Govt's housing supply response dealing to Auckland land prices is a "generational fix," Prime Minister Bill English says during discussion on homelessness, neo-liberalism and housing affordability

The National-led government’s efforts to tackle Auckland housing affordability by focussing on the planning system’s effects on land prices is a “generational fix” for the issue, Prime Minister Bill English says.

During a Radio NZ interview focussing on homelessness Monday, English was asked about the rising cost of housing contributing to a growing number of people experiencing severe housing cost stress. While Budget 2017 initiatives would help 20,000 people rise above that stress line, it was put to English that 100,000 would remain below it.

He said the government’s response through the Budget was a shorter-term fix – “it’s a policy that delivers the benefits as we have the tools and the cash to do it with” – and that government was now looking to longer-term solutions.

“A big part of the growing cost of housing has been the growth in the cost of land. And that is why we’re setting out to rethink the urban planning system – everyone agrees we should, because in the long run, that’s how to get a better grip on the cost of housing,” English said.

Budget 2017’s ‘Families Package’ which included Accommodation Supplement boosts, tax threshold rises and Working for Families tweaks would ensure “more cash in the pockets of those families, so that they can afford it. And the market is going to become more affordable.”

He added that a systematic problem was also being tackled: “Poor planning creates real pressure for low and middle-income households. And everyone now agrees, in Auckland, where they planned for decades not to grow, had the effect of driving up land prices. That’s what’s driven up housing costs, primarily. We’re fixing that. This is a generational fix.”

Neo-liberalism

Radio NZ Morning Report host Guyon Espiner quizzed English on previous National Prime Minister Jim Bolger’s comments earlier this year that neo-liberalism had failed in New Zealand. You can listen to that Bolger interview on our website here.

“Frankly, I don’t know what he meant by that,” English said. “We have an economy which is underpinned by market principles – that’s broadly accepted. That’s enabling us to be competitive in the world, we can see that with our better terms of trade, for instance…”

Espiner put to him that neo-liberalism referred to state asset sales, lower taxes, smaller government. English said the term was a product of its time.

“This economy is in good shape. It’s one of the better performing ones in the developed world by any measure, but one of the better measures is that we have a higher proportion of the working age population in work than New Zealand has ever had,” he said.

“I think a debate that’s a left-over from the 90s is not going to guide us through the 2020s. What is clear is…if you can have lower taxes, if you can have less regulation, if you can have supportive social policy, you can have a successful country with a strong economy.”

Homelessness

Asked about wealth inequality – it was put to him that those at the top were doing very well while the poorest were having to live in cars and garages – English said the National-led government had been making progress on that front.

“First, they’ve got much more opportunity to get a job now, better than ever. Secondly, with the way we’re adapting social policy – here’s a fact: In Hamilton, homelessness has almost been eliminated by dealing with the people on the street one-by-one and the complexity of their problems,” he said.

“And in Auckland, in the last four months, the same kind of scheme – Housing First – has placed 150 people in just four months. And I can see a time where homelessness is rare in New Zealand if we’re smart about how we deal with it.”

On to homelessness, and the conversation took a surprising term. English suggested that the largest problem faced in New Zealand on the issue stemmed from the Christchurch earthquakes. It appeared to be a way to initially avoid the subject of people ‘sleeping rough’, although he returned to that definition later.

“So, our challenge there, 2010-12, was to rebuild a city whose homes had been devastated. Then the Auckland house prices took off. All work that’s been done on that is now coming to fruition,” English said. “Thousands of them in garages and lounges – no places to go to.”

It helped him get on to the track of discussing housing supply. He said the government had learnt lessons from its response to the Christchurch quakes, which could be applied to dealing with homelessness issues in other cities.

“Now, Christchurch house prices are flat to falling, it’s an affordable city, it’s a growing city. When the pressure came on in Auckland we’ve transferred those lessons to here, and now it’s working – house prices are flat to falling. And our ability to deal with those symptoms…is going to increase, because we’re going to have a more manageable market,” English said.

“We’re certainly going to have a very good go at [reducing homelessness]. We can’t guarantee that – and what I mean by homelessness is not the statistics measure of your cousin staying with your brother. It is people who are sleeping rough on the street. And I think that can be virtually eliminated.”

However, what was not acceptable was “the overcrowding where people can’t afford the housing costs, and there’s too many of them in a house,” English said. He added that there was probably even more “suppressed demand” for housing at the affordable end of the spectrum than what measures indicated. “You could go to houses and find, there’s families living together under the pressure of housing costs. We want to deal with that.”

“Solving that problem is a bigger, harder one. And that’s why we’ve changed the social housing system so that, as we look out over the next 10 years, we are renewing the approach to social housing . It will give us a lot more flexibility and capacity to deal with, what I think, is still some suppressed demand. There’s still more of it out there than the government’s familiar with,” he said.