It isn’t easy, being …

Continuing on with my pre-election assessment of major party policies, I’ve been thinking about the way the major party’s policies on poverty, the environment and housing compare.

Poverty should have been a  big election issue. David Cunliffe assumed the leadership talking up the Left’s special concern for the poor, and has attempted to brand Labour as the party that cares, the implication being that the current government don’t lose sleep over the current levels of deprivation. The poverty debate, however, has all too readily degenerated into arguments about the extent of the problem (ranging from bad to extremely bad), along with vague assertions about who is to blame. The important stuff, what we might do about it, has had much less air time than the Left had surely hoped.

If this were the only issue I considered when voting (and there are worse single issues to focus on) then this would be a particularly easy vote to cast. National’s policies, it seems to me, are predicated on the notion that there just isn’t much one can do about the problem, and therefore, beyond aiming for economic growth, and hence more jobs, it’s just a fact of life and we have to get used to it. There are a number of reasons why this strikes me as a hopeless approach.

First, while jobless rates are clearly a crucial part of the equation, it’s not the case that they are the only determinant of poverty levels. Wage, benefit and cost of living issues are also crucial. Over the past thirty years we have seen dramatic changes in poverty. The reforms under the stewardship of Roger Douglas saw a significant rise in poverty, mostly because people did not exhibit the kind of flexibility the architects of the reforms envisaged. Although new jobs and industries did to some extent emerge eventually, an entire subsection were by then moving towards entrenched unemployed that in turn became intergenerational. The reforms failed to manage resource re-allocation adequately, and thousands of families have suffered ever since. The benefit cuts under Ruth RIchardson also saw a large rise in poverty levels, whereas the implementation of Working for Families saw a material reduction in poverty for those fortunate enough to be in work. So, while one might choose to argue about the pros and cons of various interventions, it is simply not true that poverty is not responsive to policy settings. That National has been so reluctant to engage about the issue of which settings they might try to change and how, strikes me as little more than an abdication of leadership.

My other main objection to the ‘jobs first’ approach to poverty reduction is that it rather ignorant the fact that no party is currently projecting a future where we return to full employment. In fact, as joblessness falls, and we experience upward pressure on prices, the Reserve Bank Act mechanism essentially requires that the brakes are put on growth.  So, given we all expect unemployment to persist, and even have sanctioned an in-built mechanism to support that persistence, suggesting that the sole answer to the poverty question is jobs is disingenuous. Considered as a package, a Labour/Green approach to poverty strikes me as simply taking the problem more seriously. The only possible defence the Right might construct at this point is to argue that the proposed measures will hurt job growth, the case they’ve tried to construct against a rise in the minimum wage, but they haven’t produced the studies or data to support their claims, and for me it has the feel of rhetoric.

While there are any number of environmental issues in play, from water management to oil exploration, climate change is surely the biggest issue. Although it’s hardly had a run during the political discussions this election, that doesn’t mean it’s a problem that’s about to go away. Indeed, our best attempts at modelling the phenomenon have grown no less alarming, and it seems both that change is coming and that, if we  don’t act collectively and decisively, that change will be hugely costly. Given this backdrop, one  might expect any serious political party to both have a strategy for adjusting to these changes, and a strategy for contributing to the global effort to minimise them. Perhaps the most depressing element of this election is the fact that an observer could easily be left concluding the problem doesn’t even exist.

National score poorly here. Under their watch, the Emissions Trading Scheme has fallen over, and their official line seems to boil down to ‘it’s not for us to lead the way.’ The argument, I guess, is that any action taken unilaterally by a small trading nation will make no difference to the overall situation, but will hurt us significantly. Against that, I would argue first, that the assertion that adjusting to the new imperatives first will hurt us economically is by no means established. What it will surely hurt is those industries built upon the assumed right to pollute without paying for their mess, but there is also genuine potential for growth amongst clean industry alternatives. Ethically speaking, I’m not particularly comfortable with the argument that, because I can’t fix the entire problem, there’s no need for me to do my bit. Pragmatically speaking, if we were to extend this approach to social behaviour, in the name of consistency, we’d buy our way into a pretty mess, I imagine. I can’t shake the feeling that the real problem on the Right is that they’re just not convinced by the science. Perhaps Colin Craig will be able to push for Creationism in Schools if he makes government, or classes in moon landing conspiracies.

On the other side, Labour are not pushing this policy area at all, and to my mind their approach (mostly trying to reform the ETS) tends towards the token. Not surprisingly, the Greens are more active on this front, although I have to say I’m disappointed that they have chosen to use clean waterways as their flagship environmental policy this time around. I suppose they’re attempting to appeal to a broader swathe of voters, but if The Greens can’t be relied upon to keep climate change front and centre, then what hope is there? This feels like one of those times in history that will take a bit of explaining, when our grandchildren start asking their pesky, ‘what were you thinking?’ questions. Nevertheless, by comparison, the Left win this one without raising a sweat, and I’m feeling much better about sending my vote their way.

Finally, and briefly, housing. This isn’t an issue that would normally be on my radar, but it is remarkable just how dysfunctional our housing market has become, and how brutally this impacts the standard of living of middle income earners. Should we find a way of bringing prices back in line with international guidelines, a massive amount of income would be freed up for the next generation of mortgage holders. Of course, for every person’s gain, another must lose, and so it is worth noting where the winners can be found in during a housing bubble. Essentially, rising house prices see a transfer of wealth from the new entrants to the existing owners, which is an intergenerational transfer in favour of the middle aged and beyond. The servicing of the debt generates income for the banking industry, so in our case that’s money being earned by NZ mortgage holders being transferred offshore in the form of banking profits. And it’s a transfer of wealth (untaxed) towards landlords, who in general would find themselves above the average for income and wealth levels. Reversing all of that scores points in the name of both equality and international debt, as well as offering the next generation a way into the most secure and reliable method of savings we have. So, any party that could turn this round would be doing something incredibly positive.

And here I stop, because I don’t know how you do that. The obvious point is that this is mostly an Auckland problem, house prices there are well out of step with the rest of the country. It’s tempting to conclude this is purely a supply issue, and that the inability of the Auckland housing market to keep up with migratory demand is the problem. To this end, efforts to free up land, encourage higher density living, or even just having the Government build the houses, all have merit. And it’s possible the Capital Gains Tax will have a positive impact here, although I can’t imagine it will be huge (I don’t think there’s any case internationally of it having this effect.)

However, and here I’m wandering well beyond the sphere of any expertise, I’m not convinced this is all about a regional supply problem. Internationally, bubbles seem to rise up unexpectedly, and the housing market has some curious features, not least of which is that the headline price (and so expected value next time you put your own price up for sale) is the result of marginal trading, which is to say, most of the time, ost houses, are not on the market, they’re just being lived in. The strange behavioural quirks this causes, from owners remortgaging  to exploit their new, and largely illusory wealth, to sellers feeling they have lost if they don’t meet their newly inflated expectations, mean that house markets can go nuts even when the underlying supply conditions are not particularly dire. Which is not to say supply won’t be part of the solution, but I wonder if policy makers shouldn’t be thinking a little more broadly.

All of that said, I’m simply not expert enough to know which of the two sides is more likely to ease the problem and so, even though it’s an undoubtedly an important issue, it won’t be part of my decision making. Not that there’s really much of a decision left. It turns out I’ll be voting Green again, all the while hoping against hope that The Conservatives aren’t part of the next Government.


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