Low-paid workers miss out

The KiwiSaver scheme, a highlight of this week’s Budget, seems little better than a cynical PR ploy, the Alliance says. No-one will get a cent towards providing a house for themselves until at least 2010 from this scheme.

Alliance co-leader Jill Ovens says housing costs are one of the most pressing questions facing people on low incomes and Michael Cullen's Budget does little, if anything, to address this.

“It takes a worker on $11 an hour nearly 30 hours a week just to pay the rent for a three-bedroom house in South Auckland. That doesn’t leave much over to buy food and pay the power bills, let alone save for a deposit on a house.”

She says housing finance assistance for first home buyers is needed to help low-income people get out of the rent trap.

“The middle class is enriching itself by buying ‘renters’,” she says. “This pushes the price of houses out of the reach of young families and those on low incomes. They end up spending their life paying off someone else’s mortgage.”

She says there should be an immediate expansion of the no-deposit loan scheme, delivered through the Kiwi Bank, just as earlier generations benefited by housing loans delivered through State Advances.

The Alliance ( www.alliance.org.nz ) is promoting massive investment in State housing as a way of reducing the reliance of low-paid workers on the private rental market. Income-related rents mean those in State houses are much better off than those in private, unregulated rental housing. But here again, the Labour Government has taken an overly cautious approach.

“The Budget provides for a mere 325 new State houses each year over the next four years. This will cost $131 million, compared with $410 million extra spending on defence.”

Capital gains taxes, especially on housing speculators, should also be introduced, the Alliance says. These taxes are already long established in countries like the United States. In the United Kingdom, capital gains tax is payable after one house sale a year.

The Alliance says capital gains from share-market investment and commercial property should also be taxed. Death duties should also be reinstated.

“This would then truly be a “fair, responsible, inclusive” budget,” Ms Ovens says. The central thrust of the Budget is the Labour-Progressive Government’s determination to be business friendly, she says.

“Apart from much needed extra Health funding of $4.09 billion over the next four years, business tax relief of $1.4 billion is the most costly new initiative announced by Cullen. In contrast, tertiary students receive a derisory $57 million in increased support over the same period.”

Infrastructure development is mainly confined to spending on roads, and even that is limited, Ms Ovens says.

“Many vital roading projects, like the much needed upgrade of State Highway One in the Auckland and Wellington regions, are more than a decade away. Business interests are predictably calling for private/public partnerships and toll roads to speed up construction.”

The Alliance says the Government could do the job better and at a lower cost by judicious borrowing to finance roads and other infrastructure development.

“The suburban and national rail networks also need multi-million modernisation programmes. Government should finance this as well,” Ms Ovens says.

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