Why not more of what works?

February 24, 2020

Leilani Farha, UN Special Rapporteur on the right to housing, visited New Zealand and left us with several recommendations including a rent freeze and capital gains tax.

I have yet to see or hear what the visit cost us, but the government that invited her, could have saved all that by asking Steven Joyce who has much better recommendations

. . . Before we embark on another “housing crisis” complete with politically partisan policy ideas that turn out to be mirages (come on down Kiwibuild), let’s have a look at all the housing policy changes that have occurred over the last decade and assess what practical lessons they provide about the New Zealand housing market.

The first is that land supply is hugely important if you want to build more houses.  . .

The price of houses is a reflection of demand outstripping supply and one of the reasons for that is restrictions on where people can build and the cost of developing new areas for housing.

The premier case study on land availability is post-earthquake Christchurch. Pre-earthquake the local councils developed a “smart growth” plan where they agreed what land around the city would be released for housing progressively over the next thirty years. Then, alongside the lives tragically lost in the earthquakes, massive numbers of houses were made uninhabitable virtually overnight.

After the quakes, amid dire predictions of skyrocketing house prices, Gerry Brownlee took the radical decision to release the whole thirty years of land at once. There was much sucking of teeth at local and central government, but it was the right call.

As the result of competition amongst developers tens of thousands of Christchurch families were able to use their insurance payouts and reasonably priced new home and land packages to successfully re-establish themselves. Christchurch house prices have since been some of the most reasonable in New Zealand. 

The second lesson is about the availability of finance. The Global Financial Crisis dried up bank finance and laid waste to non-bank lenders. The lack of finance for new builds crippled the building market and it took years to recover. That’s a cautionary tale for the Reserve Bank, whose heroic new bank capital ratios will reduce available bank finance, albeit more gradually than previously proposed.

The more banks have to hold, the less they will have to lend and the more expensive the lending will be.

The third, and arguably biggest lesson from the last decade is the now obvious role low interest rates play in driving high house prices, and indeed all asset prices. Every time interest rates have got ridiculously low, house prices have shot through the roof as people bid up prices to the limits of the mortgage they can now afford. This price inflation seems fine if you already own a house, but it perpetuates the wealth gap between those that own houses and those that don’t.

Lower interest rates allow people to afford bigger mortgages, that enables them to pay more for houses and that feeds price increases.

Ultra-low interest rates are driven by governments worldwide contracting out wider economic management to central banks, which then have to compensate for poor microeconomic policies flattening growth. You might not think an oil and gas exploration ban, poor quality government spending, and backward-looking employment policies lead to ever higher house prices, but indirectly they do.

There are lessons out of the rental housing and social housing markets. It is crazy to persist with a single monopoly state housing provider when it has never in its history managed to successfully meet the demand for social housing. It’s also not sensible to let one person have the same state house for life irrespective of changes in their family and personal circumstances. The rapidly growing social housing waiting lists compared to two years ago provide the evidence there. . . 

How can a government that cares let a couple or single person occupy a house with multiple bedrooms while families with several children are homeless?

Then there’s the added compliance requirements and accompanying costs that lead to fewer rentals.

That’s not to say never change anything about residential tenancies, but perhaps don’t whack landlords with a dozen negative changes over, say, three years.

To make housing more affordable, the last decade’s experiences tell us to greatly increase land supply, ensure a ready supply of build finance, put less pressure on the Reserve Bank to lower interest rates to keep the economy going, enlist community and NGO help in supplying social housing, and stop treating the vast bulk of residential landlords like they are pariahs. Oh, and forget a more punitive capital gains tax – countries with one of those have the same skyrocketing house prices as we’ve had.

There are valid arguments for a capital gains tax but reining in house prices isn’t one of them.

If CGTs haven’t worked anywhere else, there is no reason to expect they’d work here.

The high cost of housing is a major factor in poverty and all the problems that stem from that.

Why did the government waste money on the UN expert whose recommendations wouldn’t work, when a local one has a much better recipe that would work?


A tale of two caucuses

June 26, 2019

National leader Simon Bridges announced a minor reshuffle of portfolios yesterday:

“Paul Goldsmith will become the spokesperson for Finance and Infrastructure following today’s announcement from Amy Adams that she will leave at the next election.

“Paul is the natural choice for the Finance role. He has done an outstanding job holding the Government to account in the Economic and Regional Development portfolio.

Shane Jones will be very happy with this change, though he shouldn’t relax, the two taking over Paul’s portfolios will be just as effective at holding the Minister to account.

“Regional and Economic Development will now be split across two spokespeople. Todd McClay will look after Economic Development, while Chris Bishop will take over the Regional Development and Transport portfolios.

“Chris has done a brilliant job as spokesperson for Police and deserves to take on more responsibility.

“Jo Hayes has been appointed the spokesperson for Māori Development and Treaty of Waitangi Negotiations following the departure of Nuk Korako. Jo is a passionate advocate for Māori.

“Gerry Brownlee will pick up the Foreign Affairs portfolio, Brett Hudson will take on the Police portfolio and Tim Macindoe will become the Shadow Attorney-General.

“Other changes include Michael Woodhouse as the Associate Finance spokesperson, Maggie Barry taking over the Disability Issues portfolio, Stuart Smith will be the spokesperson for Immigration, Todd Muller will be the spokesperson for Forestry, Nicola Willis will take on the Youth portfolio and our newest MP Paulo Garcia will become the Associate Foreign Affairs spokesperson.

“I’d also like to take this opportunity to thank both Amy Adams and Alastair Scott for their valuable contributions to the National Party and Parliament. Amy was a brilliant Minister across a range of portfolios. The changes she made to domestic violence laws as Justice Minister have made families in New Zealand safer. Amy has excelled as our Finance spokesperson and has been an outstanding member for Selwyn.

“Alastair should be proud of the work he has done to prevent drug driving, and for the way he has represented and advocated for the people of Wairarapa. I’m pleased they will be here for the rest of the term to help us form policies for the 2020 election.

“National is the largest and most effective Opposition this country has ever seen. I’m proud to lead such a talented and hardworking team.” 

There are no surprises there and there will probably be none in tomorrow’s reshuffle of Cabinet but there is a major difference between the two caucuses – there’s plenty of talent in National’s with many MPs capable of becoming Ministers.

By contrast Labour’s is a shallow pool and, as Barry Soper noted:

. . .The reshuffle will be minor because most of those who should be in Cabinet are already there. And the amount of time Ardern’s taken getting around to shuffling the chairs just goes to show how hard leadership is for a person who clearly finds it hard to be hard. . . 

Ardern doesn’t have much to choose from and, if past form is a guide, will be reluctant to demote the poorest performers.


If can’t run parliament . .

September 13, 2018

If Labour can’t run parliament can it run the country?

The Government called for an extended sitting of the House to consider six Bills, but showed exactly how shambolic it is when a Minister failed to be present in the House as required to begin a debate on the next Bill on the Order Paper, Shadow Leader of the House Gerry Brownlee says.

“Today’s performance in the House borders on farcical.

“The Speaker was left with no choice but to end the extended sitting an hour and 45 minutes early meaning next to no progress was made on the Government’s legislative programme.

“Meanwhile, because the Government imposed extended sitting hours without agreement from the Business Committee a whole morning of select committee hearings was lost.

“This means Bills which could have had their first reading and be sent off to select committee for scrutiny this morning will now languish on the Order Paper for an unknown period of time. The machinery of government is being ground to a halt by a Government which can’t get the basics right.

“Leader of the House Chris Hipkins will have ministerial colleagues asking for a please explain.

“The Government needs to get its act together. More people will begin to think ‘if it can’t even run Parliament how can it run the country’.”

Labour is also having problems with its relationship with NZ First which stymied an announcement about the Crown/Maori relations portfolio at the last minute.

. . .It’s the latest disagreement between the coalition partners.

NZ First pulled the rug out from under Justice Minister Andrew Little in June when he announced his plans to repeal the three strikes legislation.

Since then NZ First has cast doubt on a Labour pre-election promise to lift the refugee quota to 1500 and has also signalled it wants to see changes to the contentious Employment Relations Amendment Bill.

It’s understood the lines of communication between Labour and NZ First are still not clear almost one year into the coalition arrangement. . . 

Few will be surprised about the difficulties in dealing with NZ First but governments have to be able to deal with all sorts of difficulties.

One of the valid questions asked of Labour as it struggled with in-fighting in opposition was if it can’t run itself, how can it be trusted to run the country?

After nearly a year in government, it’s showing it can’t run parliament and manage its relationship with the support partner which put it into power.

These are two more reasons to question its ability to run the country.


If they can’t run themselves

June 22, 2018

Labour’s continuing missteps and mistakes in opposition often led to the question – if they can’t be trusted to run themselves how can they be trusted to run the country?

This week we’ve seen the answer – they can’t:

In an extraordinary and potentially unprecedented abuse of power, the Government is attempting to impose new taxes on New Zealanders without proper debate, late at night and under cover of Urgency, National’s Shadow Leader of the House Gerry Brownlee says.

“The Government has used Urgency and an amendment to a motion to stop further debate and ram through new laws without proper scrutiny on a matter as important as taking more money off New Zealanders.

“Worse, it’s doing this because of its own incompetence and its inability to carry out a core function of a responsible Government – managing Parliament’s legislative programme.

“And it’s doing so on a Bill which it had already shortened the process for and which it has blatantly failed to win public support for.

“This is not only undemocratic – and potentially unprecedented in the 165 years of New Zealand’s Parliamentary democracy – it is arrogant. The Government is saying to New Zealand that they will be passing new taxes through Parliament by any means possible. 

“This is an unpopular and unnecessary new tax which has been sold as applying to Aucklanders only, but which will be rolled out nationwide in a couple of years, adding hundreds of dollars in costs to the average motorist every year.

“What’s deeply disappointing is the Green Party has chosen to support Labour’s move.

“Both parties have again displayed a breath-taking level of hypocrisy. After being opponents of Urgency and champions of democracy in Opposition, they are taking unconstitutional and unprecedented steps in Government, on matters as fundamental as new taxes.

“The Government has stumbled at every hurdle in its attempt to foist its new regional fuel tax on New Zealanders but it has forged ahead.

“It continues to prove it can’t be trusted. It can’t run Parliament, it can’t run itself and it can’t be trusted to act in the best interests of New Zealand.”

The perception of shambolic government isn’t helped by the Green’s not being sufficiently organised to lodge a question for Question Time.

It cost $310 per minute to run parliament in 2014.

If taxpayers are spending that much we should be able to depend on the government to run it competently.


If only there’d been a teal deal

February 16, 2018

The governing coalition is all at sea over fisheries monitoring:

Evidence given to the Environment Select Committee from the Department of Conservation (DOC) today just goes to show the deeply divided factions occurring within the Coalition Government, National’s Fisheries spokesperson Gerry Brownlee says.

“Speaking at DOC’s annual review, the Director General Lou Sanson was asked what input his department has had on the new Government’s decision to firstly postpone and then, this week, cancel the introduction of cameras on fishing boats.

“Mr Sanson and DOC have always been spirited advocates of on-board cameras as one of the best practical measures needed to protect our declining marine bird species.

“He told the committee that DOC ‘absolutely’ maintains its position that cameras on fishing boats are essential if we are to reverse the decline in the sort of seabird species we see in our waters.

“It’s therefore quite extraordinary that his Minister, Eugenie Sage, has so quickly and thoroughly distanced herself from Stuart Nash’s decision to cancel the roll-out that the National Government initiated.

“It doesn’t take a rocket-scientist to work out that Mr Nash is being leant on by Coalition partner, New Zealand First.

“I’m surprised that as a junior Coalition partner, the Greens have allowed themselves to be side-lined in this way,” Mr Brownlee says.

The Green Party has had to swallow a lot of dead rats in its agreement to support Labour and New Zealand First in government.

Had they been able to countenance a deal with National last year, there would be no compromise over on-board cameras.

If the Greens could moderate their radical left economic and social agenda, they could sit in the political middle, able to go left and right.

A teal deal would have been better for both the economy and environment than what we’ve got – a red and black one with a weak green off-shoot.


Rural round-up

July 6, 2017

Farmers’ social licence fast expiring – warning – Nigel Malthus:

Dairying has a lot at stake as the world enters the fourth industrial revolution, says former DairyNZ chairman John Luxton.

A dairy farmer, businessman and former National minister of agriculture, Luxton gave the opening keynote address at the 2017 South Island Dairy Event (SIDE) conference at Lincoln University.

He says farmers’ social license to operate as in the past was now fast expiring. Rules and regulations requiring farmers to improve farm systems were becoming more and more complex. . . 

Military cameras help red meat – Sudesh Kissun:

Cameras used by the military are helping the New Zealand red meat sector produce premium lamb products.

One camera, installed in a South Island meat plant, scans eight lambs a minute, collecting from 45 data points per lamb in a round-the-clock operation. The technology is not available anywhere else in the world; AgResearch needed special approval to get the military-grade camera into NZ.

Chief executive Tom Richardson says the technology has the potential to help farmers double their income. . .

NZ support for agriculture innovation

Foreign Minister Gerry Brownlee has announced an $11 million boost to global agricultural research.

“New Zealand is a world leader in international agriculture research and we want to help meet global food needs in ways that are positive for the environment,” Mr Brownlee says.

“New Zealand is committing $11 million over two years to the Consultative Group on International Agricultural Research (CGIAR), a network of research institutes around the world that focus on agriculture, forestry and fishing. . .

Feds’ commend Government on investment in global agriscience:

Federated Farmers commends the Government on investment of $11 million towards global agricultural research.

The announcement today, made by Foreign Minister Gerry Brownlee, is a progressive step that will drive science and innovation in the agriculture sector.

“There is a great deal of work that governments and farmers worldwide should be collaborating on in the pre-competitive space to not only lift livelihoods in rural sectors, but also improve environmental outcomes,” says Federated Farmers’ National Vice President Andrew Hoggard. . .

Horticulture ripe for investment:

World-wide consumer interest in healthy food, growers being early-adopters of innovation, and rapid growth make horticulture in New Zealand ripe for further investment, says Horticulture New Zealand chief executive Mike Chapman.World-wide consumer interest in healthy food, growers being early-adopters of innovation, and rapid growth make horticulture in New Zealand ripe for further investment, says Horticulture New Zealand chief executive Mike Chapman.

“Today, the government has released a business-focused overview in The Investor’s Guide to the New Zealand Produce Industry 2017 which shows potential investors how well fruit and vegetable production in New Zealand is going,” Mr Chapman says.  . .

Healthy humans, lusty lambs:

Managing the diets of sheep to boost human health and keep stock in prime condition will be on the menu when NSW Department of Primary Industries (DPI) researchers present their latest findings at a Graham Centre sheep forum in Wagga Wagga on Friday July 7.

NSW DPI livestock researcher, Edward Clayton, has investigated ways to lift omega-3 fatty acid levels in lamb to deliver human health benefits, which could decrease risks of cardiovascular disease and treat inflammatory conditions, including eczema and arthritis.

“Omega-3 fatty acid, found in high concentrations in oily fish, is also a component of red meat and levels can be altered considerably through the animal’s diet,” Dr Clayton said. . .


Cabinet changes

December 18, 2016

Prime Minister Bill English has announced changes in and outside Cabinet:

Prime Minister Bill English has today announced his new Cabinet line-up which builds on the success of the last eight years and provides new ideas and energy heading into election year.

“Over the last eight years National has provided a strong and stable Government which is delivering strong results for New Zealanders,” says Mr English.

“This refreshed Ministerial team builds on that success and provides a mix of new people, alongside experienced Ministers either continuing their roles or taking up new challenges.

“This new Ministry is focused on providing prosperity, opportunity and security for all Kiwis, including the most vulnerable in our communities.”

Deputy Prime Minister Paula Bennett will remain the Minister of State Services and Climate Change Issues and will pick up the Police, Women and Tourism portfolios.

“I am looking forward to working with Paula as my deputy and I am delighted she is taking on the Police and Women’s portfolios.

“As only the second woman Deputy Prime Minister of New Zealand Paula is well placed to take on the Women’s portfolio and represent the interests of women at the highest level of the government.”

Steven Joyce will pick up Finance and Infrastructure, while Gerry Brownlee will remain the Leader of the House and retain Supporting Greater Christchurch Regeneration, Defence, and the Earthquake Commission portfolios. He will also be appointed as the Minister of Civil Defence.

“Steven and I have worked closely together in the Finance portfolio over the last eight years, and as Economic Development Minister he has delivered strong leadership of the government’s Business Growth Agenda.

“As Infrastructure Minister Steven will have a key role in overseeing the significant investments the government will be making in the coming years.

“I am delighted to have Gerry continue in his senior roles, including Leader of the House, and also to have him pick up the Civil Defence portfolio in which he has provided such leadership during the aftermath of the Kaikoura earthquake.”

Simon Bridges and Amy Adams have both picked up additional senior ministerial responsibilities.

Simon Bridges continues as the Minister of Transport and will pick up the Economic Development and Communications portfolios and Associate Finance, while Amy Adams retains Justice, Courts and picks up Social Housing, Social Investment and Associate Finance. Amy Adams will take a lead role in driving the Government’s social investment approach.

“Simon and Amy are two high performing Ministers who are ready to take on more responsibility. I am confident they will work well with Finance Minister Steven Joyce,” says Mr English.

At National’s Mainland conference, Amy told delegates she’d asked for money to be directed into social portfolios because that was the way to address the causes of crime.

She is well qualified for the extra responsibility for social investment.

Jonathan Coleman continues in his Health and Sport and Recreation portfolios, and will play an important role on the front bench.

“All New Zealanders care deeply about the health system, and Jonathan’s focus on ensuring that the needs of people young and old in accessing quality health care is a very strong one.”

Michael Woodhouse has also been promoted up the Cabinet rankings, retaining Immigration and Workplace Relations and Safety and picking up the ACC portfolio.

“I would like to congratulate Michael on his promotion. He has been a solid performer and I know he still has a lot more to contribute.”

Anne Tolley has picked up Local Government and will also be appointed Minister for Children, where she will continue her work on improving outcomes for children and young people.

Hekia Parata will retain the Education portfolio until May 1, at which point she will retire from the Ministry to the back bench.

“I am keen for Hekia to see through the education reforms which she is well underway on, and she will work closely with other Ministers to ensure there is a smooth transition in May.”

There will also be a transition of ministers in the Foreign Affairs portfolio.

Murray McCully will retain the Foreign Affairs portfolio until May 1at which point he will retire from the Ministry to the backbench. A decision on his replacement will be made at that time.

“I am keen for Murray to stay on for this transitional period to ensure I have the benefit of his vast experience on the wide range of issues that affect New Zealand’s vital interests overseas.”

This ensures there will be no need for a by-election if he leaves parliament when he’s no longer a minister. It also leaves the door open   for another couple of back benchers to get promotion next year.

Judith Collins takes on new responsibilities in Revenue, Energy and Resources and Ethnic Communities, and is well placed to oversee the significant business transformation work occurring at Inland Revenue.

A number of Ministers largely retain their existing responsibilities, including Chris Finlayson, Nathan Guy, Nick Smith, Todd McClay, Maggie Barry and Nicky Wagner.

Paul Goldsmith and Louise Upston have been promoted into Cabinet.

“I would like to congratulate Paul and Louise on their promotions which are all well-deserved,” says Mr English.

There are four new Ministers. Alfred Ngaro who goes straight into Cabinet and Mark Mitchell, Jacqui Dean and David Bennett who have been promoted to Ministerial positions outside Cabinet.

I am especially pleased that Alfred and Jacqui are being promoted.

He was an electrician before entering gaining a degree in theology and has extensive experience in community work. (See more here).

Jacqui is my MP, serving one of the biggest general electorates in the country. She c0-chaired the Rules Reduction Taskforce and was Parliamentary Private Secretary for Tourism and Local Government.

“The National party Caucus is a tremendously talented one, and as Ministers finish their contribution it’s important for the government’s renewal that we give members of our caucus an opportunity. Alfred, Mark, Jacqui and David have worked hard and performed well in their electorates and as select committee chairs, and deserve their promotions.”

There will be 21 positions in Cabinet until May 1 and a further six outside Cabinet (including two support party Ministers) keeping the total number of Ministerial positions at 27 plus the Parliamentary Under Secretary David Seymour.

“I would like to thank our support party leaders Peter Dunne, Te Ururoa Flavell, and David Seymour for their continued contribution to a strong and stable government.”

Mr English said that he expected to make announcements on the two further new Ministers to replace Ms Parata and Mr McCully just prior to their 1 May retirements from the Ministry.

Ministers Sam Lotu-Iiga, Craig Foss and Jo Goodhew are departing the Ministry.

“I would like to thank Sam Lotu-Iiga, Craig Foss and Jo Goodhew for their service to New Zealand as ministers. I am sure they will continue to be great contributors to New Zealand society in the years ahead.”

The full list of portfolios and rankings is here.


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