John Hawkes: Time for Jacinda Ardern to grasp the nettle on housing

OPINION

Daunting, long-standing challenges confront the newly elected Labour Government. They include unacceptable child poverty, exorbitant housing costs gobbling up large chunks of household incomes, meagre productivity levels and growth rates, excessive per capita greenhouse gas emissions and numerous polluted rivers.

Raising revenue to rectify these and other vital issues such as healthcare, education, transport and water is imperative. Doing so will be extremely difficult because this government is not addressing the crucial question of wealth creation, nor is it prepared to widen the current narrow tax base.

Successive governments have long professed the importance of high-wage, high-skill jobs in knowledge industries. At the same time, they have done little about severe home-based skill shortages, particularly in the health, engineering and technology sectors. This situation will continue while we keep importing cheap skilled and unskilled workers.

The 1992 Building Code, building material standards, consenting processes and procedures require many building and resource management consenting authorities who certify everything. Hence the construction sector is drowning in red tape, delays and regulation costs and does not deliver high-quality dwellings.

Prefabricated Japanese houses are far superior to anything built here. It is the difference between creating a car in one’s shed and building it in a Japanese factory.

Unbelievably, the present Government has welcomed the continued rise in house prices, which are unaffordable for too many would-be purchasers, as proof of a successful economy.

The Government knows that when residential property rises in value owners are more likely to spend money. It believes this boosts the economy.

No wonder some act as if their property is an ATM and that selling houses to one another is our salvation.

The reality is New Zealanders’ personal debt is one of the highest in the developed world: some $120,000 per head of population.

We should emulate the Nordic peoples who mainly see their homes as a long-term dwelling, whether owned or rented, and not a means to make money. Besides, because housing is much more affordable than in New Zealand, they generally have greater disposable incomes than us, which benefits their nations’ retailers.

Prime Minister Jacinda Ardern listens attentively to and empathises with the people she meets but falters when it comes to implementing sorely needed transformational policies.

Yet her Government has an overwhelming mandate to enact legislation to remedy multiple issues that determine our standard of living and wellbeing. It is said the 250,000 former National voters who voted for Ardern don’t want any transformational legislation and she will appease them so Labour can win a third term.

Besides regulating the Consumer Price Index, the Reserve Bank could be mandated by Government to address marked asset price inflation. This would divert lending by retail banks away from property speculators and into productive businesses. This would apply especially to the vital export-led tech sector, which employs well-paid skilled people who enhance our export earnings, so essential to us as a trading nation.

The Government should decree that investors and speculators can invest only in new houses and not in existing ones. Unoccupied, so-called “ghost houses” should be taxed.

Auckland has an estimated 40,000 ghost houses. These empty houses appreciate greatly in value from tax-free capital gains while homeless people sleep in doorways, garages and cars. A typical Auckland worker (NZ Herald, October, 9] would need to spend almost seven years toiling in a fulltime job to earn as much as homes in New Zealand’s most expensive suburb, Herne Bay, appreciated last year.

Our housing stock, valued at about $1 trillion, constitutes a staggering quarter of our total wealth. This over-investment in non-productive assets is partly because many New Zealanders have distrusted finance since the 1987 stock market collapse and partly because they believe the age-old dictums “as safe as houses” and “an Englishman’s home is his castle”.

English academic Austin Mitchell’s 1972 book about New Zealand in the 1960s was titled, The Half-Gallon, Quarter-Acre Pavlova Paradise. In the past 50 years this dream-like view of our country has turned into a nightmare of unrestricted urban sprawl and a divided society.

• John Hawkes is a fourth-generation Kiwi; a medical graduate of Dunedin Medical School; a consultant rheumatologist near London for 25 years; a NZ athletics champion; and author of New Zealand: Paradise Squandered?

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