The Opposition is dismissing the new ministry to tackle the housing crisis as just “rearranging the deck chairs”, but the Government says it will be an effective way to sharpen the focus on housing
The Government has announced it will establish a new ministry to implement what, in its own words, is an “ambitious plan” to improve housing affordability, tackle homelessness and make our cities more liveable.
Taking its name from the United States administration’s “HUD”, the new Ministry of Housing and Urban Development will assume functions from the Ministry of Business Innovation and Employment (MBIE), the Ministry of Social Development, and Treasury.
Housing Minister Phil Twyford said on Friday that the ministry would cost $8 million to set up, but funding would come from existing base lines. It would employ 200 people, but most staff would come from existing roles within those other three ministries.
Opposition spokeswoman for Housing, Judith Collins, told Newsroom that Twyford was “rearranging deck chairs” and the change was unlikely to make much of a difference to housing in New Zealand.
“Shifting people from one place to another, giving them a different name is not going to build any houses,” she said.
The Department for Building and Housing is dead, long live the Ministry for Housing and Urban Development
National says Twyford is just resurrecting the old Department for Building and Housing, which was folded into MBIE in 2012.
That department had relatively short life, having only been created by then-Housing Minister Steve Maharey in 2004.
Collins, who was in Cabinet at the time the department was rolled into MBIE, told Newsroom that it made sense because the drivers of housing supply were the same as those affecting housing growth.
“The main rationale behind it was that all the issues around housing and making it easier to actually build houses and to make housing available were very important to the business growth agenda,” Collins said.
“A lot of the same drivers were important, whether it’s around materials or training and trade — all these sorts of things are very important for the business growth agenda,” she said.
Most commentators agree that the housing shortage is as much to do with regulatory issues and supply constraints as it is with high immigration.
Difficulty freeing up land under the restrictive RMA regime contributed to the cost of land increasing 73 percent faster than incomes between 1995 and 2015. A lack of skilled labour and the high cost of building supplies (estimated by the Productivity Commission to cost 20 to 30 percent more than they do in Australia) added to the cost of housing.
If judged by the increase in both house prices and homelessness over its lifetime, MBIE’s record of addressing these problems is not great. When MBIE was created in 2012 the median price of a house in Auckland was $470,000. It is now $850,000.
On the figures alone, the old Department for Building and Housing fared slightly better – when it was formed in 2004, the average Auckland house price was just $334,000. After five years, it had risen to $455,000.
Much of the increase in house prices since MBIE’s creation can be blamed on record high net migration over the past five years.
The Government also points to Statistics NZ data released last week as vindicating their ban on foreign buyers.
“Kiwis were right to be concerned,” said Associate Finance Minister David Parker about the statistics showing 18.7 percent of homes sold in central Auckland in the March 2018 quarter were bought by foreign buyers. Collins, meanwhile, pointed to the figure showing that, nationwide, just 3.3 percent of homes went to overseas buyers as “irrefutable evidence” that Labour’s claims of foreign buyers dominating the housing market were just “scare tactics”.
Economist Shamubeel Eaqub told Newsroom he believed the new ministry would help the housing crisis.
He said both the Department for Building and Housing and MBIE were weak, and he was pleased the new ministry had an Urban Development Remit.
“We haven’t had decent housing policy for decades,” he said.
But will it be any different?
But the Government is at pains to distinguish the new ministry from the old department for building and housing.
A spokesperson for Twyford said that the old department was “focused quite narrowly” and that the new ministry would look at everything from homelessness to housing affordability in the rental market.
Twyford said the ministry would increase accountability and allow for more co-ordinated and focused efforts to tackle the housing crisis.
“The last government had three housing ministers and that really hampered their ability to bring a level of focus to this task,” he said.
“The new ministry will have a policy and regulatory and planning function right across housing and urban development.”
“The plan here is to put into the public service the level of focus and accountability and capability to deliver on one of the Government’s most important reform agendas.”
The ministry will pull together housing and urban policy functions from MBIE; emergency, transitional and public housing responsibilities from the Ministry of Social Development; and the monitoring of Housing New Zealand and Tāmaki Redevelopment Company from Treasury.
It will be operational by October 1.
The operations of Housing New Zealand will remain separate. The delivery of the KiwiBuild programme will be done through the Urban Development Authority, which is not part of the new ministry.