Archive | Politics

English announces super at 67

Prime Minister Bill English said today the Government would progressively lift the age of eligibility for NZ superannuation from 65 to 67, starting in 20 years.

The proposal assumes National will win the election, scheduled for 23 September. Mr English said (assuming he’s still in power), the change would go into legislation next year.

As justification for a measure his predecessor, John Key, wouldn’t take, Mr English said: “New Zealanders are healthier and living longer, so adjusting the long-term settings of NZ super while there is time for people to adapt is the right thing to do….

“Gradually increasing the retirement age from 2037 will more fairly spread the costs & benefits of NZ super between generations, ensure the scheme remains affordable into the future and give people time to adjust. It will also bring New Zealand into line with other countries like Australia, the UK, Denmark, Germany & the US, which are all moving to a retirement age of 67.”

Mr English said universality & indexation wouldn’t change. He said he was announcing the change now so political parties could debate superannuation transparently in the lead-up to the election.

Little says Labour will hold it at 65

Labour Party leader Andrew Little said before the announcement that Mr English was fuelling uncertainty: “On Saturday he talked about a ‘reset’ for super, but wouldn’t be drawn on what that meant. By Monday he was ruling out changes to entitlements. What will tomorrow bring? A rise in the age of entitlement from 65? This drip feed of options is irresponsible.

“It’s just more poor leadership from Bill English, just like his approach to the housing crisis. His dithering is creating unnecessary anxiety over something he needs to be absolutely clear about because it affects the lives of so many. It’s one thing to be uncertain about what’s going to happen. It’s another thing to say let’s have a debate about it without actually putting the case for change….

“Labour’s policy is very clear. There will be no change. A Labour government I lead will keep the age of entitlement at 65 and we will re-start contributions to the NZ Superannuation Fund.”

Attribution: English release.

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The English programme is for steady growth

Bill English, completing his second month as Prime Minister, opened Parliament yesterday with a statement that was long on boring. The word ‘continue’ cropped up throughout his speech.

And that’s neither odd nor bad. A prime minister who’s just finished 8 years as deputy and also as finance minister is hardly going to tell you he’s been doing a bad job and is going to change everything.

Nevertheless, I read through it in case something had moved out of line. One thing I’d hoped might have moved a little closer to action was the Resource Management Act reform programme. It was down the end of the speech and is still a work in progress. That’s perhaps for the best, because it needs work to remove some of the unnecessary turmoil some changes were going to make.

Mr English said economic growth was expected to average about 3%/year over the next 5 years, “supporting more jobs, reducing unemployment and allowing incomes to rise faster than inflation.

“Unemployment is forecast to drop to 4.3% by 2020-21. Over the same period another 140,000 jobs are expected to be created and the average wage is forecast to increase by a further $7000 to $66,000.

“The Government’s overall fiscal strategy remains unchanged – getting on top of spending and paying off debt in the good times so that the Government can support New Zealand communities through future challenges.

“The operating allowance remains at $1.5 billion for each of the next 4 Budgets. The capital allowance has been increased to $3 billion in Budget 2017 and to $2 billion in future budgets to provide for a number of high quality infrastructure & investment projects.

“Treasury’s latest forecasts of the operating balance before gains & losses (OBEGAL) is for a $473 million surplus this year, rising to $8.5 billion in 2020-21.

“Net debt is expected to fall to 18.8% of gdp by 2020-21, with contributions to the NZ Superannuation Fund forecast to restart the same year.”

Among projects for the year (there are others, in case you think the most important one has been omitted – check the link below):

“The Government will continue work on improving the quality of our rivers & lakes, and progress work on a fair & equitable allocation system for water & discharges.

“The Government will encourage petroleum & mineral exploration while adhering to strong environmental & safety provisions. Investment in data acquisition projects such as aeromagnetic surveys will continue, ensuring aeromagnetic data on around 30% of New Zealand’s land surface will be available by mid-2018.

“The Government will continue to promote competition in the electricity market to help keep downward pressure on power prices. It will also continue to promote renewable energy, with a target of reaching 90% renewable energy by 2025, up from 81% in 2015. Work will be progressed on setting renewable energy targets beyond electricity.

“Investment in modern infrastructure is a priority for the Government. Capital spending over the next 5 years is forecast to total $32.1 billion, compared to $18.4 billion over the last 5 years, with major investments in transport, schools, hospitals, defence & housing.

“The Government will continue construction of the remaining 5 roads of national significance, and accelerate a package of regionally important state highway projects under the accelerated regional roading

“Housing will remain a key focus for the Government this year, and work will continue to increase the supply of land for housing.

“Legislation to reform the Resource Management Act will be progressed, to reduce costs & delays for homeowners & businesses, and the Government will also proceed with reform of the Building Act.

“The Productivity Commission will deliver its final report on the urban planning system. This will consider options for the long-term replacement of planning legislation.

“The Government will work with Auckland Council to ensure the successful implementation of the city’s unitary plan. Additional special housing areas will be established, and more underutilised Crown land will be made available to support an increase in residential building.

“The Government is reforming the social housing sector to grow supply and get better outcomes for people & families most in need of housing assistance.

“The Government will build & fund additional social & emergency housing places, having last year provided permanent funding to the emergency housing sector for the first time.

“The social housing reform programme will progress, with the transfer of up to 2500 Housing NZ properties in Christchurch to community housing providers. The reforms aim to drive more diverse ownership of social housing, engaging providers who can support tenants with additional social services, and redevelop social housing to better match tenants’ needs.

“The Government will progress the advanced survey & title services project, which will significantly improve the quality & range of survey & title services provided by Land Information NZ.

Legislation to amend the Local Government Act will be progressed, allowing local authorities to create more shared services across regions, particularly for core infrastructure such as transport, water & sewerage.

“The Government will continue to review New Zealand’s immigration settings to ensure they support economic growth and provide employers with access to the international labour market to fill labour needs that cannot be met domestically. A new global impact visa will be piloted to attract up to 400 young technology entrepreneurs.

“The Government will implement initiatives to contribute to its goal of raising Government investment in research & development to 0.8% of gdp, including the rollout of the $250 million/year strategic science investment fund.

“2 new regional research institutes will be established in Marlborough & Alexandra, and a second round of regional research institute funding applications will be completed, supporting 1-3 additional institutes.

“The Government will continue to resolve historical Treaty of Waitangi claims, and intends for all willing & able iwi to have settled or have an agreement in principle by the end of 2017.”

Prime Minister’s statement, 7 February 2017

Attribution: Speechnotes.

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English explains his thinking

Prime Minister Bill English used a Rotary Club address in Auckland yesterday for his first election campaign offer, a big lift in police numbers & resources.

The package would amount to $503 million and includes adding 1125 more staff to the police force over 4 years, 880 of them sworn officers; an increase in cash & assets seized from gangs & organised crime, up from $230 million to $400 million over 4 years; and $115 million for rehabilitation & reintegration programmes.

The National proposal, the first promise heading into the 23 September general election, comes 4 months after Labour leader Andrew Little berated the Government for holding police income down to 14% since it was elected in 2008, compared to a 25% rise in costs over that period arising from immigration & inflation. Labour proposed lifting police numbers by 1000 in 3 years.

More interesting to me from Mr English’s address yesterday, though, were some of the pictures he painted from his upbringing on a Southland farm, his time as a young farmer fighting the debt which threatened to overwhelm him and, he said, learning economic reality. Below, I’ve run those parts of his speech:

A successful recipe

Some people believe New Zealand’s location protects us from the most immediate pressures. But in time, the effects of decisions made in Washington, Berlin, Moscow & London will wash up on our shores.

When our values & direction are tested, we should remember that history shows we’ve developed a successful recipe for New Zealand over many years, and we can hold true to our values. That allows us to face international challenges with confidence. Confidence in our resilience, confidence in our ability to adapt and confidence in our place in the world.

We have forged a distinctive place in the global community as a fair-minded people with a successful economy open to trade, investment & migration. That economic success has been hard won by New Zealanders. It should not be taken for granted.

As some of you know, I was brought up in Southland, a place where hard work & farm skills were respected more than profit, and where no one could do it all on their own. I got my politics around our large dining table growing up, and from my mother who ran a farm, raised 12 children and was a serial community activist.

By the early 1980s, I was a new, keen & highly indebted young farmer. Interest rates were around 17%, but farm costs were held down by wage & price freezes.

That wasn’t sustainable and just papered over the economic problems that had built up over a number of years.

The economy had to be restructured. My community was hit hard as farm subsidies were wiped.

I made lots of financial & farm management mistakes. But with the help of family and a lot of hard work, we stayed on our feet.

Many New Zealand families had similar experiences in other industries, as jobs were lost and they struggled to rethink where they fitted in a country that had suddenly changed.

We thought the world owed us a living. It didn’t.

Small steps

I learned then that business & families in a small trading country like ours needs to continuously adapt in small steps – and that government should back Kiwis to do just that, focusing on resilience & aspiration rather than fear & isolation.

Hiding from economic reality eventually requires drastic & damaging change.

This has been the guiding philosophy behind the National-led Government’s approach over the past 8 years. And it has delivered the strong economy we have now.

As a new MP in 1990, I saw the deep-seated resilience of our rural families & communities as they rebuilt their skills & their confidence. I saw the same qualities in the big city when I married into a Samoan Italian family.

I must admit the scruffy unemployed farm worker who turned up on the arm of their eldest daughter wasn’t quite what Mary’s parents had in mind as a son-in-law – busy as they were with several jobs and raising a large family. From them I saw the grit & determination it takes to feed & educate a large family, own a home and win respect when starting afresh in a new country.

Mary and I have raised 6 children of our own. Along with the hundreds of families we’ve met through school, church, relatives & dozens of sports teams, we’ve shared the experience of working multiple jobs, getting everyone everywhere on time, finding time to spend with the children & each other – and for enough sleep – as well as answering the hardest question of all every day: what’s for dinner and who is cooking it?

The people who shaped my life are resilient & capable.

I’m proud that on the other side of the globe from the European capitals I visited a few weeks ago, New Zealanders have built a cohesive & globally competitive country that can provide valuable lessons to the rest of the world.

In recent years, New Zealand has dealt with the biggest financial crisis since the Great Depression, we’ve dealt with devastating earthquakes and we’ve made significant progress on deep-seated social & Treaty issues.

A sound footing

We now have a dynamic & diversified export sector, sound government finances, low unemployment and thousands of new jobs. People are voting with their feet. New Zealanders are staying home, more tourists want to visit us, and more people want to live here. The outlook remains positive and the economy continues to grow, with over 130,000 jobs created in the last year. Average wages are expected to keep rising and reach $66,000 a year by 2021. That means more opportunities for our kids to get jobs and more money in people’s pockets.

The global economy is looking a bit better than last year, with improving prospects in Europe & the US. However, the political instability I mentioned earlier means there is no room for complacency.

In this environment, I believe the biggest threat to New Zealand is disruption of the international system of open trade. Under my leadership, New Zealand will continue to advocate for free trade and aim to execute high quality trade agreements. When we open doors for our exporters, they walk through and create opportunities & jobs for New Zealanders.

Immediate challenges

Our immediate challenges at home are what I call the positive challenges of growth. The Government is building the roads, schools & houses needed to support our growing communities. We’re providing the public services & infrastructure needed by a successful, growing & modern economy – and there’s much more to do.

The whole point of building a strong economy is to improve the lives of all New Zealanders. If we can stay on course and build on the progress we’ve already made, we have the best opportunity in decades to make positive sustainable choices for our country – choices that deliver better incomes for our families, safer communities, and provide better government services for everyone.

As prime minister, I want people to be rewarded for their hard work & enterprise.

Businesses, farms and entrepreneurs across New Zealand are the engines of growth in our country – as are the people who work hard every day in those enterprises.

So we’ll continue to back people who take risks to create new jobs & new businesses.

We’ll back hard-working people who get up early in the morning to milk the cows or to catch the bus to work, so they can raise their families. And we’ll back people who bravely leave behind welfare dependency to move into work or who work hard to manage their health issues or disability so they can live independently. I believe in the capacity of all New Zealanders to improve their lives in some way, large or small. And I believe in the generosity of this country to help them do it.

Here’s what I mean.

Last year, I visited Kaiti School in Gisborne, where many of the children come from low-income families. I saw inspired teachers sign up parents, mostly young mums, to the local iwi savings scheme. I met a 5-year-old who presented me with a business plan for selling toffee apples at the school fair. He told me about his products, his customers & his marketing.

If we accept the normal assumptions, then that young Maori boy hasn’t got much chance. But what I saw in his eyes, and in the teachers supporting him, will change his life.

Finding the bright side

Through my extensive family & many years as a local MP, I have seen hundreds of examples of suffering & loss of hope turned around by quiet heroism in our communities, families, schools & public services. It never happens without the hope of one person for another.

I’ve also seen lives blighted by poor public services, bad decisions, neglect & bureaucratic inertia. A well-intentioned public service on its own is no guarantee of success – we have to help people to fan the small flames of hope. This government is committed to doing that.

We’ve developed a better understanding of the needs of people who rely on us most. Public servants can now see the lifelong benefits of intervening early to help those in need, and the lifelong costs when that doesn’t happen. We know, for example, that a teen parent on welfare will spend an average of 17 years on a benefit, at a cost of just under $300,000.

There is a group of around 1000 5-year-olds each year who, in later life, are far more likely to commit crime, be on a benefit or go to jail, and they’re far less likely to succeed at school. Left alone, each of these children will cost taxpayers on average around $270,000 over the next 30 years, with some costing over $1 million. We will spend time and money now to change the course of their lives.

For too long, governments have serviced misery, rather than investing upfront to help people change their lives for the better. Some New Zealanders need ongoing support to help them lead a decent life – and they should have as much choice as possible in how that happens. But there are many more who will benefit from smart, lighter-handed assistance and will then move on.

A basic: Money isn’t always the answer

It seems pretty basic to me that if you are spending billions of dollars on social programmes like health, education, welfare, housing and law & order then it should work. You should actually be achieving something, otherwise you’re wasting taxpayers’ money and messing with people’s lives. So we now publish results every 6 months showing what has been accomplished.

Spending more public money is not, in itself, an achievement. Real achievement is reducing welfare dependency. Real achievement is getting better results for our kids at school. And real achievement is preventing rheumatic fever, and reducing emergency department waiting times. Real achievement is changing lives. This approach, which we call social investment, is showing promising results.

There are now over 50,000 fewer children living in benefit-dependent households than there were in 2011. And the number of sole parents on a benefit is the lowest since 1988.

My government is willing to take the risk of trying new ways to help those most in need. Some new services might not work. Others might be opposed by existing providers. In election year, some will say the answer is always more money. If that were true, we would have no social problems, as we’ve been increasing funding for decades. The recent rise in the prison population confirms we need to do better.

We’ve made some progress in breaking the cycle of welfare dependency, child abuse, low education levels & escalating criminal offending, a cycle that is often intergenerational. It is a long job.

The people who fall through the cracks

But there remains a small number of people who have a disproportionate impact on the safety of our communities. Too many people in prison and on community sentences are regulars in the government system. So today I want to address that issue.

This Government’s Policing Excellence and Prevention First programmes have focused on reducing crime and preventing reoffending. These programmes contributed to a 20% reduction in crime between 2009-14. They improved public confidence in police, and they drove productivity gains that freed up the equivalent of more than 350 extra frontline officers. More recently, we’ve set challenging targets to reduce violent crime, youth crime & reoffending.

We’ve made it harder for violent offenders to get bail and we’ve sharpened our focus on preventing family violence. And we’re using social investment to better understand the people who most need our intervention and identify what really helps them to lead better lives.

We have driven government agencies to address the drivers of dysfunction, rather than just responding to the symptoms. Because preventing crime often requires intervention from education or housing agencies rather than just the police, for example.

Here is a surprising fact: The most common age of an apprehended burglar last year was 16. That’s right – just 16 years old. We need to push harder to keep every young person on a track that avoids first offending and prevents them moving on to even more serious crime. But the police frontline need more time to dedicate additional resources to crime prevention & working with other agencies, while also meeting higher demand for dealing with serious crime now.

Although recorded crime has fallen since 2009, overall demand for police services has recently increased. That’s down to the complexity & time-consuming nature of cases such as family violence, child abuse & sexual assault, as reporting of these crimes increases. In addition, recorded crime has begun to rise again over the last 2 years – particularly burglaries, robberies & assaults.

As I’ve said, this government is prepared to invest up front in programmes that will tackle these complex issues and make a positive difference to communities.

Warning: examine the promises closely

Delivering better public services for a growing country is all about investing where it’s needed, while working smarter and being more accountable for results.

In weighing up promises by political parties this year, I challenge you to look beyond the dollar-figure soundbites. I want you to ask whether the policy sets out exactly how it will improve people’s lives – or whether it is just taking the easy option of throwing money at a problem.

Attribution: Bill English speechnotes.

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Housing minister no more

Nick Smith has lost the housing portfolio in today’s Cabinet reshuffle by new prime minister Bill English, and nobody’s picked it up, although 2 ministers have social housing & Housing NZ in their titles.

Dr Smith has retained the building & construction (previously building & housing) and environment portfolios.

Ministers with ‘housing’ in their title are:

  • Amy Adams, responsible for social housing, responsible for Housing NZ Corp, also Associate Minister of Finance, Minister of Justice, Minister for Courts, Minister Responsible for Social Investment, and
  • Alfred Ngaro, Associate Minister for Social Housing.

Steven Joyce picks up finance & infrastructure, Gerry Brownlee remains Leader of the House and retains Supporting Greater Christchurch Regeneration, Defence and the Earthquake Commission portfolios. He will also be appointed Minister of Civil Defence.

Simon Bridges continues as Minister of Transport and will pick up the economic development & communications portfolios and associate finance.

Anne Tolley becomes Local Government Minister, replacing Peseta Sam Lotu-Iinga, who is retiring from Parliament.

Full ministerial list

Attribution: Prime ministerial release.

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Greens unveil expanded housing purchase plan & finance models

Green Party co-leader Metiria Turei refreshed the party’s home for life policy at the weekend with a progressive ownership plan and new financing models for community housing groups.

She told the Habitat for Humanity conference in Rotorua on Saturday: “For much of Aotearoa New Zealand’s history, governments used their low cost of borrowing to finance affordable homes for New Zealanders. It is time for government to pick up its tools again.”

The home-for-life policy is a rent-to-buy type of scheme, but Mrs Turei said the constantly rising average house price – now over $1 million in Auckland – made housing unaffordable for most people.

As a part of a government-build programme, the Green Party would make 10,000 new homes available over 10 years to people who can’t afford a deposit or a normal commercial mortgage, through progressive ownership rent-to-buy arrangements.

“Progressive home owners will pay a weekly payment of no more than 30% of their income. Part of each payment will be rent to cover the Crown’s costs. The rest will purchase equity shares in the home. Over time, with each regular payment, ownership of the home will transfer from the Government to the people who live in it.

“Our plan will save people more than $100/week compared to a commercial mortgage. This programme will work alongside any Government plan to build more affordable homes. It will provide access to affordable, stable housing and get people out of expensive rentals and into their own homes.”

Mrs Turei said community housing providers would be able to buy an additional 5000 newly built, energy-efficient homes from the Government through the progressive ownership programme: “Community housing providers may choose to use these as emergency housing, rent them out as social housing, or sell them to tenants over time using their own rent-to-buy programmes.

“Community housing providers will provide a deposit or use private sector finance to pay for part of the initial cost of building new, highly energy-efficient homes. The Government will fund the remaining stake through Housing NZ. Community housing providers will make regular payments to buy out the Government’s stake.”

She said the Greens proposed that the Government issue low-interest loans to community housing providers, funded by supplying long-term partially guaranteed housing bonds to investors who want to see their money put to use to solve the housing crisis.

Green Party, home for life policy

Attribution: Party release.

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Little sets out 8 planks to remedy housing issues

Labour Party leader Andrew Little announced yesterday that Labour would, if elected next year, carry out 8 actions aimed at fixing the housing crisis.

They are:

  1. Build 100,000 affordable homes around the country
  2. Ban foreign speculators from buying existing homes
  3. Introduce an affordable housing authority, partnering with the private sector, to fast-track development in our cities
  4. Tax property speculators who flip houses within 5 years
  5. Help 5100 more Kiwis into emergency housing every year
  6. Make Housing NZ build more state houses & maintain them properly, rather than paying dividends & selling stock
  7. Require all rental homes to be warm, dry & safe to live in, and
  8. Abolish the urban growth boundary and allow Auckland to grow up & out.

Mr Little said: “The Kiwi dream of home ownership is slipping away and we’re facing the biggest housing crisis New Zealand has ever seen. This is a game-changing policy package to fix the housing crisis.

“Labour will establish an affordable housing authority to work with the private sector to cut through red tape and get new homes built fast. It will partner with private developers, councils & iwi to undertake major greenfields & revitalisation projects, building affordable homes with KiwiBuild & the private market. These homes will be part of great communities built around parks, shopping centres & transport links.”

The party would put all surplus urban Crown land under the control of the affordable housing authority for use in its development projects.

“Only a quarter of adults under 40 own their own home, compared to half in 1991. Too few houses are being built, which is helping to drive up prices beyond the reach of middle New Zealand, and too few of the houses that are built are affordably priced for new home buyers.

“In Auckland, despite more than 13,000 new houses being needed to keep up with population growth, just 9400 new houses were consented in the past year. The trend for new consents is falling when a dramatic increase is needed.

“The Government’s estimate that only 5% of new builds are priced in the lowest quartile means fewer than 500 affordable houses will be built in Auckland this year.

“There is no single body tasked with driving the construction of affordable homes. Most developments are smallscale & slowed down by long consenting periods. To ensure profitability, private developers focus on building large, expensive houses.

“At the same time, regional centres are crying out for redevelopment of rundown town centres & suburbs but there is no support from the Government to get this done.”

100,000 affordable homes

Mr Little said Labour’s KiwiBuild programme would build 100,000 high quality, affordable homes over 10 years, 50% of them in Auckland. Standalone houses in Auckland would cost $5-600,000, apartments & townhouses under $500,000. Outside Auckland, houses would range from $3-500,000.

Growing the building workforce

Increased house-building will require a larger workforce, but the Labour policy is aimed more widely than that: “Labour’s dole for apprenticeships policy will subsidise employers to take on around 4000 young people for on-the-job training in fields including building & construction. Labour’s policy of 3 years’ free post-school education will see tens of thousands more people study in all fields, including building & construction. KiwiBuild is projected to create 5000 new jobs at its peak.”

Remove barriers that are stopping Auckland growing up & out

“Up & out” has become a common cry, often without thought on what the “out” would achieve. The constraining urban boundaries were put in place to prevent sprawl into rural areas and to enable infrastructure to service new development most efficiently, and therefore more cheaply. Auckland’s old councils were at odds on urban growth – the outer councils were attracting more housing development but had trouble meeting the infrastructure programmes & costs, while the old Auckland City Council favoured intensification as a regional policy.

Mr Little said: “Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering & holding up development. New developments, both in Auckland & the rest of New Zealand, will be funded through innovative infrastructure bonds.”

Crackdown on speculators

He said Labour would ban non-resident foreign buyers from buying existing New Zealand homes: “This will remove from the market foreign speculators who are pushing prices out of reach of first-homebuyers.”

Labour would extend the bright line test, requiring income tax to be paid on any gains from the sale of residential property, from the current 2 years to 5 years: “This will target speculators who buy houses with the aim of making a quick capital gain. Current exemptions from the bright line test will continue.”

Mr Little said Labour would consult on way to close the negative gearing loophole: “Negative gearing can be used by speculators to make taxpayers subsidise losses on their properties. This is effectively a subsidy for speculation.”

Focus Housing NZ on helping people, not making a profit

Labour will make Housing New Zealand into a public service rather than an SOE, and will substantially increase the number of state houses. Unlike the current government, Labour will not milk state housing for a dividend, and will end its programme of state house sales.

Establishing an affordable housing authority
Focus Housing NZ on helping people, not making a profit

Attribution: Party policy announcement.

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PM talks $1 billion infrastructure fund, English talks payback frame, Smith talks grabbing more power

Prime Minister John Key announced a new $1 billion housing infrastructure fund today “to accelerate the supply of new housing where it’s needed most”.

The one-off contestable fund will be open to applications from councils in the highest growth areas – currently Christchurch, Queenstown, Tauranga, Hamilton & Auckland.

Mr Key & his ministers said in background to the fund: “Why a one-off fund? Longer-term, councils need to find new ways of funding infrastructure through existing funding tools or potentially coming up with new ones.”

The fund announcement comes 3 days after Auckland Council approved a $770 million increase in its annual budget to $8.77 billion, which right-wing critics of the council say is already too big.

The budget includes $705 million of capex for growth, numerous water & wastewater projects aimed at expansion in existing areas and for greenfield growth, and provision for the council development manager, Panuku Development Auckland, to work on transformation of about 18 centres & suburbs, including regeneration & new development.

English at odds with prudent policy

Finance Minister Bill English said the new fund “will help bring forward the new roads & water infrastructure needed for new housing where financing is a constraint. The Government will invest up front to ensure the infrastructure is in place. But councils will have to repay the investment or buy back the assets once houses have been built & development contributions paid.”

That’s to say, the Government is offering councils a programme forcing them to incur extra debt beyond long-term plan provision, on a timetable they can’t control, when, in Auckland’s case, the council is struggling to maintain its debt at a prudent level.

It’s a determined continuation of the Government’s intention, in Auckland, to dismantle the urban boundary and enable more greenfield development – 3 weeks before the panel which has spent 18 months hearing & working through submissions on Auckland’s first unitary plan delivers its considered recommendations to the council, including recommendations on that urban boundary.

Property Institute chief executive Ashley Church was quick to applaud the Government for its fund: “The move will go a long way toward overcoming Auckland Council’s major objections to opening up residential land on the fringes of the city.

“It follows a recent directive from Housing Minister Nick Smith, which required councils to open up enough land to cater for the growth in our fastest growing centres. The 2 measures have stripped Auckland Council of most of its excuses for inaction.”

Fairgray spelt out growth reasons which government could control

Mr Church’s view – and the Government’s intent – are at odds with research by the economist who led much of the council’s research on growth capacity & urban boundaries for the unitary plan hearings, Doug Fairgray.

Dr Fairgray said in a column run on this website on 24 June: “So what is driving this latest upsurge [in house prices]? Simply, the conditions which underpinned the price boom through the pre-GFC period have returned, but with greater effect. The principal drivers again include the ease of securing finance to purchase dwellings, stimulated by the strong competition among banks & financial institutions to increase their loan books, together with historically low interest rates making loans more affordable, and in particular the record levels of population growth in Auckland driven by record in-migration.”

The Government was able to address all those factors. It could also have addressed the heightened investor demand for houses throughout the 5 years since the market hit the global financial crisis bottom in mid-2011.

And, if Dr Fairgray is right in saying land supply is not the central problem, the Government’s move to hasten greenfield residential development will exacerbate long-term costs for commuters and council costs for the provision of community infrastructure.

Smith stretches Government talk to power grab on planning & consents

Building & Housing Minister Nick Smith said: “The fund will be available only for substantial new infrastructure investments that support more new housing, not to replace existing infrastructure.

“To access the fund, local councils must outline how many new houses will be built, where they will be built and when they will be available. Ideally, they will have agreements with developers on these issues.

“Funding may also have other conditions attached, such as faster processing of resource consents. All of this will require close collaboration between central & local government.”

Mr English said: “Infrastructure, and its financing in particular, is one of the 3 key constraints to building more houses – alongside land supply & consenting requirements.

“Councils have strict debt limits, which means some lack the headroom to invest in infrastructure now, and then wait for future development contributions to recover the costs. The fund will help provide more infrastructure sooner by aligning the cost to councils with the timing of revenue from development contributions.”

Depending on the number & timing of applications, it will require the Government to temporarily borrow up to $1 billion, which will increase net debt until it is repaid.

Dr Smith repeated Mr Key’s recent statement that the Government was also considering establishing urban development authorities to help further speed up the supply of new housing: “Urban development authorities have streamlined powers to override barriers to largescale development, including potentially taking responsibility for planning & consenting & other powers.

“These changes are just the latest steps in the Government’s ongoing, comprehensive programme to increase the supply & affordability of housing.

“They will complement the work of the housing accords & special housing areas, our social housing build, our emergency housing programme, the expanded HomeStart scheme for first-homebuyers, the development of surplus Crown land, the national policy statement [on urban development], Resource Management Act reform and the extra tax measures we took last year.

“We are making good progress in facilitating increased investment in housing with a record $11.4 billion of residential building work underway this year. This initiative to support councils with infrastructure provision is the next logical step in this programme.”

The council budget & infrastructure projects

Auckland Council’s budget for the year that started on Friday includes a rise in debt from $8 billion to $8.77 billion, but with interest costs held below 12% of revenue (11.3% for the last year, 11.5% for the next year).

Capex for 2016-17, up from $1.8 billion for the year just finished to a budgeted $1.95 billion, includes $1.375 billion for new assets, ranging from multi-year projects such as the city rail link & Ameti (the Auckland-Manukau eastern transport initiative) to a spread of local projects.

For just under $2 billion of capex & other outgoings, including $705 million for growth, the council budget includes $835 million to come from borrowings, $644 million from an operating cash surplus, $163 million in development contributions, $87 million from asset sales & $240 million from subsidies.

Key projects include $81 million on expanding the water collection system, $71 million on expanding wastewater treatment, and a number of other expansions & replacements of infrastructure.

The new Hunua 4 watermain will run 32km from the Redoubt North reservoir at Manukau Heights to the reservoir on Khyber Pass Rd, Grafton, costing $23 million this year.

Design will continue on the central interceptor for wastewater to support growth, replace aging assets and reduce overflows into the Waitemata Harbour.

The Waikato water treatment plant expansion will be completed and preliminary work, including getting consents, will be done for the North Harbour 2 watermain.

The budget includes $4.5 million on the start of the northern interceptor wastewater pipe, which will support northern & western growth and free up capacity at the Mangere wastewater treatment plant, supporting central & southern growth.

Upgrades to the regional water network include 2 new reservoirs at Pukekohe East, the first to start in 2017 and take 2 years to complete, and the second to follow depending on population growth.

The council’s development management arm, Panuku Development Auckland, had 2 transformation projects approved last December for Manukau Central & Onehunga, 8 other transformation projects to work on and another 8 to support, including development at Pukekohe, intensification at Avondale & New Lynn and redevelopment at Otahuhu.

Institute wants initiatives to encourage builders

The Property Institute’s Ashley Church said neither the Government nor the council should build the volume of houses required to address the shortage. He said the next step for the Government should be announcement of a series of initiatives designed to encourage the private sector to start building.

“Such measures could include a return of the ability to claim depreciation on dwellings constructed from now, removal of all loan:value restrictions on the construction of new dwellings, and an exemption from the ‘bright line’ test where the seller had built a home, rather than purchased an existing home.

“Moves such as these would very quickly create private & investor activity in new home construction and would lead to a focus on the construction end of the market – which has got to be preferable to the current situation where 42% of all purchases in Auckland are made by investors selling existing homes to each other.”

Mr Church acknowledged that the high cost of land, particularly in Auckland, meant these measures wouldn’t lead to a reduction in housing prices – but said they would “very definitely” contribute to slowing the growth in those prices.

Housing Infrastructure Fund – Q & A.pdf

Earlier stories:
1 July 2016: New house consents hit 9-year high but other sectors quiet
24 June 2016: Fairgray works through the question: Who’s really the house price villain?
6 December 2015: How Panuku proposes to lead transformation of Auckland

Attribution: Ministerial & Property Institute releases, council annual plan.

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The goodies, the baddies, and who says that’s what they are…

What you see is what you get? Nope.

My weekend often takes me on many journeys, and this weekend it’s taken me along some of the back alleys of Brexit – and post the Brexit vote.

The common theory for the 52:48 vote to exit the European Union was hostility toward those in power, whose interests appeared more in holding power than in benefiting their citizens. Yet, in the wake of the vote, politicians appeared to be positioning not to benefit their citizens in recognition of the vote, but to usurp the power voters had taken it upon themselves to demonstrate.

I wrote after the Brexit vote: “For Brexit to become positive, new leaders must emerge.”

What’s happened so far is that the politically entrenched have begun using their positions to fight the great unwashed, aside from trying to or succeeding in finishing off a few of the supposedly powerful.

One to go was former London mayor Boris Johnson. First, his mates let out that he appeared to have wanted to cause a ruckus without winning the Brexit vote. And that, when he did win, he didn’t have a game plan.

Then came the move to dispose of Jeremy Corbyn as Labour Party leader. From the outside, and from a distance, it’s easy to conclude he hasn’t done a very good job. This weekend’s stories put very different options to that theme, and explain why.

On the Tory side, with the Brexit leaders still ranked as outsiders, who would succeed David Cameron as party leader? The name to the fore this weekend was Andrea Leadsom, the Energy Minister. She’s a Thatcherite, which chills me: Margaret Thatcher had a course to follow but, as with Rogernomics in New Zealand, implementing it meant dealing harshly with the unwanted. Mrs Leadsom, in Parliament since 2010, is 53 – 4 years older than the man she would replace but well short of the pensioner group in charge of too many government structures.

Former UK Environment Secretary Owen Paterson wrote in the Telegraph: “Last week, the British people voted unambiguously to leave the political arrangements of the European Union; they chose the bright clear voice of optimism in the face of an onslaught of negative advice from the political establishment.”

An onslaught, certainly, or onslaughts, but I don’t think the vote was “unambiguous”. However, looking forward rather than back, Mr Paterson wrote that he was backing Energy Minister Andrea Leadsom for prime minister: “One woman who would be the first prime minister in 26 years with a solid understanding of economics needed to steer our economy competently & confidently. As a businesswomen, a mother & an exemplary local MP, she has acquired a true understanding of the needs & aspirations of the people up & down the land….

“Within a year of becoming an MP, she had set up the Fresh start project to examine the options for a new UK-EU relationship. She co-published a paper laying out the reforms the European Union absolutely had to make for it to be in the UK’s interests to remain, all of which as we know the EU stubbornly refused to budge on.”

The Daily Mail called her a hypocrite and the Independent found why she’d been locked out of the Cabinet 4 years ago – that one, over a principle, perhaps adding to her mana now.

The story of how & why Labour activists & MPs managed to take the heat off the Conservatives by attacking their own leader is explained in the Canary, a fairly new news website headed by Kerry-anne Mendoza, who was Scriptonite of the Scriptonite Daily blog. She writes on the Canary: “Today, a handful of individuals control our mainstream media. Mass media coverage is largely conservative. We want to create a counterpoint.”

None of the above has any particular relevance to property, which is the start & finish point of the Bob Dey Property Report. However, it does have a strong relevance to international politics, finance & trade. And the Canary articles raise questions of how politics is being stage-managed these days, reminiscent of the dealing uncovered in New Zealand’s 2014 election.

And so, back to the first sentence of this article: What you see is what you get? There have always been undercurrents in politics, Britain’s are being uncovered and, you can be sure, plenty of undercurrents in New Zealand politics will go undiscovered and therefore not understood through the local & central government election campaigns here over the next 18 months.

The trickle-down link below is a reminder that some things are never as they seem. Sometimes they’re just a frolic with your headspace on behalf of an ulterior motive.

Owen Paterson in the UK Telegraph, 2 July 2016: Andrea Leadsom is the woman to lead Britain out of the EU and towards a bright future
The Daily Mail, 3 July 2016: Hypocrite! Tory leadership hopeful & Vote Leave campaigner Andrea Leadsom previously said ‘Brexit would be a disaster’
The Independent, 3 July 2016: Tory leadership race: George Osborne ‘blocked Andrea Leadsom from Cabinet after she told him to say sorry’
The Canary, 2 July 2016: The real reason the permanent political class is trying to topple Jeremy Corbyn
The Canary, 28 June 2016: The truth behind the Labour coup, when it really began and who manufactured it (exclusive)
Financial Times, 1 July: How Michael Gove forced Boris Johnson’s surrender
Jared Keller, Pacific Standard, 19 June 2015: The IMF confirms that ‘trickle-down’ economics is, indeed, a joke

Attribution: UK Brexit articles, Telegraph, Daily Mail, Canary, Financial Times Pacific Standard.

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Hobsonville precinct signing overcomes treaty breach and takes hapu into new development role

The signing of a memorandum of understanding at Hobsonville Point yesterday was all pretty ra-ra until Anita Mazzolini mentioned that, within 2 years of signing the Tamaki Makaurau claims settlement, the Government tried to breach that agreement.

The settlement gave the Tamaki collective – Nga Mana Whenua o Tamaki Makaurau – the right of first refusal over Government land to be sold within the next 170 years in an area roughly covering the Auckland region.

When the Government decided last year to dispose of parcels of Government-owned land to provide for housing, it initially bypassed that settlement condition and, at yesterday’s signing ceremony onsite at Hobsonville, Building & Housing Minister Nick Smith said they were different matters.

In a release on the signing, Dr Smith said: “This memorandum of understanding is just a first step in the Crown’s land development programme in the north-west of Auckland where Ngati Whatua o Kaipara has a right of first refusal. It is important to recognise that this legal right is quite different to the housing protocol & Mahi Ngatahi agreement with the 13 iwi over other parts of Auckland.

“There is no sense in having surplus Crown Land sitting vacant when Auckland has major housing issues derived from a shortage of land. It is a complex process freeing up this land for much needed housing, but we are progressing work in a pragmatic way to get homes built as quickly as practically possible.”

Mrs Mazzolini, who chairs Nga Maunga Whakahii o Kaipara Investment Ltd, said the memorandum meant the treaty settlement was now being honoured in a joint venture between equals – the Kaipara hapu and the Government through the Ministry of Business, Innovation & Employment’s Crown land development programme and the Hobsonville Land Co Ltd as a Government-owned developer of new housing.

The memorandum of understanding signing: Building & Housing Minister Nick Smith & Prime Minister John Key at rear and, seated left to right, Crown land programme director Roger Coulson, Haahi Walker (Kaipara trust) & Adrienne Young-Cooper (Hobsonville Land Co chair).

The memorandum of understanding signing: Building & Housing Minister Nick Smith & Prime Minister John Key at rear and, seated left to right, Crown land programme director Roger Coulson, Haahi Walker (Kaipara trust) & Adrienne Young-Cooper (Hobsonville Land Co chair).

The first land going to the hapu is the Village precinct at Hobsonville Point, which has been renamed Te Uru (the west wind).

Mrs Mazzolini said it was the director of the ministry’s programme to make use of idle Crown land, Roger Coulson, who came up with the idea of the memorandum as a win-win solution, taking the hapu into its first venture in property development through purchase of the Te Uru 9ha.

“Making money out of this is very important to us, but only as a means to an end. Even the ‘affordable’ houses at Te Uru will be way beyond the means of the hapu today,” she said

Te Uru ends separation of the 2 Hobsonvilles

Hobsonville Village, given a lift with a new supermarket & small business centre, is right next to the Kaipara site at Hobsonville Point.

Hobsonville Village, given a lift with a new supermarket & small business centre, is right next to the Kaipara site at Hobsonville Point.

Te Uru adjoins the old Hobsonville village, which has also been given a new lease of life following Progressive Enterprises Ltd’s development of a Countdown supermarket and an integrated hospitality & commercial centre, now almost fully leased.

The Te Uru land will have about 400 houses built on it, replacing a number of old Air Force houses on part of the site.

The Hobsonville Land Co will manage the Te Uru development, and the memorandum will also enable Nga Maunga Whakahii o Kaipara to draw on the company’s expertise to identify additional potential development sites and assess development possibilities beyond Hobsonville Point.

The Te Uru subdivision is to proceed next summer, for completion of the first homes in early 2018. Dr Smith said the development had “a strong affordability element, with 80% having to meet specific price points.15% are required to be below $450,000, 7.5% below $500,000 and 7.5% below $550,000. These 30% affordable homes under the Axis series programme will be sold to owner-occupiers and at least 50% of these will go to first-homebuyers. The remaining 50% will be sold below Auckland’s median house price.”

This agreement just a start

“We are also exploring a development agreement involving Ngati Whatua o Kaipara, the Hobsonville Land Co & MBIE on 18ha of NZ Transport Agency-owned land in Brigham Creek Rd. MBIE has reached a preliminary agreement with NZTA on purchasing this land for the Crown land programme and it is currently being subjected to due diligence. Other sites in north-west Auckland are also being explored.”

Mr Coulson said the agreement with the Kaipara hapu was “far-sighted & broad” and would enable high quality development, “in keeping with Nga Maunga Whakahii o Kaipara’s desires & values, that will also be of considerable value to the future housing & community needs of Tamaki Makaurau.”

Hulse, Smith & Key on housing crisis & solutions

Yesterday’s signing was also an opportunity for politicians to present views on Auckland’s housing crisis, as deputy mayor Penny Hulse did, followed by Prime Minister John Key.

Cllr Hulse said the memorandum of understanding, and the accord between the Government & Auckland Council creating special housing areas, weren’t just about policies & strategies, but were about getting people into housing.

She congratulated Dr Smith for making “a wonderful transformation to housing – this is about making smart things happen…. Despite all the criticism, the special housing areas are going great guns and I think we’re on track to make that 39,000 target [of consents for both houses & sections over the 3 years of the accord, which ends in September].”

Cllr Hulse went on to say that, with a 10:1 ratio of house prices to household incomes, “We’re in a housing crisis”. While she was starting hear some encouraging words on solutions, she said the main requirement was to reduce speculation, and to do that capacity had to be built.

“Is the council doing everything it could? No, we’re not. We need to get on with the unitary plan and zone land for development.”

Dr Smith said the memorandum was a “commonsense, pragmatic response” to Ngati Whatua’s needs: “It’s easy to give speeches and tell people to build houses… but building houses that are affordable is a big challenge.”

He said the Government was looking forward to extending the Hobsonville Point development model and linking it with the Crown land programme.

While everybody was “still looking out for the magic bullet”, Dr Smith said the housing solution would come in many pieces. He expected to make an announcement shortly on one of those, the urban development strategy. Another strand was the rise in the build rate, up from a low point of 4000 houses to 9500/year, but facing a labour capacity issue to reach 13,000/year.

Mr Key said Hobsonville Point was proof that housing at scale & in a range of prices, including affordable housing, could be built close to central Auckland. The prime minister then ventured a combined potted history & economic outlook for his audience: “Auckland has pressure on its house prices because it’s doing well. That’s true right around the world, it’s not solely unique to Auckland, and if everybody was leaving and house prices were going down, everybody would be asking, ‘What’s the Government doing about it?’”

Mr Key said before houses were built, planning was required and core infrastructure had to be put in, “but there are factors that just do change. In 2008, when I first became prime minister, nobody wanted to buy a house in Auckland.” He said the Government was considering introducing new tax measures, “but long-term supply is the answer”.

That supply could come in different forms from those preferred even a couple of years ago. Mr Key noted a change in attitude in his electorate, the rural & partly urban Helensville, where people were now saying they could live with a bit of intensification.

“And that’s where the infrastructure comes into it. Pretty soon people will be able to come through Upper Harbour Highway & straight to the airport, but you need more money, you can’t just magic it up, and anybody who tells you it is [possible to just find the money] isn’t telling the truth.”

Closing, Mr Key said Hobsonville was “just a really nice place to live. We shouldn’t have doom & gloom, we should continue to work on solutions for people, including everything we’re doing getting on top of government finances.

“The alternative would be a ghost town, [but buying a house] is actually more affordable than it was 8 years ago – the prices are higher but the interest rate is lower.”

Attribution: Signing event, releases.

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Thomas unveils multipronged shakeup plan for Auckland transport policy

Auckland mayoral candidate Mark Thomas unveiled a Better transport sooner transport policy on Friday, aimed at delivering more local transport projects, reducing congestion sooner and reforming Auckland Transport.

To achieve this, he said he would increase transport funding, restructure the way Auckland Transport works and implement a new “hybrid” mass transport plan.

“After 5 years of Auckland Council, too many key local transport priorities remain unaddressed. Auckland Transport’s plans are too disconnected from Aucklanders’ key transport concerns. A key part of my plan if elected mayor will be to use existing legislative powers to reorganise Auckland Transport to get it working better.”

Mr Thomas, a member of the Orakei Local Board, said he wanted to change Auckland Transport’s investment approach so local transport projects assumed a greater priority. He has listed the top 3 priorities in each local board area which would be part of his 10-year budget.

To implement his policy, he would introduce an Auckland Transport sub-regional decision-making capability, implementing unused provisions in the Auckland Council legislation to direct Auckland Transport to establish 6 new regional transport boards: “These will be formed with a formal delegation to approve & fund sub-regional & local transports.” Mr Thomas said this structure would save money by replacing the myriad of local board & other regional transport committees underway.

“Auckland Council funds half of Auckland Transport’s budget and, since amalgamation in 2010, there has been too much of a turf war over priorities. This has to stop, and my plan works within the existing legislative constraints to ensure Auckland Council & Auckland Transport work more effectively together so the transport policies that Aucklanders elect their mayor on actually get implemented.

“I’m confident Auckland Transport will implement these plans if I am elected, and I will appoint myself to the board of Auckland Transport if necessary.”

For funding, Mr Thomas said he’d restore the $113 million current mayor Len Brown cut from the council long-term plan transport budget by eliminating non-essential council spending: “This will see $20 million/year moving from the council’s $613m million governance, economic & cultural budget into transport. Lower priority support, co-ordination & planning work & projects will be replaced with greater investment in transport.”

Mr Thomas said he would ask Auckland Transport to work with elected members to reprioritise its $200 million/year capital renewals budget and find at least $20 million in savings by agreeing more realistic renewals standards.

He would also double the “highly valued” local board transport capital fund, used by local boards for smaller transport projects, from $10 million/year to $20 million/year, funding the increase by reprioritising local over some regional projects.

Mr Thomas said he’d lead the development of a new hybrid bus & rail plan that would draw from the city centre access study, which showed this to be the most cost-effective mass transport plan: “I expect some form of light rail may play a part in this plan, but there is currently no agreed business case or funding plan for light rail. Additionally, although central Auckland congestion will be a focus for me, as the Auckland Transport alignment project foundation report shows, the biggest growth areas in Auckland are in the north, the north-west & the south. Spending will need to be prioritised to these areas so quicker progress can happen on projects such as the North-western busway & extended rail to the south.

“Auckland Council will spend more on transport from its current budget with my changes, but if we are to make quicker progress greater investment will be needed. Therefore I will advance a new transport funding plan for Aucklanders, including congestion charging where Aucklanders agree this makes sense.”

Mr Thomas said he was optimistic the Government would agree to congestion charging as part of the transport alignment project.

“Additional funding will also come from accelerating the mixed-use development (retail, commercial & residential) of existing & new transport assets (particularly bus & rail stations and park-&-ride developments) to boost available transport funding.”

Mr Thomas said he’d also give communities greater ability to establish a targeted rate if they wanted quicker progress. He believed his plan would boost prioritisation & funding to the following regional projects:

1, The Penlink investigation
2, North-western busway to Westgate
3, A new Selwyn rail station
4, Dominion Rd upgrade
5, Stage 2 of Ameti (the Auckland-Manukau eastern transport initiative)
6, The Mill Rd extension
7, Rail planning to the south.

Mark Thomas mayoral policy

Attribution: Thomas release.

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