Christopher Luxon takes a ride on the Kjet in Queenstown.
ANALYSIS
National leader Christopher Luxon had a gorgeous day in Queenstown to announce a series of sensible tourism policies including an additional Great Walk and more access to working holiday visas.
It was also a suitable place to proclaim his ability to deliver the perfect dose of flourishing infrastructure and tourism, given the local challenges of meshing growth with affordability and workforce challenges.
The latter has seen some local workers resorting to living in vehicles. Queenstown is also in danger of following a number of similar hotspots overseas - see Tahoe, or Aspen - where the workforce can’t afford to live there anymore.
It’s already happening on some level, with some local workers living in Cromwell, a 30-minute commute each way.
“We’re trying not to make it like that because that rips the heart out of your community,” says Richard Thomas, chair of the Queenstown Lakes Community Housing Trust.
And that is happening despite a worker shortage that continues to see some cafes unable to open seven days a week.
There are several issues at play, the first being empty holiday homes. Data from the 2018 census shows roughly 5000 empty homes in the district, a shockingly high 27 per cent of the housing stock.
Part of the reason, according to Destination Queenstown chief executive Mat Woods, is the change to tenancy rules that made it harder to evict tenants.
“A lot of people are afraid to rent their holiday house for more than 90 days knowing that they may not get it back,” he told the Herald.
National wants to revert to allowing no-cause evictions, which could be abused by bad landlords, but would also help places like Queenstown fill thousands of empty homes.
This would also increase supply and lower prices, making it less likely for an exodus of local workers to the likes of Cromwell.
Thomas says changing tenancy rules would help, but more housing supply is still needed.
“The housing trust has about 100 homes under construction, but we’ve got 1100 households on our waiting list and we’re gaining about 100 households a month.”
The trust has a number of programmes including partnerships with council and developers to build affordable homes in Lake Hawea and Arrowtown, and the government-supported rent saver scheme where the trust matches a household’s savings for a home deposit.
But build more houses and you need to have more public transport and roads so people in new neighbourhoods can get around.
Meanwhile ratepayers - facing a 14.5 per cent increase this year - are already shouldering a disproportionate share of the infrastructure costs, given the high number of visitors.
How does Luxon propose to build the necessary infrastructure, given near-record net migration alongside a wish for tourism growth and more access to working holiday visas?
“We will task the new national infrastructure agency to work with local councils to ensure destinations like Queenstown - with high visitor numbers but low ratepayer bases - can actually access the funding they need to support tourism infrastructure.”
It’s one of those magic wand statements that all politicians wave around in election campaigns.
The proposal seems plausible, and might actually work. The breakdown in central and local government relations was laid bare in the Future of Local Government report, which also told central government to invest way more money into local solutions.
Or it might just be fanciful wishful thinking
The backdrop, remember, is the deteriorating state of the Government’s books; Luxon expects Tuesday’s Pre-election Economic and Fiscal Update reveal to show “a horrible financial picture for New Zealand”.
But wait, there’s more.
“We need to get the council actually consenting land. We’re going to ask every council in the country to consent 30 years of housing growth tomorrow,” Luxon continued.
Then there’s the unwinding of the bright-line test and interest deductibility to boost investment in the rental market.
“Linked to that, we need to make sure we are opening up build-to-rent programmes as well. And then we need to get capital to really good community housing providers.”
Ratepayers shouldn’t be saddled with an increasingly disproportionate share, he said.
“We’re going to have targeted rates ... applied just to those residents of those new developments, so there is no cross-subsidisation from existing residents in the town.
“And then we’re gonna say to councils, if you build above your five-year average, we will pay you $25,000 per consent for every property that’s built.”
This all raises further questions.
Would the bright-line and interest deductibility rollbacks - along with opening the door to foreign buyers, albeit in the $2 million-plus housing market - put upward pressure on house prices?
Would there be more pressure on inflation from an influx of foreign cash for the kind of house sales (totalling some $5b on average per year) to bring in the tax revenue National expects?
How would we lift productivity if housing and immigration were our pillars of economic growth, which has contributed to the housing crisis we’re already facing?
These are not National’s only policies, though, but are part of a greater whole that includes “a world-class education system”, “reliable infrastructure”, investment in skills and technology and innovation, and making better use of international connections.
Luxon was not in any way short of answers today, nor was he unconvincing. He was confident and at ease in all his interactions, in fact.
He isn’t the first politician to say he’ll wave his magic wand and just watch him deliver (Kiwibuild, anyone?), and he surely won’t be the last.
If Luxon is the next prime minister, places like Queenstown will get to see whether growth in tourism and housing and infrastructure can all meld together perfectly without overly burdening ratepayers, or throwing fuel on the inflation fire, or housing prices, or the local worker exodus.
And whether this can all be done while the books are in such poor shape.
And whether Luxon can do this while - as polls suggest he might need to - he juggles David Seymour and Winston Peters and whatever propensity they feel on any particular day towards playing nicely together.
Asked if he was sceptical about Luxon’s very smooth delivery of how he would fix Queenstown’s issues while supporting growth, Thomas was diplomatic.
“That all sounds great but the devil is always in the detail, right?”
Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked several stints in the press gallery team and is a former deputy political editor.
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