Wednesday, 4 February 2009

Development's Evil Twin

The Suburban Idyll. Dad, Mum, the kids and the dog pose before the key talismans of individual and familial success in the 1950s and 60s: a new home in the suburbs, a new car, and that prized symbol of the homeowner's annual escape from the suburban dream - a boat. But rich as suburbia's citizens believed themselves to be, they were nowhere near as wealthy as the private speculators who'd invented, constructed and profited so hugely from the new suburban "lifestyle".

WHEN I was a lad of nine or ten, my parents shifted the family to Invercargill. From the big ranch-slider doors of our brand new house on the northern fringe of the city, I looked out on to empty sections, and, beyond these ready-made playgrounds of cocksfoot and broom, to the rolling farmland of rural Southland. Rushing around the neighbourhood, I never paused to wonder who owned all these vacant lots, and it certainly never occurred to me that someone, somewhere, was becoming very rich by virtue of the fact that New Zealand was a healthy, prosperous nation in the midst of a baby boom.

Property speculation has always been the evil twin of New Zealand’s growth and development. Wherever people have settled; wherever the bush has been felled and the swamps drained; wherever, with back-breaking labour, fences have been erected, bridges built, and roads and railways laid down; there also, lurking in the shadows, have been the property speculators, ready to pocket the "unearned increment" that naturally accrues from mankind’s "improvement" of the natural environment.

The essential parasitism of the property speculator was much more apparent to the early settlers of New Zealand than it is to us today. The people who built our villages, towns and cities were only too aware of what they had collectively contributed and achieved, and they were loathe to permit anyone who hadn’t borne their fair share of the effort to walk away with the lion’s share of the profits.

It is the reason why, even today, business premises still pay a higher rate than personal dwellings. Without human-beings there can be no market for the goods and services local merchants provide, and without the natural increase in population their enterprises cannot grow. The differential rating system is a form of tax on the commercial benefits which any expanding urban centre naturally confers upon its business sector. When returned to the local inhabitants in the form of improved public amenities, this unearned increment not only enhances the quality of their lives, but also makes their towns and cities more attractive places in which to settle, thereby creating an environment even more conducive to doing business.

All this was plain to our grandparents and great-grandparents, but, tragically, it is much less obvious to us. To the generations born since the great, post-war suburban sprawl, our towns and cities are no longer seen as things human-beings have imposed upon the landscape – they have simply become the landscape.

This indifference to the realities of urban growth and development has allowed the property speculators to make millions of untaxed dollars while imposing higher and higher costs upon the nation’s ratepayers and taxpayers.

Auckland, our largest city, lies at the very heart of this speculative empire. And the fact that some of the most powerful formative elements of the right-wing coalition that eventually became the National Party were concentrated in Auckland, and its encircling rural hinterland, explains a great deal of New Zealand’s post-war history.

The Los Angeles-style sprawl which typified Auckland’s expansion in the 1950s, 60s and 70s not only made a great many of the National Party’s financial backers extremely wealthy men, but it also pioneered the growth of the deeply conservative and materialistic suburban culture which has had such a deleterious effect on our national character.

Had Labour, and not National, entrenched itself as the dominant political force in Auckland, the shape of the city, and of New Zealand politics in general, would have been very different. As Auckland fares – so fares the nation.

It was Auckland, after all, which ignited the housing boom that eventually engulfed the rest of the country. The rapid enrichment of the upper classes which Rogernomics and Ruthanasia made possible, coupled with the vast influx of Asian capital in the 1990s, dramatically extended the purview of property speculation. Almost overnight, the richest five percent of the population has become the landlord of the poorest 20 percent.

National’s housing minister, Phil Heatley, has reassured this privileged twentieth of New Zealanders that their rents are safe. There will be no Capital Gains Tax (to socialise the unearned increment) and, for the really big-time speculators, he and local government minister, Rodney Hide, have promised to lift restrictive zoning regulations and gut the Resource Management Act.

The evil twin has come into his inheritance.

This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Evening Star on Friday 30 January 2009.


Ayrdale said...

No I don't think so.
An alternative to suburban growth freehold land is a council flat on a council estate. A very likely scenario in a socialist community.
Or is there an ideal elsewhere ?

Anonymous said...

Firstly Chris - your web page is typically socialist - it only works with Microsft explorer. I use Opera and you cant post on your page in opera.
In typical socialist fashion you are forcing me to use a web page which is full of security holes - not good.

Anyway - a couple of comments.
1. Why do you think property is evil Chris. If we had decent public company management then Id be buying shares - but the managers, theyre (generally) idiots who are there through networking (ie" just like politcal parties) and like political parties they very rarely are true leaders - more like followers.
2. Even at its worst, proprety prices will fall no where near as much as share values -another reason to keep with property.
3. Capital gains has nothing to stop property bubbles in other countries - and of course capital gains has its flip side - when it all turns to custard there has to be credits handed out - like there would be now if we had one. The government would just love that wouldnt they.

Carol said...

Anon, I've always accessed and posted to Chris's blog using firefox without any problems.

I tend to agree with most of Cheris's views in this post. I'm a lifetime renter, never owned property, always lived in cheap accommodation that results in small profits for the owner, and have a small amount of savings.

I get fed up with the unbalanced focus by the news media and politicians on property ownership. The whole own-your-own-home mythology has always seemed to me to suck people into complying with a system that benefits those at the top of the property hierarchy. Meanwhile, there's a fair amount of struggle and insecurity for those at the bottom of the system trying to keep a reasonable roof over their heads, and diverting their attention from a wider focus on, and resistance to, how the system works.

When I visited Denmark a few years back, which had a social democratic system, there was a national policy of affordable housing as a basic right for all. There was less focus on home ownership, more on affordable rents etc. Basically there was less general insecurity over accommodation, and people could focus their attention more on other aspects of their lives. It didn't result in a nation of council/state housing.

It's not a case of a stark, polarised choice between a capitalist system focused on property speculation and state controlled "communism". There are social democratic alternatives that involve a mix of capitalism and state regulation.

Anonymous said...

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“What other parts of the city have such nice walks?…..

DaisyandZelda Blog said...

Hi Chris, could we use your lovely image of your 1960s home on our blog talking about living the kiwi dream.

- Zelda

Chris Trotter said...

While I grew up in a house remarkably similar to the one pictured, it is not, in fact, my home.

Please feel free to copy it.