THE SATURDAY AFTERNOON OF 18 September 1937 was warm and clear as a furniture truck pulled up outside a new house in Miramar. Greeted there by a crowd of cabinet ministers, a Prime Minister, 300 onlookers and a small gaggle of press photographers, doors were opened, cameras were loaded, sleeves were rolled up, and the crowd was treated to the spectacle of four cabinet ministers and one parliamentary undersecretary bump their way inside the house with a handful of furniture for the new house’s selected tenants.
“Everybody is happy” oozed the state broadcaster
Prime Minister Savage himself earned warm praise for his treatment of a chair, carrying it in “without a hitch” – which “in front of some hundreds, calls for more poise and purpose than the average person can muster.” Ministers of Finance and Defence also earned praise for showing the crowd how to handle a chair, while “the coatless Minister of Public Works,” Bob Semple, also helped Prime Minister Savage “to carry in a solid-looking table.”[2] “Labour Ministers, Indeed” sang the headline in the Auckland Star – appearing, however, only on page six’s ‘News of the Day’ below several headlines the editor clearly considered more important, including one about “Red Tape” in laying out school playgrounds in Te Aroha, and another trumpeting the birth of a two-headed calf in Hikutaia, the second in the neighbourhood in as many months![3]
The house was conveniently located inside the Minister of Public Works’s electorate, one of eight state houses in the electorate and 500 others around the country already completed, with another 1485 under way on the way to his target of 5,000. “The only thing standing between the Government and the achievement of its purpose,” said the Prime Minister in his speech, “were labour and materials.” Those, along with “at least £16,500,000 to £17,000,000,” and he and his team of removalists would be “more confident than ever that we could do the job.”
The nation was lucky enough to hear all the speeches over the newly-nationalised ZB radio network, which was compelled to drop its regular programming to carry the speeches,[5] while the Prime Minister and his team were lucky enough to have the newly-nationalised Reserve Bank on their side to help lend cheaply for the political promises. In April 1936 Finance Minister Walter Nash had assured a public wary of the nationalisation that he did not intend “to sit down and merely turn the handle of the printing press.”[6] But like every politician before or since, he lied. Between 1936 and March 1939 the Reserve Bank borrowed into existence £12.2 million for the Labour Government’s programmes – £5.6 million of this was low-interest loans for Lee & Semple’s housing programme.[7]
With improved employment, and those who had delayed marriage now affording to do so,[8] demand for rental houses had been steadily building. But supply had been discouraged by, among other things, a new rent control law which required a magistrate’s agreement before rents could be raised[9] -- just one of fifty-nine public Acts of parliament passed in Labour’s first year.[10]
By November 1935, when Labour were elected and announced a Christmas bonus to all voters, it looked to an electorate eager for good news like salvation was at hand.
In reality however, the Depression years here, in Australia and the UK were already over, although unemployment would remain high until the decade's end. Here and in our major trading partners, the "classical medicine" had been applied, where “balancing the budget … was seen to have made the all-important difference.”[11] Explaining it later to the House of Commons, British Chancellor of the Exchequer Neville Chamberlain took a gentle swing at America’s free-spending president:
“At any rate we are free from that fear which besets so many less fortunately placed, the fear that things are going to get worse. We owe our freedom from that fear largely to the fact that we have balanced our budget.”[12]
So in fact, Labour were gathering in a harvest grown by others—and the crop was used to enlarge spending, to subsidise monopolies, and to inflate prices.
And by 1938, their unsustainable boom had created their own self-made financial crisis —only rescued by war exports to a desperate Great Britain, and the unemployment crisis (which saw numbers rocket back to those of the bad years) was only remedied by a former pacificist sending men to war.
But let’s look at the myth of public housing. A story that Hans Christian Anderson would have rejected as a fairy tale for being so fantastic.
STATE HISTORIANS TELL US THAT “in 1936 it [the new Labour Government] drew up plans to use private enterprise to build 5,000 state rental houses across New Zealand.”[13]“In the 1930s under the first Labour government of Michael Joseph Savage, gushes political commentator Bryce Edwards,’ state house building was turbo-charged.”[14] Others simply called it a miracle of mass housing, crediting it all to the magic wand of St Michael.
Depression historian Malcolm McKinnon at least provides figures, so they can be checked. “3000 new houses had been completed in 1934-35; over 4000 in 1935-36 and 1936-37; … just over 6000 in 1937-38 and just over 8000 in both 1938-39 and 1939-40.”[15]
What McKinnon and others don’t tell you, or don’t know (or don’t care to know?) is that those figures he cites are not the figures for state houses. They represent the numbers of all houses consented across the country–private and public. And there was no year in which did state house building ever approached the numbers of privately-built houses.
Not one. Not in any year from 1937 (when state building started) right up until 1949 (when it was ended).
There was not even a year in which state-house building built more than private builders did in peak years of the previous decade.
And this was despite the country’s then largest mass house builder, Fletcher’s, working for the government and making its directors and shareholders very rich indeed in the process—James Fletcher’s “special relationship” with government quite literally paying dividends.[16] The numbers can be seen below, from Ministry of Works figures.[17] They make fascinating reading.
What they reveal in essence is that the story of state-housing here is a con.
Savage himself knew it was a con. Presenting the Budget to Parliament on Walter Nash’s behalf in 1939 (Nash was away beseeching more credit from unwilling London bankers) he admitted, “The operations of the department have been superimposed [sic]on the normal works carried out by private enterprise.”[18] The accurate phrase here is “crowding out.”
Nonetheless, he could boast that “In the last year the housing construction department commenced building 3445 houses, while the total number of dwellings arranged [sic] was 8093.”[19] The accurate phrase here is “built by private builders”—which you can yourself in the table above.
That Savage knew he had to fudge was the measure of how much he knew the programme was a con.
THIS IS A GOOD REMINDER OF the state of play in New Zealand house-building ever since we've been building houses: that the health of affordable housing is due to the profitability of private speculative builders. And that it is not until speculative builders here can get back on their feet in volume that housing today might begin to become affordable once again.
In short: Make life safe for spec builders again.
NB: The other myth exploded by perusing these tables, especially the more complete table below, is the myth that National killed the state-house programme. Despite Sid Holland’s rhetoric against it, his promises to end it were as empty as every National Party leader since.
* * * *
THE FOLLOWING TABLE [20] shows the number of building permits issued for dwellings in New Zealand since 1925. The figures for 1925 to 1938 do not include houses built in rural areas. The figures for 1937 and later years include State Rental Houses erected.
Number of New Dwellings Consented
Year ended Mar 31 Private Govt Total Total Value (£m)
1925 5,805 5,805
1926 6,850 6,850
1927 7,179 7,179
1928 5,690 5,690
1929 5,212 5,212
1930 5,747 5,747
1931 3,463 3,463
1932 1,555 1,555
1933 1,496 1,496
1934 2,649 2,649
1935 2,892 2,892
1936 4,140 4,140
1937 4,533 22 4,555 11.6
1938 5,149 1,895 7,044
1939 6,266 3,445 9,711
1940 5,816 3,870 9,686
1941 5,307 3,570 8,877
1942 4,567 2,605 7,172
1943 1,266 368 1,634 3.5
1944 3,020 1,916 4,936
1945 5,446 3,255 8,701
1946 7,481 2,875 10,356 20.7
1947 10,107 2,769 12,876 26.9
1948 10,983 3,065 14,048 29.3
1949 12,025 4,111 16,136 36.0
1950 12,262 5,395 17,657 42.5
1951 14,551 3,298 17,489 48.8
1952 14,297 2,814 17,111 59.2
1953 12,607 3,610 16,217 61.1
1954 14,025 3,432 17,457 69.5
1955 17,420 3,443 20,863 93.4
1956 16,234 3,270 19,504 90.2
[1] Ngā Taonga Sound & Vision Reference: F4372
[2] ‘Tenants Take Over,’ Evening Post, 20 September 1937, p. 10
[3] ‘News of the Day,’ Auckland Star, 20 September 1937, p. 6
[4]‘Tenants Take Over,’ Evening Post, 20 September 1937, p. 10
[5] ‘That First House Broadcast Queried: Director’s Powers – Interrupted Programmes,’ Evening Post, 24 September 1937.
[6]
[7]
[8]
[9] Fairer Rents Act, 1936
[10]
[11 Kates (2010) p. 114
[12]Neville Chamberlain, Budget speech in the House of Commons (25 April 1933)
[13] Ben Schrader, 'Housing and government – State loans and state houses,' Te Ara – the Encyclopedia of New Zealand, https://teara.govt.nz/en/housing-and-government/page-2 (accessed 15 September 2025).
Story by Ben Schrader, published 13 October 2011.
[14] Bryce Edwards, ‘New Zealand once led the world on social housing – it should again’, Guardian, 27 Nov 2020
[15] Malcolm McKinnon, The Broken Decade, OUP (Dunedin,2016) p. 363
[16] Frontier of Dreams, ed. Bronwyn Galley & Gavin McLean, Hodder Moa (Auckland, New Zealand) 283. Students of government subsidies should note however that Fletchers underbid on the housing build just as they underbid on today’s Convention Centre build, and were bailed out by government then as they have been now. Dividends twice over.
[17] Cedric Firth, State Housing in New Zealand, Ministry of Works (Wellington, New Zealand, 1949) p. 67. Amusingly, in his book-length eulogy to state power, Chris Trotter's otherwise enjoyable No Left Turn refers to Cedric Firth as Colin Firth—perhaps after one too many viewings of Bridget Jones's Diary?
[18] NZ Parliamentary Debates 254: 884 (1 Aug. 1939)
[19] ibid
[20] Combined tabulation from Cedric Firth, State Housing in New Zealand, Ministry of Works (Wellington, New Zealand, 1949) p. 67 and (Condliffe, The Welfare State in New Zealand, 1959) p. 201. Firth’s figures run from 1925 to 1949, Condliffe’s (which are not referenced) from 1938 and then intermittently to 1956. Condliffe and Firth have the same precise totals for each similar year, but marginally different numbers for government housing. As Firth is closer to the source, and his 1939 figure tallies with Savage’s account to Parliament, I have preferred his, and calculated private numbers therefrom (correcting Condliffe’s numbers accordingly).
