The crisis isn’t around the corner or about to cross the border – it’s already here – Stuff.co.nz

Henry Cooke is Stuffs chief political reporter.

OPINION: Since the start of the pandemic, grim predictions have been the one thing you could constantly count on.

The modelled death tolls always had to be taken with a cubic tonne of salt their worst cases generally supposed that governments and populations made no changes to their behaviour as thousands of people around them died but the economic models were supposed to be more predictive.

We were going to see a slump that made 2008 look like a walk in the park, with unemployment hitting double digits or at least peaking well above 6.7 per cent.

ROBERT KITCHIN/Stuff

Predictions of mass unemployment have not panned out.

Unemployment instead peaked at 5.3 per cent before dropping to 3.2 per cent at the end of last year the lowest rate since 1986, when the series began.

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House prices were supposed to crash. Instead, they rocketed up as the tool used to combat the anticipated unemployment spike cheap lending was unleashed on the market.

These grim economic predictions were often tied to predicted support for the Government, which was stratospheric in early 2020, dropping completely. As the health concern faded, the election would be about the economy, and that was where National would step in and retake the narrative. Instead, the party had the second-worst defeat in its history.

The grim predictions didnt let up in 2021. The Delta outbreak was going to do more economic damage than it ended up doing. Suicides were going to spike because of the 2020 and 2021 lockdowns. The traffic light system was going to result in case numbers exploding over summer, and huge delays for people trying to leave Auckland.

ROBERT KITCHIN/Stuff

Oppositions generally predict doom and gloom.

Even after a remarkably issue-free summer, new National leader Christopher Luxon was ready to make a strong negative prediction the moment Omicron was found in the community on January 23, saying contact tracing and PCR testing would be overwhelmed within days. They were not.

It is, of course, utterly natural to predict Very Bad Times just around the corner when you are in Opposition. Phil Twyford in 2017 said the housing market had a decent shot of going bust in two years. There was a worrying economic start to 2016, according to Grant Robertson New Zealands growth rate actually beat 2015 and 2017 that year.

These messages do double duty: they critique the government for not doing enough to stop said bad time and tell your supporters that better times (for your party) are also just around the corner. The luxury of Opposition is that, by the time your predictions are proved wrong, the whole country has moved on.

Plus, not all grim predictions are wrong. The Delta outbreak last year did lead to a very long and horrid lockdown. Omicron cases are likely to rise fairly rapidly in coming weeks. And New Zealanders are already experiencing plenty of economic pain just not the economic pain we were told to worry about.

Indeed, the actual economic crisis facing New Zealand is the boring old one thats been around long before the pandemic and against which the vaccine is ineffective: housing.

Monique Ford/Stuff

New Zealands real economic crisis is already here.

The irony is that New Zealands recent surge in house prices has been fuelled by the pandemic response, specifically the decision by the Reserve Bank to pour basically free money into the economy to keep the gears turning. Its done an amazing job at keeping the economy growing and unemployment low both laudable goals but its done so by making comfortably wealthy homeowners feel even richer, so that they are happy to go out and spend money.

Helping this price rise is the implicit guarantee that the Government (and Opposition) see housing as the one class of investment that should not entail any risk. Their worry is natural. Your house isnt actually going to fall down or be confiscated from you if it loses some of the 23 per cent gain in value it's reaped in the last year, but theres a decent chance that it would stop you feeling wealthy enough to buy a coffee every day or start a small business of your own.

Meanwhile, those who gave up on buying a house anyway are hardly better off. Rent rises have never kept pace with house price inflation the market can only bear so much when there isnt a bank offering you $1 million but have been on a steady rise, likely to be exacerbated if interest rates go up seriously this year. This is an economic issue that also kills people: New Zealand has over 1000 annual excess winter deaths, which hit those in rented accommodation hardest.

Housing is the Achilles heel of the broadly progressive economic plan Prime Minister Jacinda Ardern outlined at her speech reannouncing the opening of the borders. Fair Pay Agreements, light rail in Auckland, and generous unemployment insurance would all be massive wins for Labour, but they wont do much to help working people if the only way to obtain economic security is still to be born into it.

The bipartisan zoning reform passed late last year will ameliorate the crisis in the long term. But it really is the long term were talking about here. Labour ministers are still far too scared to say they want house prices to drop at all. But even if house prices stayed absolutely still, it would take decades for incomes to rise enough for them to reach the agreed-upon definition of affordability.

Finance Minister Grant Robertson stumbled around in this area on Tuesday, after a 1News Kantar public poll found that 47 per cent of Kiwis wanted the price of housing to drop a lot, while 29 per cent wanted them to drop a little. Robertson said voters didnt actually want that, not really, but that of course the Government shared the aspiration of New Zealanders that we want more people to own their own home.

The risk for Robertson isnt quite voter revolt not yet. But the Government did just make it far easier for New Zealanders who spent the past two years in the country to think about moving overseas. Cheaper rent and better pay might not have been much of a draw in 2020 or 2021, when it was paired with longer lockdowns, more Covid-19, and no easy way home if you changed your mind. That wont be true for 2022.

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The crisis isn't around the corner or about to cross the border - it's already here - Stuff.co.nz