Housing remains the government's biggest weakness and so National is redoubling its efforts. No, not to build houses, but to contain the political damage

I can't give you a precise day or hour, but some time in the past fortnight, National has admitted defeat over Auckland's housing crisis. You can see it in the calculated attacks on Auckland Council and the lack of action in the Budget; the government's moved into 'managing failure' territory.

Don't get me wrong, the desire for more houses remains (although so many new houses. They don't want Auckland home-owners to stop feeling rich). They are committed to opening up land and have done so successfully.

What's become clear is that Auckland's problem is no longer a land supply problem, it's a house supply problem. The Special Housing Areas have opened up over 50,000 sections according to the government, but only 1000 houses have been built. Even Auckland Council estimates six and a half years worth of land is ready to build on. What's missing is a will (or requirement) to build, tradie capacity and, arguably, a government commitment to a mass building programme.

Instead, what we've got from National seems to be an admission any fix on Auckland house prices is years away and what matters to them now is spreading the blame.

What's clear is that National, as is their well worn tactic, will do its best to ensure the blame gets shared around. Bugger the relationship between Auckland and Wellington, they will blame the Auckland Council at every opportunity so that any voter anger directed at the government becomes 'a plague on all their houses'.

National has deployed this tactic effectively against Labour several times, always trying to tie past Labour governments into any current woe. Now it's Auckland Council's turn (and in the past few days there seems to have been no recognition by the council that the game of changed and National has declared war on them. Like Chamberlain the Council still seems to naively believe in "peace in our times" while the tanks are rolling towards Czechoslovakia.)

Bill English on The Nation took the rhetoric to a new level. The council is to blame for the lack of land supply, lack of houses and lack of infrastructure. In fact its past 20 years of planning rules (often under National-aligned mayors) is even to blame for the current homelessness crisis that's seen more people living in cars and garages.

Auckland Council is in a bind on infrastructure. Not that you'd know it from most of the debate, but it's willing to sprawl somewhat. It's problem is the lack of roads, rail, sewers, footpaths and the like on the outskirts of the city and an inability to pay for it.

Auckland Council is maxed out on debt; if it borrows more it suffer a credit downgrade and the local government authority that borrows on behalf of councils simply won't let it do that, as I understand it. It can't raise rates, because they're already high and they'd suffer a revolt. Thy want to introduce congestion charges, but the government won't change the law to let them.

So where does the money come from? Says English:

"It is the council's responsibility. That's the deal. They get to decide on how their city is planned, and they get to pay for the development."

But Labour is willing to borrow to help. Grant Robertson:

"I think we've got to work together with Auckland to pay for the infrastructure. There's no point throwing around a blame game and elbowing each other in the ribs to say who is responsible. Clearly, the government has a shared responsibility here."

For once, Labour is in the sweet spot. It can watch National and the council tear strips off each other and look like the grown-up. And they can point to their four year old KiwiBuild plan and say 'told you so'.

On that point, it's interesting to note that English said this in that interview:

"we have more money than we can spend on places, on houses for people in serious housing need in Auckland. The problem isn't money; there's enough of that. The problem is getting enough houses".

It's a fascinating argument. That the government could pay the rent subsidies, the relocation or whatever, if they only had a house. What that willfully ignores is that you can spend that money on building a house. (Or the law to require those land bankers to build).

Ultimately, National may have to accept the inevitability of a government building scheme, swallow that dead rat and promise that themselves.

In fact, looking at the apprenticeships promised in this year's budget, it's just occurred to me that a National version of KiwiBuild could be the perfect surprise for Budget 2017. Pull the rug out from under Labour's feet just before the 2017 election.

But for now, National's focus is on buying time and that means spreading the blame.

 

Comments (7)

by Fentex on May 28, 2016
Fentex

Or the law to require those land bankers to build

When I read that the thought flashed through my mind - why not alter rates to take a bigger chunk from the land rather than developed proportion of the valuation?

Tah dah, instant economic incentive to build.

by Katharine Moody on May 29, 2016
Katharine Moody

National - 9 years and a bike path to show for it. What an idiocracy.

by barry on May 29, 2016
barry

Does anybody have an update to the graph here?

http://www.teara.govt.nz/en/graph/23781/apprentices-and-industry-trainee...

It shows the growth in apprentice numbers during the last Labour government. The graduates partially covered the need resulting from the Christchurch earthquake

The builders that are needed now should have been training in the last 8 years.  Do we know how many there have been?

by Murray on May 29, 2016
Murray

I think the more interesting number is the average age of the tradesmen. When I was on the Invercargill Hospital (13/14 yrs ago) the number was I think approaching 50yrs. You only have to be on any building site and see the age of the persons, there is a gap in the middle group. One of the strong points of the apprenticeship system is the passing on of knowledge that has been learnt by practical experience, in other words the hard way. Wasn't it a Shipley National Government that gutted the apprentice system, Chickens coming home to roost. How many of us had Government help to buy our first home by low interest loans, I know I did.

 

 

by Ken Crispin on May 29, 2016
Ken  Crispin

This National Government (miss) administration are to afraid of alienating their voting block as Auckland's property owners grow steadily more rich.

But they will be stupid thinking this will remain fluid until election time while Auckland implodes under the homeless saga and immigrant inflow remaining well over 100.000 each year.

So National are living in Alice in Wonderland while each day goes by and the average property prices increase by $1200 dollar's a day???  

What a mess.

by Charlie on May 29, 2016
Charlie

Tim, you're dreaming.

An analysis of the Auckland housing shortage reveals two key issues:

1. It's only in Auckland, therefore it is entirely the responsibility of Auckland Council. We've had two terms of left-of-centre local government and we haven't even got a unified plan. We've seen scandal, we've paid for appalling wastage and development has been crushed by the dead hand of a bloated bureaucracy. 

2. Droves of New Zealanders are coming home. For the first time in decades expat Kiwis see their homeland as a place of opportunity. What's more they're coming home with cash in their pockets and are buying property, often in Auckland. Although it's going to stretch services for a while, on the whole this is a good thing: A massive vote of confidence for the current government.

If you think this is going to boost Labour's chances in 2017, you need to think again.




by Donald Ellis on May 29, 2016
Donald Ellis

Tim

You have nailed the politics but some of the detail is a little awry.

 

The Special Housing Accord target was 39,000 sections (not houses!) formed or consented by about September this year. If you are a developer you would be mad not to get your bit of land/subdivision consented during the short period when the Accord makes it faster and cheaper. But you will spend the serious money on forming the subdivision later when the time is right. It could be years later.

Nick Smith is prone to counting the potential yield of sections off a block of land as success but there can be a lag of years between getting permission to develop and actually developing. Auckland Council, for their part, have been known to count developers coming for a chat as progress towards the target.

Remember that AC are very unlikely to be building any footpaths themselves. Developers build all the local infrastructure in a development and the costs are capitalised into the section price. The council builds the "upstream" infrastructure and even then they can charge both financial and development contributions from developers which, again, are passed on in the section price.

The debt ceiling is self-imposed. AC have to have a debt policy but they decide what it is. Lenders aren't going to lose any sleep over AC taking on more debt - the argument is political not financial. Lenders to councils can get security over specified assets with the right to strike a special rate themselves to recover their money if the council defaults. It's virtually no risk lending to councils in NZ. Of course the US is a different story so take no notice of what goes on there.

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