4 Sep 2017

Fact or Fiction: Do the leaders know?

From Election17 - Fact or Fiction, 6:00 pm on 4 September 2017

Last week's first debate between leaders of the two main parties (Bill English for National, Jacinda Ardern for Labour) provided fertile ground for our fact-checkers. Here's what they spotted.

"We have the lowest home-ownership rate in 60 years, we need to build houses."

- Labour leader Jacinda Ardern

Home ownership is indeed at its lowest in 66 years, sitting at a rate of 63.2 percent, as shown in Statistics NZ's Dwelling and Household Estimates. This rate has been steadily trending down in the last two or so decades since the historic high of 73.8 percent in 1991.

The lowest home-ownership rate recorded was in 1951, with a rate of 61.2 percent.

Verdict: Fact

 "There's 200,000 houses going to be built in New Zealand over the next six years."

- National leader Bill English

According to Statistics New Zealand, in the year to 30 June 2017, 30,453 homes were consented across New Zealand. If this rate is maintained exactly over the next six years, 182,718 homes will be consented – 17,282 less than Mr English states.

However, MBIE’s National Construction Pipeline Report for 2017 estimated that residential consents will steadily grow from 30,453 homes to a peak of 34,500 homes per year in 2019. If that is the case, then it is likely around 200,000 homes will be consented over the next six years, from 2017-2023.

It is probable Mr English is anticipating the rate to increase in accordance with heightened demand for housing, as New Zealand’s population is expected to grow to 5.01 – 5.51 million in 2025.

If New Zealand achieves its highest ever recorded rate of consents of 40,000 homes per year in early 1974, it will go far beyond this 200,000 houses goal.

One important caveat: just because a house is consented, does not meant the house gets constructed. Experimental statistics published by Statistics NZ earlier this year concluded that 97 percent of house consented do eventually get built, within 10 months on average.

However, over the past year Auckland Council has been developing a database of dwelling completions - the only local authority to do so. The latest monthly data puts the annual completion rate at 6,827 - despite an annual consent rate of about 10,000 houses.

Verdict: Fact (albeit a hypothetical one)

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The first leaders' debate, screened on TVNZ Photo: Screenshot/ TVNZ

Jacinda Ardern: "Housing affordability is the worst we've seen in such a long time, that we've had..."

Bill English (interrupting): "That's not true... Housing affordability is better than in 2008."

Presumably, Bill English is referring to the Massey Home Affordability Index, which compares the average weekly earnings with the median dwelling price and the mortgage interest rate.

In May 2017 the national index was 24.55 compared with 32.92 in May 2008. The higher the index number, the less affordable homes are, so by the index measure, homes are more affordable in 2017 than 2008.

But relying on this index alone is problematic because the urban housing markets of Auckland, Hamilton, Tauranga and Wellington (where roughly half the country’s population live) have grown considerably in value compared to the rest of the country. It’s also important to note that the Massey Index factors in interests rates that were over 10 percent in the lead-up to the Global Financial Crisis, and at present they hover about six percent.

Also, this index does not take into account the ability to obtain mortgages. Since October 2013, a loan-to-value ratio restriction imposed by the Reserve Bank of New Zealand requires most residential mortgage holders to hold at least a 20 percent deposit, which has proved to be the biggest barrier to home ownership since then. The median house price in Auckland is about $800,000, while 'affordable' housing usually been set at about $550,000 in most special housing areas - meaning a deposit of at least $110,000. That compares to the zero deposit mortgages some banks were offering in 2008, prior to the GFC.

Verdict: It's complicated

Jacinda Ardern and Bill English hit the campaign trail again.

Jacinda Ardern and Bill English hit the campaign trail again. Photo: RNZ

There's a separate immigration category for Labour's KiwiBuild programme

- Jacinda Ardern 

Labour does have a policy under the immigration section on their website to introduce a KiwiBuild Visa. This visa is “for residential construction firms who train a local when they hire a worker from overseas".

Verdict: Fact

Prime Minister Bill English (insert) and a house under construction

Prime Minister Bill English Photo: RNZ

"We're in the biggest construction boom New Zealand has ever seen."

- Bill English

According to this year’s National Construction Pipeline Report the value of all recorded building and construction was $34 billion in 2016.

Data available from the Ministry of Business, Innovation & Employment (MBIE) stretches back to 1988 and shows this to be the highest level of total construction expenditure over that 30-year period (including adjusting for inflation).

MBIE forecasts that the value of national building and construction will increase to $42 billion in 2020.

Verdict: Fact

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Photo: 123RF

"Forty-six percent of jobs are going to be either gone or changed in the next 20 years."

- Jacinda Ardern

Ms Ardern is referring to a study commissioned by the New Zealand Institute of Economic Research, an independent Wellington based think-tank, which has suggested that 46 percent of jobs are at “high risk” of disappearing in the next 20 years due to automation.

Verdict: Plausible 

"That's why New Zealand is one of the better performing economies in the developed world."

- Bill English

Mr English did not specify what measure he was basing his statement on, but we can look at the common economic indicators of both unemployment and GDP growth.

According to the OECD, New Zealand does have a lower unemployment rate than the OECD average. Relatively speaking we do well, although countries like US, UK and Germany do beat us.

The same is true for GDP growth rates. We beat similar countries in the OECD, including Australia, the US, UK, and Canada. Therefore, on these indicators at least, it is true that 'New Zealand is one of the better performing economies in the developed world’.

Verdict: Fact 

"Sixty percent of monitored waterways you can't swim in anymore."

- Jacinda Ardern

As quoted in a story published by Radio New Zealand in January 2016, National Institute of Water and Atmospheric Research figures show that more than 60 percent of rivers fail the health standard for swimming.

What quantifies as a ‘swimmable’ river is also being considered by Statistics New Zealand and it's open to some degree of interpretation. One suggestion is that it could be determined through measurements in e coli, which are one of many contaminants present in our freshwater systems, and another is the increases of nitrogen leaching that have taken place in the past 20 years.

Verdict: Fact


Fact or Fiction is a joint initiative between RNZ and the University of Auckland's Public Policy Institute.