Managing Expectations – the NZ Housing crisis and Labour’s response.

Watching the 2023 election campaign in New Zealand, one of Labour’s challenges appears to be that it has failed to manage voters’ expectations over the last six years.

Recalling the election campaign in 2017, Jacinda Ardern gave people hope that politics could be different. Moreover, the most significant social problems facing the country could be overcome by electing a government that promotes kindness and relentless positivity.

In early 2018 I wrote a post about the politics of hope, calling it a powerful and dangerous tool. In this blog post, I said the following:

Hope is one of the most galvanising and powerful emotions. It is the thing that has driven some of our greatest achievements as a species. It has kept people alive in times of despair and sorrow. It has driven movements for social change, such as the abolition of slavery and the civil rights movement. Hope is essential. Without it humanity cannot move forward.

But when hope is lost, it can be utterly devastating. Worse it can result in other powerful emotions, ones that drive people not to do good, but ill.

https://nickkelly.blog/2018/04/01/hope-powerful-but-dangerous-tool/

In 2023, many in New Zealand have lost hope. While the political and economic situation is arguably better in many ways than in other parts of the world, the difference in New Zealand is that people feel let down. And as I wrote in 2018, the results of people feeling this way can be devastating.

When NZ Labour won its historic majority in 2020, I wrote the following:

The coming term will not be an easy one for Labour, as the COVID-19 pandemic continues to rumble on and the world plunges into the worst financial crisis in decades. On Saturday Labour were rewarded for their handling of the crisis so far, but the hard part is yet to come. On the one hand, they need to rebuild the NZ economy at a time when international tourism is dead and export markets are volatile. But even prior to this the New Zealand economy was unbalanced and in a precarious state. Its over-reliance on dairy exports has made it vulnerable if anything happens to this market and resulted in over-intensive dairy farming which has harmed the environment – not a good look for a country that brands itself as clean and green. It also faces growing inequality with significant growth in homelessness and poverty in recent years.

https://nickkelly.blog/2020/10/19/nz-election-2020-labour-win-is-a-watershed-moment-in-the-countrys-history/

This has indeed been a difficult term in government, and all the challenges described above came to be. Whilst this was never going to be an easy time to govern, after six years in power, three of which with a massive parliamentary majority, hard questions need to be asked about whether NZ Labour lived up to voter’s expectations.

There are two areas where the Labour-led government in New Zealand could have done a better job of managing expectations. One is Housing, and the second is the government’s handling of the COVID-19 pandemic. This post will focus on housing, and the next one on COVID.

Prior to the 2020 election, I wrote the following regarding the NZ Government’s handling of the housing crisis:

It is easy for both Labour and the Green Party’s to say they could not achieve all they wanted in their first term in government because of a difficult coalition partner. But this can only go so far. There are certain policy areas where the current Labour-led government have simply not yet delivered. At the beginning of 2019, Jacinda Ardern announced that it would be the year of delivery. Yet in policy areas such as decreasing homelessness, or the now ill-fated Kiwibuild program to build houses to combat the NZ Housing Crisis – delivery simply has not happened. Yes, these are difficult policy areas, but they are also policy areas where Labour took a strong stance in opposition.

https://nickkelly.blog/2020/08/09/jacinda-arderns-labour-government-style-over-substance-or-a-guiding-light-for-progressive-politics/

The reality was and is that addressing the housing crisis was never going to be quick. A problem over three decades in the making was never going to be fixed within one parliamentary term. NZ lacks skilled construction workers due to apprenticeship programmes being cut in the 1990s. Since selling off the Ministry of Works in 1994, NZ has been reliant on large international companies for major public works, including major housing projects. These international firms have no sense of obligation to New Zealand and are price setters.

Even if the above were not issues, there still needs to be planning consents, environmental impact reports and other processes which means housing developments take time.

The problem with Kiwibuild was not only the slow pace at which progress was made but also that as a policy programme, it did not on its own mean thousands of low-income people could afford housing. It addressed a supply issue, but not related issues such as lifting people’s incomes and lowering deposit rates for mortgages.

In 2017 Labour and Green Party voters in New Zealand believed that Kiwi Build would tackle the housing crisis. The then opposition underestimated the challenge a mass building programme such as this would take. This does not mean it was the wrong policy, but that Jacinda Ardern and the Labour frontbench over-promised and under-delivered. Had they not done so, Labour’s vote may not have risen to a level where entering government was viable. But long term, this has now contributed to the challenges Labour are facing in this election.

The National Party’s track record on housing is abysmal. Nobody expects the National Party in power to do anything other than allow the wealthy few to own more and more property. In this way, National and the Right are much better at expectation management. They win not by exciting voters and giving hope, but through many voters becoming depressed to the point where they disengage.

The housing crisis is not unique to New Zealand as I wrote about back in 2018. Governments in English-speaking democracies in particular struggle with this complex problem, that has no single fix. Instead, it will take significant policy changes, but more importantly changes to public attitudes on home ownership, regulation of the rental market and in-fill housing. It takes a strong government to achieve such a change within the limits of parliamentary democracy. Until this happens, expect governments to keep falling at the ballot for inaction.