Govt reviewing Accommodation Supplement rent subsidy, Housing Minister Heatley says; Govt wants to get land prices, section sizes under control

Govt reviewing Accommodation Supplement rent subsidy, Housing Minister Heatley says; Govt wants to get land prices, section sizes under control

By Alex Tarrant

The government is reviewing how it targets state house rental subsidies and the Accommodation Supplement as it faces a blow-out in costs due to rising rents, particularly in Auckland.

Meanwhile, the government is looking at policy changes to reduce land prices and the sizes of sections. That includes extending city limits, and making it easier and cheaper to subdivide sections inside city limits.

Housing Minister Phil Heatley told TV3's The Nation programme on the weekend that Ministers would have a "good feel" of where they wanted to head by the end of the year.

See Alex Tarrant's piece on Friday, Wholesale changes to how government approaches housing affordability as it drops helping demand and focusses on supply side.

Rent subsidies

The Accommodation Supplement cost the government NZ$1.2 billion in the 2011 financial year. While Treasury forecasts this cost will rise only slightly to NZ$1.3 billion by 2016, the government-appointed Housing Shareholders Advisory Group warned in 2010 that the cost could hit as high as NZ$2.2 billion by 2016.

Even the Group's 'low-case' scenario forecast Accommodation Supplement Costs of NZ$1.7 billion in 2016 - still well above the offiical projections. See more on its research, and on the Supplement, here.

Heatley said costs faced by the government were a central reason for reviewing how the Supplement was targeted. The focus follows Green Party co-leader Meteria Turei saying on interest.co.nz in December last year that the Supplement was a "subsidy for landlords." Labour Party Housing spokeswoman Annette King echoed Turei's comments two weeks ago.

"That accommodation supplement costs about NZ$1.2 billion dollars a year, and state housing rent subsidies cost about NZ$600 million, so you you're close to the NZ$2 billion mark, and that is of a serious concern to us," Heatley said.

"We're a bit like the Labour Party actually who came out recently and asked the question, is it a good spend for that NZ$1.8 billion?"

"We think it probably can be targeted better. For example, when you’ve got someone in a state house getting a really cheap rent - 80 bucks a week - and then they have boarders who get the accommodation supplement, you know that household could be getting that state house almost for free, and we've got to be careful," he said.

Asked whether the system was being rorted, Heatley replied:

"Look in the welfare system you get these things from time to time. If it's the rules then we've got to change the rules.  Clearly if someone's being dishonest we'll catch them out."

Ministers would have a "good feel" of where they were going to head with the changes by the back end of the year. 

"It's a big piece of work for Paula Bennett - because the Accommodation Supplement's under her purview - and of course income related rents in state housing is under mine, and the Minister of Finance is also taking an interest," Heatley said.

The government would not return to market rents for state housing, and had made that "very, very clear."  

"We see a place for state housing, but what we're saying is, in terms of income related rents, accommodation supplement, the relationship between them, what levels they are, who gets them, we're like the Labour Party - we're questioning that," he said.

Land prices

Meanwhile, if there was one fundamental issue driving unaffordable housing in New Zealand, it was the cost of land, Heatley said.

"The cost of land, the cost of sections is so high that when a builder comes along and buys a bare section and has to build a house on it, because he's paying so much for the land, he has to build a flash big house to make any money," he said.

"So if you get land prices down at a reasonable level you can start building less expensive houses - houses that don’t necessarily have two or three bathrooms. So get the land price under control, and land size under control, and I think you're a long way there."

While that approach was not the silver bullet, "I'd say it would be top of the list," Heatley said.

There were two ways this could be done: releasing more land for housing outside current city limits, and allowing more subdivision inside those limits. The Auckland Council was on board with its policy for 60-70% of new house builds to take place inside current city limits over the next 25 years, allowing for 30-40% outside.

"If you’ve got an elderly couple in Auckland, and there's thousands in this situation, they're in a quarter acre or a half acre section. They'd love to cut it in half, build a new house for them on one half and sell the other bit off, and make three or four hundred thousand dollars for their retirement," Heatley said.

"They don’t do it because it costs them NZ$40,000, [takes] two years and they may not even be consented. That’s crazy," he said.

"What we're doing is we're answering the problem head on, and the problem is we're not building enough houses, and we're not building enough houses that are affordable. So the release of land, making sure that Council processes are much more streamlined [will help]."

Builders who had downed tools during the building glut through the recession were just now starting to pick those tools up again.

"We just want to make sure they’ve got the land to build on, and the consenting processes to work with," Heatley said.

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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Heatley is gutless. He won't even just come out and say what needs to be said:
"Local councils are way out of control and need their heads pulled in"
 
He also misses the point that  why would the council's and government want to "depreciate"   current property and land values via over supplying the market with new cheap sections?
It just WON"T be allowed to happen due to all current revenue gathering from local bodies and GST for government being collected based on such continuing high value parameters 
"never bite the hand that feeds you" They sure as hell wont.

Heatly was never queried on immigration despite the Savings Working Group blaming changes to our immigration policy for pushing up house prices and the national deficit:
http://www.stuff.co.nz/business/money/4622459/Government-policies-blamed-for-house-prices
http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf

reducing the section size will create a ghetto.
have a look in hamilton where they have 3 houses on a section that use to house 1.
Nothing but trouble brewing in those areas and the rents are high.
Developers are also putting 6 to 8 2 bedroom units on a piece of land that was originally the home  of 2 3bedroom homes.
 

Rubbish - depends how and where it's done.
 
Ponsonby is no longer a ghetto - and not because they made the secition sizes bigger.  If it was on the city fringe (where Hugh wants more housing) it probably would be.  A well located ghetto (like even Parnell was) doesn't stay a ghetto long.
 

The key is income.

Why immigration policy is ignored in relation to Aucklands Housing Problems [80% of population growth is from offshore]:
Self Interest:
http://www.propertynz.co.nz/
High Income Citizen of the World:
Policy analysist type/ Economist/Journalist.
The Left:
“Both in New Zealand and globally, the best of the leftwing tradition has always rejected small-minded nationalism, xenophobia and racism. In fact, leftists of an internationalist tradition have always favoured globalization and getting rid of national borders and barriers to migration. Progressive advocates of globalization of course do not defend a handful of rich imperialist countries, including New Zealand, dominating the world’s economy, but instead advocate an integrated and radically egalitarian world economy where production is based on social need and not on private profit. ”
http://liberation.typepad.com/liberation/2012/02/guest-blog-post-john-moore-leftwing-xenophobia-in-new-zealand.html
The Greens:
As a great grandson of boat people, I rise to address the Immigration Amendment Bill 2012.
http://www.greens.org.nz/speeches/kennedy-grahams-speech-immigration-amendment-bill
Anti-immigration feeling has no place in the Green party Immigration and Population policies released today, Green MP Keith Locke says.
“Our policy is the opposite of Winston Peters’,” the Party’s Immigration Spokesperson Keith Locke says.
............
The Labour Party:

It looks like the Government are set to loosen the immigration laws which will allow people to come into the country even if they cannot speak English – as long as they have plenty of cash.
The theory is that the influx of non-English speaking rich foreigners will be beneficial to the economy.
This theory however was completely demolished in April in a report from a Massy University economist, Dr Greg Clydesdale.
While Immigration Minister David Cunliffe thinks that more immigration is a ‘must for economic growth’, Clydesdale commented that ‘claims that immigrants improve the economy, introduce new techniques and grow the business sector are being exaggerated..There is often no economic evidence to support the claims made.’
Clydesdale pointed out that the Government’s own figures showed that only 2 percent of new immigrants introduced new technology.
http://nzagainstthecurrent.blogspot.co.nz/2007/06/immigration-policy-goverment-ignores.html

NZ has a policy of 'if you have $10 million plus and buy a few NZ Govt Bonds' then you're in NO questions asked'  
Which party introduced this policy which has made the likes of Bayley's RE what it is today?
One of the nations biggest traitors 

"If you’ve got an elderly couple in Auckland, and there's thousands in this situation, they're in a quarter acre or a half acre section. They'd love to cut it in half, build a new house for them on one half and sell the other bit off, and make three or four hundred thousand dollars for their retirement," Heatley said.
 
Oh yes and then along comes the IRD and takes a third off them in taxes, and taints them forever  as developers. Brilliant !

The elderly ( and there's thousands in this situation) cant even afford to pay their current power bills! let alone finance such a plan
How long do we continue to kidd ourselves here thinking the ponzi scheme just needs a yet even bigger bottom feeding?

Given the trend to subdive that started in the 80's I doupt that therewould be so many large properties left except the likes of Bob Jones?
Growing vegetables has traditionally been part of the social welfare safety net.

I'll admint im not up on this, but I though the IRD only taxed you if you had bought to speculate? So a one off sale where a long time owner sub-divides I would have assumed that was "tax free"?
In any event if you are getting on,, you will find you cannot look after 1/4 acre....so you might as well sub-divide and enjoy the benefit even if you lose 1/3rd to tax...
regards

Correct Steven, in most cases this would be a tax free capital gain.  Actual profit margin though is anyone's guess.  Maybe they do make $300k being the land "value", depending on location, sale price less cost of construction.
BigDaddy's comment shows the mentality of some (most) though.  Instead of appreciating that they've netted $200k after tax most take issue that they have to pay tax on income.  This is the parasitic nature of PI's though - how to make capital gains while feeding off the taxpayer.
 

Why is it the councils responsibility?  I fail to see why.  In terms of benefit, really all they do is provide public service(s), they dont make a profit as such.
Also the idea that a builder must build for a owner is silly IMHO....its a great excuse for the builder to charge what they like, far better to let the builder build and then the would be owner has choice.
I mean who gives money over to Noel lemon and asks them to provide a TV at some point to maybe a spec?
Also if my experience is anything to go buy the profit margins are the materials the big boys like Place makers can get away with and not builders.
regards

Council and government are the most expensive property developers and builders in the country.  You need to add 30% in your calculations, at least, for a construction project organised by local or national govt.  

Council and govt. are expensive developers because of how they go about it.  Their projects involve project managers and no-one involved has any incentive to be cost effective - except the people whom actually do the work getting screwed down on GETS 'till they can't do a proper job - which is very expensive. 
 
 

When a family falls on hard times, and has to devote lots of energy to stabilizing the
situation, and then decides to have another child (whatever the other merits of the
case) that will almost invariably worsen the family’s economic position. It is a folksy
comparison and breaks down at some points, but NZ is in some respects that family:
choosing to have lots more kids, as it were, just when were in a position to capitalize
on the good positioning reforms put in place by successive governments in the late
1980s and early 1990s. In that story, housing is more than a symptom but less than a
cause.

http://www.treasury.govt.nz/downloads/pdfs/mi-jarrett-comm.pdf

This is just loopy,
"The cost of land, the cost of sections is so high that when a builder comes along and buys a bare section and has to build a house on it, because he's paying so much for the land, he has to build a flash big house to make any money," he said."
 
Im sorry but if you make the section 1/3rd its current price the builder will still aim to build big as thats where his margin is...this isnt rocket science....
 
"So if you get land prices down at a reasonable level you can start building less expensive houses - houses that don’t necessarily have two or three bathrooms. So get the land price under control, and land size under control, and I think you're a long way there."
absolute rubbish IMHO.
regards

Not neccessarily.  Developers often very keen on cheap housing as the cheaper it is the bigger the market, faster to sell and settle, easier and more certainty on sales - all of which good for margins.  Speed and certainty are very important to them as holding and finance costs a signifigant component of cost - a delay in Resource Consent can be the difference between making a good profit and going bankrupt.
 
What happens though is that low density expensive housing is also low risk - often no resource Consent issues if you're doing an expensive house compared to doing say 2 cheaper houses on same site (which neighbours will object to).  Also development contributions are linked to number of houses, not value of houses.  So a $400,000 house pays say $25,000 (6.25%) whereas an $800,000 house also pays $25,000 (3.125%).  So a bigger house can mean less tax and less risk.  What's worse is that sections closer to CBD (facilities, roads etc. exist) often pay bigger tax than sections that require a whole new infrastructure to be built and maintained.
 
Auckland Plan could be vastly improved by having a rational attitude to density.  An 8 bedroom, 8 bathroom, 6 car house is deemed to have the same effects as a 1 bed, 1bath, 1 park house.  This is obviously nonsense and big part of problem.  If the 8 bed house could be split into say 3 smaller dwelllings with 2 parks each (it could look identical) without attracting 3x the tax and insurmountable Resource Consent 'attention' then affordability would improve.

No it is not loopy, Heatley is right (nice to see him becoming a lot more active).
One of the side effects of rigid planning constraints is that is you specify a minimum lot size of 400 square metres in many parts of central Auckland, the value is going to be usually around 350K +. It doesn't make sense to build a 200K house on a site of such land value, as this would be undercapitalisation.So you either build a mid sized townhouse of good or higher spec, or a large house of average or higher spec
Get minimum lot sizes down and you'll then get land prices down which will mean you can build smaller, less costly houses and not undercapitalise
FINALLY the govt is starting to talk sense on housing. ABOUT BLOODY TIME, it's about 4 years overdue
 

"That accommodation supplement costs about NZ$1.2 billion dollars a year, and state housing rent subsidies cost about NZ$600 million, so you you're close to the NZ$2 billion mark, and that is of a serious concern to us," Heatley said.
 
Hopefully, the recipients (not the landlords) are the cohort that smoke all the cigarettes, gamble and pay it back with excise duties and GST. Didn't Tau Henare recently claim excise duty collected from cigarette smokers has reached NZD 1.5 billion?
Are many zero sum behaviour patterns always so self serving?

Affordability for what Olly Newland called the "tacky end of the market"*
...............
"To some, the quakes should have been an opportunity to break the mould.
Christchurch architect Roger Buck, a longtime advocate of sustainable housing, says this could have been the moment to make the move to not just greener homes, but greener suburbs.
More innovative ownership models could have emerged, such as community designs grouped around shared garden spaces.
Instead, all he sees are cookie- cutter estates offering standalone houses on ever-shrinking plots. "They're short-life buildings to begin with, what I'd call stick houses," he says.
They look ritzy when first built, but use flimsy materials and are unlikely to age well.
Also, the sections are too small. Buck says people are clinging onto the old quarter-acre Kiwi ideal, but trying to make it work on half the land. We are building a rash of new suburbs that will never have vegetable patches, proper gardens or the shelter of trees.
"When the easterlies blow through, they will be utterly bleak."
Nor do these subdivisions allow people to capture the winter sun.
"You need do no more than orient your house to the north and that's free winter energy.
"However, developers just chop up the land at random to get as many sections out of it as possible. The house are then plonked down to fit the roads."
As for solar water heating and other green design basics that should by now be standard, he says people question the payback and leave these options out. "Yet they'll spend $50,000 on a kitchen without batting an eyelid."
Leaving it to the market is just asking for shallow choices, Buck says. "People are only interested in the fancy brochures - the latest gear, the flashy stuff."
Lincoln University associate professor in property studies John McDonagh agrees that people are questioning whether we are building the slums of tomorrow - houses too big on land too small, subdivisions which are tight tangles of roads where the only escape is by car.
However, he says it is unrealistic to expect a radical change in thinking just because of the earthquakes.
"It's a lowest common denominator thing.
"Developers get comfortable building a certain type of product. It's a risk-free approach. They know they can do it."
http://www.stuff.co.nz/the-press/news/christchurch-earthquake-2011/6865085/Big-ambitions-for-small-sites?

That was a very good article. Why isn't passive solar and energy efficiency part of the consent process for section developers and architects/builders? Leave it to the "market" and people just go for max size at min cost with no regard for future costs. Cheaper consents for smaller more efficient designs, more expensive consents for the opposite.
"Nor do these subdivisions allow people to capture the winter sun.
"You need do no more than orient your house to the north and that's free winter energy."

That one thing would achieve massive health (warmer, drier homes) and economic benefits (less energy consumption) both at the individual and nation wide level. Cluster housing, all north facing as possible with communal amenities seems like the way to go.
High density - look at the Beaumont Quarter in St Mary's Bay. Built on industrial site, several hundred townhouses and apartments, sunny, stylish and spacious, clusters designed by different architects to give variety and layout options. Very nice landscaping and facilities.
 

Beaumont quarter shows how high density can be achieved in a way that results in a place where people enjoy living. However the only way to achieve higher density and release sections en masse in the central suburbs of Auckland is to permit section sizes of 250m2 to 300m2 in the res 5 and res 6a zone.

It's good that the debate has intensified on housing affordability.

Hypetiger on the USA housing recovery.
The new home volume bubble popped and is appearing to be inflating again since reaching it's lowest low of the past 50 years.

The median price bubble is still intact after 41 years...But is showing signs of weakness. 

A resumption of some sort will have to be accomplished eventually or the only way to extract yield from real estate will be to sell high and buy lower...Which will cause the 41 year old real estate price bubble to collapse.

You would need to increase immigration to the USA and have well paying jobs to sustain all this.

There is not enough time to increase the birth rate...and I have zero idea what could be done at this point to create enough employment to supply incomes to attract and employ enough immigrants or even the currently unemployed.

As far as i can tell all that is happening is the 2008 engineered bounce is topping and the effect is showing up as a bottoming process.

Because the population is oblivious that the good old days are over...Everyone is still trying to capitalize upon a recovery...

This is causing a surge upwards that ultimately has no follow through.

It's basically a set up for the next collapse.

inflation greater than previous inflation to maximum potnetial is followed by inflation less than previous inflation to maximum potential.

Basically as soon as consumers reach a point where they can inflate debt in order to sustain previous standards of living...they will...Until the maximum potential of expansion is reached...then they will be forced to stop again.

They will service previously created debt until they can resume requesting commercial banks to create new debt in greater quantity than previously created debt is being destroyed.

Consumers will keep trying to break free from their fate and smashing their heads over an over again from this point out.

It's like whack a mole....As soon as consumers pop their head up and think they are free...They will be smashed back down again.

Eventually they will give up trying and the depression will set in.

That's pretty much how Michael Hudson describes it. People bouncing along at close to the maximum debt they can borrow, repaying a bit, borrowing some more, hoping for something like a big increase in income that will let them borrow more. For the banks their ideal scenario is where every bit of surplus income is committed to interest repayments, except at that point there's nowhere to go but down and fast.

41 years ago was 1971. The end of the international gold standard for the US$ reserve currency and the beginning of the biggest credit/debt bubble in human history. 

Quote:
"If you’ve got an elderly couple in Auckland, and there's thousands in this situation, they're in a quarter acre or a half acre section. They'd love to cut it in half, build a new house for them on one half and sell the other bit off, and make three or four hundred thousand dollars for their retirement," Heatley said.
"They don’t do it because it costs them NZ$40,000, [takes] two years and they may not even be consented. That’s crazy," he said.
Sheer greed if that is right.  In a realistic market they would be satisfied with recovering their costs plus the reduction caused by the reduced property value of the existing property and a reasonable profit say $50,000. The chances are that this applies mainly to Auckland anyway and if a lot more sections are made available, their profit potential would be decimated. 

On the other hand if they made $300,000, invested it in the 'productive economy', lived off the income and got zero pension then it might not be so terrible.

There is absolutley no need to go around cutting sections in half. That destroys decent living space to produce rabbit warren type slums.
There is plenty of room in this country.  Stop all this immigration, 90% of the people that turn up here are of no use to the country, either economically or socially.
 
Greedy property pigs who decimate 1/4 acre sections should have all thier money confiscated and forced to live in a sewer like the turds they are.
 

"Stop all this immigration, 90% of the people that turn up here are of no use to the country, either economically or socially."
Absolutely
And make them sell up what they have bought already.

I live on a half share of 560 sq M. Is that a rabbit warren type slum?

You don't need the interwebs to resolve that question. The answer is much closer to home.
Pop over and ask your neighbours, sounds like it won't be much of a walk.
 

Interesting idea there moa man. Might see if I can furnish the sewers under my properties, create a few more bedrooms and increase the rents.
Would you be interested?

Interested in what exactly?  Hang on, you don't need yet another loan to develop property to your usual standards do you?  If so, I would advise going to visit a bank, they are used to dealing with poor people and suckers.
I never lend to property people, way too unreliable.
 

You put your money in the bank moa man. Thank you. I will go along to the same bank and borrow it to buy property.
We're both happy now. 

Productivity Commision:
We recommend that you:
a agree to the inquiry selection process set out in Appendix 1
Agree/disagree
b agree that Commission’s second tranche of inquiries be selected on the degree that
they:

• are relatively uncontroversial given the desire to establish broad political support for the Commission
[means National, Labour and the Greens don't want to be seen as part of the problem]

• utilise the Commission’s unique position as an independent agency with high
quality analytical ability and community engagement approaches
• support the establishment of the Commission by developing its capability,
capacity and reputation, and
• have the potential to improve productivity and support the overall well-being of
New Zealanders.
http://www.treasury.govt.nz/publications/informationreleases/productivitycommission/pdfs/t2011-2000.pdf

How do you review the accom supplement?...one option really - don't pay it.

No I don't actually...I'm curious as to what the reform options are? Govt either has to pay it, or not pay it...right?

THE case for higher immigration as a driver for economic growth is far from proven, as is the notion that more immigrants can counter the negative effects of population ageing, the Productivity Commission says.
In an analysis of the "big Australia" debate in its 2011 annual report published yesterday, the commission said the economic impact of immigration "is sometimes clouded by misperception".
"Two benefits that are sometimes attributed to immigration, despite mixed or poor evidence to support them, are that immigration is an important driver of per capita economic growth, (and) immigration could alleviate the problem of population ageing," it says.
 The commission also notes immigration doesn't affect household wages overall, though particular sectors could be adversely affected if there were a large influx of skilled immigrants.
And it warns that trying to slow the impact of an ageing population on the economy by bringing in young workers is only a sugar hit.
"Any effect would be short-lived," the report says. "This is because immigrants themselves age, and progressively higher levels of migration would be needed to sustain the current age structure into the future."
The commission affirms its view that government policy effort might be better spent internally "to improve the participation rates of ... women over 45 and older Australians of both genders."
 
 
http://www.theaustralian.com.au/national-affairs/immigration/immigration-link-to-economic-growth-yet-to-be-proven-says-productivity-commission/story-fn9hm1gu-12261

Even if its true, we cannot grow any more anyway....ergo more ppl is pointless....in fact we want less....
Of course grow is a term that says consume.....so the less ppl you have per finite resource the richer the Nation is per capita, more ppl just use it faster and there is less to go around....
So, a double no.
Its just can kicking.....ppl should wake up to it and ask Pollies who say its great, "what will my children use?"
regards

 The commission also notes immigration doesn't affect household wages overall, though particular sectors could be adversely affected if there were a large influx of skilled immigrants.
 
Highly unlikely for the professional vocations - I have heard the NZ Medical Association raised the qualification bar when South African doctor imports were threating to lower the base income levels for existing NZ doctors.
 
The patients, consumers, whatever never get a supply and demand price break because  middle class unions (professional guilds) rally to the defence of their members lifestyle demands with the support of government.. The Renumeration Authority being the most forthright defender of it's member's increasing salary needs, irrespective of the crown's need to borrow to pay.

I am not anti-immigration at all, but  I DO think we should reduce our immigration intake significantly

Should stop Kiwis going to live in Aussie too eh Matt in Auck! 

Hey, Bernard,
Just reading the above it is great to see how much immigration is brought up as a contribution the the housing problems in Auckland in particular. There has to be a real association of more immigrants in Auckland with bigger housing problems.
Maybe it is time for a full discussion on the immigration topic.
A small number of immigrants contribute to the wellbeing of the country. The other 99% are just diluting the resources and wealth of those who are already here. For those born here it is particularly galling to see a wonderful living environment being wasted away by newcomers who cannot have a hope of assimilating to local conditions and lifestyles.

by iconoclast  21 Oct 2011 repeated from last year
http://www.interest.co.nz/property/56293/further-improvements-nzs-balance-sheet-needed-theres-sustained-pick-national-property

One reason why NZ needs to consider closing its doors to immigration. Over the past 10 days 2 comments have been posted (by some-one else) drawing to your attention that NZ consumes 160000 barrels of oil per day. That's 13 barrels of oil per person per year for every one of 4.4 million ppl. Man, woman, and child. A cost of USD $800 per year per person. (NZD $1000). However that is (currently) offset by NZ production of 90000 barrels per day which is exported, leaving a net cost per person of USD $500 pa. The problem is those fields producing the local 90000 bpd will be exhausted within the next 10 years. Which means in 10 years time the imported costs to the existing population will increase from USD $500 pp to USD $800 pp in constant $ terms.
 
HOWEVER, for every new migrant arriving in NZ, the incremental cost is an immediate additional imported cost to the economy of USD $800 pa per person.

AT current July 2012 cost of USD $90 pb the annual additional (imported) cost is now USD $1170 or NZD $1450. Thats crude oil, not the processed refined cost.

Have had a 15 minute chat to Nanaia Mahuta today, and asked her what do Labour spokesmen mean by statement that the accommodation supplement is 'a subsidy to landlords'?
She suggested that there is evidence that some tenants are getting very substandard accommodation but as soon as landlord knows they get the accommodation supplement they are required to pay that over to the landlord with a rent charged out of proportion to what the property is worth to rent. I have no doubt that is true in a number of cases. She said they would target this.  But how the heck they would do this seems a mystery to me.  Do you align rent to the capital value of a property, and if so how is that monitored ??  No clarification on that. It's also true that there are some tenants rorting the system by taking in undeclared boarders and' recovering' the accommodation supplement for themselves, it's possible that some lodgers themselves are accessing the supplement.
I also asked her that just as National was now definately going more to the right of centre-right, would Labour go more to the left of centre- left. She said yes, that would be the case as Labour wanted  to clearly differentiate itself more from National, and it is particularly keen to try to tap into  those 25% non-voters.  So, I indicated that to me meant higher taxes from those who disproportionately pay a huge amount of personal taxation already (15% pay 54%), and she said yes, Labour was already committed to higher taxes, including a capital gains tax. 
So, there we are, we can expect a polarisation from the centre with National heading along a track to the right and Labour (prodded by the Greens, alias the real' reds') heading along a track to the left.

"why would" indeed and one of the arguments I had with the Gareth Huges and the Green party over their wish to see all rentals insulated.  My comment was and is why dont renters move to an insulated house? I also asked where would landlords get the money from to insulate? "oh from the bank" uh hello what would that do to your cheap rent?  If you insist on insulated accomodation, thet landlord(s) may simply have to sell up as its not economic to add....where will you live then?  No one has ever really replied......
At best ive had  "well  the Govn can pay for it"....so in other words I who cant really afford to insulate more pays for others to get theirs done via a tax increase.....um hello? what was achieved?
regards

mist 42nz, yes pity I had only a 15 minutes chat.  While we can accept a bit of funny business can obviously go on with accommodation supplements, it has been my experience that most tenants have a very good idea what they can expect to pay and won't very readily hand over more than that.  Having said that, I only have one tenant who gets an accommodation supplement, as all others are in full-time work, so my experience is pretty limited in this area.
You quite rightly make some good observations, but politics is politics, eg capital gains tax is more about politics, with all the proposed exemptions and feeding the prejudices of their political base, rather than actually raising a lot of revenue - the moment you exempt owner-occupied properties, businesses owned by older people, and I would put money on exemptions for iwi interests etc, you are not going to raise any substantial amount of revenue.   

As far as I am aware accomodation sups are availble to anyone who meets an income and asset test, not just beneficiaries, so you may find more of your tenants are getting it than you realise.
That aside, the asset test is minimal ..$16,200 in assets for a couple and you fail the asset test.  So presumably all those in recipt of this accom supp have savings or assets less than this - in other words everyone in receipt of accom supp is asset poor and making little or no progress towards home ownership via savings.  Thats the frightening part.

ummm, didn't Beaumont Quarter have a whole lot of problems re leasehold arrangements and leaky buildings?
What I would concur with is that the general layout and design approach is one of the best seen in Auckland

The leasehold 'problem' wasn't a problem - it was just that it was leasehold (and the rent got put up after 9 years - a lot).  You'll probably find that if it was freehold originally it wouldn't have been a feasible project.

The company that owned the lease got greedy with the rent review and was sued by the home owners. Prices fell sharply and the company I think went into liquidation, was bought out by a small group of wealthy individuals who have freeholded a lot of it for a profit. 130m2 3 bedroom townhouses selling for up to $450,000 leasehold years ago are now selling for $650-750,000 freehold. Relative to the rest of St Mary's Bay very reasonable.
Some of the designs had potential for leaks but the body corporates(separate one for each block) are very strong on maintenance (eg compulsory waterproofing of decks) hence the high body corp fees.
A friend lives in Botany Palms (used to be Sacremento) which had major leak issues before being reclad. That apart the design of the townhouses, while not that of Beaumont Quarter, is pretty good. Everything including Town Centre and schools is within 5 minutes walk.
What would surprise most people with both developments is the privacy and lack of noise. Can't hear or see neighbours, little to no traffic and apart from decent sized patios, no maintenance.

A recent paper by Harvard economists Daniel Shoag and Peter Ganong titled, Why Has Regional Convergence in the U.S. Stopped? indicates that land development regulations tend to increase housing costs, which contributes to inequality by excluding lower-income households from more economically productive urban regions. Does this means that planners are guilty of increasing income inequality?
Smart growth critics imply that virtually any policy intended to influence development patterns reduces economic development and opportunity. For example, columnist Virginia Postrel used this to label economist Paul Krugman elitist (why him?), and Randall O’Toole used it to criticize urban planners, claiming, “Of course, many urban planners still refuse to believe that land-use regulation makes housing expensive.”
But the research actually indicates something quite different than what critics imply. Many of the development restrictions reflected in this analysis are old, sprawl-inducing restrictions on development density and multi-family housing supported by local residents, rather than progressive, smart growth policies intended to support more compact development supported by planners. Shoag and Ganong used the Wharton Residential Land Use Regulatory Index and other studies, which indicate that regulatory intensity is:

  • Lower in central cities than suburbs.
  • Negatively correlated with population density. Lower density towns tend to have the strictest regulations.
  • Strongly positively correlated with indications of wealth (median family income, median house value and share of adults with college degrees).
  • Higher in coastal states than in the Midwest and Southern states. This probably reflects a combination of natural development restrictions (such as shorelines and mountains).
  • Positively correlated with direct community democracy in the form of town meetings that require land use issues to be put to popular vote.

http://www.planetizen.com/node/57754

I don't mind if people subdivide their 1/4 acre sections. My unsubdivided one will steadily increase in value. Rarity value.

It looks to this IT GUY that they are softening up people to a blanket zoning change across the new AKL council,   I beleive that around Dec the minimum size plot will be reduced to arround 333 ish sq m, for the most suburbs.    If they try to do this by suburb the NIMBYs will scream so will be done almost blanket.
This is a cunning move by national, it will allow national voters who have land banked to subdivide easily and will allow national to say its helping create supply, which it will do, helping first time buyers and somewhat capping prices for a while.   Extra supply must do this.
The council will be supportive as all the new sections will be additional ratepayers, and any section of 1000 sq m will increase in value as is now subdividable, hence have higher rates if NOT actually divided, almost a stealth land tax on a land banker.....
This entire topic is feeling to orchastrated, ie minister says their is a problem, two days later minister has an answer....   Bernard,  just think of the traffic this will bring.
 
 
 

 I actually added your blog to my favorites list and look forward to get the same quality content every time I visit your blog. Thanks a lot.
 

Accomodation Suppliment. 
If you own your own home.. paying mortgage you can get it if your earning less than..... 40,000. And then you can get ... $9.00 a week...
really!!!