Socialism for the rich

Remember the mantra yelled constantly by Labour ‘Tax cuts for the rich?’ They completely ignored the fact that, as the tax cuts were primarily a movement of thresholds, the people who would benefit most would be those on low incomes.

Since Labour came into power, we have had free tertiary fees for middle-class students. We have had wealthy people receiving a baby bonus of $60 per week. We have had the deputy prime?minister, on a salary of nearly $350,000, receiving a winter heating benefit of $31 per week.

And best of all, we have Kiwibuild.?The Herald?describes it as “Socialism for the rich.” Quote:

If there was any excitement brewing at being able to enter a lottery to buy an affordable Kiwibuild house, it was certainly short-lived, as further details revealed that the “lottery of birth” has probably already scuttled most people’s chances. Disappointment is setting in as more people realise that the scheme is really only going to benefit the rich. This is because the houses are priced so high that few will be able to afford to even enter the final ballot for them. What’s more, many are asking why the income caps have been pitched so high that the scheme seems destined to be dominated by rich buyers who are after a good investment.

The income cap ? $180,000 annual income for a couple and $120,000 for singles ? was widely derided as being far too high, as it would continue to allow the wealthy to monopolise the scheme. Newshub’s Jenna Lynch was highly critical: “in effect there is no real income cap. Only the top eight per cent won’t be able to buy these homes. It’s a free for all. This is not going to help those on low or middle incomes – they’ll be locked out by relatively high wage earners”

Lynch also criticises the lack of asset-testing for Kiwibuild homebuyers: “Further there’ll be no asset checks for those buying a first home meaning so long as your income is below the caps, you could have millions locked away in assets other than housing and still be eligible to get the keys to a Kiwibuild house”. End quote.

Sadly, this was always going to happen. A lack of available land, high immigration numbers, councils dragging the chain, unresolved issues with the Resource Management Act, a shortage of builders and increases in the cost of building materials have created a perfect storm in the property development market. Houses are now very expensive, and out of the reach of people on low incomes, unless they live in rural towns. Labour should have realised this, but they were too busy yelling “Nine years of neglect” to realise that the problems are real. Quote:

According to Stuff journalist Henry Cooke, the “sky-high income cap”, together with any lack of “weighting for need or income like there is for state houses”, means the rich will benefit the most: “Needy families who could really use the help will be out in the cold hard private rental market while a couple of doctors making $80k each will happily move into a nice new home”

But Cooke reports that there is some logic behind this “socialism for the rich” approach. First, Twyford argues that there will be a trickle-down effect whereby the rich buying the Kiwibuild houses will eventually benefit the poor through other houses becoming cheaper (or just not getting more expensive). End quote.

What absolute rubbish. House prices will do whatever they will do, driven entirely by market forces. Once these Kiwibuild houses start coming onto the market after the 3 year hiatus period, the capital gains to be made will be eye-watering. How exactly will that ‘trickle down’? Quote:

Second, there’s the need, electorally, for Labour to keep the rich happy, with the idea that Kiwibuild is also for them: “Setting the income cap so high also invites quite a lot of middle-class buy-in. A whole lot of well-off people who assumed they would never get Government help to buy a home would have woken up on Wednesday morning to a pleasant surprise. Just like Superannuation and free education before it, making a policy universal (or close to it) buys you a lot of voters who have an interest in never seeing a policy die.” End quote.

So Kiwibuild is a middle-class vote buyer now? Funny, we all thought that it was a way for people on low incomes to achieve ‘the Kiwi dream of home ownership’. Not sure where I got that idea from. Quote:

Third, there’s a likelihood that the Government will actually need rich people to be buying the houses, given that they will be unaffordable to most others. Cooke says, “One of the worst possible outcomes for Twyford is that he does build these houses and then they sit empty.” End quote.

So the taxpayer is subsidising homes for the rich. What an unholy shambles this has turned out to be. Why are we doing this? Quote:

There’s a line being run by the Government that the lottery-element of Kiwibuild is a great equaliser ? because poor applicants have just as much chance of having their name picked as rich applicants. Twyford has said “Everyone has an equal shot in the ballot so people who are on a low income, or a high income, as long as they fit the criteria … then they can have a crack at doing this.”

The point being that any low or average income earner is free in theory to apply for the lottery but, in practice, most won’t be able to. As Brad Flahive reports, “In order to enter the ballot you also need proof that a bank is willing to loan you the money needed.” End quote.

In other words, it is socialism for the rich. Quote:

On the issue of who banks will lend to, Henry Cooke reports that banks will only lend to those who already have large deposits: “Jenny Campbell from The Mortgage Supply said many banks wouldn’t be keen to lend out 90 per cent of the value of one of the homes because of the stringent rules around on-selling. End quote.

What a train wreck this scheme has become. Pass me another glass of Chardonnay, will you?