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Jun 10, 2020
Can we use the Reserve Bank to fund the building of state houses like NZ did in 1936?
Can we use the Reserve Bank to fund the building of state houses like NZ did in 1936?
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I don't think we need to do we? Kainga Ora doesn't have a funding crisis, and we are only way behind demand because of the way social housing has been treated over the last 40 years. What a surprise: if supply doesn't consistently keep pace with demand, a gaping hole of dire housing outcomes emerge. And, the market doesn't fill it.
We can generate fair revenue to resource more affordable and social/public housing. We just aren't doing it at the moment. https://theshiftaotearoa.wordpress.com/visionweek-2020/
All The Shift Aotearoa interviews and content this week speak directly to this question, and it requires solutions and interventions across our housing system. These solutions aren't entrepreneurial, wildly or even overly aspirational and they're not primarily innovative, although there is innovation.
We can build a resource flow into public affordable housing by putting in place a series of levers: capital gains tax, public value uplift, and inclusionary zoning to start with. This is the basic kete for funding affordable housing, or making it happen. For our content and housing visions from New Zealanders: https://theshiftaotearoa.wordpress.com/visionweek-2020/
Yes, we need to. Isn't the main reason we didn't build houses for 40 years a lack of money? Capital gains tax (the blunt one as proposed by Cullen) is a bad idea that penailizes small business and innovation. Using the RBNZ is a much smarter, cheaper, better way. I checked out your links but they opened up to such a huge smorgasboard of information that I did not know what in particular you were refering to.
"Isn't the main reason we didn't build houses for 40 years a lack of money?" I understood it was an on-going embedded political decision post 1991, not to maintain prior levels of construction. Now it will take a lot of money to make up for it, obviously, but these were political prioritisations and posturing not an actual lack of money. Nothing proves the falsehood that 'the market will provide' better than this 40 year gamble.
I'm not sure that we still DON'T have adequate resources flowing into housing. $1B just got set aside to securitise more Kainga Ora lending. Many community housing developments would benefit most greatly - and increase numbers thereof - by simply have access to government interest rates in loans to be paid back. There are arguments that money is not the key barrier and COVID has shown this more than ever.
Capital gains tax may impact small businesses relying in part on capital gains for their balance sheet [I get it's embedded in accounting], but there's a flip side and just cause it's the status quo doesn't make it better: not having capital gains tax means we are literally refusing a revenue stream [and possibly penalising ourselves as a society] to do precisely what you are suggesting we could use RBNZ for. It's a great debate.
If there is an opportunity to use an RBNZ tool/intervention as well let's make sure it's strategic and enduring.