Economist Shamubeel Equub attacks the Reserve Bank at the InfrastructureNZ conference

Housing Minister Megan Woods sat backstage at the Infrastructure New Zealand symposium yesterday and heard a damning indictment of her Government’s housing policies coming from a keynote speaker on the stage.

But when it was her turn to speak she largely ignored the charges that economist Shamubeel Equub had levelled.

Instead, she offered a list of what she said were Government moves to deal with the housing crisis.

After her speech, had she stayed at the conference another half hour, she would have heard a panel carry on where Equub had left off.

But he didn’t just blame the Government. His most spirited attack was on the Reserve Bank.

The country had not built enough houses over the last 30 years and it would have to build at the current rate for the next 30 years to remedy the deficit, he said.

“But right now, what we see in the market, of course, is that the demand for housing is not physical demand, it’s investor demand.”

“We are buying and selling houses from each other.

“What we have is a central bank and banking policy that allows our banking system to essentially lend only to housing,” he said

“In the last six months, lending to businesses and agriculture has crashed.


“So the bits of the economy that actually create jobs and incomes and lifestyles, there was no investment. “

“And at the same time, lending to mortgages has barely changed.

“We’re still at record levels of borrowing.

“And of course, it makes sense to borrow money, which means housing, which has no taxes, which is the only thing that you can borrow a ton of money for.”

“But what scares me is the Reserve Bank comes out and says it’s not their job to deal with this.

“You know what? It is the only job that is left.

“You can’t cut interest rates much more.

“The only thing you can do is how much credit there is in the economy and where that credit turns up.

“It is an abdication of duty to say that it is not their job to say where credit goes in the economy.

“I want the finance minister to set a very clear direction with the Reserve Bank to say, yes, we have a monetary policy targets agreement.

“We also need to tell you what financial stability means, because what you are doing is fundamentally destabilising our housing market and our society.”

POLITIK Housing Minister Megan Woods

Strictly speaking this is well beyond the responsibilities of the Housing Minister, Megan Woods and she has had to play something of a catchup role since she took over from Phil Twyford last year.

But she is a key member of the inner cabinet

“As Minister of Housing, I’m acutely aware of how decades of underinvestment and infrastructure in the building of affordable homes has lead up to this position we are in today,” she said.

“There is currently a lot of discussion about what levers can be used to address house price rises.

“I’m going to talk about one of the most significant levers we have; increasing supply.”

It wasn’t that the symposium delegates, most of whom came from the construction industry or local Government weren’t in favour of building more houses.

And they agree with much of what Woods is doing.

She talked about the Resource Management Act reform and the $350 million fund established in August to keep housing developments stalled by Covid-19 afloat.

She also referred to the restructuring of the Government’s housing agencies which has seen the establishment of a Ministry of Housing and Urban Development and a revamped Housing New Zealand. (Kainga Ora)

Kainga Ora is the Government lever that is having the most immediate and direct impact.

“We are building more public houses that have been built in a generation; in our first term five thousand six hundred and seventy new public housing places; four thousand three hundred forty-two of those were new builds,” she said.

“We are on track to deliver over 18000 public housing and transitional places by 2024.”

Equub had applauded the increased in public housing construction, but he said the waiting list was still 20,000 people.

“We are planning to fail because it’s not enough to have just the amount that’s on the waitlist,” he said.

“You know what? There’s a whole bunch of unmet demand that’s there just in the wings of people who might be losing their job or have a family crisis or whatever else.”

He said the problem was too big for the Government to solve on its own. It needed to partner with other organisations like community housing providers.

POLITIK The InfrastructureNZ symposium housing panel (l to r): Fletcher Building CEO, Steve Evans; Property Council CEO, Leonie Freeman; Deputy Chair, Ngati Whatua, Ngarimu Blair; Chapman Tripp partner, Ross OPennington.

The views of Equub and Woods were then put to the test in front of the conference with a panel which included the Chief Executive of Fletcher Building, Steve Evans and the deputy chair of Ngati Whatua, Ngarimu Blair.

The chief executive of the Property Council, Leonie Freeman, asked the fundamental question: “How bad does this have to get until we change our whole approach to solving this issue and who gets involved and leads that action.”

The proposition that we were at a crisis point dominated the panel discussion.

Chapman Tripp law partner, Ross Pennington, said that delegates at the symposium were technicians.

“This isn’t a technical issue,” he said.

“The affordability issue is a national disgrace.

“In 1990, not coincidentally, one year before the Resource Management Act came to us, the person on the median income was spending twenty-nine per cent of their take-home pay on housing-related costs. 

“Now, six or seven years ago, that number had risen to 52 per cent.

“The degree to which social ills are caused by our signal failures in this regard is really just entirely unacceptable.”

Blair said that current projections showed that by 2060, over 90 per cent of Maori would not own homes but would-be renters.

POLITIK Fletcher Building CEO, Steve Evans

Evans said that it was clear there were now some fairly unacceptable moves required.

“There’s clearly some fairly unpalatable moves that are required,’ he said..

How do you tax those that are holding onto land to make them develop, to actually get more housing?” he said.

“How do you bring forward that infrastructure funding to allow housing to be done?

“How do you admit that we made some mistakes and move on from those.”

“In an open market, housing fits really well together when you look after people when you focus on the people.

“So there’s no reason why we shouldn’t just be getting things done, getting on with stuff.

We can’t just afford to sit in conference rooms and the like and talk about how difficult this is.

“We’re just going to have to  get the good stuff done.”

Freeman said the public service culture needed to change — but the media would make that difficult.

I think this is a real challenge for the public sector people where they actually can’t be seen to fail because the media are pretty visceral,” she said.

But if you think about a more innovative approach to anything for any business, we’ve got to be able to try and have some things not work because perfectionism isn’t an option.

“So how do we filter that?

The panel didn’t arrive at what they called a “silver bullet” but rather ended up calling for a recognition of the urgency of the situation and a willingness to try a whole range of solutions in the hope that something might work.

They agreed with Equub.

We know that there’s a whole bunch of things that we need to do, our land planning, financing, funding,” he said.

“We know all the tools we have.

“The thing that’s missing now is the social license that we give to our leaders, our politicians and local Government and business, central government to have the courage to do this stuff.

“I ask you to really press on to political leaders is ask them to be courageous and to work with a sense of urgency.

“We’ve got to have urgency because the crisis is too big, and we cannot wait any longer.”