KiwiBuild and the problem with overpromising and under-delivering

by The Listener / 20 June, 2019
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Just days away from July 1, the date that the Government promised 1000 new houses would have been built under its flagship KiwiBuild policy – with 5000 next year and 10,000 the following year – the failure of the programme can be seen in perspective. So far, 119 KiwiBuild homes have been completed.

The biggest loss is not the houses. After all, they never existed. Other than hopes being dashed by people who might have qualified for a KiwiBuild home, the biggest blow is to the Government’s reputation.

It’s good intentions are not in doubt, but nor can there be doubt that, believing its own rhetoric, it overpromised. In Opposition, Labour implied that the solution to housing affordability was simple: it promised 100,000 affordable homes in 10 years, half in Auckland.

There were always serious problems with this. Any political party that promises anything over 10 years, when it is elected for only three, deserves scepticism.

As it has transpired, even two years has proved too difficult for Labour to make inroads into the policy that it trumpeted while the National-led government flailed in its own attempts to improve affordability. Among tactics National tried were loosening local body restrictions, expanding social housing to non-government providers, and reforming the Resource Management Act. But its efforts were no match for rampant house-price inflation.

The housing market primarily comprises private buyers and private sellers and governments, as we have seen, have little influence. Labour might have gained at least some traction if it had immediately focused on its Ministry of Housing and Urban Development legislation, which aims to force councils to free up land and promote better co-ordination of infrastructure building. Yet it did not.

The Government also struggles with public expectations – again, largely of its own creation – that it can do a better job than National of supporting society’s most disadvantaged. There is demand for more targeting so that help goes to those in greatest need. However, governments must also contend with the fact that people who earn $70,000 and are in the top tax bracket, although meeting no one’s definition of “rich”, also want fairness. Universal policies, such as fees-free for the first year of tertiary education – the Government has gone deathly quiet on its promise of extending it to two, then three years – at least make middle- and upper-income earners feel as though they, too, are getting something back for their taxes. Yes, it is their own money that pays for it. Both the argument and the money quickly become circular.

The belief that only a government can put right social problems, no matter how serious and ingrained, is in Labour’s DNA. It was articulated by former Labour finance minister Sir Michael Cullen in 2007 when he said, “Only the active and redemptive power of the state can address, at all adequately, issues of serious deprivation – not random acts of charity, however welcome and well meant.”

Yet problems such as social housing, housing affordability and welfare dependency are complex and entrenched and the state is not automatically better than anyone else at providing every service. Ask any alcoholic who has experienced the genuine transformation of finding sobriety with the aid of the Salvation Army and Alcoholics Anonymous, for example.

The philosophy articulated by Cullen can, however, be seen a generation later in the Government’s overpromising on the likes of KiwiBuild and in Prime Minister Jacinda Ardern personally taking on the child-poverty reduction portfolio. The Government’s official targets include the aim to more than halve child poverty in 10 years. Yet, sadly, by some measures, poverty is getting worse.

The problems that exist in housing affordability, or among the most disadvantaged, are not the result of previous governments not caring enough. With the possible exception of National’s infamous 1991 “mother of all Budgets” that cut welfare benefits in real terms, New Zealand governments have always cared about fairness, because New Zealand voters care about it. The last government’s move to raise benefit payments in real terms for the first time in 43 years was the right thing to do.

Voters want to feel confident about issues of fairness and also that this Government knows what it is doing, especially as economic forecasts become increasingly gloomy, and immigration falls. Building such confidence could, however, turn out to be even harder than building houses.

This editorial was first published in the June 29, 2019 issue of the New Zealand Listener.

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