Aotearoa/NZ: Socialist solutions needed to address housing crisis

The following article by CWI reporters in Aotearoa/New Zealand first appeared in the Australian magazine The Socialist.

New Zealand is in the midst of a housing crisis. This crisis was created by decades of neo-liberal policy including the deregulation of housing consent and planning, the sell-off of state housing stock, and the failure to close tax loop-holes. These loop-holes have enabled a thin layer of people to create wealth out of property speculation while others struggle to meet rental payments in substandard housing.

The absence of a capital gains tax has led many investors to see property as a means to make easy profits. This has exacerbated inequality with a smaller number of people owning an increasing number of property assets to the exclusion of others.

An OECD 2011 report on New Zealand noted that: “Wealth is concentrated to a greater extent in property compared to most other OECD countries…Supply rigidities and tax incentives that bias savings decisions towards property investment have amplified the increase in house prices, widening wealth inequalities in the form of larger homes for those who can afford them, but deteriorating affordability for the rest of the population.”

The gaps in the tax system have helped create a boom in the property sector. This has left many young families unable to purchase a home. Between 1991 and 2012 home ownership fell to a 50 year low and is forecast to continue falling.

Since 1991 the government’s main intervention in the housing market has been the provision of the Accommodation Supplement to low income earners. This payment effectively operates as a landlord-subsidy ensuring landlords continue to gain a profit from their property investments. At the same time it sends a message to employers that they do not have to pay a living wage. Since 1991, the growth of this subsidy has been enormous and yet it does nothing to treat the underlying reasons for why housing is unaffordable for so many families.

The privatisation of state housing

In 1991, with the incoming National government, New Zealand saw the “mother of all budgets” which included the selling-off of state housing and the introduction of market rents for state housing.

While the policy of market rents was eventually reversed with the introduction of Income Rent Subsidies, New Zealand continues to live with the legacy of a severely depleted state housing stock. State housing is now seen as only an option for the poorest families – only those classed as “high priority” are placed on waiting lists.

According to the Housing New Zealand Annual Report 2011/2012: “Under the new criteria, only new applicants with high-priority needs are eligible for state rentals, with moderate and low-priority applicants no longer being placed on the waiting list.”

The government has meanwhile earmarked $46.8 million during 2015/16 and 2016/17 for Housing New Zealand to provide additional rent subsidies for those tenants forced to move into market rentals.

The most recent legislation to pass on state housing does nothing to address the housing short fall. Instead it allows private organisations to bid for tenders to provide social housing. This will only make access to affordable housing more difficult. The false idea being pushed is that the ‘market’ is the best mechanism to deliver social services. The truth is it’s an attempt to open new areas of the economy for exploitation.

Recently Housing New Zealand has also been through a process of “reconfiguring its portfolio”. This is code for selling off properties which have increased in value. In Auckland this has occurred most controversially in Glenn Innes under the “The Tamaki Transformation Project”.

Under the plan, Housing New Zealand has been evicting tenants and selling properties which have increased in value. State assets are not immune to the imperative that they deliver a profit, or as Housing New Zealand put it, an “acceptable return to the Crown”.

The Tamaki Redevelopment Company has been formed as a joint Council/Government agency to oversee the development of the remaining properties into one of Auckland’s largest housing projects. Under the plan, houses will be built under public-private partnerships, with a mix of state and market housing. The purpose of the Tamaki Redevelopment Company is to oversee the transfer of assets away from Housing New Zealand and to implement the management of them by private organisations. Essentially this is a stage of further privatising state housing.

Market rents

While the government is intent on pushing more families out of state housing and into market rentals, current laws provide little security for renters. There are very few provisions to address tenure security and housing that meets health standards and the differing mobility requirements of tenants.

The Child Poverty Action Group (CPAG) notes that despite the well-documented relationship between health problems and housing quality, there has been complete neglect from the government on ensuring dwellings meet basic standards.

While the government has committed an additional $102 million over the next four years on housing, none of it will go towards improving rental conditions. Most of this expenditure is needed to cover the increased demand for the Income Rent Subsidy and Accommodation Supplement.

Auckland housing issues even more acute

In Auckland there is an estimated shortfall of 15,000 dwellings and this is expected to worsen. The Auckland City Council is acting at the behest of property developers and is pushing for deregulated zoning and size restrictions so that developers can build more dwellings on less land. While there are increased rules around some visual aspects, such as how developments will fit with the heritage values of an area, they do not address the most serious problems around low-quality unsafe housing.

The Salvation Army’s 2012 report on Auckland housing is damning, not just on the lack of government response to the crisis, but it also points to the governments role in facilitating the crisis through bad legislation that has benefited property speculators and developers above families forced to live in increasingly unaffordable and unhealthy housing.

The report said: “We have developed, supported and nurtured systems that have sustained and even expanded inequality. These systems have allowed some Aucklanders to grow rich through property speculation and have allowed some Aucklanders to develop poor-quality housing that not only leaks, but is ugly and unliveable. These systems have allowed some Aucklanders to occupy larger and larger houses, while other Aucklanders live in more crowded houses and in sheds, garages and caravans. These systems have biased our tax system so that not only are house prices excessively inflated but now higher and higher public subsidies are required for modest-income households to be able to afford any housing”

Socialists fight for immediate reforms to provide some relief to people suffering from housing stress and to address the root causes of the crisis.

We call for:

-Housing to be provided to all as a basic human right -A massive public works program to build thousands of new state homes to wipe out the waiting lists and create much needed construction jobs -Tax reform that will eliminate the ability of speculators to make profits out of housing -The introduction of strict regulation for rental properties that requires all housing to meet standards on liveability, mobility, health and safety – A cap on private rents to limit landlords profiteering

A lasting solution

The commodification of housing is a perversity. We should not have a situation where some profit and others struggle to find a decent affordable place to live. The only way to change this once and for all is to change the profit driven system that creates this scenario. A socialist system based on public ownership, democratic control and sustainable planning would prioritise people’s needs and ensure that the basics of life, like a roof over your head, were provided to all.

Colonisation, capitalism and the housing crisis

Hone Harawira, facing arrest for defending public housing at Glen Innes.

Hone Harawira, facing arrest for defending public housing at Glen Innes.

Ben Ritchie, Fightback (Wellington).

Housing is in crisis. Decades of market-based policies have decimated the social housing stock, and the market is failing to provide affordable housing. After all, housing is a necessity, not a luxury good – letting the intersection of supply and demand determine prices serves only to deny housing to those who can’t afford it.

Social attitudes to housing – and successive government policies – have roots in Aotearoa/New Zealand’s colonial history. The value placed on land by the British Crown and its representatives is evidenced by the lengths they were prepared to go to in order to obtain it: aggressive deception, in the case of the Kemp purchase, or outright theft by means of punitive confiscation throughout the North Island. Such value was determined in part by the sales pitch that was made to colonials, that only in New Zealand would they have the opportunity to own their own property. This was the birth of the quarter-acre dream.

The modern equivalent of this propaganda can be evidenced in the cornucopia of house and garden magazines, home development TV shows, and extensive media coverage given over to the concerns of the minority of New Zealanders that own their own home and can afford to invest in its beautification.

At the other end of the spectrum, discourse regarding homelessness has been blaming and paternalistic – in the case of Wellington’s recent Alternative Giving scheme – and aggressive in the case of Auckland council’s proposed Nuisance Begging bylaw and the deployment of security guards to move homeless people “along” during APEC and the Rugby World Cup.

This capitalist propaganda comes against a background of declining real wages – workers’ share of New Zealand’s Gross Domestic Product has been steadily declining since the 1970s, forcing prospective home-owners to become increasingly indebted for life in order to achieve their dream of home “ownership”.

Workers share of Gross Domestic Product. Source: Bill Rosenberg, CTU (2010)

Workers share of Gross Domestic Product. Source: Bill Rosenberg, CTU (2010)

 

household debt

Household debt ($M). Source: Reserve Bank of New Zealand

Credit from banks flows easily on the assumption that they can just claim back the house if the borrower can’t meet the payments, and that house values won’t drop. But based on the capitalist model of supply and demand, this effectively pushes house prices up, encouraging the development of more profitable, more luxurious housing in exclusive subdivisions.

These upward pressures on house prices flow on to rental accommodation, Statistics New Zealand recently released a report based on census data showing a doubling in real terms of the cost rental accommodation in two decades.

Rent has doubled over the last 20 years. Source: Statistics New Zealand

Rent has doubled over the last 20 years. Source: Statistics New Zealand

But it’s not just market forces alone. Neoliberal policies introduced by the fourth labour Government in the 1980s – and carried on by National in the 90s – reduced the proportion of tenants who were renting from public sector landlords from 38% in 1986 to 18% by 2006. Further, public sector landlords, such as Housing Corp and city councils increasingly acted like private sector property developers, introducing market rates and expecting to profit from their provision of social housing. Likewise, private landlords have become more profit-hungry. In the 1980s it was relatively common for employers to provide subsidised accommodation to employees, something that is almost unheard of today.

Rightly, much media comment is made of the situation in Auckland, where a fast growing working class population is confronted by a slower housing market that is increasingly expensive. But this pattern is evident in other centres too. This month, the Porirua community newspaper the Kapi Mana led with a story State housing crisis, noting that 191 families were on the wait list for 11 available state houses in Porirua.

Opposition to the Tamaki Transformation Project in Glen Innes reached public consciousness in recent months, notably with the arrest of Mana leader Hone Harawira. After a period of false community consultation, where any intent to reduce the number of state houses was strongly denied, the project was initiated in 2011 with a reduction in the number of state houses from 156 to 78, eviction of tenants and the sale of seaside land to property developers for private housing.

Mainstream political parties have responded to the crisis. Predictably, Labour and National ignore the economic and political reality. Labour recently announced plans to subsidise the development of a large number of “affordable” homes, initially costing $300,000. This presents an excellent opportunity for speculators, as these will be houses for private sale. But it was their proposed policy of restricting investment in property to “New Zealanders” that got most attention, on the left anyway. Blaming “the foreigners” for the failings of their own market-friendly policies betrays Labour as a capitalist party that would rather introduce racist policies than dare to appear remotely socialist. Interestingly Australian investors would not be denied access under Labour’s proposed policy – apparently they are not the bad kind of foreigner.

National are predictably letting the provision of social housing deteriorate even further, and just as predictably, don’t seem to care. This year’s budget handed more responsibility for the provision of social housing to community organisations – not necessarily a bad thing in itself – but it is apparent that these organisations will be so poorly funded that the number of homes is expected to decrease as a result. National’s election promises in respect of social housing focussed more on “moving along” the unworthy poor from state homes and replacing them with more worthy tenants.

Mana’s housing policy priorities explicitly address some of the causes of the housing crisis, acknowledging the effects of colonialism on Maori home ownership, and seeking to address homelessness. Mana policy development seems to derive from the struggle for transformative reforms, and as such, demand the attention and qualified support of socialists. Unfortunately, these policies also attracted the attention of the founders and Facebook friends of the so-called Pakeha Party, whose deliberate historical ignorance wilfully construed such policies as reverse racism. Of course the Pakeha Party has quickly become a bizarre parody of itself, but in its heyday it did attract a large number of followers. Socialists must struggle not only for public housing, but against widespread confusion as to the causes of disenfranchisement (hint: it’s not foreigners or Maori).

Fightback Wellington event: Housing crisis

Housing Crisis small

Objections to MANA’s housing policy recently led to the formation of the ‘Pakeha Party’ Facebook page, with thousands of likes.
Meanwhile Labour has announced policies including investment in private ‘affordable housing,’ and restriction of purchase for non-citizens.
All the while, public housing continues to decline, with evictions at worst and poor maintenance at best.
What is behind the housing crisis? How can we address it?

A discussion facilitated by Fightback (Aotearoa/NZ).

Kiwibuild and housing in the modern capitalist economy

kiwibuild construction

Joel Cosgrove

At their most recent conference Labour leader David Shearer, under immense pressure from both inside and outside the Labour Party, announced a keynote policy which promises 100,000 new homes to be built over the ten years following a Labour Party electoral victory in 2014.

The response to date, with a few exceptions, has been divided according to two positions. The first is that Labour’s policy is a rebirth or reaffirmation of the principles of the first Labour government. The second position is that Labour is simply announcing an unaffordable election bribe, and that the policy is simply middle-class welfare and an example of big government. Both positions are analytically superficial.

In a New Zealand Herald DigiPoll survey released on January 10, over 70% of respondents approved of Labour’s promise to enter the housing market to build 100,000 low-cost homes over the next 10 years, with only 26 per cent disapproving.

This is portrayed as being a return to old-Labour values, a line in the sand ideologically with the National Party. However, below that hark back to the past, much of what Labour has presented is more aligned to a modern neoliberal perspective than a social democratic framework from the past.  [Read more...]

Housing protest videos (Wellington, Aotearoa/NZ)

[Read more...]

A small victory in the battle for Glen Innes

In mid-October, for the first week in several months there were no state houses removed from Glen Innes . House removal companies and police backed off after intense protest activity which culminated in the arrest of seven protestors including MANA movement Leader Hone Harawira. “This is a small victory in the battle of Glen Innes” said MANA Vice President John Minto in a press release.

“It’s also an opportunity for the Minister of Housing to intervene and agree to a moratorium on further removals so the community can be engaged in discussion about the proposed redevelopments. We are pleased that along with MANA, Labour and the Greens also agree to this approach. It’s common sense given that even National list MP and former Glen Innes pastor Alfred Ngaro agrees no proper process of consultation with the community was carried out before the first state houses were removed.”

“The government wants to ‘redevelop’ Glen Innes, not for the people who live there but for wealthier families from other areas, the poor are to be shifted out to South Auckland or into high rise state housing in GI which on past experience will look like a slum in five years” said Minto.
The protests are being led by the Tamaki Housing Action Group and supported by MANA, who will also be supporting the Housing Crisis National Day of Action tomorrow which will include a march on parliament and a petition demanding affordable housing for all people

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