liberation

Labour's shameful slum housing

A glimpse into the shameful state of the government's provision of housing is provided by the investigative reporting of David Fisher in the latest Listener magazine. Fisher's article, 'Lodges of last resort' reports on the 'shameful secret' of 'squalid, crowded lodges' for beneficiaries in a South Auckland cul de sac. Apparently, 'almost a 1000 people live in a cluster of buildings that was once the Mangere hospital for the insane and intellectually handicapped, closed in 1994' but now operating as 'privately owned boarding houses' that the Housing New Zealand Corporation refers people to. After viewing the accompanying article photos, it's easy to see that 'Entire families - some with up to four children - live in rooms little more than three metres by four metres that were originally designed for single patients'. Fisher says that due to a lack of state houses, 'Housing NZ in Counties Manukau has a staff member to find homes in the private sector for those wanting state houses. The state-housing provider has simply run out of homes'. Housing Minister Maryan Street 'says it is not her problem - or Housing NZ's fault. The responsibility instead lies with the National Party for selling off state houses, and with local councils, which are legally responsible for boarding houses'. Massey University senior lecturer in social policy, Mike O'Brien, perceptively comments that, 'The language shift, used by first National and then the current Labour-led government, has taken social policy from a safety net for all to a focus on individuals and individual responsibility'.

Labour’s housing disaster

More evidence has just come out of the housing crisis under Labour. Two reports - both partially funded by The Centre for Housing Research - quantify the size and scale of the housing and rental issues facing Auckland. And if you think that my continued use of the term ‘crisis’ is an exaggeration, then note that the Herard now describe it as ‘a housing crisis of massive proportions’.  The Centre for Housing Research reports says that housing unafforability ‘was likely to increase the gap between socioeconomic groups, and had implications for community stability and wealth accumulation’. In general, they say that ‘Home ownership is assuming a more polarised social character’ under Labour. [Read more below]

Housing market working well for MPs

The Parliament Register of Interests came out last week. In this, MPs have to disclose all sorts of information about their finances. There wasn't a whole lot of interesting things in it. Kiwiblog mentions the apparent contradiction of Jim Anderton being a shareholder in the Commonwealth Bank of Australia after criticising the foreign domination of banking in NZ and therefore setting up the state-owned Kiwibank.  Much more significantly, No Right Turn suggests there is a problematic issue of so many MPs owning investment properties: 'it does raise doubts about their ability to seriously discuss the housing problem, when so many of them are directly financially benefitting from the present state of affairs'. As pointed out in an earlier posting on Money & Power, Helen Clark, for example, owns an Auckland villa worth $720,000, a Wellington townhouse worth about $350,000, an apartment in Christchurch, and property at Rodney. So although Labour's faith in letting 'the market decide housing issues' doesn't work very well for working class New Zealanders, it's sure working well for the political class.

Government's neoliberalism to blame for housing crisis

As the debate on the housing crisis intensifies, more commentators are pointing the finger at Labour and National's 'hands off' approach to housing. A Herald editorial says that the 'Government has stood aloof from matters', while Matt McCarten says that 'It is outrageous that a supposedly pro-worker government manages an economic policy that tolerates a situation where workers on the average wage in Auckland would have to pay 90 per cent of their take-home pay on a medium house mortgage' and that Labour are essentially fiddling while Rome burns. The Herald also highlights the plummeting rate of home ownership in NZ - as pointed out earlier on this blog - saying that 'Home ownership has dropped almost 10 per cent since 1990 - and that was the first decade since the 1940s in which it did not rise'.

Further to last week's posts (here and here) detailing the unaffordability of housing in NZ, there's been another study released that provides further evidence of what McCarten is calling 'a major societal catastrophe'. The Massey University study says that 'buying a house is at its most difficult level since the studies began in 1989', with the author, Professor Bob Hargreaves saying 'things are pretty grim for first home buyers'.

It is becoming obviously to even mainstream commentators that Labour and National's reluctance to build enough state housing has strongly affected the problem. Quite simply, the market cannot provide the housing needs of New Zealanders. As Prof Hargreaves states, the private sector does not have the capacity for building enough low-cost housing. He says there is a lack of big building companies, and 'Part of the reason why building costs are so high is most builders are just small time, they're only building a few houses every year.... If you've a large contract... you can drive the building costs down'. At the same time, a report on building consent figures show that the number of new properties is falling, and 'average cost of a new dwelling jumping 70 per cent in the past five years'. The Chief Executive of the Builders Federation says that the budget end of the building market is in decline 'and most new houses were increasingly luxurious'.

Power profits and prices soar as NZers shiver

Labour came to power promising to fix the electricity market, yet since 2000 power prices have gone up 40% in real terms. And over the last year, electricity prices have risen by 7% for consumers, and fallen by 6.5% for businesses. On top of this, it's recently been announced that Transpower are putting up their prices by 15%, and other energy retailers like Contact are about to raise their prices significantly. At the same time, power company profits are rising fast. The Dominion Post has reported that 'State-owned power company profits topped $300 million in six months, up $37.6 million on the previous half year'. [Read more below]

Housing completely unaffordable for most

A comprehensive new report on the affordability of housing in New Zealand says that the problem is getting worse, and that it is due to 'a massive failure of public policy', with the authors suggesting that the current Labour Government is constrained by its conventional ideology. The study shows that almost three-quarters of take-home pay is needed to service the mortgage on an average house in New Zealand - taking homeownership well out of the reach of most people. In fact in some areas, to afford the average home, the average wage earner would have to spend all their pay on mortgage payments.

The study - which you can read here - translates prices, wages and interest rates into the proportion of take-home pay needed to buy the average house. As a comparison with the 74% figure of payment needed, the authors say that in 2002, house ownership only required 40% of income. The most unaffordable places are Central Otago Lakes (where the average home requires payments of 104% of the average pay), and Auckland (92%) and then Northland (78%).