It may not be revolutionary, but we are in need of radical policy change, and an overthrow of outdated and failed approaches that have let our city down.
I want to thank the Botany and Pakuranga Labour electorate committees for inviting me to be here tonight. And thank you all for coming out.
In many ways the housing crisis, and our gridlocked streets, are symptoms of a perfect storm of policy failure.
And here in Flat Bush, we are tonight in the eye of the hurricane.
It is an area of massive population growth – an extra 40,000 people will be in Flatbush by 2025.
We are a stone’s throw from three of the Government’s Special Housing Areas – the Government’s main policy response to the acute shortage of housing that is driving up house prices.
And while the East and South-East are beginning to see some investment in transport infrastructure, it has been a long time coming.
The CEO of Auckland Transport recently admitted that the South East is amongst the parts of our region that are worst-served by public transport.
I hope I don’t need to spend much time convincing you we have a problem with housing and transport.
House prices have gone through the roof. QV’s Manukau East area (which includes Pakuranga, East Tamaki etc) now has an average house price of over a million dollars – up 24% in the year.
The entire Auckland region will hit that million dollar average in less than a year the way things are going.
Our kids have been priced out of the market. Home ownership is at its lowest in 64 years.
It now takes the average Auckland homeowner 50 years to pay off their home.
The dream of affordable home ownership is dying. That’s bad because home ownership is good for families, good for communities. It gives people a stake, pride, and a stable environment for kids to grow up in.
Most Kiwis who start businesses do so by borrowing against their house.
Skyrocketing house prices also lead to rents going up as landlords try to get a return on their investment. The average rent went up $2000 a year over the last 12 months. Where are renting families going to find an extra $2000?
As always it’s the most vulnerable who feel the sharp end of any crisis.
Last week the Salvation Army released a report highlighting the plight of the homeless, that showed almost half the homeless are children.
Overcrowding, substandard living conditions, and high levels of transience are the daily experience of many thousands of Aucklanders.
So, as Lenin said, what is to be done?
We clearly need more houses. Under National a shortfall of 32,000 houses as built up. This shortage is part of what is driving prices up.
Unfortunately the Government’s flagship policy has been to draw a whole lot of lines on the map and call them special housing areas, in which the Council will fast track consenting.
Sadly in the two years since the SHAs were set up, very few new houses have been. In fact 102 according to the Herald. Given that there are 96 SHAs, and nine more were announced today that means we now have more SHAs than we do houses built in SHAs.
Remember we need 13,000 new homes a year in Auckland just to keep up with population growth.
The market is only delivering about 8600 a year at the moment – the shortfall is getting worse every day, and the Productivity Commission projects it will blow out to 60,000 by 2020.
Wait there is more, there is reason to believe the SHAs have made matters worse.
Ivan Frisken a developer who was building 140 new homes in one of the three SHAs in Flat Bush has pulled out of the SHA in Murphy’s Road. His land has been going up in value so fast the sections are now worth half a million each. The finished homes will sell for $1.1 million, and he doesnt want to be part of the SHA because it would require him to include 10% of the new homes as affordable – which is currently about $580,000.
What is clear is that many developers are in no hurry to build in the SHAs because it is easier for them to just sit on the land and watch the value go up. Whats more many sections in the SHAs are on the market and being promoted as great land banking opportunities because of their “special housing area” status.
What would Labour do?
We’d launch a Government backed building programme to produce 100,000 affordable homes over ten years, for sale to first home buyers.
We will work with the Council, iwi and private sector partners to launch a string of major urban development projects – revitalising town centres, delivering medium and high density housing in mixed-use urban communities around the rail network.
National has been tinkering, and hoping the market will fix itself. We will roll up our sleeves and build large numbers of houses just as the first Labour Government did. Just as the Kirk Government did.
We will also tackle the property speculators that are making a killing at the expense of Generation Rent.
For a start we will put a stop to non-resident foreign speculators buying existing New Zealand homes. My Bill to do this will soon be debated in Parliament.
It is the Australian government’s policy and in the last year it has channelled $30 billion of mostly Chinese investment into new apartments in Sydney and Melbourne.
The root cause of the property speculation is the expectation of vast tax-free capital gain. To root that out, we need to reform the planning rules, that choke off the supply of new land, restrict new medium density developments, and drive up the cost of new houses.
Labour will reform the way the Councils use urban growth boundaries. Land inside the boundary in South Auckland is 10 times as expensive as land on the rural side. This just drives up section prices.
18 ha of land in Pukekohe recently sold for $6 m. It sold three years earlier for $1.75m. Huge increases in capital gain.
We need to free up the rules stopping medium density development.
If you stop people building up and out – you get a pressure cooker effect and the outlet is escalating prices.
And finally we need to be smarter about how we pay for infrastructure for new developments. At the moment most of it is paid by the developer and that just gets passed on to the price tag of the new home and added to the mortgage. It can add $50-100,000 to the cost of a new home, and this gets capitalised into the market value of all homes in the market.
It would be smarter to finance the roads, sewerage, water supply, and electricity through local government bonds and then pay that off through a 30 year targeted rate on the property in the new development.
This would get the benefit of cheap local government borrowing rates. It would spread the cost over the lifetime of the asset. And by using a targeted rate, the cost stays with that development, and is not subsidised by the ratepayer.
So there you have three big bold ideas:
1. Kiwibuild, our government-backed building programme to massively increase the supply of new housing, making high quality affordable homes for a new generation of first home buyers
2. A crackdown on speculators
3. Reforming the planning rules to free up land supply, build more houses where people want to live, and lower infrastructure costs.
And three more that are just as essential:
1. Make life better for renters – increased security of tenure, and minimum standards to make sure all rental properties are warm and dry
2. Build more state houses and stop selling off the ones the Government owns
3. Commit to ending homelessness – make available the houses, and the funding for essential support services to help homeless people get their lives back on track.
Transport is the other leg of the double.
It is not a pretty picture out here in the East and South-East. It has for a long time been badly underserved by public transport and treated like the poor cousin when it comes to transport investment.
Add to that massive growth that is projected. The amount of land in SHAs and zoned future urban is the size of Hamilton.
Much of that growth is going to happen all the way down the southern corridor. Right down to Pokeno and beyond.
And all those people are going to rely on an already gridlocked southern motorway.
So it is time to get serious.
In Labour’s view, while we need to keep investing in better roads, Auckland has to turn around 60 years of under investment in public transport.
It is the only way we can efficiently more large numbers of people around the city, and preserve the liveability that we want for our town centres and neighbourhoods.
We can do this by building a modern, rapid transit network. The City Rail is an essential first step. It will allow the trains to run as frequently as every five minutes, for example, both at Manukau and Panmure.
Then if we connect Panmure and Manukau with a busway, that gives you a rapid transit spine running through Botany and connecting this whole area to the rail network.
Auckland Transport are moving ahead with the Panmure-Pakuranga leg of the busway as the first step. We will extend it through to Botany Downs and on to Manukau.
It needs to be built so it can be converted to rail (probably light rail), and from Manukau it can be extended through to the airport.
Currently the train journey from Panmure station to Britomart takes 16 min. That’s a lot faster than car or bus.
When the busway is in – Botany to Panmure will take 15-20 min. So with trains and buses running every 5 min at peak hours, that is Botany to Britomart in less than 40 minutes.
Plus rapid transit connections to Manukau and the airport.
Then if we support that spine with high frequency integrated feeder services we’ll start to see a modern public transport system.
Auckland Transport, our ratepayer funded and owned transport agency, to their credit are trying to do this but they are constrained by lack of funds. They are currently taking public submissions on their new plan for the East which includes
• more frequent services feeding Panmure and Manukau
• better connections between Botany, Highbrook, Ormiston and Manukau
• better bus-ferry connections at Half Moon Bay
• more frequent connections (every 15 min, 7 days) btwween Botany, Howick and Panmure.
So that is the vision. But without much more support from central Government than National is willing to give, we won’t see the vision become a reality under current policy settings.
Unless things change, you won’t see the busway run from Pakuranga to Botany to Manukau in the next 20 years.
For that, and for the big bold housing manifesto I set out earlier, we need a change of Government.