Labour's housing reform agenda

This blog post was originally published on The Standard, here.

The Labour Party’s centenary is a great time to be talking about housing because housing plays a starring role in our party’s proud history.

Housing is never far from the action when Labour is in Government. When National is in power, housing problems inevitably start to pile up.

With the country again in the grip of a housing crisis under National, that crisis will put us to the test. How we rise to that challenge – the quality of our policies, and the political courage we show – will determine the cut of our social democratic jib.

All Governments are defined by the big challenges and how they meet them.

For the first Labour Government it was lifting people out of the poverty of the Depression, and dealing with a World War.

For the fourth Labour Government, for better or worse, it was modernising and opening up the economy after nine years of Muldoon.

For the fifth it was restoring sanity and decency to government and the economy after the nasty divisive 90s.

The next Labour Government, led by Andrew Little, will be defined by how we respond to the housing crisis.

Our legacy will be positive social democratic solutions to the housing crisis that build a fairer and better New Zealand.

How in this land of plenty did we get to have 41,000 people classed as homeless?

The majority of those 41,000 people are families with children. Slightly more than half are people in paid employment or study.

Another face of the housing crisis is the scourge of cold, damp homes.

Thanks to the ground breaking research of Dr Philippa Howden-Chapman and her colleagues at Otago University, we know 50,000 children are being hospitalised each year with respiratory and infectious diseases caused by poverty, overcrowding and cold damp mouldy homes.

Many of them suffer permanent lung damage that leaves them vulnerable to infections and shortens their lives.

Again, how did this happen?

The third face of this housing crisis is the death of the Kiwi dream of affordable home ownership.

New figures from Statistics NZ show a million New Zealanders are shut out of home ownership. They just don’t have the net worth to afford a deposit.

Nearly 80% of renters, that’s 458,000 households, couldn’t scrape a deposit together.

Stagnant incomes, skyrocketing house prices – up 15% on average across the whole country in the last year – and it’s no wonder home ownership rates are now the lowest in 65 years.

How did we get into this mess?

The sky is dark with neo-liberal chickens coming home to roost. So let’s try and count them.

Part of the reason home ownership rates have been falling all over New Zealand is that wages have been stagnant or falling in real terms, and so many people depend on precarious work.

The reason pensioners are living out their days in campgrounds is that they have never been able to save enough to own their own home. It is tough surviving on superannuation in the rental market.

It is the legacy of policy thinking that somehow making us a low wage economy would make us richer.

Add to this the withdrawal of the State from actively supporting the building of new homes.

In the 1980s and 90s government stopped intervening in the housing market to encourage new home construction and help young families into their first homes.

That policy – State Advances loans and capitalising the family benefit – kept the build rate ahead of the population curve for decades.

It was one of the great institutions of the post-Depression post-war twentieth century, along with the expansion of free education, the public health system, and the welfare state – that made us one of the most equal societies in the world.

Good quality housing, and the pride, security and stability of home ownership, allowed generations of Kiwi families to improve their lot.

Since the light went out on that policy, we have never built enough homes to keep up, and home ownership rates have been falling.

As our society became more unequal, with a sizeable minority trapped in a cycle of low wages, a lean and mean welfare system, and the precarious work of a deregulated labour market, we failed to expand the state housing safety net that could have at least ensured those people had a decent secure roof over their heads.

National of course sold off state houses and brought in market rents in the 1990s. Helen Clark’s government restored income related rents, and built state houses to make up for the ones National sold, and deserves credit for that.

But the country has never been able to sustain an increase in the number of state houses relative to population growth. As a result, only 4% of Kiwis live in a state house. Most people who are really struggling live in a private rental that is worse quality than the state houses, they pay more rent, and have no security of tenure.

Another policy from the 1980s had unintended consequences that have come back to bite us. The Resource Management Act created a framework for Councils to plan and manage urban growth but pretty much left them to their own devices.

For various reasons many Councils adopted highly restrictive planning and zoning rules that instead of encouraging growth and building, sought to limit and control it.

In our biggest city, rules that stopped the city growing up or growing out, just created a pressure cooker – causing land and housing to skyrocket in price, triggering a speculation frenzy.

When you can make 25% capital gain in a year, and there is no effective tax on that, in fact there a massive tax breaks for property speculators, can you blame a generation of young Kiwis who think that the only way to get ahead is to buy and sell property?

The speculative mania the rest of the country associates with Auckland is now a national problem.

When the Reserve Bank, worried the Auckland bubble would pop and threaten the banking system, brought in lending restrictions that put the squeeze on investors, they simply fanned out around the rest of the country.

Now all over the country, the fall in home ownership rates is accelerating, and homelessness is increasing.

So what is to be done?

What we are seeing is systemic failure on a grand scale.

With damaging economic and social consequences.

The housing crisis asks of us a systemic response.

Tinkering, nudging, pilot projects, subsidies, micro-initiatives, announcements that are designed to send a message but not have any lasting impact.

These things won’t do.

I’ve just described National’s housing policy. Not only has it had no impact on a deepening crisis. But the public see right through it. It is not a policy. It’s just a set of lame excuses.

Our challenge is to re-set the parameters of social democratic government.

It is time to redefine what Government can and should do.

1. It is time to bring back active government.

The market is failing. It is not building enough houses. It is certainly not building enough affordable homes.

So in the words of Andrew Little let’s get on and build some bloody houses.

Since the 1980s a generation have convinced themselves Government is not capable of doing anything right. That you can only trust the market.

We are going to change that mindset. We are going to do it in partnership with the private sector – but we are going to build 100,000 affordable homes for first home buyers.

For decades the Government stimulated new builds and helped generations of Kiwi families into their first homes. We’ve done it before, and with Kiwibuild we are going to do it again.

And with our Affordable Housing Authority which Andrew announced on our centenary weekend in June, government will lead and enable the development of large-scale urban development projects that will modernise communities, improve the housing stock, and invest in infrastructure.

This will be a way that all over the country, central and local government can work together on delivering more and better affordable housing.

2. We need to change the rules of the game that allow vested interests to make a killing at the expense of everyone else.

It is madness that our rules allow huge tax-free capital gains for speculators, and actually subsidise that speculation with tax-breaks.

Last year property investors pocketed tax breaks of $650 million while the rest of us went to work every day to pay our taxes.

We are going to tax speculators who sell a rental property within five years.

We are going to shut down the tax breaks that allow speculators to write off their losses.

And as Grant Robertson has said we are going to embark on comprehensive tax reform in our first term of government.

3. Let’s put the interests of New Zealanders first.

This Government is in denial about the impact of foreign buyers in the housing market.

And they are happy to see runaway immigration even though it is throwing petrol on the housing market.

They like it because it is driving wages down and it gives the illusion of economic growth.

National hates the idea of shutting the door on foreign buyers because that would challenge their most deeply cherished commitment to the free movement of capital.

We will ban non-resident foreign buyers from buying existing homes. And we will review the immigration settings to find a better balance between the country’s need for skilled workers and the impact on housing and the labour market.

4. We should be pragmatic about finding solutions and willing to adjust our policies when the facts change.

The right have constantly blamed Councils and planning laws for expensive housing. The left has always reflexively defended planning. But it’s a fact that restrictive land use controls have stifled building, and choked off the supply of land driving up prices.

We will reform the planning system so it can both protect the environment, while allowing us to build more and build better.

5. We have to reclaim public housing and reinvent it with pride.

All over the world, right wing politics has worked hard to discredit the idea that public housing can do a good job of providing decent quality and affordable housing for people that need it.

You’d think by how much Paula Bennett talks about it that three-quarters of state houses were P-contaminated when in fact the real number is a fraction of 1%.

If National spent less time vilifying state house tenants and more time building state houses, we’d have a lot fewer homeless people.

I felt proud when Andrew Little announced at our centenary weekend in June Labour’s commitment to rebuild and revitalise state housing.

We are going to run it as a public service with one job – to provide great income-related rental housing.

We will stop National’s state house sell off, and to build thousands of new state houses.

6. When markets aren’t working, we have to be willing to re-set the rules to make them work better.

When 50,000 kids are going to hospital because of cold damp rentals, it is not working.

When half the population are renting but they can be evicted in 90 days for no reason because our archaic tenancy laws give them no security of tenure, is not working.

Making renting better will be a priority for our Government.

When housing goes wrong, it has terrible spill over effects on people’s health, education, and life chances.

When we get housing right, it sets a platform for people to improve their lives, and their children’s lives.

No one else is going to fix this housing crisis.

Only Government can do it, and only a bold and determined Labour-led Government will do it.

We have the policies, and the political will.

What better way to celebrate our great party’s hundred birthday than campaigning to win government so we can make those big reforms.