Shearer’s conference speech: was that all?
Events have obviously overtaken this post, but I’m keeping it anyway because it’s nice to be able to come back to these things five years down the track and remind myself that I was right all along. /hubris
Disclaimer: Yes, I’m a Shearer-hater. Yes, I was probably never going to be completely impressed by what he said, because it would have required a complete personality transplant and 180-degree turnaround of the entire party’s approach since Clark left.
So if that discredits my opinion, by all means go read other posts on the subject. Plenty of other people think Shearer’s speech was the second coming of “I have a dream to fight them on the beaches”.
This is an Ideologically-Impure only post because after the weekend I’m well out of energy to have pointless circular arguments against people who oppose actually arguing with what I actually say. Bitchy but true.
Here’s the first three-quarters or so of David Shearer’s speech in bullet points:
- National bad
- Labour != National
- New direction needed
It’s thrilling stuff, really. And a few faux-policy announcements:
- Manufacturers good, controlling exchange rates good (unspecific)
- R&D good (unspecific)
- Capital gains tax (dear God, an actual concrete policy! But details unspecified)
- Compulsory KiwiSaver good, primarily for stock market (concrete policy to support the stock market! Yay!)
- Productivity good, minimum wage going up good (unspecified)
- Local procurement good (where it’s good)
- New approach to education (unspecified)
- Helping Christchurch good (unspecified)
So, yeah. Nice headlines (except for compulsory KiwiSaver, but that’s something for another post) but very little concrete policy. Which is probably OK, because all of that was building to
~KIWIBUILD~
A policy apparently largely designed around someone coming up with a cool name.
The bullet points here are superficially awesome:
- Put 100,000 families into their first home!
- Building programme to grow economy!
- Kiwi dream!
(Oh, and a Healthy Homes policy copy-pasted from the previous Green Party election manifesto.)
Unfortunately, KIWIBUILD looks a hell of a lot less impressive when you examine the details.
Cost
From the much-vaunted factsheet: “Estimates of the cost of a modest entry-level home suggest they can be built for less than $300,000, especially when building is undertaken on a large scale”
…
The price of the homes will be set at a rate sufficient to fully cover the Crown’s costs, including land, construction and finance costs.
…
A small 1% margin on top of the Crown’s cost of borrowing is sufficient to ensure the programme is self-funding over the long term, while still keeping the homes as affordable as possible.
So, that’s $300,000 just in construction, plus the cost of land, plus cost of financing, plus 1%. Let’s call it around $350,000 all up for the 1/3 of the houses which aren’t being built in Auckland, and you’re looking at a 10% deposit of $35,000, 5% deposit of $17,500.
That looks totally affordable for someone on the median wage of $29k. Why, in a double-income household on the median wage, that 5% deposit is only 30% of your pay before tax!
Eligibility
This is the big one for me, especially since you would think Labour had learnt something from the lack of top-end limits on Working for Families.
Factsheet again:
No household type will receive preference over any other household type. Nor will there be any income restrictions. On the whole, people will ‘self-select’, with those who can afford to move up the property ladder excluding themselves
Yep, you read that right. There is no income limitation on this scheme. This programme to change our nation’s direction and help hard-working, struggling Kiwis realise the dream of home ownership … and there’s nothing to stop those houses going to rich pricks. Nothing to stop the 1% subsidising their kids into first homes care of the taxpayer.
I’ve been told that this isn’t a problem because rich people only want to live in mansions. Which I can only assume means there are no problems with rich people using public healthcare when they can afford private, no problems with rich people sending their kids to public schools when they can afford private, and no problems at all with rich people hiding their income in trusts because hey, why would they when they can afford to pay higher taxes?
Oh, and there’s a currently-undefined (because why would you nail down the details of your cornerstone policy before announcing it at the biggest event your party has all year?) time limit for people to stay in those houses or suffer some currently-undefined penalty. That’ll weed out the people looking for a government-subsidised investment for sure!
Language
There’s also the problem of rhetoric: as much as this is about ~the Kiwi dream~ it’s satured with phrases like “entry-level home” and “housing ladder”. What’s wrong with just owning a house? Why is it automatically a stepping-stone to Robert Kiyosaki fantasies of massive wealth? Isn’t that approach to property kind of a big part of the problem?
Finding a consistent message amongst the soundbites
Someone find me the speechwriter responsible for this, please, I’d just like five minutes alone with them in a room. And maybe a pin.
We’ve always been a creative, innovative people with a ‘can do’ attitude.
Respected and admired across the globe.
Down to earth. Willing to give it a go.
We need that new direction now more than ever.
So … the “new direction” is the same as the “old direction”? We need a new direction which is the same as the direction we used to go in but now don’t even though our reputation has remained relatively constant?
The upshot
Labour’s big sexy policy which has apparently instantly rejuvenated Shearer’s leadership is full of rightwing rhetoric about property. It’s not going to help people who are actually on low incomes and it’s hugely vulnerable to exploitation by the people who don’t need it. Meanwhile, we’re meant to just take it on Shearer’s word that there’s some exciting policies about education, research and development, manufacturing, fiscal policy, coming any day now (drink!)
Sure, he managed to speak well, by all accounts. But am I on fire for Labour – am I inspired by this speech? Compared to other things coming out of conference, like an increased voice for the membership, some strong policy remits on schools and civics and marriage equality (though that one could get a little problematic)? Nup.
Because come on, people. The biggest policy smackdown they could come up with involves wealthy people excluding themselves from a handout. Awesome.
Related reading: Danyl’s view of the speech, with this fantastically brilliant point:
Although it occurs to me that developing left-wing policies is pretty easy in 21st century New Zealand. You just look about for the top dozen-or-so catastrophic market failures, pick one, think of the most blindingly obvious solution, and there’s your policy.
Ideologically Impure 
It’ll be tax credits – same as was put in place during Clark’s term. Another gift of taxpayer funds to failed private enterprise.
Actually, no it’s not. 1) Saving money is delusional and 2) why are we having to prop up the private stock market? Isn’t it supposed to be the premium expression of the Free-market?
Money is a tool to distribute the countries resources to where it does the country the most good. Having it sitting in bank accounts earning interest (Yes, I’m quite aware that Kiwisaver funds actually go into enterprises and then get dividends but it’s essentially the same) is that money adding the dead weight loss of profit to the economy dragging it down.
Kiwibuild is actually to get people borrowing again and has nothing to do with building houses (affordable or not). Our monetary system requires that people borrow to create money and thus expand the economy. And it needs to be created at a rate greater than the amount of profit going to owners/1%. If this latter doesn’t happen then the economy will go into recession or even a depression. The recession/depression will eventually happen anyway because of a) the interest it can’t actually be repaid resulting in people being, at some point, unable to borrow more and b) the interest on the borrowed money exponentially increasing the rate at which money goes to the 1%.
The whole system is set up to fail and Kiwibuild is being put in place to try and prevent that failure.
The government is going to borrow $1.5b so that money is already available but it’s not being loaned out because the people who have it don’t take risks (and loaning to first home buyers is a risk) but still want a high return. Loaning it to the government gives them both a high return plus a government guarantee that they’ll their money back.
That money starts the build process but the first home buyers now need to go out and borrow the money to buy the homes and they’ll get that from the banks thus maintaining the borrowing that grows the economy – until the next crash.
I should’ve been clearer on the KiwiSaver thing, Draco – I actually don’t think compulsory KiwiSaver is a good policy, except of course for the stock market, who get access to the money of people who would not personally invest in it.