A Comprehensive Reading of National’s "Comprehensive Housing Policy"

Milo West
October 6, 2016
We have policies based on the strange assumption that property developers want house prices to drop. Of course they do not.
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The housing crisis has been building up for years even before the situation was called a ‘crisis’. We can trace the crisis today to decades-long government policies of a free market, colonial practices of private ownership of land and houses, and the profit-making behaviour that follows. In the midst of a crisis, protests of this or that policy are sometimes met with a demand for solutions. Community activist groups are not policy writers. So without trying to write a housing policy without any of the resources the government, we simply look to Te Ao Māori (the Māori world). The alternatives to today’s free market and colonial treatment of land and housing can be found in concepts such as kaitiakitanga, whanaungatanga and manaakitanga.

For many, government response has been lacking in timeliness and comprehension of the roots of today’s housing crisis. It has been lacking in a historical understanding of what has caused the housing crisis: for Māori, the housing crisis began with colonisation, when huge tracts of land was confiscated by the Crown (and remain in place) and colonial laws such as individual title of land were passed. But its not like Māori have been treated just like any other 'New Zealander' either. The disadvantages go beyond the scope of this article but one example is that Māori were excluded from access to state housing for the first ten years that state housing was built. How's that for 'one law for all'.

The National-led government’s response to the housing crisis, as they have recently celebrated in videos and on their own website, has seven points. These points make up what the National party calls their 'Comprehensive Housing Plan'. You can listen to a remade, 'translated' video of National's housing programme at the bottom of this article.

In this article we look at the first three points.

  • Creating special housing areas in high demand areas across New Zealand to fast-track the building of homes.

Special Housing Areas (SHAs) are ostensibly to make more affordable housing by way of encouraging property developers to increase the supply of housing which will result in lower house prices. This is based on the strange assumption that property developers want house prices to drop. Of course they do not, so they will not increase supply by any amount close to that which would decrease prices. An example of this failing is Hobsonville Point, an SHA that - after plans for state housing to be included was abandoned - has failed to provide any housing or apartments at less than half a million dollars.

  • A $1 billion Housing Infrastructure Fund to accelerate new housing in the high-demand areas where it’s needed most. The new fund will focus squarely on financing infrastructure like roads and water needed to support new housing.

This fund does not build houses. While it is a fund designed to decrease one of a number of costs in the building process, there are no obligations for private developers to provide genuinely affordable housing. Consequently, the savings are not passed on to those buying the houses; instead it simply subsidises property developers. The fund will be used for new housing developments like Hobsonville Point in North-West Auckland or Stonefields in East Auckland: both of those developments have “affordable” house prices starting from $649,000. 

  • Setting up independent Urban Development Authorities to speed up housing development in high-demand areas - they’ve proved successful in many other countries.

These authorities are to be responsible for facilitating large-scale residential developments. The underpinning thinking behind this are 1) the economics of scale, that is, the more houses being built the cheaper it should be and 2) property developers want houses to decrease in sale value. The problem is because the second is a fallacy, the first will not happen. In the 1960s and early 1970s Fletcher Construction (a private property development company) built huge numbers of houses but the reason for that was the state was building so many houses Fletchers had to build large-scale too to stay in competition. One aspect of the authority being floated is that they facilitate bank loans in partnership  (or on behalf of, possibly more likely) with private developers. The reason this is being floated is likely because banks are unlikely to give loans to large-scale developments since the costs involved are such that making profits, or even breaking even, comes so late in the project that banks cannot be confident in the housing market five years or more down the track when the project finishes. But these authorities don’t change that economic reality.

The overall sense of the government’s housing plan is an emphasis on subsidising private property developers whose primary motivation is to make as much profit as possible. These are the policies and behaviour that have led to and continue to escalate the housing crisis. Private property developers have no intention to decrease the profits they can make, and yet our government’s response to the housing crisis rests wholly in the expectation that they will behave in ways that will decrease their profits.

This is in the context of the 2013 Social Housing Reforms which is seeing the sale of thousands of pensioner flats across the country, a transfer of 2,800 state homes out of public ownership with thousands more planned to be transferred out of public ownership into the private third sector, and the removal of the home-for-life policy which gave state housing tenants security to live in and strengthen their communities.

So what sort of solutions are we looking towards in dealing with the distress many are experiencing in the housing crisis? Firstly a stop to the on-going privatisation and "transfers" of state housing and council housing into the private market (including the third sector). Secondly taxes on wealth to be increased (or enforced) and directed to renovating and building state and council housing. Thirdly addressing the three main stressers in housing: security of tenure, affordability, and quality of housing. The private profit-driven unregulated housing market has led to the housing crisis we see today. We need a housing 'market' that has a different kaupapa: that of manaakitanga.

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