Why does the Green Party oppose taxpayer savings?

Gareth MorganProperty, Tax and Welfare0 Comments

Some, including the Green Party, have questioned the wisdom of the Government’s proposed sale of state houses. In this blog we will look at the detail on how this proposal has worked overseas, and could work here. The question them becomes why the left, and the Green Party in particular, are so ideologically allergic to a good idea.

What really matters?

Let’s begin by reminding ourselves of what is important here; our most vulnerable citizens having access to safe, affordable, quality housing. Political ideology pales in significance compared to that.

Resources are always limited. Regardless of what government is in power, no matter how much money they throw at the problem, we would want to achieve as much as possible given the limited spend. If social housing providers can squeeze more out of each dollar of spend, it would be illogical not to use them.

As we will see below, social housing providers overseas have proven that they are better at achieving the government’s goals than the government is. If that is the case, we should be looking to see if the same gains are on offer here. Achieving the same outcomes by spending less money should always be a priority for government. And any political party that doesn’t seek that certainly is not fit to rule.

But this won’t build more houses!

One major criticism from Labour and the Green Party was that this policy won’t increase the number of houses available. So what? This isn’t about increasing the supply of houses, it is about improving the efficiency of government spending. It’s almost as though the Opposition only cares about diverting the discussion rather than seriously evaluating the proposal. That’s hardly earning their keep.

As it happens this change may well end up boosting the supply of houses, but we won’t know until we give it a go. Since this approach has been used in the UK, social housing providers have been able to keep increasing their stock despite falling public investment – that’s called an efficiency gain. They have achieved this by doing things in a different way – for example converting or selling existing stock, or accessing private funding. As a result, they have been able to make public money go further.

Social housing can be better

Social housing providers overseas are not-for-profit, they are not private sector operators seeking the highest return. But they do seek the highest efficiency, because each gain there enables more social service provision. That is why John Key has acknowledged that the sale of state houses to social housing providers would not be as lucrative as selling them on the open market, where the buyer can turn the biggest dollar from the asset they acquire so can afford to pay the government more for the house. And if you don’t believe they really care about their tenants, research has shown that social housing operators in the UK involve their tenants in decision making, and generally have a less hierarchical, more customer friendly approach than the public sector. As a result, they have more satisfied tenants. So much for the State as the best provider – the Greens and Labour’s view of the policy might be different if it weren’t through ideological blinkers.

Social housing providers are regulated to ensure they provide affordable, quality housing, but usually this regulation isn’t even needed. Because of the charitable status of their ownership, social housing providers operate in the best interests of their clients, indeed they usually perform better than they are required to under regulation. For example, in the UK, 35% of private rented homes failed to meet government standards, but for social housing providers the figure was much lower at 16%. Significantly, social housing also rated better than public sector owned properties – again a fact that will upset the idealogues.

Social housing brings other benefits

The benefits go way beyond better quality housing for the vulnerable. Because they are not-for-profit and listen to their tenants, most social housing operators end up involved in neighbourhood regeneration.

Research shows that benefits of social housing span health, crime, employment, wellbeing, education and a better functioning community. Here are a couple of examples:

  • tenants report fewer GP visits following the move into social housing; and
  • social housing providers run employment courses, and one in five participants find a job.

Why are the Green Party so opposed?

The Labour Party’s opposition to any asset sale is a knee jerk reaction to be expected from the left of politics. Rather than think of the best way to spend limited government funds, they default to government provision being the best way. They also want to score political points by comparing it to the sell down of SOEs – despite that being a completely different kettle of fish.

Given their stance on social justice and denial they are a left-locked party, we would expect a Green Party to be a little more open-minded. However Metiria Turei’s response to John Key’s announcement carried all the rhetoric and baggage that we expect from the hard left. Instead of evaluating the idea on its merits, her response was all political posture – claiming landlords and developers would benefit from the change, yet we all know the transfer is not to them but to social housing operators. It’s just dopey, ideological drivel.

One of her quotes in particular struck an ironic note:

[quote]But National is ideologically allergic to the state owning homes, and will sell up, regardless of the consequences.[/quote]

Metiria provides no evidence, hers’ is just vacuous political noise. Here’s a policy that is trying to get efficiency gains in the provision of a social service, with the obvious outcome being a better service for tenants and value for taxpayers, and she opposes it without cause. Oh well.

Economic illiteracy is not a redeeming feature of a party leader.

Let’s be charitable. Maybe the Green Party distrusts National over implementation. That is all very well, but they should say so. But they can’t ignore the evidence of the success of social housing operators overseas. The Green Party should be applauding National’s idea, but of course holding them to account for delivering a better deal for vulnerable people. Otherwise it’s just the same old Green Party, stuck to the left of Labour.

Why does the Green Party oppose taxpayer savings? was last modified: December 15th, 2015 by Gareth Morgan
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Gareth Morgan

Gareth Morgan

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Gareth Morgan is a New Zealand economist and commentator on public policy who in previous lives has been in business as an economic consultant, funds manager, and professional company director. He is also a motorcycle adventurer and philanthropist. Gareth and his wife Joanne have a charitable foundation, the Morgan Foundation, which has three main stands of philanthropic endeavour – public interest research, conservation and social investment.