Why Can’t The Ministry of Works Just Build Houses Like 1935?

32 comments on “Why Can’t The Ministry of Works Just Build Houses Like 1935? ”

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1. dv 1

   23 October 2020 at 8:10 am

   Thank you Ad. That is a fascinating story.

   The final line is still relevant now

   We know we can plan the future away from the concussion of the past.
   • PsyclingLeft.Always 1.1

     23 October 2020 at 8:18 am

     Especially neolib "Labour" of sir Roger, Prebble et al Infamy
2. Tiger Mountain 2

   23 October 2020 at 8:57 am

   Another centrist apologia. A lot of this history is known to those that do some research. The private sector was well involved in the original state house builds too–unlike the recent Kiwi build where they basically went on strike, wanting to concentrate on higher margin builds.

   We, as in the NZ people, can still rewrite the end of “the housing story” by kicking speculators, developers, exploitative neo rentiers, building suppliers and Real Estate bludgers in the nuts. How?–with a massive state house and apartment build, with tiny houses for homeless, and relocatable emergency housing. Such housing scattered from one end of the country to the other would over a decade incrementally start to deal with supply, home ownership rates, and exploitative rents.

   If the private sector play hard ball again–cut them out until they decide to participate, or not–import flatpacks from off shore suppliers who have been doing this for years, set up publicly owned modular building units, and throttle back the raw log exports.

   New gen state housing could be tenancy effectively for life, rent to own, or even transferable between tenants for varying periods for vacation, study or employment purposes.
   • Brendan 2.1

     23 October 2020 at 9:43 am

     Nat voter here.

     I agree, Special Housing Areas(Nats) and Kiwibuild(Labour) did not disrupt the industry, so house prices kept going up. It is no wonder that developers look at higher end homes – more profit – when land is so expensive they follow the incentives.

     I agree with playing hard ball – but unless you are able to disrupt the industry, the councils, and everyone else don't bother – Labour will just look stupid – just as it did when Jacinda helped a rich doctor* move into a Kiwibuild house and then the policy totally failed a few years later.

     *He was not a rich doctor – but to the Joe Public he may as well have been.

     And the only way you will disrupt housing supply is to have real plans which are realistic which will deliver a huge housing surge to the NZ market. And then do them.

     PS: Make sure to sell the secondary benifits of housing – right wing voters are much more happy with public spending when it saves them money in the long term.
     • gsays 2.1.1

       23 October 2020 at 1:21 pm

       Hi Brendan, your PS resonates although most Kiwi seem to be too cheap and mean to invest well now and save money in the long run e.g. housing quality and crowding contributing to 3rd world diseases, focussing on a wellness system rather than waiting for things to go wrong healthwise.
   • greywarshark 2.2

     23 October 2020 at 1:37 pm

     TM Your comment shows the way. And Ad your extensive housing post is a treasure and I would imagine that there haven't been many that have covered the times and the activities in such detail It sounds factual to me, and if anyone does pick up something wrong, please comment and give the correct version, quoting the mistake. Because after that Ad's should go into national archives. It's a tipping-point matter for the country's direction, the citizens and of course for Labour.

     And TM – tiny houses. People are getting very energised about them, how to build them efficiently, the best effective way of planning for small space, and decor. There is a well-spring of creativity bursting forward about them and many people would welcome a start of life in a tiny house, and also later on in life post-children, or larger property, or uncongenial neighbours, of a regular house in the 'burbs.
3. Brendan 3

   23 October 2020 at 9:01 am

   NAT voter here.

   Do it.

   If you put your mind to it you will succeed. But you have to be committed. No wavering. Top leadership. You start yesterday. Fire bad ministers who don't achieve.

   And cut out fluff.

   Want garage? Not included. Private sector will do it, in fact already consented.

   And set price point to cheap. ( No rentals, owner occupied only), cheap leasehold.

   If Singapore can do it, New Zealand can do it like we used to.

   Now stop reading and build us some houses. 10'000 a year please.
   • hanswurst 3.1

     23 October 2020 at 5:10 pm

     Where were all you National voters when Key was PM?
4. Adrian 4

   23 October 2020 at 9:28 am

   It was the start of a huge number of iconic NZ companies from Sleepyhead to Watties in that era. But it still took 4 years to get up to speed.
   • Draco T Bastard 4.1

     23 October 2020 at 11:45 am

     People do have a tendency to miss/ignore the physical constraints that comes with an economy.
5. Stuart Munro 5

   23 October 2020 at 10:03 am

   If you think you can, or you think you can't, you're right.

   The moral and the physical forces are inextricably linked, and cannot be separated like a base metal from its ore ~ Clausewitz.

   But ineffectual neoliberals should pause and think: if you cannot do the job, what possible excuse is there for employing you?

   Those who want to remain employed will find a way.
6. RedLogix 6

   23 October 2020 at 10:11 am

   Another reason why it worked was that the demographics of NZ was a lot younger. I can't find a population pyramid for 1935 but here it is for 1950 and it's fairly easy to project back from there.

   You can see that at this time NZ, like most other similar nations in the world, was dominated by young adults who are in their growth/consumption phase of their life. They're busy forming families and building their lives; it's spend, spend spend.

   If you look at the same data, less than 100,000 people were over the age of 65, barely a quarter of them made it over 70. In those days ordinary people in old age were either looked after by their families, or died in dire poverty. The idea that somehow you had to invest in order to provide 20 – 30 years of independent income to survive old age was decades into the future. Housing as an investment was not yet a thing.

   Another reason why it worked was that it while MoW built the homes, it was largely local councils who provided the subdivided land. Not only was there still lots of easy land to subdivide, councils could fund the works very cheaply and rely on future rates income to repay the interest costs into the future. Essentially local councils were investing into their own future, and land costs could be smoothed out over time.

   It was only in the 90's that govt prevented them from doing this, giving the private sector a monopoly on the subdivision game. And between 1935 and 2020 engineering standards have dramatically lifted, and the land is generally more challenging to work with. Planning and consent processes are a lot more complex and time consuming. All of these impose real costs onto private developers who have no option but to load these directly onto the first-time buyer of the sections.

   Instead of the section price being some small fraction of a new build, it's often now the equal or even dominant cost.

   While it wasn’t the Ministry of Works that got New Zealand housing rolling out the new nappy suburbs, there’s no doubt Labour invented new institutions that enabled a lot of market actors to work together to achieve all of this.

   Indeed. Markets respond to incentives, and that Labour govt believed in it's ability to impose them with vigour and vision.
   • Draco T Bastard 6.1

     23 October 2020 at 11:54 am

     In those days ordinary people in old age were either looked after by their families, or died in dire poverty.

     Actually, NZ has had a government retirement income since the 1890s. Sure, it wasn't great, but it did prevent dire poverty for most.

     The idea that somehow you had to invest in order to provide 20 – 30 years of independent income to survive old age was decades into the future.

     That was brought about by the failed monetary systems being used. And that investment for a retirement income is now causing massive poverty to the young of the country.

     It was only in the 90's that govt prevented them from doing this, giving the private sector a monopoly on the subdivision game. And between 1935 and 2020 engineering standards have dramatically lifted, and the land is generally more challenging to work with.

     Despite the increase in population and all the investment there hasn't been an increase in land.
     • RedLogix 6.1.1

       23 October 2020 at 1:20 pm

       That was brought about by the failed monetary systems being used

       Actually the main driver has been increasing life expectancies and mobile families no longer all living in the same locations. Instead of retired people living maybe 5 – 10 years in the care of close relatives, we're now facing 20 -30 years of non-working life, often with our now much smaller families living too far away to care for us.

       This has created an unprecedented challenge to societies everywhere; and we've been adapting. The way we're doing it is that the now smaller generation of working age adults are paying higher rents or mortgages, but can look forward to inheriting substantially larger fractions of their parent's estates, or leveraging their capital in various ways.

       Like most evolved responses to changing circumstance, it's a less than 'ideal' muddle, but it works for the time being. If NZ wants to reduce it's unbalanced dependence on housing to fund retirement age incomes, then it needs to start thinking about alternatives.
       • Draco T Bastard 6.1.1.1

         23 October 2020 at 2:16 pm

         Actually the main driver has been increasing life expectancies and mobile families no longer all living in the same locations.

         Nope, failed monetary policies that saw money as limited.

         Instead of retired people living maybe 5 – 10 years in the care of close relatives, we're now facing 20 -30 years of non-working life, often with our now much smaller families living too far away to care for us.

         That may be true but it doesn't need investment by those people to ensure that they have enough money to live on. Again, failed monetary policies that, through ownership, induce poverty for the many to support a few through bludging.

         …then it needs to start thinking about alternatives.

         The alternative removes capitalism. That is, of course, necessary so as to bring consumption into line with reality so that we don’t destroy the environment that sustains us as well as to eliminate poverty.
7. Draco T Bastard 7

   23 October 2020 at 11:34 am

   From June 1931 the MoW cut wages for all labourers. This was also right across the board: Premier Forbes had made big cuts to all public servants in 1930, with the National Expenditure Act imposed cuts on all staff members between 5 and 12.5%. os putting workers at MoW on “relief” rates meant a general reduction of 20% for them. Yup: austerity.

   And you're surprised by this why?

   It was, after all, a National government in power and they really haven't changed their spots even if they did change their name.

   By the end of 1936 as a result of improvement in conditions of employment on public works projects, complaints were being received from the private sector that the department was attracting workmen who had jobs elsewhere.

   Exactly like what they were doing in the 1970s and 80s then. Although, by then they were also blaming the government for the unemployed being able to choose a lifestyle of poverty rather than being forced to work to be in poverty instead. Unfortunately, the 4th Labour government listened and we ended up with Rogernomics and increasing poverty ever since.

   The quality of materials in the houses was improved and New Zealand sources were, as much as possible, used for these materials and the necessary equipment. This in turn assisted New Zealand industries to provide kitchen stoves, baths, roof tiles, wallboard, paint, fibrous plaster, and bricks; and the housing contracts meant continuous jobs for contractors and building tradesmen in place of alternations of unemployment and employment.

   Yes, it's amazing what happens through flow on effects when the government pushes to develop the economy rather than leaving it to the whims of the capitalists.

   While it wasn’t the Ministry of Works that got New Zealand housing rolling out the new nappy suburbs, there’s no doubt Labour invented new institutions that enabled a lot of market actors to work together to achieve all of this.

   And its also well known that they used printed money to do it.

   That is the big part. That Labour at the time understood a fiat currency and that the government spending would boost the entire economy and leave no loans with interest to be repaid.

   The Bretton Woods agreement after WWII really screwed that up for all nations as it pegged all currencies to the US$.
8. UncookedSelachimorpha 8

   23 October 2020 at 3:19 pm

   " … There are many young engineers whose efforts are stultified through the fact that everything has to go through the under-secretary, who, by the aid of an electronic button and a rubber stamp, can control the department "

   I hope this isn't making the argument that the private sector is any better. Having worked in very large corporates – I can testify they can have every bit as much stultifying bueracracy and inefficiency as any government department.
   • Draco T Bastard 8.1

     23 October 2020 at 6:23 pm

     You should probably look at who you're quoting there:

     The Hon. C. J. Carrington was quoted as saying of the GM Mr Furkert that:

     Who was part of the very-right-wing government at the time – the government that saw in the Great Depression and then deepened it in NZ. They were the fore-runners to National and they were fully against what Labour did in 1935.

     The idea that the private sector is better goes all the way back to Adam Smith.

     But the research is coming in loud and clear:

     By now privatization has been thoroughly scrutinized – there are numerous studies, surveys and, indeed, surveys of surveys of its effects. The consistent conclusion: there is no evidence of greater efficiency.2 So, the best outcome one can hope for is that private-sector ownership or involvement is no worse than what the public sector provides – hardly a turn-up for the books. The largest study of the efficiency of privatized companies looked at all European companies privatized during 1980-2009. It compared their performance with companies that remained public and with their own past performance as public companies. The result? The privatized companies performed worse than those that remained public and continued to do so for up to 10 years after privatization.

     My bold.
     • mikesh 8.1.1

       24 October 2020 at 10:27 am

       The idea that the private sector is better goes all the way back to Adam Smith.

       Competition was considered the key to efficiency, but this required so many firms that no individual firm could influence prices; price would then be determined by "supply and demand". These days, however, as has been pointed out by economists such as Joan Robinson and J K Galbraith, markets are mostly dominated by oligopolies, where competition is not a major factor in performance.

       This means that government agencies, which were never subject to competition, are really similar to private firms in that respect.
       • Draco T Bastard 8.1.1.1

         24 October 2020 at 11:19 am

         So many firms that competition was impractical and, in fact, impossible.

         Then there's the fact that competition is highly inefficient as each firm would need its own bureaucracy on top of which the society would then need more regulations and the ability to enforce those regulations.

         The reason why competition was considered optimal was because it would, through profit, push firms to be better than the competition while also decreasing profits thus proving the dead-weight loss of profit. This contradiction is considered normal and part of the self-regulation of capitalism but as large firms dominate the market instead of many small firms with none having dominance then the assumed self-regulation doesn't apply either.

         Practically we end up with an oligopoly that morphs into a plutocracy as the politicians listen to the capitalists while ignoring everyone else.

         A capitalist free-market as envisioned by Adam Smith was always an impossibility and definitely not the panacea to society's ills as we've come to believe. Considering his obviously socialist bent one wonders how he could believe that capitalism was the answer but I suppose he saw it as a better alternative than the aristocracy that he saw around him at the time:

         As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.

         Wherever there is great property, there is great inequality.

         And now we're at the point where we need to find a replacement for capitalism as its proven no better than the aristocracy that preceded it.
   • Pat 8.2

     23 October 2020 at 7:36 pm

     lol…the 'tax' is private or public, never non existent
9. Mark 9

   23 October 2020 at 4:10 pm

   State housing is mostly a failure in NZ.

   I never understood why they built two bedroom bungalows with garages.

   wouldn't it make more sense to build long houses to facilitate thousands of years of tribal living?

   A positive side effect would be the reduction of domestic violence for a start.

   In my view All prior NZ governments have been failing Māori and Polynesian people for too long by forcing white people lifestyles and solutions onto them.
   • Draco T Bastard 9.1

     23 October 2020 at 6:27 pm

     I never understood why they built two bedroom bungalows with garages.

     Because that's what we were told was the dream of every Kiwi and we believed it.

     From what I can make out though, that was a lie and what the government was really after was higher profits for the capitalists and such inefficiency as detached housing makes higher profits as it forces higher consumption.

     … white people lifestyles and solutions onto them.

     They weren't always white people solutions either.
   • Pat 9.2

     23 October 2020 at 7:11 pm

     That mistake may be being remedied…the financing of building on Maori land could facilitate the provision of self determined needs, something that was obviously neglected in the past.

     It is such an obvious solution its hard to understand why it has taken so long.
10. Brigid 10

    23 October 2020 at 9:34 pm

    And just as it was in New Zealand post WW2, a form of Keynesian economics was practised in Australia.

    This is a white paper, published in 1945, titled FULL EMPLOYMENT IN AUSTRALIA (The 1945 White Paper). It's an interesting read.

    http://www.billmitchell.org/White_Paper_1945/index.html
11. greywarshark 11

    23 October 2020 at 9:48 pm

    Meanwhile some Councils have no desire to assist people into housing with reviews of their regulations to make them more appropriate.

    https://www.rnz.co.nz/news/national/429066/converted-shed-not-fit-for-human-habitation-now-certified-after-ruling
12. NZJester 12

    24 October 2020 at 10:01 am

    When we had a Ministry of Woks the roads where better maintained and it was way cheaper to build new ones.

    When they disbanded the MOE to save costs, the costs actully went up and we got less for paying more.
13. greywarshark 13

    24 October 2020 at 10:40 am

    This is a really good big article in Saturdays The Nelson Mail Oct.24/20. It's title is 'The Corolla answer to home-building' (drawing on the effect that mass production of a good car model like the Toyota Corolla I think.) https://www.pressreader.com/new-zealand/the-press/20201024/282144998838112

    About prefabricated housing being imported from Japan – one house to two containers. It's a way to break through our lack of everything to get houses built here. The wood particularly, which our feckless government has sold off to private companies. This of course follows the outward direction of their gaze – exports are all, internal is with resources that are limited or not able to be exported.

    It could be good for the country, if we reduced our imported cars and our expenditure flowing this country for them, and spent that money on importing houses instead. That would result in a neutral balance on our country's trading with Japan.

    One thing though, the Asian hornet. In exporting from Asia we will eventually get a few of these ferocious insects into this country. They have made their way to the USA which is trying to keep tabs on them. I did a comment on them with a number of links but it was too much for TS system or something. They are nasty, much worse than wasps, and like to eat honey and bumble bees. The bees in Asia have found ways to kill individual hornets but it is a learned action, and in new countries the bees would be helpless. And people get hospitalised, and can't work outside, and schools can't play outside if there is a nest near. So our scientists who have been working on wasps need to have a cohort who are interacting with a number of nations looking into this horrible problem. Whether we import houses from Japan, the research needs to happen ahead of the flying fury!

    Other links on prefabricated houses in NZ etc.

    https://www.westpac.co.nz/rednews/property/the-ins-and-outs-of-buying-a-prefab-home/

    https://www.latitudehomes.co.nz/build-options/

    https://www.geniushomes.co.nz/

    https://fraemohs.co.nz/kitset-homes/

    Interesting – https://webecoist.momtastic.com/2013/04/29/build-your-own-eco-house-cheap-10-diy-inspirations/
    • Phillip ure 13.1

      24 October 2020 at 11:15 am

      That last link you posted has some very cool stuff…luv that container home..and the floating one…(I'll pass on the hobbit one..)…one hopes that labour will come up with options to fund such low-cost solutions to the housing mess….
    • Gabby 13.2

      24 October 2020 at 11:36 am

      So it would be much simpler and more direct for the government to secure local timber supplies by purchasing forests and mills, or shovel readying some new ones. Robbo'd like that.
14. Scott 14

    24 October 2020 at 1:24 pm

    Didn't see any mention of John A Lee.

    Learnt a lot from reading Erik Olssen's biography of him last year.

    The housing program of the first Lab government was undermined by the same things that have undermined this one.

    Managing the expectations of the private sector, both the boys Flecther and the smaller building suppliers, along with the different factions of Labour caucus representing different electorates who were leaning on the Labour executive, coupled with a bureaucracy who knew all the things that couldn't be done and none of the things that could be.

    And as Housing Under Secretary John A Lee just smashed through the lot of them.

    He hated Flecthers and thought we would be better off without them but he got them out of the way first so he could then deliver for the smaller suppliers, providing them with an opportunity – the housing program was delivered in spite of Fletchers, not because of.

    And he hated the Unionist and intellectual-pacifist arms of the party who never wanted to get anything done.

    The first Labour Government was a coalition of interests, not just a socialist dream, led by, ultimately, a very centrist Christianised expression of Social Democracy.

    Whether what Lee did then is possible now I don't know, but we should recognise that we are comparing Twyford and co to an exception within that government rather than Labours achievement begot from their innate purpose of social justice.

    If you want to do what Lee did then you gonna have to take them head-on and defeat them with share bloody-mindedness, possibly putting yourself, or your PM, close to the grave

    If my take doesn't ring a chord with people, then surely we should be in agreement that looking at the success of Labours housing program in the 30s deserves some discussion of Lee
    • greywarshark 14.1

      24 October 2020 at 1:39 pm

      Great comment Scott. I have some books about Lee which I was getting round to – faster now. And good points that ring true.

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