A 'wicked divide' is growing between the haves and have-nots, says Green Party co-leader Marama Davidson, and it's all down to the housing boom.
Property prices in New Zealand have shot up nearly 20 percent in the past 12 months, data from the likes of Trade Me and the Real Estate Institute of New Zealand shows, completely ignoring the shocks sent through the rest of the economy by COVID-19.
In fact, some have blamed the measures taken to keep the economy afloat by the Reserve Bank for fuelling the housing market, with cheap lending being spent on buying houses off each other rather than investment into businesses and the productive parts of the economy.
"Things were bad before the election, but through COVID and the extra-cheap money that has been flooding in... that has helped to cause runaway house prices," Davidson told Newshub Nation on Saturday.
"I don't think any of us before the election knew that we were going to be looking down the barrel of runaway house prices. I do think there is an opportunity - and the Prime Minister has shown that she can listen and review the situation - to reflect on all the tools, all the tools in the toolbox that are available to us."
Prime Minister Jacinda Ardern has ruled out taking measures that aren't in Labour's pre-election manifesto, most notably a capital gains tax, as well as the Greens' policy of wealth taxes.
Davidson, now the Associate Minister for Housing, said the deal the Greens struck with Labour "protects our unique political voice", allowing them to criticise their major partner without fear.
She says Ardern has shown an ability to reflect and review past decisions when situations change, so won't give up pushing for policies Ardern has publicly ruled out.
"We are very clear that we need to put all the tools on the table to make sure that New Zealanders, that people in our country can have a decent home and somewhere to live."
Because New Zealanders put so much of their savings into housing, Governments have historically been reluctant to make changes which would bring values down. On the flipside, Davidson said homeowners - like others - want "a fair society where we are not creating generational problems and leaving a whole lot of people behind".
"I think people do understand that value of not having this wicked divide that prevents us from being connected communities."
Last year, Statistics NZ said only 62 percent of households own the home they live in - down from 69 percent in 1999 and nearly 74 percent in 1991. Last year, the number of households renting increased twice as fast as those who own.
"We are at a point where we could end up with a divided country, where only people who have been privileged enough to own a home, and their children, could be in one group that goes off on that path in our country, and we have a whole lot of have-nots who are even barely able to get an affordable rental property, let alone dream of owning a home," said Davidson.
"We can actually take the opportunity right now to look at some form of wealth tax, some form of taxing unearned capital gains. At the moment our country taxes workers and not owners."
'I don't care'
Taxes won't do anything to stem the housing crisis, says economist Shamubeel Eaqub, who's calling for much stronger action - such as borrowing $30 billion and dedicating it to building rental property.
"When we build houses, we build houses for rich folk," he told Newshub Nation, appearing after Davidson. "We're not building affordable houses that people can afford to rent. If we don't focus everything that we have on fixing the bottom half of the housing market, we're going to be failing people."
New taxes - even the dreaded capital gains tax that seems to strike fear into investors and politicians alike - would only be tinkering at the margins, Eaqub said.
"I don't care," he told host Simon Shepherd, after being reminded Ardern had ruled it out as long as she's Prime Minister.
"The thing is, we can borrow $100 billion to deal with COVID. Are you really telling me when you spend $3.5 billion a year on housing support, we can't spend $30 billion to fix it? Of course we can."
Kainga Ora is already building as much as it can, so the money should be used to underwrite community and social housing providers, Eaqub said, and used to build dedicated rental housing like they have in Germany.
"They've had no increase in house prices in like, 30 years. They've got rental housing stock that is long-term and secure, and rental rights that are really secure. You don't need to own houses."
One option, using money that's already been allocated to housing, is to redirect the struggling KiwiBuild scheme towards rentals. While this might not help get Kiwis into their own homes in the short-term, Eaqub says right now the biggest problem is just getting affordable roofs over Kiwis' heads.
Reserve Bank 'not doing their job'
Eaqub wants the Government to rip up any pretence the Reserve Bank operates independently, and tell it to stop fuelling the housing price boom. The bank is allocating tens of billions of dollars in cheap lending to banks in order to stimulate the economy, which Eaqub fears will go straight into property.
"The Reserve Bank is completely out of touch with what is happening in New Zealand right now. They are asking for trouble. We know that right now what is happening is there is a huge amount of lending that's going on in the economy, but it's only going to buying and selling houses from each other. This is a recipe for disaster. They are asking for political intervention.
"We should interfere because they're not doing their job. Their job is to look after how much money there is in the economy and where it turns up. Right now it's not turning up equitably.... House lending is going up like this, and there is no lending growth when it comes to businesses and farms - the bits that actually create jobs and incomes for people.
"We've got this huge ponzi scheme that is being enabled and encouraged by the Reserve Bank. We can't afford for this to continue."
Its reinstatement of loan-to-value restrictions next year is "not enough", in Eaqub's view.
"We know that no Government can allow banks to fail, we know that no Government can really afford for house prices to fall much, so we've got to put a line under this and say no more. You have to be courageous and bold and actually take a step. We've been talking for decades, right? I'm sick of this talking. We actually have to do something."
