Thursday, June 30, 2022

Don Brash: The serious challenges facing local government

An address to the Omokoroa Residents & Ratepayers Association AGM

29 June 2022

Ladies and gentlemen,

There are a great many serious challenges facing New Zealand at the present time but most of them – like our falling literacy rates, like the prospect of a very serious increase in government debt over the next few decades as a result of the ageing of our population and the failure of either National-led or Labour-led Governments to do anything about it, like our depressingly slow rate of productivity growth compared with other countries, like our shocking levels of welfare dependency – lie well outside the scope of local government, and should remain outside that scope. These are problems which only central government can effectively deal with.

But there is one serious problem facing New Zealand that is largely the responsibility of local government, and another problem which, though not of local government’s making, is bearing down on local government and the ratepayers of this and all other districts. I want to talk about both.

First the serious problem facing New Zealand which is largely the responsibility of local government.

And I refer to the absolutely outrageous price of housing in New Zealand.

Over quite long periods of time, house prices in New Zealand averaged something like three times annual household income. When my wife and I returned to New Zealand after nine years abroad in 1971, we bought a fabulous house on the North Shore of Auckland – five bedrooms and with a great sea view – for $43,000, which was almost exactly three times my very substantial annual salary of $14,000. And though house prices rose strongly over the next 20 years, so also did incomes as a result of the high inflation of most of the seventies and early eighties.

So in 1991, the year that the Resource Management Act was passed, the median house price in Auckland was still about three times the median household income in Auckland.

But then the rot set in, and the way in which local governments interpreted their responsibility under the RMA was principally to blame.

When John Key was campaigning to win the 2008 election, he highlighted the fact that in that year the median house price in Auckland had risen to some six times the median household income in that city, a ratio which international studies classified as severely unaffordable. By the time the National Government left office in 2017, the median house price was nine times the median household income in Auckland, despite the various half-hearted attempts which that Government made to fix the problem.

At the peak last November, the median house price in Auckland was nearly 12 times the median household income, and still real estate agents and their friends in the media were urging people to stretch themselves to the limit to “get on the property ladder” – despite the fact that at that stage Auckland had some of the most expensive housing in the world, whether comparing house prices with household income or with the rental income which houses could generate.

A few weeks ago, Bloomberg, a well-regarded financial software company, assessed that the New Zealand residential property market was the most in danger of a major correction of any of the 30 countries which they surveyed.

Leaving aside the pain that would be caused by any major correction in average house prices – by which I mean a fall in prices of 50 or 60%, which would take prices back to being merely somewhat excessive, rather than being absurdly over the top – these extreme house prices have led to a huge transfer of wealth from those who don’t own their own homes to those who do, leading to a situation where some 40% of the population have not the slightest chance of ever owning their own homes.

And don’t tell me, as so many do, that “buying your own home has always been a struggle”. Perhaps, but it has become orders of magnitude harder today than it ever was when most of us were buying our first home.

But what has caused this obscene situation? A few months ago, Anne Gibson, the New Zealand Herald’s property reporter, surveyed the average price of the houses sold by the seven largest home builders in Auckland during 2021. The averages ranged from $180,000 for a builder specialising in smaller homes and apartments to $350,000 for the builder who built the larger and more expensive homes. But what gives? Those prices seem eminently reasonable and totally inconsistent with media stories of houses selling for close to and above a million dollars.

Of course the explanation is that the prices quoted by Anne Gibson didn’t include the price of the land the houses were built on. And it is the utterly absurd price of tiny pieces of residential land which explains the price which people have to pay for homes today.

A few months ago, my attention was drawn to tiny 400 square metre residential sections for sale in Papakura – some 30 kilometres from downtown Auckland – at $977,000. Almost a million dollars for a tenth of an acre of bare land in Papakura! And this in a country which is larger in area than the United Kingdom, with only five million people!

And the cause of this obscenity is Auckland Council’s Metropolitan Urban Limit. Land outside that Limit sells for what the land is worth in producing milk or meat or vegetables, perhaps a bit more if near the Limit because people hope that eventually the Limit will be extended.

When the Labour-New Zealand First Government took office in 2017, one of the explicit promises in the Speech from the Throne was to abolish that limit. Since then, Labour has equally explicitly reneged on that promise; and when the Prime Minister and Grant Robertson are asked about house prices these days, they say they want them to keep rising, but more slowly!

I’ve been talking about Auckland. But what has happened in Auckland has happened all over the country, with just a few partial exceptions (such as Christchurch). Here in the Bay of Plenty, we have Smart Growth, designed I presume to avoid urban sprawl in order to protect the environment and save on the costs of infrastructure.

But at a terrible cost. House prices in the Tauranga area – and I suspect the same is true in Omokoroa – are ridiculous, partly because Aucklanders are fleeing that city and adding to demand for houses here but largely because so-called Smart Growth has pushed the price of land on which people are allowed to build houses to ridiculous levels.

Councillors call it Smart Growth: in reality, it is exceedingly Dumb Growth, depriving a very substantial number of citizens of any chance of ever owning their own home.

I readily acknowledge that it is very difficult for individual councillors to do anything about this appalling situation: they are voted in by people who would be utterly appalled if their homes fell by 50 or 60% in market value.

But one way or another we will all pay for the grossly unfair situation which we currently live with: eventually, a significant number of people will decide that the present situation will not be tolerated any longer. We’ve had a situation where house prices have risen substantially faster than incomes for three decades. Eventually that will come to an end.

So when you consider how to vote in the forthcoming local body elections, don’t vote for candidates who want to expand the role of the Council into playing a more active role in health, education and housing, as some people advocate, but rather for candidates willing to deal to the Smart Growth nonsense so that all citizens get a fair chance of owning their own homes.

And next year, demand of those seeking your vote in the general election that they commit to scrapping the present Resource Management Act and replacing it with legislation that makes it easier to build homes, and not more difficult. What the Labour Government is currently proposing for a replacement of the RMA would make the situation substantially worse.

So much for an issue which you should be expecting your Council to solve, or at least improve.

What about the problem which, while not of local government making, is nevertheless bearing down on local government from central government?

And I am referring here to the outrageous assault on our democracy which the current Government is driving.

New Zealand has had one of the most successful democracies in the world. We were the first country in the world to grant women the vote. Almost every vote can influence the outcome of an election, especially since the introduction of MMP in 1996. There has never been a single case where a governing party has challenged the outcome of an election by violence. Every vote has the same weight, irrespective of the ethnicity of the voter or when they or their ancestors arrived in New Zealand.

This Government is determined to undermine, and eventually destroy, that democracy.

In 2019, when Labour was still in coalition with New Zealand First, the Government commissioned a report by a group of Maori radicals to advise on the implications for New Zealand of the United Nations Declaration on the Rights of Indigenous People, signed by New Zealand in 2010, soon after John Key became Prime Minister. The report was finished later that year but not shared with the New Zealand First part of the coalition. Indeed, it was not shared with the public either: had its recommendations been known to the public prior to the election, the results of that election would almost certainly have been very different.

Why do I say that? Because the report, known by its Maori name He Puapua, proposes the most radical attack on New Zealand democracy which has ever been contemplated – indeed, probably the most radical attack on democracy which has ever been proposed in any democratic country. The report proposes that in large parts of our national life those with a Maori ancestor would be separated off from the rest of the community into what would amount to self-governing enclaves, though with these Maori “enclaves” (my word not one used in the report) having authority broadly similar to that enjoyed by the much more numerous non-Maori parts of the society.

The report became more widely known in April 2021, months after the 2020 election. “Not Government policy”, the Prime Minister tried to reassure us. Given what Government has been doing over the last 15 months, it is impossible to believe her. Much of what the Government has been doing recently comes directly from the He Puapua playbook.

This first became clear last year when the Government had Parliament reverse a provision written into the law by a previous Labour Government. The Helen Clark Government had provided that, if a Council decided that Maori wards should be created, citizens and ratepayers could demand a local referendum on the issue. Over the years, a number of such referenda were held, including in the Western Bay of course in 2018. In every referendum bar one, having separate racially-based wards was overwhelmingly rejected by citizens. This Labour Government decided that citizens could not be trusted with this decision, and changed the law to ban referenda on the issue.

Since that time, we’ve had more and more attempts to separate us by race.

We’ve seen the creation of the Maori Health Authority because of the alleged racism in the health system, apparently justified by the perfectly nonsensical argument that because Maori life expectancy is shorter by a few years than that of European New Zealanders, this proves that the health system is racist. It was pointed out to the Government that many factors explain life expectancy – genetics, lifestyle choices around smoking and eating, quality of housing, etc. It was noted that Chinese New Zealanders have a life expectancy several years greater than that of European New Zealanders, yet nobody assumes that that is because the public health system favours New Zealanders of Chinese ethnicity. The co-chair of this Maori Health Authority is Tipa Mahuta, the sister of Minister Nanaia Mahuta.

We’ve seen legislation which will create four enormous entities covering the entire country to confiscate the Three Waters infrastructure of the Western Bay and all other local bodies. Initially justified by an expensive taxpayer-funded propaganda campaign designed to convince people that our water infrastructure was in dangerously bad shape throughout the whole country, and put forward as a scheme which local authorities could choose to join if they wished, it is now unambiguously a compulsory scheme.

In the case of Western Bay, assets valued at nearly $360 million will be taken over by what is called Entity B, with debt of just $75 million taken off the Council’s books. I am assured that here in the Bay you have a well maintained and adequate potable water supply that meets present water standards, a new sewerage system that will meet the needs of the district for years to come and a storm-water system that effectively conveys storm-water to the harbour without adverse environmental effects. And the Mayor supports this grossly unfair confiscation.

Worse still, these four entities, including Entity B, which Western Bay will be a small part of if the Government gets its way, are drawn along tribal boundaries and will effectively be “co-governed”, with iwi having 50% of the voting power. The Minister in charge of this legislation, Nanaia Mahuta, has refused to rule out that this structure may lead to a charge for the use of water being paid to iwi. And her sister, the one who is also co-chair of the Maori Health Authority as I’ve mentioned, has been appointed to chair the Maori Advisory Group of Taumata Arowai, the new water regulator which will directly regulate the four water services entities.

During the earlier Parliamentary term, we saw an attempt to “entrench” the Maori electorates (blocked by Labour’s coalition partner New Zealand First); and now we see an attempt to make it easier for those with some Maori ancestry to switch to the Maori roll, even though the Maori electorates have been a total anachronism since at least 1893, when all adults, whatever their ethnicity or gender, got the vote. Indeed, the Royal Commission on the Electoral System in 1986 recommended that Maori electorates be scrapped if we adopted MMP. Of course, we’ve had MMP for more than a quarter of a century, but this Government wants to entrench the Maori electorates, and make it easier for people to switch to the Maori roll.

A few months ago, the Labour majority in Parliament voted through its First Reading a Bill which would have substantially increased the “weight” of those on the Maori roll when voting for the Rotorua City Council. Only when the Attorney General ruled that the Bill was inconsistent with the Bill of Rights did the Government back off that egregious assault on the principle of one vote per adult, regardless of ethnicity.

At the moment, the Government is pushing through a Bill which will give a tribal group the right, in perpetuity, to appoint two voting members to Environment Canterbury Regional Council. All adults, Maori, European, Asian or whatever, will have a vote for the councillors, but Ngai Tahu will have an additional right to appoint two councillors. Not sure why the Attorney General thought that this law was consistent with the Bill of Rights.

And this drive to give preferential status to those with some Maori ancestry has been enthusiastically endorsed by Local Government New Zealand.

Local Government New Zealand uncritically endorsed the Government’s Three Waters plans, with its totally undemocratic co-governance arrangements; and has continued to strongly support these plans, notwithstanding widespread vigorous opposition to them on the part of many local councils.

A recent report issued by the Community Boards’ Executive Committee, on Local Government New Zealand letter-head, urges the creation of “community boards, local boards, and other forms of ‘local community’ or neighbourhood governance”. When doing so “the default membership [of such bodies] should be such that 50% are elected by residents on the Maori roll and 50% by residents on the general roll”.

And in the Western Bay, you have the Council’s Chief Executive Officer actively campaigning to change the current mix of councillors. He is quoted as saying:

“We need diversity of age, culture, experience and skillsets. We need more Maori at the table so that we can ‘hand on heart’ work in partnership with Tangata Whenua.

“We have a very clear demographic sitting around the council table and we need diversity. We need to recognise other things besides the traditional privileges of being wealthy and white.”

To me, this is a rather extraordinary attack on the councillors who employ him, and is particularly odd when two of the 11 councillors are already Maori, a proportion which is probably little different to the proportion of Maori in the Western Bay community. By contrast, it would appear that it is women who are under-represented on the Council, given that there are just three of 11, falling well short of the proportion of women in the population.

Underlying much of this nonsense is the notion that the Treaty of Waitangi was intended to create some kind of partnership between those with some Maori ancestry (often now with a very small portion of Maori ancestry) and the rest of the community. But there was no hint of partnership in the Treaty, whether in the Maori language version which was signed by most of the chiefs or in the so-called “official” English-language version. The word “partnership” simply does not appear; nor do any synonyms for “partnership”.

On the contrary, what the Treaty promised was that all New Zealanders would henceforth have the rights and duties of British subjects, no more and no less. That was an extraordinary promise for its time, when many of the early English settlors would have regarded Maori in very uncomplimentary terms. But it was a promise which was made.

It wasn’t a promise that all New Zealanders would have equal life expectancy; or equal income; or equal levels of literacy; or equally-sized houses. It was a promise of the same rights as those enjoyed by the English settlors – the right to be free persons, to buy and sell property, to enjoy all the rights which British citizens had won over the centuries since the signing of the Magna Carta. No similar promise was made to the earlier inhabitants in Australia or North America, and explains why nearly a century after the Treaty was signed Sir Apirana Ngata could declare that no other native people (his words) had it as lucky as the Maori people did.

It is a challenge facing us at all levels of government in New Zealand – central, regional and local – to push back hard against those who would divide us by race and destroy one of the most successful democracies in the world.

Dr Don Brash, Former Governor of the Reserve Bank and Leader of the New Zealand National Party from 2003 to 2006 and ACT in 2011.


Anonymous said...

You are on the money Don, which is of course precisely what one would expect from such a financially literate and erudite gentleman.
The problem as I see it is that a significant proportion of the voting public appears largely ignorant of what is going on and they just do not appreciate the extent of the deceit; the corruption of our democracy; and what it will ultimately cost them (and this nation) if this Government continues on its path.
Willie Jackson espouses that we have nothing to fear from co-governance which is fine - provided you think practising apartheid is appropriate and that such will end well; that treating the majority of New Zealanders as second-class citizens is appropriate; and, that paying a small elite cohort a great deal of money - forever, is just fine and dandy. Just look at the number of jobs already created to feed a plethora of unelected 'overseers' and, as for the nepotism indulged by Mahuta, that audacity is truly astonishing and just another clear signal of what co-governance will mean. A tribal elite system, where nepotism and contract favours will flourish, all under a main-stream media that has been paid to stick to a narrative of Govt propaganda. Whether the inquiry by some Govt bureaucrat 'proves' no wrongdoing, and irrespective of the PM's & the Finance Minister's emphatic confidence in their colleague, the court of public opinion has already found that it stinks to high heaven and it's incomprehensible that, out of all the people in NZ, four of her immediate family were all the most qualified for the taxpayer funded tasks involved. It is an utter disgrace and it is also a stunning indictment of the dishonesty and character of those that support her. It's an affront to decency and it's as disingenuous as the claims that have been made about Three Waters, and how that will provide efficiencies, and that co-governance is a requirement to honour the Treaty, and that, yes, Mana Whenua can charge a levy or royalty, but of course we don't need to worry about that while we're talking of the 'savings' we'll all make with this huge multi-tiered co-governance behemoth. Yeah right! Such is as misguided and absurd as the Health reforms, that have been budgeted to cost half a billion (and whenever has a carefully devised and considered Govt scheme ever come in on budget, yet alone one that has involved such a very radical change under extreme system duress, and one devised 'on the fly' by someone way out of their subject matter expertise?) and what will be the outcome - we already know, chaos and very costly chaos at that. How many cancer drugs could that have funded; new seismically appropriate hospital wards; or more nurses and doctors at the front line? By the time we find out the true cost, I expect a very great deal of lost opportunity that could have produced some real health benefits for all.

Quite simply, Don, you're right. This Government is well out of its depth of competency and way past its used by date but, alas, people reading these sorts of blogs already know that. It's getting to the 'too busy to be bothered'; the otherwise unmotivated; and, the 'dyed in the wool' party supporters wherein the problem lies. And, of course, ensuring that the replacement is just not more of the same. On that score, is the purported 'leader in waiting' ever going to step up to the plate and call this nonsense out? If not, dear reader, please vote for someone who will. I do expect more people will wake up eventually, but by then I fear it will be too late.

DeeM said...

Surely Climate Change must be the biggest issue (he said satirically).
I live in Hamilton and worry constantly that the Waikato River will flood the whole city. On the bright side, soon it will only be a 10 min drive to the beach and we'll have far fewer roads for Waka Kotahi to maintain.
Ah, now I see why they renamed NZTA, because soon we'll be travelling around in wakas as the country is inundated by rising sea levels.
How forward thinking our government are!!!!!

Robert Arthur said...

Because the bought off msm no longer publish observations such as Don's above, the great majorityof the public have only the vaguest notion of what is going on.

The rise in property values is largely due to the inability or unwillingness of successive governments to control inflation, and the total lack of faith that any will in future. Property is seen as the only secure investment, esp as free of gain tax. Far more sure even than gold, which is taxed.

The area of often prime productive land being encroached upon by housing is daunting, despite current density requirements.