Over the past week National and the Greens have released housing policy designed to address the country’s current housing crisis.
National’s policies are somewhat predictable, and involve mostly reaffirmation of current Government policies while trying not to give the impression that they are doing something different. From Nicola Willis on the National Party website:
National has also asked the Government explore these immediate actions:
Strengthen the National Policy Statement on Urban Development: The Government should bring this urgent rezoning of land by local authorities forward, and increase the competitiveness margin, to enable intensification and growth.
Remove the Auckland Urban Boundary: This arbitrary line has been found to add $50,000 or more to the average cost of houses in Auckland. The Government committed to removing it in 2017 but progress has stalled.
Make Kāinga Ora capital available to community housing providers: Proven social housing providers have land and consents for new housing projects ready to go. The Government could make these projects happen immediately by releasing some of the taxpayer funding ring-fenced for future social housing.
Establish a Housing Infrastructure Fund: This would help local government finance the pipes and roads required to accelerate rezoning of land for Greenfields developments.
Implement new finance models: The Government should work with industry to develop finance models that leverage Accommodation Supplement and Income-Related Rent entitlements to drive new housing development.
My comments in response are:
By way of jarring contrast the Greens have also announced their policies to address the housing crisis.
From the Green Party website:
The Green Party is calling for bold, transformational measures to stop the accelerating housing crisis that is locking New Zealanders out of a stable home.
- Removing tax incentives for investors by removing the five year cap for the bright line test.
- Regulating investors’ access to mortgages, including
- Ending interest-only mortgages,
- Putting restrictions on debt to income ratios, especially for investment properties,
- Requiring cash deposits for mortgages on investment properties, not just equity from other homes.
- Direct economic stimulus from the Government in the form of income support, instead of relying on the Reserve Bank.
- A massive urban redevelopment and home building programme led by Kāinga Ora, until supply matches demand and prices stabilise at affordable levels.
“Everyone has the right to a decent, affordable home, but house prices are out of control. Auckland’s median house price increased by $100,000 in February alone,” Green Party Finance spokesperson Julie Anne Genter said today.
Removal of the time limitation for the bright line test is an interesting proposal. As pointed out by Incognito the Government is considering extending the bright line test period by a further five years. When the IMF is telling you to get the situation under control you know there is a problem.
Labour’s previous decision not to proceed with any form of capital gains tax I thought was retrograde. Sure the proposal posed difficulties in terms of valuation of businesses. But a capital gains tax for land was simple to impose. Through the Land Transfer system the state controls the transfer of ownership. And already sufficient data such as price, personal details and IRD numbers is collected, each time land is sold, to allow IRD to fairly quickly assess tax on a transaction.
The proposal to get rid of the time limit for the bright line test is a simple way to impose a comprehensive capital gains tax exempting the family home. And all they are doing is altering an existing tax, one actually introduced by National.
As for the Green’s other proposals providing economic stimulus in the form of income support is in modern terms somewhat radical, but not unprecedented.
Back in 1935 Micky Savage successfully used it to help wrest the country out of depression. From the New Zealand History website:
Savage was greatly distressed by the suffering he witnessed during the years of the Great Depression. He travelled the country spreading the Labour message with an intensity and evangelical fervour seldom matched in New Zealand politics. He maintained that all citizens were entitled to ‘a reasonable standard of living in the days when they are unable to look after themselves’.
This message struck a chord with voters and in 1935 Savage led Labour to a resounding victory. As a statement of intent a Christmas bonus was immediately paid to the unemployed and those receiving charitable aid. Relief workers were given seven days’ annual holiday. In 1936 there was a landslide of legislation aimed at stimulating the economy, including a programme of state house construction.
Regulating borrowing for speculation is a no brainer. The massive urban redevelopment and home building by Kāinga Ora is happening. You just have to travel through parts of Mount Roskill or Mangere to see what is under way.
National’s proposal are tired, and either borrow from what is already happening or represent their doctrinaire view of the world. The Green Party proposals are well though through, somewhat radical, but something I think Micky Savage himself would approve of.
The Government had indicated that an announcement of policies addressing demand pressures is imminent. It will be interesting to see what they do.