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There Is No Kiwi Dream. Only a Dream of Property Ownership.

My regular column in the National Business Review came out yesterday. You can read it here, https://www.nbr.co.nz/node/233924, or below:

In 2008, Prime Minister Helen Clark’s Minister of Housing, Maryan Street, gave a speech entitled, “Home ownership - Protecting the Kiwi Dream”. The same theme was picked up by Labour’s leader in 2015, Andrew Little, who is now Minister of Health. At his first annual conference, he promised to restore the Kiwi Dream and defined it as being "a home of your own, a stable income and time with family and friends".


The story keeps repeating. The Beehive reported in 2018 that PM Ardern “says Kiwi Build is restoring the Kiwi Dream of home ownership to thousands of families who have been priced out of the housing market in Auckland and around the country”. Since then prices have risen by another 50%.


By comparison, the American Dream, as originally popularized by James Adams in 1931, was defined differently. It was couched in terms of ideals. Adams described it as “a dream of a social order in which each man & each woman shall be able to attain to the fullest stature of which they are innately capable & recognized by others for what they are.”


Martin Luther King invoked his own vision of the American Dream in his famous speech under the Lincoln Memorial in 1963. His Dream was that his “four little children will one day live in a nation where they will not be judged by the colour of their skin but by the content of their character”.


Picking up on these definitions, Nobel Laureate Robert Shiller has argued that the American Dream was originally conceived as having a strong moral underpinning, like giving respect and equal opportunity to all.


But not in NZ. Here the Kiwi Dream is repeatedly being defined in materialistic terms. It is about becoming a (wealthy) home owner. It is about the personal gratification received from having a stable income.


It’s not a partisan thing. National has also embraced this characterization of the Dream. In 2020, the party’s leader, Judith Collins, stated “Sadly, the dream of home ownership has slipped further away under the Labour-led Government … It helps give people financial security.” Finance Spokesperson, Nicola Willis, claimed earlier this year that “this Government is destroying the NZ dream of home-ownership”.


In doing so, Labour and National have aligned their positions with former US President Trump’s Republicans, who reframed the American Dream in exactly the same way. The US Secretary of Housing worried back in 2017 “that millennials may become a lost generation for homeownership, excluded from the American Dream.”


Our PM has even reassured folks that her government would go to great lengths to prevent them from losing their property bucks, saying “Today’s first home buyers, once they’re in the market, we want to ensure we don’t have a housing crash”. Buyer don’t beware.

Former Labour Finance Minister Sir Michael Cullen added yet more assurances when he headed the Tax Working Group. Capital gains should be taxed, he declared. Yet he quickly abandoned his own hallowed principles by declaring that most peoples’ primary source of capital gains, namely their own home, should be exempt.


Better to hit business owners with capital taxes who are investing to produce new types of valuable goods and services than a person who is a home-owning millionaire, according to Sir Michael’s Group.


There’s a simple explanation for such a stance: Labour and National’s definitions of the Kiwi Dream both don’t include becoming an earthshattering inventor or entrepreneur. The high risk to which these folks expose themselves runs counter to Labour’s Dream of a “stable income” and to National’s Dream of “financial security”. By contrast, risk-taking is fully compatible with American James Adams’ ideal of ensuring that every person is able to push to the limit of their innate capabilities.


So a strong political consensus exists in NZ, at least on this issue. For our two major parties, the Kiwi Dream is a materialist property-owning one. It even comes complete with no-crash-in-value and no-capital-tax guarantees.


As a result, National and Labour have found themselves hoist by their own petards. Having defined the Dream in this particular way and firmly entrenched it in our culture, politicians from across the divide have found themselves unable to deliver on it.


How do we know? Lord Ashcroft, the former Conservative Party Deputy Chair, commissioned a poll of 5,000 Kiwis in 2021, called “Living the Kiwi Dream?” He found “Voters rate housing as the single most important issue facing the country, even ahead of dealing with the pandemic. Whatever the causes … the results are clear to them: growing inequality between those on and off the property ladder, parents worried about prospects for their children, and young people wondering at the point of trying to make a go of things in NZ”.


Due to the bipartisan failure to achieve the bipartisan Kiwi Dream, the Enabling Housing Supply Act was passed as part of a bipartisan deal to shield our political class from intense public wrath. The Act allows for 3 townhouses of 3 storeys to be built on almost any urban site without a consent. Is it good legislation? Who knows? The NZ Treasury has not done its own Cost-Benefit Analysis (CBA) to find out. Attorney General David Parker told Parliament how a CBA was outsourced to private consultants, which is no way to independently assess such a profound change in public policy.


This article, however, is not about what policies can best address the housing issue. It is more basic. It is about the corruption of our values by Labour and National whereby success in terms of the Kiwi Dream now equals owning a house. No wonder voters told Lord Ashcroft how they “felt that whether or not they were successful in life was now completely out of their hands”.