Occasionally Erudite: Please, Labour, stop trying to link everything to the housing crisis

Written By: - Date published: 11:20 am, May 21st, 2014 - 99 comments
Categories: election 2014, housing, labour, minimum wage, Politics - Tags: , ,

Jono at Occasionally Erudite has this advice to offer the strategy team at Labour. Reposted with permission.

labour-minimum-wage-graphic

This morning, David Cunliffe’s Facebook account posted the above graphic with the following caption:

Part of fixing the housing crisis is increasing peoples’ incomes. That’s why I’ll raise the minimum wage within 100 days of taking office – then I’ll raise it again in 2015.

Now, I’m not going to get into the pros and cons of lifting the minimum wage. Instead, the question that came to mind for me was, “What has the minimum wage got to do with the supposed housing crisis?” At the risk of sounding elitist, are people currently earning minimum wage really likely to be even close to getting into the Auckland, Christchurch or Wellington housing markets? Raising the minimum wage will help pay weekly bills, not get people a 20% house deposit.

I know Labour’s seized on the idea of a housing crisis as an election year issue, but trying to tie everything to the housing crisis will only end up undermining their message.

99 comments on “Occasionally Erudite: Please, Labour, stop trying to link everything to the housing crisis”

  1. Jebus 1

    Hilarious. Years of lefties moaning about how Labour can’t stick to a single message and a strong theme and now it’s all boo hoo they keep talking about housing.

    What is it with the left’s constant will to self-immolate? Is publicly attacking Labour on issues where they’re getting traction really the best way to help change the government? How about you stop whinging and do something positive?

    • lprent 1.1

      Mixed messages are just as much of a problem as not having a message. It provides way too much room to construct a counter theme that avoids the original issue.

      On blogs it is called diversion trolling…

      • Jebus 1.1.1

        I don’t understand. Are you saying Labour should ignore the connection between wages and housing?

        • You_Fool 1.1.1.1

          No, but low wages should be it’s own theme, not a part of the “housing” theme. Thus if somehow the Nats suddenly grow a brain and solve the housing crises then this issue doesn’t fall over with it. Or probably more likely if the Nats go on about how there is no housing crises and somehow pull the wool over everyones eyes, then wages aren’t also ignored because they are a separate issue.

          Yes the two issues link, but don’t lump them together

          • Jebus 1.1.1.1.1

            Ah, the two issues are kept apart. Go look at the Labour Party website and you’ll see the two have their own sections, they’re discussed separately, they have their own spokespeople.

            From time to time a political party might link issues together to show there is a bigger picture. This also makes sense. The post above highlights one example of this on a single Facebook post linking housing and wages together and suggests it’s some major strategic blunder.

            I think some perspective and realism is called for here.

          • Chooky 1.1.1.1.2

            @You Fool +100

            Labour needs to SKEWER John Key /Nact on separate prongs of the PITCHFORK.!..not just run after Key on one issue with a big spear !( you may miss the slippery eel)

            .. there are many separate potential Labour voters out there with different priorities….some it is just survival …but for many, including those just surviving , it will be to have a dream of eventually owning their own home…just as generations of New Zealanders have done before them

            …lets not Labour destroy this dream or they are done for

            …NACT destroying the dream has handed Labour a winner on a plate ( lets not fall for fallacious arguments and let the diversionary tacticians win on this one…… and whip Labour’s advantage on a plate away)

    • Ant 1.2

      I agree Jebus, also the way it works is one issue becomes shorthand for a wealth of other issues without needing to elaborate.

      Housing Crisis is National’s Nanny State.

  2. Stuart Munro 2

    So minimum wage workers aren’t affected by the cost of rent? Rent has some relation to mortgage rates and property prices.

    • lprent 2.1

      Probably does. However the post is looking at how Labour messages rather than the convoluted economics between purchase prices of houses and rentals prices.

      The real estate market in the main centres (especially Auckland) is so distorted at present that there little relationship between house prices and rental prices. For instance.

      http://tvnz.co.nz/national-news/oecd-report-shows-housing-crisis-in-nz-labour-5975043

      The report found that compared to rents, New Zealand has the most overpriced housing market in the OECD, with house prices 70 percent too high. And they were 32% too high relative to wages.

      If there isn’t a relationship economically between rentals and housing prices, then saying there is one politically is going to be a few steps too far in terms of messaging.

      That is the type of thing that the parties of the left have to be damn sure that they have some clarity on, because pushing crap messages makes it easy for the opposition to wedge the issues in derision.

      Jono is right – need some smarter thinking please.

      • Jebus 2.1.1

        See comment below.

        Soaring rents are a major part of the housing crisis, and for those on minimum wage a boost will be a big help. Labour has talked about all elements of the housing crisis, this post merely takes separate elements at different ends of the spectrum and draws a false conclusion, in the process damaging Labour on an issue where it is finally has the government on the back foot.

        Another own goal for the left, brought to you by The Standard.

        • Colonial Viper 2.1.1.1

          Another own goal for the left, brought to you by The Standard.

          To be more accurate; Labour is not the left, it is a centrist political party aiming at winning the election via the property owning middle class, Mums and Dads who have a small property portfolio that they are hoping to retire comfortably on, and the aspiring property owning middle class, their kids.

          • Jebus 2.1.1.1.1

            So I take it you’re no longer planning to stand as a candidate for Labour then?

            Labour is a centre-left party and has a broad range of views within it. But even I, a party member well to the left of the parliamentary wing, can see that you cannot win an election in New Zealand today without addressing the concerns of the mortgage belt.

            Sure, you could run a glorious campaign to get 20%, but you wouldn’t win. And if you’re not interested in winning, despite a few compromises you may have to make to enact your agenda, then you shouldn’t be involved in a political party.

            And yes, this is another own goal from The Standard. Labour has National on the back foot over housing and this is just an ill-informed whinge that saps the morale of the left and gives ammunition to the right.

            We need to stop turning in on ourselves and looking for fault and start actually backing Labour (and the Greens, and Mana) to win. This sniping only helps the Tories.

            • Colonial Viper 2.1.1.1.1.1

              Sorry mate, I’m a Labour Party member not a Labour Party follower. Big difference. I’m campaigning to push the NATs out but fuck ever backing Labour’s push to increase the retirement age or saying that the focus on the aspiring property owning middle class with a $70K deposit is where Labour needs to be focusing.

              Labour is a centre-left party and has a broad range of views within it.

              Labour is a centrist pro-capitalist party which is looking after the investment interests of asset owning property holders, and aspiring asset owning property holders, in a balanced and pragmatic way.

              Sure, you could run a glorious campaign to get 20%, but you wouldn’t win. And if you’re not interested in winning, despite a few compromises you may have to make to enact your agenda, then you shouldn’t be involved in a political party.

              Well, I don’t make compromises that I can’t stomach. As for your multiple complaints about The Standard – a previous commentator sometime ago put it best – we’re not here to make your job easier, sorry.

              • Jebus

                Mate I’m here as a Labour Party member who wants us to win. There’s a time and a place for sniping and this issue isn’t it.

                You’ve got Labour wrong too – it is focused on people on low incomes, it just also has to focus on those in the middle. That’s what you have to do when you aspire to win 40% of the vote.

                • Colonial Viper

                  You know the definition of hypocrisy, right? You say the party is tolerant of a “broad range of views within it” but then go ahead to characterise critical views on The Standard as “sniping” and “hilarious”.

                  While Labour has policies that it rightly believes would be better for 95% of New Zealanders than National, it can aspire to just 40% of the vote and is more likely to come in around the 35%-36% level (all going very well).

                  Then while acknowledging that housing in NZ is highly unaffordable (by around 75% in Auckland if you take a $300K home as being the “affordable” benchmark at a still ridiculous 7x the median full time working income), all you can promise is to try and hold the house price bubble “steady” so that a) Labour can still get the vote of middle NZ (aka the top quintile of earners) and b) with the light handed action of inflation and wage rises over years and years and years the “real prices” of housing will eventually drop to become affordable again.

                  And you think that this deserves a cheer as being brave and courageous policy which will make a real difference and are pissed off when you don’t get it. I’ll give it to you, it’s tonnes better than National Party policy (which is why I am campaigning for Labour), but it’s also about 1/4 of the way to what the country actually needs to sort out the housing crisis.

                  As an aside, none of this takes into account one whit the permanent and grinding economic slowdown the world is now trapped in due to resource and energy depletion.

                  You’ve got Labour wrong too – it is focused on people on low incomes, it just also has to focus on those in the middle. That’s what you have to do when you aspire to win 40% of the vote.

                  As a former candidate and democractic socialist I think I’ve got Labour about right. At a guess, 80% of New Zealanders earn less than $50,000 p.a. (the median income including beneficiaries/retired being around just $29K PA). Unless they happen to already own a home in a major centre, or are married to a strong earner, or have wealthy parents, they’ve got no chance of affording an Auckland home. And these people ARE middle New Zealand.

                  The people you are suggesting as being “those in the middle” (those earning more than $50K pa) are in reality the best off quintile of this country.

      • Stuart Munro 2.1.2

        I’m sorry but I’m not persuaded.

        Housing makes the largest dent in most NZ incomes – and not just in Auckland. It is therefore a good touchstone for cost of living in general – and I would suggest that those having difficulty making ends meet are constantly reminded of the fact.

        The precipitous decline in home ownership may be more stark in Auckland, but the coastal property boom in Southland for example, has closed what was once a property ladder for itinerant workers in agriculture and forestry and their families, making that career choice frankly untenable in many cases.

        That capital gains have become so inflated in Auckland that few can pay the rent that would support a property purchase is symptomatic of the privileged investment status of property – again a matter that many of those who cannot enter that bracket are acutely aware of.

        Savage got it right. Housing is a core issue, and it is a synecdoche for cost of living in general. And on that point, with our anomalously high dollar our wages are high by world standards already – it is our cost of living that has grown completely out of proportion to the market, and to international norms, that needs to be addressed.

        • Brendon Harre 2.1.2.1

          Bang on Stuart. Labour needs to go back to its roots. The first Labour government -Fraser would not have stood around and let workers be shafted by rich property owners…

          Watch Meteria take Key down in Parliament on the housing issue.
          http://www.interest.co.nz/news/70014/key-says-doesnt-accept-affordability-harder-first-home-buyers-now-when-he-bought-says-ple

          Housing is Key’s weak spot and it is not just about cost of living it is also about the process of borrowing to bid up unproductive assets -existing houses at the expense of productive investment in businesses, employment and sustainable growth. So it has links to the Kiwisaver reforms.

          Labour can make the whole campaign about housing -it becomes a touchstone for big picture changes to our whole society/economy.

          • David H 2.1.2.1.1

            And the other thing I notice is that Smith is always going on about all these sections that he’s going to open up in Auckland. My question to him is where, and how far out of town, are these magical sections? Oh and do they have any public transport? Or do you have to get up at 4 am to sit in a traffic jam?

            • Brendon Harre 2.1.2.1.1.1

              Yes David. I hope that Labour ties in new transport investment with their KiwiBuild proposal. I am expecting some big announcements in the election campaign proper. Savage built those first State homes next to the Wellington rail corridors. We could do the same in Auckland and Christchurch. So we have another ‘link’ -transport, as part of this ‘big picture’ housing change.

  3. geoff 3

    “What has the minimum wage got to do with the supposed housing crisis?”

    Really?! This has to be explained??

    The minimum wage, house prices, electricity prices, etc…it’s all linked to cost of living and I’m surprised anyone would be daft enough to question this.

    This country has become a place where it is unaffordable to live for many people, and issues like the housing crisis and low wages are a big part of the reason why.

    • lprent 3.1

      Sure, but unless you want to raise the minimum wage differentially throughout the country and make it massively higher in Auckland so families on minimum wages can buy houses there – then it is a message that is just irrelevant.

      But it has been a while since any one person or any family on minimum wages could buy a house in Auckland or probably in Christchurch – probably pre-80s.

      In Auckland it has been at least several decades since a house rental paid for a 80% mortgage cost of a house. When I got my apartment back in 1998, one of the things that amazed friends and family was that a rental on it did pay for the mortgage. Of course that was a one bedroom apartment..

      The biggest problem with a short supply of over priced and unaffordable housing isn’t in Dunedin or Gisbourne. It acute in Auckland because that is where the jobs are, and largely because of the earthquake – in Christchurch.

      • geoff 3.1.1

        On its own it is irrelevant but not if it is in conjunction with a state housing policy, which Labour has.
        The only problem i have with Labour on this one is that their kiwibuild policy doesn’t go far enough, if they adopted something more like the Green’s housing policy then they could really make a stand against National.

        • bad12 3.1.1.1

          The Green’s variable equity scheme would make housing affordable to even the minimum wage workers,

          The problem there is that this would have to be rationed, (balloted), as the States ability to build enough housing is limited and far outweighed by the numbers of minimum wage workers who would likely apply under the Green policy,

          Presumably in the after election negotiations Labour is going to let ‘an amount’ of its kiwibuild go to the Green policy…

          • David H 3.1.1.1.1

            But when they win and go into govt together, then they will be able to marry up the best bits of both bills.

            • bad12 3.1.1.1.1.1

              To a certain extent, with a But, the Labour policy is to build 100,000 affordable homes, 100-120 square meters and then on-sell them to qualifying people who can raise from a private bank the required mortgage, there is then a much smaller budgetary requirement to roll out the Labour plan,

              The criticism of this policy says that this is simply middle class welfare where the recipients once on the property ladder will simply continue on once they have equity in the home provided by the Labour policy to engage in climbing ‘the ladder’,

              The Green Party policy proposes building the homes and offering it to qualifying people based upon a variable rate of repayment which will require the Government to carry the debt from the build for a far longer period,

              Even setting aside my membership of the Green Party for the moment i would suggest that the Greens policy contains far more socialism than that proposed by Labour, even a minimum wage worker if allowed to enter a purchase agreement under the Green policy being able to pay down the mortgage as monies become available could eventually own their own home whereas i doubt that such minimum wage workers would in any way qualify with a private bank for the mortgage necessary to enter the Labour scheme,

              Obviously to progress its policy the Greens will have to negotiate from Labour a portion of the kiwibuld along with ‘a budget’ in a coalition negotiation…

              • Colonial Viper

                The problem there is that this would have to be rationed, (balloted), as the States ability to build enough housing is limited and far outweighed by the numbers of minimum wage workers who would likely apply under the Green policy,

                we have 150,000 unemployed people in this country. The nation could build 25,000 houses a year if it wanted to. (Although in many cases low rise apartments would probably be more suitable)

                • bad12

                  Totally agree with you CV, at present tho the major player on the left of the political spectrum, Labour??, has outlined no such plans,

                  Norm Kirk’s Government managed 24,000 all up as a record high year of building, some of this was State Houses with the majority of that build being provoked via the ability of recipients to cash up their future family benefits,

                  i am not totally against the idea of high rise builds, at some point in time Auckland in particular is going to have to bite the bullet on this very issue,(i would suggest for the elderly and singles high rise apartments might just become a must),

                  Wellington’s Dixon street flats,(HousingNZ), and Berserkly Dullard complex,(Wellington City Council at the foot of the Brooklyn Hill), are high rise apartments that have reasonably good ‘press’ here in Wellington),

                  Really in Auckland in particular with its growth projections a whole new city is needed and Central Government along with the Auckland Council need address where this will be and get on with building it now rather than sit on their hands,

                  The Chinese are able to knock one of these together, admittedly all high rises, to house 250,000 people in 3 years flat…

                • billy

                  How many of the 150,000 unemployed are builders capable of building houses? Or do we import builders to build 25000 houses p.a. from overseas which would stretch the already over stretched housing supply in Auckland? You aren’t making sense!!

                  • Colonial Viper

                    Try and think through problems in order to solve them mate, you’re not always going to have solutions delivered to you on a silver platter. This ain’t primary school, this is running a country, and running a country takes planning and foresight.

                    On the job training, mentoring and trade certification courses all come to mind, with a good dose of direct employment and building by government itself. Further you only need a few qualified master builders to build a street of houses, but they will need plenty of help, labourers and hammer hands of course.

                    And for the people who aren’t putting up framing and wiring up, there’s always plenty of jobs in logistics, planning, scheduling and the like.

                    • billy

                      “Further you only need a few qualified master builders to build a street of houses, but they will need plenty of help, labourers and hammer hands of course.” – if these labourers, hammer hands etc are available now amongst the 150,000 unemployed how come there is a shortage of builders, labourers & hammer hands in Auckland and Christchurch.

                      I agree that solutions are not delivered on a silver plate but making suggestions that are impossible is just as rediculous.

              • David H

                Well they both want to build. And they both want to on sell them to first home buyers. So really all they have to agree on, is the way of payment, interest rates, and the ability to lock it in with strong contracts. Just in case of a change of government does not start a run of mortgagee sales. Also they will have to stop the wholesale selling of our state houses. And they HAVE to build more of these as well. As for Green Membership don’t set it aside. As I find there is more in the Green policies that I like, than the Labour parties .

                • bad12

                  Lolz, Re: Green Party membership, have no plans to give that away, although my thinking this year IF the parties polling is still high at the election,(enough to bring into the Parliament Marama Davidson high), my thoughts are to try and boost the Mana Party…

                  • srylands

                    I think your thoughts should switch to boosting the ACT Party.

                    • bad12

                      i think your thoughts SSLands should switch to F-ing off over to the sewer where you obviously belong…

      • Jebus 3.1.2

        Problem with your argument is you’re focusing solely on housing affordability in Auckland. Housing crisis is much wider than that and lifting the minimum wage will have an impact.

        • Populuxe1 3.1.2.1

          It’s even more pressing in Christchurch, but here it is a matter of not having enough housing and rampant rent gouging

      • cricklewood 3.1.3

        The horse has well and truly bolted in Auckland. The rising prices here have played a part in dragging up prices in the regions.
        I dont think much can be done Auckland as far as I can tell. The city has reached critical mass sucking up immigration and jobs this has been exasperated by Christchurch effectively leaving only one functional large city.

        I doubt that increasing housing will work terribly well here as the geography means bigger travel times etc and we are a very long way from sorting that.

        Also demand for limited central property will continue unabated with minimal increase in supply pushing up prices further pushing middle classes into traditionally working class suburbs. Its a vicious cycle and I doubt it can be fixed.

  4. Jebus 4

    Actually the housing crisis is broader than just home ownership, and Labour has talked about this repeatedly.

    As well as home ownership there’s interest rates, the social housing stock, LVR restrictions, minimum standards for rental properties and of course high rents.

    Raising the minimum wage will help with affordability in rentals, and in regional NZ will help home ownership.

    This post is just an uninformed whinge – the sort that drags the left down while the right get on with the business of winning.

    • Enough is Enough 4.1

      What part do current interest rates play in the housing crisis?

      • Jebus 4.1.1

        Interest rates are currently very low, but our broken and outdated monetary policy means as the growing economy puts pressure on inflation the RBNZ is going to hike interest rates. Some economists have talked about them going as high as 9%. For Kiwi families leveraged to the hilt with low wages and huge mortgages from their overpriced purchase price this is going to make people’s lives very hard and could lead to mortgagee sales.

        • Enough is Enough 4.1.1.1

          We are talking about a current housing crisis though. So is it fair to say the current rates play no part in the crisis we are in?

          • lprent 4.1.1.1.1

            I’d say so. Our major centres have an extremely short supply of affordable housing close to work.

            Building hundreds or thousands of MacMansions on greenfields in the back of beyond of somewhere like Kumeu (like this government is pushing) isn’t going to touch it. You trade off a slightly lower mortgage or rental rate and add hundreds of dollars per week to transport costs.

            We need denser housing close to work centres and/or rail routes.

            • Enough is Enough 4.1.1.1.1.1

              Bang on. I agree.

              So mention of interest rates is again a bit silly in relation to the current crisis.

    • bad12 4.2

      ”Raising the minimum wage will help with affordability”, maybe maybe not, depending upon what the landlord of a private rental uses as the measurement by which She/He sets the rent,

      There are any number of ‘means’ by which rents in the private market are set, interests rates and inflation rates may have an effect, some landlords basing their rents on ‘ability to pay’ will know what earnings their tenants have and adjust their rents as wage rates go up,

      If there is no crisis within the rental market at this point and i am not in a position to judge Auckland’s market, there soon maybe one,

      Interest rates are set to rise further by at least 2%, Labour have said that they will be kneecapping the ability of those with private rentals to write off losses on rental property against taxes on other income, including wages, which in my opinion is a large part of the ‘rush’ into the rental market in the past 20 years with 200,000 former ‘homes’ now part of the multi-ownership rental market,

      The latter i would suggest, the ability to write off losses against ‘other income’ may have a huge effect on rental prices if it is indeed scrapped as David Parker recently intimated,

      This hidden subsidy if withdrawn will have landlords seeking to recoup the full cost of mortgages through the rent charged and may force many landlords to sell such property along with many tenants out of such properties…

  5. Enough is Enough 5

    Yeah I am concerned they may over-egg this as well.

    Some comments I have read here and other blogs suggest the price of housing needs to come down, and those commenters interpret Labour as advocating for that.

    The majority of current home owners do not want prices to drop or even flatten.

    We have to be careful how this is presented because a decrease is not desirable in any way shape or form. And if we advocate for that National will be all over it.

    • Jebus 5.1

      Again, amazed at the dangerous ignorance of supposed lefties on this site.

      Labour’s policy is not to drop house prices. It is to stop the massive increases in prices we’ve seen lately. It’s to build new affordable housing rather than McMansions. It’s to lower interest rates by letting the Reserve Bank divert savings to KiwiSaver instead. It’s to remove LVR restrictions for first home buyers. It’s to increase the state housing stock. It’s to require minimum standards for rental properties. It’s to make rents, deposits and mortgages easier to afford by lifting wages across the board, including the minimum wage. Because ultimately that’s how you fix it – you make the ratio of incomes to mortgages and rents more reasonable.

      Which, when you think about it, reinforces how ill-informed and counterproductive this post is.

      • Enough is Enough 5.1.1

        Did you just call me ignorant?

        • Colonial Viper 5.1.1.1

          Must’ve been a keen student of “how to win friends and influence people” I reckon.

      • Colonial Viper 5.1.2

        Again, amazed at the dangerous ignorance of supposed lefties on this site.

        Labour’s policy is not to drop house prices. It is to stop the massive increases in prices we’ve seen lately. It’s to build new affordable housing rather than McMansions.

        Hmmmm, so Labour wants to keep house prices steady at current massively inflated highs, not drop them.

        And we’ve already seen Labour’s idea of affordable Auckland housing at around the $400K- $500K mark.

        Your McMansions comment is well off beam though – a crappy small deteriorating house in Auckland easily costs half a million dollars, and no one has been talking about McMansion style housing for the poor.

        • Jebus 5.1.2.1

          Labour lives in the real world where it has to get elected. And in the real world telling voters you’re going to put them into negative equity on their home is a sure ticket to electoral oblivion. You tell me with a straight face that it’s not.

          So, what you do is you keep average house prices steady, you create more affordable homes so that first home buyers can get into the market, and you lift wages to close the ratio between incomes and house prices.

          And the reality is that with a mix of inflation and static prices, real prices will drop. This way you correct the market without making yourself unelectable for a generation.

          The McMansions comment refers to the Nat’s preferred housing developments. They don’t target affordable housing, they just open up land for developers to build McMansions in the exurbs, which doesn’t help first home buyers.

          • Colonial Viper 5.1.2.1.1

            Labour lives in the real world where it has to get elected. And in the real world telling voters you’re going to put them into negative equity on their home is a sure ticket to electoral oblivion. You tell me with a straight face that it’s not.

            We’ve already seen in the USA with the subprime mortgage crisis where the end point of this thinking goes.

            You cannot hold a financial bubble in a steady state, in some kind of happily stable suspended animation.

            They have to keep growing and increasing or they collapse. For housing the reason is that the asset price bubble is based on massive debt levels not high incomes. The moment that banks cannot see ongoing increases in the price of the underlying asset they will tighten mortgage availability. And the credit crunch will cause a price collapse, slowly at first, then very fast as all the speculators head for the doors.

            • Jebus 5.1.2.1.1.1

              It would be insanity for Labour to campaign on dropping average house prices, you know that. Yes, house prices are overvalued, but there’s no glory in having a purist policy solution that makes you unelectable. That doesn’t help anyone.

              What Labour can campaign on is stabilising house prices and making sure there are enough affordable homes at the low end of the market so people can afford to get a foot in the door. That’s what KiwiBuild is. Other policies address other parts of the housing crisis, though you wouldn’t know it from this post.

              • Colonial Viper

                Oh I know that it’s political suicide to say that you’re going to significantly drop housing prices (even though that is exactly what is needed).

                But you didn’t address my point – you can’t keep a financial asset bubble in a steady state. It either has to keep expanding, or it collapses. There is no stable levitation mode you can enact on a market in a debt fuelled bubble expansion.

          • Tracey 5.1.2.1.2

            do you think they should lie and mislead too, if it means winning?

        • lprent 5.1.2.2

          Problem is that National and the Auckland City Councils developments to date have averaged less than 10% of what could be termed “affordable” housing. Most of those are in developments that are so far in transport terms from workplaces that they are in effect unaffordable to anyone on a minimum wage.

          Nett effect. They aren’t going to do squat to the low end of housing prices.

  6. Jebus 6

    Re Geoff’s point, it’s also worth noting that lifting the minimum wage pushes up the wages of people slightly above the minimum wage too. So if you’re on $18 an hour you’ll likely benefit from a minimum wage rise to $15 an hour.

    • lprent 6.1

      It makes no difference if there isn’t a excess of supply of affordable housing. If there is one thing that the accommodation supplement proved in Auckland it was that increasing the “wages” in the absence of a active building programme just pushed up the rentals (to closer to the true cost).

  7. Ad 7

    Disagree strongly.

    Couple of points. Those undecideds or wavering are likely to be middle class with either one house, or middle class who are aspirant for their first home. Check every second programme on tv: it’s about home renovation and gardening. And the rest of them are about cooking in a flash kitchen. As they say in The Castle “It’s in the vibe.”

    Go back to how Ronald Reagan won his first presidential campaign. He had been immersed in the real estate politics of L.A. and California. He understood the effect of seeking to control interest rates and hence the capacity to secure a mortgage. And he did it by linking almost every policy he could think of to one positive message: “It’s morning in America.” It’s all detailed in “The Boiling Point”. One third of New Zealand’s voters live in Auckland, and housing is the absolute obsession.

    Secondly the Key government is weak on housing and they know it. They can explain that it was worse under Helen, and all their policies are making traction – but explaining is losing. This government is weak on almost nothing else according to the polls that have been consistenet for about 5 years now.

    Third, housing is about the vision. Minimum wage campaigns, in a marketing sense, are utterly negative campaigns because all it seeks is a slightly higher floor if you have no other employment option. Housing represents the opposite: a positive vision about aspiration, and how Labour can get us all there.

    Finally, almost no vote will change as a result of the minimum wage. It’s targeted at mobilisation of the likely to actually get out there and vote.

    With merely 16 weeks to go to election day, and only 12 weeks until voting begins, this is the theme.
    The game is set, it’s our best shot, there’s no changing it.

    • Ergo Robertina 7.1

      While I don’t agree with your premise – that Labour must harness the ‘aspirational’ (whatever that actually means – who doesn’t want to do better in life?) – the marketing/political narratives you favour still need to make some sense. Linking a rise in the minimum wage to solving the housing crisis is obviously nonsensical, because no-one on that wage is anywhere near affording a house in most NZ cities. Connecting the two looks out of touch and glib.

      • Jebus 7.1.1

        Housing is a complex beast. Labour’s talks most days about first home buyers, LVRs and interest rates. They also talk about minimum standards for rentals and the ability for people to afford decent accommodation.

        Do you not agree that rental affordability is part of the housing crisis? And surely if it is, then low wages are a factor?

        Makes me wonder how elitist and out of touch some of the supposed lefties on this site are.

        • Ergo Robertina 7.1.1.1

          How does paying workers more so they can afford excessively high rents that prop up a bubble solve the housing crisis? This is not an argument against the minimum wage going up, it should be higher – but enabling renters to pay rent sufficient to feed investor greed is not going to solve a structural economic problem.

          • Colonial Viper 7.1.1.1.1

            The last thing the political class want to do is to pop the property price bubble. Too many middle class NZers have their wealth predicated on that you see. So Labour’s strategy appears to commit to keeping the asset price bubble steady and stable*, but not pushing it up any further.

            *By definition, this is a failed strategy from the start, highly inflated financial bubbles cannot be held in a steady state. You have to actively keep blowing air into them to expand or they will collapse.

            • Ad 7.1.1.1.1.1

              Agree.
              Win the banks and you win their analysts, and with them you win the vital financial commentariat.

              (Not sure if anyone here was at John Key’s Sky City lunch last week, but the amount of preparation Deloittes had done in their printed material shows that they had had the budget highlights many days before Budget launch. Made for yet another element in a compelling and slick show).

            • geoff 7.1.1.1.1.2

              So what would you do if you were Labour, CV?

          • Jebus 7.1.1.1.2

            You could make the same argument about any good or service.

            “How does paying workers more so they can afford excessively high food prices that prop up the supermarket duopoly solve the cost of living crisis?”

            Rents are a function of supply and demand. Lifting wages won’t lift rents, except perhaps at the margins, but it will make rents more affordable. That’s a good and noble goal that seems to have been lost on The Standard, which once upon a time stood up for the vulnerable and the disadvantaged.

            • Ergo Robertina 7.1.1.1.2.1

              ‘You could make the same argument about any good or service.’

              Like John Key, your argument’s based on the false premise that there is no housing affordability crisis.

              • Jebus

                No I agree there’s a crisis. I’m just pointing out the flaw in your logic against a rise in the minimum wage making rents more affordable.

                • Ergo Robertina

                  You haven’t followed the argument; making rents ‘more affordable’ does not solve the housing crisis, it further inflates the debt bubble.
                  Just this week we have the property investors’ federation calling for them to go higher.

                  • Jebus

                    The housing crisis is multi-faceted, which is why we need to attack it from lots of angles. One of those is lifting incomes, including at the bottom.

            • Populuxe1 7.1.1.1.2.2

              What people seem to be forgetting is the higher the wages are at the lower limit, the more disposable “fuck off” money people have means there is considerable more flexibility in being able to afford transport and live further out of the main centres, more spare cash to do up otherwise less than desirable buildings, and therefore more competition in the rental market thus lowering rents or forcing landlords to up the ante on the quality of their rentals.

          • bad12 7.1.1.1.3

            Agree with Ergo Robertina’s point here, should Labour have a blinding flash of light,(yes attempted joke), and propose to build in ”the unaffordable cities” 100,000 State houses for minimum wage workers,(firstly), and for those just above that minimum then all the stones would in effect have bee killed with the one bird,

            There are two ingredients the current private landlords need in this country to succeed, (1) being the tenants, and (2), being subsidies from the State, preferably hidden subsidies at that, which in the form of the accommodation subsidy, which looks to be a payment to the tenant but in reality the tenant is simply an agent of transference, and, the ability for landlords to write off losses on rental property against other taxable income,

            Taking out the tenants by the provision of State housing simply short circuits the whole process above, remove the tenants from private landlords and there is no reason for them to own rental property, there is then no need for the State to be paying out subsidies to private landlords,

            The other point to note here is that coupled with the full amount of the accommodation subsidy along with the ability to write off losses on the rental property against other taxable income the landlords are creaming it to an extent that in real dollar terms the Government is paying out more on each of these properties, in places like Auckland and Christchurch, than the total cost of the subsidy paid to HousingNZ for each tenant housed,

            For all this subsidy paid the tenant gains little, most paying well above the 25% of income that HousingNZ are paid…

      • Ad 7.1.2

        “Out of touch and glib” to you is “aspirational” to others.

        It doesn’t have to make rational sense – it just has to be believed.
        Welcome to political marketing.

        • Ergo Robertina 7.1.2.1

          My point is that the dreaded ‘aspirational’ Reaganite framing you are intent on is actually not achieved by linking the debt bubble crisis to the minimum wage. Smart political marketing it ain’t.

    • Colonial Viper 7.2

      Go back to how Ronald Reagan won his first presidential campaign. He had been immersed in the real estate politics of L.A. and California. He understood the effect of seeking to control interest rates and hence the capacity to secure a mortgage. And he did it by linking almost every policy he could think of to one positive message: “It’s morning in America.” It’s all detailed in “The Boiling Point”.

      Reagan and Clinton’s housing affordability policies, which had the joint political effect of getting them voted in and pandering to the finance/banking sector who knew that they would make windfall profits, eventually led to the sub-prime mortgage collapse which set off the GFC and the destruction of government backed Fannie Mae and Freddy Mac.

      So the US starts down a stupid path and here in NZ we follow them, just 20 years later? What’s next, making houses more affordable by approving 0% deposit mortgages? That’s eventually where this kind of thinking got them, in the USA.

      One third of New Zealand’s voters live in Auckland, and housing is the absolute obsession.

      There’s no doubt that NZ elections are won and lost in Auckland. To be more specific, in South Auckland. Perhaps if the rest of the country seceded from that city the rest of us would get more attention from the political class.

      Minimum wage campaigns, in a marketing sense, are utterly negative campaigns because all it seeks is a slightly higher floor if you have no other employment option. Housing represents the opposite: a positive vision about aspiration, and how Labour can get us all there.

      OK, so advocating for beneficiaries and raising benefit levels are in this framing, a no-no as they would be negative campaigns as well. While the positive aspiration about housing is, let’s be realistic, all around picking up a multi-hundred thousand dollar Auckland mortgage from a big Australian bank. The CEOs of Westpac, ANZ, etc. thank you.

      I know there’s not much time left to the election, but there’s something quite wrong here.

      • Ad 7.2.1

        Ideally keeping those bankers sufficiently happy means they at least donate equally, rather than just loading up the Tories’s guns. This ain’t tiddleywinks, the man said.

        Honey I’m not saying I like it. But that’s precisely what I’m saying.

        • Colonial Viper 7.2.1.1

          Well yeah, the last thing the country needs in its current set up is a financial capital strike, and nowadays international financiers have no problems organising one of those in 48 hours or less…

  8. Will@Welly 8

    We have a crisis. It’s not just a housing crisis – it’s affordability, it’s jobs, it’s wages, it’s dignity, and self-respect.
    Don’t attack the messenger. The girls and boys in the backroom need to get their act together, tighten their message, and then David and co to sell it.

  9. geoff 9

    “At the risk of sounding elitist, are people currently earning minimum wage really likely to be even close to getting into the Auckland, Christchurch or Wellington housing markets?”

    At the risk of sounding equitable, yes they fucking well should be able to afford to own their own home!

    Considering how poorly paid most NZ workers are (median wage is under $40,000 per annum) then minimum wage workers should be able to save enough for a deposit and buy a house.

    That is basically impossible in New Zealand right now, even outside Auckland.

    You try saving for a deposit on a ‘cheap’ $200,000 house on the minimum wage.

    And the situation gets worse by the day, all because of National’s anti-worker policies.

    • Colonial Viper 9.1

      And the situation gets worse by the day, all because of National’s anti-worker policies.

      Sure, but no one on the minimum wage was ever going to be able to afford a house in Auckland in 2006 or 2007 either.

      • Jebus 9.1.1

        It’s not just about home ownership and it’s not just about Auckland. People can’t afford to even pay their rents at the moment. That is a crisis. Get out of your ivory tower.

      • geoff 9.1.2

        So now you’re stealing John Key’s lines??

        How is that relevant to this discussion?

        Yes, we know house prices went up massively during the Helen clark government. Yes we know enough wasn’t done by that government to address the situation.

        But how exactly does banging on about that now help figure out the present conundrum?

    • lprent 9.2

      You try saving for a deposit on a ‘cheap’ $200,000 house on the minimum wage.

      So it makes sense to people outside of Auckland, Christchurch, and the Wellington areas – ie a smaller bit of the population. But they don’t have a major problem with the supply of affordable housing.

      It costs about $200k to get a one bedroom apartment through most of Auckland – at the low end. Anywhere within 10k’s or the CBD it costs more than $300k.

      Sure there are places like Northland where the quality of the housing sucks. But there are actually houses to buy there in the range of a minimum wage if you get manage to scrape a deposit together (usually with family)

      After a sustained build of more high density low cost housing in the main urban centres that has been lacking for decades, it may get interesting there as well.

      In the meantime it provides a untargeted mixed message to the bulk of the voters.

      BTW: It freaked me out how easy it was to buy a house in Invercargill on a minimal income. When I want to give up working…

      • Jebus 9.2.1

        Lynn, you don’t seem to get it. The housing crisis isn’t just about home ownership, and it isn’t just about Auckland. Lifting wages will help people better afford rental accommodation and will help people into housing. Maybe not a single income family in Auckland, but a hell of a lot of others.

        I don’t see how it’s ‘mixed messaging’ to draw this link, among the hundreds of other messages Labour comes out with on housing every week. This really is all very silly.

        • lprent 9.2.1.1

          Yes, but that is a separate issue.

          If you have say a maximum of 10% of the population that raising the minimum wage will help with the housing – ie outside the main centres, and easily 60% of the population who would be helped by increasing the supply of affordable housing, then why would you want to mix the messages up.

          What it sounds like is that Labour wants to fix the housing crisis in Auckland (~35% of the population) by raising the minimum wage. The immediate response from damn near every Aucklander I know would be something like “What a pile of useless fuckwits – it won’t do a damn thing”. I’d imagine that for differing reasons the same would be heard in ChCh.

          Think beyond your own needs and consider what it takes to get a government to attack all three issues.

          Sure there is some integration between them. But it is different solutions for different areas. If you can’t use the same co-joined message across the country without pissing one side or another, then don’t couple them.

          Minimum wages is about living costs. It has nothing to do with fixing the under supply issues of housing in the areas where it is acute.

          • geoff 9.2.1.1.1

            This is starting to get into splitting hairs territory, i feel.

            If Labour has a wider goal of demonstrating to voters how 30 years neoliberal policy has created the conditions of low wages, under supply of housing, etc then tying these messages together is fair enough, in my opinion. And my impression is that they are trying to demonstrate that to voters.

            • lprent 9.2.1.1.1.1

              If Labour has a wider goal of demonstrating to voters how 30 years neoliberal policy has created the conditions…..

              Yes, but that is a message and a debate that many in and around Labour are still not really that willing to have with the electorate.

              Now personally I think that a lot of the liberalisation of the NZ economy was required. Mostly because I was looking at the disaster of trying to run businesses in the Muldoon era when the entire economy was still geared towards selling commodity products to a “mother country” that didn’t want to need them.

              I don’t particularly like how far the change went in terms of destroying equality of opportunity in various forms from jobs to education to housing. But I can’t deny that it has allowed our economy and people to grow from largely being a population of hapless pseudo-welfare recipients of the income of farmers (like National is pressing for yet again).

              But if you’re pushing for a set of solutions for particular problems, then I think it is wise to focus on those – unless you want the larger scale debate. Even then I suspect it is better to have that debate long before an election crunch. I don’t think that it flies that well then unless the ground has been prepared years before. I don’t sense that it has.

              • geoff

                You may be right but I suppose we will find out over the next few months.

                Also, just to clarify, I don’t equate trade liberalisation with neoliberalism.
                I think trade liberalisation could, in theory, be done well but neoliberalism to my mind is just propaganda for a power grab. We may well have been pseudo-welfare recipients of the income of farmers in the past but now we are pseudo-welfare recipients of rentiers.

                • karol

                  Reminds me, it is worth listening to Rob Salmond on The Panel today – it’d be Part Two because I was listening to it while doing a stint on the exercise machine – which I started doing at about 4.40pm.

                  The crucial bit was probably fairly close to 5pm. Probably the hosuing bit. Salmond talked about having looked closely at the Treasury papers that English’s latest budget drew on. Basically they pretty much show what Piketty claims in his book – that in future in NZ, the wealth gap will increase in the next few years, due to the speculative, investment in housing focus of our economy. Salmond reckons this has actually been predicted for NZ by the Treasury.

                  It followed a bit about Suriowecki on housing – who claimed that overseas people are buying up properties in places like Vancouver, as a bolt hole to go to if the climate collapses.

                  • geoff

                    Thanks for the link.

                    It will be interesting to see how the Piketty memes play out over the next few years.

                  • miravox

                    “the wealth gap will increase in the next few years, due to the speculative, investment in housing focus of our economy”

                    I thought this Simon Jenkin’s short opinion piece links the complexities of housing, national crises, development and inequality quite reasonably.

                  • Colonial Viper

                    It followed a bit about Suriowecki on housing – who claimed that overseas people are buying up properties in places like Vancouver, as a bolt hole to go to if the climate collapses.

                    These rich-ish type people are being really stupid…unless you live there and have been part of the local community for years, trying to live in such a “bolt hole” gives you no advantages. Especially when locals start asking “hey, why did they dislike you so much in your home town that you had to do a runner?”

    • Populuxe1 9.3

      ” yes they fucking well should be able to afford to own their own home!”
      Yeah, nah. Stop clinging to the fantasies of the previous century. What we really need is things like rent control and long term leases.

      • geoff 9.3.1

        whatevs, it’s all the same thing as far as I’m concerned. At heart it’s about people having control over a really important and basic thing, which is to have a roof over their head which can’t be taken away by some greedy fucker.

  10. Almost there 10

    Raising the minimum wage will be inflationary, which will be controlled by a rise in interest rates – making housing less affordable. Or, an increase in Kiwisaver contributions to control interest rates will negate the rise in minimum wage.

    Failed policy in relation to helping low earners into a house.

  11. Herodotus 11

    “Minimum wages is about living costs. It has nothing to do with fixing the under supply issues of housing in the areas where it is acute.”
    Great summary of why wage levels are so important. Unfortunately with no comment coming from Labour as to how WFF would be adjusted to take into consideration of increased wages and how under the current position WFF payments would be reduced. Otherwise IMO families will see little if any change to their disposable income levels, whilst students and the youth will benefit.

  12. Mr Oh Well 12

    Jebus, I like your point

    “What Labour can campaign on is stabilising house prices and making sure there are enough affordable homes at the low end of the market so people can afford to get a foot in the door. That’s what Kiwi Build is.”

    I was wondering how Labour could get low cost loans + cheap housing + not reduce the price of existing housing stock (i.e. alienate potential swing voters). They need to hammer this message home.

    Not too sure how it effects landlords, they wont be too happy. See below, how the hell do you deal with that?????? Anyone.

    http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports/quickstats-about-housing/households-who-rent.aspx

    In 2013, 453,135 households rented their home (ie paid rent), up from 388,275 in 2006.
    Like households overall, households who rented their home were most likely to be one-family households (63.3 percent) or one-person households (23.5 percent).

    Oh Well, Id like to know the proportion allocated to individuals. How do you get around this. What proportion of the voting base own rentals?

    Solutions are out there, we have the land, resources, technology, people etc, there is no excuse except false economics. What a tragic way to run an economy, rentals…. how unimaginative, its a bit like selling Assets (a welfare state for the wealthy)

    From Thomas Spence, his quote:
    Ye landlords vile, whose man’s peace mar,
    Come levy rents here if you can;
    Your stewards and lawyers I defy,
    And live with all the rights of man.

    Also I think we have reached a tipping point in our society, from what I can gather from

    “The Spirit Level: Why More Equal Societies Almost Always Do Better“ Kate Pickett and Richard Wilkinson”

    NZ is down their with USA in not caring about inequality…. YUK Just hearing on RNZ the youth are becoming more Narcissistic….. Dog eat dog…..A Keys society.

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