Sunday, November 25, 2012

Will Labour's Kiwibuild Include A Pony?

The Labour conference brought together a perfect storm of diversity including rainbow, union, feminist. Maori, youth and academic factions. The common thread between these groups of non-producers is the belief that their blinkered self interests should be funded by the productivity of others.

To Labour's credit, they've managed to somehow blend these rabid factions into a relatively united front. Socialism has a habit of bonding earnest, self-righteous folk together.

One policy that had all Labourites across all factions wetting themselves with delight, was the fanciful Kiwibuild policy announcement - the grand State work scheme of building 100,000 subsidised homes and allocating them to the state-appointed "needy" by random lotto draws.

This was a magnificent coup for Labour that will help win back those disenfranchised voters that have bled to other left-wing parties (including National). After all, the swelling Kiwi underclass love lotto and of course they all deserve a house that has been subsidised by others. The only thing missing from Labour's housing policy is the promise of a pony tethered at the bottom of the garden of each new house.
So how will this new policy be implemented? Well, other than broad details of relying on the productive and further borrowing to pay for this new social program, Labour are a bit scant on detail, however we see that Kiwiblog has worked out what churning-out 100,000 government built houses over 10 years would equate to:
"10,000 houses a year is 192 houses a week. Now if you take the working week of 40 hours, that is 4.8 houses per hour. That is a new house every 13 minutes of the working week."
IF this was possible, the consequences of State involvement would be at the cost of wrecking the productive private building sector. Meddling in market forces will have serious consequences by inefficiently diverting valuable resource and ramping up prices even further across all commercial and residential housing stratas.

So what will these Kiwibuild houses look like? According to NZ Herald columnist and Labour cheerleader Brian Rudman:
"Despite scepticism from political opponents, industry sources confirm that even in Auckland, this $300,000 benchmark is achievable, able to produce a one or two bedroom, 90 sq metre, two-storey terrace house, all wired and piped and ready for occupation. That's based on a conservative costing of $1,000 a sq metre for 120 sq m of land, and a 90 sq m home, costing $2,000 a sq m to build."
Being in the motel game, we've got experience over many years of accommodating folk in modestly proportioned accommodation, so we've done our own extensive number crunching.

Unfortunately, using the figures available to us, we've come up with a picture that doesn't quite look as rosy that some have been led to believe:

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