If ever there was a seemingly intractable problem whose
solution could benefit from political consensus, then surely
the delivery of affordable housing in Auckland fits the bill.
There is, of course, already a healthy degree of consensus
between central and local government in the form of
National's Housing Accord with Auckland Council.
It is a very different story as far as National and Labour
are concerned, even though some kind of consensus between the
two major parties would be of considerable assistance to the
Reserve Bank if they stopped questioning its efforts to cool
a dangerously overheated property market as it sees fit.
Labour's willingness to make the bank's task potentially more
difficult by promising to exempt first-home buyers from new
rules which will drastically slash the number of low-deposit
home loans raises further questions about Labour's adherence
to the long-established consensus that the bank must be
allowed to act independently and be free from political
The argument for consensus solutions is enhanced by National
and Labour claiming to have the same objective - ensuring
enough homes are built in the Auckland metropolis each year
to cater for ever-growing demand while putting simultaneous
downwards pressure on the ever-escalating price of
residential property in the city.
While there may be marked differences in the two parties'
manner of delivery, there is common ground. Labour, for
example, is unlikely to overturn National's fast-tracking of
Both parties, moreover, pay homage to an amorphous tribe
known as ''first-home buyers'' who are accorded roughly the
same iconic, untouchable status as other threatened species
such as the Hector's dolphin or the yet-to-be-headhunted
members of Team New Zealand's America's Cup crew.
As the governing party, National constantly fears it is going
to cop the blame for the housing crisis - and not just from
would-be first-home buyers. The party is vulnerable to
charges that it was too slow to react to the crisis. Hence
the rush to come up with new policy ideas even if they are of
limited value, this week's FirstHome initiative being a prime
That programme involves selling around 400
surplus-to-requirement state houses, These houses are all in
provincial centres and not Auckland, prompting Act New
Zealand's John Banks to slam the move as the ''politics of
bubble and squeak''.
Labour, on the other hand, is pitching to first home buyers
on a number of fronts with the intention of marginalising
National. Labour argues it has a coherent package to tackle
the affordable housing problem in the shape of a major,
largely self-funding house building scheme and a capital
gains tax to thwart speculators.
Both policies have major weak points. But National has so far
failed to shoot down either.
Somehow Labour has instead convinced people that its policies
will make a real difference in the short term while
National's ideas will only bare fruit in the long term,.
That was why it was vital for National to this week highlight
the building of nearly 300 affordable homes on surplus
government land at Weymouth in South Auckland. The project is
the first example of how the Housing Accord will fast-track
the building of homes with the first ones ready for
occupation by the middle of next year and the development
completed by 2017.
Given affordable housing is one of the few issues where
Labour has National very much on the back foot, Labour is not
going to give that advantage away in a hurry. Labour has
instead upped the ante on National with its promise to exempt
first-home buyers from the Reserve Bank's move against
low-deposit home loans.
The central bank's rationale is worth repeating as it has
been lost sight of in the ensuing debate. Why, the bank
warns, do New Zealanders think they are immune from the kind
of financial shock that crippled Ireland as a result of an
over-inflated property market?It is a question both National
and Labour have been reluctant to address. Both parties have
instead sought to keep first-home buyers on side.
In National's case, that was thwarted by the Prime Minister's
failure to persuade the Reserve Bank to countenance an
exemption for first-home buyers. John Key's frustration was
palpable. He has an almost pathological aversion to vacating
political territory to National's enemies.
Even more galling for Mr Key was David Cunliffe stepping into
the breach with his promise that Labour would ensure that
first-home buyers were not the victims of the Reserve Bank's
decision to order trading banks to slash the number of
mortgages written for borrowers with a deposit of less than
20% of the home's value.
Labour's increasingly cavalier regard for the functions and
independence of the Reserve Bank has been obscured, however,
by the Prime Minister's seemingly similar behaviour.
The difference, however, was that National's plea was made
during consultation between the bank and ministers required
under the memorandum of understanding between the Reserve
Bank and the Government.
The bank insisted the restrictions would have insufficient
bite to curb spiralling house prices if first-home seekers
Not wanting to compromise the bank's independence, Mr Key had
to accept the bank's right to write the restrictions in its
Not so Labour. Mr Cunliffe made vague noises about not
interfering with the bank's independence. But he intimated a
Labour government would effectively instruct the bank to have
regard for first-home buyers by writing that requirement into
the policy targets agreement that a new government signs with
the bank soon after taking office.
Mr Cunliffe's stance reflects his intention to give Labour a
more bolshie image. He is exploiting the fact that Opposition
parties can promise more than governments can. He also knows
National is likely to be hit by rises in mortgage interest
rates heading into the election.
But Mr Cunliffe has to be careful. With Labour also committed
to making the Reserve Bank take heed of exchange-rate
fluctuations, he has to avoid leaving the impression Labour's
answer to every economic problem is to fiddle with the
Reserve Bank's mandate and thereby neutering the institution
in the process.
- John Armstrong is the political correspondent for
The New Zealand Herald.