David Hargreaves tries to make sense of what the Government may be planning as the so-called 'recalibration' of the flagship KiwiBuild policy continues

David Hargreaves tries to make sense of what the Government may be planning as the so-called 'recalibration' of the flagship KiwiBuild policy continues

By David Hargreaves

If a Government is about to bury one of its flagship policies, the last thing it will say is that it’s burying it.

No. It might say it’s reprioritising, or fine-tuning, or, dare I say, recalibrating or resetting the policy. And then without ever saying so it will quietly start spading the dirt on top of the policy. And it will hope people stop talking about it. As soon as possible.

Well, I don’t know for sure that the burial is being prepared for KiwiBuild and the (in)famous 100,000 affordable homes. But it’s looking awfully like that, isn’t it?

I commend anybody who hasn’t done so yet to listen to the excellent interview interest.co.nz’s Jenée Tibshraeny conducted last week with Housing and Urban Development Minister Phil Twyford.

Everybody takes specific things from an interview they see as noteworthy. Me, I was magnetised by the references to targeting rents about two minutes into the interview. And then I found this comment, about 12 minutes in, was a real showstopper: “…There’s no silver bullet. And we’ve never considered KiwiBuild to be a sliver bullet…”

Intrigued, I went back over some of Twyford’s media releases in 2017, election year, and have cobbled together a bunch of them here for your information.

How about some of these headlines: “RBNZ Governor’s warning shows need for KiwiBuild”, or “Homeownership rate hits new low; KiwiBuild needed now”, or “Research underlines need for KiwiBuild”.

And then how about this passage of text, which is not untypical:

“We can fix this; the Kiwi dream is not dead.

“It’s time for government to get off the sidelines and start building houses. Labour’s KiwiBuild programme will build 100,000 affordable homes for first homebuyers. That will give young families a real shot at owning their own place, and increase the homeownership rate.

“Labour will help young families into their first homes, just as previous governments did for decades,” says Phil Twyford.

Okay, granted, I can’t see the words ‘silver’ and ‘bullet’ anywhere, but it kind of looks to me as if KiwiBuild WAS being offered up as a simple, seemingly magical, solution to a difficult problem. Oh, and by the way, ‘a simple, seemingly magical, solution to a difficult problem’, is in fact Wikipedia’s explanation/description for the term: “Silver Bullet”.

To go back to the interview Twyford gave last week, here’s his specific comment about rents that attracted my attention:

“One of the striking things about housing in New Zealand now is the stress on renters in a number of different parts of the country.”

This suggests to me that the Government’s considering some specific direct targeting for those who rent. Some sort of subsidy or payment relief?

That’s curious for a number of reasons.

Consider this passage from one of Twyford’s 2017 media releases:

“Labour’s housing plan will stabilise house prices and ease rents by building 100,000 affordable homes, banning foreign speculators, and adding thousands more state houses,” says Phil Twyford.

Okay, in that release Twyford seems to be indicating that KiwiBuild (don’t call it a silver bullet) will help to stabilise house prices and ease rents.

And do you know what, I reckon he’s right – if you can build 100,000 houses. I reckon that’s what the policy would achieve. It would ease rents.

So, why is he now talking about being concerned about rental prices? Isn’t there tacit acceptance in such logic that these people who are renting now will in fact continue to be renters? Isn’t this tacit acceptance that these people are NOT going to be able to graduate to being home owners?

Some people rent by choice in this country. I do, if it comes to it. But hell, I tell you what, not many do rent by choice. Virtually anybody who rents in this country wishes they could own their own home. It’s the classic New Zealand psyche. Get on that property ladder and start climbing.

By now talking directly about rents, while seemingly avoiding talking about KiwiBuild, Twyford’s clearly indicating he no longer sees KiwiBuild as an answer to high rents, nor does he think he’s going to build enough houses to get all those renting who wish to buy into their own home. That’s what that all says to me.

Losing its nerve

Prior to Christmas I opined that the Government needed to get itself together over the summer break and come back with a clearly articulated plan of how it was going to organise and drive KiwiBuild.

I actually wrote that at the time because I sensed the Government was losing its nerve and that there was a real chance it would backtrack on the KiwiBuild policy.  

My concern then and it’s even more the case now, is that the focus will switch from getting people into their own homes; that it will move on to getting people comfy in rental accommodation and yes, in state accommodation.

There’s a fine line to tread here. What we want as much as it is ever feasible is to have everybody with a roof over their heads. Homelessness is a tragedy that should not exist in a so-called developed nation. But we also want and need an aspirational environment. The Government is a terrible parent. People as much as is humanly possible should be encouraged to look after themselves. Which means encouraging people to get their own homes. Not creating a comfy looking trap of welfare dependency. But I fear that’s where this recalibration/reset (burial) of KiwiBuild may lead us.

Clearly the Government HAS lost its nerve. And that’s a shame.

Rent-to-buy, anyone?

Another point I throw in at this stage, although it’s digressing slightly, is: Whatever happened to the idea of ‘rent-to-buy’? This was explicitly referenced in the Government’s confidence and supply agreement with the Greens after the election. I thought it was a great idea. But I can’t recall it ever being mentioned since.

Let’s wait and see what the Government comes out with on KiwiBuild and housing after the Budget. Bearing in mind though that we’ve now been waiting a very long time – too long - to hear what the Government intends on this issue.

I still think the Government should have committed all-in to ridding the country of housing shortages by building up the housing stock through KiwiBuild. This I think offered the best chance both of giving us a much-needed upgrade of our housing stock and of tackling affordability issues in a more long-term and meaningful way. But seemingly not.

A definitive plan?

If the Government now comes out with definitive plans to tackle Auckland’s urban boundary (which was promised), plans to reform the dreaded Resource Management Act, convincing ways of handling who pays for infrastructure in new developments, ways of making building materials more affordable, and ways to just generally remove the constipation from this country’s planning processes, well then I will forgive the Government and may even happily shovel a couple of loads of dirt on to KiwiBuild myself.

If, however, what comes out of this reset amounts simply to getting those currently locked out of the housing market comfy in rentals and in the bosom of the state then, personally, I might be a bit less forgiving.

Here’s Twyford from 2017 election year again:

“KiwiBuild is part of Labour’s comprehensive plan to boost the supply of housing, restore the Kiwi dream of owning your own place, crack down on speculators, and help families in need,” says Phil Twyford.

Well, apparently not for much longer…

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?

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64 Comments

26
up

It’s inescapable apathy. We know that this government doesn’t want affordable housing because that would require house prices to fall. They refuse to slow immigration, open and shut case. By their deeds we will know them.

21
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Voters were promised better governance but all we got is thought leadership.
Jacinda and her lackeys have utterly failed in matters of immigration, employment, economy, infrastructure, housing etc. but presume they've made up for all their failings with their moral victory in the aftermath of the Christchurch terror attacks.
They've somehow managed to reverse the 9-year momentum of job growth and labour participation built up under National and still made their voters feel it was amongst their greatest deed on earth to "help" more people in need.

15
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The 9 year job growth was just global timing, an earthquake and immigration. Nothing very smart.
That said, I booted National due to immigration and enviro.....but seeing this govt not slamming down immigration is very frustrating. If they don't get on with it then bye bye from me.

Very strange how the media asks Winnie when he will deliver on this pledge...ask anything but don't mention this terrible word or you'll be thrashed as a racist.

It is no wonder that Mathew Hooton is singing Jacinda's praises and saying that they will win the next election. The reason is that the right have no need to vote for National as this Labour government have barely changed any of the National governments policies on the major things that effect the well being of the average citizen or indeed the ever increasing wealth disparity. Just a lot of hot air and a bit of tweaking around the periphery. Totally ineffective and wasting a lot of money into the bargain.

Hi Advisor
Just remember that as Jacinda says; this is “the year of delivery”.
Just because nothing has happened so far - apart from half the year gone - this still holds so true.

Is she having another baby?

There will be the "royal" wedding, details of which will be trotted out to counteract any negative public press she might receive going into the next election. The populace are easily distracted by such things.

Jacinda Ardern seems to have no clue about what it takes to be a PM. She thinks its all photo calls, hugging people, and swanning around Europe writing social policy for global media companies. She needs to take a leaf out of Trump's book - her job is to focus on jobs, and trade, and the economy. Not what Twitter and Facebook is doing. All she has demonstrated is that she is fit only for some figurehead position within the UN, that involves lots of pontification and absolutely no action. I look forward to farewelling her soon, I hope her job interview in Paris this week is successful.

11
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The Government set itself up for failure. Instead of attacking the issues and making changes to consenting processes, obstruction by local Councils and various other bureaucratic failings they decided to make another Ministry. Of course the Ministry ended up with a bunch of people with no idea how to do anything.

Then combine this failure of imagination with people who offered cost effective solutions that the Government promptly ignored. Presumably a mixture of incompetent internal advice and the fact that Labour couldn't take credit for it prevented any real solutions being considered.

Its safe to conclude that the Government has intentionally abandoned a major election promise due to their uncompromising arrogance.

14
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Phil Twyford never* seemed capable of succeeding, he took the easy options to get his numbers up and ended up choosing to play by the current rules of the building industry. All kiwibuild would be doing right now is guaranteeing developers sales at what looks to be the peek of the market in Auckland.
They needed someone braver and more competent who would test the political capital the housing crises gave to do more extreme things such as using government powers to create cheaper land or to invest heavily (to the point it could be considered wasteful spending) in prefabs from day one.
*sorry edit

16
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We barely had a chance to say hello to KiwiBuild and now it’s all but gone..... Housing is too important for playing hoax’s with the public.

I wonder what vote-catching gimmicks Labour will dream up for the next election?

Doubt I’d trust that lot again......

TTP

Oh, so you did vote for them. I thought so.

Hi Mrs The Point,

My post above gives no information on who I voted for in the last General Election.

I suggest you do a basic course in reading for meaning.

TTP

Think again.

15
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Twyford is a phoney. He doesn't have a clue and never has.

I have heard a bit of chatter on 'build to rent'. Basically private entities who build an apartment complex (for example), retain all apartments, and manage as long term rentals.
My pick is that the government might do something- not sure what - to incentivise this.

Oh yay, sounds like more subsidies for private landlords. How about the govt just builds them/buys them and adds them to the state housing pool and stops adding more long term expenditure or income reduction to the budget. Capital expense to avoid ongoing operating expense.

agree

https://www.stats.govt.nz/information-releases/dwelling-and-household-es...'.
Turn the clock forward 20 years, but who truly cares .

As the Reserve Bank clearly indicated in its most recent OCR release, to increase GDP 'growth 'we need to see increased housing activity and increased prices, which simply will put more people in rental accommodation, by choice, depression or other, while at the same time , rents will have to increase to compensate for the 'investors' higher initial cost, and so the cycle continues.
What a very sad nation,, driven by the greed of four offshore banks, and groups that are willing to feed relentlessly from the trough.

Arrogance from the COL around KB ignoring the Building Industry advise and filling the minds of young people with a dream that could never be. Our history is littered with Governments making decisions believing they know better than Industry. Social housing is an area where Governments can and should make a difference.

Twyford two months ago insisting Kiwibuild will still deliver: 'the fundamentals of the KiwiBuild policy endure'; 'we are making steady progress'.

Yet by the end of 2018 his ministry knew that far from 'making steady progress', the program was in deep trouble.

Here's creative solution for the housing shortage:
NZ can become the 24th province of the Mother Land. Currently, there are about 80 millions unit sitting empty in China, FHBs can have pretty good picking on those!
https://www.abc.net.au/news/2019-05-14/china-vacant-property-empty-homes...

After watching some videos by ADVchina on youtube, I don't think I'd move into half those buildings if they were paying me.

Possibly not leaky like the one we have in Auckland waterfront!

I think I'd rather have water dripping on me than bits of the upstairs unit landing in my lap!

They tried and if they need to re-assess, then credit to them for recognizing an issue. Better than blindly carrying on.

But what the heck is wrong with these politicians??.....if any of us had a shortage of space at home and our family was using the car in the driveway as a room...we wouldn't keep inviting the neighbors to come live with us as well.

:(

10
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rastus- 'what the heck is wrong with these politicians?' I'd extend that to 'what in the heck is wrong with kiwi voters that we passively allow politicians to continue recklessly cramming low quality migrants into our main city when we clearly are already full to the gunnels'

We seem to be collectively indifferent to the dramatic change to our society and national identity that is being imposed upon us. Concern that we are being subjected to a level of immigration that significantly exceeds that of most other developed countries, seems to be almost absent.

Plenty did vote on it. Some via Winnie and some (too few) via TOP. But when they get in they do nothing and the media does not hold them to account. The media will question homelessness but just refuse to link it to immigration/population policy - an issue the Greens should be onto if they were true green.

The journos on this site also seem to avoid these questions too - which is disappointing.

I imagine they're being told by 'experts' that they can't slow down immigration or the cracks in the edifice start spreading and opening. We haven't had a sound economic plan from government for years now, and immigration and house price rises have been the way it's propped up...the "sign of our success" and "good problem to have".

First of all they need to define what is an affordable home price. The average price of $564,000 for a Kiwibuild home is not affordable to most FHB. They need to look into reducing the cost of building materials and the cost of developing land. In the long run, the high cost of housing will impact negatively Social well being of this country.

If the Government now comes out with definitive plans to tackle Auckland’s urban boundary...

And we can see what would have happened if the Government had done so. Auckland Council extended its urban boundary in late-2016 to allow rapid expansion of every exurban development in the region (except on Waiheke). Since 2017 we have had the dynamic where supply has been increasing across the country, we have been enjoying a construction boom and all as Auckland costs have fallen. If Phil Twyford had opened up the urban boundary around the contiguous Auckland metropolitan area (as promised) the boom would have been bigger, supply would have soared and all by making Auckland costs even lower.

The growth boundary won't go, and that will be another Twyford failure. Council will not let it go, and Twyford will (or has already?) back down. That guy needs to learn to actually THINK before he opens his gob or announces policy.

Or channel a bit more Richard Prebble and have the cojones to push hard and hold accountable.

To date, Kiwibuild has been explicitly about selling houses. I'm sure that there will now be a component of it that is a rent-to-buy scheme, where the government will own the house for some years and rent it out to people who don't have the deposit but will buy it, and this will end up being a direct subsidy to the buyer (unlike kiwibuild, which despite what people like to claim, has never been a direct subsidy to the buyer).

My understanding is that the deal with the developers obligates the Government to buy the homes if they arent sold as Kiwibuilds. Clever developers like Mike Pero have taken advantage of this by jacking up the price of the Kiwibuild homes, so that they are far in excess of what the market price is (example is one in Christchurch, for sale for $459k when the one next door sold for $422k) so that they remain unsold, and the Government then buys it at the inflated price. With all these unsold Kiwibuild homes on the books, the Government is going to end up an involuntary landlord. I guess that they may as well try and pretend it was intended all along, to save face.

Ah, yes, sigh, the left always have the next generation to deceive.

And harvests the reliable votes of those new immigrants that they deign to let in, on the very human basis of 'don't bite the hand that feeds you....or Lets you In'.....

Seems to me you're both describing the last National government as much as Labour.

And the right don't? About the only thing that been trickling down in the last decade is something normally associated with the hindquarters of male bovine.

What, are you suggesting that National MPs tell fibs? Outrageous. Surely not?

My father observed (when I asked an inappropriate question of one his better off mates) that it was quite right to explore lefty politics in one's youth, as it made you a better conservative as you got older. National just tend to make fewer stupid choices than Labour. They still do plenty daft stuff (let me see now, immigration into a physical housing shortage, bank friendly 2% inflation target produces overpriced houses, creation of the Socialist Auckland City State) and failed to gut, cough, er, reform the RMA and council friendly planning regs, and scrap MMP (where half the MPs are selected by Party Central Commitariat, not the local party members, thus ensuring ideological purity comes above all else, no independent thinking allowed).

Kiwibuild --> Kiwibuy --> Kiwibyebye

I wonder if it's dawning on them that $650,000 is by no measure affordable for the majority of first home buyers?Plus, building 10,000's of home into a housing crash leaves them wide open to attacks from National.

Anyone who has lived in a large functioning city (so not NZ) understands that rail is the life-blood that gets commuters from affordable, quality accommodation into a central city in an hour or less. NZ is crying out for high capacity, fast commuter service between Hamilton and downtown Auckland. It would open up a commuter belt all the way down to Hamilton and facilitate economic development which is simply not possible now.

Are you Phil Twyford?
Nowhere near enough population base for that.

No, and I disagree.

Why?
International intercity commuter trains usually have very big population catchments at high densities.
Hamilton would need to double its population, and have much of that extra population working in Auckland, for it to work.
Plus we'd need 2-3 small cities between Hamilton and South Auckland. Where? And how?
Sure, massive subsidies could be thrown at it to support it, regardless of insufficient catchment. But hard to see how that passes benefit/ cost analysis.

@David Hargreaves , I must commend you for pointing out that the Emperor has no clothes .

In the face of ridicule and widespread criticism from commentators on this forum I started banging on about how Kiwibuild was wishful thinking and a physical impossibly difficult idea well before the election .

Quite simply it was never going to fly , for about a dozen reasons .

Quite apart from the legal constraints build into the Resource Management Act , which this coalition does not have the balls to tackle , this is not 1945/6 , we simply don't have masses of returning servicemen to turn their guns into nail guns and become carpenters and builders and embark on a massive Public Works programe.

The councils charging nearly half a year's minimum wage for a water -meter !

The issue of land-banking where supply is throttled

The unwillingness to allow outward growth of cities, when we have about half a million new faces every decade .

In 2017 this Government did not , and still does not, fully understand the complexity of the housing problem .

They also dont get that many people will be renters for their entire lives, they dont earn enough to raise a mortgage and cant save the deposit . We are not Singapore , with a strong savings - culture, and Kiwis dont , in many cases, have the discipline to save .

Welfare has not helped , and the house renter subsidy has had the perverse of being an Intravenous drip right into the veins of the landlords.

We dont have access to affordable LEASEHOLD land or sections.

Many countries have land -leasehold ownership where you can rent land for 99 years from the State or local council including :-

Canada
England
Wales
Singapore
China
Ireland (Northern)
Scotland
Angola
Mozambique
South Africa

Hell , even Australia has leasehold land owned by the Crown and in fact Leasehold land laws exist in almost every country in the commonwealth .

There may be no silver bullet , but we can make a few sliver hundred -pound artillery shells and smash many of the impediments to fast -track ownership of a decent roof over the head for everyone .

And it cannot be done in one term in office , it needs to be a cross-party effort with a CLEAR 10 year plan , not a thumb-suck 100k and hope for the best .

The magic words. Cross party support. Time for politicians to sit down and create a plan for all sorts of issues. Be it housing, immigration, environment or benefits. Agree on the fundamentals with a bit of wriggle to left or right as each come to power.

It actually is possible. It's just that it has incompetent leadership (Ministerial, agency) 'leading' it.

"This suggests to me that the Government’s considering some specific direct targeting for those who rent. Some sort of subsidy or payment relief?"

Put another way - A landlord subsidy.

Everything is a landlord subsidy, they control everything and all the money goes into their greedy pockets.

Whats really interesting is that people on the left are generally ideas people creative etc. People on the right are logical people ie managers etc. This is why when you have Labour in govt you have great ideas but on one knows how to implement them and they can't see consequences. When National are in power they have few ideas but the ideas they do have actually get done.

Eh, i'd call that complete rubbish. I don't think either side has a claim to be more logical or creative, they just have different priorities and perspectives eg: some of the tax minimization schemes that have been dreamt up are very creative indeed.
And the further you go to either side the less they are able to see past their own biases and consider each others viewpoint.

Ideas are good. Provided they are good. And have some connection to reality.
Ideas that have no connection to reality are fine, even brilliant - in art. But not in policy.

New Zealand's history hasn't really demonstrated that.

Sounds silly, overall. When things have needed doing in NZ, it's often been a leftist government that's gotten them done. Conservatives by nature will...conserve, not take serious action. Business as usual, not projects.

You have the right to call that complete rubbish I guess but its actually been scientifically researched and proven not something I made up

The Americans put it like this:
Your car gets a flat tire, so you pull in to the side of the road (this is an American story, so American spelling seems appropriate). The first car that comes along is driven by a Republican, he knows how to change a tire, but, he has an appointment to keep, so he drives by. The second car is driven by a Democrat, who pulls over to lend a hand, but, he doesn't know how to change a tire and by some mysterious process manages to set fire to the car while trying to figure out what's wrong.

Seriously, has there ever been a NZ government that has failed to deliver on so many things that they campaigned on??
The answer is definitely not!
What have they fulfilled so far?
The prime minister is currently overseas trying to do something that is absolutely no benefit to NZ whatsoever!
If she wants to be doing all these feelgood things then she should not be the current prime minister, however the COL alternatives are also hopeless!

Have you been drinking? This makes even less sense than usual. #Syntax Horror

Sorry, didn’t proof read it and always type quickly.

"I am from Labour Party .. I am here to help you "

In this country government is an abusive, dysfunctional parent addicted to finance and growth at all costs. In many european countries the government is far better. Our issue here is landbased asset inflation affecting the price of housing that sits atop it. The government needs to buy back the land and lease the houses to nz citizens, then the cost of housing will be far more affordable.

OH dear, Labour is now pouring money directly into landlords fat pockets! The outrage! Won't anyone think of the children?

No one can afford to have children. Unless you are already on a benefit, and then Labour will pay you to have more children. The more children you have, the quicker you get to the top of the Housing NZ waiting list.