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A minor change to existing provisions!

by Elinor Chisholm

Something crazy happens at the moment. A tenant takes her landlord to the Tenancy Tribunal because it’s below legal standards: it’s damp, for example. The Tenancy Tribunal concludes, “yes, that’s illegal”. The Tribunal can order the landlord to bring the property up to standard. But the landlord can decline to do so. In that case, the adjudicator orders the landlord to compensate the tenant.

That’s great for that tenant. But not so great for other tenants. Even though the Tribunal has just ruled that the house is below standard, it can be put on the market again in the same condition, and rented out by other unsuspecting tenants.

The new tenants live in the horrible conditions. And maybe, eventually, if they are aware of their right to a home which meets a certain standard, and if they have the confidence and the time and the energy, they go to the Tenancy Tribunal. The process starts again. They get compensated, they move out, the house is rented out to others.

This process is not fair to tenants, and it’s a grand waste of the court system’s time.

(I wrote about this situation in more detail here – I learned about it in Lyndon Rogers’ excellent Paper Wallsreport).

The good news is that the government is taking action on this as part of the changes to the Residential Tenancies Act announced a couple of weeks ago. There’s far bigger changes, of course, and I’ll write about them in the future, but I wanted to draw attention to this one, as it’s easily overlooked.

It’s way down on page 7 of the Cabinet Social Policy Committee Paper, under the modest title “minor changes to existing provisions”:

j. Currently the Tenancy Tribunal can order a monetary payment as an alternative to a work order (s 78 (2)). Remove this provision in relation to work orders for compliance with smoke alarm and insulation requirements, as well as compliance with the requirements prescribed in the Housing Improvement Regulations (for example functioning sanitation).

This means that in the future, the Tenancy Tribunal has to force the landlord to bring his or her property up to standard. For example, if it’s a damp house (and it’s illegal to rent out a damp home under the Housing Improvement Regulations, as Bierre, Bennett and Howden-Chapman recently pointed out), the dampness problem has to be resolved.

This is really great news.

However, it will be interesting to see the detail of this change. As Lyndon Rogers points out, it’s strange that at present, compensation and a work order are the two alternatives available to an adjudicator. In reality, they’re different things: “compensation is about harm done, while the work order [is] about ensuring that it does not happen again…” [p.20].

Let’s hope that the future, improved s 78, which will ensure that a house’s problems are fixed, will also provide the adjudicator with the option of ordering compensation to the tenant for the harm done by living in a home below standard.

This blog post is republished from the original at Elinor Chisholm's website One Two Three Home.


Buying a fight with democracy

by Rob Salmond

Last Thursday, Labour and National presented their thoughts on the 2014 election to Parliament.

On Labour’s side, there was an inevitable and welcome move away from linking enrolment and benefit eligibility. Good, and phew.

On National’s side, the disturbing suggestions coming from Greg Hamilton are quietly dangerous for freedom of political expression in New Zealand.

First, on the supposed problem of people enrolling shortly before they vote:

National recommended that only people who were enrolled before the advance voting window should be able to vote ahead of election day.

Anyone who enrolled during the advance voting period should have to cast their vote in the polling booth on election day, Mr Hamilton said. 

This, National says, is to prevent the problem of political parties not having sufficient time to do “proper scrutiny” of the roll. That’s a pretty icky sounding phrase.

What it actually does is place extra, purely administrative barriers between citizens and their right to vote. Democracies should not do that. The citizens’ rights are more important than the administrative wants of the State or of political parties. If a person is eligible to vote and goes to a proper polling place, they should be able to cast their vote. No ifs, buts, or maybes.

In the US, the Republican Party has been using these same administrative procedures to try and put a chill on voter participation, especially among people on low incomes who are also either young or from an ethnic minority. (Horror example 1. Horror example 2. Horror example 3.)

It’s no great surprise that those targeted by the Republicans tend not to vote for right-leaning parties. It’s deeply anti-democratic, and it’s a real shock to see National copying from their playbook.

If there were any doubt about what National is trying to achieve, have a look at what National suggests to combat the rise in electoral fraud rate from 0.002% to 0.004%:

National wanted voters to be required to present official identification or sign a statutory declaration at polling stations to cut down on electoral fraud.

That’s right, more pointless administrative hurdles! For the other 99.996% of us, there will be new barriers standing between us and the voting booth.

For most Kiwis, presenting a driver’s license or signing a form isn’t a big deal. But it becomes a big deal for people with low levels of formal education, or recent migrants, or those concerned about what else the State might do with their statutory declaration.

People in those groups (surprise, surprise) don’t tend to vote National. So National wants to make it harder for them to exercise their democratic rights.

Yes, the barrier is the same for everyone. But it appears higher for the people on the lower rungs of the ladder. And National knows it. It’s disgraceful.

What positive impact on the supposedly burgeoning electoral fraud rate would we see if we went with National’s suggestions?

[National’s] deputy manager Cam Cotter conceded that he could not cite instances of electoral fraud in relation to their concerns ...

Get that – no positive benefit at all. None.

But, conveniently, a side effect of the new requirements would be to make it disproportionately harder for poor folk, young folk, and recent immigrants to exercise their legitimate democratic rights.

How about freedom of political speech during an election campaign? Surely that’s sacrosanct, right?

Hamilton also proposed a shorter advance voting period of 10-14 days and tougher restrictions on campaigning where early voting is taking place.

Oh, I guess not. National wants less flexibility in how people vote, and less freedom of political speech during the final few weeks of an election campaign.

The health of our democracy depends on freedom to talk about politics. Anything that limits that freedom threatens the quality of our democracy.

I’m genuinely shocked that the National hierarchy would propose these chilling, Republican-style affronts to our democratic engagement at election time.

And I’m confident people of conscience in National - including David Farrar who laudably proposed the antithesis of Hamilton’s ideas, asking to liberalise some rules about campaigning on election day – will be quietly aghast as well.

Making suggestions for improving elections does not have to be hyper-partisan. I support David Farrar’s proposals around election day online activity, and I was grateful to have his support at the Select Committee for my suggestions to give full electoral roll access to registered third parties as well as political parties.

But if National is going to try bringing the thuggish Republican-style intimidation of left-leaning voters to our shores, they’re buying a fight against everyone who values our democracy, and the easy exercise of our rights to choose our leaders.


House prices and the "Magic Money"

by David Hood

At any one time, some people take out loans to buy houses, some people work paying off mortgages, and some people sell houses, possibly paying off mortgages. And the housing market reflects that behaviour.

At least, that is the traditional model of the housing market. A model that applied in New Zealand, a model that still applies in overseas countries – but not a model that applies any more in New Zealand.

Because I really, really strongly believe that informed debate involves giving people access to the data and explaining your working, I have done two versions of this post. This Public Address version is the easy-to-read one that draws a cloak over the technical steps. The Github version shows the exact computer code used.

Declaring my sources for this right at the outset, the data file used is compiled from the Reserve Bank of New Zealand. The Housing Value (in billions) is available in time units of quarters in the RBNZ housing data. I have converted the billions to millions to make the units consistent with debt. The Household Debt (in millions) comes from the Reserve Bank series C6. As C6 is in time units of months I have converted it to quarters by taking the average debt of the months in the quarter, as this is what the Reserve Bank does in the shorter time series C6a. that is my raw data. I have also added the CPI for normalising the data against from Stats NZ - Infoshare Group: Consumers Price Index - CPI, Table: CPI All Groups for New Zealand (Qrtly-Mar/Jun/Sep/Dec). Arguably the Capital Goods might be better, but it really doesn't change the final results and from a people perspective you need to buy food etc. So that is the data.

People make a graph like this showing the relationship between Debt (red) and Price (blue). Which I have done in Figure 1. People go run linear relationship models on that and conclude it fits wonderfully.

It doesn't.

There are a few things wrong with this graph (the stretchy axes are a bit of a problem), but the main thing is that it has not taken into account the "stuff increasing over time" issue – that both Housing Value and Household Debt are governed by "the amount of money" factors like inflation. There is an entire website of spurious correlations of this type.

Now, because we are not blind monkeys mooshing keyboards, but instead have some understanding of the "stuff increasing over time" issue, we will take the difference between quarters.

This is a very standard approach to things that happen over time, and we have evenly spaced time periods so it all works nicely. From each quarter you subtract the value for the previous one, so that you are left with how much things change by. This lets you compare the amount that things change together, and doesn't have any "over time" issues as they are all the same short block. Making the similar graph similar to the previous one, but this time using the Quarter on Quarter information and locking down the vertical axis we get Figure 2.

We can do a linear regression of these two things, which suggests people getting mortgages are weakly matching money being paid for houses. But even that a bit rubbish because it doesn't take into account the possibility that things have changed over time, and not being a blind monkey it is pretty clear that scale of movements in recent times is much more than earlier times (other sources suggest the pre-2001 pattern held going back through time).

I would also suggest that the upward trajectory since 2008 is not reflected by movements in debt. And further suggest that, as is the case in other countries, if people were buying houses in the traditional model the ratio of increase in value to increase in debt should be relatively constant.

At this point I have satisfied myself "something is up". To get a sense of the overall magnitude in a slightly speculative way, let's look at the cumulative differences.

First, by converting the lot to 2015 dollars based on the CPI. If, hypothetically, the early figures represent an internal economy with the traditional pattern sales are paid for by equity plus borrowing, and that the 90s is representative of that ratio, we can do a linear regression to get that relationship.

Calculating it with a zero intercept, because if there was no money people would not be buying houses, we get an estimate of 2.1915 added house value to added household debt. This gives us around an average 46% equity in the purchase of a house, which in the spectrum of new buyers to older people downsizing seems a credible average. This 2.1915 multiple gives us the expected component of added values which are paid for by people getting mortgages. So what does that mean cumulatively? Well, Figure 3 is what it means.

Keeping in mind that in the early 90s household debt matched house value, and it still does in other countries that are not open to buying from the world, the height of the blue line above the red line is the gain in value (in billions) that cannot be explained by household debt (and does not seem to be coming from any other sector of the economy). I realise I am now back to "stuff increasing over time", which means it is a problem comparing things of different periods, but the CPI was the best correction we have for that.

Because it can be difficult to read heights in a stacked graph, I have separated out the magic money section by itself in Figure 4.

Is all the magic money offshore capital? We just don't know. There is a lack of evidence of it coming from other parts inside the New Zealand economy, and given the hundreds of billions of dollars, a local source would be somewhat obvious. We also know that in other countries, with more internal housing markets, household debt does not just match the pattern of house value, the amounts add up to the same in gains. In New Zealand there is a 300 billion shortfall.

This is why I don't think supply-side solutions are going to do much – the supply-side solutions are couched in terms of supplying the demand from local people, but we have no idea how big the supply would need to grow to deal with the demand from sources invisible to the New Zealand economy.

And only after that demand is satiated will the magic money not be competing with local people wanting to buy houses. And if it is offshore capital, then local buyers are competing with anyone in the world for whom buying a house in New Zealand is a superior choice to buying local property.

Just to pre-empt a few common concerns:

House Sales are not the same thing as Housing Value. True. But based on REINZ data I have seen the value in sales tracks to the same pattern as the total Housing Value which is extracted from Sales, and it is the lack of pattern in Value compared to Debt that is the give-away. Also, in other countries growth in debt does actually match growth in value, so if you are asserting in New Zealand it should not, you should produce some actual evidence for why that would be the case. Even if it isn't actual sales, it is a measure of influence over the market, so for the magic money to be there a house must have been bought. 300 billion of the 800 billion in the past decade is quite an influence.

This doesn't prove it is overseas capital. True. But it isn't coming from mortgages, and given the sheer size of the values, that amount of money being diverted from elsewhere in the economy would show up on something. It has not shown up anywhere I have seen, and I have tested a lot. Once again, if you are asserting that you should bring some actual evidence to the table.

Authority X said it was supply constriction due to RMA restriction. I am sure they did. However, the initial launch point (third quarter 2001) precedes the RMA (and subtaintially precedes the time spent implementing it). But we come back to this: if around $300 billion in the $800 billion in Housing Value gains is not explainable by inside-the-economy debt (it has nothing to do with people, actual immigration is not a very good predictor of house prices) – how many houses do you need to build to satisfy that unknown demand?


Land of the brave little kids

by Rob Salmond

My former colleague Sarah Austen-Smith recently posted some observations from her experience of America. I had an experience last weekend that caused me to think about the same NZ vs US comparison from another perspective: health care.

Of course, a lot has been written about this before. Their system is more than twice as expensive, their system is very bureaucratic, our system delivers better population-level results, and so on.

Our system generally comes out looking pretty good. But those broad comparisons don’t tell the full story.

First, there are things the US health system does better than ours. If you’re really sick, with a rare disorder, you want to be living in the US, not New Zealand. I saw this sharp end of the American medical system first-hand caring for my late daughter Sophie, and it is very impressive.

The US has many of the best specialist doctors and largest, most successful specialised hospital units in the world. The reasons are fairly simple: salaries and scale.

As a general tendency, the larger and more specialised your unit, the better your chances, because the doctors are more likely to have seen lots of cases like yours before. Practice makes perfect and all that.

That’s why those New Zealanders advocating for a South Island Starship hospital are so mistaken. Having two high-complexity children’s hospitals rather than one dilutes our expertise, meaning if your kid gets a rare disease, the doctors you see are less likely to have seen it before. They get less practice, which means the treatment is less perfect.

Yes, South Islanders will travel less time to see their sick kid in the hospital. But it’s more likely their kid will die, too.

I’ve often wondered why New Zealand’s system of escalation for really complex illness goes usually to Australian hospitals first, then to British ones. US hospitals are closer than British ones, and are often better, too, due to scale. Why not send the really complex kids to Australia first, then to the US?

So the US system is better at some big, complex things. How about small things?

This weekend my little Miss 2 presented with an angry rash. Our home medical centre was closed, so I packed Miss 2, Miss 4, and myself off to Wellington urgent care.

I’ve been to urgent care in the US, so I thought I knew what was coming. I packed my computer, DVDs, books, colouring pencils, toys, and food. I expected a four-hour adventure.

I’d made my first visit to American urgent care after picking up a hot charcoal briquette like a drunk dunce. I sat with a burning hand in the waiting room at UCLA. Several people came past with GSW. They got priority. Fair enough. Four hours later I went home, unseen.

I went a few times with Sophie, starting when she was 16 days old. She’d got out of hospital the day before, and promptly developed symptoms the specialists had told us to look out for. She was immune compromised, but it took an hour in the waiting area before we got a room, then four more hours before an overworked junior doctor sent us home, looking out for more of these same symptoms.

Other trips with Sophie got a bit better in terms of treatment – as parental Bolshie-levels rose towards 11 – but no better in terms of efficiency.

On all these occasions, there were complex insurance forms to fill out, and co-pays to pay or co-pays to argue about for months and then not pay.

Last weekend’s Wellington urgent care adventure wasn’t like that. At all. From leaving my house to getting home again was 57 minutes. I filled in one name/address-type form on arrival, then Miss 2 was seen by the nurse within 10 minutes of arriving, then 10 minutes later we saw the doctor. The doctor prescribed some antibiotics straight away, which I got filled in 5 minutes in the pharmacy next door.

No money changed hands.

And, even though some New Zealanders do pay to see the GP, we don’t pay as much as the “free” GP visits included with American health insurance plans, because the plan itself is massively expensive (average cost well over $1,000 a month for a family), and economists generally agree this is mainly money that would have otherwise gone into salary, especially for modest-wage workers.

I think our health system is better than the US’ for most people, but not for all people. But that’s no reason to ignore all lessons from the US, nor a reason to avoid all parts of the US system. Some of our sickest Kiwis need US-level care, and we’ve got the means to give it to them.


Protesting private prisons

by John Palethorpe

On May 2nd the Minister of Corrections, Sam Lotu-Iiga was interviewed on TV3’s The Nation about the opening of the new Wiri prison in South Auckland and its management by Serco.

A few weeks later the UN reported on concerns about the high level of inmate on inmate violence at Mt Eden corrections facility, as well as highlighting the over-representation of Maori within NZ’s prisons.

These percolated, and I wrote a post illustrating just some of the many failings outsourcing to Serco has produced. But last week I realised that maybe writing about it, or tweeting in an increasingly frantic style was not enough. Having attended many protests and demonstrations, I suddenly found myself organising one. The Facebook page for it can be found here.

The protest is, obviously, in response to the shocking details of the mismanagement of Mt Eden, revealed through leaked footage of violent incidents and accounts. There have been further allegations, both from families of injured or deceased inmates and in Parliament from MPs.

This evidence indicates both a troubling culture of violence within the facility and either wilful negligence or deliberate concealment of the facts by Serco. That this information has only come to light through leaks is in line with similar revelations of equally catastrophic mismanagement in other Serco run services in the UK and Australia. And while we’re beginning to talk about Serco, it’s definitely time for some action.

While the Corrections Chief Executive, Ray Smith, has invoked a ‘Step In’ clause to take control of the management of the prison, this further highlights the failures of privatisation. It is public servants who are being transferred from their own place of work in order to solve the problems that Serco have created, only for Serco to retain both the contracts for Mt Eden and the recently opened Wiri facility in South Auckland.

How the disruption of New Zealand’s publicly run prisons and the necessity of an investigation into brutal violence is a ‘cost saving’ is beyond explanation. For example, only 10% of Serco’s fee is performance-related and penalties for failing to effectively manage the prison cannot exceed 10% quarterly or annually. So, for their $30,000,000 a year, are New Zealanders getting the effective service they deserve?

The past week has seen the Minister of Corrections, Peseta Sam Lotu-Iiga, first deny a problem, then admit there might be a problem, then say there is a problem but it’s definitely not his fault and finally the Prime Minister trying to blame Labour for their role in revealing information about Serco’s failings.

The problem for the Government is that if they admit that Serco has failed in New Zealand, like they have in the UK and Australia, it raises serious questions about their competency in managing Wiri as well as excluding them from the mooted outsourcing of mental health and social care services. The issues here should obviously focus upon the appalling conditions within Mt Eden, but also raise serious questions about the alleged benefits of privatising essential public services.

In organising this action I seek to highlight the fallacy of attempting to run an essential, if relatively invisible, public service for profit. The role of corrections is to ensure that those in their care are denied their freedom, not their human rights. It is also to create an environment in which inmates are able to develop the skills and mentality to make a positive contribution to society upon their release.

The privatisation debate is framed by its advocates as the only option, with the cry of “We can’t just do nothing” in response to problems within state run public services. This creates the illusion that privatisation is progressive.

But it’s not progressive to make services more unaccountable and less effective. It’s also not progressive to pay your taxes, expect decent public services but instead fund the profit margin of a British company like Serco. The argument for quality public services where every dollar goes into effective service provision should not be seen as either regressive or radical. It’s just a reasonable expectation.

However, these are my views and mine alone. Others have been fighting for recognition of the problems of public and private prisons for far longer than I have, and it is not right for me to speak for them.

Those attending on Saturday will include family members of those within New Zealand’s prisons, established prison reform and prison abolition campaigners, MPs, activists and many others whose affiliation is simply to ensure that New Zealanders get an effective and humane prison service. There will be many views about the role and existence of prison present, all seeking to have their voices heard but all united in their belief that Serco and its like has no place in profiting from New Zealand’s prisons.

I have spent the last few days talking to different parties across the political spectrum and getting in touch with various interested groups to invite them along. This demonstration comes under no single political banner, because the issue of effective humane prisons as a public service is one which cannot and should not be claimed by one single political party. Public attention is focused both on Serco and the issues of privatisation, which need a serious and open debate. Now is the time to act.

See you Saturday.


I would also like to thank everyone who has given me advice, constructive criticism and support so far. I’ve never organised anything like this before, and the warmth and empathy which has been expressed from so many different people and groups is humbling. And again, see you Saturday.