On The Nation: Lisa Owen interviews Andrew Little

Youtube clips from the show are available here.

Headlines:
Labour will build 1000 new state houses a year for as many years as it takes to meet demand

Indicates the Housing New Zealand dividend will be used to pay for those houses

Little wants to cut the number of working visas issued. Won’t commit to how many but says National wrong to increase it by 5,000 last year while economy was slowing

Hints that Labour will announce an expansion of its Kiwibuild policy, but the houses that would have been worth $300,000 when the policy was first announced will now be worth $400-$500,000

This weekend, the New Zealand Labour Party turns 100. It’s hard to imagine it’s going to be a happy celebration. Things have stabilised since the leadership changes and the 25% result at the 2014 election, but the party is struggling to make inroads in the polls, so a lot – a lot – is riding on this weekend’s housing announcements. Labour Leader Andrew Little joins me now.

Good morning.

Good morning. So, before the break, we heard Bill English there saying he’s not committing to act on immigration numbers or tax breaks on rental properties despite the Reserve Bank’s comments. Would Labour get rid of negative gearing?

We’re making our announcements about housing policy tomorrow. It is comprehensive. It deals with a number of issues, including look at how we deal with speculators in the market. There’s no question there’s a bunch of people who are in, particularly the Auckland housing market, which is just to realise a capital gain. They’re in and out. We do need measures to address that, and I’ll be talking about that in my speech tomorrow.

Okay, well, because in 2014, it was your policy to get rid of taxes that—tax advantages that helped speculators, so is that still your position? Because that would cover negative gearing.

Yeah, so I’ll be talking about that tomorrow, and I’ll be very clear about how we’re going to deal with the speculators in the market who are driving prices up.

But the 2014 policy you stand by – is Bill English wrong on that? Negative gearing – not looking at it?

No, I think—I mean, if you look at all the independent commentators, including the Reserve Bank, who are desperate to get the Government to do something seriously about the housing market, particularly the Auckland housing market. And it is because of that, the large number of homeless, the fact that we simply are not building enough houses – that’s all driving us to our housing policy, which I’ll be announcing in full tomorrow.

Okay, well, immigration – it’s around 60,000 net a year. In the past, Labour has said that the sweet spot is between 5000 and 15,000. Do you think that’s still right?

I think the issue, certainly that I’ve been focusing on, is the number of work permits that we’re issuing – the number of people that are coming here from overseas on work permits. We increased that by 5000 alone last year at a time when the economy was slowing. And I think most people would say that that just doesn’t make sense. So that’s the area that we would have a look at, and I think that’s what the Reserve Bank indicated was the area that I think the Government needs to usefully have a look at.

So what would the numbers be, do you think, that would be right for work permits?

Well, I think the idea is to match the work permits that we’re issuing to people overseas to what the economy can sustain. And bearing in mind that we still have over 5% unemployment in New Zealand, we’ve got to be making an extra effort to make sure that those who are already here are getting the opportunities to train and get jobs here.

So, what number? What can the economy sustain, Mr Little? What’s the number that the economy can sustain?

Well, it’ll move from one period to the next. But as the economy’s slowing—

Ballpark.

Increasing the number of work permits by 5000, that doesn’t make sense.

Okay, well, can you give me a ballpark figure?

No, I can’t, because what we do at any one time is going to reflect the state of the economy and our reasonable projections about it. But when we know the economy’s slowing, because we knew two years ago the significance of the dairy downturn, the downturn in the oil and gas sector, that we were going to be—that the economy was going to be slowing and unemployment was going to be rising.

But your predecessor—

So why would we allow our immigration policy to be managed to allow 5000 more in than the previous year? That just doesn’t make sense.

Your predecessor, David Cunliffe, was very specific. 15,000 was the top number he said. Why can’t you be as specific?

Well, when we’re looking at total immigration, there’s some immigration we don’t get to control. Those coming from Australia, those coming from—our obligations to our Pacific Island neighbours. The area that we can control and should be managing is those coming here to work, getting work permits. We know that there’s an issue with the long-term and short-term skill shortages list and the occupations that appear on it and the lack of review of those occupations, so that’s the kind of work that we need to do.

So can we say at least a cut-off at about 5000?

Well, I’m not going to put a number on it. What I’m going to say is managing immigration properly to meet the needs of our economy in the state that it’s in – that’s what we need to do, and that will shift around from one period to the next. Right now, I’d be cutting that number back. An extra 5000 isn’t justified. 38,000 work permits – people coming here to fill vacancies that in many cases aren’t here – that doesn’t make sense. That’s what I would be focusing on.

Okay, so in the question of who’s right in the stoush between the National Government and the Reserve Bank, is the Reserve Bank wrong? Is it just not getting on with it, as the Government says, or is the Government wrong?

Well, the Reserve Bank’s got very limited scope to do a great deal. They can, you know, change interest rates through the OCR. They can put title restrictions on the banking sector. That’s all they can do. They have been very clear. They describe it as a team effort. Actually, the Government has to do stuff, and the Government’s got to do stuff about controlling the demand side when it comes to the property market – so there’s things they can do. Our policy is when it comes to offshore buyers living overseas, they’ve got to build a new one, not compete with people for existing houses. So there’s things like that. But in the end, it comes down to this – We have a huge housing shortage. We have to build more houses, and we have to build more affordable homes. That’s what we’re targeting.

Okay, well, let’s walk through some of the things that you could be doing about this. You ruled out capital gains tax in your first term, but if this is a housing crisis, do you need to rethink that?

Well, we’ll talk a bit about that tomorrow. There are tax measures that can be taken. I’ll about that.

So is capital gains still out in the first term?

We will not be going into the 2017 election promising a capital gains tax.

Okay, well, in terms of the plans that you’re unveiling over the weekend – KiwiBuild. We know about that, but let’s run through some specifics. 100,000 houses is what was the original target. Is that going to change?

Well, I’m going to be making those announcements tomorrow. We know we need to build more houses. There’s now an urgent—

So you’re going build more houses under KiwiBuild?

There’s a level of urgency about that, so we’ll be talking about where the numbers are and where they call.

Because in the first year of that programme, I think it was about 800 houses that you we’re going to build. Do you need to ramp up those targets? Increasing upwards.

Yeah, it will ramp up in the initial phase. There will be a two-to-three-year ramp-up sort of period, but we are very clear about the number of houses that need to be built. And they’re not, of course, just in Auckland. They’re outside of Auckland as well. And with a level of urgency. The type of housing, too, may well be different to what we were contemplating two or three years ago, so all of that sort of detail is the stuff I’ll be talking about tomorrow, and, of course, the mechanisms we have to achieve that, I’ll be talking about that as well.

300,000 was what was affordable for a KiwiBuild house when the policy was launched. What would it be now?

Well, it’ll be different, and certainly in Auckland, it’ll be different. But that’s why we’ll talk about the kind of housing, the mix of housing, that we’ll need. You know, it can’t all be a stand-alone house on a quarter-acre section. Those days are gone.

But what ballpark? 400-500,000? Is that what a KiwiBuild house will end up costing?

Um, it’ll be – that’s a rough ballpark figure, yeah.

Okay, the thing is, if you do decide to ramp up KiwiBuild – you’re talking about sticking a cap on work permits. Where are you going to get the people to build these houses? Because already, we’re using tradies from overseas down in Christchurch.

Yeah, and we still have a large number of people unemployed. Part of the programme is about a workforce development programme as well. So I’m confident that in terms of the plan that we lay out, we will address all those issues. We are committed to doing the one thing that is most needed right now, and that is to build more houses. It is something that this Government just does not seem to get.

Well, KiwiBuild is the private sector building houses with government—a government procurement, programme, basically. Are you going to build more state houses?

Yes, we’ll be doing that. In fact, I’ll be talking today about what we do in the state housing arena.

So, what are you going to do in that arena?

Well, we are going to build more state houses. The last time Labour was in government, we build roughly 8000—added roughly 8000 new stock.

How many houses will you add under this? Well, we are looking at least 1000 a year until we meet demand. This Government has sold 2500 state houses – reduced its state housing stock. They plan to sell 8000 more. So it’s got a housing—

So how long will it take to meet that demand? Sorry, Mr Little. How long? You say 1000 houses until you meet demand. So what do you estimate that period will be?

Yeah, that could be a few years. It’s hard to stipulate that. When you look at a few—

What, five years? Ten years?

It could be five years. Again, you go back to what’s happening at the moment. You’ve got a housing corporation now that is paying 100 million dollars a year in dividends to the Government. Housing New Zealand has become this glorified property management agency. We’re going to change that. We’re going to give Housing New Zealand the mandate to do the job we would expect of a proper social housing provider, and that is get vulnerable people – people who need houses, who can’t afford to operate in the private market – into homes.

So, to be clear, you’re going to use that dividend to build 1000 houses a year until you’ve got enough?

Yeah, Housing New Zealand won’t be paying a dividend to the Government. It will be focused on dealing with vulnerable people and getting them into a home. You know, it is interesting when you—

So building houses with that money?

Building houses with the money. It’s interesting in your interview with the ministers before. They talked about their big data and all the rest of it. I want to tell you a story – I’ve talking to a lot of school principals, particularly here in Auckland. In South Auckland, I spoke to a school principal who said he has a turnover in his primary school of roughly 40% of children, and mainly because the parents of those children don’t have their own home. They’re moving from pillar to post, and partly because they’re in overcrowded housing. WINZ doesn’t count an overcrowded house as needy enough to get a state house, so those kids’ educations are being totally disrupted. None of that is picked up, and this Government’s gone big-data driven social policy.

Well, the thing is, KiwiBuild goes back to David Shearer. You had a petition in 2014, I think it was, to stop state houses from being sold. You know, you’ve talked about negative gearing before. In the midst of this crisis, have you got anything that’s new?

Yes, and you’ll see that when I announce the full package on Sunday tomorrow.

What is it? Give us an indicator. What is it? What's the big idea that's going to turn this crisis around?

The reason we schedule these announcements and give adequate notice to it. So it was scheduled for Sunday. I've given you an indication that there is a comprehensive package.

It’s going to be something. Can you guarantee it's something we haven't heard before? It's not a recycled idea that we've heard before from Labour?

Yes. You've got to deal with all angles of the issue. There are multiple angles we talked about — the homeless issue the other day...

And it's specifically about lowering house prices.

...we're talking about state houses today and we're talking about the full package — about getting more houses built, cooperating with the private sector, getting affordable homes built. That's tomorrow's announcement and all will be revealed.

And you can guarantee it's not going to be a relaunched idea with a couple of tweaks around the outside? It's going to be new.

It will be a response to the prices today. It will be meaningful, practical, realistic...

But not necessarily new.

...and will answer today's problems.

But not necessarily a new idea?

There will be newness in it, believe me.

Well, we seem to be hearing more and more about things not being good for the working classes — the homeless people struggling on low incomes. Why doesn't Labour seem to be gaining any traction here because the polls seem to be standing still for you still?

Yeah, I think the challenge is to focus on the issues that matter. I think the strategy that we've been following for the bulk of this year is to chunk our issues down to the ones that define us and that are important to New Zealand at the moment. So it is about housing. It's also about health. We've had $1.7 billion cut out of the health sector. It's about education. A freeze on educational funding at the moment at a time when our education standards are slipping internationally. And community safety. Again, a freeze on the police force when our population has been growing. And there's burglaries unresolved, so...

But you don't think we're capitalising on it, Mr Little?

So we're focusing on issues, making those our priorities, and we're talking hard about those issues. And we just get on with the job of dealing with priorities, dealing with those things that actually give people opportunity and a chance and promote those, and that's what we're doing.

We are going to have to leave it there. Thank you very much for joining me this morning.

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