Thank you all for the work the Property Council does. You are important advocates for reform on issues like the Resource Management Act and the Auckland Unitary Plan.
I appreciate the ideas you’ve been putting forward, and I especially appreciate that you are willing to champion ideas even when they don’t benefit your members financially.
I know that you, like so many New Zealanders, want to see a better built environment.
An end to homelessness.
And a city where our kids will be able to afford their own homes.
Housing in New Zealand
You know, there are some people out there who think that property developers are the problem in New Zealand’s housing market.
I’m not one of those people.
There are people who think we need all manner of controls in place to stop people building.
That’s not Labour’s view.
We see your industry as part of the solution to the housing crisis we currently face in New Zealand.
We want to build more, and we want to build better.
I am committed to working work with you as Prime Minister, so we can help you do just that.w
There’s been a lot of recent public discussion about housing, and about how we build successful cities.
We’ve got real issues around housing in New Zealand, and there’s been a lively, important debate over the causes and solutions to the problems.
Most people agree that we have a housing crisis.
The current Government has allowed the problems in our housing market to spiral out of control.
Most of us can agree that both local and central government have not been good at managing growth, in Auckland and in the regions as well.
We need to change that.
I believe it is a moral issue.
We cannot sit back and allow future generations to let go the dream of affordable home ownership.
We cannot allow pensioners to live out their days in suburban campgrounds, and kids to grow up in cars and garages.
We cannot allow 50,000 children to be hospitalised each year with infectious diseases caused by cold damp houses.
And we cannot continue to allow our nation’s wealth to be sucked into the black hole of real estate speculation, instead of into businesses that build things and create prosperity.
These aren’t just economic issues. They’re moral issues.
We must bring practical solutions to tackle the root causes of the housing crisis, and fix it for the sake of the next generation.
We owe that to our kids, and to their kids.
Recent moves in urban development
I want to tell you about Labour’s housing reform agenda.
But first I want to talk about Auckland Council Unitary Plan, and the Government’s National Policy Statement on Urban Development Capacity.
Both are modest, incremental improvements.
They will help, but they won’t deliver the step change that is so desperately needed.
National Policy Statement
You’ve heard from the Minister of Housing this morning about the NPS.
I’ll add this. The NPS is nothing more than a wet bus ticket.
More than that, it is at least 5 years too late. This Government has seen the signs of escalating housing unaffordability for years now and has done nothing to address it.
The Minister has buried his head in the sand and the only response seems to be constant press releases. Reserve Bank data shows that from 2013-2016 house prices in Auckland increased by 52% compared to 11% for the rest of New Zealand.
It does recognise that restricted land supply is one of the core reasons sections costs have gone sky high. I applaud it for that, at least.
But all the NPS does with that realisation is put in a bureaucratic mechanism to prompt Councils to assess demand and incrementally rezone land for development.
But as the Property Council and others have pointed out, you can rezone as much greenfield land as you want for housing, but unless the Government starts thinking about infrastructure funding - both investing in and servicing it, we won’t get the housing Auckland needs.
Later, I’ll talk about how Labour will break the infrastructure deficit.
Auckland Unitary Plan
The Unitary Plan debate got a lot of Auckland people excited.
It’s up-zoning to allow more intensification, and a more flexible urban growth boundary, will ease the tight controls that have stopped the city growing up and out.
But it doesn’t challenge the fundamentals of a planning system that is at its heart restrictive; that creates an artificial scarcity of land, and drip feeds it into a highly speculative market.
I am sceptical it will deliver much affordability because as long as there is an imbalance of supply and demand prices will continue to increase.
In that environment, developers will naturally choose to build high-end homes most of the time, because of the greater profit margins and reduced risk in that part of the market.
Enough with the tinkering. The piecemeal measures.
If we want to solve this problem.
If we want to fix an urban land market that has given us some of the most unaffordable housing in the world.
If we want to build more and build better.
Then we need to show some ambition.
Labour’s plan for urban planning
So what will Labour do?
First, we’ll reform the planning system so that our cities make room for growth.
Our plan is to replace the urban growth boundary with more intensive spatial planning that provides signals as to where future development can occur.
It will protect areas of special value, and public open spaces big and small for future communities.
Through the current designations process, it will acquire land for roads and public transport.
And then it will allow development to take place – as long as that development can carry the costs of the infrastructure and services the new communities need.
We’ll get rid of the Auckland rural urban boundary that creates a massive differential between expensive urban land and cheap rural land just across the road. As you know, that differential triggers the land banking and speculation that drives up section prices.
With Labour, that incentive for landbanking will disappear.
It is not, as some might fear, a charter for unchecked sprawl without decent infrastructure.
If we loosen some of the height and density restrictions in the city, and we deliberately encourage brown and grey fields development, and we require new developments to carry the cost of new infrastructure – it will in fact tilt the playing field in favour of development in the city.
Labour’s plan for infrstructure
Second, we will change the unfair, inefficient and expensive way infrastructure is financed.
We have to find a way to unblock the massive infrastructure bottleneck. The current system is just not working.
Our plan is to fund infrastructure for new developments through long-term bonds so the cost can spread the cost over the life of the asset.
It will be cheaper than what happens now, when the developer passes the costs on to the price tag of the new home which is paid off on the mortgage, pushing up property values that are then capitalised into the values across the market.
The bonds would be paid off through a targeted rate on the properties in the new development, ensuring infrastructure costs are not subsidised by the ratepayer or the taxpayer in places where it is not economic to build.
Of course not all urban infrastructure can be funded this way. When government decides to open up new areas for development – let’s say a new satellite city – it should invest in transport and other infrastructure.
Affordable Housing Authority
Third, Labour will cut through the red tape to enable bigger more ambitious private sector-led development.
We will legislate to establish an Affordable Housing Authority that will manage the government’s urban land holdings. We’re following the lead of authorities like Places Victoria in this area. Our aim is to deliver a 30 year pipeline of land for residential, commercial and industrial development.
The AHA will be empowered to establish local development companies for specific development projects.
Those development companies will partner with the likes of Panuku, Auckland Council’s development agency, as well as iwi or other private sector investors.
Their role will be to lead and master plan ambitious integrated mixed-use and mixed-income urban development projects that have homes, jobs and amenities. These mixed-use, mixed-income communities will have everything they need to be propserous and thrive.
We are serious about doing this at scale. Imagine 10 or 15 developments in Auckland on the scale of a Hobsonville or a Tamaki.
The Affordable Housing Authority won’t just be an Auckland thing.
We see it as a vehicle for central government to partners with communities all over New Zealand on the built environment.
South Dunedin, for example, faces real challenges from low quality housing, flooding risk, a high water table, and rising sea levels. An urban development approach that brings central and local government together could well be the way forward.
In Canterbury, too, much of the pain and protracted delays in the rebuild have been a result of repeated failure by central government agencies to create opportunities for the private sector to invest and build. We have to learn from that.
Alongside our Affordable Housing Authority is KiwiBuild, our commitment to build 100,000 affordable homes over ten years for first home buyers.
For several decades, governments of all stripes stimulated a supply of affordable homes using State Advances Loans.
In the process, those governments put generations of Kiwi families into their first homes.
We can do that again.
We are going to finance the building of 100,000 homes, and we’ll sell them to first home buyers.
We’re going to cut through the productivity and scale problems of a construction industry that are a legacy of the boom and bust cycle.
The homes will be designed and built by local firms that can scale up.
An average of 10,000 homes a year will allow the work to be tendered out to firms that can build hundreds of homes instead of dozens; or thousands instead of hundreds.
Scale and certainty will allow firms to invest in the plant and technology of offsite manufacturing.
KiwiBuild homes will be just one supply line into the new developments of our Affordable Housing Authority - alongside open market homes, and non-profit affordable, and state and community housing.
Now if any of you are concerned the Affordable Housing Authority and KiwiBuild will crowd out private sector opportunity, it won’t.
It will generate opportunity for a bigger, more competitive development industry than we’ve ever seen.
We’ll run KiwiBuild in a counter cyclical way to ramp up production and maintain it there for a decade.
The Affordable Housing Authority will open up large new developments that the private sector on its own couldn’t do. But the actual delivery of places to live work and play will be done by your industry.
Tax incentives to speculate
Fourth, we are going to fix the tax and policy incentives that have made property speculation the country’s number one industry.
We’re going to help that investment capital return to productive businesses that create value.
The current government seems determined to ignore the effect of demand pressures on the housing market.
Well, we won’t.
We know that unless the current incentives are changed, runaway demand will stop us from ever building our way out of the housing crisis.
Labour will immediately push the bright line test out to five years. If you sell a rental property within five years you’ll pay income tax on the capital gains, end of story.
We are currently designing our policy to shut down negative gearing tax breaks for speculators that last year saw investors write off $650 million in paper losses.
Negative gearing is a harmful public subsidy for speculation, and Labour will crack down on it.
We will also ban non-resident foreign buyers from buying existing homes.
Australia, Canada, Hong Kong, Singapore and Malaysia all have policies to limit the impact of foreign buyers on local housing. It is time we got real too.
In Australia their ban on non-resident foreign buyers buying existing homes, last year channelled $30 billion of foreign investment into the building of new housing.
And in our first term of Government, we will initiate comprehensive tax reform by convening a Tax Working Group to look at making a fairer and more efficient system that promotes the productive economy as opposed to speculation.
So there’s our agenda for fixing the housing crisis and managing urban growth better.
One, genuine reform of the planning system to make room for growth.
Two, changing the way we finance infrastructure.
Three, an Affordable Housing Authority and KiwiBuild to increase the supply of affordable housing and build better communities.
Four, we’ll crack down on the tax incentives to speculate.
Thank you again for inviting me today. I look forward to your questions.