More precisely, since the existence of foreign investors is not really in doubt, it’s not obvious how far it’s true. The simple numbers don’t imply much, because relatively few people are housing buyers: for example, house buyers named “Wang” in the data set are less than 4% of Auckland residents named “Wang.” There are at least three other competing explanations, and probably more.

First, recent migrants are more likely to buy houses. I bought a house three years ago. I hadn’t previously bought one in Auckland. I bought it because I had moved to Auckland and I wanted somewhere to live. Consistent with this explanation, people with Korean and Indian names, while not over-represented to the same extent are also more likely to be buying than selling houses, by about the same ratio as Chinese.

Second, it could be that (some subset of) Chinese New Zealanders prefer real estate as an investment to, say, stocks (to an even greater extent than Aucklanders in general).  Third, it could easily be that (some subset of) Chinese New Zealanders have a higher savings rate than other New Zealanders, and so have more money to invest in houses.

Personally, I’d guess that all these explanations are true: that Chinese New Zealanders (on average) buy both homes and investment properties more than other New Zealanders, and that there are foreign property investors of Chinese ethnicity. But that’s a guess: these data don’t tell us — as the Herald explicitly points out.

One of the repeated points I  make on StatsChat is that you need to distinguish between what you measured and what you wanted to measure.  Using ‘Chinese’ as a surrogate for ‘foreign’ will capture many New Zealanders and miss out on many foreigners.

The misclassifications aren’t just unavoidable bad luck, either. If you have a measure of ‘foreign real estate ownership’ that includes my next-door neighbours and excludes James Cameron, you’re doing it wrong, and in a way that has a long and reprehensible political history.

Property Institute of New Zealand Chief Executive, Ashley Church also uses the term  ‘reprehensible’ and calls the claims ‘an exercise in unveiled racism’.

Mr Church describes the data used by Mr Twyford as ‘shonky’ and says ‘it has so many holes in it that it would be marked with an ‘f’ if it was submitted as a High School Economics project’.

“Mr Twyford uses ‘Asian sounding’ surnames as his means to identify which buyers are ‘Asian Investors’ – without any way of knowing whether the buyer is a New Zealand immigrant who lives here, or an investor based in China”.

“On that basis Mr Twyford should be blowing the whistle on Scottish foreign investment in this country – because a large number of kiwi homes are owned by people who have names starting with ‘Mc’ or ‘Mac’”.

“This is the sort of racist sideshow we’d expect from NZ First – not a serious political party with pretensions to hold the reins of power”.

Mr Church says that Mr Twyfords claims that the Auckland property market is being skewed by non-resident investors may prove to be correct – but he says that any action taken should be based on hard data and facts – and that the race of the buyer shouldn’t be a factor.

“We might be surprised to learn who the major investors really are. Work done by the Overseas Investment Office, in 2012, suggested that the biggest buyers were Americans, Brits, Canadians and Aussies – with the Chinese a long way behind”.

Mr Church says the Property Institute supports the recent move, by the Government, to create a foreign buyer register by requiring investors to have a New Zealand tax number.

“This will provide good, accurate, information and it will help us to determine whether we need to be taking steps to ban foreign investment in kiwi homes – or direct it into the construction of new houses, as is the case in Australia”.

If there is an issue with non-resident foreigners buying houses it’s not one of people from any particular country.

But in light of Twyford’s comments, who could blame anyone with a foreign-sounding name if, as Gravedodger suggests, they start buying property under some variation of The Smith Family Trust numbered whatever.

However, let’s not forget the real problem is not who’s buying houses but that there’s not enough of them in some areas nor who’s responsible for the imbalance between supply and demand:

Hugh Pavletich co-author of the Demographia International Housing Affordability Survey says blame the incompetent council:

If Auckland was a normal housing market, like most in North America, house prices would be at or below $300,000 for those on $100,000-a-year household incomes.

Thanks to the incompetent Auckland Council, an Auckland family with a household income of $100,000 is forced to pay $820,000 for a house.

The council is forcing them to pay an extra $520,000 for the house and this new study calling for more apartments in the suburbs is no solution to the crisis.

That money for an Auckland house must come from a grossly excessive mortgage, crippling the city’s residents for the remainder of their working life.

Add the interest over the life of this inflated mortgage and this $100,000-a-year household is forced to pay over $1 million in excessive mortgage costs, and all because the Auckland Council is incompetent.

The council is being deliberately misleading because it has lost control of its costs and has lost the capacity to meet its infrastructure responsibilities to its community

Land supply, infrastructure financing and processing for new housing are issues councils must tackle – and no council more than Auckland needs to deal with this.

Back to Professor Lumley:

But on top of that, if there is substantial foreign investment and if it is driving up prices, that’s only because of the artificial restrictions on the supply of Auckland houses. If Auckland could get its consent and zoning right, so that more money meant more homes, foreign investment wouldn’t be a problem for people trying to find somewhere to live. That’s a real problem, and it’s one that lies within the power of governments to solve.

It’s not difficult for people with a better grasp of statistics and without the political desperation that’s driving  Labour down this divisive path to counter the claims.

But let’s not forget that the naming, blaming and shaming by numbers can hurt people.

I received an email from a Young Nat, Melissa Hu, who wrote:

. . . I was born here, I study here, I work here and I’m a New Zealand citizen but because my last name sounds Chinese I’m apparently a big part of the housing affordability problem – (I’m actually of Mongolian descent but would Labour care about that?

Labour chose to make racially inflammatory comments based on half-baked data from an anonymous real estate agent in Auckland. They chose to say that there are too many Chinese buyers in the Auckland housing market based on whether your last name was Wang, Lee – or even like mine.

 The problem is, this data doesn’t actually prove whether the buyers are foreigners or not. Even NZIER’s Principal Economist said Labour’s comments were “very damaging for a multi-cultural, welcoming place like New Zealand”.

 I’ve lived here all my life, and I’m proud to call myself Kiwi. Young New Zealanders like me are ambitious, excited and open about New Zealand’s future. I don’t think my last name, or yours, has anything to do with trying to buy a house. 

 We need to be encouraging all Kiwis – young, old, European, Maori, Chinese, whatever – to aim high, work hard, create wealth and continue to raise our living standards. We also need the Government to keep taking common sense steps with councils to make more land available for housing. That’s why I support National they know there’s a problem and they have a real plan to fix it.

 We don’t need to start a “pick on the Chinese” attitude which could create more problems than it solves. Auckland’s housing problem is a supply issue – not a Chinese issue. We’re a multicultural, ambitious and prosperous country – I hope we stay that way.

There’s nothing new about this naming, blaming and shaming.

My father-in-law was the butt of some because his name was German, even though he’d though he’d not long returned from serving overseas with the New Zealand army.

How sad that nearly  70 years later it’s still a political tactic.

 


Seven reasons to oppose MMP

November 25, 2011

Jim Hopkins has a very good reason to vote for change tomorrow:

Unless we vote for change, the politicians will decide how they are elected. They may tinker with MMP or change it radically. The choice will be theirs, not ours. A vote for change will ensure a second referendum, with MMP tested against one of the alternatives. It means we will control the evolution of our peaceful democracy. Let the politicians address the economy. But the elections belong to us!

Auckland businessman, Ashley Church, provides six more good reasons to ditch MMP:

1.      Confusion. After over 15 years, there are still a very large number of voters who don’t understand how MMP works and don’t know whether the List, or the Electorate vote, is more important. The procedure for electing an MP and decide who will form a Government should be simple, straightforward, and easy to understand. MMP isn’t.

2.       Strategic Voting. Voting for one party in order to get another elected, such as voting ACT in Epsom to get National into Government, is one of the perverse results of the MMP system. Having to vote for one party in order to get another elected is counter to the basic  principles of democracy Voting should be simple and straightforward and based on the principle of supporting the party you want in Government.

3.      Disproportional Representation. The 3 yearly ritual of allowing small parties (sometimes VERY small parties) to decide who they will go into coalition with (and therefore, who will be Government) puts far too much power in the hands of the few, over the many. Parties which enjoy widespread voter support should have power in proportion to that support – they should not be able to be held to ransom by small parties of extremists with unpopular agendas as allowed by the current system

4.      Backdoor MPS. Another insidious feature of MMP is the way it allows people who have been defeated in a fair electorate contest to get into Parliament by the backdoor, through the MMP Party List. If a candidate has been rejected by the voters – that rejection should stand.

5.       Unstable Government. One of the repeated consequences of coalition Government, in this country, is the reality of unstable Government. One particular party has made an art form of suddenly finding a conscience 6 to 12 months out from an election and engineering its departure from the coalition – thus throwing the country into turmoil and forcing the creation of bizarre short-term coalitions. Any system which allows a small party to bring down the Government, as MMP does, should be utterly rejected.

6.       Short term thinking. Because the major parties have to keep one eye on the needs of their smaller coalition partners, long-term thinking is virtually impossible under MMP. The concept of a nation-building plan which spans several electoral cycles is virtually impossible under MMP because the makeup of each Parliament differs so much depending on the configuration of parties which form the Government.  Governments should be able to plan for changes that take more than 3 or 6 years to implement – but under MMP they can’t.

I would add: MMP gives too much power to parties at the cost of representation for people; promotes groups at the expense of individuals and makes electorates too big.

P.S. the quote from Jim is the closing paragraph in a column on voting which deserves to be read in full.

P.P.S. I have no idea who Ashley Church is, I came across his media release on Scoop.


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