Q+A Housing Debate: Amy Adams and Phil Twyford

Labour’s Phil Twyford told TVNZ 1’s Q+A programme that after the Pre-Election Economic and Fiscal Update (PREFU), Labour’s modelling for KiwiBuild is accurate.

‘So, we’ve gone back and looked into the modelling for KiwiBuild. We’re putting in $2 billion to kick-start a programme of capital recycling over 10 years that will deliver at the end of it 100,000 homes. We did the original modelling less than 12 months ago. We believe that the $2 billion will be enough, but, look, it’s a 10-year programme.’

AMY That’s not what Grant Robertson said.

PHIL It’s a 10-year programme. If things change within that 10 years, we will put more money in, because we’ve made this an absolute rock-solid

National’s Amy Adams conceded saving a deposit for a house is difficult but defended National’s record on housing.

‘Well, certainly getting that deposit together is really tricky, and we’ve quadrupled the support for first-home buyers to get into their first home.’

Phil Twyford told Jessica Mutch, ‘Amy’s putting on a very fine gloss on what has become in this country a housing basket case. We have the lowest rates of home ownership now since 1951. It’s virtually impossible for a young family to get a 20% deposit together for the median house in Auckland. People can’t save $150,000 or $200,000. It’s impossible. The dream of home ownership is dead, Amy.’

Amy Adams told Q+A, ‘those home ownership rates have actually been dropping steadily since the 1980s, and that’s a global phenomenon.’

‘I think we do have to have a well-functioning housing market and the best thing that will drive down prices – and we’ve seen it happen down in Christchurch, we’re seeing it happen now in Auckland – is increasing land supply. But, yes, the government is absolutely committed to building affordable houses.’

Q + A
Episode 1725
AMY ADAMS AND PHIL TWYFORD
Interviewed by JESSICA MUTCH

JESSICA I want to start off with some quick-fire questions first. We’ll start with you, Amy Adams. Do you own your own home, and where is that home?

AMY My husband and I bought our first house, it was just a little flat, just before we were married, so, what, 20 years ago.

JESSICA And do you own more than one home?

AMY Through our trust, I’ve got a place where I stay when I’m in Wellington, and we’re lucky enough to have a small holiday home.

JESSICA Mm. Same questions for you, Phil – do you own your own home?

PHIL I share it with my wife and the bank.

JESSICA And how old were you when you purchased that home?

PHIL I was 27.

JESSICA Do you own more than one home?

PHIL I do not.

JESSICA Right. Now that we’ve got those questions, I want to ask you what you think is an affordable home?

AMY Mm. Well, obviously, it varies for people, depending on the time and circumstance, how much they want to commit to their house, but what we know is that, you know, rough rule of thumb that the OECD look at is around 35% of your income going to housing costs tends to be what people regard as a bit of a bright line, but look, there are people who are spending a lot more than that, and that’s by choice. But, you know, that’s not a bad indicator of how much of your income could be set aside for housing costs.

JESSICA What’s affordable, Phil Twyford?

PHIL If the housing market was working properly, then the typical house would be about three to four times the typical household income. In Auckland now it’s about ten times that. So it’s three times less affordable than it was when my wife and I bought our first home in the late 1980s. So we have some of the most unaffordable housing in the western world.

AMY But we have to remember that price is certainly important, because getting that deposit together is hard work, absolutely. But, actually, the interest rates and the ability to service that mortgage plays a bigger part, and what we’ve seen obviously over recent years is that interest rates have been at very low levels. I remember when my mother bought her first house as a single mum, and interest rates were up around 19%, 20%. So price is important absolutely, but when you look at more house affordability, it is the ability to service that mortgage, and that’s where interest rates are an incredibly important part.

JESSICA But it is ten times the median income at the moment. It is impossible for a lot of people.

AMY Well, certainly getting that deposit together is really tricky, and we’ve quadrupled the support for first-home buyers to get into their first home. So we’ve seen that go from less than 150 million when we took office to now $730 million a year going in to support first-home buyers with that deposit. Because once you’re in there, as I said, it’s really interest rates that dictate affordability, and that’s why we’re so focused on keeping the economy strong, New Zealand having a very good credit rating, because that does drive down interest rates and makes the servicing of that mortgage much easier.

PHIL Amy’s putting on a very fine gloss on what has become in this country a housing basket case. We have the lowest rates of home ownership now since 1951. It’s virtually impossible for a young family to get a 20% deposit together for the median house in Auckland. People can’t save $150,000 or $200,000. It’s impossible. The dream of home ownership is dead, Amy under your Government.

AMY And that’s why we made those changes to KiwiSaver and HomeStart. And now what we’ve got is first-home buyers accessing $730 million, both from accessing the KiwiSaver account since we changed the rules and our HomeStart grants.

JESSICA So will you offer help for those first-home buyers? Because at the moment, even with that support, and some would say around the margins, it’s still hard to get into a first home.

AMY Yeah, but interestingly enough, we’ve got now the highest proportion of home buyers being first-home buyers we’ve had since 2008. Both the number–

JESSICA But it’s an all-time low of home ownership in New Zealand at the moment.

AMY And that’s interesting. So, if we have a look at that, those home ownership rates have actually been dropping steadily since the 1980s, and that’s a global phenomenon.

JESSICA So are you satisfied with that, that that’s just what we have to put up with?

AMY No. We want New Zealanders to own their own home, but I think we have to put it in the context that home ownership rates have been on a slow decline globally since the 1980s, so it is a different market. What we’ve said is we’ve put a huge amount of money, we’ve quadrupled the assistance going to first-home buyers, and it’s working, because we now have the highest proportion of first-home buyers since we took office.

JESSICA So, going back to my first question, what do you consider is an affordable home in Auckland?

AMY Well, look, Auckland is a very difficult market. We’ve said anything up to $650,000 is able to access that KiwiSaver assistance. But what we’re seeing actually is houses selling $400,000, $450,000, $500,000. I do think that’s a stretch.

JESSICA But where?

AMY Hobsonville’s a great example.

JESSICA So those are for apartments and townhouses, one bedroom?

AMY No, they’re two bedrooms, three bedrooms. I saw a two-bedroom home that sold for $400,000. I saw a two-and-a-half bedroom that sold for $480,000. We’ve done the Weymouth development where 250 homes were affordable homes. So we are absolutely doing that. But let’s be honest – the best way to drive affordability of home ownership is to improve the market, improve supply–

JESSICA On that, I want to go to Vote Compass now, because we have been looking at that over the last week or so, and we’ve had some responses to that. So this was a statement that we put together to people. ‘The government should build affordable housing for Kiwis to buy.’ 41% strongly agreed with that, 34% somewhat agreed, 13% were neutral, 9% somewhat disagree and 3% strongly disagree. Now, that’s based on nearly 63,000 people who filled in that Vote Compass survey. Now, I’ll start with Amy, and then I’ll come to you, Phil. In terms of those numbers, 75% of people who answered that question say they either agree or strongly disagree that the government should be building houses. Do you think that the market can take care of itself? And then I’ll come to you, Phil.

AMY I think it’s a combination. I think we do have to have a well-functioning housing market and the best thing that will drive down prices – and we’ve seen it happen down in Christchurch, we’re seeing it happen now in Auckland – is increasing land supply. But, yes, the government is absolutely committed to building affordable houses. And of the 5% of residential that we own, 20% of them will be affordable.

JESSICA Phil, in terms of that, it’s not working at the moment, is it?

PHIL Jess, it’s great to see from your numbers that the public overwhelmingly support Labour’s policy, which is to build large numbers of affordable homes and sell them to first-home buyers. In the current market, very few homes are actually affordable. Few of them – 5% of the new builds – are actually affordable. People can’t afford the million or $2 million four-bedroom, two-bathroom homes that the market is currently delivering, and Amy’s government refuses to actually roll up their sleeves and build houses. They talk about subsidies for first-home buyers. In a supply-constrained market, that’s actually making the situation worse, because it’s driving up demand.

JESSICA So, give us some numbers. What is Labour promising with affordable housing, how many and by when?

PHIL We will build 100,000 affordable homes over 10 years; half of them in Auckland. In Auckland, we can build standalone homes for under $600,000 and medium-density homes.

JESSICA Your numbers, Amy Adams. What are your numbers?

PHIL Hang on. Hang on – medium-density homes, which will be new homes in Auckland for under $500,000.

JESSICA Okay. Amy Adams, your numbers.

AMY Well, first of all, Labour have already had to admit that they have no idea what this will cost. They have no idea what the labour is–

PHIL Amy, that’s simply not true.

AMY Because, actually, Labour are pulling numbers out of thin air, they’re not costed, have no land.

JESSICA So what are your numbers?

PHIL That is incorrect, Amy. You’re making it up.

AMY They don’t know what it will cost. Our plan is fully costed. We know where the sites are – 34,000 houses across Auckland alone.

PHIL How many affordable?

AMY Across the Auckland build, 20% of those social houses, because this government is committed to building twice the number of social houses that Labour are prepared to commit to. 20% affordable and the rest market. But what I’ve said is actually our view is that the most important thing government can do – absolutely we’ll play our part on our land. The most important thing we can do is increase land supply, provide for the infrastructure–

JESSICA Right. Okay.

PHIL She won’t build affordable homes. She promised 4000 affordable homes in 10 years. That’s pathetic.

AMY Ours will be built, Phil.

JESSICA All right. I’ll ask–

PHIL We need affordable homes.

JESSICA Phil, I want to pick up on a point that Amy Adams was just saying. With Kiwibuild, you said you were going to pump $2 billion into that. Now that the pre-election books have opened up, will more money go into that?

PHIL So, we’ve gone back and looked into the modelling for Kiwibuild. We’re putting in $2 billion to kick-start a programme of capital recycling over 10 years that will deliver at the end of it 100,000 homes. We did the original modelling less than 12 months ago. We believe that the $2 billion will be enough, but, look, it’s a 10-year programme.

AMY That’s not what Grant Robertson said.

PHIL It’s a 10-year programme. If things change within that 10 years, we will put more money in, because we’ve made this an absolute rock-solid promise – we will deliver 100,000 affordable homes for young families.

JESSICA All right. Amy Adams, do you think that prices need to come down?

AMY They can’t say where they’re going. They can’t say what it’ll cost. On Phil’s numbers, they would have to be building and selling a house every four months over 10 years at frankly ridiculous levels. It’s just not a believable plan.

PHIL Amy, you used to be ambitious for New Zealand. (CHUCKLES)

JESSICA Do you think–? Hold on. Hold on.

AMY It’s easy to name a number, but actually it doesn’t make sense. Our 34,000 are costed, identified, scoped. We know we can build them. Our plans are robust.

PHIL And hardly any of them are affordable.

JESSICA Do house prices need to come down?

AMY Well, I think you’re already seeing that. So, in Auckland, we’re already seeing over the last few quarters–

JESSICA But more, because that’s only around the margins into what?

AMY Well, what you’re seeing, I think, is as we improve land supply, as we improve infrastructure, as you improve that supply and demand in a functioning market,…

JESSICA What’s the number?

AMY …you will see house prices absolutely flatten and it will come off some of the peak.

JESSICA How much?

AMY Well, look, ‘how much’ is a difficult question to assess. What I’m saying is that the way to address housing affordability is to increase the number of houses. We are now on track to see over 100,000 houses built over the next three years. That will make a huge difference.

JESSICA Phil, I’m going to ask you the same question very quickly. How much do house prices need to come down?

PHIL We’re going to squeeze the speculation out of the market, and we’re going to house a quarter of a million young Kiwis in affordable first homes.

JESSICA All right. We’ll have to leave it there for the moment, but we’ll be back after the break with even more on housing. Thank you.

JESSICA Welcome back to our debate on housing. Now, Phil Twyford, I’ll start off with a question for you this time. What do you say to people who just can’t afford to save up for the deposit for their first home? Can you give them hope?

PHIL I say help is on the way, because if New Zealand elects a Labour-led government next month, they are going to get a government that will tackle the root causes of the housing crisis, not this endless tinkering around on the edges with inconsequential little schemes, subsidising this and that. We’re going to crack down on property speculators. We’re going to get the government back into the business of building large numbers of affordable homes for first-home buyers like governments used to in this country. And we’re going to genuinely reform the planning rules so that our cities can make room for growth and not have these ridiculous land prices that are the root of the problem. We’re going to stop the sell-off of state houses, and we’re going to fix the rental laws to give renters a better deal.

JESSICA All right. We’ll talk about that side of it a bit later. Amy Adams, in terms of hope, for the people sitting at home saying, ‘I haven’t been able to buy a home,’ can you give them new hope in the next term?

AMY Look, I think we absolutely can, because we talk about reforming the planning laws. Actually, Labour have voted against every single one of those initiatives. What we’re seeing now is…

PHIL It’s not true, Amy.

AMY …the changes we’ve made to improve the RMA, to improve the Auckland plan, to make councils provide for a lot more future growth than they ever have, to fund the infrastructure that sits underneath the houses.

PHIL But you haven’t done that.

AMY We’re now seeing 100,000 houses being planned over the next three years. We’re now seeing the highest proportion of first-home buyers coming into the market than we’ve seen for a long time. We’re seeing the support for first-home buyers tripling or quadrupling, in fact. And, actually, if you look what’s happening in Christchurch, we’re a few years ahead, because post-earthquake, we freed up a large amount of land supply. We’re seeing absolutely how that pays off. Prices are coming down. Buyers are coming into the market easily. In fact, there’s some talk now of a housing glut. We’re seeing rental prices come down. So we know that these things work. What we’ve needed to do in Auckland, obviously, is deliver the unitary plan, which Labour voted against; change the planning laws, which Labour voted against.

JESSICA You’ve had nine years to do that.

AMY That’s absolutely right. And delivering the Auckland unitary plan – in fact, when I was Environment Minister, I put the legislation before the House to do that. That was a three- to four-year process. That has now been delivered. And that is now allowing us to get large scale, more building into the Auckland market that we haven’t seen for many, many years.

JESSICA Too slow, Phil Twyford?

PHIL They’ve had nine years. They’ve just tinkered around the edges. The housing crisis has got worse every year. They won’t even acknowledge that there’s a crisis. The legacy of National’s nine years in government is that they’re spending $140,000 a day putting people up in motels. Now, that is not a housing policy; that’s an admission of failure.

JESSICA I want to talk about that later. We have known about the shortage of housing supply, though, for 12 years. That started under the Labour government.

PHIL Actually, Jess, it didn’t. The current shortfall of homes in Auckland, which people estimate is 40,000-plus, built up entirely while National’s been in government.

AMY That’s simply not true.

PHIL And it’s getting worse at the moment by 7000 a year.

AMY We saw a plummeting of the number of consents in Auckland.

PHIL Amy’s own officials will advise her that the deficit of houses that Auckland has won’t be eliminated until after 2030. It’s getting worse. It’s not getting better. And there are no affordable homes being built.

AMY I’m afraid it’s simply not true. Phil can, you know, shout it as much as he likes, but the reality is the number of consents in Auckland fell steeply under the last years of Labour. And under us, they have been increasing. We have fixed the Auckland plan through our new planning process. We’ve changed the RMA. We’ve created an urban planning national policy statement. We’ve brought large numbers of extra people into the construction sector.
JESSICA But some people will be sitting at home screaming at the TV at the moment, ‘But it’s not working.’

AMY Look, I absolutely get that. There is real pressure at the moment, and we understand that these things take time to come to fruition. But what I would say to them is that we see 100,000 new houses coming over the next three years. There is a quadrupling, in fact, of support for first-home buyers, more and more first-home buyers coming to the market.

PHIL Hardly any in Auckland.

JESSICA All right.

AMY Freeing up land supply is the best thing we could do for housing, and it is working. It does take time, but it is working.

JESSICA One thing you’ve talked about over the weekend, Phil Twyford, is bonding - paying teachers, we do that already, more if they’re living in Auckland. Do you think we should be doing that for other public services – fire, police, for example?

PHIL This is the ultimate in short-termism. It’s typical of this National government’s approach to the housing crisis. They want to pay young teachers an extra $10,000 to get them, because otherwise schools can’t recruit teachers in Auckland. How about building some affordable houses? How about taxing speculators? How about really fixing the planning rules by getting rid of the urban growth boundary? We have to fix the fundamentals that have caused this problem and stop tinkering around on the edges with subsidies here. It’s not working. They’ve had nine years, and Auckland is a housing basket case.

JESSICA Amy, would you consider extending the bonding scheme?

AMY Well, look, what we want to is absolutely fix the fundamentals of the housing system.

PHIL You clearly don’t.

AMY And that is about land supply. It is about infrastructure. Even Phil Twyford’s own mate says actually, the urban growth boundary is not the issue if you don’t fix infrastructure.

JESSICA So would you consider extending the scheme?

AMY Well, no, so what I’m here to talk about is what we’re going to do in housing. So we are going to put $1.6 billion into building the infrastructure needed for housing. We’re amending the planning laws, because land supply is the single biggest thing that would bring more houses to market.
PHIL You’ve had nine years.

AMY And bringing more houses to market is what will ultimately make houses more affordable. Look, it’s not unusual that we pay people to go to hard-to-staff areas. We’ve been doing it in rural New Zealand. We’ve been doing it in sectors around the country that are hard to staff. What we need to do, though, is get the Auckland housing market working well. And I think actually what we’ve seen over our time in government is that we’ve put in place those steps that now show 100,000 houses coming over three years. That’s because of the things we’ve done.

JESSICA All right. But one of the things we’ve seen as an example that it’s not working well is in social housing, in terms of buying motels to temporarily house people. Surely, this is a sign that the system isn’t working.

AMY No, I think what it’s a sign off is we’ve always had rough sleepers. We’ve always had people waiting to get on to the social housing register. Those stats haven’t changed significantly. What we’ve seen differently is that this National government isn’t prepared to say, ‘Continue sleeping in your car.’ While you’re waiting to get into a social house - and that’s not a new phenomenon – we are stepping up and saying we will put you into short-term housing. Now, you can talk about motels. Actually, they’re 57 places out of 1600. So most of the houses we’re providing are houses. They’re purpose-built units. A few, yes, we have bought accommodation blocks where that makes sense. But actually, I think it’s a good thing that we’re saying while you’re in short-term need, we will look after you. We won’t see you sleeping in cars. We don’t want to see homeless. We’ll address it.

JESSICA Do you agree that it’s a good thing, Phil Twyford?

PHIL It’s an admission of total failure. There are 41,000 people who are homeless, according to the government’s own definition of homelessness. There are families living in cars and garages. And since National’s been in office, they’ve reduced the number of state houses by 5000.

AMY That’s not true, Phil. You know that’s not true.

PHIL When you take into account social housing provided by community housing providers, there are 3000 fewer places than there were when Amy took office.

AMY Also not true. You’re making things up. It’s outrageous.

PHIL Last year they built 795 state houses. They sold off 925. Now, if the government hadn’t taken $1.8 billion out of Housing New Zealand in taxes, in dividends, in interest payments, if they had invested that in building more state houses, there’d be 5000 extra state houses.

JESSICA All right.

AMY Let’s address that. Because actually, those numbers are simply wrong. We now have 2100 more people getting income-related rent subsidies than when we took office. We are growing state housing at the rate of 2000 state houses a year.

PHIL No, you’re promising to do that. You haven’t done that.

AMY Labour is only committing to 1000 a year. We are growing the supply of social houses. And we are now for the first time ever addressing those true rough sleepers. We’ve supported programmes like Housing First that are addressing homelessness for people who have been on the streets for 20, 30 years. This is a long-term problem for New Zealand. And the figure of 40,000 is simply not right. The most recent figure that that talks about rough sleepers, people in the parks, people in cars, is around 4000. Now, except that’s from the last census, it might be slightly wrong.

JESSICA And those numbers we’ve talked about before. There is a difference in your definition.

PHIL So if someone’s sleeping in a car, are they homeless, Amy? If they’re sleeping in a car?

AMY We have said the number of people who are rough sleepers is around 4200 based on the best figures we have. You keep throwing this number out. You know it’s wrong. You know it’s wrong, 41,000.

JESSICA All right. I want to move on now. I want to put another number to you. According to MSD, Maori make up 44% of those waiting for a state home out of the 5353 individuals who are on that list.

AMY No, no, 5353 families.

JESSICA Families, I beg your pardon, who are on that list.

AMY Mm.

JESSICA Is that good enough?

AMY Well, look, we don’t want to see anyone in need of a social house. And we don’t want to see anyone waiting for a social house. Of course, the proportion of Maori on that is too high compared to the population.

JESSICA Why is that?
AMY Well, look, there’s a number of very complex reasons, and that’s where the government’s social investment programme is working very hard to address some of the core drivers that not only affect social housing; it’s the same families that are popping up in truancy and educational underperformance in the justice system.

JESSICA All right. We’ll get your response to that as well, Phil.

PHIL This is a housing problem. There aren’t enough houses. It’s not complex, the fact that there are families living in cars and garages and campgrounds. It’s a lack of affordable housing. And you have failed to do that. You’ve reduced the number of state houses, Amy.

AMY That’s not true, Phil.

PHIL You’ve allowed the market to melt down. We have now the most expensive housing in the Western world, relative to incomes. That’s why people are living in uninsulated garages in the suburbs. People are living in tents in other people’s backyards.

JESSICA All right.

AMY Just to make one point. When Phil’s party were in Parliament, there was 3.5 people on the housing register per 10,000. It’s now 3.3. There is a lower number of people without housing under our government than was under Labour. They have no credibility on this base. It’s a fact.

JESSICA We are going to have to leave that there, but thank you very much, both, for joining me this morning. A very hot election issue. Thank you for your time.

AMY Thanks, Jess.

you can watch part 1 and part 2

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