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Insights 45: 27 November 2020
NZ Herald: Oliver Hartwich says bad government policies are making housing unaffordable
Freely Speaking podcast: Why is NZ’s housing market messed up?
Energy News: Matt Burgess on the effect of James Shaw’s sweeping powers on emissions

This is why housing is expensive
Matt Burgess | Senior Economist |
Last Sunday, Wellington mayor Andy Foster joined a protest at a housing development at Shelly Bay.

Wearing suit and tie, he pitched tents to support the occupation but then later told media he thought it was merely a “community gathering.”

Regardless, Foster’s attendance at the protest was inescapably seen as going against his own council, which days earlier voted to support the $500 million project.

Foster, who launched his political campaign on opposing the development at Shelly Bay, was on the losing side of that 9-6 vote. Shortly after, he declared it was “democracy in action.” Clearly, he has since reconsidered that position.

The mayor could not have picked a worse time for his stunt.

For years, councils across New Zealand have made it hard to build a house. Now prices are rocketing. Wellington house prices have doubled since 2014, up 20% in the last year alone, to sit at $785,000. In Auckland, the median house now costs $1M, more than ten times the median household income. Only Sydney, Vancouver and Hong Kong are less affordable. At current rates, Wellington houses will reach $1M in early 2022. Auckland will pass $2M in 2025.

These shameful statistics are the predictable result of poor policies and practices in councils, particularly their practices around resource consents. A 2015 study by Motu found the median time for councils to issue a resource consent is 18 months. Some developments waited more than eight years for a consent.

These delays are long enough to consume a significant part of the housing cycle. Apart from piling up costs on developers (and therefore buyers), delays worsen housing market volatility. Spikes in housing demand take years to turn into new homes, which leaves house prices to absorb the shock.

Foster’s support for protestors only signals further erosion of council processes. Developers already burdened by plan changes, community consultations and consents can now look forward to land occupations as well.

Future opponents of development will simply skip council processes if councils are unwilling to stand behind their decisions. And developers will not turn up at all.

Bigger protests may lie ahead. Increasing numbers of young people feel locked out of an asset class that has provided security and wealth for generations. Should hopelessness among Millennials turn to anger, pitched tents may be replaced by pitched battles.

Education Ministry strikes fool’s gold
Roger Partridge | Chairman |
All too often, today’s flavour of the month is tomorrow’s failure. This truism appears to be playing out in education.

A Ministry of Education study published last week highlights Kiwi kids have better access to computers in the classroom than children from any other developed country.

According to the study, 93% of Year 5 students use computers when learning to read. This compares with only 55% in England and an international average of only 44%. Kiwi students are also the most likely to be asked by teachers to search online and write using a computer.

Good news, right? Especially in the digital 21st century? Hold your horses.

The Ministry’s study found a direct negative relationship between children's enjoyment of reading and how often they read with computers or tablets. Rather than improving student literacy, the education system’s enthusiasm for digital learning may be hurting it.

This over-reliance on digital learning may partially explain New Zealand’s dismal decline in student literacy over the past two decades. Year 5 students ranked last across English-speaking countries for reading – and 24th out of 26 participating OECD countries – in the most recent Progress in International Literacy Study (PIRLS).

The Ministry’s results are not surprising. A 2015 OECD publication, Students, Computers and Learning, found that “levels of computer use above the current OECD average are associated with significantly poorer results.”

Unfortunately for Kiwi students, the allure of shiny but unscientific solutions for classroom problems has plagued schooling for years.

Indeed, the misplaced reliance on digital devices has a far more troubling parallel. Decades of research in the science of reading shows the best way to teach children to read is with a structured, phonics-based approach.

Yet, instead of acting on the evidence, the Ministry champions Reading Recovery, a “whole-language” theory of teaching reading. Proponents claim that reading is best developed by exposing children to whole texts. They believe children can learn to read in the same natural, unconscious way they learn to speak.

The problem is that this seductive approach is not supported by the evidence.

England reintroduced structured phonics early this century. Since then, English Year 5 students climbed 11 places in the PIRLS league tables to sit at 8th equal overall (compared with New Zealand’s 32nd).

England’s experience suggests New Zealand might be wise to investigate using structured phonics here as well.

The whole language approach is certainly alluring. Yet as the Ministry now sees with its digital literacy research, all that glitters is not gold.

Military theatre
Leonard Hong | Research Assistant |
These days, even the German army cannot afford to neglect its green credentials. Pity if that’s the only thing it is good at.

German military manufacturer FFG just presented its latest tank. This is not your usual combat vehicle, not just because of its deep blue livery. It’s a hybrid.

The Genesis, as they call this beast, is a modern field general’s Prius. Except it runs on eight wheels, weighs up to 40 tons and has a 30mm automatic cannon. No Tesla can compete with that.

And it’s a technological miracle. The Genesis reaches speeds of up to 100 kilometres per hour. In silent mode, the only thing you can hear is the gun, and it can drive submerged under four metres of water.

The tank’s green credentials excite Germany’s military strategists. Pity that the rest of the German military is no longer fit for purpose.

The past decade has been terrible for Germany’s armed forces. And this time, it did not even lose a war. Hardly a week goes by without new absurdities from the Bundeswehr. It is hard to imagine how this country ever threatened anyone but itself.

A couple of years ago, only four out of 128 Luftwaffe fighter jets complied with NATO’s basic requirements. But that was still a better percentage than the German submarine fleet back then: all six U-Boats were out of commission.

Maintaining marine equipment is not exactly the Germans’ strength.

The pride of the German navy is a three-masted barque, the Gorch Fock. Though it looks like a relic from the Crimean War, it was only commissioned in 1958. It should have undergone a €10 million repair job in 2015, but five years and €135 million later, the Gorch Fock job is still unfinished.

The list goes on. Airforce pilots losing their licences because their helicopters don’t fly. Soldiers complaining they need to bring their own thermal underwear on exercises and deployments. And the army apparently only has enough ammunition for two days of fighting should the country ever find itself at war.

Maybe the Bundeswehr is just a sign of the times. It virtue-signals some modern values and guarantees that no country ever need to fear the Germans again.

Even their electric tanks would need to be recharged shortly after crossing the border.
On The Record

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