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Insights 41: 2 November 2018
Read: Dr Eric Crampton covers in his Newsroom column the government's proposed changes to post-disaster rules
Read: Briar Lipson discusses in the NZ Herald how the NCEA review is not tackling our declining performance
Read: Dr Eric Crampton discusses the Tax Working Groupís advice on tobacco and alcohol excise and sugar taxes

KiwiBuild lottery will not restore the great Kiwi dream
Roger Partridge | Chairman |
Auckland’s first KiwiBuild winners could hardly keep the smiles off their faces. And who could blame them?

Yet there is a flaw at the heart of Housing Minister Phil Twyford’s KiwiBuild policy. At around seven times Auckland’s median household incomes, no one can seriously argue that a house costing $650,000 is affordable. On internationally recognised measures, KiwiBuild houses would need to be sold at a 50% discount to meet the affordability tag.

Consequently, KiwiBuild homes are out of the reach of median income earners across New Zealand. Instead, KiwiBuild is creating state-subsidised winners in a housing lottery for the well-off.

Meanwhile, the high cost of housing continues to hurt low-income Kiwis. It stifles labour mobility, locking workers out of our growing cities. Even worse, high housing costs cause overcrowding and poverty.

Instead of starring as host of the new KiwiBuild game show, Mr Twyford should focus on the real cause of the housing crisis: the lack of affordable land. We will never have affordable houses when there are no affordable sections on which to build them. KiwiBuild barely scratches the surface of this problem.

To lower the price of developable land, we need fundamental reform of New Zealand’s obstructive town planning culture and the incentives that have created it. This requires changes to the way we fund local infrastructure for new housing.

Currently, population growth is an expensive inconvenience for local councils. The extra income tax, GST and company taxes generated by new residents flow straight to central government. Meanwhile, councils are left looking to reluctant ratepayers – or to borrowings – to fund the infrastructure needed to house their new residents. Little wonder our growing cities suffer restrictive planning processes and a shortage of infrastructure-ready land for development.

Countries with stable house prices like Switzerland and Germany show us what needs to change. If central government redistributes a share of the taxation from population growth back to the localities that are growing, local councils have both the means and the incentives to build the infrastructure needed to accommodate their new residents.

Getting the incentives right then creates a virtuous circle within growing regions, increasing the supply of infrastructure-ready land for housing, keeping land prices low. In turn, this attracts more residents and more growth.

The KiwiBuild lottery may be creating smiling winners. But until our politicians address the systemic infrastructure funding flaws, for many ordinary New Zealanders the great Kiwi dream will remain just that.

Setting the question
Dr Eric Crampton | Chief Economist |
Supporting a regulated market for cannabis hardly requires you to think cannabis is a good thing. It rather recognises that illegal markets are risky with their own harms, and that American states that have liberalised have generally seen good outcomes. Regulated legal markets bring the protection of the Fair Trading Act and the Consumer Guarantees Act. Criminal profits transform into government excise earnings.

Labour’s agreement with the Greens promised a referendum on legalising the personal use of cannabis at or before the next election.

But what would that mean? The referendum could ask whether people be allowed to grow one or two plants for personal use, maintaining prohibition elsewhere. It could propose removing cannabis from Schedule 2 of the Misuse of Drugs Act and treating it the same way as any other consumer product. And there are no small number of options between those poles.

Next week, the Cannabis Referendum Conference will start hashing out what legalisation should look like. The Greens’ Chlöe Swarbrick will talk about the recent medical cannabis campaign before joining a panel with Labour’s Ginny Anderson to discuss the coming referendum on personal use. Former Prime Minister Helen Clark will appear by video conference.

And Labour’s Greg O’Connor will be there talking with me about models used abroad, his recent travels to places like Switzerland, and Canada’s legalisation of cannabis this past month. 

Canada’s marijuana legalisation piggybacked a bit on the country’s varying provincial rules for alcohol. Provinces have different minimum drinking ages; minimum purchase ages for marijuana were left to the provinces. Some provinces limit alcohol sales to provincial government stores; provinces were left to decide whether cannabis sales should be through private stores, government stores, or both. Excise of $1/gram applies everywhere.

New Zealand could do well by simply adapting for cannabis the rules already in place for alcohol – like minimum purchase ages, provision for local cannabis policies that vary from a national default, and restrictions on advertising and marketing.

Referendum questions should ask voters to approve a finalised piece of legislation. Even questions that seem straightforward can turn thorny in the political debates around a referendum – the referendum on legalising spanking was not that long ago. Two years is a long time for thinking about a referendum question but is not all that long for setting legislation.

Hopefully, next week’s conference will help start the ball rolling.

Tricks and treats
Dr Oliver Hartwich | Executive Director |
Today is 2 November, and for conservative Christians among us that means All Souls. For the rest, it is just day two after Halloween.

Halloween is a strange feast in our calendar. Nobody knows what is celebrated and why. But that, I would argue, makes it the perfect candidate for New Zealand’s next public holiday. We need more nonsensical feasts to guide us through the year.

As far as I can tell, Halloween’s sole purpose are two traditions, neither of which is ancient. The first tradition is to observe Halloween with trick-or-treating and anything pumpkin-related. The second is to object to observing Halloween, presumably because it lacks meaning.

Before anyone corrects me now, of course there is more to Halloween. Yes, it is ‘All Hallows’ Eve’ – the night before All Saints. Which makes it even more curious: As society is becoming more secular, a new pseudo-religious festival has been born.

But that is the key to understanding Halloween. Where there are fewer holy days, people are yearning even more for holidays. We need them not primarily because of their meaning but because they structure our lives. They also provide excuses to behave badly and eat unhealthy food.

Seen in this light, with its sweets and noisy behaviour, Halloween is the perfect way to introduce even children to the concept. Hence, the proposal to make it a public holiday.

Especially in New Zealand, with our mediocre number of just 10 public holidays per year, we would all benefit from having more time off. Our bizarre ‘Day after New Year’s Day’, some obscure regional anniversaries, and another holiday celebrating a distant monarch’s birthday in the wrong month are a good start. Let’s now properly fill our calendar.

New Zealand has a dearth of public holidays between early June (Queen’s Birthday) and late October (Labour Day). We could add the Chinese ghost festival Zhōngyuán Jié, which usually falls in late August. It could be our annual practice run for Halloween.

Toilet Paper Day (26 August) and International Strange Music Day (24 August) could also inspire great traditions of children behaving badly.

There is no limit to the occasions we could celebrate. Cambodia today has no fewer than 28 days off per year. The ancient Romans were on holiday half the year and still somehow built an Empire.

One final suggestion: I believe we need a day to celebrate satire. Let’s start with it today.
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