Monday, July 04, 2016

A billion dollar blame shift

For months, National has been denying that there is a housing crisis, despite the average Auckland house price heading towards a million dollars and home ownership falling to the lowest rate in 60 years. And then yesterday they suddenly announced a billion dollar infrastructure loan package for local authorities:

The Prime Minister today announced a new $1 billion Housing Infrastructure Fund to accelerate the supply of new housing where it’s needed most, Finance Minister Bill English and Building and Housing Minister Dr Nick Smith say.

The contestable fund will be open to applications from councils in the highest growth areas – currently Christchurch, Queenstown, Tauranga, Hamilton and Auckland.

Mr English says the Housing Infrastructure Fund will help bring forward the new roads and water infrastructure needed for new housing where financing is a constraint.

“The Government will invest up front to ensure the infrastructure is in place. But councils will have to repay the investment or buy back the assets once houses have been built and development contributions paid.”

Which sounds good - a billion dollars! But note what they're not doing: actually building houses. Faced with an acute problem of supply, which is turning kiwis from home owners into peasant tenants, National is still tinkering around the edges. Worse, they're doing so in a way aimed at shifting blame to councils (and driving them over their debt limit so they're forced to sell assets) rather than actually solving the problem.

We know what it will take to solve this crisis: a mass government house-building programme, backed by low-interest government borrowing and the Public Works Act. But there's no money in that for National's crony property developers, and it would crash the price of National MPs' Auckland investment properties, so they refuse to go there. Ditto the anti-speculation measures of broad capital gains taxes or land taxes. So they tinker around the edges, to create the appearance of action but not its substance, while trying hard to do nothing. And if we want to change this approach, we will need to change the government.