Making sense of Labour- Housing and the Rich List.

It might be 2 years from the election, but the Labour party is making its pitch for the 2017 elections now. Since becoming Labour Leader, Andrew Little has made a consistent appeal to a very specific demographic within New Zealand. Understanding who is Labour’s target audience helps to define what progressives can expect from the Labour opposition under Little, and from a future Labour government. Contrary to expectations, Labour is not singing its tune to disillusioned progressives or the union movement. It’s not even aimed at the wavering national voters in ‘middle new zealand’.

The core of Labour’s pitch is to New Zealand’s rich and powerful.

Labour’s 2014/5 review [1]

In the first instance, we should take the Labour Party’s word for it. In the wake of the unsuccessful 2014 election the Labour Party commissioned a review to avoid such failure again, which was later leaked. Its results are telling. Organisationally the reviews recommendations seek to undermine the participation of ordinary members. Instead of an organisational turn to strengthening its base, the review politically and financially orientates the Labour party to big businesses.

According to the review, party branches should no longer have a formal space within the party organisation. Instead, Local Electorate Committee’s, or LEC’s, would be the party’s primary local entity. These committees, instead of being open to membership as in a branch, are restricted to 12-15 members. On top of this, these LEC’s can only develop local strategies in line with that developed by national executive and delivered by regional ‘Hubs’. These Hub’s replace regional councils, and the recommendations suggest are responsible to the national executive, rather than local party members. By themselves these reforms disenfranchise local members, but are only a turn to centralisation. The reality of the big business approach of labour is shown elsewhere.

The ‘policy’ section of the report is brief and vague. Whilst saying that the Labour party must ‘respond to’ growing inequality, the party commits itself to being pro-business (although it also says that it should be seen in favour of ‘small and medium’ business in particular). More interesting is the section 1D on fundraising. The recommendation reads:

Labour must build greater confidence in its ability to win and to form a successful government, and – in addition to building its database of online donors – it must use high-level business and other contacts, supported by a strengthened group of professional fundraisers on the staff team, in approaching the corporate sector and other potential sources of funding for donations.

Central to the Labour Party leadership’s strategy for the future is big money. Rather than trying to strengthen the capacity of its membership and organisation, or reaching out to its traditional base in the union movement, the Labour Party is turning to the big end of town. And, as the saying goes, you don’t get money for nothing.

Understanding Labour’s business pitch: Housing

At a glance, Labour’s messaging under Andrew Little seems less than consistent. After winning the Labour leadership, Andrew Little first called for the labour party to drop its policy of a capital gains tax[2]. Then in April 2015 he called for a crackdown on ‘speculators’ by forcing tighter controls on lending[3]. Finally, Labour created controversy by releasing data on ‘chinese’ home buyers and calling for controls on foreign home ownership.

On the surface, this seems like a series of puzzling twists with Little pitching first to the right, then to the left, and then to the racists. Taking a closer look at the policy suggestions of Andrew Little shows a fundamental consistency, a pitch to the wealthiest New Zealanders.

To find the beneficiaries of the Auckland housing price boom you only need look as far as the National Buisness Review’s annual Rich List. The Rich List is a fairly comprehensive list of New Zealand’s wealthiest individuals and families. The 2015 Rich List includes 180 individuals or families with a net worth of over 50 million dollars. Of those 180, at least 53 are listed as making their wealth from ‘property, ‘real estate’ or ‘housing’. These are exactly the ‘high-level’ contacts that the Labour Party is attempting to woo to finance their future campaigns. And each of Andrew Little’s announcements would benefit these 53 property barons, at the expense of working New Zealanders.

In the first instance, Andrew Little spoke in favour of dropping the Labour Party’s existing policy for a capital gains tax. Such a tax on those that sell homes for a profit would clearly benefit working class people in Aotearoa. A portion of the profit from property speculation would go into government hands rather than to wealthy individuals, and this could be reinvested into public housing or social services. Dropping the capital gains tax keeps this money firmly in the hands of property developers. To appeal to New Zealand’s elite, dropping the tax is an obvious first step.

Less obviously pro-business was Little’s call to crack down on speculators. On rhetorical, it appears he is taking aim at the rich speculating on housing and driving up prices for everyone else. The devil is in the detail. Little calls for “loan to value ratio… limits on bank lending”.  Large investors would be unaffected by these changes, they already have the capital to invest, or assets to borrow against and therefore could meet higher ratios. However, this would place limitations on small time speculators, who borrow heavily from the bank and gamble on raising house prices to flip homes for a profit In practice, such a policy would actually increase the strength of large property developers, as it would place significant hurdles in the way of smaller competition. In practice this isn’t cracking down on speculators, but allows large capitalists a greater share of the market.

And finally there was the ‘Chinese last names’ debacle. This was widely seen (and condemned) as a ‘dog whistle’ to racist undercurrents in New Zealand society. The policies public presentation was aimed at placing the cause of housing at the feet of foreigners but when placed into the Labour Party’s strategic vision it looks differently. Again, the Rich List is instructive. The problem of housing affordability go back a lot further than a recent influx of money from overseas. Primarily, housing prices have been driven up by local investors. Controls on foreign buyers- again- would not solve the underlying causes for the housing problem and would just strengthen the hand of local capital against their international competitors. For the Labour party, appeal with xenophobe voters was an merely an added bonus.  

A disaster for the left, or an open road?

This may be depressing reading for Labour Party true believers. Not only has the party leadership fallen in behind a strategy that focusses on the needs of business, the party review recommends undermining the capacity for the membership to be involved and counter these tendencies. Any semblance of hope for a left turn within the Labour party should have been seriously questioned after Andrew Little’s comments on July 17. He spoke against Labour Policy and promised to keep 90 day trial periods[5]. 90 trial periods remove undermine worker’s rights by removing protections from unfair dismissal at work. If in opposition a Labour leader can’t stick to Union principles and the party platform, there is very little space to be confident that this party would advance working people in government.

But there is a more optimistic reading of the situation.

Understanding and accepting that the Labour Party is wedded to a strategy of working for “high-level business” also means that there is space to build an alternative. For the non-labour left in the Union movement, it can be expected that the Labour party under Andrew Little will continue to seek the support of business donors ahead of the unions. While initially disheartening for some, it does mean that the space for those pushing for a more independent political stance in the Union Movement can expect greater hearing.  Alternatives may take time to materialise, but accepting that the Labour party has gone down a different strategic path opens the door for that disscussion.

For the Greens, this should mean clear space to grow their organisational base amongst progressive sectors of Aotearoa. A Labour strategically orientating to the business table should leave space for the greens to grow and solidify their position as the progressive party of Aotearoa, including in the union movement, with less effective competition than ever before. (Whether or not the Greens take this road is to be seen).

There still needs to be a political organisation to represent and fight for progressive change in Aotearoa. The Labour Party’s embrace of business at the expense of working people shows definitively that it is not the organisation capable in leading this fight. But in its place, new organisations can be built, and by learning the lessons of the Labour Party’s embrace of the wealthy, the left can build political organisation that wont make the same mistakes.

[1] The Labour Party review can be read in full here: http://www.scribd.com/doc/267495328/Labour-Review-2015

[2]https://www.tvnz.co.nz/one-news/new-zealand/andrew-little-wants-to-drop-super-age-capital-gains-tax-policy-6135059

[3]http://www.stuff.co.nz/business/67814030/wrong-time-for-a-capital-gains-tax

[4]http://www.stuff.co.nz/business/money/70155168/labours-halfbaked-property-data-turns-chinese-buyers-into-scapegoats

[5]http://www.stuff.co.nz/national/politics/70319219/labour-would-retain-90day-trial-periods-but-make-them-fairer–little

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