Opinion: Labour looks to its history to chart the way forward

For the first time in a long time, Labour has come up with something radical on the policy front which may grab the public's attention, and which National cannot really get away with copying.

In promising to build 100,000 modest but affordable homes over 10 years, Labour is drawing inspiration from its proud legacy as a provider of state houses during the Savage and Kirk eras.

But the similarities end there.

Labour's KiwiBuild programme will see the Government borrow about $1.5 billion to start what will become a self-funding scheme as the proceeds from the sales of houses to first-home buyers are reinvested.

National has sought to paint the scheme as unworkable, especially in Auckland where the crisis in home ownership is at its worst.

National argues that Labour's claim a modest entry-level home can be built for less than $300,000 is absurd, given the price of sections in Auckland are close to that even in less well-off areas.

Labour's policy, however, is being written by the formidable Annette King, who holds responsibility for Labour's shadow housing portfolio.

She says high section prices in Auckland could result in Labour promoting mixed housing developments which would see the more expensive homes cross-subsidising others meeting the affordability criteria.

Ms King is still fleshing out the detail of the policy framework, which was unveiled by David Shearer at Labour's annual conference two weekends ago.

There have been rumours this might be Ms King's last term in Parliament.

But she says she is not going anywhere.

That is bad news for National. She has outfoxed National generally and Housing Minister Phil Heatley in particular.

The Government's affordable housing "package", released in late October, focused on freeing up land for new housing and cutting red tape to speed up building consents.

That is all fine and dandy. But it takes a while for such changes to have an impact. They do nothing to address what amounts to the market failure. In Auckland, only about 5% of new homes are targeted to the lower end of the market.

National's response to the affordability crisis was to be seen to be wringing its hands. In contrast, Labour is rolling up its sleeves.

The latter's package directly addresses market failure. The policy heralds Labour's adoption of a more interventionist, hands-on style of governing which the party believes the electorate is increasingly willing to embrace, especially where market-driven approaches are not delivering.

Labour is being bold. Like the push for a capital gains tax, the housing promise is a break from Labour's immediate past of playing safe and finding excuses for not doing things.

David Parker, Labour's finance spokesman and third-ranked MP, this week spoke proudly and unselfconsciously of using "the power of the state" to bulk build houses.

Helen Clark and Michael Cullen were hardly averse to state intervention, but couched their language in more cautious fashion.

What the housing policy says about Labour's direction is arguably as important as the policy itself. It shows Labour regaining its soul.

The policy will appeal to middle-income voters in the political centre, especially those worried they or younger relatives will never get on the homeownership ladder.

Those voters worried about Labour being profligate with taxpayer dollars will be comforted by knowing the $1.5 billion will be designated as capital so will not slow the country's return to Budget surplus.

The capital injection will provide a stimulus to a sluggish economy. The 10-year programme will provide some certainty to an industry notoriously victim to boom-bust cycles.

The ramping up of building activity dovetails with Labour's long-held preference for an effective apprenticeship system.

The policy is also an answer to the anti-poverty lobby which argues not enough is being done to lift the quality of the housing stock, reduce the effect of poor living conditions on a person's health and alleviate child poverty.

Labour also intends using the policy to turn the tables on National in another way.

New Zealanders will be offered the chance to invest in Housing Affordability Bonds, with Labour arguing that is preferable to buying shares in state assets they already own.

Lastly, the target of 100,000 new homes over 10 years is the kind of promise which only one or other of the two major parties can make with any certainty it will be fulfilled.

It should shift votes Labour's way and thus shift the balance of power on the centre-left away from the surging Greens and back to Labour.

All of this should be of major worry to National. Labour may well be capable of shooting itself in both feet on occasion.

In fact, the very public argument at Labour's conference over how the party will elect its future leaders, combined with David Cunliffe's less-than-subtle self-promotion, overshadowed the announcement of the new housing policy, reducing the amount of publicity it got.

However, in terms of ideological renewal and momentum, Labour is stating to get it right.

National's nervousness at what Labour might come up with on the housing front was evident even before the unveiling of KiwiBuild.

Having got wind that housing was a major component of Mr Shearer's keynote conference speech, National sought to cancel out in advance whatever the Labour leader had to say. On the preceding Friday, National announced up to 600 of the 2500 to 3000 homes to be built at Auckland's Hobsonville Point would be priced at $485,000 or less.

This massive U-turn was very cynical politics. National originally set aside 100 houses for first-home buyers. That was cut to less than 20 last May.

National was punting that its sudden generosity would be sufficient to neutralise Mr Shearer's announcement. That might have worked in the past. Labour's newfound willingness to take risks suggests it won't in the future.

• John Armstrong is The New Zealand Herald political correspondent.