Why the left should be against Labour’s housing policy

There’s a lot not to like about Labour’s housing policy from a fiscal responsibility point of view. But upon reflection, I think there is even more to dislike about it from a left wing focus on equality and poverty. In fact it looks like it could almost set a record in terms of ways one could rort the policy. Let’s go through the issues.

  1. Generally the state provides assistance to people and families either on a universal basis or a targeted basis. All children get free compulsory education and all under 5s get free healthcare for example. That is a universal approach. A targeted approach is stuff like Working for Families (the lower your income the more you get) or even state house rentals (the rental is linked to your income). But this new housing policy is neither universal or targeted. It is a Lotto policy. If there are more applicants for these cheap sub $300,000 houses than there are houses (which of course there will be), then they will be allocated by random ballot. Now just think about this. As the median house value is $410,000 the lucky winners of these ballots will be arguably gaining $100,000 or so of value. Do you see why this should be called a Lotto policy!! You may earn less money than Jane and John next door but if they win the ballot they effectively gain $100,000 and you get nothing. Anyone from the left who seriously backs this policy is being sycophantic to Labour. They should be demanding the houses be allocated to the lowest income families – or given to Housing NZ to become state houses with income related rents.
  2. Purchasers who win the ballot will stand to make huge profits. If they buy the house for $300,000 and the market value is $400,000 then many of them will sell them as soon as they can to make a profit. Yes the policy says they may be required to retain them for a certain period of time – but that will just delay the cashing in for a profit. Also what will stop them moving out and turning it into an investment property? Will the state send inspectors in to check they are actually living there? Smart people, to make money, will find ways. They may get in “flatmates” but in fact not live there themselves.
  3. Rich families will love this policy. Huey, Dewey and Louie will each get a cheap taxpayer subsidized house for their 21st birthdays.
  4. This will be a boon for lawyers and trusts. The policy is that people must be first homeowners. So what the smart people will do is make sure their family trust buys their first home. They’ll then still be able to get a taxpayer subsidised home as technically they are still a first time homeowner. Cactus Kate is already making plans to make some arrangements so she qualifies for the handout.
  5. This policy will do little for poor families. They can;’t afford to buy even a $300,000 home. A better policy for Labour would have been that they will build 5,000 houses a year and turn them into state houses for low income families. But instead they are doing the housing equivalent of Working for Families – trying to buy the votes of middle class voters who hope they will win the Lotto ballot for a subsidized house.

So from a fiscal sanity/centre right point of view there is a lot to attack this policy over. But I think the strongest criticisms can be made from a left point of view. It won’t help the poor, it will be great for the rich who can buy homes for their kids, great for family trusts and those who receive this huge subsidy will be chosen by random ballot!

Imagine if Labour announced Working for Families was going to be replaced with a system where instead of support going to families with children who earn under a certain threshold, they were going to just give away $100,000 a year to 10,000 people drawn out of a ballot. That is the equivalent of this policy!

I suspect this policy was thought up a few days ago to try and gain some positive headlines for the conference. It is something you’d expect from Mike Moore in his heyday.

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