Monday, February 12, 2018



Worse than we thought

So, it turns out that National's housing crisis is much worse than we thought, with an enormous hidden pool of homeless people exiled from state housing, massive undersupply, and long-term consequences for health and our society. And fixing it is going to be far more work and far more expensive than Labour imagined:

Eaqub said the new Government was actually lacking ambition in the area - they needed to double the number of state houses and build 500,000 homes over the next ten years instead of 100,000.

He said the Government's budget responsibility rules were an unnecessary straitjacket which could hold the Government back from properly addressing the crisis.


The Herald version has some even blunter language about this:
Eaqub said investment was needed in infrastructure and housing such as the KiwiBuild programme yet the Government was restricted because of the fiscal responsibility rules.

He said the infrastructure issue could be resolved by "borrowing s***loads of money" and only a "fiscal idiot" would not have been borrowing money in the current climate or over the past decade.


So basicly we're going to need long-term and very expensive reinvestment to fix National's infrastructure deficit. And while the government is doing that, National will spend the entire time screaming about debt and taxes. Because fundamentally, National doesn't care about housing and everyone having a roof over their heads - that was clear enough from their policies. What they care about is rich people not having to pay for anything. Just like the local government morons who whine perpetually about rates while letting their sewage systems, roading networks, and other public infrastructure decay.

But it has to be done. The report makes clear that failing to fix this will cost us in health costs, education costs, and significantly in superannuation costs. Not fixing it is dereliction of duty. The good news is that building state houses is an investment: you borrow money, and you get an asset, which then rises in value and delivers social and economic benefits (e.g. reduced health costs). Eaqub is right: when interest rates are low, it is mad not to do that (even National accepts this, at least when it comes to interest-free student loans). The big problem is going to be the capacity of the building sector to deliver a mass house-building programme. So the government is going to have to do a lot of work building the capacity to build. The good news is that having permanent work from the government will remove the boom-and-bust cycle from the building market, and allow serious long-term investment to make it more productive. Assuming of course that a National government doesn't just come along and scrap the entire thing again.

The full report is here.