No Bill, it is not the environmentalists who push up price of land

This week we had the extraordinary spectacle of the Prime Minister of New Zealand addressing his party Blue-Greens, claim that environmentalists push up the price of land.

OK he is getting at the over-bureuacratic interference in the planning process and cites examples of councils wanting to know about furniture layouts and positioning of plants before they grant a permit.

Pull the other leg Bill. We are not going to accept that one. Sure they are intrusive, but that can be solved. Probably councils are desperate for revenue and central government gets far too much of the public revenue.

No Bill, land only has value because of community activity. You don't put a factory out in the wop-wops where there is no electricity, no internet, no sewerage or water supply, let alone the transport to get the goods out. You put it where it is near to all the infrastructure, suppliers and markets. You site it near rail, near ports. It is all the government expenditure on infrastructure, and all the businesses and community that makes a certain site desirable. Land which is well serviced has more value than land which is isolated and poorly served.









The value of land is increased by five things:

1. Infrastructure provided by government – rail, roads, schools, hospitals
2. Infrastructure provided by local government – water, storm water, sewerage, streets, lighting, parks, community halls, street enhancement.
3. Businesses and industry – manufacturers, maintenance, retail, warehousing, commercial centres
4. Community organisations and individual housing – clubs, organisations, neighbours.
5. Nature – proximity to rivers, seas, views, good soil, good weather

Given that Auckland has all these, and you have seen immigration as a way of increasing the GDP, making government look good, it is no wonder Auckland prices have been rising for so long. Then again, the international trend to very low interest rates has been a huge factor (not something you can take credit for Bill though you try I know).

And all this before the big one – the fact that the tax system favours buying houses for investment as those who own 2, 5, 20 houses have much to gain and precious little tax to pay. That is on your plate Bill, don't dodge it. The Green Party tries to recoup a small proportion of the capital gains for the public purse and the Opportunities Party collects it all, but you only collect a miniscule amount of this unearned income. Shame on you. And double shame for then turning round and blaming environmentalists. Get real.

So Bill, if you want to blame bureaucracy or environmentalists demanding good tree planting, please see it in the full context of what actually raises the price of land.

Reform of tax and money system essential for narrowing gap and bringing jobs

So we have just seen the Ikaroa Rawhiti by-election win for Labour with Mana coming in second. The successful candidate Meka Whaitiri has repeatedly said "Our people are hurting. The issues are poor housing, jobs and poverty" Labour has said people are moving from National to Labour because of the rising cost of living.
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With currency reform and tax reform money will flow into activities that maintain and upgrade assets like houses

If the money system widens the gap between the rich and the poor then a party which ignores this or even understand this will do little to reduce wealth disparity. Explaining this: If money is created by banks as interest bearing debt, but the banks don't also create the interest, then there will never be enough money in the system for everyone to pay back debt. So the losers have to go further into debt. This widens the gap. If in addition the tax system causes wealth to concentrate with property owners and stops money going into investment in the productive sector then a party which ignores this will surely make little progress in alleviating poverty or bringing jobs for the rangatahi of Ikaroa Rawhiti electorate. Explaining this: If we tax labour, sales and enterprise with income taxes, GST and company tax, then the purchasing power of everyone declines. The cost of living rises relative to income. At the same time investment money goes into housing, because there is no tax on land and everyone is betting on rising land prices. A notable example was of an Auckland house which was recently sold by New Zealand Transport Agency for $220,000 above Rateable Value. The housing bubble in Auckland is a serious threat as the Reserve Bank constantly reminds us. Because our party has looked to the root of the issues, and have proposed a well designed domestic-only currency linked to a completely new tax and welfare system, (see http://neweconomics.net.nz/index.php/2013/06/how-to-build-a-life-supporting-economic-system/), only our party can offer serious solutions to the growing wealth disparity and bring real jobs to the Ikaroa Rawhiti electorate.  

Home affordability the big issue

Today there was a great programme on Q+A on TVOne. Murray Sherwin from the Productivity Commission spells out the facts. Median house price for the country is $372,000 and for Auckland it is $500,000. The big factor is the price of land in Auckland is 60% of the value of the section. Don Brash, a commentator quoted a 500 sq metre Pukekohe section as costing $230,000. Bernard Hickey says a young couple might have to borrow 7-8 times their income, but if they have a pregnancy, get sick or if interest rates rise from 5% to 8%, they are in big trouble. Moreoever they often have high student debts as well.  A generation of New Zealanders won't be able to own their own homes and this is a cause of social strife. We are 10,000 to 15,000 homes short and the problems are mostly in Auckland and Christchurch. Bernard Hickey said between 2004 and 2007 when house prices rose so steeply, many had leveraged up their equity in homes, and the total increase in wealth of homeowners was in the region of $300b to $400 billion. All of which was private gain for homeowners and banks. My comment is that this was public money and should have been publicly gathered. The programme highlighted the fact that most of the homes which have been built have been top end houses from spec builders. We need better economies of scale and only Fletchers can do this. There are too few factory built modules. Dr Bryce Edwards, a political scientist commentator, said no political party has campaigned on affordable housing. Helen Kelly from the CTU said families are struggling and living in poor quality housing. There are 4000 on the Housing NZ waiting list. Wages are too low and the price of renting is rising. Whereas once 75% of households were owned their home this has now dropped to 65%. Hickey said that land taxes and capital gains tax must be discussed but the former is a political hot potato. We need land prices to come down. Brash said Capital Gains Tax was not working in Australia and they had the same problem. Annette King, spokesperson for Labour has apparently said that the Accommodation Supplement needs to be revisited. Sherwin said that all up it is a $3-4 billion subsidy to landlords. Building costs and consenting costs are too high. There is a monopoly supply of building materials, which add 20% to the building costs. The answer is not in extending city boundaries. That raises the burden on supply of infrastructure and make travel distances too far. Our challenge as a party is to find a politically acceptable method of imposing a land tax, while reducing the price of building and using the current housing stock efficiently. We must work towards a future where good, low cost houses are provided without increasing costs to local authority in infrastructure. Even Don Brash said the price of land was the core issue. Nobody on the programme raised the issue of currency reform. It is time to connect the creation of money with land, but do it at government level.  

Christchurch currencies needed for reconstruction

Media Statement 4 Nov 2011 Let Christchurch City Council issue a Christchurch dollar, says candidate. According to Laurence Boomert, Wellington Central candidate for the New Economics Party, the best thing the government could do to help Christchurch recover to allow them to create a range of interest free local currencies. “Here we have a cost of up to $30 billion for the Christchurch rebuild. It is time to think outside the square,” said Boomert. The Council could reduce its expenses in NZ dollars, and if local businesses play their part, then the labour part of local infrastructure repairs could easily be paid with a local currency. Boomert said there is a huge component of local labour and there should be no need to use precious national dollars for that. CERA, the Canterbury Earthquake Recovery Authority needs to play its part. It is already empowered to override any existing legislation, so that should also be true for the legal tender law. CERA could declare the Christchurch Earthquake Dollar legal tender, and then have the City Council issue the money by spending it into circulation. He said it would involve legislating to ensure that the Christchurch dollar would be acceptable for paying rates. It would be essential that the Chamber of Commerce and other business associations should be on board and we call on them to do so. Since local businesses are hurting as a result of the earthquake, anything that increases turnover should find their support. Boomert said the Council could persuade locally owned businesses to accept the Christchurch Earthquake Dollar and in this way money could be kept in Christchurch.  The notes could have pictures like the old cathedral and other landmark buildings on it. “A local currency keeps money in the area and usually circulates faster, doing more good,” said Boomert. For further comment Laurence Boomert  03 525 8229/027 258 8807