Hard News by Russell Brown

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Hard News: Housing, hope and ideology

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  • Dean Wallis,

    That Mr key, he's such a nice man, I'm sure he knows what he's doing dear.

    Point Chevalier • Since Jan 2013 • 44 posts Report Reply

  • Euan Mason,

    I completely agree. Listening to Key this morning left me wondering; is he incapable of learning from history or is this just a blatant gift to Landlords (who are more likely to vote National than their tenants)?

    Canterbury • Since Jul 2008 • 258 posts Report Reply

  • Josie McNaught,

    The policy has Bill English's paws all over it remember - Jonkey is just the messenger because English is starting to look alarmingly like some Scrooge or Shylock type character and they don't want to alarm their loyal supporters - many of whom obviously aspire to be slum landlords.

    Auckland • Since Oct 2012 • 25 posts Report Reply

  • Lucy Telfar Barnard,

    There's another piece of the 1990s puzzle that I see even David Thorns missed. The decision to remove income-related rents was also a response to a Business Roundtable complaint that income-related rents in state housing created unfair competition for private landlords and thus kept rents lower than the market rate (sorry, I don't have a reference for this, but I remember it clearly from an essay I wrote on the subject in 1992).

    So the expectation, even from the Right, was that removing income-related rents would make rents go up, it's just that they would have viewed the initial increase as a "market correction" or some other cruel euphemism. The AS was meant to soften the blow of that correction, but I can't imagine they didn't see an associated rent increase as inevitable. I certainly did. Though at the time I think there was some rhetoric about how it wouldn't affect rents because the existence of the supplement would make investment in new rental stock more attractive, or some such BS.

    There are of course so many issues with the state removing itself from social housing provision, not least amongst them some concern over the lead role being taken by the Salvation Army, who do great work, but have views on homosexuality, and possibly other things that wouldn't be permissable in a government agency.

    So, yeah, if the government were looking to add community providers into the social housing model, that could be a good thing. But divesting responsibility looks a whole lot like passing the buck to me. It's just another case (analogous to the PM handing over responsibility for the GCSB to the AG) of the government looking at what issues are causing it embarassment and rather than fixing the problem, finding a way to make them embarrass someone else instead.

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • Lucy Telfar Barnard, in reply to Josie McNaught,

    English is starting to look alarmingly like some Scrooge or Shylock type character...

    Please, not Shylock. I know English is Catholic, but references to the ticklish one caused enough embarrassment and distraction in the election without carrying on here.

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • Russell Brown, in reply to Lucy Telfar Barnard,

    Please, not Shylock. I know English is Catholic, but references to the ticklish one caused enough embarrassment and distraction in the election without carrying on here.

    Yes. What Lucy said.

    Auckland • Since Nov 2006 • 22724 posts Report Reply

  • Kumara Republic,

    Time to dust off the ‘Eviction Notices’?

    Seriously though, I’m on the Accommodation Supplement, and I’d rather not be. It’s a necessary evil while I struggle to progress from a dead-end job, while I’m on the Community Services Card, and still waiting for the local hospital to approve some very complex dental surgery.

    And does the Housing Minister really think the likes of the Sallies have the dosh to take on such big housing assets? I still can’t help thinking that the biggest winners will be those who already have properties, thereby further solidifying the neo-feudal beast. It's as if property speculators are the country's House of Lords.

    The southernmost capital … • Since Nov 2006 • 5414 posts Report Reply

  • Bob Williams,

    Some years ago a colleague and I were contracted by a government agency to do some work for them. After listening to the brief, my colleague and I discussed the job over coffee (well it was Wellington). "But this was done fifteen years ago, the two of us were involved. It didn't work then and it won't work now" I said. "Yes" replied my colleague, "but this bunch were still at high school and everyone else was made redundant and are now living on the Kapiti Coast ... we are the organisational memory."

    Wellington • Since Apr 2007 • 10 posts Report Reply

  • Sacha, in reply to Lucy Telfar Barnard,

    because the existence of the supplement would make investment in new rental stock more attractive, or some such BS.

    And we're getting the same fact-free rubbish this time around. The new wrinkle is that PPPs between community organisations and financiers will add some rigour to the business model of subsidy-guaranteed income streams and untaxed capital gains. And somehow magically incentivise building new stock (even though rents will stay higher if supply stays below demand).

    Both English and Key are not stupid enough to actually believe this, so it seems more like another dishonest ploy to both reduce the size of government in our economy (as is their declared goal ) and to funnel more public money into the pockets of the global finance sector.

    Ak • Since May 2008 • 19667 posts Report Reply

  • Lucy Telfar Barnard, in reply to Kumara Republic,

    does the Housing Minister really think the likes of the Sallies have the dosh to take on such big housing assets?

    The Salvation Army already have a large housing portfolio, so I suspect they do have the dosh (so shouldn't need to rely on their earnings from getting the problem gambling services contract)

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • Bob Williams,

    Oh and um, if rental properties become more financially attractive, then that could encourage more second and third home buyers into the market, which could further increase housing prices, increase our debt levels and reduce investment in the productive sector. Oh the delights of unintended consequences. Assuming of course, the conspiracy theorist in me coming to the fore, that they are unintended.

    Wellington • Since Apr 2007 • 10 posts Report Reply

  • Sacha,

    And does the Housing Minister really think the likes of the Sallies have the dosh to take on such big housing assets?

    No, he’s counting on them having to partner with organisations with capital to invest.

    Ak • Since May 2008 • 19667 posts Report Reply

  • Sacha,

    If community organisations, councils and iwi lock up their own limited capital in housing, the main harm is them not being able to invest in other more productive things like local business, training and community development actitivies.

    Ak • Since May 2008 • 19667 posts Report Reply

  • Glenn Pearce, in reply to Kumara Republic,

    And does the Housing Minister really think the likes of the Sallies have the dosh to take on such big housing assets?

    Well they made a $24 million operating surplus last year and have hundred of millions of $ in retained earnings/reserves from previous years so I don't think it will be an issue for them.

    Auckland • Since Feb 2007 • 499 posts Report Reply

  • Glenn Pearce,

    All other concerns aside, is it correct that subsidies would the fastest way to get people into appropriate housing ie: as opposed to the length of time if would take to build the required stock?

    If you really wanted to make a difference quickly this would be the way to go?

    Auckland • Since Feb 2007 • 499 posts Report Reply

  • Sacha,

    is it correct that subsidies would the fastest way to get people into appropriate housing

    if there are not enough dwellings, how does a rental subsidy increase their availability?

    Ak • Since May 2008 • 19667 posts Report Reply

  • Glenn Pearce, in reply to Sacha,

    Isn't the issue supposed to appropriateness of the current stock on HNZ houses ie: not enough 1 bedroom and 4/5 bedroom. Subsidies allows you to access those types in the wider market outside those owned by HNZ? Or am I missing something?

    Auckland • Since Feb 2007 • 499 posts Report Reply

  • Sacha,

    It’s not like there are heaps of empty houses waiting for the right tenant (except the HNZ ones deliberately left so).

    Ak • Since May 2008 • 19667 posts Report Reply

  • Sacha,

    How much would (subsidised) weekly rental fees have to go up by to incentivise developers to build more houses than they already are?

    Ak • Since May 2008 • 19667 posts Report Reply

  • Josh Petyt,

    I went overseas in 1997 and barely looked back for a few years. The Bolger/Shipley reign made the country feel oppressive, dull and depressing. I was back for six years from '06. It's so depressing (now that I'm planning to return again) to see the country going back to the way it was when I escaped all those years ago.
    I know people were bored with Clarke's government but this is ridiculous. Three terms of these smug creeps is going to be intolerable..

    Japan • Since Apr 2014 • 44 posts Report Reply

  • Marc C,

    Sigh, John Key and numbers, sigh again.

    The accommodation supplement for a single person is capped at $ 145 per week in Auckland, it is less in other regions, and it has not been increased for years. The maximum amount claimable is $ 225 per week for a sole parent with two or more kids, or for a couple with at least one kid. entry thresholds apply for beneficiaries and non beneficiaries, for rent they pay.

    http://www.workandincome.govt.nz/manuals-and-procedures/deskfile/extra_help_information/accommodation_supplement_tables/entry_thresholds_and_maximum_rates.htm

    So a person getting the maximum at $ 145 p.a. that means $ 7,540 per annum, and multiplied by a thousand that would be 7.540 million alone. For a family it would be $ 225 per week, which means 11,700.00 per annum, and say with that covering at least 3 persons (young and old), multiply that by 333 to get a comparable figure of 3.896 million per annum for a thousand persons claiming it, or rather being covered it for that scenario.

    You would reach the 12 million Key quoted within a time less than two years for a single person, and just over 3 years for a small family, that is if they claim the full entitled amount for Auckland.

    He says it would cost half a billion to build a thousand homes, which may be true if each single home (does not have to be a house these days) would cost half a million. Key does not consider the lower comparable cost of more economically built, cheaper homes and the use of them over at least one generation, which is common.

    I wonder whether Key and English read from the same (song-) balance sheet. Keys figures are absurd. Most beneficiaries will pay more than half their total benefit income on rent, and many working poor are not far off that either.

    Now even many in Housing NZ homes pay more than 25 percent of their total income in rent, as they also charge market rents to many tenants.

    Rental subsidies have been proven to serve as a subsidy for rental property investors, small and big, and enabled many to pay off their mortgage debts and develop their investment portfolio. In effect these subsidies are subsidies for many middle and upper class rental property owners, and they also help push up rents.

    I think what we are getting from the government is less than half baked calculations and policy – and otherwise just damned ideology and propaganda. National have always wanted to privatise as much as they could, and now they are trying to crack the big nut, state housing, and hammer it to pieces.

    The winners out of what seems to be proposed will be Nat friendly property owners and investors.

    Akl • Since Oct 2012 • 437 posts Report Reply

  • tussock,

    It's the underpants gnomes all the way down, except they've got a step 2.

    1: Supply and demand works, for profit maximisation.
    2: Price-indexed subsidies to remove the price drag on demand.
    3: Profit!!!!!
    3a: Also a massive subsidy cost, borrowed from future generations. Suckers.

    Obviously if you cared about making rent prices come down, you'd increase the supply. Of things for people to rent. Like houses. Or reduce demand by taking people out of the rent market. By giving them a state house with a low rent. That's what works. For people who aren't landlords.

    So for a thousand people to support them in income related rents costs us $12 million, to build a thousand state homes costs us half a billion.

    So.
    1: It doesn't take a thousand homes to house a thousand people.
    2: If you actually build a thousand homes, you get massive bulk discounts, like how you can fit them all in a few big buildings.
    3: The money you spend on rent is a "loss", while the money on houses is an "investment". That means the house money is still on your books. Think of it as a $12 Million+ (you also get rents) return per annum on your $500 million- (how are they spending $500k per house anyway? They can get land cheap, prefabs cost fuck all, so whut?) investment.


    Which is to say, this is all about giving money to the bourgeoisie.

    (in Marxist theory) the class that, in contrast to the proletariat or wage-earning class, is primarily concerned with property values.

    Muldoon was the same with the subsidies for farmers in the little farm seats. Key is with propping up the dairy. Find the biggest, most precarious bubble in your economy, pump a whole lot more air into it whatever the cost, and hope like hell it holds until the next government's term. Meanwhile, more wine for the drunks: other people's sobriety is bothering them.

    Since Nov 2006 • 607 posts Report Reply

  • Lucy Telfar Barnard,

    There are also the harder-to-measure cost benefits. Rental tenure is insecure tenure, and the govt's not making any noises about doing anything to improve tenure security. The social costs of tenure insecurity feed through into high school turnover and poorer health outcomes.
    Plus Marc, yes, thank you for pointing that the figures are all wrong: The other side of your coin is that 1000 people don't need 1000 houses (the average household size on the census was 2.4, even if we ignore the likelihood that state house tenants have larger household sizes), so the $12m vs $500m is even more clearly a false comparison, even if the $12m were costed accurately, which it's clearly not.

    Wellington • Since Nov 2006 • 580 posts Report Reply

  • Marc C, in reply to Lucy Telfar Barnard,

    So, yeah, if the government were looking to add community providers into the social housing model, that could be a good thing. But divesting responsibility looks a whole lot like passing the buck to me. It's just another case (analogous to the PM handing over responsibility for the GCSB to the AG) of the government looking at what issues are causing it embarassment and rather than fixing the problem, finding a way to make them embarrass someone else instead.

    The providers that already exist would not have the resources to buy existing Housing NZ stock in large numbers, or to build new housing from scratch. Some trusts apparently help low income earners to get their own homes on a kind of rent to buy scheme, but even then the persons that buy into that have to pay a deposit, which most Housing NZ tenants cannot pay.

    One would have thought that improving performance within Housing NZ, and by providing the corporation with low interest, government backed funding, to build more suitable, affordable housing stock themselves, would be the smarter way to go. Looking at the economy of scale approach that makes more sense, than simply passing on the responsibilities to small, fragmented operators, largely NGOs, who will also face limits and challenges that Housing NZ has had to face at a larger scale over years.

    The number of people unable to afford to buy has increased substantially, so it makes more sense to build more state housing for people to rent, and also some for people to rent to buy. A large provider like Housing NZ could also have larger purchasing power, and could get better deals when working with builders, construction firms and building suppliers. Small providers will struggle with this.

    We are going to face a huge mess, if the National led government goes ahead as they seem willing to, I fear.

    Akl • Since Oct 2012 • 437 posts Report Reply

  • Glenn Pearce, in reply to Lucy Telfar Barnard,

    I believe a large part of the problem is at the other end of the profile. Approx 35% of HNZ priority waiting list demand is for 1 Bed but only 10% of HNZ stock is 1 bed.

    Auckland • Since Feb 2007 • 499 posts Report Reply

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