Julian Wood

By Julian Wood - 30/05/2016

Julian Wood

By Julian Wood -

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Budget won’t fix lack of vision

Last Thursday when I told my son I was going to be home late because it was Budget Day, and I’d be working on Maxim’s Income Tax Tracker, my five-year-old son announced, “I love Budgets, I want to come too!” He followed this up with, “Does Budgets have bouncy castles?” “No son,” I replied. To which he replied, “I don’t like Budgets! I’m staying with Mummy!”

It might seem appropriate for a five-year-old to announce a disinterest in the Budget due to its lack of inflatable toys, but I note that much of the adult response to last week’s Budget also focused on what it was “lacking.” Unfortunately, in a Budget that focused on paying off existing debt, there isn’t much room for big spend solutions for the issues many are passionate about—at least not without higher tax or more debt.

Take the intense focus on housing, with reports of many sleeping in cars, and severely overcrowded homes. Countless community groups, marae, churches, friends, extended families are all trying their best to help those in need. With the ongoing political pressure, we can be sure that Government staff at WINZ, the MSD, MBIE, and Treasury will have been working from a multitude of angles—all to find solutions for people without the most basic of provisions.

In fact, a heavily redacted “Briefing for the Incoming Minister 2014” is tucked away on Housing New Zealand’s website. On page nine there are four options outlined for meeting demand in the broader housing market, labelled A, B, C, and D; unfortunately all details of the options are blacked out. However, the non-redacted information on the page is highly valuable. The four options are assessed as to their “economic optimality”, “financial sustainability,” and their potential to “meet all demand.”

Option A would meet all demand, but unfortunately is neither economically optimal or financially sustainable. Option B doesn’t meet any of the criteria. Option C is only financially sustainable; not economically optimal, or able to meet demand. Lastly while Option D is both economically optimal and financially sustainable, it wouldn’t meet all demand.

So essentially, Housing New Zealand told its incoming Minister that New Zealand is stuck between a rock and a hard place. According to them, even if we leave out the need for economic optimisation, there aren’t any policy options that would meet the demand for social housing, and be financially sustainable. Some are suggesting we respond to this urgent need by throwing policy advice to the wind, building a bunch of houses and borrowing the money to do so. Debt, of course, must be paid off at some point, but they’re right to expose that there seems to be a lack of vision, with no reasonable solutions for people in need right now.

The Budget isn’t the place to answer all these questions, and money alone won’t provide real answers. It’s clear that we need an “Option E,” one that involves government and the community working with their combined resources, knowledge, and experience.

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Julian Wood

By Julian Wood -

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