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February 12, 2008 | by  | in Online Only | [ssba]

Money for Nothing

Helen Clark’s first speech to parliament has outlined Labour’s new welfare policy. At first glance it looks good, giving money to help the poorest among us is part and parcel with Labour’s Keynesian, leftist tradition. However, there are certain things about Helen’s speech which irked me.

Firstly, it appeared to once again be a knee jerk reaction to National’s policies released over the Summer. The focus on affordable housing would be in direct response to National formulating thier own housing policy, and the direct election year appeal to the working class is an obvious move to reclaim some ground with New Zealand families following the hostile reaction to the anti-smacking legislation.

The policy to re-look at affordable housing and increase the public housing sector appears ill thought out. Economists have been repeatedly saying that the housing market is overvalued by at least 30% and is due to correct anytime.  Bernard Hickey, does a great breakdown (complete with fancy looking graphs) here.

So the question is, will this Labour policy become another money eating bureaucratic tax revenue sinkhole? In my heart I hope not, affordable housing for the poorest is always welcome. But I’m not convinced that there really is a massive problem on the horizon, and if this housing correction occurs Labour will have egg on their face.  It’s also ironic that with this speech Labour is promising a hodgepodge of streamlined grants, to ‘increase’ efficiency, and conversely increasing bureaucracy with its odd housing policy.


About the Author ()

Conrad is a very grumpy boy. When he was little he had a curl in the middle of his forehead. When he was good, he was moderately good, but when he was mean he was HORRID. He likes guns, bombs and shooting doves. He can often be found reading books about Mussolini and tank warfare. His greatest dream is to invent an eighteen foot high mechanical spider, which has an antimatter lazer attached to its back.

Comments (3)

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  1. peteremcc says:

    Actually, it’s more likely that Labour’s policy would CAUSE the correction.
    Opening up more land for building means more competition which reduces prices.

    I guess it’s lucky that all Labour announced was a committee to investigate the possiblity of thinking about maybe opening up some land for certain building projects then isn’t it?

  2. Alan Bollard says:

    This is the weakest political and economic analysis I believe I have ever seen.

  3. Well with the way you are handling inflation at the moment mr “Bollard” I dont think your opinion counts for much.

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