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Cause of poverty and inequality found!

Written By: - Date published: 8:06 am, October 8th, 2014 - 36 comments
Categories: capitalism, housing, local government, national, poverty, spin, you couldn't make this shit up - Tags: , , , , ,

Good news citizens! The National government has revealed unto us today the cause of poverty and inequality:

Is it the neoliberal paradigm which has seen these problems skyrocket since the reforms of the 80’s/90’s? No!

Is it the broken economic system which rewards the accumulation of capital but not work? No!

Is it the broken tax system that encourages property speculation at the expense of productive investment? No!

Is it the poor social mobility that makes poverty and inequality an ongoing inter-generational trap? No!

Is it insatiable greed – “the love of money…”? No!

Is it 6 years of punishing the poor and rewarding the rich under the current National government? No no no!

The problem, citizens – This Shocking News will Amaze You! – the problem is local councils:

Councils blamed for home hardship

Finance Minister Bill English is pointing the finger at local government planning rules, saying they are a major cause of poverty and inequality because they drive up the price of houses.

What a farce this “government” is.

36 comments on “Cause of poverty and inequality found!”

  1. vto 1

    Couldn’t agree more r0b. What grates is the gall that in particular Bill English and John Key have in talking absolute bullshit.

    Example one: the one above of English.

    Example two: “Dirty Politics” was a left wing smear campaign. It was clearly all about right wing smear campaigns.

    The bigger the bullshit the more they seem to get away with it.

    • Murray Rawshark 1.1

      I’m pretty sure I’ve seen someone somewhere saying that the bigger the bullshit, the more people will swallow it. This is just one more example. What does worry me is how stupid people have to be to swallow what, to me, is such obvious crap.

  2. cogito 2

    The problem with Bill is that his statements are a bit like crack cocaine – he gets a high by making one outrageous one, and then he can’t resist the urge to make another. As the addiction worsens, his statements will likely become even more outrageous until he will finally self-destruct like Judith Collins.

  3. hoom 3

    What a fucking joke.
    Absolute codswallop.

    But unfortunately especially for poor people is this is the thinking that will shape the next 3 yrs of Govt policy.

    Key has all his big hitters in Housing related positions so they are going to royally fuck over housing/local govt.

    A lot of this is aimed at Auckland to try to make it impossible for Len to get a 3rd term.
    Expecting to see Rodney Hide or other extreme rightie put his name in for Mayor with universal wall to wall media praise.

    Edit: Or maybe even more likely, throw out the Council altogether & replace with Appointed extreme rightie Technocrats.

    Because you know, its a crisis & its most severe in Auckland.

    Doubtless will have an ex Nat/Act Cabinet minister with outrageous conflict of interest write a masively one-sided report to justify it first.

    • Draco T Bastard 3.1

      Or maybe even more likely, throw out the Council altogether & replace with Appointed extreme rightie Technocrats.

      That’s what they did with ECan so I’m pretty sure that they feel that they can get away with doing to Auckland and then the rest of the country.

    • ma rohemo 3.2

      ” Or maybe even more likely, throw out the Council altogether & replace with Appointed extreme rightie Technocrats”

      A precedent was made in Kaipara after the overspending on a sewerage scheme by council.
      The govt audit office failed to spot the extraordinary $50m loan during their annual inspection.
      Rates that had been levied illegally for the scheme were reinforced by National retrospective legislation that made all the illegal levies completely legal.

      When Natz took charge they cancelled the entire elected council and imposed a three man management team, which was quickly reduced to one.

      About a week before the Auditor General completed her 18 month investigation the statute of limitations expired for any claim against the govt audit office for negligence. Excellent timing for some.

      The new administrator established a $250 roading fund on top of our rates. Although it was ring-fenced for roading for the first year it was increased to $350 the next, and rolled into the general fund so that it was not guaranteed for roading.

      Roading was cut back in fact. Spending was reduced and the savings were paid as interest to the Aussie bank that carries the dodgy loan.
      As a result of this the roading spend has been lower than normal and the next round of central road funding will be reduced accordingly.

      The ratepayers also have a been levied a fee to repay the loan. This is in effect subsidizing absentee owners of Mangawhai holiday homes for extra value added to their properties now that they do not have to rely on septic tanks.

      My rates increased 42% in 18 months. Hard going on a fixed income.

      All this was done without any electoral voice for the ratepayers.

      Auckland could be in for a huge shock if the Natz succeed in taking control by means other than an election.

  4. karol 4

    And as Metiria Turei says, this from English comes after the Nats have been denying the existence of poverty for 6 years.

    Who is the chief spin meister now Ede has gone?

  5. Tracey 5

    Since when did developers pass on savings to purchasers? Any drop in costs is unlikely to go anywhere other than the developers margin.

    Developers already have a fast track process for their consents not available to owner builders….

    • aa 5.1

      A developer needs at least a 20% margin to get money to develop (much like you need a deposit to get a house – except much higher risk to a bank). That’s the lenders buffer in case things don’t go as planned. Any drop in costs means means they can sell cheaper not just by the saving, but also the associated lending costs. Unless specifically aiming for the upper ends of the market developers want to sell, build and settle on their projects in the shortest possible time (as time/funding is one of their major costs – that’s where many go bankrupt). The cheaper they can sell the quicker they can sell (cheaper means a bigger market) the more likely they will succeed.

      Probably about 1/3 of developers lose money, 1/3 end up where they started and 1/3 make money – mostly depending on timing. Over the 2 or so years it takes to do a project the market can change significantly.

      Of course I’m not suggesting they are anything other than greedy and evil etc.

      • bearded rawshark 5.1.1

        I think you are making this up aa. Around Wanaka subdivisions have been a licence to print money for the last 20 years apart from 2/3 years after the GFC.

        • MrSmith 5.1.1.1

          In my experience I think aa is pretty much on the money and lucky you Bearded if you own your own home down south.
          Property development is a risky business and like aa points out the finance costs are high, people seem to think these people have wads of cash, but that cash is normally on loan and if the market gets the jitters then you can be left holding a massive debt, I know a couple of property developers that went under after the GFC, these were hard working family men that now still owe a lot of friends and associates money, money they may never be able to pay back in their life time, all because of something that happened they had no part in, that’s the risk these people take. People like to blame the person out in the arena taking the risks for the housing problems, but this lot are usually playing Russian roulette and will pull the bullet sooner of later, as usual the bankers are making the money here and if the banks profits where going back into the country that wouldn’t be so bad but they aren’t, nationalize the banks!

        • Karl's Marx 5.1.1.2

          Take a look at this commentary on interest.co.nz from a developer including detailed cost breakdowns for a recent subdivision.

          An 8% profit-margin only achieved because of rising house prices. Council plus consultant costs ($3.3 million) of close to $100,000 a unit.

          If that is the case, something is seriously broken with our current land use/ council/ development pricing model.

          http://www.interest.co.nz/property/72319/john-bolton-shows-what-property-developer-against-when-constructing-houses-costs-syst

          • MrSmith 5.1.1.2.1

            Well yes and no, unfortunately people will be people and without any oversight from council and regulatory bodies they tend to go for the lowest denominator in search of profit.

            I can tell you there is still more quick profit in a straw house.

            People tend to complain about the bureaucracy and cost of housing until they find themselves living in a leaky house with storm water and sewer drains that back up every time it rains or polluted drinking water, phone and power supplies that crash, there is nobody sitting around making piles of cash out of all this, it’s just the price we pay for the things we take for granted.

        • aa 5.1.1.3

          Just what I’ve noticed from 20 years of working for developers (who I’m not insinuating are anything other than greedy and evil) on thousands of dwellings. Another thing I’ve seen a lot is presales are needed at say 70% to get funding. So they want to make these sales ASAP to start project (and minimise holding costs) so they sell as cheap as they can, then get caught by rising construction costs and/or Council delays. Then they are stuck with contracts that don’t cover their costs.

  6. wekarawshark 6

    Farce yes, but is this also tragedy? ie National gearing up for more local body reforms?

  7. greywarshark 7

    In the last housing post I put some stats showing how important a driver in the economy housing is. I’ll enlarge on them here. (I can’t put the graphic from NZ Stats because I don’t know how. Haven’t acquired enough skills sorry. But have labouriosly copied out for you.)
    I have arranged the industries in descending order. Housing and peripherals come first. I’ve included most of them, any left out are at the lower end.

    [lprent: This one? Just give the URL and ask. ]

    Number of NZ Enterprises by industry in 1,000s
    Feb 2013
    Rental, hiring and real estate services 100
    Agriculture, forestry, fishing 65
    Professional, scientific and technical services 45
    Construction 45
    Financial and insurance services 25
    Retail trade 22
    Wholesale trade 18
    Acommodation and
    food services 19
    Administration and
    support services 17
    Transport, postal
    and warehousing 16
    Health care and
    social assistance 16
    Information, media
    & telecommunicatiions 4
    Education & training 5
    Arts and Recreation 4

    Few in –
    Mining
    Electricity gas water and waste
    In the last housing post I put some stats showing how important a driver in the economy housing is. I’ll enlarge on them here. (I can’t put the graphic from NZ Stats because I don’t know how. Haven’t acquired enough skills sorry. But have labouriosly copied out for you.)
    I have arranged the industries in descending order. Housing and peripherals come first. I’ve included most of them, any left out are at the lower end.

    Number of NZ Enterprises by industry in 1,000s
    Feb 2013
    Rental, hiring and real estate services 100
    Agriculture, forestry, fishing 65
    Professional, scientific and technical services 45
    Construction 45
    Financial and insurance services 25
    Retail trade 22
    Wholesale trade 18
    Acommodation and
    food services 19
    Administration and
    support services 17
    Transport, postal
    and warehousing 16
    Health care and
    social assistance 16
    Information, media
    & telecommunicatiions 4
    Education & training 5
    Arts and Recreation 4

    Few in –
    Mining
    Electricity gas water and waste
    In the last housing post I put some stats showing how important a driver in the economy housing is. I’ll enlarge on them here. (I can’t put the graphic from NZ Stats because I don’t know how. Haven’t acquired enough skills sorry. But have labouriosly copied out for you.)
    I have arranged the industries in descending order. Housing and peripherals come first. I’ve included most of them, any left out are at the lower end.

    Number of NZ Enterprises by industry in 1,000s
    Feb 2013
    Rental, hiring and real estate services 100
    Agriculture, forestry, fishing 65
    Professional, scientific and technical services 45
    Construction 45
    Financial and insurance services 25
    Retail trade 22
    Wholesale trade 18
    Acommodation and
    food services 19
    Administration and
    support services 17
    Transport, postal
    and warehousing 16
    Health care and
    social assistance 16
    Information, media
    & telecommunicatiions 4
    Education & training 5
    Arts and Recreation 4

    Few in –
    Mining
    Electricity gas water and waste
    http://www.stats.govt.nz/browse_for_stats/businesses/business_characteristics/BusinessDemographyStatistics_HOTPFeb13.aspx

  8. greywarshark 8

    Thanks for that lprent. I did originally manage to clean up the repetitions in the window but see they have come back again. I will make the effort to get the method of picking up the graphic straight in my mind. Will talk to my son so if I forget he will know.

  9. So, no mention of low wages; lack of job security; attacks on trade unions and collective bargaining rights; inadequate work hours for part-timers; lack of support for beneficiaries; poor access to training and educational opportunities; intergenerational cycles; imbalances between male and female wages and between Māori, Pacifica and others; lack of support for employment in small towns and cities; lack of funding for research and development that would allow NZ firms to develop, compete and employ more people, or unbalanced tax policies and practices from Bill, then.

    I’m sure he just overlooked these factors…

  10. aerobubble 10

    With the drop in demand for dairy and logs from China, housing rebuild in ChCh and returning population are the only thing keeping our currency from falling. And should it, the full effects of the GFC would impinge on the NZ economy, the real financial signal from higher petroleum prices would hit mum and dad mortgage holders. Small businesses, retail, would all feel the contraction in peoples wallets. To some extent we are already with the drop in confidence.

    So you can see why National would target ‘housing’ as the problem. But even when they act entirely politically they still continue to select the wrong tool. Take selling state homes to charities, like charities have seen how government works, they destabilize existing charities, reduce funding, etc. So what are these new charitable home owners going to be expecting from government, but drops in income from government. Should those charities fail, government has already off loaded its worst stock, and sucked up charitable funds.

    So National are consistent, they not only draw up the ladder, they undermine and distort the market, embedding poor governance. Take sprawl, without proper purposed public transport, utilities, we get everything from power cuts and urban ghettos. I mean what our many regional towns in NZ without their state housing ghettos, caused by central government failure to grow the whole NZ. There is no long term group thinking in our parliament, and why/ no upper house, small number of senatorial politicians (Dunne the worst of the batch), and a three year turn short term lottery (had Hone and Dunne swapped wining for losing – due mainly because the left won’t sell the idea that split tickets means better outcomes, i.e 120 seats + 70 electorate = 170?). While Epson gets three representatives, Seymor, Goldsmith and Genter.

    But back to the point. Key is a corporate raider, carefully targetting and sell of prime assets, and reorganizing the rest to look good on paper, so he gets re-elected. Though over time his legacy will leave a toll on NZ that will keep clipping the NZ growth ticket, as costs have been hidden, supports undermined and sustainability lost.

  11. Poission 11

    “it’s pretty much illegal to build a house, or has been until recently illegal to build a house under half a million dollars in Auckland”. says English.

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11338730

    What he (or the reporter asks( is why,

    The answer is building covenants made by private developers to ratchet up prices.

    • Draco T Bastard 11.1

      What he (or the reporter asks( is why,

      Fails to ask?

      • greywarshark 11.1.1

        English is implying that Councils have been soooo unreasonable and bureaucratic that it is they who have acted as gatekeepers preventing buildings going ahead. Yet how much land lies unused for years in places regarded as being prime for the future while the speculator leases it for grazing?

        How many planned subdivisions offering a mix of two to four storey apartments with wide cul de sacs and space around each house for a fenced off garden and open area that the residents can share? Nice low high-rise and near services, a dairy and bus to the shopping area? With a school nearby that has a separate hall for the children, and that can be used by the community as well. Would anyone who knows of one like that built inthe last twenty years tell me where?

        In the old days a speculator would build one of a set of plans that was chosen by the prospective owner. Now two storey edifices are lined up pre-built looking less homelike than an educational hall of residence. All to the convenience of the speculator.

        Of course when the leaky homes saga was on, it was theyCouncils which had not been bureaucratic enough.to ensure their suitability. The prevailing idea then was not to stand in developers way. They were the innovators, the investors, the business people who had the expertise and it wasn’t the job of any government entity to tell them anything, and what they did tell them should be expedited because any delay just added to the cost and put the price up as the bulders wanted to get their full 100%? working profit out of the house. Builders have often been able to build a fifth house for half the normal cost say, using bits and pieces ‘left over’ from other jobs and paid for by those owners.

        • red blooded 11.1.1.1

          Good point re the turn-around in attitude towards councils and building regulations, greywarshark.

          Of course, accommodation costs around Canterbury are also high because so many are displaced because of the earthquakes. The council’s planning office may or may not have been running well (they were replaced to speed up commercial developments), but they certainly can’t be blamed for the costs imposed by this naturally disaster. I wish the same cold be said about EQC, Southern Response and the other insurers.

          • greywarshark 11.1.1.1.1

            @ redblooded
            Yes Chch is in a special position. Brownlee had an opportunity to show his talents helping the people and businesses there to adjust and regroup but unfortunately he didn’t have many.

            Some of the stories are mind-boggling. I think that if CERa didn’t have a trouble- shooter with staff, they should have done. The job would have been to keep tabs on the anomalies as they cropped up. And look over figures and see what was proceeding well and where the holdups and mishaps were, then go and deal with the easiest and start on the harder ones at the same time.

            All long-standing problems would have been reviewed after say six months with the intention of getting finality within six months. This would have been extended when there was a later couple of heavy earthquakes. But every problem would have been under scrutiny then. It sounds good anyway.

  12. Sue 12

    So this is one of the ‘fresh ideas’ JK asked for to help tackle child poverty – undermine local authorities and the RMA so developers can really let rip! Hmmmh – and here was me thinking that our low wage economy and ‘flexible’ (=insecure for workers) job market had something to do with it.

    • One Anonymous Bloke 12.1

      How does the saying go? If at first you fail like a Tory, fail, fail and fail and fail and fail again and again and again. Or something like that.

      Just between us, Blinglish has a secret: it’s got fuck all to do with poverty and everything to do with policies that were bought and paid for on the golf course, by property developers.

      Our next policy to tackle child poverty is to see to it that the police are provided with stronger surveillance powers.

  13. BLiP 13

    . . . Finance Minister Bill English is pointing the finger at local government planning rules, saying they are a major cause of poverty and inequality because they drive up the price of houses . . .

    And so it begins: the National Ltd™ Cult of John Key working in collusion with the foreign-owned MSM to hard-sell the rewriting of the RMA to remove any practical consideration for the protection of New Zealand’s environment.

  14. irascible 14

    Expect English’s commentary and position to be the precursor for legislartion to “reform all local government” by consolidating into administrative districts over seen by the Minister of Local Government. Such a reform will conveniently remove the embarrassment of local body elections and local bodies daring to challenge the dictats of “Dear Leader” in the future… after all the Dear Leader’s National govt is dedicated to efficiencies best achieved through centralising all decisions.

  15. Tim O 15

    His idiotic comments no doubt precede an imminent all out attack on the RMA – not to help rich developers to bypass bylaws, ignore people’s concerns clear trees, and root the environment, but to help the poor people, of course ! National – the caring party !

  16. Foreign Waka 16

    I heard on the radio today a comment (sorry, don’t know the lady’s name) that Mr English comment might initiate the change of the RMA?

  17. Barfly 17

    Shrug …perhaps it’s a prelude to an all out attack on Local Government so as to asset strip Local Government Bodies and forward an agenda of privatizing water supply…..very little surprises me these days…..sadly

  18. Lindsey 18

    You would think that some Journalist – if we still had any, might ring the Auckland Council and see if there were any actual – you know – figures on this. Building Consents are charged on a % basis of the value of the building work so they will have a pretty good idea how many dwellings are built at what cost. You also need to look at what is being built. Particularly on the North Shore, everything has 5 bedrooms and six bathrooms. But there is no law saying that is what you have to build.

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