Protecting poor people: the call for a rent freeze in Auckland

Written By: - Date published: 10:47 am, February 3rd, 2023 - 187 comments
Categories: climate change, housing, human rights, sustainability, tenants' rights - Tags: , ,

You know how people like the Greens and climate activists bang on about the connection between social issues and environmental issues? And why Just Transition matters?

Well, here’s New Zealand’s first major example visible to the mainstream: the climate-crisis-generated Auckland floods of the last week took out many homes. Which means that our already existing housing crisis just got worse (and not just for Auckland, there will be flow on effects to the whole country). While New Zealand has been largely able to ignore the displacement from climate events on the West Coast (where more than 400 homes were not repaired 1 year on from the July 2021 floods), Auckland will be much harder to ignore.

Just to recap: rents in recent decades have increased out of proportion to income increases (wages and/or benefits), which means that low income renters are perpetually held in poverty, and middle income renters are being forced downwards.

There are already reports that rents will rise. Reports from the rentier classes,

President of the Auckland Property Investors Association Kristin Sutherland said the rent hikes were not landlords using the last week’s severe flooding events to make more profit, but simply market forces at work.

In other words, landlords will be able to take advantage of the additional squeeze on housing to increase rents.

Fortunately, community groups are on it. Renters United and Action Station along with 20+ community groups are calling on the government to put a temporary rent freeze in place.

For many people in Tāmaki Makaurau their largest expense is rent. With less than a week passing since the floods we are already seeing property investment groups preparing to increase rents for communities devastated by flooding. While renters are struggling to clean and repair their homes, and get kai back on the table, the last thing they need is the looming threat of yet another rent increase.

An historic and continuing under investment in public housing has led to a sector that puts profit before people, but it’s not too late to put communities first.

We, the undersigned, are calling on you, as the Minister for Auckland, to put your communities first in response to the flooding by putting a temporary freeze on rent increases.

As the Chloe Swarbrick and the Greens are pointing out,

“Poverty is a political choice. We implore the Govt to use their power to freeze rents, like many of the grassroots organisations who have responded to the flooding this weekend, bc some landlords have clearly indicated they intend to abuse their power.”

You can sign the petition here.

The following is to pre-empt the arguments against prioritising people over investment.

For the ‘what about the landlords?’ argument, it’s really simple. People’s desire for passive/investment income doesn’t trump people’s human right to housing. If you cannot afford to run a rental property, including how to pay for emergencies and repairs, then sell the house to someone who can.

If private landlords want to sell up en masse, good. Let central and local government make use of the opportunity to increase social housing stock. Iwi are probably interested too.

For the ‘what about the Mum and Dad investors?’ I’ve made the argument before that government policy should protect such investors where possible, because it doesn’t have to be a choice between the middle and working/under classes. We also need to look at the decades long bad advice about retirement income advocating property investment, which leads to a bigger conversation about how we look after retirees and the elderly.

For the reactionary ‘rent freezes make things worse’ argument, it depends on how they are done.

We had a rent freeze during the pandemic, and then rents rose again afterwards, which led to the New Zealand Human Rights Commission in August last year to reinstate the rent freeze,

HRC housing inquiry manager Vee Blackwood said more than half of renters were spending more than 30 percent of their income on rent.

“The overall cost should be no more than 30 percent of your income after tax being spent on your housing costs, but we know that almost half of renters do spend that or more and this is predominantly felt by those on the lowest incomes,” Blackwood said.

Long term rent control is used in a number of countries in Europe. Here’s an example from Vienna, Austria.

Of note with this against argument is that the examples are of where rent control is done badly and doesn’t work instead of where it’s done well and does work. As with everything, we need multiple, intersecting solutions, not single silver bullets.

For the BUILD MOAR HOUSES argument, sure, we now need replacement houses and temporary accommodation while repairs are done, alongside new housing.

But slapping down lots of housing without thinking about the bigger picture creates more problems. Infilling suburbs increases the impacts of climate by reducing the amount and distribution of spaces that have trees and other plants. Trees lower local temperatures, and trees and plants can be used to mitigate water in high rain events. More hard surfaces like roofs and driveways increased the catchment of water that flows too fast and into places that can’t cope.

Unbuilt spaces are also needed to grow food locally, because local food lowers GHG emissions and is more resilient to extreme weather and climate. We can expect increases in food costs from crops lost in the last week, as well as crops lost to the global food supply. That’s on top of the current rising cost of living.

The housing crisis has to be talked about in the context of both populations and the carrying capacity of increasingly burdened ecological systems as they adapt to the climate crisis.

All the things are connected rather than a set of separate units of problematic effects that impact on BAU, and the best and sustainable solutions come from thinking about whole systems and how to transition everything.

187 comments on “Protecting poor people: the call for a rent freeze in Auckland ”

  1. Tiger Mountain 1

    Nice one. Totally agree with this post.

    Rent Freeze Now!! and planned rent control in future.

    ‘Generation Rent’ know they are being ripped–paying off some other bastard’s thumping great mortgage.

    Think about it…how many houses or apartments does anyone really need? Luxury Luxon seems to need–count ’em—Seven! There are thousands of multiple property owners and thousands more with none.
    https://www.nzherald.co.nz/nz/part-time-paradise-mum-and-dad-landlords-own-more-than-a-third-of-property/L5S3MVSOUZLW74K575GKOAO3NU/

    Housing should go back to being accomodation and a family resource rather than a cash cow. A primary house and a holiday home if affordable should be enough for anyone.

    Labour with its absolute majority can still set things in motion to turn this around. State house/apartment mega build (use imported flat packs), tiny house precincts for homeless, emergency houses in every town.

  2. Alan 2

    But Chippy wants to win the election

    • weka 2.1

      don't think a temporary rent freeze would scare the horses enough to wreck that. The pandemic rent freeze ran from March – September in 2020, an election year that Labour did well in.

    • Tiger Mountain 2.2

      Use your words perhaps Alan…what is “won” if nothing changes for working class people, or the environment? A roll over of the usual format will not do it in 2023.

  3. tsmithfield 3

    As I have pointed out previously, price controls cause shortages. The problem with rental price controls in a housing shortage is that it doesn't increase the supply of houses, which is the current problem. In fact, it is likely to exacerbate the shortage.

    When there is already a housing shortage, exacerbated by recent weather events, the last thing that is needed is rent controls. All that will do is encourage landlords to take their houses out of the rental market.

    I know when this issue was discussed on previous occasions, proponents of the idea pointed to countries where it does work. However, from what I remember from that analysis, countries that had rent controls also had large quantities of rental houses, often supplied by the government. Hence, the rent controls seemed to have "worked'' simply because they were at about the market level anyway.

    What would work would be to rapidly increase the housing supply. This may mean shifting temporary housing onto available land for instance. There are modular type solutions available at the moment that could likely be constructed quickly for this purpose.

    • weka 3.1

      As I have pointed out previously, price controls cause shortages. The problem with rental price controls in a housing shortage is that it doesn't increase the supply of houses, which is the current problem. In fact, it is likely to exacerbate the shortage.

      I've never seen anyone say that rent freezes or controls should be used in isolation. I made a point in the post to say solutions need to be multiple and interrelated.

      Nor have I seen anyone say we should continue to run a shortage of housing. The point of the temporary rent freeze isn't to solve the housing crisis, it's to give some relieve to people already living in poverty, and to stop more people from dropping into poverty. BUILD MOAR HOUSES ignores that and presents some vague handwave to a time in the future when we will have enough houses to magically drop the rents.

      What would work would be to rapidly increase the housing supply. This may mean shifting temporary housing onto available land for instance. There are modular type solutions available at the moment that could likely be constructed quickly for this purpose.

      Can you please explain how this would work economically beyond simplistic rhetoric of supply and demand? As we build more houses, people want return on their investment (developers, buildings, investors, home owners, landlords), and thus the market perpetuates. This is essentially what is happening. Building is booming, prices are going up and now going up further because of materials and labour shortages.

      The small drops in property prices in the last year or so don't address the massive gap between benefits or even low wages and market rents for instance. Rents are increasing not decreasing.

      The only way I can see it working is if houses are built outside of the market ie social housing and other models like community land trusts. But it still needs to be part of a wider strategy (eg address accommodation supplement), and poor people still need rent caps in the meantime.

      • tsmithfield 3.1.1

        See my reply further down. We went through this in Christchurch and came up with a number of temporary housing solutions.

        As I said below, I think increased rental subsidies as a better option to help existing tenants. While not helping the house supply either, it does help the tenants without disincentivising landlords, which is totally counter-productive to housing supply.

        • mikesh 3.1.1.1

          I would think that rent subsidies contribute to higher rents. What is needed is to get landlords out of the market who should not have been there in the first place. I’m thinking of landlords who have been forced to take out large mortgages in order to enter the market.

  4. Corey Humm 4

    As a survivor of the chch earthquakes where my house fell down (after I'd spent all day cleaning it for a rent inspection at 2 and it bloody falls down at 1 lol!) We desperately needed a rent freeze, rents skyrocketed in the immediate aftermath.

    I full heartedly support Aucklanders getting a rent freeze, because rents will continue to skyrocket in the aftermath.

    This can be considered a tiny payback for one of the greatest transfers of wealth in NZ history, the COVID response where the labour govt did things like refuse to allow rent holidays despite mortgage holders having mortgage holidays.

    Landlords sucked up plenty of cash during lockdowns, don't let them hurt the poorest during natural disasters.

    • tsmithfield 4.1

      I was in Christchurch after the earthquakes as well.

      I remember trying to help someone find a house to rent. It was crazy. Often the houses would be full to the brim of people looking for a rental. And the prices went crazy. But that was a function of there not being enough houses.

      If there had been a rent freeze, two things would have happened. Firstly, landlords would have become even more picky about who they took as tenants. Secondly, rentals would have been allocated in a way that was not optimal for the recovery. For instance, landlords may have preferred to rent their houses to high income couples without kids, whereas the need may have been for houses for people with families.

      The insurance issues didn't help the situation either. Optimally, the best solution would have been to have had houses made habitable again as quickly as possible. In shortages, the best solution is always to increase the supply. Attempting to control prices doesn't help the supply side where the need is, and only makes the situation worse.

      • weka 4.1.1

        Firstly, landlords would have become even more picky about who they took as tenants. Secondly, rentals would have been allocated in a way that was not optimal for the recovery. For instance, landlords may have preferred to rent their houses to high income couples without kids, whereas the need may have been for houses for people with families

        I think it's naive to think that that wasn't happening pre-quake anyway, and that it didn't continue to happen post-quake.

        The supply will fix everything argument is moot. Neither Auckland nor Chch have manage to garner enough supply to reduce rents. Nor has the rest of the country, where we feel the overflow effects.

        • tsmithfield 4.1.1.1

          You don't seem to disagree with the proposition that supply is the problem. Rather, that it is a difficult solution to impliment. And that is true. But it is the only solution, other than shipping people away from where they live to a location that has spare housing.

          However, on a macro scale, we can see what happened to the housing market in Christchurch. Eventually, the supply side increased so much that house prices were hardly moving for a number of years. I wasn't up to date with rental prices over that time, but I assume they were relatively flat as well.

          So, increasing the supply does work, eventually.

          That situation has washed through the system now, to the extent that our market was underpriced compared to the rest of NZ. So, there has been some catch-up in prices recently as supply and demand have equalised more.

          What we need to be doing is creating an environment where people want to rent out spare housing capacity. If the the government creates disinsentives for that, then people are less likely to want to rent out houses.

          I would favour temporary increases to government rent subsidies rather than rent controls. That wouldn't help the supply shortage either. But it would help those already in rentals.

          I don't own any rental properties myself btw.

          • weka 4.1.1.1.1

            However, on a macro scale, we can see what happened to the housing market in Christchurch. Eventually, the supply side increased so much that house prices were hardly moving for a number of years. I wasn't up to date with rental prices over that time, but I assume they were relatively flat as well.

            not sure what problem you believe that resolves, but the people living in poverty before the quake, that had rent increases after the quake, even if those rents then stabilise they're still living in worse poverty.

            It really does help to start with the people and work out from that.

            So, increasing the supply does work, eventually.

            Does work at what? 'Cooling the market'? What you've pointed to is that one aspect of the housing crisis changed somewhat over a period of time probably because of the increase in builds. The measure here is whether poor people are less poor.

            Afaik Chch still has a housing crisis.

            That situation has washed through the system now, to the extent that our market was underpriced compared to the rest of NZ. So, there has been some catch-up in prices recently as supply and demand have equalised more.

            Mate, can you stop and listen to what you are saying? You are basically saying that the market will increase prices once we have equal supply and demand.

            I would favour temporary increases to government rent subsidies rather than rent controls. That wouldn't help the supply shortage either. But it would help those already in rentals.

            Increases in accommodation supplement track with rent increases. I had an increase in rent of $50/wk one year. Paying off the landlord’s mortgage. Can you please explain why the government should be subsidising that?

            • tsmithfield 4.1.1.1.1.1

              Mate, can you stop and listen to what you are saying? You are basically saying that the market will increase prices once we have equal supply and demand.

              All things being equal, prices should be stable if demand equals supply. Basic economic theory. Of course, things aren't always equal. There are movements in interest rates, increases in the cost of government prices, increases in rates etc, that feed into rental prices.

              I am not sure where we are in Christchurch now, so far as housing supply is concerned. But, I don't think there is an oversupply anymore.

              But, so far as Auckland goes, the more effort there can be in meeting temporary housing needs through innovative ways, the less pressure there will be on the rental market, and the less rents should increase.

              Increases in accommodation supplement track with rent increases.

              That probably is true over the longer term. I don't really like that solution either. But, on the other hand, landlords likely don't know if specific tenants have received subsidy increases, so, it probably would help as a temporary solution for tenants who are housed in dry rentals.

              Wouldn't it be great right now if the government was up to date with its 100k houses promise?

              • weka

                I am not sure where we are in Christchurch now, so far as housing supply is concerned. But, I don't think there is an oversupply anymore.

                This is the point you are missing. I'm not talking about supply. I'm talking about the rent people pay each week and how that impacts on their ability to feed themselves and their kids and pay their bills and have a normal life.

                But, on the other hand, landlords likely don't know if specific tenants have received subsidy increases, so, it probably would help as a temporary solution for tenants who are housed in dry rentals.

                Change to AS are publicly notified. No government can increase AS secretly.

                Wouldn't it be great right now if the government was up to date with its 100k houses promise?

                You still haven't explained how this wouldn't push prices up during the years those houses were being built.

                • tsmithfield

                  I don't disagree that a rent freeze wouldn't help existing tenants in the short-term. That is, until the landlord decided it wasn't worth it, and decided to sell.

                  But it certainly wouldn't help those looking for rentals, as the supply of rentals would likely reduce.

                  A commonly cited disaster for examining the effect of price controls was Hurricane Hugo. We studied that in an economics paper at Uni. Some interesting articles on that here:

                  https://fee.org/articles/hurricane-hugo-price-controls-hinder-recovery/

                  https://mises.org/library/government-and-hurricane-hugo-deadly-combination

                  The upshot is that price controls don't alleviate the underlying problem, which is lack of supply. While, some may be helped with rent freezes, a lot more will likely be locked out of housing than otherwise needed to be the case.

                  What you don't want, is a situation like we had in Christchurch where houses were so swamped with people looking for rentals, that it was hard to move. Literally.

                  I had to help my parents try and find somewhere to live after the quakes. They also had a dog, which didn't help. Their house had been totalled, and was unliveable. So, I do have some insight into the issues.

                  As I was trying to show, it is possible to kill two birds with one stone. Find some innovative solutions to house people temporarily. Then there won't be so much pressure on rental prices because the demand won't be so high.

                  Look at some of the innovative solutions we came up with to get people housed quickly. Such as fleets of camper vans, or self-contained caravans as we did in Christchurch. Not great. But better than nothing, and keeps people safe and dry temporarily without the infrastructure issues that housing developments have.

                  • mikesh

                    The upshot is that price controls don't alleviate the underlying problem, which is lack of supply.

                    Too many would-be landlords looking for rental properties increases demand and creates the imbalance that leads to housing price increases And as long as the price of housing is increasing landlords will see housing as an attractive proposition because of the capital gains available, so this factor feeds upon itself. This is not an argument for CGTs which only seem to "slam the the stable door only after the horse has bolted".

                    Make it impossible to invest in a rental property without borrowing, as suggested by the Opportunities Party, would be the best solution, at least in the longer term. In the short term I would like to see the government divest landlords of uneconomic residential property investments, and rent them out themselves as social housing.

          • weka 4.1.1.1.2

            You don't seem to disagree with the proposition that supply is the problem.

            Actually, I completely disagree with this proposition. The problem is that we consider houses primarily an investment rather than a human right and a home. Which is why you are arguing abstracts about supply/demand and ignoring the real life impacts on poor people who rent. Which is what this post is about.

            Rather, that it is a difficult solution to impliment. And that is true. But it is the only solution, other than shipping people away from where they live to a location that has spare housing.

            Multiple, intersecting solutions to the problem of how to provide everyone with homes they can afford in places that meet their needs. Not silver bullets like build moar houses.

            • tsmithfield 4.1.1.1.2.1

              The problem is that we consider houses primarily an investment rather than a human right and a home. Which is why you are arguing abstracts about supply/demand and ignoring the real life impacts on poor people who rent. Which is what this post is about.

              Mate… Unfortunately we live in a world where people make a crust by supplying a service that people are willing to pay for. The less there is of anything relative to demand, the more it costs. This fact has been true since we moved out of the bartering system, and applies to just about anything, including rents and houses.

              Investing in anything isn't a one-way get-rich guarantee, as those who invested in houses at cheap interest rates at the top of the market are likely finding out now.

              The esoterics of whether housing is a fundamental human right is really something for governments to consider at the social housing level.

              Most people going into property investment do so to earn a living first. If they can help people out in that along the way, then even better. If it is seen as too hard, they will find something else to invest in that has a better return for less hassle.

              The yeild on rents in Auckland can be as low as 3% or so, which is hardly a killing.

              https://www.opespartners.co.nz/property-markets/auckland/yield

              • weka

                The esoterics of whether housing is a fundamental human right is really something for governments to consider at the social housing level.

                Why? You've essentially made the argument that people have more of a right to passive income than they do to a home. Care to explain that?

                Unfortunately we live in a world where people make a crust by supplying a service that people are willing to pay for

                that's an unfortunately choice of phrase given the context.

                The less there is of anything relative to demand, the more it costs. This fact has been true since we moved out of the bartering system, and applies to just about anything, including rents and houses.

                This is an argument against capitalism not for it.

                • tsmithfield

                  Why? You've essentially made the argument that people have more of a right to passive income than they do to a home. Care to explain that?

                  Landlords are responsible for the tenants in their care. Not for everyone in need of housing, other than for paying their taxes. At the level of the concept of fundamental human rights for housing, only the government is able to facilitate that through rent subsidies, social housing, and setting the right conditions to incentivise people to rent property.

                  This is an argument against capitalism not for it.

                  It would be lovely to have a system where everyone shares out of the goodness of their hearts. But, take a look around, the world doesn't work that way.

                  However, I do think the consumer driven model is doomed due to decreasing demographics. The consumer driven model (rather than capitalism) depends on an ever increasing demand from more and more people.

                  I don't think that sort of model is sustainable in the long term.

                  • KJT

                    Those who build and maintain houses are supplying a service.

                    A big issue with our economy is that there are too many ticket clippers who do not add anything.

                    In fact the argument has been made, conclusively, that we would all be better of if many such "services" especially financial ones, were paid to stay at home.

                • mikesh

                  Unfortunately we live in a world where people make a crust by supplying a service that people are willing to pay for

                  They are not actually supplying a service. The capacity for providing accommodation comes with house. Landlords are simply "clipping the ticket". There is nothing wrong with that in this instance, but it is not the sort of thing to which people have a right, at least not in the way that people might be said to have a right to a job at a living wage.

              • KJT

                Landlords, on the whole, are in it for the capital gains.

                Making money on rent is taxable.

      • Drowsy M. Kram 4.1.2

        Yes, some tenants had a particularly rough time of it after the ChCh earthquakes.

        Shelter is a basic human right – if a short (6 month?) rent freeze "only makes the situation worse", then perhaps more drastic measures are needed? Weka's example of long-term rent control did appeal to me.

        Vienna effortlessly tops the world’s most liveable city surveys, and for good reason. Its citizens – 1.8 million at the last count – enjoy affordable public transport, abundant greenery and rents UK citizens could only dream of.

        Hammer’s total rental costs are €560 a month. That’s just under £500, and 18% of her take-home pay, which compares to the 50% an average worker renting in the UK pays and 79% of take-home pay that London workers spend on rent.

        Alas, not going to happen in an election year, but tenants can dream, can't they?

        https://tpaauckland.org.nz/

        https://www.aclc.org.nz/

      • AB 4.1.3

        And the prices went crazy. But that was a function of there not being enough houses

        No it wasn't. It was a function of opportunistic behaviour by people with pricing power in the market – used against those without pricing power in the market. It was a choice, and like all choices, is always subject to moral scrutiny.

        • tsmithfield 4.1.3.1

          Actually, it was a function of not enough houses, simply because a lot of them had been destroyed. Whether there was opportunistic behaviour or not is somewhat moot. That is because, the opportunity would not have been there if there had been enough houses.

          As I said, the issue is the supply side. In the ChCh Earthquakes, there was temporary housing set up in Christchurch after the earthquakes. In fact, some of that was sent to Franz Josef to help with their housing issues during their floods.
          Who knows, we may have more of that here that could be sent up north.

          Another thing that was done was that a fleet of camper-vans was made available as a temporary housing option, because that didn't have the same requirements so far as infrastructure is concerned. Perhaps that idea could be implimented up north as well as a temporary solution.

    • Pingao 4.3

      I agree that a temporary rent freeze in Auckland is a good idea as a stop-gap measure in a crisis.

      Christchurch's housing crisis post-quake was pretty bad with people sleeping out in the sand-dunes at New Brighton, moving in with family in overcrowded houses or even moving back into their red-stickered houses (my neighbour did that during the big snow following the February 2011 earthquake – no power, no water, no furniture as he had given it all away). National denied there was a crisis of course.

      National also used the earthquakes as an excuse to ditch a whole lot of Housing New Zealand houses (in my opinion) – i worked and lived in the east side and saw many HNZ houses empty for months if not years or demolished when they had non-structural damage and broken sewers (all repairable).

      Regarding the mortgage "holiday" in Christchurch I would like to would like to point out that it was a deferment not a holiday – you would actually wind up paying the bank more money as your mortgage would be paid off over a longer period. So a rent "holiday" would probably be unworkable in practise as the tenant would just wind up in rent arrears.

  5. Ad 5

    I've just finished 10 months with a couple with little money in one of our rentals. It worked out OK and felt nice apart from losing a good chunk of money every week.

    I'd only do it again if it was signed to an NGO with a super-professional wraparound service provision.

    All sounds fun and mung beans operating like a charity until you have to deal with desperate people who ned far, far more help than you can ever provide.

    • tsmithfield 5.1

      And I bet you would be even less likely to rent it out if the government tried to control what you could charge.

      • weka 5.1.1

        Ad's story is about the difficulties of renting to people when they've got multiple other problems going on. I have no doubt that Ad helped those people by not increasing rents.

        • tsmithfield 5.1.1.1

          I didn't suggest that Ad wouldn't. I asked if Ad would have been so willing to rent out if the government was controlling prices.

          But, perhaps we should let Ad answer that question rather than speculating on a response.

          • weka 5.1.1.1.1

            I thought you implied that any reasonable person wouldn't be willing to own a rental if the government controlled rents more than they do already. And you didn't give a rationale for that idea.

            You also yet again side stepped the issue of helping poor people, which is what my reply to you was about.

            • tsmithfield 5.1.1.1.1.1

              I have described myself previously as a right-winger with a heart. I do have concerns for the poor. In fact, I am on the board of a trust that operates in one of the poorest areas of Christchurch.

              So, I am not coming from a position of lack of concern for the poor. I am looking at this more from the perspective of what works, and what will impact on poor people generally. So, rental controls for a few is not that helpful if it means less rentals overall, and more poor people homeless as a result.

              I think that is the problem of your perspective. You appear to only be considering those who are lucky enough to be in a stable renting situation without considering the whole picture.

              Good discussion by the way. And why l like coming here, because it is good to get a completely different perspective on things to what I am used to.

              • weka

                In your comments today, you've consistently argued a specific housing crisis ideology without reference to the reality for poor people.

                So, rental controls for a few is not that helpful if it means less rentals overall, and more poor people homeless as a result.

                that's the ideology I'm talking about. You haven't demonstrated that this is what would happen. You've made a lot of assertions that it would without good argument to back them. I've had to explain the realities of accommodation supplement, which you appeared to not get but were using as part of your argument.

                I think that is the problem of your perspective. You appear to only be considering those who are lucky enough to be in a stable renting situation without considering the whole picture.

                Not at all. I'm saying that I think any negative effects from a rent freeze can be solved by attending to them specifically, and they need to be done anyway to solve the housing crisis.

                eg, if a landlord sells up because they can't afford to run their rental with a rent freeze, then central/local government can buy that house, or Iwi, and run it as a rental.

                • weka

                  eg why didn't the government buy up motels and hostels during the pandemic for emergency and interim housing? Use it later for worker accommodation too.

                  These are failures of imagination fueled by ideological attachments to old ways of working that are simply failing.

                  • tsmithfield

                    eg why didn't the government buy up motels and hostels during the pandemic for emergency and interim housing? Use it later for worker accommodation too.

                    Perhaps because this sort of accommodation effectively creates ghettos, which are not good for social cohesion or development as is currently the case in the likes of Rotorua.

                    If the government is to make long term investments in social housing, then it should avoid this type of solution, and only use it temporarilly until better solutions are developed.

                    • weka

                      Perhaps because this sort of accommodation effectively creates ghettos, which are not good for social cohesion or development as is currently the case in the likes of Rotorua.

                      See the bit in the post where I said the against use examples of badly designed solutions? The problem is the people managing those projects don't have good system design skills. The problem isn't the infrastructure of a motel.

                      And as Ad's comment pointed out, there have to be multiple solutions that interact. Which is what I also said in the post. So don't put a bunch of stressed, poor people in a motel with a shitty social situation. There are way better ways to design than that.

                • tsmithfield

                  You haven't demonstrated that this is what would happen. You've made a lot of assertions that it would without good argument to back them.

                  There were a number of articles on this last time rent controls were mooted.. As this article points out:

                  one careful analysis of San Francisco, for example, found an expansion of rent control in 1994 led to a 25% decline in available rental units among the newly rent-controlled apartments.

                  So, there is evidence to support the proposition that rent controls can lead to a decline in housing availability. I am looking at it more from a general economic perspective of supply and demand, and from an operant conditioning perspective that holds that rewarding desired behaviour increases the incidents of that behaviour, while punishing it reduces the behaviour. So, landlords that are effectively punished through increased government rules and costs will be less likely to rent their properties out, increasing rental costs.

                  As above, there is evidence supportive of this proposition.

                  if a landlord sells up because they can't afford to run their rental with a rent freeze, then central/local government can buy that house, or Iwi, and run it as a rental.

                  This type of situaiton is one that simply discourages investment in our economy and is bad for everyone. That is the thought that a government may interfere arbitrarily in a market in unpredictable ways.

                  People could lose their shirts due to this sort of interference, and so the number of poor people simply increases.

                  I am not opposed to not-for-profits investing in social housing by purchasing property. In fact, one of the trusts I am on the board of has been considering this possibility.

                  • weka

                    Please explain how the San Francisco situation relates to Auckland (no, I'm not reading links to parse your argument, I've done enough research writing the post, the onus is on you to make the argument and readers can follow the links if they want more).

                    I am looking at it more from a general economic perspective of supply and demand,

                    Yes, I know. This is why we have a housing crisis. It's a distinctly different approach than starting with people.

                    and from an operant conditioning perspective that holds that rewarding desired behaviour increases the incidents of that behaviour, while punishing it reduces the behaviour.

                    So, landlords that are effectively punished through increased government rules and costs will be less likely to rent their properties out, increasing rental costs.

                    This doesn't make sense. If a landlord can't afford to manage a property with a rent cap, how could they manage it with no rent coming in at all?

                    And for the few that can, that are using the increase in property prices as income and asset accumulation, a CGT and other measures can remedy that.

                    And again, you are saying that the needs of landlords are the primary consideration here. I don't think they are if we want a functional society. Making income from renting isn't a right.

                    • tsmithfield

                      And again, you are saying that the needs of landlords are the primary consideration here. I don't think they are if we want a functional society. Making income from renting isn't a right.

                      I am not so bothered about landlords. I am not one myself, and I certainly believe that people stand and fall by their decisions. If the market goes against them, and they lose their shirts because house values fall, or the market rent won't cover the costs, then that is just the market at work.

                      What I am against is that situation developing due to arbitrary government interference in areas of business, unless that is well flagged, and consulted with affected businesses. Sometimes this type of intereference is necessary, but it should be absolutely minimised and carefully implimented to avoid unintended consequences.

                      People who invest in anything usually understand the concept of risk and return, and that markets can fluctuate and go against them. If they don't understand that, then they are fools.

                      However, it becomes very difficult to make investment decisions if the government of the day is going to interfere in some arbitrary way unrelated to market conditions.

                      In the housing market, this would mean investors building less rental housing, less people renting out housing etc because they couldn't be sure they would be able to adapt to changing market conditions due to artificial restrictions placed on them by a government.

                      That is precisely why governments have been reluctant to interfere in markets, simply because there tends to be all sorts of unintended consequences, and things often end up worse than they started.

                      For example, the unintended consequences of rent controls in Sweden.

                      https://www.tutor2u.net/economics/blog/maximum-prices-why-rent-control-isnt-working-in-sweden

                      Very similar to this in Holland. I met up with someone I know while over there. He said he was on a seven year waiting list for a house, and was about number 700 when he started.

                    • weka []

                      ok, but now you are saying the market is primary.

                      I’m not sure how you are using the term arbitrary. There’s nothing random about the propose rent freeze and it has rationales even if you disagree with them.

                      In the housing market, this would mean investors building less rental housing, less people renting out housing etc because they couldn’t be sure they would be able to adapt to changing market conditions due to artificial restrictions placed on them by a government.

                      You still haven’t explained how a temporary rent freezer would lead to less rentals.

                      Very similar to this in Holland. I met up with someone I know while over there. He said he was on a seven year waiting list for a house, and was about number 700 when he started.

                      What’s he doing in the meantime? Living on the streets?

                    • tsmithfield

                      What’s he doing in the meantime? Living on the streets?

                      LOL. No. With his parents. I met him because we knew his girlfriend, a kiwi girl who had moved over there. They were both living with his parents, which probably wasn't great for anyone. But, they have to live somewhere I guess. And the houses aren't huge over there either.

                      You still haven’t explained how a temporary rent freezer would lead to less rentals.

                      Probably because the government is prepared to go there at all. It is a terrible signal to those who would invest in increasing our rental stock. Because it tells them that their investment could go south anytime in the future because the government could slap rent controls, temporary or permanent, without any consideration to their individual circumstances.

                      At the moment, a landlord may face increased costs.

                      If the market allows it, the landlord knows that rents can be increased to cover those costs within the scope of market settings. If the market conditions don't allow for this, then it is just the tough consequence of an investment decisions. In business, we do our due diligence, and make the best decisions we can.

                      But, if the government signals it can randomly put in place rent controls for who knows for how long in the future whether on a temporary or permanent basis, how can anyone be certain those rent controls will be adequate to cover their costs?

                      This is totally unpredictable, and arbitrary variable, and adds a whole new layer of risk that can't be planned for through market research or modelling. And, would likely make it very difficult to get bank financing.

                      So, given that, why would anyone want to invest in rental properties?

                    • weka []

                      I still don’t see the problem. The government, local bodies, Iwi, trusts etc can buy the rental houses. And the private landlords that have enough equity to run a rental properly. Landlords not being able to gouge the rental market =/= less rentals available.

                      A rent freeze isn’t arbitrary. Anyone who thinks they can increase rents as their see fit doesn’t know the business they are in. We’ve had increasing legislated tenant rights, and a rent freezer in 2020.

                      And the legislation we have now didn’t always exist, investors had to adapt or get out. Government intervention is a normal part of the market if you like.

                      Your friend in the Netherlands living with his parents, might not be ideal but not living with one’s parents isn’t a human right, having adequate housing is. If the relationship has broken down to the extent that living there is hell, that’s inadequate housing. But parents and adult offspring living together isn’t inherently a bad thing. One of the keys about the world we live in now is to change expectations around what is reasonable and learning how to make that work.

                    • tsmithfield

                      Landlords not being able to gouge the rental market =/= less rentals available.

                      There is provision in the legislation for tenants to be able to appeal against gouging. And I will concede that there is an issue where tenants have their rents reviewed.

                      So far, as looking for a new rental is concerned, it is essentially just meeting the market. But, existing tenants are more vulnerable to exploitative landlords. Perhaps that appeal procedure could be streamlined to make it easier for tenants to utilise.

                      A rent freeze isn’t arbitrary. Anyone who thinks they can increase rents as their see fit doesn’t know the business they are in.

                      But it is just another attack on landlords that disincentivises them from providing rentals.

                      How about the government help tenants by reversing their stupid law that denies landlords the rights that other businesses have to claim interest costs against tax. Given that interest costs are increasing significantly, it is likely that the non-deductability will be having an impact on tenant rental costs. So, the government could actually make a difference here.

                      Your friend in the Netherlands living with his parents, might not be ideal but not living with one’s parents isn’t a human right, having adequate housing is.

                      I agree. Their situation is fine, though probably a bit of a dampener on their love life I expect. Though, not everyone would be in that relatively favourable situation. So, I don't know how those people get by.

                    • This doesn't make sense. If a landlord can't afford to manage a property with a rent cap, how could they manage it with no rent coming in at all?

                      The simple answer at the moment is either they sell (almost certainly to an owner/occupier – since renting has been made un-economic.

                      Or, if they want to retain the property (bright line test would be a probable reason) – they shift to Air BnB – any of the middle/upper areas will make more money this way.

                      If they want to game the system, they move a family member in (after due notice), and then rent out room-by-room.

                      Finally, the other alternative – is that they declare the property needs renovation – move the tenant out – do renovations, and rent at a higher level (since the amenities are now better).

                    • And, that's the core of the debate. The hard left would agree with you – housing is a basic need, and shouldn't be run for profit – the hard right would disagree.

                      The centre regards it with more caution – there are arguments both ways.

                      Given that Hipkins appears to be moving towards the the Centre – or at least that's what he's signalling. I don't think that we'll be seeing a rent freeze any time soon.

                    • Drowsy M. Kram

                      The hard left would agree with you – housing is a basic need, and shouldn't be run for profit – the hard right would disagree.

                      Imho, one would have to be very hard right indeed to maintain that housing isn't a basic need. The centre right to the hard left would, I hope, agree that access to adequate housing is in fact a human right.

                      Universal Declaration of Human Rights Article 25
                      Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

                      Of course, we've come a long way since 10 December 1948 and NZ’s programme of building state housing.

                      https://nzhistory.govt.nz/culture/we-call-it-home/first-state-house

                  • mikesh

                    This type of situation is one that simply discourages investment in our economy and is bad for everyone. That is the thought that a government may interfere arbitrarily in a market in unpredictable ways.

                    It probably discourages investment in our housing market, but not the economy. However, it probably frees up resources and enables government to invest in social housing.

      • Ad 5.1.2

        It would indeed become much harder to do so, since mortgage costs and rates have gone up, while property values have gone down. I'm not underwater so to speak but it ain't pretty.

        • Incognito 5.1.2.1

          From 1 April this year only 50% of mortgage interest can be claimed back from IRD for rental properties.

          https://www.ird.govt.nz/property/renting-out-residential-property/residential-rental-income-and-paying-tax-on-it/property-interest-rules/how-interest-deductions-are-affected

          With the huge increases in mortgage interest rates over the last year and a bit (OCR increased by 4% since Sep 2021) it is hurting a lot to a lot of people with mortgages. This year could be mayhem for many.

        • tsmithfield 5.1.2.2

          I agree. I think that in many cases, house owners are actually being worse affected than renters at the moment with the effect increasing interest rates can have on mortgage repayments.

          We are lucky because we are quite a long way through paying off our mortgage, and have been able to get ahead in terms of repayments. This means we have actually decreased the interest component a lot. So, the interest increases made little difference to us. So, if there is some advice I could give, is to get as much paid down off your house as possible when interest rates are low.

          For some though, there are huge increases. And people are really struggling. Some people are likely facing a doubling of their mortgage repayments. It would be unusual for renters to face their rents doubling overnight.

        • mikesh 5.1.2.3

          Rates don't affect property values. They are determined only by local authority spending. Mortgage costs shouldn't affect rents either since they are the landlord's responsibility rather than the tenant's. Unfortunately they probably do, and tend thereby to increase rents. Hence the Opportunities Party policy, of preventing borrowing for the purpose of investing in the rental property market.

          • Belladonna 5.1.2.3.1

            Property values do, however, affect rates. If you live in an area where property prices have increased disproportionately compared to the rest of your town – your rates increase will be greater.

            And, I know you have a theory that mortgage costs shouldn't be funded by rental income. But the real world disagrees with you.

            If someone is running a business renting accommodation – the only income stream s/he has is rent. Which has to cover all outgoings (rates, maintenance, insurance and mortgage costs).

            • Drowsy M. Kram 5.1.2.3.1.1

              If someone is running a business renting accommodation – the only income stream s/he has is rent.

              Maybe. Are times equally tough for landLords & their income stream tenants?

              Personally, I like the idea of a cap on the profits of businesses providing basic needs. Nothing too drastic, nothing that would cause a business to go under – just something to take the edge off extreme profiteering.

              You know, like our government is trying to limit the profits of supermarkets – that sort of thing. Won't be easy, of course, particularly in these inflationary times, but why not give it a go?

              Come to that, why not place a profit cap on other businesses – current bank profits fall well within my 'extreme zone', as do oil companies and the like.

              These four NZ subsidiaries are massively profitable and in some cases even outperform the Australian parent companies.
              https://en.wikipedia.org/wiki/Big_Four_(banking)#New_Zealand

              https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses

              • Do you have a mechanism for assessing profit (let alone extreme profit)?
                Because if it requires independent accounting and auditing – then the only people getting rich off it will be bureaucrats and accountants.

                You do realize this will only hit the Mum and Dad investors. The professional investor class are leveraged, and well able to diversify their investment portfolio to make profits evaporate.

                Extremely wealthy people already have a great deal of success in hiding income streams and assets from the IRD (we see this periodically in the papers, when there's a marriage break up, and the wife (it's almost always the wife) finds that 'magically' the husband has no assets and his business is barely breaking even.

                Not to mention – putting profit caps on all businesses – what a way to crush any spirit of entrepreneurship! I mean, why would you take the risks and potential sacrifices (family home, stable income, time with family, etc.) if you don't have any prospect of reaping an equivalent reward.
                Look at Sam Morgan, for example, or Seeby Woodhouse – made huge profits when they were young, and are basically living off them for the rest of their lives.

              • If someone is running a business renting accommodation – the only income stream s/he has is rent.

                Maybe. Are times equally tough for landLords & their income stream tenants?

                Do you want to tell me what other income stream the landlord has from the property? I'm afraid handwavium doesn't pay the mortgage.

                If the landlord is forced to sell at a loss (can't finance the mortgage with the double whammy of Government tax changes and rising interest rates), or can't afford to re-build or repair (not only home-owners are under-insured). Then, yes, they are indeed worse off than the tenant.

                • Drowsy M. Kram

                  If someone is running a business renting accommodation – the only income stream s/he has is rent. – Belladonna @5.1.2.3.1.1 (1:15 pm)

                  Maybe.

                  Do you want to tell me what other income stream the landlord has from the property? I'm afraid handwavium doesn't pay the mortgage. – Belladonna @5.19 pm

                  Belladonna, you've rather narrowed your situational criteria @5:19 pm.

                  To flesh out my "Maybe." response @5.1.2.3.1.1, I know of two landLords who have (passive) income streams from bank term deposits, and there are other options. "Buying a rental property" is number 10 on this list of 30 – no mention of bank term deposits though.

                  Maybe that's how.

                  And, while it's certainly possible that a landLord may indeed be worse of than their income stream tenant, it hardly seems likely (to me) that this would be the norm, let alone common.

                  As to the downside of profit caps, sure there are some, but inequality is a problem that needs addressing, imho.

    • You may have saved lives. Well done Ad. We did similar when letting out our home while we travelled.

  6. Anyone else remember Muldoon's wage and price freeze of 1982-84?

    https://teara.govt.nz/en/cartoon/25623/the-wage-and-price-freeze-1982-1984

    Lead to the dumping of the then ruling party (National) and made inevitable Rogernomics.

    So – go ahead have a rent freeze – and suck up the subsequent wage freeze (why do people need more wages – there is a rent freeze in place [NACT])

    The worst effect of a freeze is the hurrying to catch up AFTER the freeze is lifted.

    [please make sure you have read and understood the post before commenting again. – weka]

    • A freeze could operate for a short period 3months? "till people get on their feet.

      Or limit rises to the CPI for 2 years. (As insurers say they will need that sort of period.)

    • weka 7.2

      mod note.

      • Maurice 7.2.1

        I have read the article – and reread it. My thoughts went instantly to experiences in that period. 1982 rent 22% of income 1984 rose to 36% of income (after freeze came off) Then a small wage increase in 1985 followed by purchase of the least expensive place I could find … with borrowed money from a lawyer at 7% as Banks would not lend to me. The two years later interest rates soared to 22.5% and interest payments increased to over 60% of my wages. Fortunately had a job where Union muscle won subsequent wage rises until unions we neutered by Employment Contracts Act 1991

        Just trying to inject the hard learned knowledge of my experiences

        The kicker is always the unintended consequences.

        • weka 7.2.1.1

          I have read the article – and reread it. My thoughts went instantly to experiences in that period. 1982 rent 22% of income 1984 rose to 36% of income (after freeze came off)

          Why did rent as % rise to 36%? was it because rents were still rising? This is not an argument against a rent freeze, whose purpose is to make sure rents are related to income.

          Then a small wage increase in 1985 followed by purchase of the least expensive place I could find … with borrowed money from a lawyer at 7% as Banks would not lend to me. The two years later interest rates soared to 22.5% and interest payments increased to over 60% of my wages. Fortunately had a job where Union muscle won subsequent wage rises until unions we neutered by Employment Contracts Act 1991

          There's a lot of government policy in there to be critiqued. Again, this isn't an argument against a rent freeze, it's an argument for making system change. No-one is saying do the rent freeze and nothing else.

          The kicker is always the unintended consequences.

          what, like rent hikes after a major climate event?

    • weka 7.3

      Anyone else remember Muldoon's wage and price freeze of 1982-84?

      https://teara.govt.nz/en/cartoon/25623/the-wage-and-price-freeze-1982-1984

      Lead to the dumping of the then ruling party (National) and made inevitable Rogernomics.

      the 2020 6 month rent freeze doesn't appear to have impacted on Labour's election changes later that year.

      So – go ahead have a rent freeze – and suck up the subsequent wage freeze (why do people need more wages – there is a rent freeze in place [NACT])

      The proposal today is for a temporary rent freeze. Six months and it would have ended by the election.

      The worst effect of a freeze is the hurrying to catch up AFTER the freeze is lifted.

      Yes, because we run the economy for the rentier class and not for people generally. That need to change anyway. A rent freeze opens the door to that as well as providing immediate relief.

    • mikesh 7.4

      The ideal situation would be a deflationary one where income remained static while prices fell as a result of productivity increases. The people would then benefit from falling price levels rather than from rising incomes. However, such an economy would be difficult to maintain.

  7. "Why did rent as % rise to 36%? was it because rents were still rising? "

    Because the freeze was abandoned by the Labour Party in 1984 and the landlord made up for lost income as soon as able.

    “what, like rent hikes after a major climate event?”

    Like rent rises because there have been interest rate rises and interest is no longer tax deductible from many hard pressed one or two house rentiers. The flooding has just provided a catalyst as renters are forced to change houses because the one they were in is FUBAR

    "There's a lot of government policy in there to be critiqued. Again, this isn't an argument against a rent freeze, it's an argument for making system change."

    Yep and the system change we are likely to get is Retrolibralism which will not be a great help given that going back to the 1950's and 1960's is retrogressive.

    https://journals.sagepub.com/doi/abs/10.1177/1464993416641576

    This article coins the term ‘retroliberalism’ to describe the aid regime that has evolved out of the post-Global Financial Crisis (GFC) world order. This approach sees a partial return to the principles of classical liberalism with respect to the role of the state vis-à-vis the market, whilst also perpetuating a number of the principles of neoliberalism. At the same time, the rejuvenation of an active state harks back to modernization principles prevalent in the 1950s and 1960s.

    • SPC 8.1

      1982 rent 22% of income 1984 rose to 36% of income

      Context. From 1976 to 1981, there was no increase in house prices because of high interest rates. Inflation was really high and wages increased to compensate workers. By 1981 wages were at a peak to house values (1976-1981 was the best time ever to be working and saving to buy a house).

      House prices (and the share market) boomed during 1982 and 1983. Higher rents to income, but not to the rising house value. House prices continued to rise to Labour's re-election in 1987. But afterwards the house market divided – the desirable “gated by price’ areas went up further and further because of the lower top rate of tax, but other areas flat-lined because of loss of jobs, then lower wages after the ECA (not recovering until Labour 1999-2002 ended that regime and GWB ushered in the era of cheap money).

      • Maurice 8.1.1

        Yes was what was known as a Hairy Legged Apprentice back then but thanks to completing that and having parents who went though the great depression of the 1930's had it thumped in to me to SAVE – so had enough for a deposit in 1985

  8. arkie 9

    There is are some important points that people seem to be missing about our current rental housing situation:

    1. The 'market' currently doesn't reflect the traditional (read simplistic) understanding of supply v demand. Right now there is an OVER-supply of rentals on the market and average rents are at record HIGHS (RNZ). This demonstrates the fatuousness of the 'Build Moar Houses' argument.
    2. Everyone needs somewhere to live, those who cannot afford to buy must invariably rent. With an absence of social or public housing to compete with the private market, landlords can price largely as they like. The only tool renters have to contest unreasonable rent is through the Tenancy Tribunal and that is based on the Market Rent. Essentially the nuclear option for renters and easily gamed by landlords.
    3. Property is itself not a competitive market, each plot of land is a monopoly (location, location, location). Developers (and successive governments) don't want to reduce the profitability of this sellers market.
    • tsmithfield 9.1

      Obviously we would disagree in a number of areas.

      But I think something that should be promoted more and incentivised by the government is for developers to build more long-term rentals. Perhaps 10 year leases, or similar.

      This would provide a lot more certainty to tenants, and allow them to have a similar life experience to those who own their own homes.

      • arkie 9.1.1

        You can’t disagree with the facts.

        One can set a lease for as long as the landlord likes in our current system. Renters rights are not particularly strong in this country and a 10 year lease is not something I would sign up to.

        There are many varied solutions but further incentivising build-to-rent development is certainly not one of them.

        One that would be a temporary, targeted and helpful solution would be an immediate rent freeze.

        • weka 9.1.1.1

          what about build to rent along with longer leases and the house has to remain a rental?

          • arkie 9.1.1.1.1

            The current build-to-rent model is for private investors, people who never set foot in the property. If it was government funded and built walkable, liveable and varied developments with people and environment at the centre of the design then that would be a solution. But what that really is, is increased public housing, alongside other interventions including rent controls. If we want real change the model, as you've pointed out before, should be Vienna (Guardian), and that requires a lot reorientation and reinvestment for which there does not seem to be the political will.

            • weka 9.1.1.1.1.1

              definitely need an increase in social housing. I was thinking about regs on the private market too, that some houses would have to remain rentals permanently.

              • arkie

                I agree that would be a good move for rental supply; more regulation of the rental market in favor of renters would be greatly appreciated. Not sure the BtR aspect would attract investors on the private market however.

              • tsmithfield

                I don't like the government just being able to stand over anyone with respect to their own property and telling them what they are allowed to do with it.

                But, I think incentives would be better. That way landlords would be motivated to provide more long-term housing.

                What concerns me with our current model is that there is a lot of uncertainty for families. It isn't good for kids to be shifting around all the time. So, from a social perspective, I think longer term housing is a good idea.

          • Maurice 9.1.1.1.2

            That linked to tax deductible interest payments might get some traction with private investors – though they can be notoriously fickle. Virtually a guaranteed income for ten years.

            A number have cashed up (sold their housing) and now invest in Commercial Real Estate to avoid the present Government strictions.

        • tsmithfield 9.1.1.2

          From what I understand, it would be the right for up to say, 10 years, not an obligation.

      1. If the market really is over-supplied, then rents would be going down. Landlords (typically) can't afford to wait for months with no income. I don't see that happening. Indeed, properties are typically snapped up very quickly (at least, they are here in Auckland) – despite the rent level.

      [NB: your RNZ link doesn't go anywhere]

      2. This seems to negate your argument against 'Build Moar Houses'. The extension of social government housing must indeed compete with the private market. There is little appetite for private build-to-rent schemes – certainly not at the bottom of the market – since there is little profit in these for anyone concerned (building costs, land costs, council contributions, etc.) – setting aside the risks involved in renting or building in those areas.

      3. Indeed they are making no more land – and, given the recent weather-related events in Auckland and elsewhere – they may be taking existing land away. I don't see how this impacts your argument at all. Unless you are proposing that all land be nationalized, and the government be the sole housing provider.

      • arkie 9.2.1

        Apologies

        The national median weekly rent was $580 last month, matching the record prices recorded in April.

        It was an increase of $20 per week, or 4 percent compared with October last year.

        That was despite the oversupply of rental properties on the market.

        https://www.rnz.co.nz/news/national/479433/rents-on-rise-again-as-landlords-pass-on-costs

        Public housing is able to undercut the existing market, it isn't building more houses for private rentals which is the usual BUILD MOAR HOUSES argument as evidenced by the comments in this post.

        There are numerous build-to-rent investment developments if you look for them.

        What it means is that land sales are monopoly-priced, i.e. prices don't reflect simple supply vs demand. Look at the stats, there is a glut of rentals and prices are at record highs, that is evidence against any argument that more private rentals will solve the housing cost problem.

        • Belladonna 9.2.1.1

          However, I don't see any evidence provided in the article for the claim that there is an over-supply of rental properties in the market.
          It doesn't seem to be the case- given that properties (in Auckland at least) are being rented very quickly – if there was an over-supply, then it would take considerably longer for houses to be rented (and put pressure on landlords to reduce rent – something being better than nothing). Where is this glut of houses?

          I’ve had a quick look, and found a couple of articles referring to it taking longer to rent in Auckland, and that rental listings are increasing (driven by people going overseas on OE). However this was accompanied by virtually static rents over the year, and even indication of rents dropping – which is exactly how the housing market should operate.

          https://www.interest.co.nz/property/118094/rental-market-appears-particularly-weak-auckland-rental-listings-trade-me-51

          • arkie 9.2.1.1.1

            The Interest article you cite uses the exact same source as the RNZ article that you disbelieve; Trade Me Property.

            You seem to fail to understand renters need to have another rental before their previous contract ends otherwise they are homeless. This necessity for shelter is not the same as the loss of income from leaving a house unrented for a couple of months. This need for housing means renters are at a disadvantage in the dynamic of the 'market'. They rarely can afford to wait for a cooling of prices nor are they in any position to bargain.

  9. Maurice 10

    This is interesting:

    https://www.hud.govt.nz/our-work/income-related-rent-subsidy/#:~:text=The%20majority%20of%20public%20housing,percent%20of%20their%20net%20income.

    The majority of public housing tenants pay an income-related rent determined by the Ministry of Social Development, with the amount generally set at 25 percent of their net income.

    Te Tūāpapa Kura Kāinga – the Ministry of Housing and Urban Development (HUD) pays the income-related rent subsidy to Kāinga Ora – Homes and Communities and registered Community Housing Providers (CHPs) to cover the balance between the tenant’s rental payment and the market rent for the property.

    Also: https://www.beehive.govt.nz/release/income-related-rents-what-it-means

    This from December 2000

    What about people who do not live in a state house?
    Government spends around $860 million a year assisting low-income people to pay their rents to private landlords or to pay their mortgage.

    Still government policy and action?

    • weka 10.1

      Accommodation supplement is a difficult problem to solve.

      • arkie 10.1.1

        That approach applied to the private market would be an improvement on the current one.

      • Maurice 10.1.2

        Indeed it is a difficult problem because both low income renters and landlords depend upon it to keep the rental market solvent. Once these things get baked in to the money-go-round there is the danger the whole shaky edifice comes apart at the seams if it is ever reduced or (heavens forbid) removed. It is essentially a flow of Tax money in to rental house owners pockets as the renter becomes just the conduit. For government social housing it is simply a money-go-round which flows through renters back to Government agencies. The whole thing is mind numbing and essentially inescapable.

    • Ad 10.2

      We do try and choose our tenants so they get to around 25% of income.

      It's cruel out there.

  10. Mike the Lefty 11

    Why just Auckland?

    Unaffordable rent increases are happening all over the country.

    We know that National/ACT won't do anything about it if they get into government.

    Time for Labour to show they are REALLY different from the opposition.

    • weka 11.1

      In this case it was in relation to the flooding and potential impact of that where landlords start increasing rents (for whatever reason) at a time when people have additional costs.

      But yeah, I'm in favour of a nationwide rent freeze while the government looks seriously at a strategy to help low income people. I believe this is Green Party policy.

  11. tsmithfield 12

    Here is another point. A lot of those being affected by the current dynamics of the housing market are home owners facing huge increases in interest rates. For some, it could well mean doubling of their mortgage payments. Thus, many home owners may be in a very difficult situation as well.

    So, if the government is going to impose a rent freeze, should it also impose an interest rate freeze? Sock it to those greedy banks.

  12. Stuart Munro 13

    Well, I'm not a fan of rentier capitalism. Neither was Marx.

    And the inflation of property prices and rents in NZ has been out of control for a generation. It is systematically further impoverishing our already disadvantaged. No effectual government action is apparent thus far – so Chloe's proposal seems like a very modest first step.

    I am of the working classes, higher education not being respected in NZ. I've worked in some pretty tough situations, and still do. But there will be no financial security for me. My governments prioritized the rights of slave ship operators, racist migrant exploiters like Chorus, and property speculators. None of the economic babble of self-styled economic experts has benefitted me or my peers.

    So, my question for highly paid allegedly professional economists and for government is "What the devil do you think you are playing at?"

    • weka 13.1

      I grew up middle class. I know from that experience and then encountering politicised working class people in my twenties that the middle classes are mostly blind to class issues in NZ. This makes it easy for them to make decisions based in middle class values that miss the mark for other people. That's what they are playing at.

      I consider myself part of the underclass (due to disability and life on a benefit) with the buffer of my middle class family still making things easier. My current view is that the middle classes are consolidating their power out of fear because of climate, global crises etc. The liberal ones care but they're still voting Labour because Labour will protect their assets whereas the Greens and TPM will try and share things around.

      I think/hope that climate will push us towards building community and in that we may find some of the class issues addressed. Working and underclass people are experts in dealing with crisis, depletion and powerdown in ways that middle classes just aren't. Once people understand we are all dependent on each other, as the middle class securities are stripped away, things may change. We have some choices here in whether this tips towards regenerative change or drops into the scary collapse scenarios.

      • Stuart Munro 13.1.1

        Yes, well explained.

        But it is not you, but those privileged policy makers that need the thought experiment of considering what BAU plus contemporary policy changes amount to in terms of outcomes for the two lower income quartiles.

        Either they are not thinking it through, or they are lying to themselves.

  13. tsmithfield 14

    Another problem with a rent freeze is that it benefits a lot of people who probably don't need it. So, landlords are being expected to carry the cost for a lot of people who could otherwise afford to pay an increase.

    But, an increase to the accommodation supplement is specifically targeted at those who need it most.

    • weka 14.1

      I've already explained to you that increasing AS leads to increases in rent. This is why anti-poverty activists want AS scrapped. It's a pipeline from taxation to landlord bank accounts.

      You should also understand that WINZ use a formula to calculate AS, and that interacts with the rest of the person's benefit. So a rent rise doesn't automatically mean the person gets the full amount from WINZ.

      I'd like to know who these people are that can afford a rent rise.

      • SPC 14.1.1

        An AS adjustment is required because rents have been increasing nationwide to the levels of urban centres.

        An AS is best made with the imposition of a rent freeze (thus will certainly ease living cost pressures). And from next year landlords will only be able to claim half the mortgage interest cost against rent income (those who own outright will as always pay tax on the rent income after costs – insurance, rates maintenance) as it reduces to zero year by year.

      • tsmithfield 14.1.2

        I'd like to know who these people are that can afford a rent rise.

        Quite a few actually:

        For instance, young people who have high incomes, but not enough deposit for a home yet; people who have temporary high paying jobs away from home that don't want the commitment of a mortgage, to cite several examples of people who would be able to afford a rent rise.

        My wife used to work in real estate, and there was a market for high end properties for people like this.

        And, I did argue that there would likely be a lag between rents adjusting for increases in the rental subsidy.

        Logically, if there was a direct, one to one correlation there would never be any point to increasing it, and in fact, it might as well be abandoned all together because rents would automatically decrease by the amount of that reduction due to the AS being abandoned.

        • SPC 14.1.2.1

          Sure those people renting and who are saving to buy a house (with more than just their Kiwi Saver) can pay more. But if they do, will their saving to own stop? Will their aspiration to own be dependent on further house price falls? A landlord who wants to sell before they lose all their mortgage interest deductions will need buyers in the market.

          • tsmithfield 14.1.2.1.1

            If they want to save, there are often other options. For instance, they could board with a family, or they could go back home to live with mum and dad.

            • SPC 14.1.2.1.1.1

              The old, human lives should be based around maximising the return on capital asset/property ownership after a natural emergency (earthquake/flood), argument.

              The issue is threefold

              1. Auckland rents had flatlined but now face upward pressure because of the flood.
              2. nationwide rents have been rising to the urban centre levels, but AS support is set at a lower level.
              3. people are facing a living cost problem, a rent freeze would help

              It’s a temporary approach to solve these issues.

              • A short-term rent freeze will only help those whose rents would be eligible for increase during that time.
                Under the new legislation, you're only able to increase rents once a year.

                And, of course, all the tenants will know that, even if there is a rent freeze, the rents will increase with a bang once the freeze is over.

                And, it will do nothing to help those most in need of help – those whose current rental is now uninhabitable (or seriously at risk of more flooding), and who will be seeking a new rental. Landlords can charge what they please for a new tenancy – it's entirely unaffected by a rent freeze.

                • SPC

                  And no government can freeze rents and deal with a loss of supply at the same time … well National did not after the earthquakes and landlords practiced extortion. We expect more of Labour.

      • tsmithfield 14.1.3

        Weka, the other thing is that when your argument about the AS was really about correlation, not causation.

        It could well be that governments increase the AS in response to rent increases, and that could well explain the correlation.

        To demonstrate causation it would be necessary to show that rent increases statistically occur after increases in the AS, and not the other way around.

        • weka 14.1.3.1

          people report increases in rent after increases in benefits. Not just AS. I agree that someone should be doing proper study on this. AS is in the too hard basket.

          • tsmithfield 14.1.3.1.1

            I actually think that increasing the AS probably does have some effect on rents when there is a shortage, for the same reason that inflation occurs due to too much money chasing too little goods and services. That is because AS effectively puts more money into the system, and at a time of a housing shortage, and that increase in money will likely be inflationary.

            But, I don’t think that is a one-to-one correlation, and that the inflationary aspect would lag. So, when we are considering a temporary emergency as in Auckland now, increasing AS might be as useful as a rent freeze.

            So, I don't completely disagree. Only that increasing AS would likely have little or no impact on rents if there is enough, or an oversupply of housing.

  14. SPC 15

    Preventing people who own rental properties from exploiting earthquake or flood diminished housing supply to extort "windfall" profits should be the expected response by government.

    Any other response is accepting that exploitation of the vulnerable is normal market practice that government should not interfere with – this is part of the world view of neo-liberalism.

    It will be a good test of where Labour stands (or is allowed to stand by the delegations placed on it by those who reign without accountability to any voter – those who enforce the established regime while elected governments come and go).

    • tsmithfield 15.1

      As I explained previously, the only real solution is to increase the housing supply.

      That is, because, rent increases are simply a reflection of a shortfall between supply and demand. Neither rent freezes, nor increases in the AS will change that fact.

      Some will be helped by rent freezes. But a lot will also be put into very difficult situations because landlords will become much more choosy about who they accept as a client. As, the risk factor is magnified if they are unable to cover their risk through rents.

      So, if you have a dodgy credit history, if you have pets, if you haven't been in a job long enough etc etc it will be very difficult to get a rental if you have to shift for any reason.

      I am not saying that these things aren’t considered already. But they will become much more of an issue if a rent freeze is introduced.

      • SPC 15.1.1

        Not even applying a temporary rent freeze after an earthquake, or flood, is miserable. And it has nothing to do with the "housing market" in normal times. We know National were miserable, but it would be a reality check for many here if Labour adopted their neglect.

        And as for the current practice of landlords as to tenant selection, a rent freeze would simply mean many retain current tenants because they were unable to bump up rents beyond their ability to pay. Bad for removal companies, good for those wanting security of tenancy.

      • Belladonna 15.1.2

        I find the current egg situation a parallel.

        There was a sudden crash in the wholesale supply of eggs (there are multiple causes and reasons, but the result is unequivocal). I read one estimate that NZ was about 200K eggs/day under what the market was demanding.

        Note, the eggs that were still being supplied – were no more expensive to produce and distribute.

        However, egg prices went up – substantially – and virtually overnight.

        Why did the price go up? Because the retailers – who had customers clamouring for eggs – offered more to the producers, to cut out their competitors. Where one retailer goes, the rest must follow – or have no eggs to supply at all. Result: price increases.

        [Usually we see this the other way around, with retailers putting pressure on the producers to lower prices – but this time it was the producers gaining the addition income]

        Now, that didn't erase the shortage, but it did reduce the demand (shoppers could choose to reduce or eliminate eggs from their weekly shop).

        When I shop at my local supermarket – eggs are rare on the shelves. But if I go to the upmarket Farro – they are almost always there… at an increased price. So eggs are available, if you can afford them.

        Will this last forever? Probably not. Most likely, producers will see that there is a sustainable profit to be made in egg production, and new barns will be established, increasing the egg supply. However, it is also possible that the new government regulations, RMA requirements, and the uncertainty of the behaviour of the large retailers (mandating different conditions at very short notice), may make this business unattractive for egg farmers to establish or expand. In that case, the higher prices are here to stay (and may increase further).

        I think that the parallels with the housing market are fairly apparent.

        • SPC 15.1.2.1

          A few details missing.

          New Zealand went from 86% of its laying population being housed in battery cages in 2012 to only 10% in December 2022. 33% of hens are now housed in colony cages, 26% in barns and 31% free-range.

          The decision to eliminate some of the egg supply from the marketplace, stage by stage (first battery, then colony). All replacements to the lost supply were more expensive. And the late decision by one supermarket not to retail eggs (colony) that were to be available to the market for some years yet. That supermarket chose to compete for a limited range of the available supply.

          Artificial changes in the market, such as that caused by events such as earthquake or flood. The market will respond, but it would be unwise not to protect the poor from the temporary rising cost impact. Such as we did with the price of petrol.

          And every decision that holds down costs reduces pressures for OCR increases that influence the mortgage cost faced by homeowners, including landlords.

          Doing the right thing can create a virtuous circle. Not that they teach that in market theory.

          • Belladonna 15.1.2.1.1

            The reasons for the shortage, aren't material (which is why I didn't include them), it was the fact of the shortage I was addressing. Although you have neatly outlined that it was driven by government policy, and an arbitrary decision by (at least one) of the major retailers.

            It is no more expensive today to supply free range eggs, than it was a year ago (well, not significantly). Yes, the alternatives were cheaper – but that wouldn't drive up price of free range eggs – it was the shortage, and the competition for a scarce supply which did this.

            I think you're ignoring the artificial changes which the government has been imposing on the housing market.

            Continually penalizing landlords (inability to claim back interest, additional costs for healthy homes (from which the Government exempted themselves), etc.), combined with market conditions (increased interest rates – which are also, at least partly, the result of Government policy) – has, unsurprisingly, resulted in increased costs to tenants.

            Now, landlords – even those not facing repair bills – will be anticipating a significant hike in insurance premiums – which will, again, inevitably, result in increases in rents.

            This 'virtuous circle' you refer to doesn't seem to be in operation. Really, I assure you, international banks are entirely unmoved by rent freezes, and will cold-heartedly insist on mortgagee sales, if mortgage payments can't be met. [NB: the sitting tenant will almost certainly not be in a position to purchase the property – given the interest rate rises, and the new mortgage lending rules]

            The way the government should intervene would be to provide or facilitate temporary housing options, and/or streamline the rebuild process (as they did in Christchurch by suspending the RMA). However, given the current wait list for state housing in Auckland – there seems to be little chance of this being an effective policy. I will await their actual policy with interest.

            On the topic of petrol levy reductions – I note that the Taxpayer's Union is also celebrating this continuation. Perhaps a strange bedfellow, for you.

            https://www.scoop.co.nz/stories/PO2302/S00006/taxpayers-union-welcomes-decision-to-extend-fuel-tax-cut.htm

            I note it was roundly condemned by the Green Party

            https://www.greens.org.nz/greens_not_on_board_with_fossil_fuel_subsidy

            • SPC 15.1.2.1.1.1

              We've been through this all before, the litany of excuses for why there should be no CGT etc or why making too hard for landlords means they will be forced, against their will, to punish tenants. They are not hostages to hold government to ransom.

              The largest impact has been the huge increase in property value caused by the QE settings after the pandemic arrived, this occurred despite landlords knowing of the phased loss of their mortgage interest deductibility.

              Taking house values beyond wages was only feasible while interest rates were artificially low, or the nation was turned into one of renters working to sustain the lifestyles of the landlord class.

              Rising costs to owners lowers values (and reduces wealth inequality), this allows more to own – we once aspired to be a property owning democracy (for the 90% not the 51%).

              • Don't know about 'forced against their will to punish tenants'

                But, rent rises are an inevitable consequence of increased costs to landlords, until the market reaches a point where tenants refuse to pay (i.e. there are other housing options they prefer to take).

                Or do you have some alternative explanation for the rent rises?

                If you are conducting a business, and your outgoings increase, you have little alternative but to increase your income. The alternative is that you go out of business, since you cannot operate at a loss for a sustained period.

                Those who believe that only government (or other social agencies/charities) should operate rental housing, won't see a problem in this. Those who believe that housing provision is just another type of investment, think otherwise.

            • Incognito 15.1.2.1.1.2

              Continually penalizing landlords (inability to claim back interest, additional costs for healthy homes (from which the Government exempted themselves), etc.) … [my italics]

              This is a most puzzling comment oozing negative emotions and containing potentially misleading info.

              Government has most certainly not exempted itself from having to comply with the Healthy Homes Standards. It did give private landlords and itself an extension.

              https://www.beehive.govt.nz/release/rental-sector-changes-regulate-residential-property-managers-clear-meth-confusion-and-ease

              Interest tax deductibility gave landlords an advantage and Government is gradually correcting this. This is not ‘penalizing’.

              The Healthy Homes Standards intends to improving housing quality across the board. This is not ‘penalizing’ either.

              • Private landlords required to meet healthy homes standards by July 2021 (within 90 days of any new or renewed tenancy)

                Kainga Ora (now) required to meet healthy homes standards by July 2024. There has been at least one time extension for KO. I can see no reason why the government (should it still be in power) wouldn't extend this further.

                https://www.hud.govt.nz/our-work/healthy-homes-standards/

                Surely the government should have been leading the way – if improving housing quality was their number one priority. Requiring private landlords to meet their deadline for healthy homes, while continuing to exempt their own housing, sounds pretty penalizing to me.

                Rental housing is the only investment where interest costs are not deductible. Also sounds pretty penalizing to me.

            • pat 15.1.2.1.1.3

              Once upon a time I invested in a company that was riding a wave of 'great expectations', facilitated by the banks and gov policy…..conditions changed and the banks removed their support and my investment was revalued to zero.

              Such are the risks of investment.

              • And did you choose to invest in that area again?

                Almost certainly not. Once burned, twice shy.

                • pat

                  You are half correct….I did not directly invest in that area again (nor did many who were burned by the change) but I am sure that my Kiwisaver provider has invested in the same area …. and the NZX continued despite my and the companies loses.

                  • So, you can see why in an environment of …. uncertainty… providers are less likely to invest. Whether that is egg production, or house building. Which is the point I was making.

                    • pat

                      Of course….however you also claimed the following..

                      "Those who believe that only government (or other social agencies/charities) should operate rental housing, won't see a problem in this. Those who believe that housing provision is just another type of investment, think otherwise."

                      The point is investment carries risk and property investment is no different, nor is there any obligation on the government (or taxpayers) to mitigate those risks for investors.

                      As stated…such is investing.

                  • Um, yes. That's why they'll protect themselves by not investing.

                    If the government wants to have private investors funding lower-cost housing, then they have to create and sustain an environment where those investors believe they can make a profit, and won't have the rug pulled out under their feet by sudden regulatory changes.

                    We've already seen several developments go into receivership, before the houses are complete. These appear to be due to a range of issues (inflated cost of building materials, and rising interest rates would be my pick for proximate causes, but uncertainty around the housing investment regulatory environment, are likely to explain why extended credit wasn't available from the banks).

                    However, given those failures, I'd say that almost all developers would be eyeing the current NZ environment with a great deal of caution.

                    If, as many here appear to believe, there is no place for private investment in rental housing, this isn't, of course, a problem. Government can just build all the houses (no idea where the Government is supposed to get the money to do this, however)

  15. tsmithfield 16

    Here are some things I would do that would actually make a difference.

    First, in the emergency environment that exists after the flooding I would look for innovative ways to house people so there isn't additional pressure on the rental market. For instance, that might involve encouraging people to billet a family if they have room while there house is being repaired. Maybe bring in some camper vans or self contained caravans, or temporary houses. We had experience of all this after the earthquakes.

    Secondly, I would remove some of the stupid costs imposed on landlords. For instance, I would reinstate their ability to claim interest as an expense. Hopefully, this will reduce the need for landlords to increase rents.

    Thirdly, I would set up subdivisions that have requires that housing built on those subdivision is for rental purpose.

    Fourthly, I would underwrite rental developments so that banks would be prepared to lend to developers for that purpose.

    This then targets the actual causes of the issue rather than tinkering around with rent freezes that cause as many problems as they solve.

    • SPC 16.1

      First, in the emergency environment that exists after the flooding I would look for innovative ways to house people so there isn't additional pressure on the rental market. For instance, that might involve encouraging people to billet a family if they have room while there house is being repaired. Maybe bring in some camper vans or self contained caravans, or temporary houses. We had experience of all this after the earthquakes.

      Yes, but did not prevent huge windfall profits by those who raised rent levels bigly.

      • Belladonna 16.1.1

        Followed by rental stagnation and deflation – once the temporary surge in demand was over.

        https://christchurchrentalproperties.co.nz/news/rental-supply-and-demand-in-christchurch-post-earthquakes

        Absent moving to government control of a resource, there is no way I know of, to suspend the 'law' of supply and demand in a capitalist economy.
        If you have an example, of this working effectively, then please share it.

        • tsmithfield 16.1.1.1

          There does tend to be market swings and over-corrections. That is why there is the old adage that the best time to get into an investment is when most people are saying it is a bad idea.

          But things do tend to level out in the end.

          And, do governments do any better? Usually governments don't really understand the problem they are trying to solve, and totally fail (eg. 100k houses) or cause all sorts of unforseen problems.

        • SPC 16.1.1.2

          If there had been a rent freeze, there would not have been the belated over-supply … .

          Boom bust is a market thing. Greed and or fear (of consequence) dominates market cycles.

          Before Christchurch there was the inflation managed by Bollards rising OCR – and then the collapse of the property developer market and bankrupt finance companies. For years afterwards there was a lack of new consents and building – this when combined with the immigration intake led to another property shortage and rising market values (and rising rents).

          Now there has been the QE led boom on boom in values – caused by unsustainably low mortgage rates.

          Claiming that markets are all knowing and operate some invisible truth is religion, which is why economics is called the dismal science. It requires constant sacrifices of humanity.

          • tsmithfield 16.1.1.2.1

            I don't see markets as all knowing. But more like a barometer that responds to whatever conditions are in existence at the time, or perhaps even like a thermostat that automatically regulates itself.

            This is not the same as consumerism, which is a concept that depends on an ever increasing demand, sort of like a pyramid scheme, which is clearly unsustainable, and is likely to become so soon due to demographic trends etc.

            A market is just the cumulative result of transactions between all those who buy and sell. And things eventually sort themselves out, though not necessarily in a way that makes people happy.

            I see the role of government is more to shape the conditions in which markets operate, and to give guidance on upcoming situations that could impact the economy etc rather than directly interfere in markets.

            Because when governments interfere, they often take a very simplistic approach that attempts to solve one problem that is a pressing issue, but ends up creating all sorts of other problems and unintended effects that just makes things worse.

            Think of it the same way you likely think of National’s boot camp idea. Simplistic solutions that push the buttons of voters, but under objective analysis just don’t work.

            • arkie 16.1.1.2.1.1

              This is the religious bit:

              A market is just the cumulative result of transactions between all those who buy and sell. And things eventually sort themselves out

              This is an article of faith, not an evidenced look at reality.

              • tsmithfield

                You missed out:

                though not necessarily in a way that makes people happy.

                Which takes away the "religious" element.

                Let me give an example from the effect of government interference in the Hurricane Hugo disaster.

                We studied that in an economics paper at Uni.

                One of the issues was the supply of ice. Because power was out, people needed ice to pack their freezers to keep meat and food edible. Everyone wanted ice. Because there was a shortage, the price of ice went sky high.

                This caused a lot of public angst. So, the local government put price controls in place.

                What happened was that it became a first-in first served type of environment. So, people who wanted ice for some trivial reason (e.g. to keep the beer cold) would get their ice if they were in first. But then, because there just wasn't enough ice to go around, the ice ran out fairly quickly. Then people who really wanted ice to keep their meat etc frozen missed out.

                But, if the market was left alone, those who really needed ice, and were prepared to pay the price would have got it. Whereas, those who wanted it for trivial reasons probably wouldn't have bothered.

                The same sort of thing happened with plywood, power tools etc. Price controls were put in place on those sorts of things. Merchants decided it was easier just to sell those products in their local markets, whereas they would have flooded the place with that sort of stuff if it was worth their while.

                So, it was concluded that government interference had really slowed the recovery down.

                We had a similar situation in Christchurch after the earthquakes. Power was really dodgy, and so there was a high demand for candles. I went into Mitre 10 to get some. Instead of being about $3 per box as normal, they were suddenly at $12 per box. So, I didn't bother buying any at that price.

                The funny thing was, that, not long after that, the power problems were resolved. So, Mitre 10 may have had to pay a lot more for candles themselves for similar reasons. And perhaps they were a bit speculative stocking up on candles.

                So, they may have lost a lot on their stocks of candles if they had to sell them at a loss to clear them.

                But, that is the way it works. Not necessarily in a way that makes everyone happy.

                Price increases are really an indication of shortages. So the answer to the problem is either to let the market set a price that regulates the available supply, or to increase the supply.

                Price controls are part of the problem, not the solution.

                • arkie

                  Another religious statement:

                  But, if the market was left alone, those who really needed ice, and were prepared to pay the price would have got it. Whereas, those who wanted it for trivial reasons probably wouldn't have bothered.

                  What happened to those who needed the ice but couldn't afford it?
                  What happened to those who wanted the ice for trivial reasons but could afford it?
                  Only those with the ability to meet the sellers price got any ice, their level of need or reasoning for getting the ice was entirely irrelevant.

                  Markets are not moral, they need regulation to function, and heavy regulation to be considered free or equitable.

                  • tsmithfield

                    I agree that markets often need regulation to prevent exploitation etc.

                    And, I agree, the situation wasn't ideal or completely fair. But the market setting the price would have led to better outcomes than fixing the price.

                    The best solution would have been to have found some way to increase the supply of ice. Because that would have regulated the price, and ensured there was enough to go around. So, no one would have needed to miss out.

                    Fixing prices is just trying to treat the symptom, not the problem.

                    As I said, the fundamental issue at the heart of price increases is that it is a response to shortages. So the most equitable way to solve that problem is to increase the supply.

                    • The best solution would have been to have found some way to increase the supply of ice. Because that would have regulated the price, and ensured there was enough to go around. So, no one would have needed to miss out.

                      And an increase in the price of ice, provides a great incentive to innovation, in finding a way to achieve this.

                      Whereas market caps, provide no incentive for anyone to increase the supply.

                  • Do you have a solution? You appear to be advocating for some local regulation czar to be determining the individual 'need' of each person wanting ice.

                    I can't think of a situation where that hasn't resulted in massive inefficiency when there are shortages (everyone who needs ice has had their meat spoil, by the time the decision is made), and/or corruption (those with most power/influence get their ice, and everyone else misses out).

                    • tsmithfield

                      No. Something the local government could have done, rather than fix prices, was to perhaps cut red tape (if that was a problem) so someone could rapidly set up an ice production plant, using petrol electric generators or something.

                      Because there was a shortage, there would have been enough incentive for someone to do that. Heck, its only ice, not advanced computer chips.

                      As I said, the cause of the problem is the shortages. The price is only a symptom of the shortage. So the best solution to the problem is to solve the shortage.

                • tsmithfield

                  And here is another thing:

                  I think, left alone, the market would also solve global warming. Though not in a way many (including me) would like.

                  The result the market delivers would probably be to right-size the world population to the available resources. So, likely mass starvation and deaths in many areas.

                  But, we are heading in that direction anyway. If things keep intensifying beyond what was experienced in Auckland there are huge problems ahead.

                  And how are all those government summits and things going?

                  And we haven't had a pure market in place in the world economy which is why the problem hasn't already been sorted. Think all those agricultural subsidies and the like.

                  The fact that government interference at multiple levels has allowed the global warming problem to get so far out of hand means that any market correction to that would be much more severe than it needed to be.

                • Drowsy M. Kram

                  Naomi Klein: how power profits from disaster [6 July 2017]
                  After a crisis, private contractors move in and suck up funding for work done badly, if at all – then those billions get cut from government budgets. Like Grenfell Tower, Hurricane Katrina revealed a disdain for the poor.

                  But, if the market was left alone, those who really needed ice, and were prepared to pay the price would have got it.

                  So "if the market was left alone", the ability to pay, rather than need, would determine who got ice, or whatever? Good ol' invisible hand.

                  A "Handy" Guide to the Housing Market

                  Invisible-Hand-Of-The-Free-Market Man

                  Your Coporate Democracy

                  A Disturbing Conversation (but what can we do?)

                  Crisis Management

                  From CC to the Delta variant, too bad there’s nothing we can do!
                  "Maybe we should prioritize people's lives over corporate profit."

                  Ladies and Gentlemen, Capitalism Has A Winner!

                  Imho, too many things are skew-whiff. Global civilisation is seriously (terminally?) out of kilter, and BAU neoliberalism is a dead weight.

                  Hope I'm wrong – time will tell.

                  As the cost of living crisis becomes entrenched, Nick Dowson examines the scene of the crime, tracks down the culprits and proposes a route to resolution. [12 Jan 2023]

                  Everywhere the story is the same: more misery for the many, more profits for the few. Through 2022, roughly one million people were pushed into extreme poverty every 33 hours. For 150 million people hunger is a daily reality. But champagne dealers are worried about low stocks, as the wealthy rush to buy their finest bottles.

                  In a crisis like this, it’s more important for someone to heat their home than heat their swimming pool,’ says Hayes. Or one could say: it’s more important to allow everyone to be able to eat, than to allow corporations to devour bumper profits. Or if another reminder is needed that this crisis is also a planetary crisis, here’s a fact: each billionaire is responsible for emissions a million times higher than anyone in the poorest 90 per cent.

                  The cost of living crisis, like the climate crisis, is a crisis of inequality. Is now not the time to say – is enough not enough?

                  • tsmithfield

                    So "if the market was left alone", the ability to pay, rather than need, would determine who got ice, or whatever? Good ol' invisible hand.

                    Absolutely true. But still more efficient than the first-in first-served market that arose due to price controls. Because, in that environment, people who couldn't afford to pay would have still missed out if they weren't far enough up in the queue.

                    At least the market approach meant that those who had the greatest need for the ice were more likely to get it.

                    But, all this is showing is that the real problem was lack of supply. If the supply issue was resolved, then the problems of both lack and price would have been solved.

                    Imho, too many things are skew-whiff. Global civilisation is seriously (terminally?) out of kilter, and BAU neoliberalism is a dead weight.

                    As I said earlier, consumerism is really the problem, not so much market economics. The two are quite different concepts, although I think much of the angst from the left is really directed at consumerism, but they conflate that term with market economics.

                    I see consumerism as largely a result of interventions by multiple governments across the decades. For instance, look at the deficit trend in the US. The continual creation of these deficits sets the conditions for the market. The result is easy credit that fuels consumerism.

                    So, I contend that market interference from governments is one of the main causes of the problems the world has today. And, unfortunately, when the "correction" comes, it is going to have a much more severe impact on society, especially the poor, than it ever needed to.

                    • Drowsy M. Kram

                      Absolutely true. But still more efficient than the first-in first-served market that arose due to price controls. Because, in that environment, people who couldn't afford to pay would have still missed out if they weren't far enough up in the queue.

                      At least the market approach meant that those who had the greatest need for the ice were more likely to get it.

                      Can you explain the "more likely" bit. Surely a "market approach" prioritises the 'needs' of those with the necessary wherewithal, who are not necessarily those with the greatest needs, either quantitatively or qualitatively. What am I missing here?

                      So, I contend that market interference from governments is one of the main causes of the problems the world has today.

                      So too much market interference from govts was a main cause of the 2007-2008 global financial crisis, global warming et al.? Can you join the dots for me, preferably with a few links.

                      A "Handy" Guide to the Housing Market

                      Arguably the largest contributor to the conditions necessary for financial collapse was the rapid development in predatory financial products which targeted low-income, low-information homebuyers who largely belonged to racial minorities. This market development went unattended by regulators and thus caught the U.S. government by surprise.
                      https://en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis

                      I contend that known aspects of human behaviour, e.g. greed and exploitative/expansionist tendencies, coupled with inadequate (govt) regulation/moderation, are the most significant contributors to our civilisation's past, present and future woes. But it’s not all bad.

                      Do you ever wonder if the human passengers of spaceship Earth are really that much 'smarter' than bacteria on nutrient agar in a Petri dish? Maybe that depends on how one defines intelligence.

                      Is "the market approach" the 'market' of the Petri dish, do you think?

                    • tsmithfield

                      Can you explain the "more likely" bit. Surely a "market approach" prioritises the 'needs' of those with the necessary wherewithal, who are not necessarily those with the greatest needs, either quantitatively or qualitatively. What am I missing here?

                      I am talking about probabilisitic outcomes rather than immutable laws.

                      In a market, the price will rise until the demand and supply side equals. That is why we purchase our red and green peppers in the summer and slice them and freeze them for the winter. Because, they are plentiful in the summer so the price is low. In the winter, the prices for peppers tend to rise and get quite expensive due to the lower supply. So, we tend not to buy them then because the price is very high and rely on our frozen ones instead. But, the fresh peppers are available for those who want them badly enough to pay the going rate.

                      So too much market interference from govts was a main cause of the 2007-2008 global financial crisis,

                      I am glad you mentioned that. Because, government interference was definitely a major contributor to that issue.

                      Have you heard of Fannie May and Freddie Mac?

                      From the link:

                      Fannie and Freddie were government-sponsored enterprises (GSEs). Like private companies, they had to be competitive to maintain their stock prices. At the same time, the federal government implicitly guaranteed the value of the mortgages they resold on the secondary market. That caused them to hold less capital to support their mortgages in case of loss. As a result, Fannie and Freddie were pressured to take on risk to be profitable. With government backing, they also knew they wouldn't suffer the consequences if things turned south.

                      I have seen opinions that these two government-backed finance companies were the main cause for the subprime mortgage collapse. As the article points out, the reality was more complex than that. But they definitely were a substantial contributing cause.

                      What happened was that people who could afford their mortgages when interest rates were artificially low, suddenly couldn't when interest rates rose, becoming the initial cause of the cascade of failures that followed. The multiple securitisation of those mortgages definitely magnified the problem. But, the cause was the high degree of bad mortgages that resulted.

                      But, as I mentioned in an earlier post, this was just the market responding to earlier bad decision making in a way that people didn't like.

                      The market wasn't the cause. The market just reacted to the conditions that had been set.

                    • Drowsy M. Kram

                      That is why we purchase our red and green peppers in the summer and slice them and freeze them for the winter.

                      Glad you mentioned green/red peppers – do you think there are Kiwis who lack the wherewithal to enter the 'pepper market', even when prices are relatively low? If so, what market solutions are available to them? Peppers are quite good (healthy), so can 'the market' provide, or should people in poverty grow their own?

                      Why poverty in New Zealand is everyone's concern
                      Liang describes poverty as a "heritable condition" that perpetuates and amplifies through generations: "It is also not hard to see how individual poverty flows into communities and society, with downstream effects on economics, crime and health, as well as many other systems. Loosen one strand and everything else unravels."

                      A Kete Half Empty
                      Poverty is your problem, it is everyone's problem, not just those who are in poverty. – Rebecca, a child from Te Puru

                      https://thespinoff.co.nz/society/16-08-2022/the-side-eyes-two-new-zealands-the-table

                      Inequality is a ginormous problem in my book, and we agree that consumerism is (also) a problem. Might 'the market' be contributing (deliberately and continuously) to that problem via advertising?

                      Might government regulations that place restrictions on the sale and advertising of some harmful products be a net gain for society?

                      Talking of 'the market' and harm, here's an interesting link to the history of the seatbelt, and the reluctance of car manufacturers to install seat belts in cars. 'The market' was simply responding to signals from consumers, so government regulations were needed to override 'the market'. Has anyone estimated how many lives have been saved by those government requirements and regulations.

                      An act of altruism
                      Indeed, so convinced was Volvo of the importance of the invention, they gave it away. Yup – they deemed the seat belt too significant to the car industry to profit from it. They simply gave it away and allowed anyone and everyone to use the design.

                      Finally, some progress
                      This didn’t mean other car manufacturers did though. It wasn’t until 1961 when New York State passed a requirement that manufacturers must at least provide anchor points for front seatbelts on all cars sold. Other states soon followed suit, despite the car companies citing cost considerations and being against the idea.

                      Just having the seatbelts fitted to cars was only half of the problem. People had to actually use them. Closer to home, the Victoria State Government decided to take matters into their own hands. On December 22nd 1970 they made the wearing of seatbelts mandatory.

                      There are many more obvious examples of beneficial outcomes from government interventions in 'the market' – hardly surprising, given that the over-riding purpose of 'the market' is to generate profits for providers of goods and services, in some cases massive profits. Consumer wellbeing is typically at best a secondary consideration. Even when CEOs know one or more of their products is harmful, they'll often deny it with every fibre of their being, because – profits.

                      The chair of the board of DuPont was quoted as saying that ozone depletion theory is "a science fiction tale…a load of rubbish…utter nonsense".
                      https://en.wikipedia.org/wiki/Montreal_Protocol#History

                      Still, your faith in 'the market' is touching – maybe there's hope for civilisation yet.

                      NO UTE TAX! WE PAY IT SO YOU DON'T HAVE TO!

                      I'm never 'nervy' now! Take MARSHALL'S Fospherine

                      I choose to have as little to do with 'the market' as is humanly possible, but if you have money, then 'the market' can be a thing of wonder. Whereas if you have no money, then you're of very little interest to 'the market'. Practically invisible – market-transparent.

                    • tsmithfield

                      If so, what market solutions are available to them?

                      There are solutions. But just not "market" solutions. Because, by definition, it is not a function of "the market".

                      For example, a trust that I am treasurer for runs a community garden. We also have a commercial kitchen, and are looking to establish community cooking classes this year.

                      You see, a lot of people no longer no how to cook their own food, and therefore end up using more expensive, less nutritious food choices. So, if they were given bucket loads of peppers they may not have a clue what to do with them.

                      So far as regulations for safety belts etc, that is just the government shaping the direction of the market, not interfering in it. That is non-controversial, and exactly the right thing for governments to do.

                      When I talk about government interference in a market, I am meaning that the government is interfering in the way the market operates. For example by price freezes, or, as in the case of the sub-prime market, the government pressuring its pet lenders to avoid normal due diligence in approving loans.

                      To make it clear "the market" isn't some type of evil entity. It is simply the statistical outcome of multitudes of transactions between buyers and sellers. It is totally amoral, and uncoordinated. But, its cumulative effects are predictable based on principles such as supply and demand, elasticity of demand etc.

                      So long as people buy and sell there is a market. It is nothing more than that.

                      "Market" has nothing to do with whether we should be concerned about the poor etc. It is just that by definition, it has nothing to do with that, nor can it.

                    • Drowsy M. Kram

                      So far as regulations for safety belts etc, that is just the government shaping the direction of the market, not interfering in it. That is non-controversial, and exactly the right thing for governments to do.

                      Odd don’t you think that both ‘ends’ of ‘the market’ (manufacturers and consumers) considered such intervention/”shaping” unnecessary and/or undesirable, given its apparently non-controversial nature.

                      To make it clear "the market" isn't some type of evil entity.

                      To make it clear, I never said it was. Imho, generation/extraction of profit is now the primary purpose of 'the market' – it's reason for being – and massive profit-taking year-in year-out, by any and all means within, or indeed outside the limits of laws/regulations, has flow-on effects.

                      US utilities shut off power to millions amid record corporate profits – report [30 January 2023]
                      Largest utilities spent billions on stock buybacks, dividend payments to shareholders and executive salaries, analysis finds

                      Richest 1% bag nearly twice as much wealth as the rest of the world put together over the past two years [16 January 2023]

                      Corporate greed, not wages, is behind inflation. It’s time for price controls [23 Sept 2022]
                      Corporations are using those increasing costs – of materials, components and labor – as excuses to increase their prices even higher, resulting in bigger profits. This is why corporate profits are close to levels not seen in over half a century.

                      Controls?! Hmm, perhaps 'price shaping' would be more palatable.

                      https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/antitrust-laws

                      https://en.wikipedia.org/wiki/Insider_trading

                      'The market' is merely (a) human (construct), and to err is human. 'The market' is 'exploited' for evil purposes – pity the abused and exploited market – and thank goodness for market regulators.

                      "Market" has nothing to do with whether we should be concerned about the poor etc. It is just that by definition, it has nothing to do with that, nor can it.

                      And yet the title of weka's post is: Protecting poor people: the call for a rent freeze in Auckland

                      If "market" “has nothing to do with whether we should be concerned about the poor etc.“, then it seems pretty abstract and useless to me, although one's PoV might by influenced by the flow of market profits.

                    • tsmithfield

                      Imho, generation/extraction of profit is now the primary purpose of 'the market' – it's reason for being – and massive profit-taking year-in year-out, by any and all means within, or indeed outside the limits of laws/regulations, has flow-on effects.

                      I think you are over analysing what a market is.

                      Markets are simply the function of the fact that money exists as an efficient means to enable exchanges between buyers and sellers. Nothing more than that. Think of it as a very simple game. The rules are: Provide something that people want and are willing to pay for.

                      Those who are grandmasters of that game experience far more demand for their products than they can produce themselves. So, they employ people to help them meet the demand. And so the world goes around.

                      And, you likely support those who are making billions from the market without even thinking about it. Every time you use Google, for instance.

                      Hmm, perhaps 'price shaping' would be more palatable.

                      I don't think governments should never intervene in pricing. Just that it is a very simplistic response that often causes more problems than it solves.

                      Look at the increasing excise duty on cigarettes for example. I actually think this is a good thing overall because smoking rates are declining which has great health benefits.

                      But there are lots of unintended consequences. For instance, cigarettes are now seen as valuable commodities that make it an incentive for criminals to rob dairies.

                      Even if the commercial sale of cigarettes were banned altogether, it would simply create an underground criminal network to supply the demand. And, soon we would be in the place we are with cannabis, and there would be calls to legalise cigarettes again.

                      And, it has in a large part been responsible for the surge in vaping, which is helping many to quit smoking (a good thing) but also causing its own problems at the moment (e.g. kids picking up vaping as a habit with unknown long term health effects).

                      So far as price freezes on rents are concerned, I have argued that the downsides of this far exceed the upsides, and that the actual problem which is a shortage of rental accomodation will just be intensified through this.

                      So, I see rent freezes as an attempt to treat the symptom rather than the problem. And I think it is much better to look at ways to solve the actual problem as quickly as possible.

                    • Drowsy M. Kram

                      I think you are over analysing what a market is.

                      Bull market, bear market, black market – willing buyer, willing seller.

                      Human trafficking
                      According to the International Labour Organization (ILO), forced labour alone (one component of human trafficking) generates an estimated $150 billion in profits per annum as of 2014.

                      Best not to over-analyse “what a market is“, and does? indecision

                      I don’t know – there’s good analysis, and bad analysis, but over analysis?

                    • tsmithfield

                      Yep, best not to think too deeply about what a market is and does

                      As I said earlier. Markets are amoral. Can be used for good or bad. Just the same as money is, because markets are just a projection from money.

                      And, I did say I am not always opposed to intervening in markets. Intervening in human trafficking is obviously something we should be doing.

                      But, again, human trafficking is often a symptom as well as a problem. The underlying problem often is that poor people can become vulnerable to human trafficking because they lack choices due to their poverty.

                      Intervening in human trafficking is the right thing to do. But so long as the underlying poverty prevails, it will never be stamped out. So, dealing with the underlying poverty is the ultimate solution.

                    • Drowsy M. Kram

                      https://www.merriam-webster.com/words-at-play/using-unmoral-immoral-nonmoral-amoral

                      So, dealing with the underlying poverty is the ultimate solution.

                      Absolutely. And anyone expecting an amoral market to ameliorate poverty will be in for a long wait. Can't help wondering, however, about the pros and cons of some short-term, localised rental market 'shaping', or even long-term rent controls similar to those used in Vienna (weka's example).

                      Hmm – might market 'shaping' imbue an amoral market with morals?
                      Vis-à-vis dealing with poverty, maybe a wealth tax is preferable wink

                  • tsmithfield

                    I guess we would both agree that a solution that targets a symptom but makes the underlying cause worse is not a good solution.

                    I suspect the only point of disagreement is whether that applies to rent freezes, temporary or otherwise.

                    I am not sure we can advance this much beyond that.

                    • Drowsy M. Kram

                      I am not sure we can advance this much beyond that.

                      Yes, with serious pain in the offing for a significant minority, progressive change is inevitable. The on-going COVID-19 pandemic and recent weather events offer glimpses into the future of passengers on spaceship Earth, and Kiwis may fare better than most.

                      The opinions presented in this old article appealed to me as a way of providing some rapid pain relief, although more drastic ‘shaping‘, interference even, will be inescapable in the medium-to-long term.

                      The Need For Moral People In Amoral Markets
                      [28 July 2014]
                      The irony was and is that such rapt attention on profits undermines the long-term success of a company. The complexities of business mean that after a certain point, maximizing profits means reducing what is available to other corporate stakeholders — business partners, employees, customers, and lands and societies in which business is done. Executives eat away at the foundation that enables a long-lasting and profitable company.

                      Government will be of limited health because executives have the companies contribute money to reelection campaigns, creating a disincentive to change the status quo. The only true hope is to focus on the need for the expression of morality and ethics in business.

                      Calls for bigger windfall tax after Shell makes ‘obscene’ $40bn profit [2 February 2023]
                      Sunak government under pressure after gas prices fuel ‘outrageous’ doubling of profits at Anglo-Dutch group

                      Comment: While Exxon rakes in record profits, extreme poverty is on the rise [1 February 2023]

                      How large corporations make huge profits from hidden markups at the expense of consumers
                      [18 January 2023]

                      Oxfam: Social inequality and poverty soaring in Australia [18 January 2023]

                      Richest 1% have captured almost two-thirds of all new wealth since 2020 [17 January 2023]
                      Oxfam is calling on governments to introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering. In addition, governments must permanently increase taxes on the richest 1 percent, for example to at least 60 % of their income from labor and capital, with higher rates for multi-millionaires and billionaires. Oxfam says governments must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income. Moreover, the wealth and resources of the richest 1 % needs to be redistributed by implementing inheritance, property and land taxes, as well as net wealth taxes.

                      According to new analysis by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam and the Patriotic Millionaires, an annual wealth tax of up to 5 % on the world’s multi-millionaires and billionaires could raise $1.7 trillion a year, enough to lift 2 billion people out of poverty, fully fund the shortfalls on existing humanitarian appeals, deliver a 10-year plan to end hunger, support poorer countries being ravaged by climate impacts, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries. “Taxing the super-rich is the strategic precondition to reducing inequality and resuscitating democracy,” explains Bucher. “We need to do this for innovation. For stronger public services. For happier and healthier societies. And to tackle the climate crisis, by investing in the solutions that counter the insane emissions of the very richest.

                    • tsmithfield

                      So, how would you define an "obscene" profit.

                      Is it "shit this is a big number so it must be an obscene profit"?

                      Because I often hear this assertion that corporation x makes an "obscene" profit. And then some large number touted as evidence of that.

                      But, corporations tend to be big, and employ a lot of people by the way, so their profits will tend to be big also, just as a function of scale. And, sometimes, when measured on the basis of ROI, then, the returns may not be that impressive, and said corporations may have made more by leaving their money in the bank.

                      So, how is it objectively determined that a profit is obscene? And what would a fair profit be?

                      For me, the answer would be more around how those profits are generated rather than the size of them. For instance, if profits are made by destroying the environment or exploiting people, that would be more indicative of an obscene profit rather than the amount.

                    • arkie

                      profits are made by destroying the environment or exploiting people

                      This is the truest thing you have said. Look at the degrading environment, profit-seeking has done this. Look at the growing and extreme inequality, profit-seeking has done this.

                    • tsmithfield

                      Look at the degrading environment, profit-seeking has done this. Look at the growing and extreme inequality, profit-seeking has done this.

                      But a lot of corporations are trying to clean up their acts.

                      But in the end, it comes down to us as consumers. If we continue to support unethical corporations because they produce cheaper goods then we are part of the problem, rather than part of the solution.

                      For me, "ethical" means minimising environmental impact where it is necessary to mine for resources for whatever reason, and ensuring that damage is mitigated afterwards. And ensuring that standards of living for those employed are lifted where corporations take advantage of cheap labour rates in countries such as China, Indonesia, or India.

                      That can be harder to achieve where corporations subcontract to local manufacturers. But the subcontracting companies probably need to be audited on that basis to ensure they comply.

                      But taking these sort of measures may increase the cost of those specific goods. So, if faced with the option of buying say, a pair of sneakers where the ethically produced ones were say $30 more than the cheap, unethically produced ones, which would you choose? Because it is our choices in the end that drives the behaviour of corporations.

                    • Drowsy M. Kram

                      So, how would you define an "obscene" profit. – ts @7:22 am

                      I'll leave that to people who know what they're talking about, but I know what I like – and what I don't.

                      Give Me Those Obscene Profit Margins [6 Sept 2022]
                      The point of business is not revenue, or growth. It’s profit.

                      Because I often hear this assertion that corporation x makes an "obscene" profit.

                      We must move in different circles – I'd been unaware of the phrase "obscene profit(s)" before I started replying to comments in this thread. Still, it seems you are correct – the "obscene profit" meme is well established, and on the rise.

                      Pfizer Accused of 'Obscene' COVID Profits After Posting Record Revenues [2 February 2023]

                      Morgan Godfery: The big banks are making obscene profits. Let’s tax them [3 November 2022]

                      Canada joining International Group to Investigate “Obscene Profit” of Shipping Carriers [22 March 2022]

                      Builders – The real polluters – must be asked to pay: an open letter to High Court of Gujarat [2018]
                      Builders have violated Floor Space Index (FSI) rules to construct more than double area to earn obscene profit.

                      Shell bets everything on a four degree future
                      [4 October 2012]
                      If you're Shell, this scenario means obscene profit for a couple more decades.

                      Profit is fine, but obscene profit is just immoral
                      [11 January 2010]

                      But could "obscene profits" really be bad? There's a growing awareness (slow to dawn on some) that "obscene profits" fuel poverty and obscene inequality, undermining resilience when we need it most. Which may be slightly concerning to some CEOs, but I reckon most are well insulated from the 'obscene profits' meme.

                      But a lot of corporations are trying to clean up their acts.

                      Good on them for trying. The same could be said for a lot of consumers, but it's not easy… what a world/spaceship.

                      Come and get a taste of normal’: Advertising, consumerism and the Coronavirus pandemic
                      [19 July 2022]

                      If there is a silver lining here, it is that the worse things get, the more likely they are to be exposed and publicly critiqued.

                      If advertising during the pandemic encouraged some consumers to challenge rampant consumerism and commercialism, and to want to hold consumer brands to account, the big question is how we harness that energy as we brace ourselves for future crises and their attendant advertising campaigns.

                    • Drowsy M. Kram

                      Because it is our choices in the end that drives the behaviour of corporations. – ts @9:51 am

                      'Our' choices? If you're lucky enough to be in a position to make ‘choices’, then maybe – but imho the 'choices' of the majority of passengers on spaceship Earth don’t drive corporate behaviour.

                      https://www.statista.com/chart/11857/the-global-pyramid-of-wealth/

                      Egypt tells Elon Musk its pyramids were not built by aliens
                      Wealthy people are in the driving seat – don't rock the spacecraft wink

                  • tsmithfield

                    'Our' choices? If you're lucky enough to be in a position to make ‘choices’, then maybe – but imho the 'choices' of the majority of passengers on spaceship Earth don’t drive corporate behaviour.

                    We all have choices, even if it is not to buy something. Usually there is noone pointing a gun at our head when we go to buy something.

                    But, this is an area where governments can shape the market. Create a river bed for it to flow in if you will.

                    For instance, governments could start requiring corporations to have a recognised certification (maybe ISO?) in sustainability and ethical behaviour before those goods can be imported.

                    Perhaps governments could start requiring that goods be repairable and also be economical to repair instead of just possible to repair. I signed a Greens petition on this recently. And, from memory, France already have something like this in place.

                    Thats something that really annoys me. The amount of waste and pollution due to junk being produced that gets thrown away at the end of its life.

                    • Drowsy M. Kram

                      We all have choices, even if it is not to buy something.

                      Hmm, but if you (not you, obviously) can’t afford to buy something, is not buying it really a choice? Can you help me out here?

                      Yes, all people have choices ('Sophie's Choice' is a sobering film), and some people have (obscenely) more choices than others.

                      Seems consumers and Governments are to blame again – 'poor' ol' helpless corporations are simply powerless to stop raking in their obscene profits. How frustrating, annoying even, to have no choice.

                      Death by the Virus or Death by Starvation…Sophie’s Choice of the Poor [26 April 2020]

                      The Global Wealth Pyramid [29 September 2022]
                      The level of financial inequality around the world is staggering.

                  • tsmithfield

                    Can you help me out here?

                    There often (not always) is a choice that doesn't involve anything radical such as robbing the store.

                    For instance, buying clothes at an op-shop rather than new. For someone who can't even afford that, an organisation like the Salvation Army could probably help them out.

                    Seems consumers and Governments are to blame again

                    I am not trying to blame anyone. Markets are really just basic human nature at play. So, whatever fits with that will likely work in a market. So, corporations will take the least path of resistance if they are allowed to, and produce their goods as cheaply as possible to be competitive.

                    Of course, what I proposed could be viewed as the government intervening in the market, though I prefer to see it as "shaping". But there are consequences for that sort of action. If there were rules about sustainability etc applied to imports, then choice would likely go down, and the price would likely go up. So, we would have to accept that as the price for doing the right thing.

                  • tsmithfield

                    I've read a few tortuous defences of 'obscene profits' – imho, those who stand to benefit will resist anything that might threaten profit with evey fibre of their being.

                    But, you haven't defined what an "obscene" profit actually is, and use examples that seem to indicate that the best you can come up with is the "shit, thats a big amount, it must be obscene" definition.

                    I would be interested to get your definition of how you define an “obscene profit”.

                    At least I tried to define that by suggesting that "obscene" profits are more to do with the way profits are generated rather than the amount. So, for instance, profits generated by human trafficking would be obscene, whatever the amount.

                    And, implicit in your assumption, is that corporations generate "obscene" profits through raising prices, and thus impacting on the poor. But that often isn’t the case.

                    As an example, few would buy a ballpoint pen that cost 20 cents to produce if it were priced at $100.00. So, virtually zero dollars profit at that price point. But millions would likely buy it at $2.00. So, lots of profit at a much lower price point. This is just basic economic theory.

                    So, for instance, if BP (and other fuel companies in concert) were to double their prices (and could avoid a commerce commission prosecution for price fixing), their “obscene” profits would likely drop considerably because the effect described above.

                    And, you should love that because the sudden reduction in fuel use would be great for the environment. And, you would have the pleasure in seeing a reduction in those “obscene” profits.

                    But, at the same time, the poor would suffer greatly as they would be less likely able to afford electric vehicles, or maybe needing fuel for basic survival needs.

                    So, the poor would be getting exploited, but the environment would be getting saved. Quite a dilemma for someone who is both green and a socialist. Which is one reason I don’t see the two positions as compatible.

                    • Drowsy M. Kram

                      We all have choices, even if it is not to buy something.
                      – ts (7 February 2023 at 3:12 pm)

                      Still not getting it – surely one only has a choice (not to buy, or to buy, something) if one has the wherewithal to buy. If one doesn't have the wherewithal to buy something, then how is the 'choice' "not to buy something" a real choice? [The meaning of choice.]

                      I would be interested in your thoughts.

                      But, you haven't defined what an "obscene" profit actually is, and use examples that seem to indicate that the best you can come up with is the "shit, thats a big amount, it must be obscene" definition.

                      I would be interested to get your definition of how you define an “obscene profit”.

                      As explained previously, my own definition of "obscene profit(s)" does not exist – I'm a financial novice, having been lucky enough to always have the wherewithal to meet my (modest) needs.

                      Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
                      – from David Copperfield, by Charles Dickens

                      As such, I must turn to investment experts. If you think I might be misinterpreting my chosen expert, then let me know. If you disagree with that expert (John), then please take it up with him.

                      jdorfman@dorfmanvalue.com

                      Give Me Those Obscene Profit Margins [6 Sept 2022]
                      The point of business is not revenue, or growth. It’s profit.

                      That’s why I like companies with fat profit margins. Obscene profits? Fine, in my book.

                      Once a year in this column, I feature companies that stand out for their profit margins (profits as a percent of sales). I consider an 18% margin after taxes as a shining result.

                      If pressed, I'd suggest that 'obscene profit' is profit that results in a net degradation of the wider community/ecosystem from which that profit was extracted. An obscene profit might claw it's way to decency if it was used to ameliorate the scurge of poverty, or otherwise enhance community resilience; enhancing the wealth of the wealthy, not so much.

                      I favour the idea that corporations and markets don't exist in a (moral) vacuum, rather they are of the society that enables their creation, growth etc. etc. So structuring one's finances to avoid paying a fair share is just wrong, imho, even if it is (pretty) legal.

                      How Large Corporations Avoid Paying Taxes
                      [22 August 2022]
                      So long as efforts to make large corporations pay their fair share must coexist with tax credits and deductions encouraging a wide range of favored activities, corporate lobbyists and tax lawyers will remain in demand.

                  • tsmithfield

                    If one doesn't have the wherewithal to buy something, then how is the 'choice' "not to buy something" a real choice?

                    You're shitting me, right? People have been buying crap they can't afford with money they don't have for years. Heard of After-Pay, loan sharks, and the Pawn Shop? And, if someone really wants something and has no other way, they could resort to stealing to pay for it. Your logic only applies if there is absolutely no choice, not even a theoretical one.

                    If pressed, I'd suggest that 'obscene profit' is profit that results in a net degradation of the wider community/ecosystem from which that profit was extracted.

                    That doesn't sound too different to my definition. And good to see you coming up with something that isn't related to the size of the profit. Because a number is meaningless unless it is referenced to something. For instance, return on investment etc.

                    • Drowsy M. Kram

                      You're shitting me, right?

                      I shit you not. If one borrows or steals money (to buy something), or buys on tick, then they have the wherewithal to buy something.

                      I'm asking about the 'choice' of someone who doesn't have the wherewithal to buy, i.e. they don't have and (although it hardly needs to be said, when you think about it) can't get the wherewithal.

                      By your logic, everyone could theoretically buy nearly anything – all they need to do is beg, borrow or steal. A fantastic world to be sure, and unrealistic, don't you think? Not everyone has our choices.

                      We all have choices, even if it is not to buy something.
                      – ts (7 February 2023 at 3:12 pm)

                      Glad you're happier about the interesting idea of 'obscene profit(s)' – maybe we'll be hearing about it more often.

                      Vast energy firm profits raise fresh questions over windfall tax
                      https://www.bbc.com/news/uk-scotland-64560073

                      Maybe ‘Titanic profits‘ would be more appropriate.

                  • tsmithfield

                    Maybe ‘Titanic profits‘ would be more appropriate.

                    Again, it doesn't mean anything without context. There are a lot of factors to consider.

                    First, return on investment. Is the return significantly better than what could have been earned by leaving all the invested money in the bank? Because, business is a lot more risky. So, the profit has to be a lot better than the bank, where a safe though unspectacular return can be made. So, ROI is an important consideration when considering profit.

                    Secondly, how variable are the returns from year to year? Because if a business has high peaks and low troughs it may need the high profits to offset losses in coming years. Think about farmers affected by catastrophic weather in one year after making a healthy profit the previous year.

                    Thirdly, need to retain funds for future investment. Business may have plans for growth, and may need those funds to fund future growth.

                    So, without context, it is impossible to know whether profits are high or otherwise, and whether that is a good thing.

                    • Drowsy M. Kram

                      Again, it [Titanic] doesn’t mean anything without context. There are a lot of factors to consider.

                      And considering lots of factors can lead to confusion – paralysis even – which is OK if one has the luxury of time.

                      Apologies ts, "Titanic", with a capital 'T', is just my 'little' joke, along the lines of "Electrifying the Titanic" by William Ophuls.

                      Innumerable warnings have failed to motivate peoples and nations to take the emerging ecological crisis as seriously as it warrants. What is worse, they have chosen exactly the wrong strategy for dealing with the crisis.

                      There's that idea of choice again – ahh, the luxury of choice.

                      Tax the rich… everywhere! [7 February 2023]

                      Our economic crisis is part of the same pattern of rampant profit extraction replicated across the globe… capital is seeking to drive up profits at the expense of the vast global majority

                      Several of these global dimensions are frequently invoked by the Tories, with soaring food and energy costs attributed to factors such as the war in Ukraine, rising levels of post-covid demand, or covid generated (others say Brexit generated) bottlenecks in global supply chains. What they do not identify as an international driver are the large corporations accumulating the titanic profits that Oxfam enumerate.

                      The Earth Is Moving Under Medicare And The Price Of Drugs ― But Slowly [4 November 2022]
                      It’s a story of how one industry, the Pharmaceutical industry, has done Olympian good while achieving Titanic profit, which has been surgically excised, Midas-like, from the hides of American taxpayers who never felt the touch.

                      Into the Mind of White-Collar Criminals
                      [23 February 2022]
                      Or take the Chinese milk scandal of 2008, when it was discovered that top managers of a dairy company were aware that a toxic compound was being added to its milk products. This led to the poisoning of 300,000 people, mostly infants.

                      https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal

                    • arkie

                      Adam Smith, the 'Father of free-market economics' understood all those years ago:

                      Wherever there is great property there is great inequality. For one very Rich man there must be at least five hundred Poor, and the affluence of the few supposes the indigence of the many.
                      Wealth of Nations

                  • tsmithfield

                    Profit is just another form of money that can be used for good or bad. And I think we both agree that profits are obscene if they involve explotation or criminal type behaviour.

                    But, a lot of wealthy people do actually care about people and the environment, and are directing a good portion of their wealth to making things better. And, that is a positive side of profits that are not often talked about. A lot of that wealth would be wasted if it were distributed around, and vital projects may never happen. Whereas, it can be focussed in a highly positive direction for both people and the planet.

                    Take, for example, this Bill Gates backed project to convert atmospheric C02 into fuel that can be used by motor vehicles creating a 0 net carbon loop.

                    If this type of solution could be commercialised, it would arguably be better for the environment than EVs because it could be immediately used by existing petrol vehicles rather than having to wait for them to be replaced by electric ones, which could take decades.

                  • tsmithfield

                    This is one hell of a long thread!!

                    Good discussion. I have enjoyed it. I think we have reached the position where we have to agree to disagree on whatever we disagree on now.

                    But, I think we actually agree on quite a lot when it is all boiled down.

                    Thanks for the chat. I find it a lot more enriching discussing issues with people I disagree with, than just continually bouncing things around inside an echo chamber of agreement.

                    • Drowsy M. Kram

                      Appreciate that – it's important to tease out diverse PoVs and priorities, particularly in an election year.

          • Belladonna 16.1.1.2.2

            If there had not been a rent increase, there would have been no incentive for developers to invest in building. If the potential reward isn't there, they don't invest.

            See, I can speculate, just as well as you can.

            • SPC 16.1.1.2.2.1

              No. A rent increase does not result in new building (costs more than existing building), it is an incentive to own existing property for the greater rent return.

              There is no economic good to this – it neither improves productivity nor the circumstance of anyone but the property owning few (those able to leverage existing asset wealth to borrow to acquire more).

              It is a waste of capital/poor use of debt finance.

              A government ending mortgage interest rate deductibility for existing property ownership is creating an incentive to place capital in new building or other real wealth/job creation.

              See how much smarter Labour is than National?

              An investor with smarts would have sold his rental in 2021 paid some CG (brightline test) and invested in a new build.

              • Sorry. You've lost me.

                Let's say that our property investor owns a property to rent – where s/he owes 300K in mortgage (not an uncommon scenario). Mortgage rates have gone up (or will go up at the next review). In order to re-coup his/her increased costs, s/he needs to raise the rent.

                That's the real consequence of the government's "incentive to place capital in new building", by removing tax-deductability of interest payments. Unintended consequences, but nonetheless real; and, pointed out multiple times when the policy was established. Of course, then, we had record low interest rates – now, not so much.

                Also note, that nothing stops the owners of the new build property increasing rents to 'market level' and pocketing the difference. They may even have a 'quality' argument: a new house is nicer to live in than a 40-year-old one, even if the latter is retrofitted to meet the new healthy housing standards. [NB: I don't agree, I like old houses – but I acknowledge that many people do like to live in modern spaces]

                Note, that many people who own a second house, do so, primarily as a retirement nest egg. They have zero desire to experiment with risky new developments (especially when they see them go under, as we have several times over the last year). 'Smarts' is a user-defined criteria – you need to know what's most important to the invidual investor, before you can critique their decision-making.

                We're back, I think, to the basic question. Should private investors be entitled to own rental property? Or should this only be done on a not-for-profit basis by the Government?

                Finally. Do you trust that the Government (any government over the next 20 years – the lifetime of this exemption) won't change the interest deduction rules? I don't.

                • SPC

                  I can see that you are lost. When you find your way back to the argument at hand, we can resume it.

                  Clue

                  1. housing supply involves an incentive to build new homes, not bid up the price of existing property.
                  2. quality of life for the people involves affordable property (to rent or to own) and healthy homes.
                  3. quite apart from the UN Declaration of Human Rights 1948 (as to housing as a responsibility of government), there is the necessity of government to regulate markets.
                  4. you seem to confuse government by the people with rules that suit those who wish to operate within the property market.
                  5. no I do not trust National not to prioritise the interest of the few over the many and thus I will always oppose them politically.
                  • Incognito

                    Both National and ACT have stated that they will reinstate the interest deductibility. Add this to the long and growing list of selfish reasons for people to vote for them – this includes fears of loss of rights, entitlements, and privileges. That said, (most?) people vote based on their interests, of course, not because of charitable altruistic reasons – there is no virtue signalling in the voting booth.

                    • SPC

                      Very few are advantaged by rules favouring landlords. And very few would be subject to CGT, wealth tax or estate tax, yet of course those who would be are very determined to obscure this fact.

                      The irony is that some people vote with the capitalist dominant few because they either want trickle down rewards (tax cuts) or they want to be associated with a dominant cultural order (heritage nationalism) which is a form of virtue signalling/middle class identity parochialism.

                      The idea that people vote based on their interests, not because of charitable altruistic reasons, is too cynical. Most educated people would be aware of the concept of consequences of living in a society unfair to too many.

                    • Incognito []

                      Very few are advantaged by rules favouring landlords. And very few would be subject to CGT, wealth tax or estate tax …

                      I have no idea what you base your assumptions on. A year ago, there were about 120,000 of active landlords and about 440,000 rental properties were privately owned.

                      https://www.stuff.co.nz/life-style/homed/real-estate/124320645/nearly-80-per-cent-of-landlords-own-just-one-property-data-shows

                      In my cynical realistic view, people might be aware but there is a huge gap with actually acting on it. People need to be reminded and nudged constantly, including carrot & stick approaches, to do what is best for them and their nearest & dearest – think Climate Change and our ‘legacy’ for next generations.

                      I won’t comment on “educated people” making better or worse decisions for the greater good of all because I have no idea what you mean by this. Except to say that ‘better educated’ people generally are better off, economically speaking aka ‘middle class’, and as such have more to lose and act (or don’t act) accordingly, IME & IMO.

                      The less ‘kinship’ people feel with others and with their fellow citizens, the less they will consider their needs. In fact, when the needs of others are perceived to compete with and even crowd out one’s own needs, etc., one is more likely to vote against such changes. These sorts of negative perceptions are created, cultivated, and propagated by populist politicians such as David Seymour.

                      https://www.newshub.co.nz/home/politics/2023/02/waitangi-tribunal-recommendations-should-be-rejected-as-consequence-could-be-kiwis-rights-up-in-air-david-seymour.html

                      Divisive and polarising politics weakens social cohesion and makes it less likely that people vote with other people’s interest in mind, IMO. People may tell others of which Party they voted for but they not necessarily be (fully) honest about (all) the reasons.

                    • SPC

                      I won’t comment on “educated people” making better or worse decisions for the greater good of all because I have no idea what you mean by this.

                      Have you heard of the term enlightened self-interest?

                      The less ‘kinship’ people feel with others and with their fellow citizens, the less they will consider their needs.

                      Back in the 19thC cynics such as Randolph Churchill argued that the Tories had nothing to fear from an extension of the franchise to the working class as it would drive the middle class Whigs into their arms.

                      They found convergence in the mercantilism of a landlord class and exploitation of labour, domestic and foreign.

                    • Incognito []

                      What does “enlightened self-interest” have to do with being “educated”? Is this something they teach at schools?

                      Is class membership a form of ‘kinship’ that leads to more/better consideration of fellow members when voting? If so, that is the corollary of my point.

                  • Yes. Though so.

                    We are attempting to debate two entirely different topics.

                    Not much point in continuing, since we're just talking past each other.

          • tsmithfield 16.1.1.2.3

            I have never claimed markets to be all knowing as if they are some sort of divine entity.

            Just that markets respond to conditions in predictable ways, and tend to self-regulate, although their can be fairly wild swings at times. As I said, markets are just the aggregated effect of ongoing transactions between buyers and sellers. Nothing more.

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    Democracy ProjectBy bryce.edwards
    3 days ago
  • Bernard’s Dawn Chorus with six newsey things at 6:46am for Saturday, March 16
    TL;DR: The six newsey things that stood out to me as of 6:46am on Saturday, March 16.Andy Foster has accidentally allowed a Labour/Green amendment to cut road user chargers for plug-in hybrid vehicles, which the Government might accept; NZ Herald Thomas Coughlan Simeon Brown has rejected a plea from Westport ...
    The KakaBy Bernard Hickey
    4 days ago
  • How Did FTX Crash?
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    PunditBy Brian Easton
    4 days ago
  • Elections in Russia and Ukraine
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    4 days ago
  • Bernard’s six stack of substacks at 6pm on March 15
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    The KakaBy Bernard Hickey
    4 days ago
  • Buzz from the Beehive Finance Minister Nicola Willis had plenty to say when addressing the Auckland Business Chamber on the economic growth that (she tells us) is flagging more than we thought. But the government intends to put new life into it:  We want our country to be a ...
    Point of OrderBy Bob Edlin
    4 days ago
  • National’s clean car tax advances
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    No Right TurnBy Idiot/Savant
    4 days ago
  • Government funding bailouts
    Peter Dunne writes – This week’s government bailout – the fifth in the last eighteen months – of the financially troubled Ruapehu Alpine Lifts company would have pleased many in the central North Island ski industry. The government’s stated rationale for the $7 million funding was that it ...
    Point of OrderBy poonzteam5443
    4 days ago
  • Two offenders, different treatments.
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    KiwipoliticoBy Pablo
    4 days ago
  • Treaty references omitted
    Ele Ludemann writes  – The government is omitting general Treaty references from legislation : The growth of Treaty of Waitangi clauses in legislation caused so much worry that a special oversight group was set up by the last Government in a bid to get greater coherence in the public service on Treaty ...
    Point of OrderBy poonzteam5443
    4 days ago
  • The Ghahraman Conflict
    What was that judge thinking? Peter Williams writes –  That Golriz Ghahraman and District Court Judge Maria Pecotic were once lawyer colleagues is incontrovertible. There is published evidence that they took at least one case to the Court of Appeal together. There was a report on ...
    Point of OrderBy poonzteam5443
    4 days ago
  • Bernard's Top 10 @ 10 'pick 'n' mix' for March 15
    TL;DR: My top 10 news and analysis links this morning include:Today’s must-read: Climate Scorpion – the sting is in the tail. Introducing planetary solvency. A paper via the University of Exeter’s Institute and Faculty of Actuaries.Local scoop: Kāinga Ora starts pulling out of its Auckland projects and selling land RNZ ...
    The KakaBy Bernard Hickey
    4 days ago
  • The day Wellington up-zoned its future
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    The KakaBy Bernard Hickey
    4 days ago
  • Weekly Roundup 15-March-2024
    It’s Friday and we’re halfway through March Madness. Here’s some of the things that caught our attention this week. This Week in Greater Auckland On Monday Matt asked how we can get better event trains and an option for grade separating Morningside Dr. On Tuesday Matt looked into ...
    Greater AucklandBy Greater Auckland
    4 days ago
  • That Word.
    Something you might not know about me is that I’m quite a stubborn person. No, really. I don’t much care for criticism I think’s unfair or that I disagree with. Few of us do I suppose.Back when I was a drinker I’d sometimes respond defensively, even angrily. There are things ...
    Nick’s KōreroBy Nick Rockel
    5 days ago
  • The Hoon around the week to March 15
    Photo: Lynn Grieveson / The KākāTL;DR: The five things that mattered in Aotearoa’s political economy that we wrote and spoke about via The Kākā and elsewhere for paying subscribers in the last week included:PM Christopher Luxon said the reversal of interest deductibility for landlords was done to help renters, who ...
    The KakaBy Bernard Hickey
    5 days ago
  • Labour’s policy gap
    It was not so much the Labour Party but really the Chris Hipkins party yesterday at Labour’s caucus retreat in Martinborough. The former Prime Minister was more or less consistent on wealth tax, which he was at best equivocal about, and social insurance, which he was not willing to revisit. ...
    PolitikBy Richard Harman
    5 days ago
  • Skeptical Science New Research for Week #11 2024
    Open access notables A Glimpse into the Future: The 2023 Ocean Temperature and Sea Ice Extremes in the Context of Longer-Term Climate Change, Kuhlbrodt et al., Bulletin of the American Meteorological Society: In the year 2023, we have seen extraordinary extrema in high sea surface temperature (SST) in the North Atlantic and in ...
    5 days ago
  • Melissa remains mute on media matters but has something to say (at a sporting event) about economic ...
     Buzz from the Beehive   The text reproduced above appears on a page which records all the media statements and speeches posted on the government’s official website by Melissa Lee as Minister of Media and Communications and/or by Jenny Marcroft, her Parliamentary Under-secretary.  It can be quickly analysed ...
    Point of OrderBy Bob Edlin
    5 days ago
  • The return of Muldoon
    For forty years, Robert Muldoon has been a dirty word in our politics. His style of government was so repulsive and authoritarian that the backlash to it helped set and entrench our constitutional norms. His pig-headedness over forcing through Think Big eventually gave us the RMA, with its participation and ...
    No Right TurnBy Idiot/Savant
    5 days ago
  • Will the rental tax cut improve life for renters or landlords?
    Bryce Edwards writes –  Is the new government reducing tax on rental properties to benefit landlords or to cut the cost of rents? That’s the big question this week, after Associate Finance Minister David Seymour announced on Sunday that the Government would be reversing the Labour Government’s removal ...
    Point of OrderBy poonzteam5443
    5 days ago
  • Geoffrey Miller: What Saudi Arabia’s rapid changes mean for New Zealand
    Saudi Arabia is rarely far from the international spotlight. The war in Gaza has brought new scrutiny to Saudi plans to normalise relations with Israel, while the fifth anniversary of the controversial killing of Jamal Khashoggi was marked shortly before the war began on October 7. And as the home ...
    Democracy ProjectBy Geoffrey Miller
    5 days ago
  • Racism’s double standards
    Questions need to be asked on both sides of the world Peter Williams writes –   The NRL Judiciary hands down an eight week suspension to Sydney Roosters forward Spencer Leniu , an Auckland-born Samoan, after he calls Ezra Mam, Sydney-orn but of Aboriginal and Torres Strait ...
    Point of OrderBy poonzteam5443
    5 days ago
  • It’s not a tax break
    Ele Ludemann writes – Contrary to what many headlines and news stories are saying, residential landlords are not getting a tax break. The government is simply restoring to them the tax deductibility of interest they had until the previous government removed it. There is no logical reason ...
    Point of OrderBy poonzteam5443
    5 days ago
  • The Plastic Pig Collective and Chris' Imaginary Friends.
    I can't remember when it was goodMoments of happiness in bloomMaybe I just misunderstoodAll of the love we left behindWatching our flashbacks intertwineMemories I will never findIn spite of whatever you becomeForget that reckless thing turned onI think our lives have just begunI think our lives have just begunDoes anyone ...
    Nick’s KōreroBy Nick Rockel
    5 days ago
  • Who is responsible for young offenders?
    Michael Bassett writes – At first reading, a front-page story in the New Zealand Herald on 13 March was bizarre. A group of severely intellectually limited teenagers, with little understanding of the law, have been pleading to the Justice Select Committee not to pass a bill dealing with ram ...
    Point of OrderBy poonzteam5443
    5 days ago
  • Gordon Campbell on National’s fantasy trip to La La Landlord Land
    How much political capital is Christopher Luxon willing to burn through in order to deliver his $2.9 billion gift to landlords? Evidently, Luxon is: (a) unable to cost the policy accurately. As Anna Burns-Francis pointed out to him on Breakfast TV, the original ”rock solid” $2.1 billion cost he was ...
    5 days ago
  • Bernard's Top 10 @ 10 'pick 'n' mix' for March 14
    TL;DR: My top 10 news and analysis links this morning include:Today’s must-read: Jonathon Porritt calling bullshit in his own blog post on mainstream climate science as ‘The New Denialism’.Local scoop: The Wellington City Council’s list of proposed changes to the IHP recommendations to be debated later today was leaked this ...
    The KakaBy Bernard Hickey
    5 days ago
  • No, Prime Minister, rents don’t rise or fall with landlords’ costs
    TL;DR: Prime Minister Christopher Luxon said yesterday tenants should be grateful for the reinstatement of interest deductibility because landlords would pass on their lower tax costs in the form of lower rents. That would be true if landlords were regulated monopolies such as Transpower or Auckland Airport1, but they’re not, ...
    The KakaBy Bernard Hickey
    5 days ago
  • Cartoons: ‘At least I didn’t make things awkward’
    This is a re-post from Yale Climate Connections by Tom Toro Tom Toro is a cartoonist and author. He has published over 200 cartoons in The New Yorker since 2010. His cartoons appear in Playboy, the Paris Review, the New York Times, American Bystander, and elsewhere. Related: What 10 EV lovers ...
    5 days ago
  • Solving traffic congestion with Richard Prebble
    The business section of the NZ Herald is full of opinion. Among the more opinionated of all is the ex-Minister of Transport, ex-Minister of Railways, ex MP for Auckland Central (1975-93, Labour), Wellington Central (1996-99, ACT, then list-2005), ex-leader of the ACT Party, uncle to actor Antonia, the veritable granddaddy ...
    Greater AucklandBy Patrick Reynolds
    5 days ago
  • I Think I'm Done Flying Boeing
    Hi,Just quickly — I’m blown away by the stories you’ve shared with me over the last week since I put out the ‘Gary’ podcast, where I told you about the time my friend’s flatmate killed the neighbour.And you keep telling me stories — in the comments section, and in my ...
    David FarrierBy David Farrier
    6 days ago
  • Invoking Aristotle: Of Rings of Power, Stones, and Ships
    The first season of Rings of Power was not awful. It was thoroughly underwhelming, yes, and left a lingering sense of disappointment, but it was more expensive mediocrity than catastrophe. I wrote at length about the series as it came out (see the Review section of the blog, and go ...
    6 days ago
  • Van Velden brings free-market approach to changing labour laws – but her colleagues stick to distr...
    Buzz from the Beehive Workplace Relations and Safety Minister Brooke van Velden told Auckland Business Chamber members they were the first audience to hear her priorities as a minister in a government committed to cutting red tape and regulations. She brandished her liberalising credentials, saying Flexible labour markets are the ...
    Point of OrderBy Bob Edlin
    6 days ago
  • Why Newshub failed
    Chris Trotter writes – TO UNDERSTAND WHY NEWSHUB FAILED, it is necessary to understand how TVNZ changed. Up until 1989, the state broadcaster had been funded by a broadcasting licence fee, collected from every citizen in possession of a television set, supplemented by a relatively modest (compared ...
    Point of OrderBy poonzteam5443
    6 days ago
  • Māori Party on the warpath against landlords and seabed miners – let’s see if mystical creature...
    Bob Edlin writes  –  The Māori Party has been busy issuing a mix of warnings and threats as its expresses its opposition to interest deductibility for landlords and the plans of seabed miners. It remains to be seen whether they  follow the example of indigenous litigants in Australia, ...
    Point of OrderBy Bob Edlin
    6 days ago

  • Government moves to quickly ratify the NZ-EU FTA
    "The Government is moving quickly to realise an additional $46 million in tariff savings in the EU market this season for Kiwi exporters,” Minister for Trade and Agriculture, Todd McClay says. Parliament is set, this week, to complete the final legislative processes required to bring the New Zealand – European ...
    BeehiveBy beehive.govt.nz
    2 hours ago
  • Positive progress for social worker workforce
    New Zealand’s social workers are qualified, experienced, and more representative of the communities they serve, Social Development and Employment Minister Louise Upston says. “I want to acknowledge and applaud New Zealand’s social workers for the hard work they do, providing invaluable support for our most vulnerable. “To coincide with World ...
    BeehiveBy beehive.govt.nz
    7 hours ago
  • Minister confirms reduced RUC rate for PHEVs
    Cabinet has agreed to a reduced road user charge (RUC) rate for plug-in hybrid electric vehicles (PHEVs), Transport Minister Simeon Brown says. Owners of PHEVs will be eligible for a reduced rate of $38 per 1,000km once all light electric vehicles (EVs) move into the RUC system from 1 April.  ...
    BeehiveBy beehive.govt.nz
    9 hours ago
  • Trade access to overseas markets creates jobs
    Minister of Agriculture and Trade, Todd McClay, says that today’s opening of Riverland Foods manufacturing plant in Christchurch is a great example of how trade access to overseas markets creates jobs in New Zealand.  Speaking at the official opening of this state-of-the-art pet food factory the Minister noted that exports ...
    BeehiveBy beehive.govt.nz
    10 hours ago
  • NZ and Chinese Foreign Ministers hold official talks
    Minister of Foreign Affairs Winston Peters met with Chinese Foreign Minister Wang Yi in Wellington today. “It was a pleasure to host Foreign Minister Wang Yi during his first official visit to New Zealand since 2017. Our discussions were wide-ranging and enabled engagement on many facets of New Zealand’s relationship with China, including trade, ...
    BeehiveBy beehive.govt.nz
    23 hours ago
  • Kāinga Ora instructed to end Sustaining Tenancies
    Kāinga Ora – Homes & Communities has been instructed to end the Sustaining Tenancies Framework and take stronger measures against persistent antisocial behaviour by tenants, says Housing Minister Chris Bishop. “Earlier today Finance Minister Nicola Willis and I sent an interim Letter of Expectations to the Board of Kāinga Ora. ...
    BeehiveBy beehive.govt.nz
    1 day ago
  • Speech to Auckland Business Chamber: Growth is the answer
    Tēna koutou katoa. Greetings everyone. Thank you to the Auckland Chamber of Commerce and the Honourable Simon Bridges for hosting this address today. I acknowledge the business leaders in this room, the leaders and governors, the employers, the entrepreneurs, the investors, and the wealth creators. The coalition Government shares your ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Singapore rounds out regional trip
    Minister Winston Peters completed the final leg of his visit to South and South East Asia in Singapore today, where he focused on enhancing one of New Zealand’s indispensable strategic partnerships.      “Singapore is our most important defence partner in South East Asia, our fourth-largest trading partner and a ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Minister van Velden represents New Zealand at International Democracy Summit
    Minister of Internal Affairs and Workplace Relations and Safety, Hon. Brooke van Velden, will travel to the Republic of Korea to represent New Zealand at the Third Summit for Democracy on 18 March. The summit, hosted by the Republic of Korea, was first convened by the United States in 2021, ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Insurance Council of NZ Speech, 7 March 2024, Auckland
    ICNZ Speech 7 March 2024, Auckland  Acknowledgements and opening  Mōrena, ngā mihi nui. Ko Andrew Bayly aho, Nor Whanganui aho.  Good morning, it’s a privilege to be here to open the ICNZ annual conference, thank you to Mark for the Mihi Whakatau  My thanks to Tim Grafton for inviting me ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Five-year anniversary of Christchurch terror attacks
    Prime Minister Christopher Luxon and Lead Coordination Minister Judith Collins have expressed their deepest sympathy on the five-year anniversary of the Christchurch terror attacks. “March 15, 2019, was a day when families, communities and the country came together both in sorrow and solidarity,” Mr Luxon says.  “Today we pay our respects to the 51 shuhada ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Speech for Financial Advice NZ Conference 5 March 2024
    Speech for Financial Advice NZ Conference 5 March 2024  Acknowledgements and opening  Morena, Nga Mihi Nui.  Ko Andrew Bayly aho, Nor Whanganui aho. Thanks Nate for your Mihi Whakatau  Good morning. It’s a pleasure to formally open your conference this morning. What a lovely day in Wellington, What a great ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Early visit to Indonesia strengthens ties
    Foreign Minister Winston Peters held discussions in Jakarta today about the future of relations between New Zealand and South East Asia’s most populous country.   “We are in Jakarta so early in our new government’s term to reflect the huge importance we place on our relationship with Indonesia and South ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • China Foreign Minister to visit
    Deputy Prime Minister and Minister of Foreign Affairs Winston Peters has announced that the Foreign Minister of China, Wang Yi, will visit New Zealand next week.  “We look forward to re-engaging with Foreign Minister Wang Yi and discussing the full breadth of the bilateral relationship, which is one of New Zealand’s ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Minister opens new Auckland Rail Operations Centre
    Transport Minister Simeon Brown has today opened the new Auckland Rail Operations Centre, which will bring together KiwiRail, Auckland Transport, and Auckland One Rail to improve service reliability for Aucklanders. “The recent train disruptions in Auckland have highlighted how important it is KiwiRail and Auckland’s rail agencies work together to ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Celebrating 10 years of Crankworx Rotorua
    The Government is proud to support the 10th edition of Crankworx Rotorua as the Crankworx World Tour returns to Rotorua from 16-24 March 2024, says Minister for Economic Development Melissa Lee.  “Over the past 10 years as Crankworx Rotorua has grown, so too have the economic and social benefits that ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government delivering on tax commitments
    Legislation implementing coalition Government tax commitments and addressing long-standing tax anomalies will be progressed in Parliament next week, Finance Minister Nicola Willis says. The legislation is contained in an Amendment Paper to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill issued today.  “The Amendment Paper represents ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Significant Natural Areas requirement to be suspended
    Associate Environment Minister Andrew Hoggard has today announced that the Government has agreed to suspend the requirement for councils to comply with the Significant Natural Areas (SNA) provisions of the National Policy Statement for Indigenous Biodiversity for three years, while it replaces the Resource Management Act (RMA).“As it stands, SNAs ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government classifies drought conditions in Top of the South as medium-scale adverse event
    Agriculture Minister Todd McClay has classified the drought conditions in the Marlborough, Tasman, and Nelson districts as a medium-scale adverse event, acknowledging the challenging conditions facing farmers and growers in the district. “Parts of Marlborough, Tasman, and Nelson districts are in the grip of an intense dry spell. I know ...
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    5 days ago
  • Government partnership to tackle $332m facial eczema problem
    The Government is helping farmers eradicate the significant impact of facial eczema (FE) in pastoral animals, Agriculture Minister Todd McClay announced.  “A $20 million partnership jointly funded by Beef + Lamb NZ, the Government, and the primary sector will save farmers an estimated NZD$332 million per year, and aims to ...
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    5 days ago
  • NZ, India chart path to enhanced relationship
    Foreign Minister Winston Peters has completed a successful visit to India, saying it was an important step in taking the relationship between the two countries to the next level.   “We have laid a strong foundation for the Coalition Government’s priority of enhancing New Zealand-India relations to generate significant future benefit for both countries,” says Mr Peters, ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Ruapehu Alpine Lifts bailout the last, say Ministers
    Cabinet has agreed to provide $7 million to ensure the 2024 ski season can go ahead on the Whakapapa ski field in the central North Island but has told the operator Ruapehu Alpine Lifts it is the last financial support it will receive from taxpayers. Cabinet also agreed to provide ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Govt takes action to drive better cancer services
    Health Minister Dr Shane Reti says the launch of a new mobile breast screening unit in Counties Manukau reinforces the coalition Government’s commitment to drive better cancer services for all New Zealanders. Speaking at the launch of the new mobile clinic, Dr Reti says it’s a great example of taking ...
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    6 days ago
  • Govt takes action to drive better cancer services
    Health Minister Dr Shane Reti says the launch of a new mobile breast screening unit in Counties Manukau reinforces the coalition Government’s commitment to drive better cancer services for all New Zealanders. Speaking at the launch of the new mobile clinic, Dr Reti says it’s a great example of taking ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Work begins on SH29 upgrades near Tauriko
    Unlocking economic growth and land for housing are critical elements of the Government’s plan for our transport network, and planned upgrades to State Highway 29 (SH29) near Tauriko will deliver strongly on those priorities, Transport Minister Simeon Brown says. “The SH29 upgrades near Tauriko will improve safety at the intersections ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Work begins on SH29 upgrades near Tauriko
    Unlocking economic growth and land for housing are critical elements of the Government’s plan for our transport network, and planned upgrades to State Highway 29 (SH29) near Tauriko will deliver strongly on those priorities, Transport Minister Simeon Brown says. “The SH29 upgrades near Tauriko will improve safety at the intersections ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Fresh produce price drop welcome
    Lower fruit and vegetable prices are welcome news for New Zealanders who have been doing it tough at the supermarket, Finance Minister Nicola Willis says. Stats NZ reported today the price of fruit and vegetables has dropped 9.3 percent in the 12 months to February 2024.  “Lower fruit and vege ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Statement to the 68th United Nations Commission on the Status of Women
    Tēnā koutou katoa and greetings to you all.  Chair, I am honoured to address the sixty-eighth session of the Commission on the Status of Women. I acknowledge the many crises impacting the rights of women and girls. Heightened global tensions, war, climate related and humanitarian disasters, and price inflation all ...
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    6 days ago
  • Speech to the 68th United Nations Commission on the Status of Women (CSW68)
    Tēnā koutou katoa and greetings to you all.  Chair, I am honoured to address the 68th session of the Commission on the Status of Women. I acknowledge the many crises impacting the rights of women and girls. Heightened global tensions, war, climate related and humanitarian disasters, and price inflation all ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Government backs rural led catchment projects
    The coalition Government is supporting farmers to enhance land management practices by investing $3.3 million in locally led catchment groups, Agriculture Minister Todd McClay announced. “Farmers and growers deliver significant prosperity for New Zealand and it’s vital their ongoing efforts to improve land management practices and water quality are supported,” ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Speech to Auckland Business Chamber
    Good evening everyone and thank you for that lovely introduction.   Thank you also to the Honourable Simon Bridges for the invitation to address your members. Since being sworn in, this coalition Government has hit the ground running with our 100-day plan, delivering the changes that New Zealanders expect of us. ...
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    1 week ago
  • Commission’s advice on ETS settings tabled
    Recommendations from the Climate Change Commission for New Zealand on the Emissions Trading Scheme (ETS) auction and unit limit settings for the next five years have been tabled in Parliament, Climate Change Minister Simon Watts says. “The Commission provides advice on the ETS annually. This is the third time the ...
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    1 week ago
  • Government lowering building costs
    The coalition Government is beginning its fight to lower building costs and reduce red tape by exempting minor building work from paying the building levy, says Building and Construction Minister Chris Penk. “Currently, any building project worth $20,444 including GST or more is subject to the building levy which is ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Trustee tax change welcomed
    Proposed changes to tax legislation to prevent the over-taxation of low-earning trusts are welcome, Finance Minister Nicola Willis says. The changes have been recommended by Parliament’s Finance and Expenditure Committee following consideration of submissions on the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill. “One of the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister’s Ramadan message
    Assalaamu alaikum. السَّلَام عليكم In light of the holy month of Ramadan, I want to extend my warmest wishes to our Muslim community in New Zealand. Ramadan is a time for spiritual reflection, renewed devotion, perseverance, generosity, and forgiveness.  It’s a time to strengthen our bonds and appreciate the diversity ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister appoints new NZTA Chair
    Former Transport Minister and CEO of the Auckland Business Chamber Hon Simon Bridges has been appointed as the new Board Chair of the New Zealand Transport Agency (NZTA) for a three-year term, Transport Minister Simeon Brown announced today. “Simon brings extensive experience and knowledge in transport policy and governance to the role. He will ...
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    1 week ago
  • Speech to Life Sciences Summit
    Good morning all, it is a pleasure to be here as Minister of Science, Innovation and Technology.  It is fantastic to see how connected and collaborative the life science and biotechnology industry is here in New Zealand. I would like to thank BioTechNZ and NZTech for the invitation to address ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Progress continues apace on water storage
    Regional Development Minister Shane Jones says he is looking forward to the day when three key water projects in Northland are up and running, unlocking the full potential of land in the region. Mr Jones attended a community event at the site of the Otawere reservoir near Kerikeri on Friday. ...
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    1 week ago
  • Government agrees to restore interest deductions
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    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister to attend World Anti-Doping Agency Symposium
    Sport and Recreation Minister Chris Bishop will travel to Switzerland today to attend an Executive Committee meeting and Symposium of the World Anti-Doping Agency (WADA). Mr Bishop will then travel on to London where he will attend a series of meetings in his capacity as Infrastructure Minister. “New Zealanders believe ...
    BeehiveBy beehive.govt.nz
    1 week ago

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