Euphemism of the week. So far. "We will ensure there is equity between private rentals and state home rentals." It sounds sort of nice in context in National's Housing policy, but yes, what it means is a return to market rentals for state housing. Here are the money quotes on what that wrought last time.
National's Housing policy comes in the dainty little flier format that suffices for policy documents in this campaign. It's quite a piece of work. It addresses access to the housing market:
"Housing is less affordable than it was 20 years ago partly because of the lack of available land. National believes there must be a more responsive zoning of land to open up more of it for housing. Reforming the RMA will help to achieve this," it says. In fact, the claim that that there is a lack of available land that could be fixed by RMA reform appears twice in the two pages to which the "plan" runs.
Oddly enough, it's a factor that was cited in a speech a year ago by Reserve Bank governor Allan Bollard, entitled What's happening in the property sector?, a grand total of zero times.
Bollard noted that the recent period of strength in the residential property market was "hardly unprecedented" in New Zealand.
The early 1970s, the early and late 1980s, and the mid 1990s were also periods marked by intense activity in the housing market and strong house price inflation.
There were some unique features to each of those cycles, but also some common drivers. Each coincided with a substantial acceleration in population growth to levels well above normal, due mainly to a spurt of high net immigration -- more arrivals and fewer departures. Each cycle was also reinforced by some other stimulus, such as a lift in export prices received from abroad, fuelling household incomes.
He went on to note that "a sharp lift in net immigration and the sharp improvement in export returns from about 2000 through to 2002" were catalysts for the upturn, but thought that both short and long term migrant pressure was easing. As other possible factors, he listed the drift to warmer regions, a drop in the average number of person per dwelling, lifestyle changes and the shift to "more exotic alternatives to the traditional New Zealand family home", capacity in the construction industry, "strong economic activity", the popularity of residential property investment and the inevitable short-term inelasticity of housing supply.
At no point did he refer to regulatory roadblocks to the supply of land for housing developments. But he did say this:
Another source of demand during the latest cycle, at least in its early stages, has been the significant demand for properties by non-residents particularly in coastal and lakeside regions. The relatively low New Zealand dollar up until about 2002 helped to make such properties particularly attractive to foreign buyers. Although we have no reliable way of telling how much of New Zealand's housing stock is now owned by people living abroad, that proportion has almost certainly increased substantially over the past few years. Demand coming from people living abroad is likely to be less sensitive to monetary policy than demand coming from resident population.
So. Coastal and lakeside land. The very sort likely to be freed up by a loosening of the RMA …
National also claims to be "wary of the perils of offering a one-off grant [ie Labour's KiwiSaver-based package] to help people into first homes … ultimately the cost of housing rises to match the size of the grant." (Curiously, if you're a state house tenant wishing to take your property out of the public housing stock, you will be eligible for a $15,000 suspensory loan for your deposit, written off after seven years' occupation.)
And yet National is happy to ditch conventional public housing rents, and load the public obligation into the accommodation supplement, a landlord subsidy (National actually wants to pay it direct to landlords). This policy helped send rents soaring last time around. This will doubtless come as welcome news to people who piled into residential property and have felt the pinch as rents fell: rather than being left to the discipline of the market, they'll be bailed out by National. If you're renting but would like to buy a house: not so good.
Seriously. The last time market rentals were phased in, from 1994 to 1996, the percentage of state house tenants spending half or more of their income on their housing costs increased from 37.5% to 58.8%. At the same time, the percentage of private tenants spending half or more of their income on rent increased from 58.9% to 62.7%. By the end of the 1990s, 71% of applicants for food parcels at the Auckland City Mission cited market rents as the reason for applying.
What planet are these people on?
PS: For a little light relief, National's Communications policy. All 82 words of it (exactly the same length as this paragraph). It proposes a return to generic competition law (which worked so well in the 1990s), implicitly rules out unbundling, promises telco power of appeal against the Telecommunications Commissioner and says National would "regulate an outcome if necessary" if all players fail to strike a deal on number portability. Nothing about broadband or mobile termination rates. Is this some sort of joke?