Here are the graphs to show you why.
Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. This content was first published here and is used with permission.
Mr Morgan. Please start your political party along side Winston Peters and let us solve these obvious issues. Staring at graphs pointing out what we all already know will achieve nothing. We have a treasonous government totally unwilling to act. You have the resources and obvious compulsion to do something. So where do we sign up?
You are right, something needs to be done. Problem for me is, that I do no believe we can find a solution in far left socialism and envy.
We should always aim for a fair system that rewards people for self discipline and values hard work. We have to provide opportunity but there also needs to be consequences for laziness and poor decisions.
It is hard to imagine what information is leading the government to think that it is paving the way for an improving future for the average working NZder. Increased housing costs and Immigration don't seem to have a positive effect on that goal.
Well said, I couldn't agree more.
I do agree Caleb, ASLONG as we find far better solutions to the far left socialism currently going straight into the pockets of landlords via things like the Accommodation Supplement.
Also things like WFF which has become a wage subsidy for employers
The Living wages issue must be addressed also.
Do you agree?
Sure, but without a shift in how we view each other, a living wage could just be more of the same. It does seem likely that any meaningful change will be forced upon us because of economic turmoil and maybe we should be talking about how to start afresh...
What I don't understand Caleb is why a living wage is 'seen' as so hard, when all we need do is eliminate all these government crutches that just lead to what we have now.
Yes, higher wages can be inflationary, but...much of those wages gets recycled back into the economy via spending. When people have no/less disposable income then we ALL suffer, legitimate businesses especially, thus we shoot our economies in the foot via a method of austerity.
We must address our tax system and warped incentives into non productive assets particularly. We must address NZ's compulsion to prop up monopolistic and duopolistic behavior at a corporate level. We must get as much government bureaucracy out of the way of peoples hopes and dreams. Bring local councils back into line and crush their egotistical power and self interest. Hit these things from multiple angles.
I'd also encourage this. But you'd have to overcome the cat lovers' vote and get the young and downtrodden to actually vote.
Being a cat lover myself, I'm willing to compromise with Mr Morgan on this issue. As for the young vote, yes this also needs addressing which I think it can. Just need the right person saying the right things and engaging with the youth instead of patronizing them.
But what is GM trying to prove here??
He is not looking at the cause he is looking at the affect. Gareth Morgan should also know better in that there is a time factor in any investment or obtaining assets!!
Justice is correct Mr Morgan, Many Kiwi are waiting for someone to stand up and be the voice of the people. Start and see how many sign up as data and analysis does not help as we all know what the national has done to NZ.
The only reason Brexit and Trump happened.
Mr Winston Peter has the best shot of his political carrier if he raises the concern of the people and now what he says does make sense to many.
Power has made national arrogant and vested interest have made then blind and deaf to the people of NZ. The best part is that they are not even aware of it - this is what power does - over confidence and this is what led to Brexit as no one had thought that people will vote for it.
The only reason Brexit and Trump happened.
One is really obliged to think out the consequences of what the majority of UK citizens actually voted for. Not that I believe the choice either way was attractive for the many.
Forgot to mention that I had read a comment from someone in interest.co.nz website that just tell the name of JK and see the reaction.
In the party Last week did pop up his name and got funny unprintable comments from all and to national party, one thing can be assured was not positive.
This reflects anguish in the society.
Everyone should try it over the weekend when with friends
Hands up - who got a plus five percent pay rise in Wellington?
Not many?
Rates bills across Wellington will increase by an average of 3.6 per cent, after the city council set its budget in stone for the next financial year.
Councillors signed off on the city's 2016-17 Annual Plan on Wednesday, striking an average rates increase of 5.4 per cent for residential ratepayers and an average 2.7 per cent increase for commercial ratepayers – equating to a hike of 3.6 per cent across the city. Read more
Inevitably, council authorities across the country will claim ownership of residential properties in lieu of non payment of rates. It certainly is a dash backwards to enforced feudalism.
The Wellington headlines were that the WCC had kept their rates rise down to 3.6%. But as you point out all residential property will have a 5.4% rate rise. While this may not make much, if any, difference to the official CPI it certainly makes a real difference to the actual cost of living experienced by all Wellington households.
It would take very rose tinted glasses to imagine that the WCC will actually provide 5.4% more services.
And a similar situation with the Regional Council rates which were indicated to be only 7.9% rates rise for the coming year.
And both Councils claim 'rising costs' are the reason. And we're told officially that costs are only rising by 0.1% per year. Hmm. I know what my experience indicates which is that costs of most important things is rising for what is generally lower quality.
Someone I know joined NZ First recently and hasn't heard back (since I last spoke to her). If that was the Green Party their would be an instant response and a lot going on. The Green Party is born out of the tertiary institutions. They have (as someone put it) "the infrastructure". National and the Greens are unashamedly globalist and labour has one foot in and one foot out. NZ First just doesn't have the skills (or is it the money?).
This could explain Nationals behaviour
http://kauri.aut.ac.nz:8080/dspace/bitstream/123456789/205/1/clydesdale…
There is a danger that a sector of the economy is being augmented that is totally reliant on a
small domestic economy. Not only do these industries have limited potential for per-capita
growth but ‘deriving growth via factor inputs such as labour places pressure on infrastructure
such as transport and land supply, and ultimately have a further negative impact on growth
(ARC 2005). Finally, as the sector gets larger, it gains in lobbying/political strength and can
lobby for immigration regardless if it is the best interests of the economy as a whole. This
could be seen in Canada where the development industry has lobbied hard for high sustained
immigration levels (Ley and Tutchener 2001).
http://kauri.aut.ac.nz:8080/dspace/bitstream/123456789/205/1/clydesdale…
Very interesting to see that net worth stratified by age and income. However I think the real action/Damage is happening inside the age 25-49 bracket. That’s because the collapse in interest rates, and subsequent Auckland asset price hyperinflation happened over a very brief 7 year period (2009-now). People aged 25-35 may have missed out while people age 35-49 have probably got in.
Also the thing that the graphs don’t show is the long lasting and cumulative impact on peoples personal finances that will occur for the people who missed out on buying a house if price trends continue.
I think that the probability of house price trends continuing is about 0.003%.
So these people are better off not buying anything in Ak now. Just wait.
The best way to earn money is to move to a place where you can get good pay but living costs are low. ie Don't even think about starting out in Ak at the moment.
Come back later if you want to.
However..... a new immigrant I know (only here for about a month) got a job in Whanganui. Why didn't a NZer get that job? Maybe because there is no policy within the appointment process to favour and train up a NZer. Thats one job less out there in the regions taken....
I thought Auckland's prices were outrageous 2013 so I purchased in Tauranga. Turns out I had my arse handed to me on a plate. I've given up making predictions. If Canada is anything to go by then Auckland house prices could quadruple. Doesn't matter for me anymore. I simply cant afford it. Even 2 bedroom "do ups" in my area are selling for almost 900K.
I agree with the 0.003% chance of current state continuing... but what if all the money that QE is printing ends up creating hyper-inflation in asset values globally... I think hyper inflation in consumption goods is unsustainable, as is based on working wages, but asset values based on 'money' that is being diligently created by hard working central bankers could easily enter a round of hyper-inflation, when people look back in a few years at houses that used to cost only several million, now costing several tens or hundred of millions. When the first Chinese or Russian or American Trillionaires starts looking to convert their 'money' into tangible things...
Ridiculous? Could never happen? Seems to be what our political class are actively working towards
New Zealand has a simple choice.
He can face up to our housing crisis. Make some hard decisions wrt confronting nimby-ism, urban planning, immigration, secure tenancy rights, healthy rentals, taxation of property .... . Or we can passively allow our country to create a landlord class and a generation rent class.
If NZ splits into patrimonial classes then long held values like believing that kiwis get a 'fair-go', that we support the underdog, equality of opportunity...... these values go out the window and NZ becomes a meaner, nastier place....
Eventually the 'have nots' will start causing trouble for the haves. Inequality tends to lead to crime and violence and the amount of people in the 'have nots' is growing a heck of a lot faster than the haves.
Eventually.......It already happens.The have nots don't rob from the have nots they are already targeting the have's and have done for a long time.
The "have nots" are too lazy to even plan to hit a wealthy neighborhood. They would rather jump the fence and rob their neighbors (see http://www.stuff.co.nz/national/crime/10291306/South-Auckland-hit-by-mo…). Crime is always focused where the poor live. To ensure less crime move the poor to the South Island. Nationals idea of offering state houses in Invercargill, Bluff and other underpopulated areas throughout NZ is a vote winner.
Canceling rent subsidies will ensure the poor emigrate from Auckland. If you are not working and earning a good income (i.e. can't afford Auckland house prices) there is no need for you to be in Auckland.
Two words - Brexit & Trump. The result of inequality. I have no doubt resentment is brewing in Auckland and immigrants are starting to take the brunt of it even though only a small % immigrants can afford to buy. Just subtle casual racism that will intensify unless housing is addressed. Have some guts John Key.
Clearence68, you are right under current is very strong and if national party still not wake up can get ugly.
Silly Gareth, he means well. He thinks house prices go up because of the untaxed benefit in kind of the householder's equity. Whereas it's really caused by the unrestricted inflow of money.
Just like the Brits, we need to establish reasonably free trade, reasonably free immigration and reasonably free flow of capital, with control of what is reasonable in our own hands. NOT unrestricted free trade, unrestricted free flow of people and unrestricted free flow of money. Just as the Brits find their immigration policy is largely dictated by france and Germany, in New Zealand the flow of money is decided in Australia, America and China. Most of it just goes into pushing up house prices, the idea that it somehow magically goes into creating productive assets is largely a lie.
"unrestricted inflow of money."
And, the unrestricted 'creation' of debt/money also.
There is an untaxed benefit which encourages multiple investment in debt/mortgages though Roger. That being untaxed capital gain. Fore without capital gain to offset your interest payments then would interest needing to be paid 'per annum' seem such a great idea?
It's a self reinforcing system, house prices go up, attracting more people and creating more collateral.
http://www.rbnz.govt.nz/statistics/s7
now others are starting to think as I do, this will be the consequence of less owners and more renters and once they pass the tipping point of being the bigger voting block watch out landlords
William Cairns and James Lockie of mortgage brokers General Finance say that as the renting population continues
to grow, a trend is emerging where the Government could push more obligations onto landlords.
We believe that over the next few years, more tenant favoured laws will be passed."
These things could include compulsory heat pumps, longer notice periods to remove a tenant, restrictions on rental increases to once a year, or clauses for such things as interior repainting every three or five years
#JKEXIT
Don't forget that the Council is part of the culprit. Their justification of raising the rates is by raising each property's valuation. Ask the Council to cut the valuation by 50% and reduce the rates by 50% also. See how the Council will react.
You clearly don't understand how rates are calculated or work.
What's also getting hard is being early thirties with a lot of friends in the mid forties bracket (I've always gravitated towards older friends) I'm a renter and they all own. All good. But, now they are spending lots and lots of time talking about the new investment they've made in rentals. Lots of patting on the back and congrats all round, while I find it extremely hard to get enthused, in fact my heart is breaking. It leads to talk of 'just move out of Auckland' again and again and again. I wonder if they think it through? Who's going to teach their kids, or police their streets when we've all been pushed out. I tried to argue my point today about that but it fell on deaf ears. It's allllll good. Yeah, it's all good until someone loses an eye right? It's exhausting.
I work with a young guy that is doing just that moving to another city so he can buy a house. he brought for himself after 2009 ( FHB good timing) then wanted to move to more local so went 1/2 with family so sold and brought has not worked out so getting brought out BUT due to the increases and he only got 1/2 the capital gain can only now afford a crappy box now
he is looking at brand new 3 bed 2 bath on full section for under 500k with a travel time to work a third of now.
also will still be on same wage, so even though he made a mistake is using it as a opportunity to get to a better position
Instead of moving out ofAuckland. #JKEXIT
the biggest driver of inequality in the NZ is the silly notion that an iPhone and holiday to the GC is a right rather than a privilege, those that forgo these luxuries can still buy a reasonably priced house in their 20's. i am envious that Gareth had a garage and had the good sense to rent it to his son, i also have the good sense to ignore anything that spouts out of his mouth...
As far as Auckland is concerned that is not true. If the baby boomers had to put up with foreigners stealing their future prosperity from under their feet when they were in the 20's and 30's they would have rioted in the streets and burned parliament to the ground. But that would never have happened because the national party was an honorable institution back then. Muldoon never would have let this happen to his own people.
its claptrap like this which keeps interest.co.nz comment section in business...my parents are baby boomers and it has never been illegal for them to sell their properties to non-nationals...fatty, foreigners have been buying NZ property since 1776...(including my father who was born outside of NZ and became a citizen in the 60's)
If foreigners had been excluding us from buying houses back in our day by buying them in such numbers, you can bet your rear end we would have been up in arms about it.
Do not fret, the National party have exceeded all expectations on the housing matter by offering temporary "pop up" houses for the homeless and those on the housing NZ waiting list.
I have another idea: build council estates and drop 200 odd families in them. The UK did a wonderful job of this in the 60's and 70's.
So now will have refugee camp in NZ ( temp pop up houses). Thanks to national party, Aucklanders will have to migrate to make way for rich immigrants needed to fuel JK ecenomy and thouse who not migrate may find shelter in national party refugee camp.
The only solution that national party confenrence think of under JK.
#JKEXIT
Visions of women carrying water from the central well back to their shack, spring to mind.
A NZ version of Pauline Hanson would do the country good.
Here, too, One Nation pulls no punches. "Multiculturalism has failed everywhere," it says.
"It is negative and divisive, a weight that is drowning our once safe and cohesive society. One Nation will abolish multiculturalism and the Racial Discrimination Act and promote assimilation, nationalism, loyalty and pride in being an Australian."
The Racial Discrimination Act would be replaced "with a policy of assimilation".
Oh, and "temporary"?
Are we getting a new people political party.
In India a new political party was formed in Delhi out of common people and got appox 95% seats in Delhi against 2 major political party - impossible was made possible.
https://en.m.wikipedia.org/wiki/Aam_Aadmi_Party
People are fed up of politucians and fresh idea/party is welcome.
Yeah need intelligent leaders and not power hungry politicians.
Seriously it is not a bad idea justice.
Morgan pretty little graphs however as another person commented time you took action. All the graphs in the world won't change Nationals do nothing say nothing attitude and if we are not careful they will be voted in again.
#JKEXIT
Can't we sign a treaty deal with the immigrants, so in a 100 years, Grandchildren can lodge a treaty claim and get a massive payout.
Might be a bit late for the Citizens offspring to wait ...as a roof over their heads now,.. would have been ...more beneficial.
The Asians are paying top dollar for the land they are buying unlike the thieving Europeans.
No need for a treaty, just stop crying about the competition.
Hh
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#JKEXIT
Yes would like to see new faces with fresh political idea in NZ politics. Think seriously.
End of the day, house prices are ridiculous. There are a number of factors driving it. Overseas owners who pay no tax in NZ, Investors debt junkies trying to offset some tax, lack of infrastructure planning by previous decades of GOVT (not just JK and co), and stupidly restrictive Council processes. The only real winner is the Aussie banks who are making record billions in NZ, for pretty much doing nothing.
We need more leadership around this and unfortunately JK appears to be just oblivious to it. We need more people in NZ, but they have to work productively and pay all their tax here. Any party that can actually have solid policy here gets my vote next year. Youth may have to get off its cell phone and actually vote this time, because avoiding the issue and running away to sunny Aussie is not the option it once was.
The rich will always be rich and the poor will always be poor. You could take all the money in this country, divide it evenly between all the citizens and in 10 years we will be back where we are now. Your life is about the decisions you make and your personality and attitude and to a lesser extent your education. You simply cannot help some people so there is no such thing as lasting equality.
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