Labour gets a fail mark


Guest post

Labour’s Non-answer to the Housing Problem.

Let’s assume that there is a problem in housing.  There is a case to be made out that it is more in the minds of opposition party politicians, those unwilling to wait, make sacrifices and save and a media looking to create problems and solve them to sell copy.

Let’s also assume that if the problem is real and causing pain that the task at hand is to fix it rather than simply do some cheap vote buying.

There is nothing more basic Economics 101 than the truism that prices are mostly a factor of supply and demand.  If demand rises and supply does not or cannot rise, prices will increase.

It therefore follows that if the number of people seeking a house goes up significantly and there are too few houses available the price of houses will go up.  It is impossible to get past this most fundamental of problems.

So why, oh why is the problem of land constraint artificially created by short sighted planning regulation allowed to continue.  Why wasn’t Andrew Little’s first and most loudly proclaimed point in his weekend release – getting rid of restrictions in planning laws?  Dead simple and fundamental to any solution package but studiously ignored.  It is equally a blind spot for National, too but they aren’t promising to “fix the problem” right now, like Labour.

Any dispassionate examination of the problem always come back to the boundary constraint created artificially by bureaucrats, often with an agenda to save the world, putting us all on bikes and buses.

Labour are keen to have the state provide more houses.  That means extra construction workers.  Where are they going to come from if Labour knobbles immigration?  Some poorly considered policy there.  The state cannot do anything extra to what the private sector can do short of taking land forcibly and that isn’t going to happen under any government.

The fiddling with the tax issues that Little announced will quickly be capitalised into the market.  Its peripheral tinkering aimed at sounding off to the party faithful who are the green eyed, wanting capitalists put in their place.

Imposing capital gains tax on flipping will not achieve much.  Most of the people involved have to show the gain as income at some point and pay tax anyway.

In summary, it’s playing to the gallery.  An exercise in keeping his socialist tribe feeling good.  Studiously avoided the most obvious of problems.  No pass mark – must try harder.


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