Prof Jim Flynn analyses economic crisis in talks
Professor Jim Flynn analyses economic crisis in public talks
Alliance Party Media Release – FOR IMMEDIATE RELEASE – Monday, October 19th, 2009
Affordable housing is one of the keys to economic recovery and preventing further economic crises, author, political studies lecturer and Alliance Party finance and tax spokesperson Emeritus Professor Jim Flynn told a public meeting in Dunedin recently.
In his talk entitled “Roots of the Current Economic Crisis” Professor Flynn drew on his studies of the recent American crisis and research undertaken for his recently published book Where Have All the Liberals Gone?
Professor Flynn argued that good quality affordable housing provided by the state to people on low incomes is essential to avoid both social issues associated with extreme poverty and the sorts of credit crises that caused the near collapse of the US banking system. If the state provides housing for people on low incomes either through rental accommodation or low interest loans, Professor Flynn said, the banks are no longer tempted to give loans to people who have no hope of keeping up payments. Thus the problems with subprime mortgages and bad debts, the reasons for the current crisis, could not arise again.
In addition, Professor Flynn recommends that those on low incomes should pay no more than 20% of their income on housing as rent or 25% as mortgage repayments. Any more impinges on their ability to pay for other essentials such as food and electricity. It is highly unlikely that the private market can provide this, so the state must intervene by expanding its own stock of housing.
Professor Flynn’s thesis is amply demonstrated in the Queenstown Lakes District. There the lack of state intervention, and consequently affordable housing, means according to the Community Housing Trust that householders there, are spending on average, around 47% of their income on their mortgage repayments. This is correlated with up to 50% of people moving out of the district within 12 to 18 months because of high living costs. As a consequence, the Lakes District faces a chronic shortage of skilled workers, even in times of high unemployment elsewhere.
The Alliance Party is the only party in New Zealand that is committed to the construction of more state housing and also to provide state financed low interest concessionary mortgages to both ordinary workers and beneficiaries so that they can buy their own homes as Professor Flynn suggests.