Signs of a domestic house price spiral are now evident in the coalition government’s feeding of expectations of providing universal housing.
Fantastic early estimates of domestic house new-buildings are being drastically cut back pre-budget.
The Labour-led coalition knows that it has very little room to move in the massive new buildings schemes now being widely speculated upon.
Its hands are substantially tied.
It cannot replicate New Zealand’s first labour government which quite simply under the direction of John A Lee (pictured) directing the state housing construction scheme quite simply built the nation out of the problem.
There was a difference.
In that era the Labour government in effect and applying the doctrine of John Maynard Keynes, the first nation anywhere in the world to do so, took control of the nation’s industry at large and specifically in house construction.
The pre-eminence of the Fletcher interests until very recently was the direct result of this intervention.
In contrast, and as it knows, the Labour coalition is restricted in what it can do by an encasing swathe of legislation in the sociological sphere.
There are similarly limited in what they can do in domestic housing supply by policies of successive National governments which elevated university grade education of a non productive category above the training of the wealth generating sector in the construction industry, among others.
The low-wage drift of the New Zealand economy in the past 30 years can be sheeted home to the 1980s era Labour government, the nation’s fourth, which determinedly force marched New Zealand into globalisation which eliminated high-paying worker production jobs.
Automotive manufacturing assembly is just one example
The current Labour administration in a desperate attempt to appease its doctrinal far left can do little to restore these high paying jobs beyond various high –profile regional grant and subsidy arrangements.
Intricate and costly safety schemes have boosted the price of domestic house construction, most visibly in the form of the tightly networked scaffolding for low rise bungalow erection.
The coalition knows, as National always knew, that easy money for housing has much the same effect as seeking to souse a fire by pouring petrol on it.
Rather less than half of one percent or 0.5 percent of New Zealand is urban, i.e. zoned for buildings.
This percentage includes the nation’s most fertile lands. Southern Auckland and Wellington’s Hutt Velley are two examples.
Nobody doubts the sincerity of the current Labour government in seeking to reprise the magic wand, it is the only description, of the first Labour government which by drastic policy decisions cured the housing problem, and also the unemployment one.
They know too the real danger of any policies that they may decree that seek to replicate the drastic and successful actions of the first Labour government.
This is because the current version, the Labour coalition, knows that cures they decree, the financial incentive ones, are as likely to inflame the problem, as they are to alleviate it.
When John A Lee MP drove the state housing scheme his hand in effect was on three levers.
There was the state housing scheme itself.
He was close to the lever of the productive economy that financed stare housing.
If anyone got in the way he held a direct lever to the cabinet which would cause the obstacle to disappear.
Now in contrast the Labour coalition is confined by doctrinal constraints preventing the full exploitation of the nation’s productive resources that add up to high wages for working people.
Its hands are substantially tied.
Only the promises are unfettered.