National’s cows coming home to roost

Written By: - Date published: 8:08 am, April 26th, 2014 - 79 comments
Categories: capitalism, cost of living, debt / deficit, Economy, wages, workers' rights - Tags:

 

The reserve bank has lifted the official cash rate up another 25 basis points to 3%.

For the average Auckland mortgage holder ($400,000 mortgage) that’s an extra $20/week taken out of their pockets, which means they are now over $1000 a year worse off.

Add that to the 25 basis points added near the start of the year and that makes the tally (so far) over 2000 bucks a year worse off.

And apparently that’s just the start of interest rate rises. According to the Reserve Bank, this tightening cycle will likely top out at an overall increase of 200 basis points or 2%. For the average Auckland mortgage that’s an additional cost of $160 a week or over $8000 a year.

National’s response? Not bovvered.

But those cost increases shouldn’t matter because the economy is growing and we’re all going to benefit from that, right? A rising tide lifts all boats, right?

Well maybe it would if we could all share in the growth but National’s anti-employee policies mean that very few of us will benefit from the forecast economic growth. In all likelihood, the heavily indebted NZ public is only going to suffer the pain of increased housing costs with slim chance of an upside.

The right loves the bogus ‘wages go up with productivity’ line but in reality National’s rotten labour laws mean productivity and growth gains are rarely shared with employees.

Thursday night’s TV 1 news piece on the OCR rate increase features CTU economist Bill Rosenberg, near the end, commenting that productivity in New Zealand has gone up 10% from 2009 to 2013 and yet wages have only risen a miserly 0.6%.

As Bill says in a recent media release, “the focus should be on getting housing costs down, and raising wages to make housing more affordable.”

Sorry Bill, that ain’t ever gonna happen under a National government.

The Orivida National party has put most of its economic weight behind the dairy industry but as
this RNZ piece illustrates, even in the rockstar dairy industry, employees are getting screwed.

That story refers to an MBIE labour survey conducted in August last year which found 3 farms in Southland that were found to have underpaid their workers. But what the RNZ piece fails to mention is that it was actually 3 farms out of 10. So that’s 30% of farms in the survey failing to comply with minimum employment rights.

These are the natural consequences of National’s perverted policies, folks suffering even during times of economic growth. The only possible silver lining from this will be if people finally see through the thin veneer of John Key and appreciate the full, ugly vista that is a National government.

79 comments on “National’s cows coming home to roost”

  1. karol 1

    The most significant stats in the post are the ones about wages not keeping up with efficiency increases. That and the over-focus on the dairy industry.

    Mortgages and rate rise? Well, the housing bubble has long been in danger of a crash. Those of us with savings and not mortgages, superficially look to benefit from the rise of the cash rate. However, I suspect the knock on impact on living costs will negate any superficial/apparent gain.

    • geoff 1.1

      I don’t believe there will be a property market crash. I think some folks will default on their mortgages but many more will just suffer further and fall further behind financially.

      Renters will likely suffer from these interest rate increases as landlords attempt to pass on increased mortgage costs to their tenants.

  2. cricklewood 2

    If you can get a $400000 mortgage your income is such that an extra $100+ a week isnt the end of the world.
    Id dare say that there wouldn’t be many people with a mortgage this big that didnt either take it out in the knowledge that rates would eventually rise or have it prior to the gfc and have either been paying off more principal or enjoying lower payments.

    • BM 2.1

      Or you’ve well and truly over leveraged yourself and need an uppercut or two for such blatant stupidity.

      • dave 2.1.1

        i agree with you BM i cant wait TO all stupid pricks that borrowed based of belief the music will never stop HAHAHA ROCK STAR ECONOMY YEAH RIGHT !!!! SCREW THEM YOU BORROWED TIME TO PAY IT BACK!!!! DEBT BOMB READY TO BLOW!!!!!!!!!!DO YOU STILL LOVE YOUR JOHN KEY!!!!

        [lprent: Don’t SHOUT. It hurts my eyes. I reduced the volume. ]

    • lprent 2.2

      A 400k mortgage with a 20% deposit is at least what is required to get a very modest 3 bedroom house in Auckland close to a main transport route to get to work. Usually it is whole lot more. If you rent, then the same costs show up in the rent. You have to live somewhere so your financial advice is quite simply inane when looked at with the realities of Auckland and indeed moist of the larger cities where most of us work and live.

      You can get cheaper houses in Auckland but only if you want to spend hours and lots of money commuting from FAR far away, or you like bringing up kids in a shoebox.

      An extra $100 per week is extra $5200 per year after tax income. That sounds like quite a lot to me, especially when the wage increases in the last 5 years have been a pittance – as Geoff points out in the post.

      • cricklewood 2.2.1

        To service that mortgage that size you need a household income comfortably over 100k to keep a semblace of reasonable affordability with payments at least $660 per week. whilst an extra $100+ is a lot its not impossible to find.
        As BM points out if you are silly enough to leverage yourself to the max without thought to an increase in rates you’re an idiot.
        Of course the effect on the economy when discretionary spending plummets as a result is a different kettle of fish.

        • RedLogix 2.2.1.1

          I’m old enough to vividly recall interest rates around 23%.

          I had just purchased my first home because we’d moved to a small town for a new job. The rate when we signed the mortgage was around 6 or 7% IIRC. It was a bit of a stretch because my partner really couldn’t find work in the area and we had a new baby.

          Suddenly our mortgage goes from an affordable 25% of income to almost 60%. The only thing that saved us was a massive pay rise within weeks.

          People don’t get into massive mortgage because they want to. It’s because they need a roof over their heads and they aren’t faced with too many good choices.

          • cricklewood 2.2.1.1.1

            “People don’t get into massive mortgage because they want to. It’s because they need a roof over their heads and they aren’t faced with too many good choices.”

            I know this all to well having recently taken on a large mortgage for those reasons. What I did do however is budget on interest rising at least 3% and bought accordingly rather than max out straight off the bat.

            • Naki Man 2.2.1.1.1.1

              Cricklewood
              Obvious really, people just like to blame the government for their own stupidity.
              Some people live in a dream and expect the government to spoon feed them.

          • Naki Man 2.2.1.1.2

            “People don’t get into massive mortgage because they want to. It’s because they need a roof over their heads and they aren’t faced with too many good choices.”

            Bollocks. Look outside of Auckland there is plenty of affordable housing.
            Auckland is a very expensive city to live in but its not compulsory to live there
            especially when you are young and buying your first home.

            • Paul 2.2.1.1.2.1

              I think naki man posits the weakest of all the arguments made by the gaggle of extreme right wingers who frequent this site.
              I nominate him for RWNJ for 2014.

            • RedLogix 2.2.1.1.2.2

              Look outside of Auckland there is plenty of affordable housing.

              My first home that I mentioned above was in Kawerau.

              Right now I can sell you a very nice 5 bed, 2 bath, rennovated, re-wired, insulated 194m2 home in a provincial town for $220,000.

              Right now I am also living in rental accomodation myself. (I’m an odd case of someone who owns 8 houses but rents the one I live in.) We are living in a ‘regional city’ as they call them here in Victoria. We’re pay a derisory rent of $230 pw for a really nice, modern 120m 2 bed unit, right bang in the best part of town.

              So there really is no need to tell me about the good value of housing outside of the cities.

              I’ve made the same case elsewhere that if you have the choice, then moving out of the big cities makes sense for some people. But in case it’s not obvious to you – this is not an option for everyone. What’s more is once you have committed to property outside of Auckland, most people find it very hard to get back in.

              But of course it doesn’t matter a damn how cheap the housing is in any location. If there is not the job there, or the ability to live there for any number of reasons – then the house could be free and it would still be too expensive.

            • JanM 2.2.1.1.2.3

              And the job to pay for this?

        • lprent 2.2.1.2

          It makes little difference if you are servicing a mortgage or renting. The amounts paid will tend to be in the same order. Which is why two worker families are common and illness these days is such a burden. It has nothing to do with choosing to take on that financial burden. You have to take it on to be able to live in Auckland with a family.

          The only long term way to fix the issue is to increase the supply of affordable housing close to where people work. In other words denser brownfield sites in the existing city sprawl.

          However this government prefer to favour greenfield sites which throw much of the cost for the provision of new services on to the ratepayers that are tens of kilometres from workplaces. Not only that but the majority of housing created are frigging macmansions and just as unaffordable. It is supremely stupid.

          Sure there are a few redevelopments of sites inside the current city. But in most cases they too have little lower cost affordable housing. Much of the HNZ land has been turned over to developers for higher cost terraced housing.

        • finbar 2.2.1.3

          Yet in fairness you are speaking of the ever increasing minority who can afford such outlandish home ownership prices.

          Crunch the number of full time workers, who!s wage falls into the ever increasing annual wage now almost $100,000,per year,to service a mortgage.

  3. vto 3

    borrow borrow borrow

    and sell the assets

    thick-headed actions that not a single National government member would do in their personal lives…

    Says it all really. Why would they do this I wonder?

    • One Anonymous Bloke 3.1

      Hmm. Private debt levels are far too high too: most of them don’t own the assets they hold and they’re still borrowing borrowing borrowing.

  4. Red Rosa 4

    Lets not forget the massive increase in NZ debt under National..and still increasing…

    Nine years of Labour surpluses, followed by six years of National deficits…what’s so great about that, Bill?

    • Naki Man 4.1

      Red Rosa hasn’t heard about the Canterbury earthquake and the GFC. You would be whining if National had not acted and let unemployment blow out to 10%.

      • Hamish 4.1.1

        So which party was it that persisted with unaffordable tax cuts for the rich in the aftermath of the GFC?

        • Paul 4.1.1.1

          Naki can’t answer that so won’t.
          He just snipe somewhere else.
          Never debates, just annoys.

        • Naki Man 4.1.1.2

          The tax cuts that we received were offset by the rise in GST. The GST rise is an effective way of taxing people who do cash jobs and don’t pay their fare share of income tax.

          • Clint 4.1.1.2.1

            “GST rise is an effective way of taxing people who do cash jobs”

            No it isn’t. The IRD is paid to target off-the-books payments, not the widest ranging non-discriminatory tax possible.

            If a GST rise was targeting cash jobs then National would do other clumsy and needlessly wide ranging tactics, like targeting a tiny majority of beneficiary fraudsters by attacking everyone receiving social welfare or chasing an artificial budget surplus while borrowing mountains of debt. Hmmm… now that I think about it you could be on to something.

          • One Anonymous Bloke 4.1.1.2.2

            No, they weren’t. That probably explains your support for National: you’re completely clueless as to the actual effects of their actions.

            The tax cut/GST hike was not fiscally neutral. According to the parliamentary library, cited by Russel Norman:

            …the estimated lost tax revenues from National’s 2010 tax cut package are between $1.6–$2.2 billion…calculation includes company and personal income tax revenues offset by increases in GST.

          • lprent 4.1.1.2.3

            No it is not. That particular fallacy only works is you make it ubiquitous and don’t have holes in the collection structure like own property or finance. If you look at what people pay directly in GST as a proportion of their income, you’ll find that it falls far more heavily on those with lower incomes. They use a much higher proportion of their income on the basics like food, transport, and rental accommodation (with its GST built into the cost structure).

            • finbar 4.1.1.2.3.1

              And as the farm fence cries,dole bludgers what tax do they pay.Every payment to those dole bludgers is taxed,and every cent paid for goods and services their basic needs is also taxed,its called G.S.T.

              How about to ballance fairness,all those receiving state assistance be given a card that exempts them from paying G.S.T.’

      • JonL 4.1.2

        You would be whining if National had not acted and let unemployment blow out to 10%. – how convenient then that those who could left and went to Aust.
        Without that out, unemployment would have been north of 10%!

      • finbar 4.1.3

        What about bailing out Canterbury Finance.Farmers delight.

    • Lets not forget the massive increase in NZ debt under National..and still increasing…

      I sometimes prod Kiwiblog RWNJs with that one myself, but only to point out the hypocrisy of their claims that a Labour government would increase public debt. Looking at it objectively, it’s an excellent thing that the Nats have massively increased public debt – it’s what Labour would have done in response to the GFC as well, because the alternative is the kind of austerity measures that make recessions a whole lot worse for the people on the bottom.

      • Jackal 4.2.1

        The $60 billion debt wasn’t instead of austerity measures Psycho Milt. It was to give National MP’s and their rich mates a tax cut, build a few roads of little significance and generally line their own pockets. Those at the bottom haven’t seen any benefit from Nationals unwise borrowing. In fact the thousands of additional NEET’s who aren’t receiving any form of benefit are testament to the young and poor bearing the brunt of the GFC and the current governments fiscal mismanagement.

        • srylands 4.2.1.1

          Can you please provide a breakdown of your absurd claim about that $60 billion? No because you are a liar. An ungrateful liar. For a start, the roads – desperately needed infrastructure – are all financed by user charges. NZTA can now raise debt but it is all matched by an income stream. None of that debt is core Crown debt. So you are either ignorant or a liar.

          Stop making shit up.

          • Skinny 4.2.1.1.1

            Meanwhile Rail upgrades go backwards under the failed ‘gobackwards plan’ as is usual under National. Must go for a ride on the new electric trains next week. Goodthing is at the stroke of a pen after Sept some roads are out and the rail loop is in!

          • freedom 4.2.1.1.2

            What has created the massive increase in debt since National came to power srylands ?

            If the roads are self funding and the insurance is paying for CHCH and the Asset sales brought in so much money (-sarc) how was the new debt created?

            More importantly what exactly is it all being spent on?

            Or do you just refuse to acknowledge that National has grown our debt by over 50 billion dollars in only five and a half years?

          • Paul 4.2.1.1.3

            £60 billion debt.
            Touched a nerve with Slater’s disciple srylands.
            Please note, leadership of Mana, greens.., Labour, NZ First …..the Nats are vulnerable on issue of their chronic mismanagement of economy.
            Repeat in the media.
            £60 billion debt….. £60 billion debt….. £60 billion debt….. £60 billion debt..
            Tax cuts for the rich….Tax cuts for the rich…Tax cuts for the rich…..Tax cuts for the rich

          • mikesh 4.2.1.1.4

            It doesn’t matter whether they are paid from taxation or from gasoline excise. They are still a waste of money..

          • McFlock 4.2.1.1.5

            Net core crown debt: 2014 forecast $60b.

            Skyrocketing.

            $27b in 2010 (same source, few years previously).

            Where do you reckon all that debt has come from, sspylands?

            I would call you a liar, but you’re just a demonstrated moron who can’t remember what a tory is, after being told repeatedly.

          • Jackal 4.2.1.1.6

            srylands

            For a start, the roads – desperately needed infrastructure – are all financed by user charges.

            Are you sure about that srylands? I think you’ll find that around $1 billion of the $3.6 billion for 2013/14 relates to loans from the Crown. They have done this of course so that the price of fuel doesn’t increase too fast and spook voters. You’re right in a roundabout way though…that expenditure from increased debt doesn’t explain exactly how the Natz have mismanaged New Zealand into a $60 billion hole. Clearly it wasn’t spending on those at the bottom, as Psycho Milt claims.

            If the roads of little significance are so badly needed, why has the benefit-cost ratio on many of these projects been ignored? Previous to this current inept government a BCR of 4.4 was required before any project was given the go-ahead. Now they are as low as 0.5, meaning there is no economic benefit at all. In fact if you take all of Nationals think big roading projects you get a BCR of around 1.2. That means they’re running at a loss and borrowing to invest in projects that will show no real economic return or benefit society in general is simply stupid! I guess that’s why you support the policy srylands.

  5. Corokia 5

    Increased interest rates will mean an even lower tax take from the dairy industry which has massive debts.

  6. Chooky 6

    “cows coming home to roost”!?….that would be a sight to see…up the pine tree….and PIGS might fly!

  7. Corokia 7

    Dairy debt is reported at 32 billion, so I think that means the 25 point rise in interest rates would be 80 million more a year going to the banks.

    • RedLogix 7.1

      Well according to BM above all those dairy farmers are due an uppercut for such massive stupidity.

      • Naki Man 7.1.1

        RedLogix
        You need to learn about personal debt and business debt.
        There is a government website to help with your financial literacy

        • RedLogix 7.1.1.1

          For personal reasons I’m not going to divulge to you – congratulations on a perfectly wrong comment. It’s not often someone achieves that.

          Of course ultimately a bank doesn’t care particularly whether a debt is personal or business. They will of course rank their relative risk differently, and require levels of security, LVR, insurance and subject them to many, many different internal policy rules – but ultimately a loan boils down to security and serviceability.

          Banks are generally willing to lend more heavily and cheaply into housing mortgages for three reasons; the first is that people are generally very reliable at paying down the mortgage on their own home. The second is that wages and employment are generally more sticky than business incomes, so the income to service home loans are more reliable. And thirdly the security can be readily valued in the real-estate market. If the loan does go bad the bank will most likely be able to recoup the loss in a fairly prompt mortgagee sale.

          Business lending is quite the opposite in most respects and is thus treated as a higher risk loan. And of course crucially regardless of the nature of the loan, it still needs servicing.

          And in that respect the exposure of the dairy industry to a fall in commodity prices and a rise in interest rates – is considerably more acute than for the average homeowner.

  8. burt 8

    Interest rates are slowly climbing back toward the average we had under the last Labour government. Strangely interest rates weren’t a problem when we had a party in power that had a red logo.

    • Paul 8.1

      I don’t remember the same debt levels though….

    • RedLogix 8.2

      Take a look at this RB graph.

      You are right that interest rates were some 2% higher back around 2008 although if you look back 20 years that was actually lower than the long term average.Go right back to 1991 at the start of the series and the interest rate was 16%. And as I mentioned above it was over 20% during part of the 80’s.

      But despite those much higher interest rates the servicing affordability was ok because the total debt was much lower in those days.

      Ramp forward to 2008. Total debt had soared massively (due primarily to banking de-regulation globally) and for this reason even relatively modest interest rates of 8% caused an historically massive spike in servicing costs.

      Total debt dipped a little immediately after the GFC but is rising back to the same levels again. (Which incidentally is the cause of the economy doing it’s little ‘rock-star’ blip.)

      As a result if the RB raises interest rates 2% as they are signalling – serviceability will rapidly deteriorate once again.

    • lprent 8.3

      Strangely interest rates weren’t a problem when we had a party in power that had a red logo.

      The rate of building new accommodation to cater for the growing population carried on rising as well.

      However in Auckland that has now been on a 5 year hiatus. So the price of property has been steadily rising even through the GFC and its fallout.

      This link is old, but shows the scale of the problem.
      http://www.stuff.co.nz/business/9055539/Auckland-needs-54-building-boost

      Meanwhile wages have been rising at a much lower rate pushing more and more of the housing available out of reach of those who need it.

  9. Colonial Viper 9

    Complain about interest rate rises all you like, but in the USA the preferred merchant banks (the Fed Primary Dealers) can access newly printed money at essentially zero interest (ZIRP policy). So if you are paying out on a mortgage at 6.5% pa the difference is simply rent you are paying into the current privatised banking and money supply system.

    And no political party has any intention (or ability?) of changing that.

  10. Corokia 10

    There has been a huge increase in the amount of debt taken on by the dairy sector during the 2 terms of this government. The dairy debt is not ‘sustainable’ as interest rates rise, neither is the environmental impact of increasing dairying acceptable. Cheerleaders for the dairy industry claim it supports the economy, but my point was that 80 million less is now available to pay for the schools and hospitals that they tell us are the benefits we taxpayers get in exchange for polluted rivers.

    • Colonial Viper 10.1

      There has been a huge increase in the amount of debt taken on by the dairy sector during the 2 terms of this government.

      Although true, it’s utterly disingenuous to blame National for this while ignoring that the trend of massively increasing farm debt (and residential private mortgage debt) started in the Clark and Cullen years.

      This article from 2009, and the debt data within the article which covers up to 2008/2009 makes that very clear.

      http://agprodecon.org/node/90

      In short: Cullen let a massive property price increase occur on his watch, fuelled by Aussie sourced debt, while the middle class celebrated all the capital gains they were making from the resulting flipping of houses.

      • RedLogix 10.1.1

        While I agree with your basic sentiments CV, I’d still argue you are being too hard on Clark and Cullen.

        Remember that this was all before the GFC. The neo-liberal mantra completely dominated conventional thinking; mere mention of even quite modest reforms like a CGT or a limit on LVR’s was considered verboten and political suicide.

        • Ergo Robertina 10.1.1.1

          It actually would have been easier to argue for a CGT during the years the market was heating up. Now, it looks too little, too late.
          Such measures are always ‘verboten’ to some; they could have been sold to those not insulated by $80k plus wages during the years electricity and house prices were soaring.
          Especially in provincial NZ, there are indelible memories of Rogernomics, and farmers forced off the land by soaring interest rates, so LVRs could have been sold as a way to cool a bubble.
          It could even have won Labour votes in rural families worried about their children being priced out of owning farmland.

          • RedLogix 10.1.1.1.1

            I agree with your motives ER; but I’m wary of the hindsight.

            For instance, for thousands of years human chattel slavery was ‘normal’. No respected or influential person argued against it. Even the slaves themselves believed it was the natural, invariant order of things. For a very long time change was impossible, because no-one believed that anything could be different.

            Then after a heroic political struggle, coinciding with Watt’s steam engine revolution – that form of slavery was ended. And now people can generally no longer imagine a time when it was ever considered acceptable.

            In a smaller sense the neo-liberal madness has inflicted a similar ideological blindness. It narrowed down the acceptable range of political discourse to a tunnel-vision which aligned only with “free-markets, de-regulation and trickle-down”. No other alternatives were allowed; and it’s appointed gate-keepers have spent a lifetime enforcing this.

            Look at today’s column from John Armstrong to see one of them still in action.

            • Ergo Robertina 10.1.1.1.1.1

              Yes, it is all a bit academic, but I was writing mindful of Armstrong’s column and the frenzy of which it forms a part. Your explanation to PG on Open Mike re Cunliffe being a crack in the neoliberal consensus is apposite. The manufactured crisis over Jones’s departure is a part of the push-back to Labour’s hints it may break with neoliberalism.
              These of course are exactly the same commentators who run the TINA lines about the economy.
              (It’s not ‘hindsight’ though – there are always quite a few people who aren’t lured by the faulty logic of every bubble in history, that somehow ‘this time is different’.)

        • Colonial Viper 10.1.1.2

          RL, I take your point about the loss of sovereignty that the globalised economic/bankster norm entails.

          But the Clark govt was also more than happy to get the polling boost from the middle class feeling richer month by month as their house values escalated, and Cullen was more than happy to rake in via taxes the money injected into the economy by increasing private sector debt levels in order to get his vaunted public sector surpluses.

    • Will@Welly 10.2

      Corokia, if you go back and read the early history of the Canterbury Plains, they were dotted with Butter Factories. These proved to be unsustainable due to the farming conditions. So I was really surprised when the “great” dairy conversion began in the South Island. Of course it is being done with “borrowed’ money – that is why Fonterra needs such a premium for it’s milk products, and in particular milk powder – milk/cheese etc. doesn’t cut it.
      Those early settlers were true pioneers/entrepreneurs, and if dairying on the plains could have been made to have worked, they would have made it work. So for the “current boom” in dairying to work, those investing must be paying a premium, both for the land, and in interest rates.
      As we’ve seen with the sale of the paper mills to Japanese firms, and other farms to overseas buyers, bit by bit, New Zealand is being sold off to overseas owners as it becomes too expensive for New Zealanders to own.
      Being based overseas, these firms take their profits there, and pay the bulk of their taxes there. New Zealand becomes the loser. And John Key takes his 30 pieces of lucre.

      • Paul 10.2.1

        The environment of the waterways of the Canterbury Plains is also paying a premium for intensive un stainable dairying.
        Short term thinking.
        A crash will happen.

  11. Jrobin 11

    That was be because under Labour wages and conditions were not screwed down by a pro bankers ruling elite Burt. You have only looked at one perspective. Listening to David Parker on The Nation, my husband and I both felt stirrings of hope. A clearly stated and practical approach that doesn’t privilege the bankers and currency dealers. Suddenly Shane Jones looked rather irrelevant.

  12. Skinny 12

    The disturbing trend of the inequality gap stretching out can be linked to the loss of union membership density, not just here but many of the western nations, America being a prime example.

    Very interesting how the documentary Mind the Poverty Gap actually got people thinking. Got a pleasant surprise that my obscenely wealthy ( to my standards) sister in Auckland saw this doco and is calling the 1% a bunch of crooks. Better still Key-National guilty of being at the thick end of the swindle, and now seeing John Key for what he truly stands for. I call this ‘unveiling the Key Teflon veneer.’

     Referring to my sister, this is remarkable that they (husband too) can watch MTPG and proudly tell me of a switch from Act to Greens, just like that. Worthy of a celebration when I am Auckland next week over night with them. They live Epsom so it is the candidate vote Nat debate on the agenda.  While they have always excepted my strong socialism/activists points of view, including mocking them to the point of hanging their heads in shame admitting their tax cut was wrong & it should have gone to low income earners, that wasn’t too hard, however after much abuse & a near fist fight with my brother-inlaw over capital gains tax, a year of no contact with my only sister, we have always been close, seem to have given them the guilts.  Anyway happy it resulted in a moral rethink, getting them out of the first home buyer market, 6 houses, making just as much, more by the sounds by adding to their commercial property portfolio with a clearer conscience to boot. A close family relationship again with a great summer going surfing up North here.

    Sorry strayed off topic to a rave there.

    Happy to hear the producer is in Harlem hopefully carrying on the good work. We need more thought provoking 
    documentaries like this, which gives people a far better insight than the sheep fodder trotted out by the MSM day after day.

    • Paul 12.1

      Don’t you mean Brian Bruce’s doco ‘Mind the Gap?
      He also made ‘Inside Child Poverty’. The issues in that film should be campaign platform of left wing parties. End child poverty. Better warm, dry public housing. Healthy, cooked School lunches. Full health centres.

  13. geoff 13

    Good to see there is no objection from the RWNJs that National treats employees like shit.

    Also no objection that workers have little chance of benefiting from the forecast economic growth.

    It’s nice to see there is some consensus at least.

  14. Ad 14

    The cost of housing is the remaining card to play for a progressive change of government in 2014. Nothing else has middle of road traction that MSM will ever care about this year.

    The rising cost of living – electricity, insurance, rent, mortgage etch – is broadly corrosive on public opinion. Too broad as a whole, but narrowed to housing is a winner.

    It’s not only whether one could ever buy a house, it’s whether one can pay this months’ bills. That sense of going backward, hitting the suburban mortgage belts of Auckland and Christchurch.

    Labour has excellent policies for housing. As do others. But from the media shadows cast by Jones we saw a potential new leader emerging. I suspect, since he commented on this site yesterday, that he gets this and will run a strong media programme in the next few months.

    Arise, Sir Twyford.
    Don ye your mask of valour, pull us from the Slough of Despond. Ahrrr. Ahrrr. Braveheart speech.

  15. DH 15

    “For the average Auckland mortgage holder ($400,000 mortgage) that’s an extra $20/week taken out of their pockets, which means they are now over $1000 a year worse off.”

    Reading this I was tempted to make a snarky comment about learning maths but instead will make the observation this is a common miscalculation, a business editor in the Herald made the same false assumption.

    It’s not $20/week. Most people have table mortgages, it’s largely only property speculators who take out interest-only loans. On a new $400k table mortgage a 0.25% hike in interest rates is about an extra $14/week.

    Note that’s only on a new mortgage. For existing mortgage holders the increase depends on how far into their mortgage they are (how much principal they’ve paid off). A person 5yrs into a 25yr $400k mortgage would be looking at about an extra $12/week, 10yrs in only $6/week…etc

    Now since the majority have been banking a tax-free capital gain averaging well over $500/week I can’t see why anyone would be crying crocodile tears for Auckland property owners. As always it’s the renters who get hurt the most here, the leveraged property investors will try to push rents up to cover the higher interest payments. That leaves renters less able to save for a deposit.

    • geoff 15.1

      You can play with the numbers all you like but even at $14/week that’s still over $700 a year worse off and that is still only for a single 0.25% rate increase. We’ve had two 0.25% increases already this year.

      Anyway you slice it people’s housing costs are going to increase, renters and mortgage holders alike.

      My take home message in the post was that National’s problem is that they have set the economy up so that many workers won’t benefit from the economic growth, indeed as housing costs go up they’ll end up all the poorer.

      Not a good look for them in election year I’d have thought.

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