Are We Spinning Around in Moral Circles?

Have we lost our moral compass? The events of the last two weeks seem to indicate that, as a society, we have. It started with yet another story on the tragedy of Aleppo. Five years of warfare in Syria and still we as a world community allow this tragedy to continue. Actually, tragic doesn't start to describe it to be honest. The words sickening, shameful, atrocious, heartbreaking come to mind. But yet we do nothing. "It's over there" we say as we sip on our flat whites and chai lattes. "What can we do?"

Then we were hit with the reality that we couldn't deny, even here in our safe, secure corner of the world. Both Radio New Zealand and the NZ Herald revealed that Kiwisaver funds were being invested in the very companies that profit from the tragedies like Aleppo, sparking shock and outrage (rightly so) summed up nicely in an aptly poignant cartoon from Emmerson.

Many called for the government to step in and put restrictions in place to ensure that money Kiwis were putting into Kiwisaver for retirement wasn't being used to profit off tragedy. Our prime minister's response to those calls was to claim that it was up to individuals to find out where their money was going. In some ways he is right. It is our money and it is for our individual retirements. We as individuals should take more of an interest in what is happening with our Kiwisaver money. But has the prime minister actually tried to do what he suggests? Finding out where money goes once it is in a Kiwisaver Fund is a long, drawn out, confusing process, particularly if you have never done that kind of thing before. Who is my provider? What fund is my money in? What companies and other funds does my provider use to grow my money? Where are those companies and funds based? How do they make their money? Are they investing in questionable companies as well? How do I read company reports to understand the type of company my money is invested in? These are all questions that must be asked and answered. No wonder many Kiwis haven't done this earlier. It's not easy.

Which is why the prime minister's comments were so disappointing. The government already has rules and regulations in place to prevent funds going into the wrong type of companies. After all, the Auditor General found in 2012 that it was illegal for NZ Superannuation to invest money in companies manufacturing cluster bombs either directly or indirectly. All the government would need to do is apply the same rules and regulations to Kiwisaver providers. The primer minister is right in his assertions of individual responsibility but absolutely wrong on the moral and ethical depravity that comes from passing the blame. Government must show leadership and take the initiative. And that's the point. If our leaders aren't willing to show real leadership and simply pass the buck then we have, as a society, lost our moral compass. 

I was reminded of it again this week, this time on the housing crisis that is gripping our country. The Greens, Labour and the Maori Party are traveling the country, listening to people tell their stories of how life is tough throughout Godzone - that housing is unaffordable for many throughout the country and that homelessness is a growing problem not just in the big cities but in the regions as well. Many average Kiwi's are echoing the sentiments of agencies like the Salvation Army and calling for a state of emergency. When questioned on this (for what seems like the thousandth time), our prime minister passed the buck again, this time blaming the previous Labour government (last in power 8 years ago!). Eight years of being prime minister and the best he could do in answering a question about a huge issue facing thousands of Kiwis right now was to brush it aside and blame the previous government.

Come on John! Come on National! It's time to move beyond the petty politics of party and personality. Real leadership is needed and at the moment you are failing to deliver. If you are unsure of what real leadership looks like, I'll give you a clue. First, you announce that no Kiwisaver provider is to invest in any questionable or downright morally reprehensible companies and manufacturers either directly or indirectly. Then you apply the same rules that NZ Super must abide by, stopping any money from New Zealand going into companies that make munitions, cluster bombs and the like. Then, you announce a housing state of emergency. You take the information from the housing hui and from agencies like the Salvation Army and you do something about it. You state that you aren't looking to blame anyone but would rather find solutions that will work. You say, "this isn't right! Not under my watch!" and then you do something about it.

And as for all of us who sit and say, "yeah! Stupid government! Bloody politicians!!" I ask this: What are you prepared to do? You see, we do need government and our leaders stepping up on moral issues like these, but we also have a part to play. Are we willing to move our retirement savings away from providers who have invested in morally reprehensible companies? If enough of us do it, the providers will have to sit up and listen to us. But we can't stop there. We also need to ask ourselves if we are willing to be a helping hand to those who are struggling in our society. Can you make yourself available for a time? Can you donate food or clothes or how about those blankets in the cupboard that you never use? Can you cook a meal? You see, we are made to be creatures of community and therefore we all have a part to play. So take courage, challenge your politicians and then get involved yourself. Perhaps then we might find our collective moral compass pointing true north again.

Up Not Out: Are We Really Serious About the Housing Crisis?

Last week we looked at the need for more homes. In this final part of the series on the New Zealand housing crisis, why building up and not out is the way to go.

Auckland City Council yesterday approved the Unitary Plan. For those outside of the City of Sails, this is an overarching plan which will guide how the city grows in the next few decades. It has been needed and overall it sets out clear ideas and guidelines as to how Auckland will look in years to come. It will see more concentration of housing and more apartment living.This is necessary and vitally important.

It also signifies a shift in thinking in New Zealand. For years we have clung onto a 1950s ideal of a house on a quarter acre section with a  white picket fence. While the section has stayed the same, often the houses have turned into something akin to a 1980s Eastern European athlete pumped full of steroids. That ideal should be banished to history. It is no longer valid or logical. Let’s consign it to history where it belongs.

Instead of holding onto an outdated ideal, we need to build up, embracing apartment and townhouse living. Our family sizes aren’t getting any bigger so why shouldn’t the size of our houses reflect this? And in a sprawling metropolis like Auckland, building up solves not just the housing crisis but many other problems as well, so long as it is done well.

What do I mean? Well, we should focus on efforts on building town centres in and around key transportation hubs. No more NIMBYism (Not In My Back Yard). All parts of Auckland need to embrace this. Whilst the council may like to showcase Flat Bush and Hobsonville Point as great examples of the way forward, the big problem with those new suburbs is that neither is near a major transportation hub. People will still need to jump in private cars and add to an already congested roading network. I think we need to look more towards New Lynn and make that our blueprint.

New Lynn has the third busiest rail station in the Auckland region behind only Britomart and Newmarket. Next to the transport centre is an apartment block and behind that the public library. Across the road is Lynnmall. A medical centre is in the lower floors of the apartment block. Looking west, on the other side of the transport hub is Les Mills and behind that a new housing area which will fill up with townhouses, expected to house 5000 people where the old Crown Lynn and Monier Brick companies were sited. Up the road is a local primary school. All within walking distance. Commuter trains travel in and out, as do across town buses. There are also smaller commuter buses, gathering people from the wider catchment and dropping them to the transport centre. The only thing truly lacking is some decent playgrounds and green areas for families. That’ll change but the point is this is the way forward. Building up. Creating more concentration. Utilising space better.

Building up means a more concentrated population. It makes public transport more doable and appealing. It increases housing supply and also cuts back on the number of single occupant vehicles on the roads. Whilst there are plans for building out in the unitary plan, I strongly believe that the emphasis needs to be on building up.

Building out means taking more farm land and turning it into suburbia. It sprawls Auckland even more. It pushes people away from their work places and forces them into hours of commuting on congested roads each day! More outlying suburbs mean less farmland to produce the food we need. Look at Pokeno, just south of the Bombay Hills. Where farmland and cows once stood, a whole town has now popped up. And it is pretty much all people who then commute into Auckland, some 45-50kms away.

Building out is old world thinking trying to solve a problem of today. It’s time to build up. It’s time to invest in public transport infrastructure. It’s time to see multiple town centres sprouting up throughout Auckland. It’s the only logical way forward and the most sensible way of solving the housing crisis without creating a new problem on the roads.

----------------------------------------------

This is the final part of a 6 part series titled “See Are We Really Serious About the Housing Crisis?” Thanks for all who journeyed all the way through. For those who may have only come in part way, please feel free to read all the parts as I attempt to offer a multi-faceted solution to the current housing crisis.

This is a Time to Build: Are We Really Serious About the Housing Crisis Part 5

Last week I looked at the importance of financial education. This week I look at the need for more homes.

Everyone is talking about it. We have a housing crisis on our hands. One of the major contributing factors to this crisis is that we aren’t building enough houses for the growing population. Demand is out-stripping supply. Particularly in Auckland. It’s a major issue. The reality is that for too long our housing stock has been increasing far too slowly.

Not only that, but some of our housing stock is in serious need of being replaced. Unfortunately it seems to be at the bottom end of the housing market where landlords and tenants haven’t looked after the property. Of most embarrassment to us as a nation is the fact that many state houses are the worst offenders. They look disgusting. Many of them are poorly insulated, mouldy, cold and drafty. They were built in a time where building codes weren’t as stringent as they are now and successive governments have dropped the ball by not making sure they are liveable. In their negligence they have made a mockery of the name and crapped all over the legacy of Michael Joseph Savage.

Admittedly, there are issues with building new homes that do hold things up. The RMA, building consents, local councils, building supplies, even labourer shortage. All have been used as excuses to try to explain away why we aren’t building the homes we need. Enough is enough though. No more excuses, because the excuses are being used as a scapegoat for inaction.

Some of the so called excuses are important steps in the process and I would hate it if we cut corners with them. We don’t want a repeat of the leaky home catastrophe of recent past. We want homes that are good, solid, long-lasting. They should be built to be healthy, warm, and energy efficient.

But we need to build. Not only that, but we need to reconsider what type of homes we are building. It seems that our average house size is getting bigger and bigger. Section sizes are remaining the same, but the buildings look like they are on steroids. Four bedrooms, two lounges, an office, and at least two garages. It seems more like a mansion, particularly seeing as family sizes aren’t really increasing. We need to relook at how we house ourselves. We need more and we need them smaller. Readjust our expectations of what the size of our houses should be is important. We also need to plan well and strategically, which is why I support the Unitary Plan that Auckland Council is considering. It is an overarching, region wide plan on how our biggest city can grow and plan for growth now and into the future.

 So let’s get building and let’s do it well. We owe it to ourselves and to our children. This is a crisis we can’t pass on to them to deal with.

----------------------------------------------

This is part 5 of a 6 part series. See Are We Really Serious About the Housing Crisis for the summary. Next week, I conclude this series with why I believe we should be focusing more on going up rather than out, particularly in Auckland.

Future Proofing & Educating Ourselves: Are We Really Serious About the Housing Crisis Part 4

Last week I looked at Capital Gains Tax and Comprehensive Capital Income Tax. This week I look more longer term with the importance of financial education.

Kiwisaver has been going for nearly nine years. 2.5 million of us are enrolled, with $28.5 billion in assets *. Truly it has been a success and of huge benefit to the country. But, despite this, we are still very financially illiterate as a nation. Not many people would be able to differentiate between a share and a bond. We are buying up homes like they are going out of fashion, and are very happy to put ourselves heavily into debt to do so.

Why this push towards houses? I believe it is for two reasons. One, a house is very tangible. You can see it, touch it. It’s like sticking your stake in the ground, declaring to the world, “this is mine!” The second reason is that we just don’t know about other investments while we continue to fool ourselves into thinking that because we live in a home we understand the property market. We are deluding ourselves.

But it doesn’t have to be like this. Simply saying “uncle Bob invested money in a finance company and lost everything, therefore I won’t trust the sharemarket” shows how much we don’t understand things financial. It is possible to learn about financial investments and not be afraid of them. We just have to spend a little time to do so and Kiwisaver is a fantastic way of doing this. In fact I believe that a non negotiable in signing up to Kiwisaver should be to participate in a four part course on investing basics, the sharemarket and the importance of diversification. If at the end of this course you decide to opt out of Kiwisaver that is fine but at least you have learnt about investing and long term financial planning.

I’ll share my story to explain. When I was enrolled into Kiwisaver I knew nothing about investing and the sharemarket. I was nervous about it, even a bit fearful. Growing up in the eighties I had memories of the 87 stockmarket crash. I let that fear dictate how I looked at Kiwisaver for three years. But one day I looked at my Kiwisaver balance in the default scheme I was in and I decided that I had to do something about it. The first (and probably best) thing I did was read. The most comprehensive and helpful book for me was Mary Holm’s The Complete Kiwisaver. Then I heeded her advise and researched the schemes available, deciding on one I felt would be the best fit for me. But I didn’t stop there. The scheme I moved my Kiwisaver into allows me to select what funds and companies I invest my money into. So I decided to use my Kiwisaver as a platform for learning about the sharemarket. I took a four part investor basics course my provider runs. I learnt how to read market research. I keep an eye on how my Kiwisaver is going. I have regular reviews with the advisor my scheme provides for me. I don’t regret doing any of this at all. And I don’t share this to say look at me. I share this to say if I can do it, so can you. It isn’t hard but it is worth it.

I still have a lot to learn about investing and the sharemarket. But I’m not afraid of it as I once was. I don’t see that the only way to get ahead financially is to buy property. In fact I am so relaxed about the sharemarket that now, with housing prices in Auckland so ridiculously over-inflated (around nine times the average wage), I am very comfortable with the idea of not purchasing a house and instead directing that money into the sharemarket and other investments. And that is where this links into housing crisis. Too many of us throw money into property simply because we believe it is the only way to get ahead. With so many of us doing that it over-inflates the housing bubble. It will pop one day. It won’t stretch on forever. Now is the time to re-educate ourselves and get rid of our fear of the sharemarket and non-property investments.

* The stats used are from the FMA (Financial Market Authority) released Kiwisaver Annual Report 2015
----------------------------------------------

This is part 4 of a 6 part series. See Are We Really Serious About the Housing Crisis for the summary. Next week, the desperate need of building more homes before I complete this series with why I believe we should be focusing more on going up rather than out, particularly in Auckland.