If National wins ...

[craic]

A local company here in HB make a point, in their advertising, of the fact that they were specialists in this field before the subsidies and will still be after the subsidies. Their point is clearly that the subsidy has attracted unscrupulous traders into the market.

[fungus pudding]

A local company here in HB make a point, in their advertising, of the fact that they were specialists in this field before the subsidies and will still be after the subsidies. Their point is clearly that the subsidy has attracted unscrupulous traders into the market.

Precisely. Subsidise anything at all and the price goes up. Subsidies help vendors/suppliers when they are always designed for the buyer or consumer.

[iceman]

Precisely. Subsidise anything at all and the price goes up. Subsidies help vendors/suppliers when they are always designed for the buyer or consumer.

I do know that many rental properties in lower socio-economic areas here in Nelson have been insulated as a result of this project. That is a good result and many families are living in healthier homes as a result.

EZ, this scheme was a result of a formal working relationship between National and the Greens in the first term, which did not last with the Greens having moved squarely to the loony side of politics since then
.

[elZorro]

I do know that many rental properties in lower socio-economic areas here in Nelson have been insulated as a result of this project. That is a good result and many families are living in healthier homes as a result.

EZ, this scheme was a result of a formal working relationship between National and the Greens in the first term, which did not last with the Greens having moved squarely to the loony side of politics since then
.

We had our house insulated under the scheme, I didn't bother checking the quote, although one other firm came and had a look but never quoted. It wasn't very expensive, and a thorough job was done. Putting in a heat pump was even easier, done afterwards.

Russell Norman was on TV this morning, he looked very normal to me, was described as unemotional. He showed the whole range of Green policies, that are a lot wider than the news will report on. Certainly looked like the Greens and Winston Peters could far more likely work with Labour than National, in 2014. Say what you like, the Greens achieved 11% of the vote last time. Winston will also do OK.

Another big topic of conversation was the high price of housing in Auckland. Bill English says thay have some tools to sort that out, although it is very complex. When asked for a description of the tools by Corin Dann, all I heard was politico-waffle. This goes back to a conversation I had with a builder as leaky homes were first appearing. He was involved in building granny flats. They'd make a clear profit of $15,000 on a small cheap home.

Now why would anyone in the private sector risk a lot more investment than that, to make just $15k, if there is any chance of a comeback under the building warranty? To remove those issues, you'll have to use better materials, and then to make a decent margin you'd have to build a bigger and more expensive house.

This is where the private sector fails. They have no interest in building or supplying cheap homes for those with limited incomes. The state will need to do this, and will profit by it, as only they can. Using centralised design and procurement (playing fair of course), and the building teams could be drawn from the ranks of recently unemployed manufacturing workers. National would never do this, as the private sector is all-knowing, and best to let things take their course, right FP? But Labour and the Greens could certainly do something about the issue.

However there is another option - people could move to cities like Hamilton, where the traffic lights are few, and semi-insulated weatherboard houses can be purchased close to the city centre for well under $300,000. But just as in Auckland, jobs are hard to find, especially if you're new to the workplace.

[POSSUM THE CAT]

El Zorro get rid of Fletchers & prices would drop by close to 20% IMHO as you can tie most house building companies to being part of the Fletcher Group to the best of my knowledge.

[elZorro]

El Zorro get rid of Fletchers & prices would drop by close to 20% IMHO as you can tie most house building companies to being part of the Fletcher Group to the best of my knowledge.

Hi Possum, I'm not sure how wide a reach Fletchers has, but all the signs are there that this is a cut-throat business, with net profit being 1.5% of turnover, unsure what the gross profit was. http://www.stuff.co.nz/business/indu...ws-NZ-business

In a similar scenario with the Railway workshops, the State has a clear interest in seeing less people on the dole, and more paying greater tax on goods instead. A builder will pay staff and their PAYE for them, these are costs to the business, but a good portion ends up as income to the State. Business owners soon tire of doing long hours to end up with small gross profits, and in their view the govt taxes become the last straw.

However the State could build these lower cost houses, reap the extra taxes paid and reduce unemployed costs, and still move the houses on in the current low interest environment, thus recycling the cash for the next house. This would not be like the old state housing schemes, as the house will move off the books and will be owner-occupied. Even if the house is sold on at cost, the State wins, by whatever the difference is between a team of building labourers and suppliers being on the dole, and being gainfully employed (it's a lot more than $15,000 per house). Refurbishing older state houses could be a similar sensible process, as long as the asset is sold at the end of it. Moderate refurbishing of rented state houses would be dictated by the return.

Policies like this shouldn't hurt the private sector, since they are not interested in such low-profit building jobs. The effect of some lower cost housing being available shouldn't clobber upmarket house prices either.

Here's an article I found, when trying to quantify the govt benefits of a scheme like this.

http://www.pundit.co.nz/content/tax-...s-for-a-change

This all happened before the last election. In reality, those with 50-60% of the wealth in NZ pay 43% of the income and GST tax. That's not unfair, it's common sense.

The benefits of the State building low-cost houses:
Assume the workers on the houses are over 25, so they might have families too. If they were on the dole, each one of them previously cost the state at least $10,000 a year, minus the 20% tax and excise they'll be paying on their purchases. If they are employed at gross pay of $50,000 for a 40 hr week, their income tax returns $8000 annually to the govt, and then on their take-home spend of $40,000 they'll pay another $6000 in GST, $1000 in fuel tax, and $500 on alcohol tax possibly. Other incidentals mean each new employee will be giving about $16k a year back to the govt. So on the average wage, each new employee means the govt is about $24,000 a year better off than when they were on the dole.

Making the assumption that the team is made up entirely of unemployed skilled people, and that between them they have all the skills/training needed, the team will need to consist of at least 5 people, working for the entire year to complete the house. 10,000 hours approx. Auckland needs another 10,000 houses right now, to keep up with growth. Enough work for 50,000 unemployed, if the correct training and systems were put in place.


Building each house would benefit the state by about $125,000 improvement in net taxes received, and of course the profits on other expenditure by the new workers would also be taxed to various degrees. If the govt sold the houses for anything above the actual costs, that would be another bonus. But it's unlikely the private sector would obtain even $25,000 profit on building a lower cost house to meet the low-waged buying needs, so it would rarely be attempted.

I admit this could be well out, but interesting, no?

[POSSUM THE CAT]

el Zorrol Fletchers average building cost $2000.00 per square metre Golden homes average building cost $1050.00 per square with Steel frame. Some on this chat site query the quality & quote about eight other building companies at $2000.00 per square metre but when you look into it they are all part of the Fletcher group. Also when you look into the building supply companies how many of these are controlled by Fletchers. So no competition just a big Monopoly. Why do Fletchers have a controlling interest in the Christchurch rebuild.

[craic]

Someone on talkback this morning came up with what I would call a great idea. New houses to contain, where possible, a granny flat or unit. They suggested that this would eventually relieve the stress on rentals and other housing. The houseowner would have a means to pay rates or even more or a place for a grown offspring to start out with relative independance ,etc. Years ago, when I built a double garage next to my house, I was limited in the stud height to prevent the garage qualifying later as accommodation. I made the nibwall foundation much higher and didn't fill in before I put the floor down. Everything else was in place but I sold the property and I think the new owner was a motorhead so nothing was gained. A friend had converted a single freestanding garage into a flat without any problem. I agree that the monopoly situation is serious but you can still b uild a standard bungalow from treated radiata pine with a corrugated roof in the same way that has been around for years.

[elZorro]

Appreciate the comments PTC and Craic. My maths will be badly out, because you can buy a 150-200 m2 house off the plans for about $250k-$310k that would suit a small section worth another $100k (how much are sections in Auckland?). If the price of $1000-$2000/m2 is correct (depends on the materials used), assuming half the cost is labour, then it seems it takes only 3000 hours to build a house, if done at cost of labour. There's no great markup here. Maybe National's idea of supplying cheaper serviced sections at a quicker rate is the main issue, rather than builders not wanting to provide lower cost houses.

Regarding cost-benefit to govt, I forgot that there is GST levied on a house sale and its components, so all the way up the chain the govt will end up with a total of at least 13% of the labour proportion in the house, as GST tax. This assumes the markup on the materials is small, and that the sale recoups all costs involved. No-one claims back the GST on labour.

[Fudosan]

Precisely. Subsidise anything at all and the price goes up. Subsidies help vendors/suppliers when they are always designed for the buyer or consumer.

That's my experience when we insulated our house this year. Had several quotes but was surprised to find the prices very similar. An experienced insulation firm not on the list could offer a similar price close to the other two receiving the 33% subsidy from the government.