Bryce Edwards: Political Roundup - Labour’s KiwiBuild reset disaster

The Government has been widely panned over its major announcement yesterday on housing. There are a few positive takes on the “reset”, but generally it has been viewed as an embarrassing backdown at best, or at worst a sell-out of those needing the housing crisis addressed. One political journalist has even branded yesterday’s announcement as “easily the worst day politically” for the Labour-led Government so far.

This criticism isn’t just politicking from conservatives or the right. The most severe criticism has come from progressives and the left. This isn’t really surprising because – as with Jacinda Ardern’s capitulation on the capital gains tax – the announcement suggests the Government has essentially given up on bringing transformational change to the housing crisis. Many of those who might be sympathetic or supportive of the Government are those most deeply disappointed with what Housing Minister Megan Woods is now doing with KiwiBuild.

To get an idea of critical reaction from the political left, it’s worth reading the No Right Turn blogpost: Not impressed. He calls the reset a “broken promise” and is disappointing about the tinkering announcements, suggesting they might actually make the housing crisis worse.

He concludes that the reset shows Labour, as with other political parties, simply isn’t interested in solving the housing problem: “while the obvious policy we need is a mass house-building programme of state and affordable homes, to crash both house prices and rents, the property owning class – which includes almost every MP – don't want that, because it would devalue their assets and their landleach income-streams. So instead we get this sort of bullshit, spending billions on producing the impression of action, while actually doing nothing much”.

It’s not only leftwing bloggers who are unimpressed. For a scathing assessment of yesterday’s announcement see Newsroom editor Bernard Hickey’s latest column, Young renters just got double toasted, in which he argues those suffering from the housing crisis have now been abandoned by this government.

Hickey argues that the jettisoning of the basic KiwiBuild promise was entirely unnecessary: “to abandon the entire target for the entire 10 years is simply silly because the first year's target was missed. Urgent and large scale action by the Government could have cleared the way for a 100,000 house build over the next 10 years. Labour just gave up at the first hint of trouble”.

As to all the minor announcements made yesterday, Hickey thinks they’re a “distraction” meant to help sell the capitulation to the public: “It also tried to dress the broken promise by making it easier to use more KiwiSaver money for home deposits and to be able to borrow more to buy a first home. Neither will sweeten this dead rat much. It's more of a rotting and hairy cat.”

Hickey says the conclusion we can draw from the KiwiBuild reset is that Ardern’s reputation is now settled, and it goes to “prove she is just another transactional smile-and-wave politician who believes she is better at wielding the status quo than the other lot. She has now forfeited any right she had to talk about being transformational and claiming ownership of a generation's dream.”

Similarly, in an opinion piece for RNZ, I’ve argued that Labour and its coalition partners now risk losing support from their core supporters who were relying on seeing real progress on the housing crisis, and those struggling with housing might legitimately feel “ripped off” – see: Government should be held to their 100,000 KiwiBuild promise.

Here’s my conclusion: “much like the CGT backdown – the government's other key policy to deal with the housing crisis – it will shake the confidence of supporters who are wanting to see the transformational change promised. The Year of Delivery becomes an empty slogan for those depending on real change. When it comes to next year's election, the governing parties might find their lack of courage leads to fewer of their supporters being mobilised to vote… Having won power in 2017 on the basis of promises like KiwiBuild, it would be apt if the Labour-led government lost that power in 2020 because of their failure to deliver.”

RNZ’s Tim Watkin points out that this failure of delivery and ambition is what Labour used to criticise the last National Government for: “Twyford was famous for mocking previous Minister Nick Smith by saying ‘you can’t live in a consent’. Truth is, you can’t live in a reset either” – see: You can’t live in a reset.

Watkin labels yesterday’s announcement a “disaster”, saying “amidst the announcements came the smell of burning rubber as the government preformed some of the biggest political u-turns you’ve ever seen.” Green co-leader Marama Davidson was also at the announcement, claiming the KiwiBuild reset put housing “back within the realm of lower income people”, but Watkin says “It’s hard to see how.”

Political journalists have also been damning in their reports. Henry Cooke, who has probably written more on KiwiBuild than any other journalist in recent years, says: “KiwiBuild is now a shadow of the huge promise it once was” and that the reset was a “serious humiliation for the Government” – see: KiwiBuild emerges from nine months in the shop a shadow of its former self.

He disputes many of the claims of the Housing Minister. For example, on the notion that the Government is still delivering a significant house ownership programme, he says: “that's like selling someone a car and delivering a scooter. They both serve the same purpose, but the product is not what was said on the tin.”

As to Megan Woods’ new mantra that “KiwiBuild is a lever, not an outcome”, Cooke says: “That's fine and good if you're looking at the housing market from the perspective of a minister, but if you're a young buyer who thought with 100,000 homes there was sure to be one for you in the mix, KiwiBuild sure as hell was the outcome, and an outcome you wanted. Bad luck.”

Cooke also outlines how the Government is failing to deliver in other areas of housing. And some of the new announcements seem half-baked at this stage – for example, “the fact this progressive home ownership plan has still not gone to Cabinet beggars belief.” And he says that the changes to eligibility will not “change the problems with KiwiBuild thus far.”

As to cancelling the 100,000 house target, and the refusal to replace it with anything new, Cooke says: “Every Government breaks promises made during elections. But few break ones this big and this specific.”

This broken promise will come to haunt Labour in the future, according to Claire Trevett: “it has given Labour a credibility problem. This will cause Labour problems in future elections when they put up similarly ambitious policies. Ambitious is a kind way of saying unbelievable. It gives voters greater cause to doubt whether they can actually deliver. It has, in short, become Labour's folly” – see: The lesson of KiwiBuild, the Little Engine that couldn't (paywalled).

The failure to adopt a new target is also a problem for accountability she says: “The 100,000 figure was replaced by the rather more nebulous ‘as many homes as we can’. That is far less pithy – but also much harder to hold the Government to account for.”

This nebulous promise is highlighted by Herald political editor Audrey Young who says: “It is not a line that would be acceptable in many other policy areas. Imagine the farmers saying: ‘We will lower methane emissions as much as we can, as quickly as we can’” – see: KiwiBuild reset – Megan Woods gives masterclass in surrendering to failure (paywalled).

Young says this abandonment of targets is confusing, because in other policy areas Labour is adamant about the importance of such goals – for example: “It is clear the Government can't make up its mind about targets. It's good for child poverty reduction to have an overall target and short-term targets, so much so that it is now a statutory requirement to set targets.”

She also marvels at the chutzpah of the new Minister of Housing in selling such negative news as being so positive: “Woods gave a masterclass today in political communication that should impress not only her hapless predecessor, Phil Twyford, but every other member of the Cabinet that could be prone to trouble. Let's not call it a reset. It was backdown to behold, a political surrender painted as showing courage and honesty to voters.”

Little attention has been directed, so far, at the logic of stripping a fifth off the KiwiBuild budget and putting it into a separate programme for the Greens’ nebulous “rent-to-own” scheme. But Newsroom’s Marc Daalder covers this in his article, KiwiBuild reset shows how badly policy was bungled.

Here’s his main point, questioning the scheme: “the Government concedes that only 4,000 people are expected to benefit from this. That's 20 percent of the KiwiBuild budget put towards helping put people in just 4 percent of the now-scrapped 100,000 homes. While that money will eventually be paid back to the Government and recycled into KiwiBuild, that could take years. This raises the question: wouldn't the money be better spent on state housing?”

In terms of Megan Woods’ decision to scrap plans to continue with hundreds of KiwiBuild houses and sell them on the open market, Daalder says: “the entire situation underscores how significantly the Government's flagship policy was bungled.”

For economist Gareth Kiernan the reset was a missed opportunity, and he laments the “sticking-plaster solutions” that were announced – see: KiwiBuild reset proves Government still doesn't get it. One preferred solution, he says, would have been to focus more on state housing supply: “the Government has missed the chance to shift its building programme from the middle-class welfare of KiwiBuild to concentrate on social housing, where the needs are evident.”

Kiernan also suggests that other more fundamental problems remain in the housing market, which he argues the Government are not grappling with – especially partnering KiwiBuild with mass construction technologies.

It’s not all bad for the Government. Some commentators have been supportive of the KiwiBuild reset. For example, today Newstalk ZB’s Mike Hosking says the Housing Minister has been sensible – see: New KiwiBuild Minister Megan Wood showing signs of common sense.

Today’s very congratulatory editorial in the Dominion Post makes the argument that modern governments aren’t equipped to make significant market interventions like KiwiBuild, and therefore Megan Woods is to be commended for recognising this and abandoning “unrealistic” goals – see: After the fantasy, Woods restores some sense in KiwiBuild.

The editorial points out the gist of the new KiwiBuild approach: “The reset KiwiBuild will help fund buyers into new homes, rather than build those houses for them.” Therefore: “The rethink is less a reset and more of a recognition that modern governments no longer have all the answers. Nor the means. They have steadily withdrawn from the many markets and industries they once controlled and must use greater wisdom to understand what they can change, and how to go about it.”

Former CEO of the Property Institute of New Zealand, Ashley Church, awards the Government with a 10 out 10 mark for scrapping the Kiwibuild targets, and a 10 out of 10 for making it easier for buyers with smaller savings to get together a deposit to buy houses on the open market – see: 5% deposits for first home buyers will remedy housing travesty.

Church says Woods “has delivered. The main features of her near-total rewrite of the previous policy have rendered it virtually unrecognisable – but the changes are mostly pragmatic and bring KiwiBuild more into line with the commercial and cyclical realities of the market.”

Finally, for humour about the reset, see The Civilian’s parody news report: Government says it will now build just one really nice home.

Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society.