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On the edge of a second recession, Greens have a plan, Nats don’t

Written By: - Date published: 10:31 am, September 3rd, 2010 - 53 comments
Categories: Economy, housing, jobs - Tags:

A year ago, commercial building consents fell off a cliff as firms cut investment because of the recession. Now, that’s flowing into a big slow-down in the construction industry. NZIER says 20,000 jobs are at risk.

The latest NZIER quarterly predictions slashed growth forecast for the next year in half. They have GDP growth slowing to below population growth, a quarter of negative growth, and the economy missing a second dip into recession by a hair’s breadth. I reckon NZIER is being too optimistic, simply because these predictions tend to respond to events only slowly.

A construction collapse could be the tipping point for the faltering economy, if it doesn’t come from overseas first (big economists abroad are saying there’s a one-in-three chance of another global recession starting this year).

So, 20,000 more jobs at risk and healthy odds of another recession when we’re still a long way off recovering from the previous one.

What’s the government doing?

Well, Rodney Hide – fresh from stuffing up Auckland – has decided to make reforming dog control laws his last big achievement before he gets kicked out of Parliament next year. Peter Dunne is spending his time on child support. Tariana Turia is still pretending that Whanau Ora isn’t a joke that’s already months behind schedule. Kate Wilkinson is cutting our work rights. Bill English is handing over hundreds of millions to the rich (again). Anne Tolley is trying to piss off everyone in the education sector. Paula Bennett is making life harder for beneficiaries while cutting job creation programs. Tony Ryall is busily playing statistical games to make himself look good. Nick Smith is using the RMA reforms to sidestep public opposition to National’s Roads of National Significance. John Key is bouncing from cloud to cloud collecting autographs from foreign leaders. And the rest, who knows?

The Greens, at least, have a plan. It’s a lot like what we’re been talking about on The Standard.

There’s a shortage of quality housing in New Zealand, there’s a lot of construction workers about to lose their jobs, and there’s a hell of a lot of low quality government spending into motorways whose economic benefits barely outweigh the costs about to take place. The obvious solution: divert a chunk of that white elephant motorway spending to state housing construction (divert some more to public transport projects with decent benefit/cost ratios, and more to early childhood education with its 13:1 BCR).

The Greens reckon that building 6,000 extra state houses at a cost of $2 billion would create 28,000 jobs and provide about 20,000 New Zealanders with healthy, environmentally-friendly modern housing.

That’s the kind of visionary economic leadership we need. We’re not going to get it from National.

53 comments on “On the edge of a second recession, Greens have a plan, Nats don’t ”

  1. B 1

    An even more effective, immediate and urgent way of addressing these issues would be large scale leaky building repairs. They make up a significant proportion of housing stock, Most continue to deteriorate and many are uninhabitable. The lack of progress on a major repair programme must be paralysing investment decisions on housing throughout the economy. Such a programme would easily employ the 20,000 and it has to be done sometime.

  2. dunedin-dave 2

    And we’re not going to get it from Labour either.

    I will vote for the Greens once again, despite personally standing in strong disagreement with some of their core policies, as they appear to be the only viable party in New Zealand who is pushing progressive politics. The two major parties are largely led by cavemen.

    The Greens were the only party to comprise and publicise an alternative budget that wasn’t either malignant (ACT / Sir Roger) or just plain ridiculous (Libs).

    I don’t even think Labour bothered? (Please correct me if I am wrong).

    The Greens, as usual, are the only ones with a sensible plan forward. It’s a pity they’re all hippys, maoris and crusading dykes, who want to tell us all what light bulbs we’re allowed to use and whether or not we’re allowed to beat our kids, right?

    Enjoy the double-dip, Key will play the fiddle while watching the country burn, and Goff will stand with his hands in his pockets looking the other way.

    • BLiP 2.1

      Yeah, me too. Having had no fun trolling for NZF, I am to have to come out and just get over myself about the MoU to get back on board with the only party that not only has the best policies but also has risen above much of the bullshit that passes for politics in New Zealand.

  3. Mac1 3

    Yes, the kind of visionary programme that happened in New Zealand in the Thirties, after that Depression.

    That built the type of house that John Key lived in.

    That was espoused in a rousing address that I heard John A Lee deliver in Room D at Canterbury University in the late Sixties.

    That is an old vision, but still valid today.

    Anti-spam ‘doors’: build them to open them. Lovely.

  4. I don’t think this is fair Marty. The nats have a few plans:

    1. Hang onto power
    2. Give tax cuts to their mates in the hope that this will miraculously make things better and so their mates will continue to support them in goal 1.
    3. Cut essential services so they can achieve 2.

    • Pascal's bookie 4.1

      You forgot the most important part: cheap labour

      • david civil servant 4.1.1

        They have cheap labour mate, you and your mates.

        • BLiP 4.1.1.1

          david (the note very) civil servant.

        • Pascal's bookie 4.1.1.2

          They have cheap labour mate, you and your mates.

          Fucking idiot. If you are going to try and throw a bomb at someone, it pays not to tie it to your dick.

          Tories hate it when anyone points out that they only actually have two policies.

          ‘Cut taxes’ and ‘lower labour costs’.

          And of those two, only the latter is a real one. The tax cutting part is something they never really manage to pay for beyond a few measly points. Instead they end up cranking up deficits and running down services The deficits have to be repaid, and the voters demand that the services get restored even at the cost of a tax increase. So while they may make a sizable short term cut sometimes, though this lot haven’t even managed that, it’s pretty much an obvious’ sucker the rubes and bugger the kids’ bet.

          Everything else is about lowering wage pressure or transferring externalities onto wage earners, which amounts to the same thing. If you vote for the right you are either in the top 5 percent of wealth owners, or a sucker.

          Cheap labour tories don’t like subsidised health or education because they like wage earners to be over a barrel and desperate for cash.

          Cheap labour tories make sure that investments get equal protection in FTAs but labour doesn’t, because the point of FTA’s to cheap labour tories is to access cheaper labour.

          Cheap labour tories don’t like sex ed and reproductive health because they like workers to have as little flexibility and as many commitments as possible. Getting them having kids young is just made of win for that.

          Cheap labour tories wank on about after tax wage growth because it lets them give a small nominal increase that they pay for by cutting govt services, which increases the pressure on wage packets, and it doesn’t cost the employer a cent. Sweet.

          Cheap labour tories wank on about productivity because it’s such a slippery measure, and one of the main ways it’s measured is by the cost of labour.

          Cheap labour tories pretend to hate identity politics because it’s useful to have the majority of their workforce shitting on various minorities of it.

          Cheap labour tories love identity politics because it’s very important that people just have the right attitude don’t you know. That’s what makes you successful.

          Cheap labour tories like vocational based education because they’d be stupid if they didn’t. They like it even more when the workers pay for their own training.

          Cheap labour tories think broader education, isn’t. They say if it’s not commercial, it’s not real.

          Cheap labour tories don’t like organised labour because they are cheap labour tories.

          Cheap labour tories like govts with fists.

          Cheap labour tories go on about big govt liberals because they understand propaganda.

          etc, and so on, and so forth.

  5. KJT 5

    Extend the insulation scheme to all housing. Also solar water heating.
    Don’t pick and chose installers though as many have been padding prices. Let any one do it subject to an inspection.

    • Rob 5.1

      KJT, you might be aware of the rorting that happened in Aus exactly due to a free and easy installer model for Au Govt grants for insulation. As a key part of their stimulous package it was abject failure and there is major recriminations, although it did sell tonnes of insulation which kept those major businesses pretty happy for a short period of time.

      • KJT 5.1.1

        Yeah I knew about that. The same thing has happened here. The unsubsidised quote before the scheme came in was the same as the quote afterward. Trouble was they picked and chose installers which meant the licensed installers had a bonanza and the ones who did not get licenses went broke.

        As builders we were capable of doing insulation too, but were not allowed to participate in the scheme.

  6. Bored 6

    At least somebody is showing some vision, well done Greens. Personally I think that the whole housing plan should be placed into a broader context of transforming our urban environments into “post oil age” communities with sustainability and self supportability built in (like community gardens, shared workshops etc) as the primary focus. However one step at a time, well done Greens.

    capcha: develop

  7. rich 7

    The NZ people now own, courtesy of SCF, a large number of failed property developments.

    It’d make sense to finish these and rent them out as housing, thus turning a dead loss into an asset.

    Changing the law to get recourse to the full assets of property dealers who got cheap loans from their finance company mates would also be an idea. It might even be possible for the Proceeds of Crime act to be used for this, but suspect that’s only for working class criminals.

  8. Armchair Critic 8

    Last month Rob Mercer of Forsyth Barr flagged this particular aspect of the failure of National’s, when he said:
    The outlook for New Zealand commercial construction activity has softened heading into 2011, placing Fletcher’s earnings for 2011 under pressure. Fletcher now relies on a solid recovery in residential building activity to help offset the anticipated shortfall in near-term major construction projects.
    Johnathon Ling, CEO of Fletcher Construction, confirmed it a couple of days later. When Fletcher’s Annual Report was released, he said:
    New Zealand’s residential market is “expected to continue a slow and gradual recovery in new building activity, albeit remaining below mid-cycle levels” with the central bank raising interest rates likely to constrain growth in new housing starts, the company said. At the same, commercial construction activity “is expected to remain at very low levels throughout 2011″ with a decreased volume of government-funded work.” (My emphasis).
    Back in December 2009 Fletcher’s acknowledged that government funded projects are essential to their continuing business
    increased [Government] spending on infrastructure are expected to continue at a similar rate in the short to medium term in both markets, and this is helping to underpin volumes and operating results.
    and that Fletchers, like many companies involved in infrastructure, are relying on projects coming on stream in a timely fashion
    The Infrastructure division will continue to benefit from publicly-funded construction work in New Zealand, although the timing of large projects will impact results in the second half.” (emphasis added)
    Six months later the outlook is even worse.
    •Commercial construction activity expected to remain at very low levels.
    •Infrastructure spending likely to dip in 2011 before growing in 2012.

    Overall, National have not supported infrastructure investment. Sure, they have talked about it, but their pet projects are not economically viable, and not ready to be built. A number of large projects will be completed in the next six months or so, but there are many fewer projects available to move on to. National have stuffed up, big time.
    What’s worse is that many of National’s policies and new legislation are stifling investment in infrastructure by others.

    • Zaphod Beeblebrox 8.1

      What policies? they don’t have any. Their housing policy revolves around hoping changes to the RMA will miraculously stimulate residential construction and their urban development policy appears to revolve around removing all restrictions to Metropolitan Limits which takes away any capacity they might have had to promote urban development.

      They spent nine years in opposition, then when they got into government had no idea what to do. Now belatedly they are trying to outsource policy suggestions to a series of working parties whose suggestions they immediately start hosing down.

      Spending cuts are not an economic plan.

    • BLiP 8.2

      “The Infrastructure division will continue to benefit from publicly-funded construction work in New Zealand, although the timing of large projects will impact results in the second half.” (emphasis added)

      What’s being discussed here is the fact that several major projects have been delayed so as to minimise disruption during the World Cup. We only have the word of the boardroom pirates that this is a temporary situation.

      Overall, Fletchers is not looking as rock-solid over the short/medium term as it did, say, a few years ago. Its taking a bath on its ill-advised purchase of the US-based Formica outfit and this is only going to get worse as the US housing market continues to disintegrate.

      • Armchair Critic 8.2.1

        We only have the word of the boardroom pirates that this is a temporary situation.
        It’s not temporary, the projects aren’t coming through fast enough to take up the capacity becoming available as current projects end. Even the boardroom privates know this.

  9. Lanthanide 9

    One thing I’ve noticed in the media that I’ve found interesting, normally from ‘person on the street’ interviews but also occasionally commentators talking about it. People keep referring to the economy as if we are STILL in a recession. This is particular evident for American media, where the government numbers show they’re out of recession but the feeling on the ground is very different.

    There seems to be a disconnect between the official stats and what people think is really going on.

    • Vicky32 9.1

      Hey, I’ll know we’re out of a recession when I have a job! So, we’re still in a recession – I saw someone make a comment on a thread here the other day that it’s “worse than the usual cyclical one”. Why, I ask, do we put up with a system that has “usual” cyclical recessions as a norm?

    • Draco T Bastard 9.2

      The official stats show the rich getting richer. People on the street know that they’re getting poorer especially the unemployed.

  10. Bob the Builder 10

    Sounds nice but there is a practical flaw:

    Commercial construction and residential construction are nowhere near related in method or skill type. The closest you’ll get, if you force construction workers into residential, is cold leaky monstrosities, like the projects in USA. That’s not a slur on construction workers, but just a reflection that the two areas use different approaches. Green, energy efficient housing won’t be possible.

    • Rob 10.1

      Yeah, but lets not let sense and practical reality guide any of the discussion here. I am sure a tilt slab , re- bar constrution worker would have excellent transferable skills prettying up boundary fences for community housing.

    • outofbed 10.2

      I;m not sure that i totally agree we that having had experience in both
      And as residential construction is under a very tight regulatory and inspection regime . It is exceedingly unlikely that you will get “cold leaky monstrosities “. if you did it would be the oversight that was lacking not the construction workers skill level

      • Draco T Bastard 10.2.1

        And as residential construction is under a very tight regulatory and inspection regime . It is exceedingly unlikely that you will get “cold leaky monstrosities “

        Don’t kid yourself. A number of those regulatory practices are making things worse (using foam to seal around windows) and several popular building materials just shouldn’t be used at all as they don’t comply with the building code. One product is guaranteed for 10 years but states that the manufacturers code must be used and not the stronger council code. The reason why is because that particular product (outer cladding BTW) absorbs and holds water and so the manufacturer requires that no nails are exposed to the elements as they would break the water seal so no lower nails but the regulation requires the lower nails to help keep it place. This product is used extensively on modern buildings and the only way to get code compliance is by using the councils code which breaks said water seal and essentially sets the building up to fail and with no come back on the manufacturer. Of course, using the manufacturers code also sets the building up to fail but in a more spectacular way.

        • outofbed 10.2.1.1

          (using foam to seal around windows) Bum! better move to OZ

          • Draco T Bastard 10.2.1.1.1

            Not quite sure how to take that comment but if you didn’t know the foam absorbs and holds moisture making the windows leak and rot faster.

  11. roger nome 11

    lolz – this Tory government is so cliche. First comes the attack on work rights, then tax cuts for the rich, then a good dolop of corporate welfare for the cherry on top. All the while Key smiles and waves to a gormless press gallery. If our media keeps this up well be sliding in to the surreal world of fox news in no time. It would be funny if it wasn’t so tragic

  12. 🙂 ‘s Plan:

    1. Announce grand plan of wage parity with Australia by 2020!
    2. ?
    3. Achieve goal – then retire to Maui to play bball with my main man Barry!

    However, there are no interim milestones on the way. So we have to wait until 1/1/2020 until we find out if said plan will work.

  13. outofbed 13

    Is not much of a plan but its his. i just hope they don’t lose the napkin that it is written on the back of

  14. Herodotus 14

    I am confused The Greens were able to construct an alt economic plan with how many MP’s and support staff and what has come out of the Labour camp?
    The Greens are comming up with some good initial ideas re Houing, yet all we got out of Labour re state housing was PPP’s with 10 year rental guarantees market rents from private investors.
    If govt got back into building houses , I know Labour did build a cul-de-sac or 2 over their reign, but by geting govt back into construction,town planning then the decision makers could see how difficult they have made if for any progress. As stated before it takes about 10 years from framland-operative plan change-1st residents as a time span. For Auck there has been a hugh slow down of land being put into operateive zone. Just look at Flat Bush originally to commence 97, 1st stage operative about 2006 after Airport concerns were sorted out, stage 2 consultation 2006, still taking place (Draft plan for summissions is out) and this was to cater for 40k of people or about 15k dwellings.
    I wonder if the Greens stay on a few target issues with some depth of talent what they could achieve. At least they have a plan better than that from the 2 old farts that hang onto power at all costs. 😉

    • outofbed 14.1

      I think the greens have been working really hard on their Economic policies,in spite of only having a small team i guess ut about Its about trying to change the worn out cliche that the Greens are dope smoking hippies.
      Along with The Green “new deal”
      They have been running a “mind the gap campaign” http://www.greens.org.nz/mindthegap
      initiatives to combat growing inequality in New Zealand
      They are building strong relationships with the Union movement and
      basically they are working really hard kudos to them

      • BLiP 14.1.1

        Frustrating how cliche images are retained for so long. I suggested to a couple of my Labour-voting but fed-up-with-them mates to consider voting Green. The dope-smoking wasn’t much of an issue but both recited the “folk-dancing” scene our MSM presented – how many years ago?

        • outofbed 14.1.1.1

          Yeah Blip I have been to 4 or 5 conferences know hundreds of Greens and never seen anyone Morris dance
          but i have seen lots of deeply committed people who care about New Zealand her people and the Planet

  15. gloria 15

    Hey I called the Greens with about four housing plans about 10 days ago.

    This vaguely resemebles one of the ideas i.e. the 2 billion was a figure I quoted.
    I would like that 2 billion to go into land subdivision and building which the Housing NZ does do.

    I\’ve built basic houses in the past and know that the real costs can be much lower if you buy all the materials yourself and you can save even more by doing your own subdivsion.

    I would like to see at least half of those houses sold off to applicants at cost thus eliminating a need for deposits and reducing the purchase price. For people who cannot afford to buy even with lower prices could buy a share in the house. Once houses are sold off the money taken could be reinvested in more low cost houses and thus the stimulus continues from the original investment.

    State tennants who cannot afford to buy could be offered a 25% stake on the title so they have real ownership of a portion of the property thus encouraging them to take real care of that property and to look toward a productive future. This also means their rent is going into a nest egg which could later serve as a deposit on their own home. With benefit levels and wages so low in NZ many people at the bottom are loosing hope. The best way to get some of them out of the social rot that occurs in impoverished groups is to give them something to aim at. Having a home is the kiwi dream and is where we need to invest. Offshore retirement funds can be gone in a matter of moments with the shady financial practices now occuring overseas. My retirement advice. Pay off the house first.
    It might also inspire those at the bottom to find a way of increasing their income and freeholding the property. Families might club together and take over the entire mortgage etc.
    Home ownership inspires people to get ahead in life and once you are freehold you are much more secure.

    • Carol 15.1

      As a lifetime renter, I”ve never been in favour of the major promotion of home ownership as a life ambition. IMO, it can just keep some people locked into notions of personal gain, supports the ultra capitialist ethic, results in some people trying to struggle for the dream, and sometimes can divert attention from wider social issues. I’d rather see affordable housing all round, with a choice between lifetime renting, good savings options, affordable lease-holds, housing co-operatives, and some sensibly priced free-hold options…. etc.

  16. busy bee 16

    Can someone point me to the Green’s plan ?

    I can’t find it.

  17. The Voice of Reason 17

    Great idea from the Greens. Well, to be more historically correct, great idea from Labour. This is a terrific updating of the policy that put pictures of Michael Joseph Savage in hallways all over New Zealand and absolutely deserves support from our current Labour MP’s. If the next Government is going to include both parties, this is the kind of thing they need to put to the voters before the election as something they are both committed to. Show some unity, some sense of common purpose.

    Give people a clear choice between jobs, housing and positivity from the left and unemployment, poverty and greed from the rest.

  18. gloria 18

    Thats an interesting perspective Carol. Its not one I share but to each his own.

    I think saving is a good idea but only if you can trust the banks and I don’t think we can.

    I don’t see anything wrong with a bit of greed as long as you don’t hurt others to achieve it and use your wealth to help others.

    The realy rot I see in society comes from all walks of life and it is when people just don’t give a damn about others. That sort of attitude affects the rich and poor.

    Tell me how will you pay your rent when you retire? Will the pension cover it. Maybe you have savings but I wouldn’t trust my money in a regular bank right now.

    The banks loan about 10 times what they have in assetts so if everyone withdraws they cannot cover it.

    I think the Nats want to sell kiwibank becuase they know we are going to see a complete collapse of our worlds fincancial sytem. A mortage free home might be the only thing keeping some people off the street under those circumstances. I hope you are not one of those people.

    I hope I am not one of those people but I probably will be.
    I have major health problems and lost my home under a Labour government becuase I needed expensive medicine not funded by the government and I needed that medicine becuase my health deteriated badly after being forced by my landlord to move quickly. When I first moved into that home and the move made me really ill and everyone noticed i hadn’t unpacked ” because I was too sick.
    No one offered to help me so I just lived in a house with everthing in boxes.

    Then afew weeks later they put the house on the market. I asked for my moving fees back and my fee to the agent which I needed to get out of a situation which was detrimental to my health and the agency just told me where to go.

    I know about greed and landlords that is for sure. The lies I was told may not have affected the average person but becuase I was ill they impacted severely on my life.

    I cannot work and quite honestly I would be scared to live in a state house. Plus if you are sick and alone you are going to be put in a unit. When you are in constant pain and cannot get out living that close can be horrible as you hear everything through the walls and if you are in unbearble pain its just enough to push you right over the edge. Its like torture so a state house is not going to be any use to me. They are not going to give me a separate dwelling for just me are they. Units are a living hell for those in constant pain or for the sick who need sleep to recover.

    • Carol 18.1

      Well, I’m sorrt to hear about your experiences, gloria. But it is greed and putting too much focus on everyone owning property that has put the banks and financial system at risk, IMO.

      I have modest amounts in pension funds in the the 3 countries I have lived (NZ, England, Aussie), currently paying into Kiwisaver & have money in banks…. although that was quite a personal question…? I pay low rent, and expect to be able to continue to work part time beyond retirement age. With that in mind, I keep myself as fit and healthy as I can, and generally live modestly – my needs are small.

      I don’t see the financial situation being fixed globally by continuing to put pressure on all people to own their own homes. It seems to me to be more of the problem than the solution. I remember when I visited Denmark, many years ago, that everyone was pretty much guaranteed an affordable place to live, with affordable rents, and limited focus on people owning their own homes. Large numbers of people were happy to rent. Seemed like an ideal situation to me.

    • Vicky32 18.2

      Gloria I am in a State House, and I am not the most healthy of people… I need a State house as I can’t afford the rent in a privately owned one – but truly, I would prefer a Unit, as this house is so big and cold… But I don’t want to buy trouble by asking for a transfer, as the tenancy manager is an amazingly lazy cow who wants rid of me!
      If you were in a State unit, I would love to do a swap!
      Deb

  19. the sprout 19

    it hardly surprises me Nat have no plan,
    after all non-intervention is at least consonant with their neo-liberalism.

    but it disgusts me that an allegedly social democratic party like Labour has no plan either.

    Green is looking like a wiser vote every day.

  20. Manu 20

    Why aren’t we taxpayers kicking up more about the Government bailing out the bloody rich – again? I very much object. Don’t I get a say, seeing as I have paid my taxes? That amount of money could help SOOOOOO many families.
    I’d rather we taxpayers give the billion bux to improve the standards of living eg, cheaper power in the winter time so we can at least feel warm……. National stands for the RICH to get RICHER and retain the POWER to get even RICHER! All of you National politicians should be gaoled for theft – theft of my money over the many years that I’ve paid tax upon taxes – and more taxes. THIEVES I’m sick of you all! National, I pray you get booted out of government next elections and go to gaol – you thieving pack of fiends!

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