On The Nation: Pre-Budget Debate
On The Nation: Pre-Budget
Youtube clips from the show are available here.
Lisa Owen: You’re back with The Nation and our pre-budget debate with the minor parties – the Greens’ Julie-Anne Genter, United Future’s Peter Dunne, the Maori Party’s Marama Fox and Act’s David Seymour. Question for all of you – who here thinks that the Auckland housing market is a bubble? Is it a bubble? Hands up if it is.
Peter Dunne: It’s a large bubble, a very large bubble.
Julie-Anne Genter: And can I say that National has really, completely been irresponsible in not dealing with this issue? Treasury was trying to get them to act on it back in 2010. They’ve failed to act on both the demands side and the supply side, and now it’s actually a ticking time bomb.
Ticking time bomb, Mr Dunne. Do you think it is too?
Dunne: I think it is, but I think there is a solution, but we’ve got to do the whole job, and it seems to me that the solution involves the Government, it involves the local authorities, the construction industry and the banking sector. It’s all very well to talk about freeing up land for housing development. That’s fine. I think you’ve got to bring in the housing construction companies and the banking sector to say, ‘How do we get good financing packages to get young families into new housing in particular? How do we build houses that are going to meet their needs?’ If you’re going to take the whole picture-
If you’ve got a bubble, bubbles burst, so you’re saying we’re at risk of that?
Dunne: No. As I said, it’s a big, expanding bubble.
Genter: But it’s been eight years, and the Government still hasn’t acted. They’ve had eight years.
Hang on. David Seymour, I just want to know how it can- how it can’t be a bubble when house prices are going up in Auckland 1300 bucks a day. How is that not a bubble?
David Seymour: We’ve been programmed to think in terms of the GFC and the US mortgage market from a decade ago, and the difference is that the Auckland housing market is a very very small part of the global economy, and I’m sure that the number of returning New Zealanders, the number of migrants, can actually keep it going, perhaps indefinitely, because Auckland house prices are not that high by global standards.
On that point, actually, the Westpac bank has predicted that migration levels are going to drop away in two years’ time to a third of what they are now, so how would you sustain it?
Seymour: If I had a dollar for every time a bank’s made a prediction, then I probably wouldn’t need to be a politician.
So you’d buy a house in Auckland at the moment? You think it’s a good investment?
Seymour: Well, look, I haven’t bought a house in Auckland. I’m hedging, I guess. But at the end of the day, I don’t know where the price of housing will be in a few years’ time. What I do know is that as the government, we have to create the conditions where people can build more homes, because we just are not building enough homes. That’s the start, middle and end of it.
Mrs Fox, this Government that your party’s helping prop up, are they asleep at the wheel on this one?
Marama Fox: Well, let’s get that right for a start, because if I wanted to be in the National Party, I’d be wearing blue; I’m not. We’re the Maori Party, so we can only govern what we can do, and what we’re doing is the housing network-
So are they asleep at the wheel?
Fox: Of course they’re asleep at the wheel. We need to get on to it. They’re starting to get on to it. They agreed with Labour the other day about stretching out the boundaries for a housing development in Auckland, and that’s going to be good. But let’s talk about what the Maori Party are doing, because actually, we’ve just put an extra $12 million into Kainga Whenua so that people can establish Papakainga developments all over the country that are seeing young Maori families into home ownership and low-income families being able to rent homes.
Seymour: Lisa, can I just respond to something we heard earlier about the politicking of this? If you look at the ratio between house prices and incomes in Auckland, it started taking off in the very early 2000s, so it’s not right to blame just the current Government, just as it’s not right to blame just the Labour Government.
Genter: No, but it is right to say that they haven’t taken action in the past eight years.
Seymour: Well, that is correct, but you can’t blame any particular side.
Dunne: At the moment, we’re focusing, I think, on one side of the equation only. We’re saying we need more land supply to build houses. Absolutely, but we still have to get the houses built. We still have to get the families that want those houses into them. And I get annoyed when I see all the construction company adverts on TV every night for ‘the home of your dreams’. Let’s bring them to the table. Let’s sit down with the banks as well and the Government and say, ‘How do we jointly work to resolve this?’
Seymour: I’m pretty sure if we build the houses, people will willingly go into them.
Dunne: But you still have to actually get the houses that people want.
Seymour: Yep, I agree.
Genter: Developers tend to seek to maximise profit. They pitch to the high end of the market, and so we need the Government to be involved in well-run economies where you have affordable housing. Government is far more involved in the provision of housing. And it’s not just stand-alone houses-
Seymour: No, it’s not. That’s absolutely not true, Julie-Anne. And can I just make the point that if you have a shortage of land-? If it costs $800,000 for a section, you’re not going to put a $100,000 house on it. Until you free up the land supply, you’re not going to get a wide range of houses for people.
On that point-
Dunne: But that’s not the sole- That’s part of it. It’s not the sole- It’s not the sole issue.
On that point, Mr Seymour, has Phil Twyford been sculling from the Act Kool-Aid when he says he wants to ditch the city limits in Auckland and build further out?
Seymour: No, that’s the point-
Hang on. Just a minute. If you build further out, doesn’t that mean that the Government has to stump up with infrastructure before you start putting houses up so people can get to their houses?
Seymour: Well, it’s a bit of both, because in my electorate right now, we’re having massive earthworks to upgrade pipes in the centre of Auckland. Everybody flushes the same amount, whether they live in the centre of the city or outside the city. You still have to build the pipes, whether it’s upgrading existing infrastructure or building new infrastructure. So it’s not obvious-
Fox: You should take that argument to the people of Mangere Bridge and Ihumatao, whose last little piece of land is going to be taken away for a special-housing development without their needs being even spoken about or discussed. They’ve had no infrastructure in that land until all of a sudden, ‘now we want it’. If we’re going to take land, please, let’s talk to iwi, because we own less than 5% of this country.
Seymour: Look, I’m sure all of us here can give a bouquet to Phil Twyford. Six months ago he was playing the race card; now he’s talking real economics. So good on Phil Twyford.
All right. Ms Genter, I want to ask you about this. Is Labour backing urban sprawl? Have you sold you down the river on this one?
Genter: If you look at the policy announcement, it’s not just getting rid of the rural urban boundary. It’s also getting rid of the regulatory barriers to providing more dwellings where people really want to be, in the inner suburbs, where land-bankers are highest.
But you don’t back sprawl, do you? You don’t want cars and congestion on the roads. You don’t back that.
Genter: I think that if you get rid of the barriers to providing more dwellings where people want to be, in the inner city, then we will get more dwellings. It is true that transport costs are much higher for land on the fringe. So if you build a bunch of cheap houses at the outside of the city, you’re going to get more congestion, more cars, higher costs.
Yes or no – do you support their view on the urban boundary?
Genter: I think that Labour was incorrect in how they characterised what Auckland Council’s looking at with the rural-urban boundary. We said, ‘Look, we’re willing to talk if you price the externalities, if you price the infrastructure; if you get rid of the height limits and the density restrictions, actually, we’re probably not going to get car-orientated urban sprawl.’ But that’s a completely different planning system that Twyford is talking about, and, you know, it’s pretty hypothetical.
Seymour: The fact is that the argument is being lost by the compact-city model.
I want to move on to something else. Mr Dunne, negative-gearing tax breaks for people who have rental properties – shouldn’t we just get rid of that, because that would cool the investor market instantly, wouldn’t it?
Dunne: Again, it’s maybe part of the solution, but I think the problem we have with housing all the way through, whether it be advocates for capital gains’ tax or people say ‘here’s the silver bullet’ is we keep grasping at the one thing that’s going to make the dramatic breakthrough.
But as a factor, one of the things we could do?
Dunne: But I wouldn’t get hung up on it. I think the bigger issue is – how do we provide the houses that we’re short of for the people who need them? That is the bigger issue. I don’t think anyone has actually really come up with the answer to that.
I want to just poll the table – should people with rental properties be getting this tax break? Hands up if you support them getting the tax break, negative gearing, keeping it?
Dunne: Yeah, I don’t have a problem with that.
So nobody wants to keep negative gearing?
Dunne: No, I don’t have a problem with the system we have at the moment, but it’s not the issue.
Genter: There are too many tax advantages in our system to investing in property, and that holds back our economy in many ways. It’s just one part of the housing problem, and it’s also part of the reason why we don’t have more investment in actual productive sector of the economy, which is part of the reason why the productive sector of the economy has been languishing for a decade.
Fox: It’s additional corporate welfare. It is. It is additional corporate welfare. There is corporate welfare all over this country, and we need to stop that and have just a fairer tax system for everybody.
Seymour: But let’s be clear. The only reason that people are speculating in housing is because there’s a shortage.
Time out, table. In the time we’ve got left, I want to talk about the Housing New Zealand dividend. Mrs Fox, should the Government scrap it, just use the money to build more houses – don’t ask Housing New Zealand to pay 118 million back. What do you reckon?
Fox: Absolutely. Why are we charging our own government agency? Why are they getting to benefit from housing our most vulnerable people? That should not be happening. Use the money, build more homes. Get the people who are waiting to get into a home into a house.
We’re out of time, so I just want to ask – I know the Greens want to build houses – Peter Dunne, should they have to pay the dividend?
Dunne: I think we should use it as part of a wider home-building strategy.
Seymour: No. You’ve got to run it with proper accounting. It’s always tempting to just right off a dividend, but that’s actually dishonest accounting.
So keep paying the dividend? We’re out of time, so keep paying the dividend?
Transcript provided by Able. www.able.co.nz