Brian Fallow has a piece in the Herald today, prompted by the Productivity Commission report, that champions more active government involvement in the housing market, with barely a hint that anything governments do ever goes wrong. The words “masterplanned”, when uttered of the activities of government entities, other than tongue in cheek, should send something of a shiver of alarm through the citizenry, rather than a frisson of excitement. The track record isn’t good.
But what struck me was the claim that the Productivity Commission’s report “is unequivocal about the fact that we are dealing with market failure here”. Where, I wondered, was the evidence of the market being allowed to work? One might more accurately sum up the Auckland property market as the most probable outcome of two sets of government policies. Restrict the supply of land, and at the same time actively take steps to maintain rapid population growth, and what would one expect but high land prices? One might more accurately call it “policy success” (predictable outcome of deliberately chosen measures, if anyone had actually done the analysis) than “market failure”. But surely no politician was ever dumb, or venal, enough to have wished for the sorts of outcomes we’ve seen in Auckland in particular in recent decades?
Which is not to disagree with Fallow’s concluding observation “the status quo is perilously unsatisfactory”. Well, yes, but instead of proposing providing new compulsory acquisition powers – not just to elected ministers, as at present, but to unelected, barely accountable, appointees – how about giving the market a chance? Free up land supply (zone it all residential, as a default) and urban land will quite quickly become affordable again, and arguments about “hold-outs” surely become moot (if any land can be built on). Oh, and our ancient freedoms are respected as well.
It is a sobering reflection on the growth of the regulatory state that yet more encroachments on peoples’ liberties, with even fewer protections, are proposed in the week in which we mark the 800th anniversary of Magna Carta.