Guest Post: Housing

A guest post from a reader:

The country has painted itself into a bit of a corner.  Not everyone is able to own a house, so many have to rent a place to live. A lot of rental houses are older ones that have fallen off the bottom of being places where owners want to live.  I am not saying they are all cold and mouldy dumps … just like not all tenants are feral.  It is what  it is.

House prices are set by supply/demand and the cost/feasibility  of borrowing.  So lower deposits and mortgage interest rates mean higher house prices.  Add to that the ability to rat your tax-subsidised  Kiwisaver pension fund plus  various grants and you get relentless upward price pressure at the first home level.  Rents on the other hand are sort of tied to capital values and (of course) also influenced by what tenants can afford.  On the face of it as prices have inflated way above incomes this has created problems for both renters (rent hard to afford) and landlords (rent not generating enough return).

The sad fact is that if you are renting a house and want to buy one just like it for about the same as what you are paying in rent, you need a deposit of 40-50%.  Do the math and don’t forget rates, maintenance and insurance.  So a high LVR lets you get into paying a whole lot more per week, but at some point – looking at 10 years income to buy –  it eventually becomes sort of impossible.  It has never been easy to buy a first house, but it is only getting harder.  The “how many years income” thing just goes up and up.

As prices outpace rent growth, the rate of investment return on residential housing drops off.   This leaves a potential investor with little or no income and hanging out for the eventual capital gain. The show may be run at a cash loss for a while as the 40-50% deposit also applies if you want to buy a cash-neutral rental.  Ring-fencing the loss just makes life harder.  The corner we have been painted in to is that – generally – building houses to for income makes no sense.

None of the first-home buyer incentives lead to the building of more houses – they kick the can down the road and pour a bit more petrol on the bidding fire.  This is particularly true at the bottom end of the market – so-called “affordable” homes.   The RMA and high land prices do not help.  When Kiwibuild was announced there was a lot of noise about how prefabricated homes were going to take off and dent the price/availability problem.  There would have to be thousands of such homes under construction to have this effect.  This has not happened. 

So there are not a lot of new private sector low end houses being built, and rental houses make no sense as an income proposition. The $ profit is too low to interest many developers – why would you build a low price house on high price land?

And yet – if you drive around the country, every small or large town has significant collections of reasonably solid State houses largely built in the late 1930’s to the mid 1950’s. The bulk of them have since moved into private ownership.  One sort of wonders how it was all managed – Kiwibuild was an unsuccessful attempt to sort of replicate it.  National’s previous “Special Housing Areas” solution had been a bit of a fizzer.  

The corner just keeps getting smaller.  Unfortunately the State is the only player with the scale to do anything about it.  

Discovery buys Mediaworks TV arm

Newshub reports:

New Zealand’s largest independent commercial broadcaster MediaWorks and the global leader of real-life entertainment Discovery Inc have reached a binding agreement on the sale of MediaWorks’ free-to-air TV business.

The transaction is subject to a number of pre-completion approvals and is expected to be completed by the end of the year.

The MediaWorks TV acquisition will be Discovery’s most significant free-to-air investment in the New Zealand market to date. It includes entertainment channels Three and Bravo, streaming service ThreeNow, and multi-platform news and current affairs service Newshub, as well as the further channels Three+1, Bravo+1, The Edge TV and The Breeze TV.

Discovery will continue the existing strong partnership with NBCUniversal for the Bravo channel joint venture.

In the New Zealand market, Discovery currently operates a portfolio of six pay-TV channels including Discovery Channel, TLC, Animal Planet, Food Network, Living and Discovery Turbo and two free-to-air channels HGTV and Choice TV.

This is a great outcome. Tv3 and Newshub get an owner that is a media company, not an investment company. Discover boosts it presence here, and TV3 and Newshub get to continue.

I’ve noticed this year that Newshub has broken a huge number of exclusive stories, especially around Covid-19. We are well served by their presence.

General Debate 09 September 2020

Did James Shaw actually fund a housing development?

Stuff reports:

It’s been revealed the Taranaki Green School at the centre of a political funding row has aspirations to create an ‘eco-village’ at its Ōakura site including 20 houses.

This is news to the Green Party co-leader James Shaw, who says he knew nothing about it before granting the school nearly $12 million.

This would be funny, if it were not our money.

The school was planning to expand anyway, to 500 students. The $40,000 they charge overseas students would have funded the school expansion.

But James came along and gave them $12 million for nothing, to fund the school expansion.

This frees up $12 million from the owners, that they can use for their housing development.

The Green School also declined an interview.

In a statement, it said it had always been open about plans for the eco-village and they were not required as part of the Shovel Ready funding application.

“The plans refer to an eco-village housing area that has been in the public domain since the inception of Green School and shared openly with anyone interested in the project. It is a matter of public record.”

But there is no public record of the eco-village. It is not mentioned on the Green School website, in council documents or in previous media coverage about the school.

The school later clarified that the village has been mentioned in verbal briefings to people who have expressed an interest.

It said the development was in its early stages and would help relieve demands on rental property in Taranaki.

“There is a mix of housing available for school parents and the open market whereby they will be available for anyone looking to move into the area.

“These sustainable homes, of which there will be approximately 20, will be physically located on the other side of the road and away from the Green School campus.”

Mentioning something in a verbal briefing is not making it public.

So we’ve really given $12 million to property developers. Well done NZ Green Party.

Guest Post: Victoria is now a police state

A guest post by a reader:

The city of Melbourne has already endured one of the longest and harshest lockdowns anywhere in the world. And the lockdown has just been extended, with little hope that this will be over anytime soon. 

The Victorian Police is behaving like a hostile occupying force, with the gentle bedside manner of Imperial Stormtroopers and the sense of humour of the Stasi. Peaceful protest is illegal. The Police recently arrested a pregnant woman in her home and charged her with incitement. She now faces up to 15 years in jail for the heinous crime of promoting a peaceful protest on Facebook. Others have been forcibly masked before being wrestled to the ground and handcuffed for the crime of being out of their homes for a non-permitted reason. 

The Police has unlimited power. They can enter your home without a warrant, and they will do so without any hesitation. If you’re not quick enough opening the door, they will break it down for you. 

How could this happen in a civilised country? Why is there nobody stopping the madness? Here are some hints.    

For many years, governments have promoted the view that any means are justified to if lives are saved. How often have we heard politicians or officials say that a particularly onerous law is worth imposing if it only saves a single life. The Victorian government strategy with COVID-19 has been consistent with this: Exaggerate the risks and spread fear to justify imposing a state of emergency that gives you unlimited power. Then label any dissenter as selfish, irrational and willing to risk others’ lives. Use labels and emotive language to describe anybody who disagrees. Use force to intimidate people into compliance. Extend the state of emergency from time to time because lives are at stake. 

Civil liberties have long been treated as expendable. Protections against unreasonable search were merely an inconvenient nuisance in the way of the Police’s desire to go on fishing expeditions rather than doing the hard work. Civil liberties were easily abandoned when the Police and their sniffer dogs wanted to carry out the vital task of harassing an entire audience just in case a few teenagers could smoke a joint at an open-air concert. Now, when we really need our civil liberties, neither politicians nor the Police have any intention of upholding them. The precedent that the end justifies the means was set a long time ago. This is a slippery slope, and we are well on our way sliding to the bottom.

Finally, there is an arrogant and inappropriate culture within the Police. The Police behaves like a master, not a servant of the public. They are overtly political. They kneel in front of Black Lives Matter activists, but brutally suppress any dissent against the lockdown. They are tough on victimless crime, but soft on violent crime. They will blindly enforce the law to the hilt – as long as they like the law. 

Think this could never happen in New Zealand? You’re only slightly behind us. And don’t worry, you will catch up. 

The author is a New Zealander who has worked in Melbourne since 2012.

Revised: THE COSTS AND BENEFITS OF A COVID-19 LOCKDOWN

Martin Lally has revised his paper on the costs and benefits of a Covid-19 lockdown.

The key numbers are:

  • Eradication strategy may have saved 1,000 lives
  • The estimated number of QALY (quality adjusted life years) is 2,445
  • GDP loss is $87 billion
  • GDP loss due to lock downs rather than mitigation is $22b
  • GDP loss per QALY is $8.5 million
  • Normally a QALY is valued at $45,000
  • The cost of suppression rather than mitigation is 190 times the pre-Covid value for a QALY

This is why we need a Royal Commission into our Covid-19 response. We need the best experts to evaluate if our response was the best one available, so next time we are acting on a better information base.

Welfare numbers increasing before Covid-19

If Labour hikes taxes, Australia will gain

Luke Malpass writes:

The Labour Party is expected to release its tax policy within the next week or so. There are increasing murmurs that this could include an income tax hike for higher earners. There have been many around Labour who have always thought the cutting of the top rate to 33 per cent by John Key and Bill English was anti-progressive policy that exacerbated inequality, and should have been repealed.

But hiking the top tax rate would be a big mistake. First, in order to make it politically palatable, it would have to apply to relatively few people, which would mean it would not bring in much money.

Second, Labour has done a good job of appealing to aspirational New Zealand and those who want to get ahead. Ardern nixed a capital gains tax on this basis. NZ First wouldn’t support it and, even if it had, it would have killed Labour politically.

The other problem is a more long-term one. While current Labour MPs are very proud of Michael Cullen’s fiscal management, he unambiguously failed on one big metric under his stewardship: there was a steady and growing exodus of Kiwis to Australia that shot up to nearly 40,000 a year.

One of the things that helped change that equation during the Key years was a Kiwi economy performing better, with an overall lower tax burden. Should Labour propose to jack up the top rate again, most Kiwis will be left with salaries that are an average of 25 per cent less, and taxes that are the same or higher.

Australia already has tax cuts legislated for both 2022 and 2024. The 2024 cuts, which are admittedly a while away, will see all Australians taxed a maximum of 30 cents in the dollar up to $200,000.

If we increase taxes while Australia cuts them, then I have no doubt we will lose people to Australia. Once the Australian tax cuts are implemented, NZers will be paying more tax on all incomes up to $250,000. Here’s a table of the differences:

IncomeNZAustExtra tax NZ
 $    10,000 $    1,050 $           –   $          1,050
 $    20,000 $    2,520 $        342 $          2,178
 $    30,000 $    4,270 $    2,242 $          2,028
 $    40,000 $    6,020 $    4,142 $          1,878
 $    50,000 $    8,020 $    6,592 $          1,428
 $    60,000 $  11,020 $    9,592 $          1,428
 $    70,000 $  14,020 $  12,592 $          1,428
 $    80,000 $  17,320 $  15,592 $          1,728
 $    90,000 $  20,620 $  18,592 $          2,028
 $  100,000 $  23,920 $  21,592 $          2,328
 $  110,000 $  27,220 $  24,592 $          2,628
 $  120,000 $  30,520 $  27,592 $          2,928
 $  130,000 $  33,820 $  30,592 $          3,228
 $  140,000 $  37,120 $  33,592 $          3,528
 $  150,000 $  40,420 $  36,592 $          3,828
 $  160,000 $  43,720 $  39,592 $          4,128
 $  170,000 $  47,020 $  42,592 $          4,428
 $  180,000 $  50,320 $  45,592 $          4,728
 $  190,000 $  53,620 $  48,592 $          5,028
 $  200,000 $  56,920 $  51,592 $          5,328
 $  210,000 $  60,220 $  56,092 $          4,128
 $  220,000 $  63,520 $  60,592 $          2,928
 $  230,000 $  66,820 $  65,092 $          1,728
 $  240,000 $  70,120 $  69,592 $             528
 $  250,000 $  73,420 $  74,092 $           (672)

So someone on $160,000 a year will be paying $4,000 a year more income tax in NZ than Australia. And Jacinda and Grant want to increase that gap even more.

Yet Jacinda and Grant want to increase taxes, while Australia cuts them.

Also the median FT wage in NZ is around $60,000 and in Australia almost $80,000. So this means the median FT worker in NZ will be taking home $49,000 and in Australia around $64,500.

General Debate 08 September 2020

Labour’s answer to a recession is more costs of employers!

Newshub reports:

Labour is luring voters with the tantalising prospect of another day off making Matariki an official public holiday, but the party may not get it across the line. …

“The issue, of course, is that it’s another public holiday that employers have to pay for,” National Party leader Judith Collins said on Monday.

ACT leader David Seymour said Ardern is “in la la land”. 

“Small businesses don’t need another day off. They need this Government to take the next three years off. It just means another additional cost for businesses.”

The economy is in recession, borders may stay closed for years and Labour’s solution is to increase costs further on employers.

I’m all in favour of Matariki replacing an existing holiday such as Queen’s Birthday or Labour Day, but imposing an extra public holiday on employers is just going to punish them.

Many people don’t realise that the cost to some businesses of a public holiday isn’t just the costs of paying staff for not working, but the foregone revenue.

I used to work for a small advertising and design agency. It had around a dozen staff and the owners sometimes took home less in pay than the receptionist.

Say you have eight creative staff who normally do six chargeable hours a day at $100 an hour. That extra day’s leave means you lose around $5,000 in revenue. That would often be the entire profit for the month gone.

This policy just reminds me that almost no Labour Minister has worked in the private sector, let alone for a small business.

An interesting Topham Guerin interview

Schoolboys can beat women’s world records

I saw this on Twitter and thought it was very powerful. If you want to illustrate the huge difference biological sex makes in athletics, this shows it.

Basically top 14 to 16 year old boys can run faster or jump higher than any women in history. This is why we have different divisions for men and women.

Trump’s electoral college advantage

This is a very interesting analysis of the difference between the popular vote and electoral college vote.

If Biden gets just 1% more popular vote than Trump, he has only a 6% chance of winning the electoral college. In fact anything up to a 3% lead sees Trump more likely to win.

For Biden to be confident of victory he really needs to be aiming at a 4%+ lead in the popular vote. His current lead in 7.5% so only needs a 3.5% slippage for the race to get competitive.

Seymour makes a good point

General Debate 07 September 2020

How many falsehoods were Green members told by Shaw?

Stuff reports:

The New Plymouth District Council has moved to separate itself from the furore over the Government’s decision to give $11.7 million to the Taranaki Green School, after a video was leaked in which Green Party co-leader James Shaw told party members the council was a “funding partner”.

RNZ published a video of James Shaw during a conference call on Friday with green party members, in which he said Minister of Education Chris Hipkins gave the Green School project tacit approval because of its funding partnership with the New Plymouth District Council.

In the video, Shaw said: “He [Hipkins] did say that – assuming everything else being equal – as long as the funding partner is the [New Plymouth District] Council, which it is, that he was okay with it.”

In a statement on Thursday, Shaw said the comment, made during a videoconference with party members was a simple error.

It seems clear the Green Party members were spun, or worse.

Shaw told then NZPDC is a funding partner, and they were not.

Shaw told them Hipkins verbally approved the funding, which he didn’t.

Presumably Shaw didn’t tell them that he personally forced the Government into funding it, by refusing to sign off on the other 165 projects unless this one was included.

What else were Green members misled about?

A widow wants choice

Stuff reports:

A woman whose terminally ill husband chose suicide over a prolonged painful death is urging New Zealanders to allow people the option to die with dignity. …

Richard, Heather Gregory’s husband of 30 years and father to their five children, was diagnosed with carcinoid cancer at 58 years old.

He had lived with the slow-growing cancer for years, but in 2014 his health rapidly declined.

“The tumour exudes hormones, and it damaged his heart. He wasn’t getting enough oxygen; his body was breaking down,” Heather said.

“When it happened, it was very sudden and very severe.”

She said Richard was thin and she had to dress his weeping leg wounds in adult nappies every day. He had a bed sore on his back, and his personality had changed.

“He felt he was losing control. The day he died, he had a nap in the sun and when he went to push himself up, he couldn’t – he wasn’t strong enough.”

On that August night in 2014, Heather went off to her quiz night in her home town of Hastings.

But she had a bad feeling she couldn’t shake. She contacted her daughter at 8.30pm, and that’s when she heard the news.

Richard had taken his own life.

The fallout from Richard’s suicide was distressing. Two of their adult children were left traumatised after finding him, and the three who weren’t there felt displaced, Heather said.

“It was a devastating end to a very good life, and it could have been so much better.”

A terrible trauma for the family, because Richard felt he had no choice. If euthanasia had been legalised he could have talked to his family about stopping his suffering, and they could have had a proper goodbye.

Richard’s suffering was unbearable and there was little that could truly relieve it, Heather said.

Had euthanasia been an option, he would have taken it, she said.

“If this had been in place it would have changed the whole dynamics of the whole situation leading up to it, and the final moments, and the time afterwards.”

No other family should have to endure what this family did.

When will the Parole Board learn?

The ODT reports:

One of the country’s longest-serving prisoners is back behind bars after taking drugs while on parole.

Andrew Peter McGlynn (53) was sentenced in the High Court at Christchurch in February 1986 to life imprisonment for murder.

The defendant, who appeared in the Dunedin District Court yesterday for breaching parole, has made headlines in the past for his indiscretions while on release.

Soon after being paroled, in 1994 McGlynn was incarcerated once again after committing an armed robbery.

Another release in 2003 had an almost identical result.

McGlynn was back to prison to continue serving his life sentence after being convicted of aggravated robbery.

However, it was not enough to convince the Parole Board he should remain there.

In 2005, yet another stint in the community was abruptly ended when McGlynn assaulted a woman.

So they release him on parole, he commits a serious crime, they release him again, he commits another serious crime etc etc.

McGlynn’s latest parole decision, released to the Otago Daily Times, revealed he had been released and recalled six times and committed 23 offences since the 1986 murder.

You know I don’t think he is going to change.

General Debate 06 September 2020

Fox News confirms that Trump called war dead “losers”

The Atlantic has an explosive story about how Donald Trump referred to American war dead as “losers” and “suckers”.

TDS (Trump Defender Syndrome) sufferers will find a way to pretend it is fake news, but they may struggle with the fact that Fox News has confirmed the accuracy of the key aspects of the story with two separate sources.

Other outlets have also had officials confirm the accuracy. In total six different sources. And it is suspected one of the sources is no less than Trump’s own former Chief of Staff.

It saddens me that so many people can’t see what is obvious – Trump is simply a terrible human being. No amount of being right on some policies can make up for having a rotten core.

Damning UNICEF report

Stuff reports:

The annual Unicef Worlds of Influence Report Card released today shows that New Zealand is one of the worst places in the developed world to be a child, ranking 35th out of the 41 richest countries surveyed – which include OECD countries and the countries that make up the European Union.

Personally I don’t find the UNICEF rankings very useful. But nevertheless after the PM said her number one priority was child poverty (which has gone up), this reinforces how rhetoric is easier than results.

Winston is consistently inconsistent

Winston Peters on 9 May 2019:

‘Government will build ‘a lot more’ than 100,000 Kiwibuild homes.

‘100,000 over 10 years is easily achievable’

Winston Peters on 4 September 2020:

‘We knew Kiwibuild was never going to work, we said so’

The only thing consistent about Winston is his inconsistency.

General Debate 05 September 2020

The Mayor’s house purchase

Stuff reports:

A prominent Wellington politician bought a large piece of land within an area known as being considered for development, months before more detailed plans were revealed to the public.

Lower Hutt Mayor Campbell Barry, then a second-term councillor, purchased a house and 5.13ha of land on Upper Fitzherbert Rd in Wainuiomata North in early 2019. In November 2017 Barry was briefed on possible development options for the area by consultants. The options were not made public.

Shocking judgment for a Councillor to buy land in an area confidentially marked for potential development.

The documents shared with Stuff show Barry and other family members bought the property for $858,000 in February 2019. Zoned rural residential it is now potentially worth millions of dollars if the zoning is changed to residential as part of any future development.

Stuff investigations have revealed that a nearby 4ha property, valued at $540,000 in September 2019, sold recently for $1.9 million. The owner turned down another offer of $2.3m.

It is understood another two neighbouring properties, two blocks of 2.4ha each, both sold for $2m. And developers have been approaching other residents in the area since the release of the report.

So the fact it is now publicly known the area is likely to become developed, has led to sections selling for 300% over their CV. So Mayor Barry’s property might now be worth $2 million more than he paid for it.

The council knew the development, intended as part of a plan to address Lower Hutt’s growing housing crisis, would be unpopular because of its potential impact in a quiet, largely rural area.

Former mayor Ray Wallace, approached by Stuff, said “meetings were all ‘public excluded’, therefore all of the minutes would never be allowed to be released to the public during that sensitive process”. …

The documents and email exchanges show Barry was involved in planning for the development, including “public-excluded” briefings, meetings and workshops throughout 2017 and 2018.

Barry initially claimed he had not been to any briefings. He later clarified that he had attended a meeting at the Dowse Art Museum in November 2017, when consultants outlined “possible options” and some “blue-sky thinking” in Wainuiomata North.

So Mayor Barry denied he had been briefed at all, but later “clarified” he had been.

On at least one other occasion, he and Briggs were invited to an exclusive briefing on progress, documents show.

That progress included a then “confidential” 110-page report detailing well-developed plans for an 84.5ha subdivision, including between 1200 and 1800 homes, a possible new primary school and a small shopping centre.

So that’s two confidential briefings.

Barry insists he knew little of those plans because, despite being one of two Wainuiomata ward councillors, he did not attend any other briefings or meetings.

”I was aware of that fact, as was the wider public,” he replied in an email to Stuff.

But it seems the public knew little of those bigger, post-2016 plans.

As the development firmed, the council became so worried about information getting out and creating concern among residents and a “gold rush” for developers that it declined a number of information requests about what was happening in the area.

The fact prices now are so much higher than they were in 2019 strongly suggests that the public did not know of the plans, as you would not have picked up a five hectare block so cheaply.

Barry initially told Stuff that he sought legal advice on any possible conflict of interest before purchasing his Upper Fitzherbert property. The email Barry supplied to Stuff suggests that advice was sought after Barry had purchased the property.

So that is a second instance in which something Mayor Barry said was not accurate. He claimed he had not been briefed, and he had. He claimed he sought prior legal advice, but it seems he had not.

A little more than two months later, three years after the councillors and officers had begun an exhaustive, public-excluded process, producing a 110-page report and timeline for possible district plan changes, Miller canned the scheme and publicly released the plans.

She did that without first consulting the mayor and councillors, leaving senior officials “shocked” and “surprised”. One described it as “cavalier”.

So why did the Chief Executive ditch the plans?

UPDATE: Stuff has a second article on the issue, including comments from neighbours who are critical of the Mayor.

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