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Q + A July 15 - Panel Discussions

Q+A, 9-10am Sundays on TV ONE.

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Q+A

Panel Discussions

HOSTED BY CORIN DANN

CORIN DANN
To our panel now. From Otago University, Dr Bryce Edwards, CTU President Helen Kelly, and former Reserve Bank governor and former National and ACT leader, Dr Don Brash. Good morning to all of you. If I could start with you, Dr Edwards. Housing is gaining some momentum. We can feel that from that discussion. Huge political risks in this and a lot of almost traditional nervousness from political parties.

DR BRYCE EDWARDS, Political Analyst
Yes, and political parties don’t like risk, and that’s one of the problems with this issue, because it’s really a classic case study in how public policy isn’t dealt well with by political parties, because this is a crisis in unaffordability in housing, yet no political parties campaign on it or research it or propose it – Labour, National, Greens, whoever. They’re interested in more sexier, short-term issues that they can make political points on, they can spout the sound bites. But when it comes to public housing, they’re not really interested in it.

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CORIN There will be people watching this programme, Dr Brash, who will say, ‘Oh, look, get a cheaper house on the outskirts of Auckland. People just wanna live in Grey Lynn. They want it all right now.’

DR DON BRASH, Former Reserve Bank governor
That’s not true. I recently saw a subdevelopment just out of Pukekohe - $249,000 for a 500sqm section. I mean, that’s a ridiculous price. That’s $4 million a hectare. I think the Productivity Commission report had a very good chart in it which compared the price of land just 2km inside the metropolitan urban limit in Auckland with the price 2km outside that limit and the multiple was nine times. It’s a question of supply of land.

CORIN So that argument, perhaps, from older New Zealanders who say, ‘Oh look, it’s just young people being greedy’ is not true.

DON Not true at all. It’s a supply of land problem.

CORIN Why isn’t there more angst coming through from people about this issue?

HELEN KELLY, CTU President

Well, I think there were a whole lot of issues that came out of that interview. One of them is it’s not just actually a supply of accommodation. For everyone where they say it’s unaffordable to have accommodation, there are families who are absolutely struggling in poor-quality housing. So the real story here is already there are people living in housing that is unsuitable. There are 4000 people on the Housing New Zealand waiting list, and you have to be right at the bottom of the heap to even get on to that waiting list. That should be dealt with immediately. There should be 4000 new houses built where those people are, putting them into decent accommodation.

CORIN So do you agree, because, I mean, the Productivity Commission comes from the right. It was an ACT Party partnership with the government. Do you agree that supply will fix this problem?

HELEN There were a number of things that need to fix the problem. There should be a capital gains tax. Why shouldn’t there be? Why should people be making free money out of housing, out of other forms of capital, without paying their fair share of tax? There’s lots of principled reasons but also good housing reasons for that. The state is a very good supplier of high-quality, low-cost housing. It should step up and do that, and it should do that with, instead of subsidising landlords, who are providing terrible housing, they should increase rights for tenants.

DON We know that Australia has a capital gains tax, and they have same problem exactly with housing that we do. So a capital gains tax doesn’t actually fix the problem. What we need is a bigger supply of residential land.

BRYCE What’s really interesting about this debate is that it’s a classic left versus right one where the solutions aren’t necessarily mutually exclusive. You can actually have the government intervening and producing low-cost quality housing, and you can have the supply issues dealt with, whereby greater land is freed up to reduce the price of land. That’s the funny thing. We’re arguing against each other, but we can have both.

CORIN Where’s the political leadership that sits down and says, ‘All right, let’s sort this out.’ We could get some agreement on this.

HELEN There’s no political leadership on this. John Key’s response, which you played in that clip, was, ‘It’s a great time for low-income people to be buying housing.’ Really? Has he talked to any low-income people recently? Actually, wages are too low, there isn’t a climate for developing good-quality housing that people can afford. His response is, ‘Let the market do it.’ The market is failing. This whole programme is a classic story of market failure.

CORIN So you say the government should step in and build, but you say leave it to the market to sort out.

DON The market is stopped from working. It’s local government which has stopped the market from working.

KELLY I don’t agree with that. You heard that there are only five companies in New Zealand that are building multiple housing-

DON And the Productivity Commission makes the point that they can’t get the economies of scale because they cannot get the land. It’s as simple as that.

KELLY Well, I don’t think that is the case.

DON Well, that’s what the Productivity Commission concluded.

KELLY Well, the Productivity Commission isn’t necessarily something that I would have agreed to set up in the way it was set up. I think there are a whole range of policy issues that need to be addressed, and they do include the tax settings, the incentives, the role of the state, a whole range of things, and wage levels.

CORIN There are some big problems here, because if we go down the road of more supply, and they free up more land in Auckland, or wherever, the rest of the country as well, there’s going to be problems with local government, because they’ll have to provide infrastructure. Where’s the money for that gonna come from?

BRYCE That’s right, and that’s why the coming reforms in local government could be quite important in this area, because I think there are supply issues that local government are having problems with, but it’s gonna be central government that has to ultimately tell local government or work with local government to make it happen. I think it’s gonna be social housing. It’s gonna be the state intervening and providing more state housing. Because at the moment we’ve got about the same amount of state housing as we had in the early 1990s, yet demand has sky-rocketed. So that’s the answer in my opinion.

KELLY And why are we relying on local government to provide this very expensive infrastructure, given that local economies are so variable in terms of their wealth and their ability to do that? If we believe that infrastructure should be of a high quality - there should be decent sewerage, roads, water, whatever - maybe it’s time to look at who provides the infrastructure, and stop relying on local government to do that.

CORIN Don Brash, you must be heartened. It does seem that there is some momentum building around the supply side. Do you see problems, though, in opening up that land?

DON Well, I look at Auckland Council. They seem to be hell-bent on any kind of freeing up at all. You drive up the Northern Motorway. There’s no exit on that motorway between Oteha Valley Road and Silverdale, a distance of 14km. Now, that’s not good quality horticultural land; that’s clay.

CORIN But can we really expect Auckland to keep expanding as it is? It’s huge.

DON Hold on a second. If you look at the whole urbanised area in New Zealand, it makes up 0.7 of 1% of our land. 0.7%. It’s negligible. We’re one of the least densely populated countries in the world, and yet we have this very expensive land. It’s ridiculous.

BRYCE There’s something a bit false in this debate. Often it’s assumed that you can either have expanding suburbs or you can have denser housing. You can actually have both. You can have rules that local government allow denser housing in urban places like Auckland and free up those green field housing areas as well.

HELEN There’s also the issue that the cost of building houses here seems to be higher here than everywhere else, and the Productivity Commission alluded to the fact that there perhaps is a monopoly around the supply of building materials, which I think needs to be looked at. And I understand that’s adding a premium of around 20% on to the cost of building a decent house, and if that’s what’s happening-

CORIN But what can be done about that, Dr Brash?

DON Well, we don’t have import controls. There’s no reason that we can’t import cheaper building materials.

CORIN You can’t require private companies to charge less for building houses.

KELLY Well, you can regulate monopolies, if that’s what’s going on.

BRYCE Fletcher has a monopoly, let’s face it.

DON You can import any building material, including cement. You can import any building materials. There’s no reason we can’t import. Murray Sherwin made the point that at the moment 60% of the price of house in Auckland is land. That’s the core problem.


(in response to Harawira interview)

CORIN Do you think that, Dr Edwards, that the Maori Party have taken the right approach, not walking away yet, but certainly threatening?

BRYCE Oh, they’re stuck in the middle and they don’t know what to do. I don’t think anyone knows how this is gonna play out yet, but ultimately they will have to walk if John Key, the National government does go against the Tribunal’s ruling, especially if they pass legislation. Because then it’s not tenable.

CORIN Could they actually do that in this environment, do you think, pass the legislation on this one?

HELEN Well, they don’t need to. They’ve passed the legislation. They’re gonna ignore the Tribunal’s hearings by pushing ahead with selling the assets, and that’s why the Maori Party should walk, because actually they’ve already decided they’re selling the assets regardless of the Tribunal’s findings. Now, if the Tribunal finds, which I think they will, that Maori have an interest in water which they should be allowed to pursue, and National go ahead and sell the assets, that’s the thumbing the nose at the Tribunal. No new legislation needed at all.

CORIN The thing that confuses me is that the government maintains that they’re working with Maori on the issue. There’s the Land and Water Forum, there’s the Iwi Leaders Group. They were prepared for this, Dr Brash, but it still seems they’ve been caught out.

BRASH Yes, I think that they were surprised by the fact that the Maori Council took this action with the Tribunal as late as they did. I mean, why didn’t they take it a year ago or 18 months ago when the government quite clearly signalled its intention to go down the mixed ownership model? I mean, I think on this issue John Key is absolutely right. No section or group has an interest in owning the water. If Maori owned water in 1840, it’s long gone. It’s flowed to the sea. They don’t own the right to the rain.

CORIN They own the rights, though, potentially, in some cases to the allocation of that water, though, don’t they?

DON Well, I’m someone who has always supported Treaty settlements - the payment of compensation when property rights have been confiscated or expropriated in some ways, and I still believe that, no matter who’s had their property confiscated. But to claim that any one racial group owns the right to water in New Zealand I think is a nonsense.

BRYCE But aren’t you out of sync with other right-wingers in New Zealand who sort of say, ‘well there’s property rights here’, and you’re taking a collectivist approach, and a classic left-wing approach of nationalising everything.

HELEN And this isn’t just about property rights. This is about cultural rights as well, and the interests that Maori have in river, and river history is part of their culture, and you heard Hone say that. This actually shows who the power house is in Maoridom that the Maori Council have taken this. Now, the government has tried to create alternatives to the Maori Council through the creation of the Iwi Leaders Group. Now, that’s all backfired on them. The Maori Party could almost be called irrelevant in this debate. They’re in this government which is not having any impact. The Maori Council is the new story here. It’s interesting that everybody’s focusing on the Maori Party. The interests that are flexing their muscles and showing their power in this debate are Maoridom itself through their genuine representatives, the Maori Council.

BRYCE Generally the media and political science don’t really understand Maoridom and politics in Maoridom, but you’re precisely right. The Maori Council have asserted themselves in a way that no one was expecting, and that’s what’s made this very interesting. But in the end I still believe that the government will try and do a deal with the fresh water component of the Iwi Leadership Group, and that will actually be the way out for the Maori Party. There’ll be a deal done, they’ll get some shares given to them, and that will be the excuse for the Maori Party to stay in coalition.

CORIN Dr Brash, how does John Key navigate the waters now? Does he have to do what-

DON Well, he’s got a majority in parliament even if the Maori Party walk. Certainly a majority of only one, but if for some reason John Banks, for example, were convicted on the local government issue that he’s confronting, I mean, at that point, he goes to the country. And he would romp home on the issue of who owns the water.

HELEN It won’t be run on the issue of who owns the water. It’ll be run on the issue of asset sales. And for Maori it will be run on whether this constitutional body that was set up to try and resolve the issues between the Crown and Maori over their rights in this country, whether they’re gonna be completely ignored or not. We’ve got the referendum coming up. People are queueing up to sign it.

BRYCE But nonetheless I think Don’s right that John Key is in sync with mainstream thinking on the ownership or rights to water.

CORIN But the asset sales confuses it, though, doesn’t it. It makes it a little bit murky. I mean, how much is a risk- What is the political risk if John Key decides, ‘I’m gonna have to delay this sale.’ I mean, what’s the risk? That’s his flagship programme in tatters.

BRYCE Well, I think it’s already in tatters a wee bit, and the finances weren’t really stacking up, so it could be the out he needs, actually.

CORIN That might be for some, but, Dr Brash, for your constituents in the business community, they would be very disappointed if they didn’t push on with this sale.

DON That’s absolutely right, but I don’t think that’s any reason to stop. I mean, he does proceed, if he has to legislate to override the Waitangi Tribunal and he goes to the country, he wins.

CORIN Where does that leave race relations, though, if we have another government legislating to overrule the Tribunal?

BRYCE It will be the foreshore and seabed all over again, perhaps bigger, I think. This issue’s not going away, and I think there will be momentum, combined with asset sales, absolutely.

DON Yeah, but, I mean, the reality is most New Zealanders want a country where every New Zealander is treated equally under the law where there are no distinctions based on race. A lot of people were angry about the government’s decision to sign the Declaration of the Rights of Indigenous People. Helen Clark refused to do that. She was right, I think, in that respect. This government agreed to sign it. I think people are getting fed up with the amount of racial bias-

HELEN People will celebrate if this action by the Maori Council stops the asset sales. And as Hone said, people are united against these asset sales. Maori have made it really clear the reason they’ve taken this action is because the water is about to be privatised. And if you ask New Zealanders, would you rather the Maori Council take a challenge around Maori having an interest in water or the water to be privatised through asset sales, I’ll tell you what they’ll back.

DON Are Maori likely to say you can’t have any wind farms because we own the air?

HELEN No, they’re not saying that.

DON But that’s the next stage.

HELEN No, what they’re saying is that the water that flows through those rivers is very important to them and they want their rights explored and they want a say in how that water is used. And every New Zealander feels very very close to those rivers.


(in response to Pamela Jones Harbour interview)

CORIN Dr Edwards, you’re pretty active on the internet with your newsletter and all that sort of thing. Do you worry about your privacy?

BRYCE Not a great deal. I think it’s a generational thing. I mean, even younger than myself, all the students that I teach at the university, they live their lives on Facebook and they have total trust in Apple, Google, Facebook. I mean, they seem to get by OK and there’s no big controversies, but a few years’ time, they will be burnt. Something will happen, with all the accumulation of data.

CORIN Well, this is interesting, and it comes down to employers and employees, because there’s the temptation for employers, presumably, to check up on employees via those sorts of mechanisms.

HELEN Well, there’s two things. One is there’s a growing number of people getting into trouble for stuff they’ve put on Facebook or views they’ve expressed in what they think is a personal forum, but actually is very hard to protect and employers have seen that and taken offence. We’ve actually seen the reverse with the dispute at the Port of Auckland where the Port used the internet to publish private material about one of their employees in the most ruthless way, really, through a very right-wing blogger in an attempt to damage him and the union. So very unaccountable what goes on on the internet. They obviously thought they could get away with that. Privacy Commission is investigating it. But our privacy laws, I think, have proved to be quite weak in that regard in terms of motive is not taken into account.

CORIN Well, Dr Brash, you had a first-hand experience, didn’t you, with some emails being hacked. Do you think that privacy is perhaps an issue that needs some attention from government?

DON Well, yes, I worry a bit about my credit card every time I use it on the internet, but then I worry about that when I go to an ATM and draw money out too. It’s not peculiar to the internet. I don’t worry too much when Amazon sends me an email saying, ‘You bought X and Y; how about buying A and B?’ That doesn’t fuss me too much, I must say. But criminal activity is a matter of concern, and I accept the point that Helen makes, that we don’t want employers using private information on Facebook, but then why put private information on Facebook? I don’t do it personally.

CORIN Well, this is the thing. Is this a case where a whole generation is gonna need to get burned before there is a change?

BRYCE I think that’s what’s gonna happen. At the moment it seems very benign, that there’s no problem with putting your whole life on the internet, but one day there will be.

CORIN Does that, though- There’s a law of diminishing returns here, that people become less fussed about what’s on the internet, you know, that if you put your private parties up there it’s not a big deal.

BRYCE OK, I guess, if everyone does it, maybe there’s gonna be a level playing field and everyone will be burnt equally.

CORIN The privacy laws are being looked at in New Zealand. Do we need to beef up the Privacy Commissioner? I know that she’s talked about having too many media enquiries, and of course then we’ve got the government issues of ACC and those sorts of data issues.

KELLY We need to have more remedies available to the Privacy Commission to directly enforce, in my view. At the moment they have to try and mediate, and then there’s a Tribunal. It’s quite an effort to get any sort of remedy to a privacy breach. And I think as things are growing on the internet and getting more and more privacy breaches are coming in, looking at some stronger jurisprudence and jurisdictions for them to take some penalty actions in their own right.

CORIN I mean, one of the recommendations from the select committee on this was a minister in charge of privacy. Would that be a potential area to go down, do you think?

BRYCE Yeah, I mean, political parties don’t have a lot to say about the internet and technologies at this stage, but they will need to. That’s what voters will be asking for, especially young voters.

CORIN So this is a sleeper issue, do you think, Dr Brash?

DON Yes. I think there are more important issues immediately, I must say. I mean, talking about water rights and railways and things of that sort. Yes, one of these days it’ll become-

CORIN Well, they are more important on a big sense, but on a day-to-day sense when you’re talking the numbers of people that use online. There’s this idea that when you go online you can’t possibly not be tracked now.

HELEN Well, it’s interesting, isn’t it, because there’s a lot of focus on consumer privacy on the internet, but there’s also rumours about business privacy on the internet - rumours about companies hacking in and getting company secretes and data and intellectual property. So it is a growing issue. A very narrow group of people understand the technology. That’s part of the problem, whether a minister would ever understand the technology. But certainly it’s a conversation people have to keep on having and keep on top of.

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