Posts by Lucy Telfar Barnard
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Hard News: Housing, hope and ideology, in reply to Jim Cathcart,
The idea that the government cannot build enough housing for everyone is garbage. Of course they can. What it will mean is that the public deficit will explode, but it can be done. NZ is a sovereign nation with its own currency.
As I understand it, the issue isn't the cost, but the availability of building materials and adequately-skilled labour.
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Hard News: Housing, hope and ideology, in reply to Jim Cathcart,
So, off the top of your head, you believe that micro-managing supply “should mean” that you can control price rises keeping everybody happy. You would be popular in a Len Brown regime, but I think that’s an unrealistic claim, even if you have the econometric modelling to support you. In fact, it is that mentality that has got us to this point that we’re in now. And I will call you on it.
Call me on whatever you like. I wasn’t trying to address the question of controlling price rises, and I’m not interested in micro-managing supply or in “keeping everybody happy”, I’m interested in making sure everyone has somewhere decent to live. At the moment that would require something macro, not micro. The reality is that even if the government were interested in building new houses, which it’s not, we’d be lucky to get anywhere close to building enough to get to the point where we’re treading water with matching supply and demand. However, in the unlikely event that we did manage to catch up, and prices fell as a result, and people lost money because they chose to invest in property, well, they can’t say they weren’t warned that property as an investment has risks like any other investment.
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I spent my childhood in a rural provincial village. Everyone there prioritised having a pair of gumboots pretty highly, and would also have prioritised having a pair of "good" shoes (for weddings and funerals and dances and trips to Auckland) and a pair or ordinary shoes (possibly jandals if they were feeling poor) for going into town when it was too warm for gumboots. . At school we were in gumboots in the winter and barefoot in the summer, but we did aim to own a pair of shoes that fit - though occasionally poverty prevented that aim.
The survey doesn't make assumptions about people's economic well-being by looking at their feet. It makes assumptions based on what people have, or have done. I have yet to meet anyone who has no shoes out of choice (and if I did, I'd be wanting to know whether they could afford shoes if they wanted to). Even the guy at work who goes barefoot all the time out of choice has a pair of shoes that he keeps in his car because it's illegal to drive in bare feet. Of course you may know someone who is an exception to this, but that's why surveys ask lots of people rather than just one - and also why there are questions later in the survey about what people think are important, which would help identify whether not having an item on the flashcard list was a choice/priority rather than a question of affordability. -
I’m not quite sure what your point was there steven, but your “fact” is a bit off.
The average salary of policy analysts in June 2013 was $88,912. If we assume 37.5 hours/week, that's 1950 hours over the course of a year (including paid holidays), which is $45.60/hour. Before tax (relevant because shoes are not tax deductible).
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On the poverty front, I would see the lack of shoes being included in the index as being a way of measuring extreme poverty. Poverty isn't a on/off thing, it has degrees, and I would see all three of those questions (overseas holidays, automatic washing machines, shoes) as being useful clues to where on the poverty continuum people sit.
The problem with this is that with so much of the country’s wealth wrapped up in houses, any social housing initiative is going to potential stymie the whole mechanism by which NZers have lived and saved for financial independence.
That depends on how you manage it. At present unmet housing need in Auckland alone is measured at about 30,000 houses now, and 13,000 houses a year subsequently. Meeting that need should mean house prices just stop going up so bleeding fast, rather than dropping in value. You can deal with the high prices by letting time and inflation reduce the real value of property.
If people are living in the houses they own, any drop in real value won't make a difference to them. If they're not living in them, then it's too bad. Every bit of financial advice over the decades has warned property investors that they're not immune to changes in the market: they made their investments knowing that risk, and if that risk is to a small extent realised and leaves them with a smaller nest egg than they were counting on (though it's still likely to at least be the value they originally invested plus inflation), they'll still be better off than people who had their retirement savings in anything-corp in the 80s, or finance companies in the noughties.
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There are also the harder-to-measure cost benefits. Rental tenure is insecure tenure, and the govt's not making any noises about doing anything to improve tenure security. The social costs of tenure insecurity feed through into high school turnover and poorer health outcomes.
Plus Marc, yes, thank you for pointing that the figures are all wrong: The other side of your coin is that 1000 people don't need 1000 houses (the average household size on the census was 2.4, even if we ignore the likelihood that state house tenants have larger household sizes), so the $12m vs $500m is even more clearly a false comparison, even if the $12m were costed accurately, which it's clearly not. -
Hard News: Housing, hope and ideology, in reply to Kumara Republic,
does the Housing Minister really think the likes of the Sallies have the dosh to take on such big housing assets?
The Salvation Army already have a large housing portfolio, so I suspect they do have the dosh (so shouldn't need to rely on their earnings from getting the problem gambling services contract)
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Hard News: Housing, hope and ideology, in reply to Josie McNaught,
English is starting to look alarmingly like some Scrooge or Shylock type character...
Please, not Shylock. I know English is Catholic, but references to the ticklish one caused enough embarrassment and distraction in the election without carrying on here.
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There's another piece of the 1990s puzzle that I see even David Thorns missed. The decision to remove income-related rents was also a response to a Business Roundtable complaint that income-related rents in state housing created unfair competition for private landlords and thus kept rents lower than the market rate (sorry, I don't have a reference for this, but I remember it clearly from an essay I wrote on the subject in 1992).
So the expectation, even from the Right, was that removing income-related rents would make rents go up, it's just that they would have viewed the initial increase as a "market correction" or some other cruel euphemism. The AS was meant to soften the blow of that correction, but I can't imagine they didn't see an associated rent increase as inevitable. I certainly did. Though at the time I think there was some rhetoric about how it wouldn't affect rents because the existence of the supplement would make investment in new rental stock more attractive, or some such BS.
There are of course so many issues with the state removing itself from social housing provision, not least amongst them some concern over the lead role being taken by the Salvation Army, who do great work, but have views on homosexuality, and possibly other things that wouldn't be permissable in a government agency.
So, yeah, if the government were looking to add community providers into the social housing model, that could be a good thing. But divesting responsibility looks a whole lot like passing the buck to me. It's just another case (analogous to the PM handing over responsibility for the GCSB to the AG) of the government looking at what issues are causing it embarassment and rather than fixing the problem, finding a way to make them embarrass someone else instead.
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Yup, and the banks lending policies affected the modern distribution of wealth in other ways too. I remember a friend telling me how his parents were house-hunting in the late 60s. There was an old villa in Devonport they really wanted to buy, but as you've noted, the bank wouldn't lend the money to buy something old, and they couldn't buy without a mortgage, so they bought a new build in Ranui.
By the time we were talking about this, in the 1990s, Devenport had already gentrified. Ranui apparently still hasn't. So his parents' asset-base was directly determined not by their own choice, nor by how much deposit they had, nor their income (since the mortgage required for either property was the same) but solely by bank mortgage policies
I guess the equivalent now would be small apartments, where banks will lend less because of the perceived risk. Kind of hard to see them appreciating compared to other options the way Devonport did compared to Ranui, but who knows?