Affordable housing must become priority - English
The Government is looking at housing investment in New Zealand, both Kiwis' fixation with property and the lack of adequate low-cost housing, Finance Minister Bill English says.
Speaking at the annual Family Help Trust fundraiser in Christchurch yesterday, English said despite growing demand for lower-quartile housing, virtually no such housing was being built anywhere in the country.
Changes to local government planning processes would need to be made to allow developers to build cheaper homes and still make a profit, he said.
The rebuild of Christchurch would be a good laboratory for getting the cost of house construction down and an "opportunity to stress-test" the property market, he said.
Recent governments had been "particularly incompetent, almost negligent" in not providing enough social housing for poorer and younger Kiwis who needed it, he said.
The $15 billion spent each year on social housing could be better used and the Government was investigating it.
However, the larger issue was Kiwis' $600 billion investment in property - "by far the largest asset class in New Zealand by a long way", he said.
A flexible property market was needed and that included looking at the way councils planned for the future demand of housing, he said.
"If we can get the housing market better, then we are more likely to get investments more balanced."
Then money would flow into investments that improved the real economy, rather than "overpriced housing", he said.
Meanwhile, the Government was planning to stick to its knitting and provide the environment for businesses to grow, by encouraging investment in machinery, technology and people.
"That decision by a business to employ another person, to invest a bit more . . . that's what economic growth is.
"We don't believe there are short cuts, like there are no short cuts in this city. It takes time to do things."
Strong economies were the best way to protect vulnerable people in societies, which was an important message in a global age of austerity, he said. Countries with large welfare nets were now seeing those protections fraying, he said.
"Those that suffer most when governments have to contain their spending are the most vulnerable."
The world had adjusted and most developed countries were resigned to a period of debt reduction, after generations of debt-boosted growth.
"We're all getting used to the long grind of those economies improving, which seems a lot like the people waiting in their houses in Canterbury: they know it's coming but it's going to take a long time."
However, Christchurch would be an island of high growth due to the influx of insurance money and overseas investors looking for a growing market to park their cash, he said.