Politics
The Government’s policies are up against unintended consequences.
At long last, the first of those billion trees has been planted and the Housing Minister may have found a way to raise money for those 100,000 new houses – but who’s this coming along with a clipboard and a “Not here, you don’t!” notice? Why, it’s the Notable Soils inspector.
This Government, however well-meaning, does seem to make life difficult for itself at every turn. In the compulsory jargon of the beltway, you’re supposed to “roll out” policies like ready lawn. The Ardern administration’s way is more like assembling a team of soap-opera storyliners, charged with providing a major cliffhanger and at least a couple of “Oh, no!” moments for every episode.
The new Notable Soils project guarantees no end of cliffhangers. It’s quite literally a new grass-rootssensible approach to land management, but it’s got “unintended consequences” written all over it. For years, those in the know have lamented that land that could sustain highly productive horticulture and other types of agriculture is being used for housing and lifestyle blocks. Environment Minister David Parker has asked for what’s called a National Policy Statement (NPS) on Versatile Land and High Class Soils, which aims to identify and sequester these precious tracts of prime horticultural land.
Parker has long had a bee – doubtless a busy fertilising one – in his bonnet about what he regards as our underinvestment in horticulture, which helps explain why he would park this new classification system in an NPS – a super-planning designation that can override all others.
So while it might be a blast to have one’s bit of dirt classified “high class” or notable, it’ll be a damned nuisance if one’s intention had been to develop it for housing rather than peonies or brussels sprouts.
We’ll have to reach apocalyptic food shortage days before the Notable Soils inspector compulsorily rezones people out of existing suburbs because their bungalows are displacing prime arugula-growing opportunities. But the potential clashes with lifestylers, housing developers and even Parker’s ministerial colleague Phil Twyford could get extremely tricky.
THE TWYFORD ZONE
Twyford has enough roughage on his plate without having to fend off orchards and broccoli. Never mind where – he still can’t say exactly how the Government will finance its KiwiBuild programme, where the skilled workers will come from or where, assuming we have to import a lot of them, they will live while they build the houses. It’s beginning to look as if we’ll have to import a second tranche of overseas builders to build the temporary digs for the KiwiBuild builders – except where would they live?
Before the election, Twyford had suggested funding new infrastructure with municipal bonds, financial instruments through which the state guarantees a return – usually tax-free – on money invested to build infrastructure such as roads, schools and hospitals. But these would have to be
It looks as if we’ll have to import a second tranche of overseas builders to build the temporary digs for the KiwiBuild builders.
weighed on the Government’s balance sheet, and this administration – anxious to court a sceptical business community – is fanatically debt-shy.
So now Twyford is considering Special Purpose Vehicles (SPVs).
These are not to be confused with LAVs, the fleet of Light Armoured Vehicles, owned but little used by the Army, or with LVRs, loan-to-value ratios operated by the Reserve Bank, which are designed to deter people from buying houses they can’t afford. And people will confuse the three, because Twyford’s other big policy drive is to get people to eschew their un-armoured vehicles – and because the invention of SPVs is an admission that the Government itself is buying houses it can’t afford.
SPVs would be a sort of hybrid of municipal bonds and public-private partnerships. They would not confer ownership or rights on any private investor and they’d keep the asset and the debt off the Government’s balance sheet. The technical niceties of this are understood only by those who speak fluent accountancy, but the bottom line is that the Government would still own both the debt and the houses, but remotely, through SPVs.
The layperson might unkindly ask why the hell not just amp up Crown debt a bit, get the best possible borrowing rate while it’s going and have done with it. The International Monetary Fund (IMF) says we have a bit of wiggle room to let debt expand without jinxing our international credit rating. But this debt aversion is getting to be the central motif of Finance Minister Grant Robertson’s Budget reign. He seems to have been permanently scarred by all those years of Bill English’s “my debt’s smaller than yours” at Parliament’s question time.
OVERWHELMINGLY NEGATIVE SUBMISSIONS
Twyford’s other headache is the Government’s flagship policy to ban foreigners from buying property and to impose a five-year “bright line” penalty for resales. It’s beyond debate that cashed-up buyers, mostly from Asia, have contributed to the increase in house prices, especially in Auckland. Although we don’t keep sufficient records here to prove it, it’s happened in so many other cities around the world that it would be silly to think it hadn’t been a factor here. Even if, as the scanty official statistics suggest, the foreign-buyer quotient is as low as 5%, it doesn’t take more than a few buyers at a time to lift a market.
With prices now easing, the benefits of banning Johnny Foreigner may barely outweigh the political hoo-hah. But all three governing parties remain solemnly committed, despite the risk of ill feeling abroad. The five-year anti-resale penalty would require tax officials to determine who had exceptional and genuine reasons for selling early – divorce, illness, business collapse – and those who were pulling the wool. Naturally, they’re unkeen.
It’s understood submissions on the changes are overwhelmingly negative, and various groups are predicting a slew of downstream consequences, such as lay-offs in the architectural sector as big-spending overseas investors no longer commission lucrative work.
Some in the business community are sceptical about whether the Government can ramp up housing and infrastructure investment while denying beneficial ownership to prospective capital investors abroad. Howls of racial discrimination continue, including last week from the IMF – yet China and Australia, among many others, remain unembarrassed about their foreign-buyer restrictions.
This may all be moot. By the time the Notable Soils inspector clears Queenstown to unlock its rich alluvial potential, foreign investors will have lost interest.
The anti-resale penalty would require officials to determine who had good reasons for selling. Naturally, they’re unkeen.