Labour is promising a new house every 13 minutes of the working week!

November 23rd, 2012 at 11:00 am by David Farrar

I previously blogged on how ’s Lotto Housing policy, where they will effectively allocate their subsidised houses by random lotto type draws.

But sadly for those who like Lotto and were hoping to win a taxpayer subsidized house, their numbers are looking very dodgy.

Now bear in mind when I say their numbers are dodgy, they have not provided many numbers. Merely that they will do 100,000 Lotto houses for $1.5 billion of net capital. They have given no details on how much land they would need, no detailed budget etc. It’s the sort of policy you dream up in desperation the week before a conference.

But they have given us one concrete figure. The Government will build 10,000 new houses a year. Now let’s break that down.

10,000 houses a year is 192 houses a week. Now if you take the working week of 40 hours, that is 4.8 houses per hour. That is a new house every 13 minutes of the working week.

Hands up those who think the Government can build a new house every 13 minutes? If your hand is up, please keep it up and please join the queue for free trips to the North Pole to see Santa Claus.

But even if you think the Government can build a new house every 13 minutes, also consider the impact on building costs. Labour often forget or ignore basic economics such as increased demand pushes prices up. Trying to build 10,000 houses a year, on top of the existing building programme and on top of the Canterbury rebuild will see huge inflation in the construction sector. The costs of labour and materials will inevitable increase. And that means of course taxpayers get let with the bill for cost over-runs on 100,000 houses. Imagine how much more money we’ll be boring offshore to pay for it!

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64 Responses to “Labour is promising a new house every 13 minutes of the working week!”

  1. queenstfarmer (696 comments) says:

    Labour often forget or ignore basic economics

    Or don’t understand.

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  2. Trouble Man (7 comments) says:

    So first we had the claim that it is apparently impossible to build a house worth less than $400,000, and now apparently the only way to build houses is one at a time.

    Stick to blogging, David, this is getting embarrassing.

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  3. Brian Harmer (686 comments) says:

    Summarising stats to produce a shock horror headline is something I expect from MSM, David. Before we gasp and say one every 13 minutes is absurd, can we have a context please? Given projected population growth, how many new families per week will need a new house? And if there is a discrepancy between need and delivery, what should be done about it? I suspect the Government of Singapore would probably think that one every 13 minutes is too slow … not that I want a Singapore style government :-)

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  4. emmess (1,333 comments) says:

    Look at it this way

    They say are going to put in $1.5 billion for 100,000 houses
    That $15,000 per house
    So they will sell $315,000 houses for $300,000
    Whoop-de-fuck – over the lifetime of a mortgage 15 grand is peanuts but what do you have to give up for it?

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  5. Cobolt (82 comments) says:

    I’ve seen this argument rolled out a few times now and it still palls. 10,000 homes a year sounds like alot until you realise that at the moment we are building about 15,000 new homes a month, in 2007 it was about 26,000 a month. And it’s not like Labour will be building all of these houses additional to the current rates. Bad argument and make it look like your research is non existant.
    I think Labour’s plan is flawed but argue against it with valid arguments.

    [DPF: We are building 15,000 homes a year, not a month. Get your facts right.

    An increase from 15,000 to 25,000 is absolutely massive. A 67% increase in house construction]

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  6. freedom101 (439 comments) says:

    If Labour win the next election then buy Fletcher Building shares on the following Monday morning.

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  7. lastmanstanding (1,154 comments) says:

    Random questions regarding the Socialist Parties housing scheme.

    1. Where are the houses to be built. Scattered thru out the existing suburbs or all together in culsters on green field sites.

    2. Where are the trades people to build all these houses. Are they on the unemployment benefit if not they will need to be recruited and trained ( 3 to 4 years apprenticeships) or enticed back from Australia

    3. Where are the building materials coming from. Existing stocks ( dont think building suppliers are currently carrying stock on hand to build that quantity.

    4. What will happen to the value of ALL existing houses if 100,000 hit the market at a narrow band below the current market prices over short period.

    5. Will the loss of tens if not hundreds of thousands of dollars in value not piss off existing house owners ( even some Socialist Party supporters)

    6. What will the banks do when they find they have thousands of customers upside down ( thats when you owe more to the bank than your house is worth)

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  8. RRM (8,988 comments) says:

    I wonder what the rate of state house construction was, during the massive state house developments in the Hutt?

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  9. Luc Hansen (4,573 comments) says:

    DPF

    You should stop worrying your poor brains, old son.

    If Key and English can ‘muddle through’ a global financial crisis, I’m sure a halfway competent Labour/Greens (even better, Greens/Labour) government can muddle through building houses at the rate we used to turn them out in the 1970s/1980s.

    In addition, this kind of stimulus is exactly what the great Maynard Keynes was referring to as essential to overcoming the mass deleveraging our private citizens are quite properly engaging in.

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  10. scrubone (2,971 comments) says:

    Well, put it this way.

    If you build a house in 4 weeks (very quick but we’re talking standard designs here and the ability to be quite specialised) that means you’ve got 770 houses under construction at once.

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  11. Harriet (4,010 comments) says:

    If this goes to plan like the Australian Labour model of installing pink batts did……..then NZ can look forward to 1500 house fires and 5 electrocuted dead males!

    But like I said, they were only installing pink batts…….building houses is another matter altogether! :cool:

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  12. lastmanstanding (1,154 comments) says:

    BTW if memory serves me correct NZ was building 24000 per annum in the boom period and this has dropped to 10000 pa in the past couple of years.
    Yes buy FBU shares. I did when they dropped to $5 now trading at $7.50 and expect they will go to $13/$14 as CCH rebuild kicks in. FBU were just short of $10 at their peak 2007/08

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  13. bhudson (4,720 comments) says:

    this kind of stimulus is exactly what the great Maynard Keynes was referring to as essential to…

    … the road to stagflation.

    That was also the 1970′s you refer to Luc.

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  14. Ross12 (927 comments) says:

    Well put Cobalt.

    I think there has to be major rethink on how most “standard” houses are built. In a way it has already started. More of the house has to be built offsite ( like with commercial buildings). House building has to move towards what the Chinese architect does with those fast built hotels — have them prebuilt in factories where economies of scale can be achieved, quality control can be better , factories can work 3 x 8 hour shifts if need be etc. The bureaucrats would probably have nightmares but creative thinking is required to get costs down ( including land costs)

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  15. Luc Hansen (4,573 comments) says:

    bhudson

    Those were different circumstances in economic terms, silly boy. Do some homework. And I must say as a young Dad and house buyer, the 1970s were very kind to me!

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  16. bhudson (4,720 comments) says:

    @Luc,

    Not at all. Troubled economic times. Uncertainty in markets. Shifts in traditional markets. Government stimulus (Keynsian economics) seen as the answer.

    Perfectly describes the current environment and the policies of Europe and the US.

    Perhaps it is you that needs to do some homework. But then you might have to allow your story to be ruined with a few facts.

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  17. alloytoo (337 comments) says:

    @Lastmanstanding

    6. What will the banks do when they find they have thousands of customers upside down ( thats when you owe more to the bank than your house is worth)

    Perhaps labour is sour about our banks weathering the GFC, so they want to manufacture one specially for NZ.

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  18. Colville (1,771 comments) says:

    New house builds are around 15,000 pa now , years ’02 thur 07 were all 25,000 to 30,000 houses pa so its possible to buid that many houses BUT many of the houses build in that period are the most shoddy around, not to mention hugely expensive.
    Many builders trained in the late 90′s and early 00′s went straight out and became contractors.
    A ute a cell phone and a dog is all you need!

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  19. Colville (1,771 comments) says:

    alloytoo, many many of the houses purchased late in the “boom’ left first home owners seriously underwater when prices fell 20% in 2008. Banks didnt call too many mortgages otherwise they would have created a bigger problem with the market flooded with houses no one would/could buy for what was owed to the bank.

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  20. Colville (1,771 comments) says:

    Ross12, what part of an affordable house do you see a factory being able to produce that isnt standard practice to do so already?

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  21. RJL (122 comments) says:

    You are such a fool DPF.

    Department of Building and Housing is predicting a demand of 20,000 new houses per annum, and are predicting a substantial shortfall of supply. In Auckland the shortfall is predicted to be about 90,000 homes by 2031.

    There may well be problems around implementing Labour’s plan, but the scale of their plan matches the scale of the problem.

    You are right that it is a large number of houses to build, but that is because there is a large problem to solve.

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  22. Ross12 (927 comments) says:

    Colville –I don’t pretend to be a building expert. But when you see those German “factory built” houses that are put up in a few weeks and the concepts that the Chinese guy has with all the plumbing , wiring , insulation etc put into the walls and floor slabs in the factory and are just linked together like Lego bricks I’m sure we can go further along that line than what is being done already. ( Obviously it would mean more standardised designs etc —is that a good thing ? That is the trade off I suppose.)

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  23. labrator (1,691 comments) says:

    There may well be problems around implementing Labour’s plan, but the scale of their plan matches the scale of the problem.

    Great, then as long as any plan is well intentioned, let’s just do it! Zero unemployment, the government will employ everyone. No poverty as the government will pay everyone enough to live at the median wage. No violent crime as, um, something something…

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  24. RRM (8,988 comments) says:

    Ross12 –

    Plenty of people happily own a standard Toyota Corolla or a standard BMW 328, and plenty of people wear a standard pair of Levis 501s or a standard pair of Ray Ban Aviators. I have never understood why there is always such distaste for the idea of standardized houses…?

    Meanwhile, if you go to a new spec house subdivision, all the covenants on allowable building materials mean that even in a street where all of the houses are all built to completely different plans, they nevertheless all look alike anyway…

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  25. emmess (1,333 comments) says:

    I have never understood why there is always such distaste for the idea of standardized houses…?

    Yes, I agree
    It usually comes from the condescending left who love to sneer at what they call McMansions

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  26. PaulL (5,774 comments) says:

    In the US it’s very much the done thing – housing estates with identical houses built on a production line. Not so much in a factory, but the slab guy pours the slab at house 1 in the morning, house 2 in the afternoon, house 3 next morning and so on. The framing team come and stand up frames for houses 1, 2, 3, 4 on days 4 and 5, houses 5, 6, 7, 8 on days 6 and 7. The sparky comes, the plumber comes. They all follow each other around the subdivision in order, installing the same stuff in the same way. So yes, very possible. And of course I’m all in favour of us being more like the USA.

    As to the likelihood of the govt being the catalyst for that happening. Heh. I’ve worked in govt many years. If you want something done, you don’t ask the govt to do it. The only way this works is the Labour govt pay private companies to build them. The right Labor govt program to compare to in Australia is building the education revolution, which paid over the odds to build school halls. Check the numbers on that.

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  27. Lance (2,309 comments) says:

    Those German factory built houses (Huf Houses) are bloody expensive.
    Whats more the assembly on site requires tight logistics, no supply fuck ups and they work to a fixed install price, no overtime etc. Like NZ workers are going to work their arses off like Germans…. Tui ad.

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  28. hinamanu (2,352 comments) says:

    Labour absolutely know their time is short. Give the moon promises like this are fantastical. They are giving more credence to Winston and truly building him up because he identifies where the real problems lie and actual solutions.

    I never hear Nat/Lab pollies-MP’s talk actual solutions

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  29. Cricklewood (21 comments) says:

    As a tradesman I can’t wait, in fact it’s almost enough to make me vote labour. There will be such a trades related skills shortage that i’ll almost be able to name my price and we will see a rapid rise in construction costs much like during the last boom in which my hourly rate more or less doubled in less than two years.
    The loss of apprenticeships and the half rate training that the polytechs provide has left a huge skill gap which will not be filled anytime soon. Especially when the Greens are against foriegn labour….

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  30. Elaycee (4,066 comments) says:

    Winston… …identifies where the real problems lie and actual solutions.

    Cue: Tui Ad.

    Remind me… did Winston ever pay back the $158,000?

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  31. Lance (2,309 comments) says:

    @Cricklewood
    Don’t worry, there is lots of fine arts graduates that will solve the skills shortage.

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  32. garethw (205 comments) says:

    Ha, what a classic post…

    10,000 extra houses a year is ~850/month. In 2004 we were doing ~2,700 new houses a month – in 2010 it was <1,400. So this is returning building levels to still within peaks of the last decade.

    There's certainly valid reasons to question the ability of the trade economy to return to those levels (at quality) but in the last 10 years we were doing a new house every 5mins – clearly some form of sorcery!

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  33. cha (3,529 comments) says:

    Following a stint in post war California observing the tract housing schemes mentioned above by PaulL, which were modelled on Levittown, the late Barry Beazley pioneered mass house building.

    The Beazley model provided managerial expertise and technical services, used economies of scale to supply pre-cut timber, building materials and hardware at a lower rate and capital for land development to a network of franchise holders.

    The franchise holders then provided a one stop shop, from land and plans through to paths and a clothesline, using local labour only trades to build reasonable homes for thousands of lower and middle income New Zealand families.

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  34. Colville (1,771 comments) says:

    It would be almost worth be worth Labour trying to build 100,000 houses of the German factory type to see Shearer/Silent T/Robertson trying to explain why Japanese industrial robots have taken the place of all the unskilled labour out of the houses.

    Can you imagine a South Auckland factory run and staffed by work to rule union fuckwits turing out a decent product on time?
    Ha!

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  35. Rex Widerstrom (5,124 comments) says:

    Well the labour shortage is easily solved. According to the Australian Housing Industry Association:

    The HIA Trades Report, a survey of builders and sub-contractors, highlights a historically high availability of skilled labour due to depressed levels of housing demand…

    The HIA Trade Availability Index registered +0.15 in the September 2012 quarter, meaning that trades were in moderate oversupply (a reading between 0 and 1 signals oversupply).

    If NZ were to embark on a major building program, the trans-Tasman exodus would almost reverse, since the Labor government here has alternately artificially increased prices and caused an undersupply through its ill-fated Pink Batts and “Building the Education Revolution” schemes, then – just as training colleges are ready to disgorge their first cohort of increased training places – caused a downturn and oversupply through imposition of the carbon and other taxes.

    Thanks, Julia.

    Of course as DPF has pointed out, the surge of activity would inflate prices as it did in Australia. But the labour shortage… not a problem.

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  36. dime (8,751 comments) says:

    so the 10,000 extra houses a year would put us back at previous levels.

    using that sort of thinking people are implying the government will be as efficient as the free market.

    good luck.

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  37. m@tt (535 comments) says:

    Come on David. You are smarter than this.
    Argue the merits of their plan but don’t fight it with complete bullshit like this.
    10,000 houses a year is easily achievable.

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  38. James Stephenson (1,885 comments) says:

    If the UK experience with Barratt and Wimpey is any guide, then at least we’ll be building a rich new vein of material for Fair Go.

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  39. OneTrack (1,958 comments) says:

    “Cricklewood (16) Says: November 23rd, 2012 at 1:27 pm As a tradesman I can’t wait, in fact it’s almost enough to make me vote labour.”

    Unfortunately the Greens will be part of that mix. More than likely they (and half of Labour) will want to resurrect the Ministry of Works and hire you as an “employee” ( well we know they hate Hobbit contractors ). It will just be the standard “Living Wage” for you and you WILL be happy with it. The compulsory union fees wont be too much either.

    So, vote Labour if you must, but dont come crying back here with a “I didn’t think they would do that” because I suspect there is going to be a lot of that around about June 2015. :-)

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  40. Luc Hansen (4,573 comments) says:

    @bhudson (2,733) Says:
    November 23rd, 2012 at 11:44 am

    Sorry, I’ve been away. But you need to know that stagflation is a condition of high inflation, low growth and persistent high unemployment.

    Globally, only two of those conditions exist today. Inflation is well and truly under control and most governments, in fact, are more concerned about deflation.

    Basically Keynes theorised that the role of government is counter-cyclical: when the private sector is booming, the public sector needs to pay down debt and not fuel the fires. Arguably, Michael Cullen did just that, although his increases in social spending made necessary by low wages paid by the private sector, combined with the craze for tax cuts, built in another problem for the future – and we are in that future now.

    So, we know by looking at the government accounts and retail spending figures that the private sector is busy deleveraging. If the government insist on doing the same, which is exactly what it is saying even though our debt levels are remarkably low after such a major global financial crisis, thanks to the aforementioned Michael Cullen.

    So( again), with inflation bordering on zero, interest rates fast approaching the zero lower bound, interest on long term – say 10yr – government borrowing close to as low as they can ever be, now is the time to spend a little to provide lots of jobs and housing people should take priority over building roads (especially when mass transit is the only sensible pathway to a low carbon future)

    Simple really. If Keynes hadn’t worked it out I would have!

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  41. Luc Hansen (4,573 comments) says:

    damn, distracted half way through – fourth paragraph should have ended with “government policy will push us into deflation and recession”.

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  42. bhudson (4,720 comments) says:

    Luc,

    Our debt levels are not low! Our govt debt is comparatively low, but our private debt is high. At least one rating agency has recently made the point that they have us on stable outlook because govt debt is low and the people are saving/paying down debt.

    Increased borrowing now (public or private) would risk a further downgrade which would raise the cost of borrowing, reduce business investment and result in greater unemployment.

    Interest rates in NZ are not “fast approaching zero”. Not only are they not near zero now, the RBNZ Governor has made it very clear that he is not of a mind to reduce the rate further under current conditions.

    Keynesian economics is the wrong answer at the best of times. It would be pure stupidity for us right now.

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  43. Luc Hansen (4,573 comments) says:

    Our govt debt is comparatively low, but our private debt is high

    Which part of “the private sector is deleveraging” do you have trouble understanding? So that problem is resolving itself.

    We need worry about the credit rating agencies. If the government had trouble selling its bonds, or could keep them denominated in our own currency, then we would need to reassess, but we are a long way from that. We are still one of the best positioned amongst the advanced economies – as Gareth Morgan said in today’s Herald, we are a rich country, still. Your recipe of double deleveraging in a fragile economy is a recipe for economic disaster.

    And the zero lower bound is not actually zero, but never mind. The reason we are not closer is the triumph of ideology over the facts of the real world. In the contest of neo-lib theory vs the real world, according to fanatics like Wheeler, the real world is wrong, always. The RBNZ will need to change its tune as we head into recession – essentially, we are in recession except for the CHCH rebuild.

    And using that thinking, Key/English no doubt see the destruction in Gaza as a great growth opportunity for Palestinians and they should be forever grateful to Israel for that favour.!

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  44. bhudson (4,720 comments) says:

    Luc,

    People paying down private debt is not a reason to borrow more. It is a time to encourage that to rebalance our economy such that it can survive this, and future, economic crises.

    We are well ‘in the hole’ on private debt – we need to climb out of it, not take a Keynesian approach, which amounts to ‘keeping digging’

    Your approach has you the slave to the money lenders – your theory is that as soon as you start to pay off your debt, you borrow some more money!

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  45. Pauleastbay (5,030 comments) says:

    Tract housing – nothing wrong with it but wasn’t Glenfield tract housing?

    By that I mean 20 thousand couples in their mid 20′s move in and breed, 20 thousand kids hit the school age at the same time, 20 thousand shag each other at the same time resulting in 5 thousand illegitimate sprogs arriving at the same time. 20 thousand get their licence at the same time resulting in 10 thousand cars hitting the same area at the same time.

    By cramming them into “estates” the social costs are huge, they are not absorbed by existing infrastructure in a trickle fashion, its “bang all at once, so new schools, hospitals all this infrastructure has to be done at once so even if the houses are “cheap” it will still cost the tax payer billions

    The only upside was 18000 divorces resulting in an unlimited supply of solo mothers drinking at “The Poe”.

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  46. Monique Watson (1,062 comments) says:

    Fuckers:
    http://nowoccupy.blogspot.com/2012/11/labours-new-housing-policy-digging.html
    that’d be more succinct if it wasn’t for my proximity to Sonoma wines :)

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  47. Luc Hansen (4,573 comments) says:

    No, bhudson, the theory is that low interest rates are an ideal opportunity for a government to add to the country’s assets while also fulfilling a social need.

    Even the IMF understands and now accepts Keynes’ dictum that the multiplier effect is at its greatest in recessions/depressions.

    I am not advocating an increase in private debt. I personally am deleveraging as fast as I can – a process made much easier by such low interest rates – but government is not a household. What is sensible for the household is not necessarily sensible for government. In this case not adopting stimulus policies is a clear abdication of government responsibility.

    Our net debt is still under 30% of GDP. So we do not have a debt constraint. And governments with a fiat currency who issue debt in that currency don’t have a solvency constraint. It has an inflation constraint and that bogey is well and truly off the table.

    The example of the US and its QE is instructive. The inflation hawks (eg Niall Ferguson and the entire Republican establishment) insisted loudly that hyperinflation was imminent! That was how many years ago? Fail…

    The course this government should follow is clear. It needs to get more tax out of the wealthy – I don’t care how, but thumbscrews should do the trick! – and spend, baby, spend on serious projects, like the billion dollar broadband project, for example, that it is currently rolling out.

    We are sorely in need of affordable housing. Just go do it, Bill!

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  48. Reid (15,527 comments) says:

    What I don’t get is that if Liarbore want at least 10,000 if not 20,000 more votes per year once this gets again, why do we have to pay for that?

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  49. Luc Hansen (4,573 comments) says:

    @PEB

    It’s OK mate, just get your IDF mates to flatten them! With illegal white phosphorous shells. That’ll teach ‘em!

    @Monique

    Have you had that threesome yet? You know, double cocks is double fun!

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  50. Steve (North Shore) (4,318 comments) says:

    PEB @ 6.03

    The only upside was 18000 divorces resulting in an unlimited supply of solo mothers drinking at “The Poe”.

    Sad, you forgot the Mon, the GT, the Milford Arena, and the Thunderbird! I met my current partner at the T Bird, she wasn’t a solo mum, the solo mothers club was at the GT thursdays lol

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  51. Pauleastbay (5,030 comments) says:

    Luc

    You have morphed in Phil,.. a statement probably unfair to Phil because every now and then he made a point, you havn’t for days, you’ve been owned on you pet hobby horse and as an economist you suck.

    There is shit loads of affordable housing. I am sick of “I can’t afford my first house because Herne Bay is too expensive.”

    You buy your first house in Avondale like we did and work hard. If you want to buy a house, buy one in Otahuhu. I know its untrendy and full of Indians and those islander types but you will be able to afford a house there. It s ahouse and an assett.

    20 years ago people were mocked for snapping up houses in Onehunga, now Onehunga is bloody expensive.

    Glen Innes is the next great buy in Auckland. The waterfront property there is amazing, the houses are well built. The services follow the money, if enough people with money do up an area, the cafes etc follow.

    Sho HO in New York, Notting Hill in London. People make the market not governments or bitter socailists

    Anyway as an economist you are stuck in the past with no fucking idea about quite alot actually

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  52. Pauleastbay (5,030 comments) says:

    Steve, forgot about the Thunderbird, never frequented the Glenfield Tavern much only ever for a quick beer.

    The Poe during footy season or after golf , Mon during summer. hard to believe that was 30 odd years ago

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  53. Fisiani (851 comments) says:

    Posted a minute ago on the Standard.

    Wonder how long it will last there.

    Care to actually point out the maths of how an EXTRA 10,000 homes can be built in the 40 hours of a 48 week effective working year, bad weather not included. (PS Modular house erection erection does not equate to having a house fit for habitation.)

    Virtual Chocolate fish to the first delusionist to prove how it is possible.
    I will not accept answers such as ” The Hogwarts school of carpentry” or “300,000 migrant Oompaloompas” or ” there are 170,000 ‘builders’ unemployed”

    The only explanation of this mathematical brain fade is that someone has tried and succeeded in making Shearer look utterly incompetent. Perhaps it was just a decimal point in the wrong place.
    1000 houses would only take 130 minutes each to construct.
    100 would take 1300 minutes or 21.6 hours

    Don’t even get me started on the shonky cost calculations………..

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  54. bhudson (4,720 comments) says:

    Luc,

    You don’t get it Grasshopper.

    It is balance…

    The reason the ratings agencies don’t slam us for our high private debt is because our govt debt is comparatively low. Up the govt debt and you upset the balance – our private debt is then too out of kilter and the credit downgrade cometh.

    Your borrow and spend ideas are what killed PIGS in the first place. They have failed in the Keynsian efforts to lift the US or the UK out of their problems – the UK have made it clear there will be no further QE as it hasn’t worked. Barack is still to wake up to that reality.

    You are in love with an economic theory that has discredited itself – in started to do that in earnest in the 1970s and has finished the job off in then21st century.

    Socialism went first, Kensyian theory fell next. What alternative do you have left?

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  55. bhudson (4,720 comments) says:

    @Monique

    Have you had that threesome yet? You know, double cocks is double fun!

    So, Luc, you claim to be 60-odd years old and have a daughter around 4 years old. Quite the example you are setting for her.

    What kind of a role model are you trying to be? Bert Potter?

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  56. Luc Hansen (4,573 comments) says:

    bhudson

    Monique raised the double cock thing directed at my good self!

    Would you like me to dig up the KB link?

    Am I supposed to lie back and accept it?

    And don’t worry, my princess can’t read much yet.

    I consider advocates of mass slaughter here like PEB much more repulsive than Monique.

    Oh, talking of PEB

    Glen Innes is the next great buy in Auckland.

    Built, and many well built, as you say, by the government, Paul, so what’s your point?

    Shall we do it all again?

    Sounds good to me!

    But don’t give the job to Fletchers!

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  57. Luc Hansen (4,573 comments) says:

    @bhudson

    Your borrow and spend ideas are what killed PIGS in the first place. They have failed in the Keynsian efforts to lift the US or the UK out of their problems – the UK have made it clear there will be no further QE as it hasn’t worked. Barack is still to wake up to that reality.

    You avoid the central reality I have pointed out to more than once: we have our own fiat currency and we issue debt in that currency.

    Prove me wrong on those central points and I have a problem, I admit. But my source is our own government accounts.

    The PIGS joined the Eurozone. Three of those four governments ran run of the mill fiscal policies – the exception is Greece, poor buggers – and the government debt problem for those three arose when they took on the debts of the banks after the GFC. Iceland, on the other hand, with its own currency but an even worse bank problem just let the banks fall over and their exchange rate flexibility is slowly picking up the pieces – classic Keynes!

    I call your bullshit on the UK and QE. More is coming soon. Cameron and Osborne don’t have a choice as they are now heading into a triple dip recession – only the Olympics saved them in the last results, and then only because all the benefits of that extravaganza were gerrymandered into one quarter!

    When I did Economics 101 in 1970 it was classical Keynes, multiplier and all that jazz. Then the Chicago School came to the forefront and I figured Keynesianism was dead and buried. Boy, was I wrong!

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  58. bhudson (4,720 comments) says:

    Luc,

    Your romantic notion that having fiat currency provides some sort of immunity has been refuted repeatedly over the past few days (in particular.)

    QE is destructive of wealth, destructive of savings. It would not only see inflation rise and the cost of living along with it, it would also see a credit downgrade as our net savings position would deteriorate as so much of our debt is offshore borrowing. It is a wholly bad idea for NZ – as evidenced by the wide ranging criticism of Russel Norman’s money printing scheme.

    I, and others, repeatedly, over the past few days, have attempted to explain to you why deficit spending is not a panacea at the best of times and why, particularly now, it is a very bad idea for us. You are clearly wed to Keynesian economic theory and refuse to accept the obvious – which does not change the facts.

    Cameron and Osborne don’t have a choice as they are now heading into a triple dip recession

    You miss the point Luc. It is for the very reason that it has not worked – your claim of further recession – that the UK has said it will not pursue further QE actions.

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  59. SPC (4,634 comments) says:

    There were 14,500 building permits for the year to 31 March 2012, there were over 24,000 in 2008 at the tail end of the asset bubble.

    http://www.scoop.co.nz/stories/BU1204/S00910/nz-home-building-consents-rise-to-2-year-high-in-march.htm

    10,000 per year with the current level of private sector building only takes us back to the level of 2008. Given there is some house replacement in Christchurch, doubting that such a level is possible is a bit naive.

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  60. SPC (4,634 comments) says:

    bhudson,

    QE would only have inflationary impact if it was not accompanied by a balancing measure – currently recession is providing that in those countries using QE.

    A zero cash rate is also regarded as inflatonary – but there is little in the USA.

    Running huge budget deficits and borrowing the money from offshore is regarded as inflationary – but there is little in the USA, UK or New Zealand.

    Norman was criticised by the people who do not even notice these little details – small men in times larger than them.

    Wise men at the IMF know that indebted nations have an option – QE to replace debt finance and taking the private banks off fractional reserve to balance this (it is the new left vs right, public vs private frontier).

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  61. Jim (385 comments) says:

    “10,000 houses a year is 192 houses a week. Now if you take the working week of 40 hours, that is 4.8 houses per hour. That is a new house every 13 minutes of the working week.”

    Impressive, but nothing compared to the USA.

    Using your methods I calculated that Americans can build a house in 14.4 SECONDS. Holy shit. That is fast setting concrete! 130,000 new homes completed in the 13 weeks of Q3 2012. Do the math. And they are in a depressed market!

    We just need to follow USA construction methods and we can get our 10,000 houses in just 1 WEEK!

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  62. Joseph Carpenter (210 comments) says:

    The problem is not the quantity, 10,000 p.a. is easily do-able.
    The problem is the cost, it’s simply not possible to build a decent 3-bedroom house or apartment in Auckland including the land for $300,000 when the land alone for developed sections way out on Auckland fringe is 700-1000$/sqm. I refer you to the ongoing disaster of the last Labour government for low cost affordable housing in Auckland – Hobsonville Point, where the Government ALREADY owned all the land and used Housing Corp for the development, latest info here, read it weep:
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10847892

    And their new scheme is exactly the same only 1000x larger and they don’t even own the land and will have to buy it (or will they?…). Something has to give: cost blowout or build tiny shitbox sub-NZBC apartments with no land out in Massey/Drury/Whitford as Trev Mallard said or they steal citizens land.

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  63. bhudson (4,720 comments) says:

    Norman was criticised by the people who do not even notice these little details – small men in times larger than them.

    Printing money is inherently inflationary – it increases the money supply which will result in prices rising. It is also done with the specific intention (under Keynsian theory) to stimulate aggregate demand – to stimulate spending. Increased demand will also raise prices which in turn increases inflation (this demand driven inflation can be more of a spike than a lasting problem or spiral – higher prices softens demand – it is printing money and injecting it into the economy that is the real problem.)

    Your recession balance argument is fallacious – printing money is designed to increase spending – there is no balance.

    Furthermore, while QE is acknowledged as an option of last resort, I remind you, yet again, that Russel Norman is not proposing QE – he merely deliberately and disingenuously misuses the term. QE is where a central bank buys assets from banks with newly printed money. It is done when interst rates are effectively zero and banks still aren’t lending – businesses are not investing. The action is taken such that the banks will free up lending and businesses will invest. (the central bank will some time later sell down the assets which will remove the money they injected from the money supply.)

    Aside from the facts that our interest rates are not effectively zero and our banks are lending, Norman doesn’t want to execute QE as such – he merely wants to print money and spend it on govt funded schemes and largesse ($50/wk on single benefits for instance.) It is deficit spending via the printing press.

    It didn’t work in Weimar Germany. It didn’t work in South Amercia. It still isn’t working in Zimbabwe.

    Norman is an economic disaster in waiting.

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  64. Fentex (656 comments) says:

    This isn’t a good argument against the plan. Building another 10,000 homes a year is perfectly possible if the money is spent to do it.

    The issue remains the money.

    And from what little information is offered it seems Labour thinks a $15,000 subsidy per home is enough to make it work.

    I don’t think many will be convinced by that.

    I recently listened to a radio show that had a very experienced advertising expert on it who posited an interesting theory when talking about his work. Addressing the question that his career was all about encouraging people to buy things they didn’t need he talked about peoples valuations of what they wanted and the history of peoples purchasing.

    He pointed out (I don’t know how accurately) that in the 1970′s people in industrialised countries spent considerably more, as a proportion of their income, on unnecessary luxuries than they do today. That the explosion in cheap industrial manufacturing and technological advances had made the cost of the many luxuries we can access today extremely cheap.

    And here’s why I’m mentioning this; as a consequence, he opined, those things which haven’t benefitted so much from technology and industrial advances and aren’t such luxuries – such as houses and the land they sit on – have inflated in price to soak up the excess capital freed by the reduction in cost of luxuries.

    I think, though he didn’t phrase it quite so, that he was suggesting as prices can be as high as the market can bear advances in industry and technology have allowed the market for housing to inflate into the space created by other efficiences to soak up what should have been a creation of wealth for all.

    I thought it an interesting exercise in contemplating the myriad effects of markets.

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