Opinion: KiwiBuild risks embedding wealth and housing inequalities

6:26 am on 5 July 2018

By Jessica Berentson-Shaw*

Opinion - Many of us dream of truly affordable, warm, dry houses. A place to be comfortable in winter (without wearing three jerseys and a hat), that costs little to heat, and leaves enough after paying rent or the mortgage to have real choices.

Construction starts on the Kiwibuild project

Construction starting on the KiwiBuild project. Photo: RNZ/ Sophia Duckor-Jones

We are dreaming of a home. Yet it has become a nice luxury to have - a privilege for some only. Everyone else just gets shelter.

New Zealanders know this to be wrong, deep in our bones.

We know the places families - the elderly, newborns, and young people in education - carry out their lives, should be joyful places, welcoming, warm and healthy. Even our Building Act reflects these shared values.

However, our homes have become a money-making scheme for the wealthy, unaffordable, unattainable, run down, and the source of ill health for babies and children.

There is no simple reason for this, but certainly a lack of tax applied to unearned income from houses created a major incentive for those with money to buy up homes on a large scale.

The Titanic is sinking, house prices have risen exponentially, incomes have not. Can Phil Twyford and the Labour-led government rescue New Zealanders from this disaster with KiwiBuild? The answer is only some.

The income criteria announced yesterday (those earning up to $180,000 as a couple and $120,000 as a single will be eligible to put their name in a ballot and buy a home costing up to $650,000) means some middle- and high-income earners will have the opportunity to get into their own home.

That is a good thing for those people. They should have a choice to get into a home.

But what about everyone else who is nowhere near even being able to whistle at home ownership? Those families whose children are doing homework in vans? What choice do they get?

Unfortunately, giving only some people the opportunity to own a home may embed inequalities that have been in place for decades in New Zealand.

As those with existing advantage to buy these homes - those who have help from parents, a higher education, permanent jobs - move into ownership and gain the further advantage that housing ownership brings, those forced to stay in poor standard rentals or state homes have few opportunities to experience such advantages.

It is time to get more innovative with housing policy to ensure KiwiBuild does not embed housing and wealth inequality.

First, elected officials need to assess the impact of this policy on those with the fewest choices.

Start by asking those many people paying at least 50 percent of their income on accommodation, while their children freeze through winter, what they need.

Include that data in the design of further housing policy - people-centered policy design can help deal with complex problems like housing. They are doing just that in Australia.

Next Mr Twyford could look to countries like Sweden and Germany. Decades back they committed to building large-scale high-standard low-cost rental housing, available to most in the population.

We could deliver it through community providers, not for profits, iwi and cooperative housing models.

Changes to the Debt-to-GDP ratio rules would enable this long term and effective investment in people's wellbeing. Furthermore, it would help move our investment obsession away from housing.

It is feasible for people in government to ensure the next generation of children has more choice.

Building standards need an overhaul. We are lagging behind other similar countries.

Mr Twyford should be informed by open source energy-efficient housing systems like the passive house standard.

It is a system that lends itself to prefabrication on a large scale, and has been used in the UK and Europe to improve wellbeing and overcome energy poverty.

Of course the Tax Working Group and the Labour-led government need to show real leadership on tax policy.

All is possible if the people elected to govern commit to restructure opportunities and deliver homes for everyone. We should all at least have the choice.

*Dr Jess Berentson-Shaw is co-director of the research and policy collaborative The Workshop and is a research associate of the Public Policy Institute at University of Auckland.

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