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Q+A 2013 Episode 11 19/05/2013

Q+A 2013 Episode 11 19/05/2013



Time to welcome the panel. Dr Raymond Miller from Auckland University; former Green MP and activist, Sue Bradford; and Dr Oliver Hartwich who is the director of the NZ Initiative. It’s a new-ideas shop for economic policy replacing the Business Roundtable the NZ Institute. Very nice to have you all here. Good morning. Let’s start with the big one - housing. And, Oliver, I’ll start with you on that. Bill English says we’re sending a very clear signal. We’re dealing with the supply side of it, and the Reserve Bank has tools. Interest rates will go up. Is it going to make any difference? Are they doing enough to cool down Auckland’s overheated housing market?

DR OLIVER HARTWICH - Executive Director, NZ Initiative
I believe it’s a good start. It will probably make a difference because it shifts expectations, just as Bill English has mentioned. People have to come to the point that they realise that she shouldn’t just sit on land, not develop it. They should actually bring this land to the market and build the houses that this country needs. Because we’ve got a big affordability issue in this country. It is good the government’s finally addressing it.

SUSAN Sue, what more could they do?

SUE BRADFORD - Social Activist
Heaps more. I mean, this Budget does nothing for low-income people in Auckland or anywhere else who badly need housing right now. It’s a disgrace. Because his talk about opening up land in Auckland does nothing at all for people who are desperate for houses. We need state houses-

SUSAN He says they’re insulating houses, he says they adding rooming on to houses.

SUE They’re building something like 3000 extra bedrooms onto state houses. They’re talking about bedrooms now, not houses. 500 more two-bedroom houses. This is over several years. That is a drop in the bucket inside Auckland. Until we have a massive commitment to state and community sectors, social housing build in Auckland and other parts of the country, nothing will change for unemployed people, for beneficiaries, for low-wage workers who can’t afford either the commercial rents or the prices of houses in Auckland and elsewhere. Um, this is ludicrous. Those 39,000 houses, if they’re built, and there’s no guarantees of that, but if they’re built, the price of them is likely to be like Hobsonville or out in South Auckland where they’re building houses now. You’re lucky to get in for $600,000. That does nothing to change anything for the sort of people that I work with.

SUSAN So did we, Raymond, hear any alternative from the Greens and Labour that would provide cheaper housing?

DR RAYMOND MILLER - Political Scientist
Well, of course they’re hoping that capital gains tax will do the trick. That’s not a very popular policy for voters. Anything that involves tax and particularly tax on investments and so on in housing is not popular. But the government is playing catch-up, really, on this housing issue, because it’s only a few months ago that Labour came out with the policy of 100,000 houses in 10 years. And the government was basically saying that the market will sort things out, and of course it’s become clear that the market isn’t sorting things out, and the government is intervening. I really commend to viewers an article by John Armstrong in Saturday’s Herald, because he points out that of course the government is really contemplating some really heavy interventionism, particularly in places like Auckland. The sort of thing that if it were Labour proposing would be considered to be state socialism. But as we know, the National government is quite capable of heavy interventionism. And what they want to do, of course, is intervene where councils are acting too slowly in increasing the number of passing of resource consents and opening up land. So it will be very interesting to see whether or not at this late stage they’re really able to do anything, particularly for first-home owners.

SUSAN Oliver, what was interesting, I think, from Russel Norman is the suggestion of some sort of restriction around foreign ownership. Is that going to have any real impact?

OLIVER Of course not because, in the end, if you’ve got foreign ownership, foreign investors in the housing market, they are buying property, but the properties are not kept empty. There will still be New Zealanders living in them. So that is not the solution to the housing problems. The housing problem can only be solved if we get rid of some planning rules that hold back the housing market, because at the moment, we don’t really have a market. The market is heavily regulated, and we do not have consensus for councils to actually go for growth. At the moment, we’re holding them back. We are not really helping them with their infrastructure needs when it comes to new development. We should really be tackling the issue on the supply side.

SUSAN So what we saw yesterday, you know, the house under urgency debating this and new rules coming through. Is that going to have the sort of impact you’re talking about?

OLIVER Well, as I said, it’s the first step. I think what we really need to do is we need to make sure that councils go for growth, that that are properly compensated for infrastructure spending. We really have to simplify planning rules because we actually have to bring more houses onto the market. We can only solve this problem on the supply side because the demand is already there. We’ve got a young population, an ageing population, a growing population. We have kids, so unless you really want to deport people and solve the problem there, you have to build more houses. That’s the only way you can really solve the shortage: by building more homes.

SUSAN Did you see, Raymond, anything in there to Corin’s very good question that will address inequality?

RAYMOND No, and it’s interesting that almost lethargically they come up with a series of things that the government is actually doing, almost always beginning with home insulation, which I understand was actually a Green initiative.

SUE Yeah, that’s right. They’ve actually cut the funding for home insulation. It’s a load of old bollocks that it’s been increased. They’ve cut the funding, but, of course, as usual, any government makes it sound like a-

SUSAN It’s more targeted, the funding, though, isn’t it, to be fair?

SUE It’s more targeted, and some of it is cut. So a lot of people currently working in helping to insulate houses are going to lose their jobs, actually.

RAYMOND Yeah, but I do think the government realises this is potentially a very important issue for next year. The whole question of poverty and things like food in schools. But it doesn’t just affect the people who themselves are poor, but a lot of fair-minded New Zealanders, middle New Zealanders, just don’t like to see the amount of poverty that we currently have in NZ, particularly where it affects small children.

SUSAN And, Sue Bradford, I think that is the point. Most New Zealanders are horrified at the thought of any child being hungry at school in the morning.

SUE That’s right, and poverty is only getting worse in this country every day, and it’s being deliberately created by this government and its policies, and this Budget-

SUSAN Deliberately created? What government in their right mind would deliberately create poverty?

SUE This government, it does it every day, and this Budget absolutely does it. I mean, things like saying all state tenancies will now be renewable. We’ve completely lost the concept that anyone has housing security, even the most needy people in this country. As soon as people start-

SUSAN But there are some people who take the mickey.

SUE There are some people in the cycle in and out of state housing, out of very low paid work and into welfare and back from welfare into very low paid work. No commitment to job creation, no commitment to state house building that will do anything to solve the housing crisis. No commitment to a welfare system that will actually treat people fairly and give families enough money to live on. This Budget is driving inequality, driving poverty deeper and deeper and creating a millionaire’s playground in NZ.

RAYMOND I think, to be absolutely fair, the government recognises this problem. The government has been dealing with this problem. It is a major problem. Christchurch and redevelopment in Christchurch and a number of initiatives will help in terms of youth employment, in particular. I think we can be positive about a lot that this Budget actually signals.

SUE Like what? What is positive?

RAYMOND Well, there’s nearly a billion dollars in new initiatives, and they’re spread across the economy. It’s a very political Budget because the minister realises that next year is election year, and even although he is naturally inclined towards being cautious, being pragmatic, being careful, nevertheless I think he realises that he has to cover all bases.

SUSAN Where, though, Oliver is our export-led recovery that we have been promised for a number of years?

OLIVER Well, it’s difficult, of course, as long as the dollar is as high as it is. But on the other hand, the economy is growing by 2.5 to 3 per cent over the next few years. It actually makes NZ one of the best performing economies in the developed world, and I think that’s the only chance we have to really generate that export growth that we would all like to see. The government can’t legislate for that, but we can create an environment in which economic growth happens, and I think the government is doing just that. And on your poverty point, it just ludicrous to say the government is creating poverty. We’re actually trying to get people out of welfare dependency, back into work, because it’s the best chance these people to actually have to have a decent income again and to progress in life, rather than staying on the welfare rolls.

SUE That is so true, but how is that happening with Bill English’s unrelenting focus on work with the government’s wealth reforms when the sick, the disabled, the injured, sole parents with young children are being driven back into the workforce to compete for the same few jobs, is desperately unemployed, and the government has zero commitment to job creation? So people are just being recycled between the welfare system and very low paid, poor, insecure jobs.

OLIVER Well, it’s just not true.

SUE What is the point of that?

OLIVER It’s just not true. When you’ve got an economy growing at 2.5 to 3 per cent, that’s decent growth, and that will actually create the jobs that these people will need. And I’m agreeing with you here. We need decent, targeted support for people who really need it, but for all other people, we should actually focus on getting them back into the labour force.

SUE But what if the jobs aren’t there? The jobs simply aren’t there for so many people who are desperate-

OLIVER We’ve got job growth. If you look into the Budget papers, you can see that there are jobs being created, and we’ve actually created jobs.

SUE But very few. Every Treasury forecast in every Budget over the last few years, a very low percentage has actually been created compared to what they’ve predicted. I don’t trust any of Treasury’s budget predictions on unemployment. You only have to look at them to see that. I’m sure you have seen.

OLIVER I’m pretty sure you can still create enough jobs for these people. One of the ways in which you can create exports is to provide these jobs at home. Because part of export jobs is tourism. There is enough opportunity in tourism to have a thriving tourism economy, and I think these jobs will be created in the tourism industry.

SUSAN And fair to say also, I think, Oliver, education. There is an emphasis with this government, as others have, on education, which of course helps people get out of the poverty trap to some extent.

SUE One of the worst things in this Budget for education is people over 40 are now restricted to only three years of potential support for a degree. So it’s like a Bachelor’s degree is as far as you can go. No post-graduate training or education for people over 40 anymore with government support. Isn’t that terrible? At a time when we’re encouraged to be retrained and re-educated.

SUSAN Oliver?

OLIVER Well, I think that the government has also shown that they are committed to education. We just have to see what Gabriel Makhlouf, the Treasury Secretary says and actually increasing the quality of our teaching profession. I think that’s the way to go. We have a lot of work to do. By and large, the NZ education system performs well, but we know we’ve got pockets of deprivation in the country.

SUSAN And a very generous student loan scheme. Even though they’re now talking about arresting those who don’t pay at the border, it’s still a very generous scheme.

RAYMOND Yes, a high proportion of the money that goes to tertiary education goes to students, and that is both good and bad. The good thing about it, of course, is that it gets students the opportunity to have a tertiary education. But of course universities are struggling with underfunding and, really, you know, when you want a world-class university, you have to pay for it. And we spend so much less than, say, Australia does on its university education, and, really, I think that’s something that will need to be addressed very soon, because we do offer world-class education here in NZ.

SUSAN Very good. We will leave it there with the panel.


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