David Hargreaves challenges the Government to let common sense prevail - and axe its proposed state housing sale

David Hargreaves challenges the Government to let common sense prevail - and axe its proposed state housing sale

By David Hargreaves

During a brief foray into the world of public relations many moons ago, I picked up a piece of information/knowledge that was like gold.

It went something like this: When being questioned by the news media, under no circumstances should the person being interviewed ever repeat in their answer either the question, or parts of the question, that they have just been asked.

For example, what should the retort be if you are faced by the question: "Do you beat up your partner?"

Well, the answer to this question should be something along the lines of: "I have the utmost respect for my partner and treat them very well at all times."

The completely wrong answer - and it's a good game to listen to interviews and see how often the interview subject gets this wrong - would be: "I don't beat up my partner."

The essential problem with the second answer is that while it does an immediate job in answering the question, it sounds defensive, it puts negative words in the person's mouth, and it opens up the person to having the words repeated in isolation - without the much needed context and explanation that the words were actually used in response to a question.

Even worse, when people see such words associated with someone, they unconsciously in their own minds start to remove the denial part of the statement. "I don't beat up my partner" starts to morph into "I beat up my partner". Oh, yes, you do, I bet you do. I know you do.

I use that example because I felt the Government's attempts to get the public on board with their, well, I'll humour them and use their term: "social housing reform programme"  had more than a little of the "definitely don't beat up my partner" feel. I tried to make some sense of all this in a recent opinion article on the subject.

I was magnetised in particular by question 11 in the question and answer paper produced by the Government at the end of January in explanation of the policy. The question stated: "Is this all about selling state houses?" To which my internal dialogue immediately responded: "Why, yes. Of course, it is."

It may therefore come as some surprise that the "real" answer, well, at least the official one, was: "No. It's about better meeting the needs of tenants...", etc, etc, etc, etc, etc.

But I'm afraid from that moment on I have been very much in "beating partner" mode and have formed the view that this is really all about selling state houses because if the Government's denying it, then it must be.

And why does the Government want to sell state houses?

Because that's the sort of thing a National Party should do.

We had the "mixed ownership model" plan for state assets put in place between 2013 and 2014, which for the uninitiated involved flogging off part of some of the Crown's assets.

Because that's the sort of thing a National Party should do.

Power companies sold cheaply

Even though the timing of the partial float of the state power companies was not good, the Government went ahead, with a result that the taxpayer has in all probability seen half their shares in those companies sold too cheaply.

As I have been leading to in developing this article, I think the real problem here for the Government has been dressing up an asset sale as if it were some improved social policy. And it seems clear enough that the real motivating factor is pursuing some type of National Party "privatisation good, state ownership bad" ideological dogma.

Now the Salvation Army has dealt a big blow to this "social housing reform programme" and specifically the plan to sell up to 2000 state houses this year by saying it won't be a buyer. The Labour Party says the sale plan is "turning to dust". And as Monday (March 23) wore on more and more parties were seemingly climbing into the proposals, critical of them.

I think the real problem here is that no one really understands what the Government is trying to achieve in the longer term, including the Government. It just, well, wants to sell houses, because it SHOULD.

This Government has started from an ideological position of deciding to sell state houses and then has looked for reasons to justify that.

Difficult to justify

Having read much of the background material prepared for the Government, I thought it was clear that officials had really struggled to try to justify the Government's plan to shift more control of "social" housing from the state to community groups.

Consider this gem from material prepared for Cabinet, which states as one of the reasons for transferring ownership of state houses to community groups: "They [the community groups] bring new approaches to supporting tenants and can deliver integrated, wraparound, support services to the benefit of tenants."

I'm not even sure what all that means and I don't know if the person who wrote it does either.

The issue that always loomed as the large animal with the trunk in the room was how were community groups supposed to pay for these houses?

Or did the Government perhaps realise early on that they wouldn't be able to?

Ironically, I think if the Government had simply approached the subject from the perspective of saying: "The land that some state houses are on is very valuable, we could make good returns by selling it" then they would be more likely to find a groundswell of support. I would support that in principle.

Big sections

You only have to look around, Auckland particularly, to see a lot of average-sized state houses on very large sections. It makes abundant sense to go for more compact styles of state/social housing and to sell off these large sections for good money as redevelopment sites or even, heaven forbid, have the Government partner in redeveloping them itself.

If the Government really wants to flog off some state house sites then it should be upfront and say that is the intention. Then it can sell them to the highest bidder and get good returns for the taxpayer.

My concern would be that if it keeps up this pretence of this all being about some sort of great social housing reform then it may yet attempt to cobble together shaky deals whereby community groups form "consortia" with property wheeler dealers, buy the state houses cheaply and then allow the property wheeler dealers to maximise profits from on-selling some of the sites later.

I think that scenario is eminently possible and would definitely fit in the category of privatising profits and letting the taxpayer take losses.

I think the Government should call a halt to these current plans now and go back to the drawing board.

The priority - the real one - has to be made clear.

If the Government is determined to sell state houses then  let's have its proposals dressed up as they really are - state asset sales - and let's have a set of proposals that maximise returns for the taxpayers and, who knows, maybe help with Auckland's housing supply problem along the way.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

18 Comments

Comment Filter

Highlight new comments in the last hr(s).

Completely random and haven't though through but wouldn't it be interesting if the Government could use its housing stock as a bit of a strategic reserve that it could release to the market when demand for housing was high?
 
Governments around the world have strategic reserves for oil, commodities, China even has one for pork - when prices get high they release it to take the edge off.
 
Supply comes in two forms - absolute land and physical stock - and listings.  People dont want to sell often when prices are high or it is hard to find places to roll over into.
 
WHen sales volumes increased the government could release say a 1000 houses to the market - boy that would have a big muting impact on prices. 
 
The social aspects need to be carefully considered and trump all.  But if it could be worked through it could be a useful little tool to take the edge off the boom and busts.
 
 
 

Okay this is likely to be a highly emotive issue in the next few weeks, and honestly , I like most poeple I have spoken to , also dont understand the real motives for simply selling off State Houses .
Its a bit like mining the Coromandel , it was never the intention to strip - mine the Corormandel , and the Government did not expalin what they were doing resulting in a few noisy people marching up Queen Street and a whole lot of really bad press

Sell Auckland Central houses to the public at full market price, then the Govt can replace their stock with new builds in cheaper locations and have cash to spare.  A win, win all round: more Central Auckland houses for sale, better quality state houses, more construction work and more cash in the Govt's pocket.

I confess to not having read the detailed plans or FAQs and responses. It would be good if whatever the plans, they do not open the taxpayer up to too much exposure, while also giving reasonable housing provision to those who need it but clearly cannot reasonably pay for it. In this latter category would be people on welfare with no/very little income, and also potentially essential service people who should live nearish to where their services are required. This could include people like teachers, nurses, policemen, who may struggle to afford to otherwise live even close to expensive areas. My recollection is that the UK has quite a good model in this regard.
As with David Hargreaves, I agree that selling older state houses on large sections that may well be worth $1 million + to a developer would make sense. And those funds should allow building of sensibly located housing of a reasonable standard.
Secondly there presumably are some state houses in regions where there is now little natural demand, and the state houses maybe create demand for welfare dependence, and or get in the way of towns rightsizing themselves or keeping their overall housing stock at a fair standard. These could be sold, or almost gifted to smaller towns/provinces.
Thirdly, there could be outsourcing in some way management of the housing and their tenant services. While I see no reason why governments cannot run fully commercial power companies, or even airlines, I do see that governments may not be the best managers of tenancies. Each property is case specific. There is scope for under or over provision, and scope for maintenance or building contractors to take advantage of being a government supplier. Similarly tenants need managing in terms of their responsibilities to a property. I could envisage arrangements with probably small medium service providers who could manage a portfolio to an acceptable standard.
The arrangements would need to be closely defined, such that the service providers were not just an expensive extra layer of cost. Whether they needed to own the properties is moot.  What they should pay for them, whether they could sell them and so on, would need to be defined, as would many other things.
 
 

My recollection is that the UK has quite a good model in this regard.
 
Is that so?
 
Guy Hands, a tax exile and one of Britain’s top private equity investors, has emerged as the controlling party behind a property business that has evicted dozens of families, many of whom were previously homeless.
Hands runs a multi-billion-pound investment house, Terra Firma, which acquired Annington, one of the UK’s largest private owners of residential property, now poised to bulldoze 142 homes on Sweets Way estate in north London. They were being used by a housing association to accommodate families on Barnet Council’s waiting list, but under Hands’s control, Annington plans to replace them with 229 houses and flats for sale on London’s booming property market and 59 “affordable” homes. Read more
 
I came across Hands when living in the UK - at the time employed by Nomura to put it's capital to work in equally unsavoury pastimes, involving pubs etc.

Fair enough, good evidence that the rules need to be clear. I owned a house- and still do in fact- in a newish fairly upmarket housing development built in the early 2000s on the Thames in West London. The developers as I understood it were obliged to build a proportion of the houses as "social housing" and these were sold (in a valuation process I confess to not understanding) to Thames Valley Housing, a social housing owner/ administrator. Somehow as a buyer of one of the full spec houses I had somehow subsidised the social housing, but that seemed okay, and the value of my house seems to have appreciated with the rest of London. These social houses were largely provided to people providing "essential services" but were mainly on low incomes. It was this example that prompted my comment. 
Are there loopholes? Probably. Have the Conservatives changed the rules for ideological reasons, or to help their mates- as your link hints at? Quite possibly, but maybe there was another side to the story; just maybe the houses concerned were something of a ghetto, (which all countries struggle to evolve from) and it is possible reasonable alternatives have been found for all residents. I doubt any were offloaded under bridges.

Quite possibly, but maybe there was another side to the story; just maybe the houses concerned were something of a ghetto, (which all countries struggle to evolve from) and it is possible reasonable alternatives have been found for all residents. I doubt any were offloaded under bridges.
 
I am not so sure.
 
Starting this Wednesday, 4,000 men (and, yes, they’ll mainly be men) will gather in a giant hall in London. Among them will be major property developers, billionaire investors and officials of your local council or one nearby. And what they’ll discuss will be the sale of public real estate, prime land already owned by you and me, to the private sector. The marketing people brand this a property trade show, but let’s drop the euphemisms and call it the sales fair to flog off Britain.
For the past 25 years, this conference – Mipim for short – has been held in Cannes. It’s a jaunt so lavish as to be almost comic – where big money developers invite town hall executives for secret discussions aboard private yachts, and whose regulars boast that they get through more champagne than all the liggers at the film festival.
Suitably oiled-up, local officials open talks with multinational developers to sell council housing estates and other sites. All this networking is so lucrative for the builders that they even fly over council staff. Last year, Australia’s Lend Lease paid for Southwark’s boss, Peter John, to attend Cannes. This is the same Lend Lease to which Southwark sold the giant Heygate estate at a knockdown price: 1,100 council flats in inner London to be demolished and replaced with 2,500 units, of which only 79 will be for “social rent”. Read more

For example, what should the retort be if you are faced by the question: "Do you beat up your partner?"
 
LOL. The question is usually more loaded, as in, "when did you stop beating your wife?"

Double LOL. The question is actually "Do you still beat your wife?" it needs to be a question that is answered yes or no and neither answer will demonstrate that you never did

Don't listen to the so called bleating charities about housing.  They are just trying to get something for nothing to add to their already non performing government contracts.

Agree completely. If the government wants to sell up large million dollar state house sections in Orakei it should be up front about it. Doing so would undoubtedly make sense, especially if the money was reinvested in housing, since I doubt most of those living in statehouses in Orakei are working in the central city (because if they were they wouldn't meet the income requirements) so don't actually need a home 10 mins from downtown. Nothing wrong with sprinkling state houses throughout new developments across the city - ghettos should clearly be avoided. I don't really see how the goverment gets out of the state house business altogether because rent supplements clearly just push up rents and help landlords not tennants (one reason that 50% of renters are receiving government supplements - an astounding figure that was on this site recently). 

Following the 1990 election John Luxton, then Minister of Housing, spent millions getting advice from First Boston on how to restructure State Housing (both mortgages and rentals). State Rentals were transfered to an SOE (Housing New Zealand Limited) - TO BE AT ARMS LENGHT FROM POLITICIANS - A statutory certificate was to be issued anytime a government instructed the CEO to deviate from business practise and WINZ pay rent subsidies to tenants who paid market rent to the SOE. Well that bit never happened, income related rents were reintroduced and politicians soon took up micro-managing things, big and small (right down to individual evictions).  Therein lies the tale. And it is a sad story for the Taxpayer because it is a very valuable business: get out a calculator and multiply the average weekly rent by c.70,000 - and then by 52! 
Ergophobia

The second one is an explicit and simple no I do not, I odnt see it as negative myself. The first taken look like fudge words avoiding the truely answering the question. For me I'd take the second as someone being truthful, the first not so, in fact it could be a downright mis-direction/lie and I'd watch the person from then on very carefully.  Then I dont like PR ppl at all.
 
 

I would have thought that the best owners of houses are the occupants.  It is the most efficient model with the minimum involvement of the state or any other cost/profit focused organisation.  People are more motivated to care for something that is their own and will also manage the proprties in a manner that best fits their needs and resources. 
When he was in Parliment, Bob Clarkson had the government departments produce accurate figures on how the full cost of their owning a state house compared to the rent recieved.  Turned out that they were loosing hundreds of dollars per week and that it would have been far better if the tennants were managed into a situation where they owned the properties and payed a mortgage.  (maybe that is why the govt want to get rid of them and the Salvation Army doesn't want them)  Any way Bobs plan would have lead to a stream of released capital that could have financed further state houses and so on.  Clearly not all tennants would be in a position to take on ownership immediately, but surely should this not be our long term objective, rather than perpetuating the situation where many people are traped and dependent on an expensive and not particulary effect social welfare system and charties filling the same need.  The whole country would be far better off if we addressed this whole mess properly at it's root causes, dealt with it effectively once and for all, then freed up people and resorces so that they can get on with something more useful and productive rather than chasing arround dealing with the symptoms.

Absolutely Chris M.  The most economic way to house people is for people to live in houses they own.   Good for them, good for the nations dollar, and produces a better society.
If the government spends money ti would be better to put the effort into increasing ownership rates.  To over 80 and preferably 90%

The trouble is any system set up to increase home ownership will get abused by people who don't need to be inside the system.......What NZ has is the snookering effect of all past Governments, Bureaucracies, rules, regulations and legislation....they go to move one way and all hell breaks loose....they go to move the next way and all hell breaks loose.......common sense would suggest stability is good for a society but you will not get stability in house prices, home ownership rates etc while politicians and bureaucrats continue to breach the constittutional foundations.
 
As people we either tend to be fiercely independent or protect dependence fiercely !!!!!  I have witnessed more and more of my friends and aquaintances transfer from the former to the latter as the system bullies them into submissive acceptance of the States authority. The State does not want an individual to have a Mojo !!!! 
 
There is only one proper solution to all the problems including housing issues......and that is to allow people to be fiercely independent!!!
 
Humans are the only species who pay for the Right to be on the Planet!!

Using a simple average (coz I dont know how many are in AKL)
 
A total national asset base of $18 billion
68,000 houses
Equals an average value of $264,000 per house
Reckon the land alone for the AKL ones are worth more than that

Government doesn't have to own houses to provide social housing options.....just .the same as Government doesn't have to own retirement villages, aged care facilities or pre-schools etc but these people still have their needs met.
 
I think it is wise that the Salvation Army didn't take this housing on....if they don't have the necessary skills and expertise it oculd well go pear shaped for them.......and then they wouldn't be able to be of any assistance.
 
Maybe DH has spent far too much time slapping around the wrong questions.