By Vanessa Cole

Economic and Social Research Aotearoa’s Vanessa Cole critiques Labour’s Kiwibuild policy and whether it can help solve the housing crisis in New Zealand.

The Labour-led coalition that came into power in 2017 have vowed to address New Zealand’s rampant housing crisis. However, their programme largely follows the same logic that underpinned the former National government’s policy – the private market – and in doing so risks exacerbating the problem of affordability.

This article critiques the Kiwibuild programme as the solution to this ‘crisis’. It will argue that building private housing on public land risks facilitating gentrification, and that a state-led housing build programme must focus instead on building public and non-market housing.

Whose housing crisis?

It is important to contest the language around the housing crisis. It is not a new phenomenon but a persistent condition of the economic system we live under: a system where housing is treated as a commodity for the purpose of exchange value rather than its living, leisure and community value. The condition of cold, mouldy and unaffordable housing is not a new reality for low-income people. The reason why it is being discussed more intensely in the media in recent years as a ‘crisis’ is because these conditions are increasingly impacting middle-income earners who no longer have access to home ownership. Housing being treated as a commodity that can be profited from is at the roots of the crisis, yet it is rarely discussed in the media and public policy.

Not all people are impacted equally by a lack of secure and affordable housing. Property developers, financiers and landlords are accumulating massive amounts of wealth from housing. A third of all investment in Aotearoa New Zealand in 2017 was in housing. Between 1 April 2018 and 30 June 2018, 3.5 billion was gained from re-sales. Further to sales, landlords extract an average of $541 a week in rent in Auckland and an average of $444 overall. Much of this investment in housing is completely unproductive for both tenants and the economy. In other words, while poor people pay regressive taxes on food, transportation and other basic needs, wealthy investors and landlords profit through charging exorbitant rents and do not get taxed for it.

Housing conditions for poor people deteriorated significantly over the nine years the Fifth National government was in power. This was largely because of the selling of state housing, eviction of families, and rampant gentrification supported through speculation by property developers. This forced people onto the streets, into their cars, and into emergency accommodation or substandard rental housing. We now have a situation where emergency housing is bursting at its seams with 80-90% of homeless people turned away from emergency housing providers.

This crisis is innate to an economic model based on the private accumulation of wealth by some and the exploitation of many. For the 9000 people on the Housing New Zealand waitlist, 40,000 homeless people, and low-income renters paying large proportions of their income on rent, the idea of homeownership is not an option. So why is Labour consistently hailing the Kiwibuild programme as the great solution for the housing crisis?

Who is Kiwibuild for?

Kiwibuild appears to be a rational response from the Labour-led coalition for renters who are currently locked out of the market and stuck in exploitative relationships with landlords – insecure tenure, substandard conditions, unaffordable rents and hardly any protection under law – and who desire the security of homeownership. Kiwibuild, however, risks being accessible only to those earning higher incomes, and risks facilitating processes of state-led gentrification, the privatisation of public land, and potentially not addressing the housing crisis at all.

The Kiwibuild programme is an initiative to build 100,000 homes for first-home buyers over the next decade. The prices of the homes in Auckland will be between $500,000 and $700,000 and cheaper elsewhere, but significantly below the current market price for housing. The criteria has been widely criticised for having an income cap of $120,000 for a single applicant and $180,000 for more than one applicant. This means that those who earn well above the average household income are still eligible to apply. People are also only required to hold on to the homes for 3 years, after which the houses can be sold at the market price. This means these homes are only affordable for a limited time which could potentially fuel speculation and on-selling.

 Many of the areas in which Kiwibuild is being rolled out are in large-scale developments of state housing communities on public land. Some of the areas in Auckland are Mt Roskill, Māngere and Northcote which will involve the demolition of Housing New Zealand stock and a building of mixed-tenure communities – public or social, affordable and private market housing. Essentially, if these developments have around one third social housing, one third affordable and one third market housing, then that is two thirds of public land being placed in the hands of the private property market. When we lose public housing, we lose the function it holds in controlling the private market and ensuring affordability not only for its tenants but for entire communities.

In Māngere the proposal is for 2,700 state houses to be demolished, to be replaced with around 3,000 new state houses, 3,500 Kiwibuild homes and 3,500 market houses. While this project is building more homes overall, it is not really increasing the much-needed public housing stock and is instead privatising public land that could be used to build it.

John Tamihere, CEO of West Auckland urban Māori Authority Te Whānau o Waipareira Trust called the policy of building a mixture of social, private and affordable homes ‘social engineering’ and argued that there should instead be 100% social housing built on public land.

As seen in the Tāmaki Regeneration and in many international examples of urban regeneration, the building of private housing for middle to high-income earners in previous low-income public housing areas risks processes of state-led gentrification. Land values are likely to increase due to expensive private housing being built and the composition of the community shifts in a way that tenants – both private and state – risk eviction and displacement. As made clear by Salvation Army economist Alan Johnson when discussing the Kiwibuild programme:

‘It is probably time to call the Government’s flagship KiwiBuild programme for what it is – state sponsored gentrification of state housing suburbs.  As such it is little different from the previous Government’s efforts in places such as Tāmaki to extract value from the public housing estate under the guise of modernisation.’

There is a need to update some of the public housing stock, and to focus on building more dense and environmentally sustainable housing. But if we are going to build more housing and create genuine affordability, it cannot be placed in the hands of a private market which is fuelling the crisis in the first place.

What about public and communal housing?

To address the immanent crisis in housing, the Labour-led coalition should not be facilitating the developers’ profits from private market housing built on prime public land. A more effective public building programme to address the demand from renters who are locked out of the private market, and to create healthy, secure housing for those on low-incomes is to facilitate a mass build of public housing, and expanding the criteria of those who have access to it. Instead of building mixed-tenure communities, an idea could be for the Government to build high quality mixed-income 100% public housing on public land.

While it is important to defend and expand public housing as an immediate solution, the state needs to redistribute income and wealth to communities and support the creation of other models of ownership such as co-housing with cheap rents. Central and local government must build genuine Te Tiriti relationships with iwi and hapū to support the building of papakāinga and ensuring land is returned to tangata whenua.

If we create a programme for massive amounts of well-built public, papakāinga, and other non-market common housing, alongside secure tenure and expanding the criteria for public housing to include all renters, then it can have the positive impact of forcing down house prices and rents. This is because if more people have access to a viable alternative, private landlords will no longer hold monopoly power to charge exorbitant rents or provide substandard accommodation. It will also mean that those desiring homeownership will have the option of accessing secure rentals for life.

When state housing was first built in Aotearoa New Zealand, it was available to middle-income earners and to working class families. It was a secure and desirable alternative to private housing which acted both to improve living standards and to ward off speculation. In a more contemporary example of large-scale public housing policy, three in five residents in Vienna, Austria live in public housing which are provided by the city. Their public housing is luxurious and desirable – some with pools and saunas. Their policy is almost universal, with rich and poor accessing and living in subsidised public housing. The reason why it is protected, maintained and of high quality is because housing is normalised as a space for living and public housing is accessible to many.

While it can be dangerous to romanticise the past, or to compare Aotearoa New Zealand to other spaces, it is important to recognise that the idea of housing beyond speculative markets is not utopian but instead has concrete and successful stories that are already with us today. It is economically possible to redistribute wealth and end the commodification of housing. To fund it will require adequate taxation of income and wealth, the end to Budget Responsibility Rules and invest the $5.5 billion surplus in providing housing for all.

When we discuss the housing crisis, we need to remember that it is a permanent crisis in the economic system, and a crisis in the value we place on living. If we want a system that thinks of the future of housing as environmentally, economically and socially sustainable we need to demand and work towards a vision of housing as a common good rather than a commodity.

Vanessa Cole is a researcher specialising in housing and urban planning in Aotearoa, and coordinates Economic and Social Research Aotearoa’s Housing Group. 

Disclaimer: The ideas expressed in this article reflect the author’s views and not necessarily the views of The Big Q.