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Speech to Property Council Residential Development Summit
It is an absolute privilege to be National’s spokesperson for Housing, Infrastructure, Urban Development and RMA Reform.
I think New Zealand’s approach to housing has been one of the most profound public policy disasters of the last 30 years.
Our country’s collective failure to build enough houses has significantly impacted almost every aspect of New Zealand society – from homelessness, inequality, poverty, poor productivity, economic growth, and intergenerational mobility.
The results are in plain sight.
Despite being a country of only five million people with a land mass about the size of the United Kingdom, we have some of the least affordable housing in the developed world.
Over the last 20 years, New Zealand has experienced faster growth in real house prices than any other OECD country.
In recent years rents have strongly increased as well. Nationwide median rents have risen by $150 in the last five years. The regional picture is varied, but to give you an example from my own patch of Lower Hutt – rents are up $225 per week since October 2017.
Rent increases have put massive pressure on many households and are a big contributor to our cost of living crisis.
The social housing waitlist has utterly exploded under Labour.
In the last five years the waitlist has gone from around 5,000 people to over 23,000 people. That’s 23,000 people who are in severe and urgent need of housing, who currently don’t have a house.
People now wait much longer for a social house too.
When National left office, someone who was classified as A20 on the waitlist (the highest need) waited about 45 days for a state home.
In June last year, they were waiting 421 days. That’s well over a year.
And then we get to the human catastrophe that is emergency housing.
Emergency housing started as a short-term measure. It was designed to put a roof over a family’s head for a few nights before they moved into permanent housing.
But it has turned into a permanent part of New Zealand’s housing mix and an institutionalised part of the government bureaucracy.
Emergency housing is a social and economic disaster.
About 3000 families live in motels. 3000 of them are kids.
The average length of stay in a motel used to be around 3 weeks.
It’s now 21 weeks.
So people are, on average, spending almost half a year living in a motel.
The New Zealand Government currently spends about a million dollars per day housing people in motels. Phil Twyford used to say it was a sign of failure when we spent $90,000 per day on motel accommodation.
Let that sink in. $1 million per day.
Since 2017 the Government has spent over $1.2 billion.
It’s great for motel owners. It’s terrible for the Government and even worse for the people who actually live in the motels.
Like in so many areas, Labour have talked a big game, but utterly failed to deliver.
First in Opposition they blamed people with Chinese-sounding names.
Then they came up with the hoax that was KiwiBuild, which has so far delivered just 1.6 per cent of the promised 100,000 houses.
Then they launched a war on landlords by removing interest as a legitimate expense for rental property owners and extending the bright-line test to 10 years. They were warned it would put pressure on rents and the social housing waitlist, but they did it anyway.
I am looking forward to sharing National’s ideas for fixing our housing crisis in the coming weeks and months. We are focused on the following.
First, freeing up land. The big driver of house price growth in recent decades is limited land supply. We are not a small country, but government fiat has artificially constrained where and how we can build.
We want competitive land markets in and around our cities and I’ll have more to say on that soon.
Second, infrastructure funding and financing to make sure insufficient infrastructure isn’t a barrier to new housing. We hear the calls of local government that housing density and housing growth has to come with the right infrastructure. There’s a role for central government here alongside Councils’ existing tools. And our transport planning system has to facilitate growth, not stop it.
Third, making sure communities share in the benefits of housing growth. The political economy in too many communities and too many councils is stacked against growth.
My very clear message is that housing growth is good. It means fewer kids in motels, more people in warm and dry homes, more young people getting into a first home, reduced government expenditure on housing subsidies, and a more productive economy.
There’s a role for central government to help change the calculus from ambivalence bordering on outright hostility, to enthusiasm for more growth. Watch this space.
Fourth, making resource consents cheaper and faster.
I am deeply sceptical that Labour’s current RMA reforms are going to make it easier to get a consent for a house and actually get it built. The reforms are falling apart and about the only person who likes them are David Parker and Tony Randerson KC.
Fifth, we need a more competitive building materials market. Why is it so hard to get building materials that are authorised for use in countries with similar environments and standards, like Canada and the European Union, available in New Zealand?
My colleague Tim van de Molen, our spokesperson for Building and Construction, is working hard on this area, alongside our Building Consent system. To say it is broken would be kind. We need urgent reform.
Sixth, we will be stopping Labour’s war on landlords and improving the rental market.
We’ve already announced we will bring back interest deductibility for rental properties and restore the brightline test back to two years.
Mum and Dad landlords aren’t the enemy. They’re an important part of our housing market and the sooner the Government stops demonising them, the better.
I’m also a big supporter of Build-to-Rent developments, a new form of rental housing in New Zealand. These developments are common overseas but rare in New Zealand.
Typically they consist of multi-unit residential developments within walking distance to key transport links. The developments are professionally managed, with great amenities and offer residents a variety of lifestyle options as well as unique security of tenure to tenants.
The Government finally moved last year to reintroduce interest deductibility for Build-to-Rent developments, which I note in passing it hilariously described as a “tax break” even though it is in fact standard tax treatment.
Today I am announcing that if we are elected on October 14 we will quickly move to implement the other changes required to unlock Build-to-Rent in New Zealand.
These changes are contained in the Member’s Bill currently in my name, the Boost Build to Rent Housing Bill.
The first major change is to the Overseas Investment Act. This will give greater certainty for institutional investors to invest in New Zealand’s Build-to-Rent market. We need both domestic and international capital to help us house kiwis.
It is nuts that retirement homes and student accommodation have an easier ride through the Overseas Investment Act than Build-to-Rent developments. We will make sure they are treated the same.
The second change relates to the tax treatment of a completed Build-to-Rent development.
Currently a completed Build-to-Rent development is treated for tax purposes as a residential building, and so falls outside the depreciation deductions available to all commercial buildings that were reintroduced in 2021. Our change will ensure that Build-to-Rent developments are eligible for depreciation deductions.
I understand from Property Council members that, conservatively, a minimum of 25,000 additional Build-to-Rent homes could be built in the next 10 years if the Government settings were right. That’s a lot of kiwis with warm, quality, professionally managed roofs over their heads. And it would make a substantive difference to solving our housing crisis.
Thank you for inviting me here today and I look forward to your questions. In the coming weeks and months I look forward to outlining National’s housing policies for the election. We’ve got a lot of work to do!