John Armstrong's opinion: Labour's record so far on affordable housing builds is pathetic

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When Labour unfurled its flagship KiwiBuild policy back in 2012, the party thought it had come up with something special.

It thought it was onto an absolute winner.

And with good reason. The policy had a number of virtues for a party in Opposition, the chief one being its sheer simplicity.

Anyone could comprehend the policy’s objective of building 100,000 “affordable” new houses for first-home buyers over 10 years.

Source: 1 NEWS

In setting such a target, Labour provided a focus so obviously lacking in the former National-led Administration’s headless chicken-like response to the housing crisis in the country’s largest metropolis.

The Housing Minister is unhappy Treasury downgraded its forecast over how much extra housing investment Kiwibuild will deliver to the economy.
Source: 1 NEWS

Unlike National, Labour had no qualms about harnessing the resources of the state to provide the oomph necessary to get an ambitious house-building programme under way.

Now in power, Labour has found that those factors have so far had little discernible impact on the fundamental problem confronting whomever ends up holding the Housing portfolio.

Just like his National Party predecessors cast in that role, Labour’s Phil Twyford is finding his efforts being sucked into a Black Hole of seemingly never ending lags and lead times in getting a new housing development off the drawing board and for the cement to start pouring on site.

As someone who mercilessly flayed National for the mishmash mix of panic and paralysis which characterised that party’s tenure in the Housing portfolio, Twyford knows he is on a hiding to nothing.

It is still early days, but the feeling lurks that a policy which was such a valuable weapon in Opposition may not be quite the mechanism for easing the chronic shortage of “affordable” housing that Labour is hoping it will prove to be.

KiwiBuild may work in theory. Getting it to mesh with the forces operating in the wider property market may turn out to be an entirely different story.

That there is such difficultly could be deduced from Twyford’s rounding on officials from the Treasury after they drastically downgraded the degree of positive impact that KiwiBuild is likely to have on residential construction.

It was a minor fuss over a forecast - and should have remained so.

Twyford could have responded by saying Treasury’s analysis did not square with similar research undertaken by his own officials in the Ministry of Business, Innovation and Employment — and left it at that.

He instead sought revenge by lambasting the unnamed Treasury staff responsible for the forecast as “kids fresh out of university” who were “completely disconnected from reality". 

The slur cast by the minister on the competence and professionalism of Treasury officials was unacceptable. 

Public servants must be free to offer advice to Cabinet ministers even if the latter do not wish to hear it.

The 1 NEWS political team look at the issues of Labour's big housing promises.
Source: 1 NEWS

The Prime Minister deserves credit for upholding that principle by ticking off Twyford.

What should be worrying Jacinda Ardern is that Twyford’s all guns blazing response to critics could quickly revert to a siege mentality where the minister becomes impervious to justified criticism.

His outburst spoke volumes about him rather than the targets of his invective. It suggested he is feeling the pressure building as a result of the time it is taking to turn a manifesto promise into reality.

So far, all Twyford has to show for his efforts are two housing developments, the first of which is the plan to build up to 4000 homes on land purchased from Unitec in Mt Albert. Between 30 and 40 per cent of those homes will be built under the KiwiBuild banner. 

Twyford was able to generate another much-needed photo-opportunity by hailing the start of construction of 18 houses on former Defence Force land in Papakura as the official launch of KiwiBuild.

Some will scoff at such publicity-seeking, but Twyford needs to maintain a sense of momentum in the housing portfolio even if progress in implementing KiwiBuild is painfully slow.

Such paltry progress has been overshadowed by poultry coming home to roost elsewhere, however.

Labour was always clear that it would take time to ramp KiwiBuild up to full steam; that it would take more than three years to reach an annual output of 10,000 new homes.

It suited Labour politically for people to think an annual 10,000 target would apply from year one.  The party made precious little effort to correct that impression.

It is now paying a price for failing to do so. 

The mistaken target makes the low level of construction look even more  pathetic than is already the case.

Labour is also paying a price for not adapting the six-year old policy to account for the huge change in the economic circumstances in which KiwiBuild must now function.

When he unveiled the policy back in 2012, David Shearer, Labour’s then leader, stressed the scheme’s big plus would be a consequent cut in unemployment.

Six years on Labour is instead having to grapple with a shortage of skilled workers in the construction sector. It is a shortfall which in the short-term can only be remedied by opening the gates to skilled migrants and thereby exposing Labour to voter grizzles.

Another problem is that wage pressures caused by a labour shortage along with price rises for building materials have seen Labour having to up the price at which KiwiBuild homes will be sold.

This poses a major dilemma. If the price is too high, it might shut even more deserving first-home buyers out of the property market.

If the price is too low, taxpayers will effectively be subsidising home ownership for a relatively lucky few.

Worse, taxpayers might well end up subsidising would-be homeowners who do not need help to buy their first house. The Cabinet has yet to finalise the criteria determining eligibility for the purchase of KiwiBuild homes.

If limits are not placed on applicants’ income levels, sooner or later someone will secure a KiwiBuild property even though they could afford to buy on the open market. 

If the Government fails to block such opportunities to manipulate KiwiBuild, it will be courting a severe backlash.

Such a commotion will be trifling in comparison to the anger and indignation which will erupt if taxpayers end up underwriting property speculators who go bust.

That may sound far fetched. But the time it is going to take to get construction under way on large projects like the one planned for the Unitec site has seen the Government opt for buying properties off the plans of private developers. 

The latter are finding it more difficult to get the financial backing from banks and other sources willing to lend the kind of money required to get building on large subdivisions under way.

Twyford has indicated that he is willing to have taxpayers underwrite such developments.

This is dicey stuff  - politically as well as financially. Whatever safeguards might be in place, when property developers go belly up, there is only one thing that you can guarantee - namely that every one ends up being a loser.

Overall, KiwiBuild will be judged on a simple measure: how many extra houses end up being built as a result of its existence minus how many do not get built as a result of its existence.

One thing is not in dispute, however. As the unofficial Minister for Auckland, Twyford has to deliver. 

Should he fail to do so, his career in politics will be over. It is as simple as that.

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