I wouldn't normally respond to Mike Hosking's comments about Council and Local Government. But his column in NZ Herald this week is an insult even to his intelligence. There is a place for sarcasm and even cynicism in journalism, but there's no place for plain ignorance....so here's Mike's column with my corrections...
Here's my advice to Nick Smith. Roll them, roll right over the top of them.
The Auckland Council, in yet another display of its complete inability and ineptitude, has bought a fight with the Government over special housing sites by blocking three of them and holding the Government to ransom.
Correction: It's not holding the Government to ransom. It's ensuring the Government makes a contribution to the economic growth activity it wants in Auckland - in the same way it has supported growth in the dairy industry and earth-quake recovery in Christchurch.
In a week in which we have discovered the average sale price in Auckland is now $800,000, in a week the Government's bumped the affordable homes prices by about 50 grand a house, in a week in which Barfoot and Thompson tells us it has never sold so many homes, the last thing Nick Smith needs is a bunch of head-in-the-sanders telling him what they're putting up with and what they're not.
Correction: It's basic statistics that you don't use "average" as a measure of the centre of a distribution. Even Demographia is aware that you use "median". Hosking perpetuates the meaningless use of statistics - worse than lies. Sure the median house price in Auckland is high and increasing, and Auckland Council is clearly aware of this. Most of its Auckland Plan and much of the Unitary Plan address this problem.
I think we've worked our way through the whole "housing crisis" enough to understand most of it has nothing to do with the Government.
Correction: You do, do you. Now you're the one with your head in the sand. Haven't you read what Treasury is saying about the effect of Government policy settings on house prices?
Indirectly the Government is responsible for the conditions which exist, ie a strong economy, cheap money, booming migration ... but these are broad-based market conditions and in many respects we should be welcoming them.
Correction: I agree we should be welcoming them. Auckland Council has as its own GDP growth target for Auckland, year on year, as 5%. This might not be welcoming in so many words, but it is certainly supportive.
The bit that does have to do with the Government is supply.
Correction: Last time I looked this Government was not running a command economy a la Soviet Union - especially when it comes to housing. If anything, this Government is doing whatever it can to wash its hands of the need to supply more houses - especially social housing.
You want to slow prices rising? Build more homes. The more you build, the more supply there is, the more that supply soaks up demand. None of this is hard, unless you want to make it hard, which the council clearly does by blocking progress.
Correction: This shows a woeful understanding of the type of economics NZ runs with. The news is full of stories today about how there IS an oversupply of houses in China. The place is full of new empty homes. And the global commodity market is in decline because China doesn't need to build any more houses. That's over-supply. In a place like New Zealand, if Government isn't going to supply more homes, do you really think that NZ's construction market will deliberately build so many homes that they'll drive down their selling price? Talk about cutting your own throat.
Which is really where a lot of this trouble starts and stops.The council.
The council has been anti-growth. It doesn't want more land released. It doesn't want to build up or out.
Correction: This is bollocks. Council is highly pro-growth. 5% year on year GDP growth has been its agreed plan since amalgamation. It is a lie to say it doesn't want more land released. Perhaps I should rub Hosking's nose in the RUB.
It doesn't actually want to do much of anything and when the money is cheap and the population booms and the arrivals start asking where the houses are, your classic demand-supply equation unfolds before your eyes.
Correction: This ignores the fundamental driver of rising house prices: buying houses is the best way to save money and make a buck in Auckland. It's not "arrivals" - though they add to the pressure - it's home economics 101. Buy a house, rent it, do it up, buy another one, etc.
Those with the money buy what's available, those without, miss out.
Correction: Those who don't buy - rent. Just like they do in most other big cities.
The mere fact the Government has had to enter this debate tells you all you need to know about the council's inability to read the future and plan for it.
Correction: This is fanciful and dishonest. The Government is intervening in Auckland, for the same reason it has in dairy, mining and Christchurch. It wants to stimulate economic activity, it wants to keep unemployment down. In the short-term. That is its priority. Local Government obligations - for example Auckland Plan - 10 year plan - all required by legislation - are primarily about long term planning. There is a difference. And sometimes this leads to conflict.
It is a widely known fact that migrants stay where they land. The main point of entry to New Zealand is Auckland.
Correction: Widely known facts are like common sense: not that common.
It is widely known that as we've boomed and Australia has hit the wall, the migration movement has turned around.
It is widely known that as the economy has hit rock star status, money has become cheap and given inflation is low and staying low, money will remain cheap.
Note to the council ... it will most likely be even cheaper by the end of the year.
The Government's big picture problem is by entering this debate in the first place it has created the expectation it has the answers which, of course, it doesn't. Not unless it takes control of the council decision-making process over the availability of land, which it might have to.
The council's argument is infrastructural. What about the transport routes and what about all the issues that come with new houses and new people?
Correction: This skims over "Council's argument", and fails to do it justice. Council's responsibility is to ensure that newly subdivided land is fully serviced. This isn't just "transport routes". It's mainly sewage and water. That's expensive and fundamental for public health. It's also stormwater. If that's not properly planned for new subdivisions will flood next time there's a 1 in 100 storm and the insurance industry will go ballistic. And there's electricity and telecommunications. And new schools are needed, let alone community facilities like green areas and sports fields. This is all infrastructure. And it doesn't grow on trees.
The answer is rates. With new people comes new revenue and don't get me started on this council's ability to raise revenue.
This is the council run by the mayor who promised rate rises of no more than 2.5 per cent, until it became 3.5 per cent, which was a straight-out broken promise.
The irony of the 2.5 per cent promise was that Len Brown argued it was roughly in line with inflation, which, of course, it wasn't, given inflation is basically zero.
Then Len rolls in with his newly invented transport levy taking rate rises to 6.5 per cent.
So how about a bit of that money going towards the new infrastructure?
Correction: Next time you write something like this, Mike, please do us all a favour and do a a bit of basic research first. Then you might contribute to the debate rather than taking up space.
After all, you either want to grow your city or you don't.
Of course if you have followed my thinking on this in previous columns, all of this will eventually resolve itself.
There is no crisis, there is no bubble. Increased numbers of houses will come on to the market, interest rates will rise, migration will slow ... market forces will meld their way into their own natural solution.
This is the way it's always been in this country.
Do remember the oft quoted fact - in 45 years we've never actually had a housing crash.
Correction: This is manipulation, economy of the truth. In the crash of the 1930's many investors in housing lost everything they had. My grandfather and many like him lost all they had when house prices collapsed in Oamaru. That's where savings went then. In the crash of the 1980's - mum and dad investors who had put their savings into other savings schemes lost out big time. Now we have a situation like the 1930's where mum and dad savings are in housing. The wheel is turning.
The global financial crisis (GFC), at its worst point saw prices here fall 9 per cent.
Pre-GFC they had gone up close to 100 per cent; they fell 9 per cent when the world stopped. They've since regained all of that and a whole bunch more.
I have spent no time sweating this stuff, but for those who have and are ... let's deal with this with some common sense and professionalism. Holding a government to ransom the way the council is trying it on with Nick Smith is asking for more trouble than a local body will be able to cope with.
Correction: Of course you've spent no time sweating this stuff. You're far too well paid. If you were being professional you'd do a bit of research. Nick Smith has got himself into an ideological corner and he knows it. Many of his cabinet colleagues don't support him on this. You might try and force economic activity and housing production onto Auckland, but someone has to pay. And if investors won't pay for necessary infrastructure, and neither will the Government, why should the rest of Auckland and its Council subsidise them more than they already are?
Look what the Government did to Christchurch City Council post-earthquake.
Correction: They did to City Council, the same as they did to the regional council as few years before. Government got rid of institutions that stood in the way of its short-term fixes. The one because it was concerned about retaining rivers, the other - in part - because it raised questions about infrastructure costs and about retaining heritage. All long term concerns. Which have not gone away, and which weigh as heavily today.
If I were Nick Smith I'd be looking to shunt this lot sideways as well.
Correction: Yeah, right. Then we could have Mike and Nick running the show. We'd be up shit creek with a pair of paddlers - one with a PhD and one who can't be bothered reading.
Friday, May 8, 2015
On Hosking On Council & SHA's
I wouldn't normally respond to Mike Hosking's comments about Council and Local Government. But his column in NZ Herald this week is an insult even to his intelligence. There is a place for sarcasm and even cynicism in journalism, but there's no place for plain ignorance....so here's Mike's column with my corrections...
Here's my advice to Nick Smith. Roll them, roll right over the top of them.
The Auckland Council, in yet another display of its complete inability and ineptitude, has bought a fight with the Government over special housing sites by blocking three of them and holding the Government to ransom.
Correction: It's not holding the Government to ransom. It's ensuring the Government makes a contribution to the economic growth activity it wants in Auckland - in the same way it has supported growth in the dairy industry and earth-quake recovery in Christchurch.
In a week in which we have discovered the average sale price in Auckland is now $800,000, in a week the Government's bumped the affordable homes prices by about 50 grand a house, in a week in which Barfoot and Thompson tells us it has never sold so many homes, the last thing Nick Smith needs is a bunch of head-in-the-sanders telling him what they're putting up with and what they're not.
Correction: It's basic statistics that you don't use "average" as a measure of the centre of a distribution. Even Demographia is aware that you use "median". Hosking perpetuates the meaningless use of statistics - worse than lies. Sure the median house price in Auckland is high and increasing, and Auckland Council is clearly aware of this. Most of its Auckland Plan and much of the Unitary Plan address this problem.
I think we've worked our way through the whole "housing crisis" enough to understand most of it has nothing to do with the Government.
Correction: You do, do you. Now you're the one with your head in the sand. Haven't you read what Treasury is saying about the effect of Government policy settings on house prices?
Indirectly the Government is responsible for the conditions which exist, ie a strong economy, cheap money, booming migration ... but these are broad-based market conditions and in many respects we should be welcoming them.
Correction: I agree we should be welcoming them. Auckland Council has as its own GDP growth target for Auckland, year on year, as 5%. This might not be welcoming in so many words, but it is certainly supportive.
The bit that does have to do with the Government is supply.
Correction: Last time I looked this Government was not running a command economy a la Soviet Union - especially when it comes to housing. If anything, this Government is doing whatever it can to wash its hands of the need to supply more houses - especially social housing.
You want to slow prices rising? Build more homes. The more you build, the more supply there is, the more that supply soaks up demand. None of this is hard, unless you want to make it hard, which the council clearly does by blocking progress.
Correction: This shows a woeful understanding of the type of economics NZ runs with. The news is full of stories today about how there IS an oversupply of houses in China. The place is full of new empty homes. And the global commodity market is in decline because China doesn't need to build any more houses. That's over-supply. In a place like New Zealand, if Government isn't going to supply more homes, do you really think that NZ's construction market will deliberately build so many homes that they'll drive down their selling price? Talk about cutting your own throat.
Which is really where a lot of this trouble starts and stops.The council.
The council has been anti-growth. It doesn't want more land released. It doesn't want to build up or out.
Correction: This is bollocks. Council is highly pro-growth. 5% year on year GDP growth has been its agreed plan since amalgamation. It is a lie to say it doesn't want more land released. Perhaps I should rub Hosking's nose in the RUB.
It doesn't actually want to do much of anything and when the money is cheap and the population booms and the arrivals start asking where the houses are, your classic demand-supply equation unfolds before your eyes.
Correction: This ignores the fundamental driver of rising house prices: buying houses is the best way to save money and make a buck in Auckland. It's not "arrivals" - though they add to the pressure - it's home economics 101. Buy a house, rent it, do it up, buy another one, etc.
Those with the money buy what's available, those without, miss out.
Correction: Those who don't buy - rent. Just like they do in most other big cities.
The mere fact the Government has had to enter this debate tells you all you need to know about the council's inability to read the future and plan for it.
Correction: This is fanciful and dishonest. The Government is intervening in Auckland, for the same reason it has in dairy, mining and Christchurch. It wants to stimulate economic activity, it wants to keep unemployment down. In the short-term. That is its priority. Local Government obligations - for example Auckland Plan - 10 year plan - all required by legislation - are primarily about long term planning. There is a difference. And sometimes this leads to conflict.
It is a widely known fact that migrants stay where they land. The main point of entry to New Zealand is Auckland.
Correction: Widely known facts are like common sense: not that common.
It is widely known that as we've boomed and Australia has hit the wall, the migration movement has turned around.
It is widely known that as the economy has hit rock star status, money has become cheap and given inflation is low and staying low, money will remain cheap.
Note to the council ... it will most likely be even cheaper by the end of the year.
The Government's big picture problem is by entering this debate in the first place it has created the expectation it has the answers which, of course, it doesn't. Not unless it takes control of the council decision-making process over the availability of land, which it might have to.
The council's argument is infrastructural. What about the transport routes and what about all the issues that come with new houses and new people?
Correction: This skims over "Council's argument", and fails to do it justice. Council's responsibility is to ensure that newly subdivided land is fully serviced. This isn't just "transport routes". It's mainly sewage and water. That's expensive and fundamental for public health. It's also stormwater. If that's not properly planned for new subdivisions will flood next time there's a 1 in 100 storm and the insurance industry will go ballistic. And there's electricity and telecommunications. And new schools are needed, let alone community facilities like green areas and sports fields. This is all infrastructure. And it doesn't grow on trees.
The answer is rates. With new people comes new revenue and don't get me started on this council's ability to raise revenue.
This is the council run by the mayor who promised rate rises of no more than 2.5 per cent, until it became 3.5 per cent, which was a straight-out broken promise.
The irony of the 2.5 per cent promise was that Len Brown argued it was roughly in line with inflation, which, of course, it wasn't, given inflation is basically zero.
Then Len rolls in with his newly invented transport levy taking rate rises to 6.5 per cent.
So how about a bit of that money going towards the new infrastructure?
Correction: Next time you write something like this, Mike, please do us all a favour and do a a bit of basic research first. Then you might contribute to the debate rather than taking up space.
After all, you either want to grow your city or you don't.
Of course if you have followed my thinking on this in previous columns, all of this will eventually resolve itself.
There is no crisis, there is no bubble. Increased numbers of houses will come on to the market, interest rates will rise, migration will slow ... market forces will meld their way into their own natural solution.
This is the way it's always been in this country.
Do remember the oft quoted fact - in 45 years we've never actually had a housing crash.
Correction: This is manipulation, economy of the truth. In the crash of the 1930's many investors in housing lost everything they had. My grandfather and many like him lost all they had when house prices collapsed in Oamaru. That's where savings went then. In the crash of the 1980's - mum and dad investors who had put their savings into other savings schemes lost out big time. Now we have a situation like the 1930's where mum and dad savings are in housing. The wheel is turning.
The global financial crisis (GFC), at its worst point saw prices here fall 9 per cent.
Pre-GFC they had gone up close to 100 per cent; they fell 9 per cent when the world stopped. They've since regained all of that and a whole bunch more.
I have spent no time sweating this stuff, but for those who have and are ... let's deal with this with some common sense and professionalism. Holding a government to ransom the way the council is trying it on with Nick Smith is asking for more trouble than a local body will be able to cope with.
Correction: Of course you've spent no time sweating this stuff. You're far too well paid. If you were being professional you'd do a bit of research. Nick Smith has got himself into an ideological corner and he knows it. Many of his cabinet colleagues don't support him on this. You might try and force economic activity and housing production onto Auckland, but someone has to pay. And if investors won't pay for necessary infrastructure, and neither will the Government, why should the rest of Auckland and its Council subsidise them more than they already are?
Look what the Government did to Christchurch City Council post-earthquake.
Correction: They did to City Council, the same as they did to the regional council as few years before. Government got rid of institutions that stood in the way of its short-term fixes. The one because it was concerned about retaining rivers, the other - in part - because it raised questions about infrastructure costs and about retaining heritage. All long term concerns. Which have not gone away, and which weigh as heavily today.
If I were Nick Smith I'd be looking to shunt this lot sideways as well.
Correction: Yeah, right. Then we could have Mike and Nick running the show. We'd be up shit creek with a pair of paddlers - one with a PhD and one who can't be bothered reading.
Here's my advice to Nick Smith. Roll them, roll right over the top of them.
The Auckland Council, in yet another display of its complete inability and ineptitude, has bought a fight with the Government over special housing sites by blocking three of them and holding the Government to ransom.
Correction: It's not holding the Government to ransom. It's ensuring the Government makes a contribution to the economic growth activity it wants in Auckland - in the same way it has supported growth in the dairy industry and earth-quake recovery in Christchurch.
In a week in which we have discovered the average sale price in Auckland is now $800,000, in a week the Government's bumped the affordable homes prices by about 50 grand a house, in a week in which Barfoot and Thompson tells us it has never sold so many homes, the last thing Nick Smith needs is a bunch of head-in-the-sanders telling him what they're putting up with and what they're not.
Correction: It's basic statistics that you don't use "average" as a measure of the centre of a distribution. Even Demographia is aware that you use "median". Hosking perpetuates the meaningless use of statistics - worse than lies. Sure the median house price in Auckland is high and increasing, and Auckland Council is clearly aware of this. Most of its Auckland Plan and much of the Unitary Plan address this problem.
I think we've worked our way through the whole "housing crisis" enough to understand most of it has nothing to do with the Government.
Correction: You do, do you. Now you're the one with your head in the sand. Haven't you read what Treasury is saying about the effect of Government policy settings on house prices?
Indirectly the Government is responsible for the conditions which exist, ie a strong economy, cheap money, booming migration ... but these are broad-based market conditions and in many respects we should be welcoming them.
Correction: I agree we should be welcoming them. Auckland Council has as its own GDP growth target for Auckland, year on year, as 5%. This might not be welcoming in so many words, but it is certainly supportive.
The bit that does have to do with the Government is supply.
Correction: Last time I looked this Government was not running a command economy a la Soviet Union - especially when it comes to housing. If anything, this Government is doing whatever it can to wash its hands of the need to supply more houses - especially social housing.
You want to slow prices rising? Build more homes. The more you build, the more supply there is, the more that supply soaks up demand. None of this is hard, unless you want to make it hard, which the council clearly does by blocking progress.
Correction: This shows a woeful understanding of the type of economics NZ runs with. The news is full of stories today about how there IS an oversupply of houses in China. The place is full of new empty homes. And the global commodity market is in decline because China doesn't need to build any more houses. That's over-supply. In a place like New Zealand, if Government isn't going to supply more homes, do you really think that NZ's construction market will deliberately build so many homes that they'll drive down their selling price? Talk about cutting your own throat.
Which is really where a lot of this trouble starts and stops.The council.
The council has been anti-growth. It doesn't want more land released. It doesn't want to build up or out.
Correction: This is bollocks. Council is highly pro-growth. 5% year on year GDP growth has been its agreed plan since amalgamation. It is a lie to say it doesn't want more land released. Perhaps I should rub Hosking's nose in the RUB.
It doesn't actually want to do much of anything and when the money is cheap and the population booms and the arrivals start asking where the houses are, your classic demand-supply equation unfolds before your eyes.
Correction: This ignores the fundamental driver of rising house prices: buying houses is the best way to save money and make a buck in Auckland. It's not "arrivals" - though they add to the pressure - it's home economics 101. Buy a house, rent it, do it up, buy another one, etc.
Those with the money buy what's available, those without, miss out.
Correction: Those who don't buy - rent. Just like they do in most other big cities.
The mere fact the Government has had to enter this debate tells you all you need to know about the council's inability to read the future and plan for it.
Correction: This is fanciful and dishonest. The Government is intervening in Auckland, for the same reason it has in dairy, mining and Christchurch. It wants to stimulate economic activity, it wants to keep unemployment down. In the short-term. That is its priority. Local Government obligations - for example Auckland Plan - 10 year plan - all required by legislation - are primarily about long term planning. There is a difference. And sometimes this leads to conflict.
It is a widely known fact that migrants stay where they land. The main point of entry to New Zealand is Auckland.
Correction: Widely known facts are like common sense: not that common.
It is widely known that as we've boomed and Australia has hit the wall, the migration movement has turned around.
It is widely known that as the economy has hit rock star status, money has become cheap and given inflation is low and staying low, money will remain cheap.
Note to the council ... it will most likely be even cheaper by the end of the year.
The Government's big picture problem is by entering this debate in the first place it has created the expectation it has the answers which, of course, it doesn't. Not unless it takes control of the council decision-making process over the availability of land, which it might have to.
The council's argument is infrastructural. What about the transport routes and what about all the issues that come with new houses and new people?
Correction: This skims over "Council's argument", and fails to do it justice. Council's responsibility is to ensure that newly subdivided land is fully serviced. This isn't just "transport routes". It's mainly sewage and water. That's expensive and fundamental for public health. It's also stormwater. If that's not properly planned for new subdivisions will flood next time there's a 1 in 100 storm and the insurance industry will go ballistic. And there's electricity and telecommunications. And new schools are needed, let alone community facilities like green areas and sports fields. This is all infrastructure. And it doesn't grow on trees.
The answer is rates. With new people comes new revenue and don't get me started on this council's ability to raise revenue.
This is the council run by the mayor who promised rate rises of no more than 2.5 per cent, until it became 3.5 per cent, which was a straight-out broken promise.
The irony of the 2.5 per cent promise was that Len Brown argued it was roughly in line with inflation, which, of course, it wasn't, given inflation is basically zero.
Then Len rolls in with his newly invented transport levy taking rate rises to 6.5 per cent.
So how about a bit of that money going towards the new infrastructure?
Correction: Next time you write something like this, Mike, please do us all a favour and do a a bit of basic research first. Then you might contribute to the debate rather than taking up space.
After all, you either want to grow your city or you don't.
Of course if you have followed my thinking on this in previous columns, all of this will eventually resolve itself.
There is no crisis, there is no bubble. Increased numbers of houses will come on to the market, interest rates will rise, migration will slow ... market forces will meld their way into their own natural solution.
This is the way it's always been in this country.
Do remember the oft quoted fact - in 45 years we've never actually had a housing crash.
Correction: This is manipulation, economy of the truth. In the crash of the 1930's many investors in housing lost everything they had. My grandfather and many like him lost all they had when house prices collapsed in Oamaru. That's where savings went then. In the crash of the 1980's - mum and dad investors who had put their savings into other savings schemes lost out big time. Now we have a situation like the 1930's where mum and dad savings are in housing. The wheel is turning.
The global financial crisis (GFC), at its worst point saw prices here fall 9 per cent.
Pre-GFC they had gone up close to 100 per cent; they fell 9 per cent when the world stopped. They've since regained all of that and a whole bunch more.
I have spent no time sweating this stuff, but for those who have and are ... let's deal with this with some common sense and professionalism. Holding a government to ransom the way the council is trying it on with Nick Smith is asking for more trouble than a local body will be able to cope with.
Correction: Of course you've spent no time sweating this stuff. You're far too well paid. If you were being professional you'd do a bit of research. Nick Smith has got himself into an ideological corner and he knows it. Many of his cabinet colleagues don't support him on this. You might try and force economic activity and housing production onto Auckland, but someone has to pay. And if investors won't pay for necessary infrastructure, and neither will the Government, why should the rest of Auckland and its Council subsidise them more than they already are?
Look what the Government did to Christchurch City Council post-earthquake.
Correction: They did to City Council, the same as they did to the regional council as few years before. Government got rid of institutions that stood in the way of its short-term fixes. The one because it was concerned about retaining rivers, the other - in part - because it raised questions about infrastructure costs and about retaining heritage. All long term concerns. Which have not gone away, and which weigh as heavily today.
If I were Nick Smith I'd be looking to shunt this lot sideways as well.
Correction: Yeah, right. Then we could have Mike and Nick running the show. We'd be up shit creek with a pair of paddlers - one with a PhD and one who can't be bothered reading.
3 comments:
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I'd have abbreviated it to "Hosking, you're a Dick", but that might be belittling dicks, something that the male segment of the population lives in mortal fear of.
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May 8, 2015 at 5:51 PM
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There's so much more that could be said in response to Hosking's drivel, but this is a good start. Expect to see more of this odious crap creeping into the discourse courtesy of Lynton crosby or their local imitators.
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May 8, 2015 at 6:10 PM
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Hi Joel , Thanks for an excellent analysis of a patently fatuous article.
John
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May 8, 2015 at 10:17 PM
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3 comments:
I'd have abbreviated it to "Hosking, you're a Dick", but that might be belittling dicks, something that the male segment of the population lives in mortal fear of.
There's so much more that could be said in response to Hosking's drivel, but this is a good start. Expect to see more of this odious crap creeping into the discourse courtesy of Lynton crosby or their local imitators.
Hi Joel , Thanks for an excellent analysis of a patently fatuous article.
John
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