Sunday, July 30, 2017

Landlord capture of accommodation subsidies

The following excerpts are from a cabinet paper prepared by MSD, arguing that increasing accommodation subsidies (Accommodation Supplement - AS) won't be exploited by landlords. I am unconvinced if only because of the contradictions in the paper.

For instance, the paper primarily argues that the tenant is likely to spend the extra income from raised subsidies on food, clothing, heating etc. "...rather than more expensive housing".

But it then goes on to make this statement:

Moving out of HNZ properties into the private sector almost always involves paying extra rent.

Which is it to be?

Then consider this:

It isn't difficult to imagine a graphic depiction of this. The rent line would be increasing year-on-year, and the AS line would be static.

Yet the graph used in the paper (to argue that landlords have not been capturing the subsidies) shows virtually the opposite:

Of course, these are averages and city rents pose a problem for low income people. But that also means that there are imminently affordable rentals elsewhere.

Here is a prime example of someone spending far too much on rent.

The answer to housing affordability is not to keep on increasing subsidies. The answer lies in increasing supply and tenants actually cutting their cloth.


Redbaiter said...

It makes me sick to see them arguing (on Kiwiblog & elsewhere) over National and Labour, when the problem you have highlighted here demonstrates so clearly the real overwhelming and most urgent problem is the socialist treadmill that we apparently cannot get off.

Landlords benefiting from accommodation subsidies is only the tip of the iceberg, and really just NZ in an economic and social microcosm.

Then we have real producers dying, because the cost of forcibly supporting the socialist state has sapped their spirit and made them noncompetitive.

There's no relief in sight, just more badgering from a dysfunctional and almost financially bankrupt media as to who will be best lion tamer in the socialist circus.

Labour are driven insane from lack of oxygen, as the Nats and the Greens have taken all their policies and left them in a vacuum. One almost feels sorry for Andrew Little who is being made the scapegoat for poor polling by a squabbling collection of freaks, losers, welfare clowns and power seekers.

NZ is in a world wide competition for private investment, but you'd never know it from the two Venezuela parties, National and Labour, who both think NZ can lift itself into the air by pulling on the handles of the socialist buckets it has its feet in.

As for housing prices, just cutting back on immigration levels would fix that, but of course its only those record number of newcomers that are keeping the whole socialist scam afloat.

A govt built Potemkin village underpinned by a mirage founded on an illusion. Rent subsidies schment subsidies. The whole goddamn edifice is a ridiculous seething milling farce.

Don W said...

Redbaiter , It seems you are not keen on immigration. Immigrants built this country.Prior to immigration this country was wilderness occupied by a stone aged warrior society. The immigrants brought their ambitions, their energy, their dreams and their capital and law and order that turned this country into the prosperous place we now live.It is not immigrants that are the problem but the hopeless gov'ts we now have that couldn't organize a feed at Maccas,Gov'ts that want to take over our lives and dictate to us how we get to live while feathering their own nests.

Lindsay Mitchell said...

Immigrants bring with them demand for housing. When my family arrived in NZ in the 1960s, first we rented a house; second we rented another house in the suburb we had identified as 'home' while 3rd, we paid a builder to build us a house in that locale. Renting a house was not difficult or expensive. Neither was building. My parent's mortgage was $11,000 for a 4 bedroom house.

You must know Red that it is constrained supply of housing that is at the root of the housing problem? Remove the constraints and immigrants will only add to the prosperity of NZ.

DonW said...

You are right Lindsay, immigrants add to prosperity.My family came here just prior to WW1. They became farmers in the King Country, and, to this day. My Great uncle and his two brothers went back to fight in WW1. He was was killed in action on August the 1st at Passchensdale, Tomorrow. These young men went to fight and die in an unnecessary,horrific war created by political leaders. Our country is so much better or having these immigrants who came here looking to better their prospects. God bless my uncle and all those that made the ultimate sacrifice. The political leaders are not our friends.

Anonymous said...

Look on the bright side, Lindsay: as Labour implodes, we might actually get a real National or National+ACT government.
* terminate accomodation supplement
* super means tested
* zero corporate tax rate
* fully charter all state schools (before privatising)
* privatise all DHBs
* terminate government university loans
* real reform: terminate benefits
* terminate all council land use zoning
* close down Kiwirail and sell for scrap
* sell all other SOEs

now or never, Lindsay, now or never.

Redbaiter said...

"You must know Red that it is constrained supply of housing that is at the root of the housing problem? Remove the constraints and immigrants will only add to the prosperity of NZ."

Lindsay, I agree that their are unnecessary restraints on housing but these have been in place for decades, whereas the price rises are comparatively recent. The thing that changed is the rate of immigration.

Nobody I know is against immigration. However I know many who are against invasion and cultural degradation. Immigration is fine as long as it is manageable and in numbers that do not destroy the cultural identity of a country. Or lead to stresses on infrastructure and inflated house prices etc.

On a personal level, I liked Auckland fine before it was inundated with Chinese, Indians, Pacific Islanders and various other cultures/ races, and no one ever asked me if I wanted it changed in that manner. In fact there was a completely undemocratic agreement made between Labour and the Nats not to discuss or debate this matter. (they hate Winston for refusing to be part of this) I'm still pissed off about that elitist denial of choice.

As for the claim that immigrants bring increased prosperity, this is a common fallacy that more modern studies have completely discredited. There is an increase in GDP but the actual pie stays the same size. This results in more people sharing the same pie, which means everyone actually gets less.

See the second half of my own blog post here which deals with these studies in more detail.

Don- Yes, immigrants built this country, but they were predominantly European and of the Anglo Celtic race. From a piece of bush covered rock in the South Pacific they gave that rock a name, hewed a country, and established a parliamentary democracy, the rule of law, and all of the traits of British civilisation that had been developed over thousands of years. From this grew our uniquely Kiwi culture.

No need to disrespect this heritage, which must be the envy of many in the world, for the multi-culturalism you enjoy so much only ever occurs in one direction.

Don W said...

Red baiter. Are you suggesting that the Anglo Celtics,White Europeans, are a superior race.?

Redbaiter said...

What if I was Don?

Naaah, forget it. Don't need to debate anything at this level.