Productivity Commission slams National | The Jackal

11 Apr 2012

Productivity Commission slams National

Today, the newly formed Productivity Commission released its Final report into Housing Affordability (PDF), and it's all bad news for young Kiwi's who want to own their own homes.

Here's the upshot:

Home ownership will continue to elude many New Zealanders unless bold changes are made to New Zealand’s housing market, the Productivity Commission says.

Of course John Banks "thinks" this is a windfall for property developers:

"ACT would like to see action taken immediately to lift the restrictions on buildable land so that more New Zealanders, particularly the young, can afford to own their own piece of New Zealand," Mr Banks said.

Completely ignoring the fact that the high price of materials in New Zealand has led to a housing shortfall, John Banks arrogantly promotes a lifting of building restrictions to benefit property developers. He fails to acknowledge that international competition for our materials and overseas investment contributes to unaffordable housing.

It's also housing cost versus low incomes... If the government fails to develop policies to limit the drivers of the housing bubble such as property speculation, and continues to rely on a low wage economy, our home ownership rate will simply continue to decline.

Ignoring these facts, David Farrar also dishes out another dollop of propaganda:

Now some of the usual suspects will say “No we can’t do it” because they think larger cities means more roads and more roads are of course evil. Now sure you can have that view, but be aware that the price of keeping to that view is that more and more low to middle income families will never get to own their own home, and will probably also end up paying more to rent than in the past.

People like John Banks aren't talking about urban spread, they are talking about enabling more high density developments and reducing restrictions on the building consent process, which is exactly what happened before the leaky building crisis that has ruined many lives.

The bold changes the Productivity Commission is talking about should include a Capital Gains Tax so that property speculation doesn't drive up prices. Lifting the minimum wage would also help make housing more affordable for ordinary New Zealand families and better social housing policy would ensure a safety net.

Instead of making the best decisions for New Zealanders, the National government is fundamentally opposed to policy that ensures housing affordability. In fact over the last few years they have gone about making the situation a lot worse.

The Productivity Commission cuts to the chase*:

Although the Commission supports the better use of public assets, it is concerned that the way the current social housing reforms are being conducted may undermine the social purposes for which the state is involved in providing housing. Starting the reforms by making changes to state housing without addressing demand pressures and building options for state tenants to ‘move on’ is generating a risk that those who are reviewed out of state housing will have to accept inadequate alternatives. Coupling redevelopments with a transfer of existing state housing stock to the community housing sector has the potential to deliver better social outcomes.

Social housing is targeted to people with a set of risks or vulnerabilities that predispose them to social and economic disadvantage. The sustainability of these tenants’ ‘readiness to move on’ is contingent not on a change in their level of need, but on addressing the vulnerabilities that create that need. The current model of moving people through different kinds of housing based on an assessment weighted heavily towards housing affordability is not well equipped to address these vulnerabilities.

By inadequate alternatives the Productivity Commission means homelessness or people living in garages. Instead of ensuring a viable social housing system, the overall state houses available declined by 171 between 2008 and 2011. National increased the amount of vacant state houses by a whopping 471 over the same time period and 256 state houses were demolished.

Along with the harsher criteria and restrictive 0800 answer-phone service, this is designed to move people into an overpriced open rental market, which ensures house prices remain artificially inflated. The social cost of such short-sightedness is enormous!

*Incidentally, the version David Farrar linked to didn't include the paragraphs quoted.