Tuesday, July 21, 2015

Policy creep

National's state house sales policy was originally about shrinking the size of the portfolio and reducing the capacity of the government to assist people with housing - effectively one of a slow exit from a core government responsibility. But according to Treasury advice, its now gone beyond that, into selling all of the state houses in some cities to create regional private monopolies:

Treasury has revealed that all of the houses in each city - 370 in Invercargill and 1250 in Tauranga - could be sold to a single buyer. At a minimum, Treasury would look at selling at least 100 houses to each buyer because of the cost of transactions.

"Our current thinking is that we will transact at scale, the upper end being the entire portfolios in each region and the lower end potentially being one or two hundred," Treasury told potential buyers.

The Government would be prepared to have a single charity operating all of the social housing, as the scale may be a greater advantage than the lack of competition.

"It may not be feasible to have a traditional market with competition in each regional market due to the size of these markets," Treasury said, saying that in Invercargill "it is possible that a transfer of the whole portfolio may bring benefits that outweigh the need for competition".

So, monopoly state provision is bad, but monopoly private provision is good. No, I don't understand that either. But it seems that the policy isn't being driven by the needs of state house tenants, or people who need housing assistance, but by the desire of the private sector - which now means banks and foreign investors - to insert itself leech-like into a guaranteed government funding stream. And if they make their profits by underproviding the service they're being paid to provide, well, its not as if any of their victims, the tenants, will be in a position to complain about it, or seek a better service elsewhere. And meanwhile, politicians will be able to dodge responsibility for any problems by blaming the provider (while of course continuing to shovel money at them in income-related rent subsidies). The politicians and their cronies win - but its the public who will lose.